To our Alliqua Shareholders:
I hope you have seen our recent exciting announcements that we
believe drove the increase in our market capitalization and
liquidity over the past couple of months. Based on the positive
response to that news, we continue to be encouraged about the
potential these transactions have to create longer-term value for
our shareholders. On behalf of our Board of Directors, please allow
me to explain in further detail.
First, on May 7, 2018, we announced the completion of an asset
sale to Celularity Inc. of our property, assets and rights relating
to Alliqua’s advanced biologic wound care business, UltraMist®
Therapy System and other therapeutic ultrasound platform products.
This transaction allowed Alliqua to strengthen our balance sheet
and focus on maximizing the value of our remaining assets.
In early 2018, we retained HC Wainwright to run an extensive
process to determine the best way to maximize the value of our
remaining assets for the benefit of our shareholders. After
reviewing proposals from close to 50 companies and evaluating 15
company management presentations, on October 11, 2018 we announced
the signing of a merger agreement with Adynxx, Inc., a clinical
stage pharmaceutical company developing a proprietary platform of
non-opioid therapies for the treatment of pain. Adynxx was recently
awarded a $5.7M grant by the National Institute on Drug Abuse
(NIDA), part of the National Institutes of Health (NIH), to support
the clinical development of the company’s lead product candidate,
brivoligide for postoperative pain. Adynxx issued a press release
announcing this grant award on December 13, 2018. Given
Adynxx’s impressive stockholder base, world-class management team
and exciting pipeline of product candidates to treat pain and
inflammatory diseases, we believe that this merger could create
tremendous value for our shareholders. We estimate this transaction
will close in Q1 of 2019. Alliqua’s shareholders will continue to
hold their shares in this new entity post-closing of the
transaction.
As we announced on November 28, 2018, prior to closing the
merger with Adynxx, Alliqua intends to spin off its
contract-manufacturing subsidiary Aquamed Technologies, and merge
the business with TO Pharmaceuticals to establish a clinical-stage
pharmaceutical company focused on commercializing cannabinoid-based
therapies. Potential applications for these therapies include FDA
regulated clinical indications and select over-the-counter (OTC)
consumer wellness markets. The recently passed Farm Bill will
clearly enhance the resulting company’s ability to use hemp-based
CBD (cannabidiol) for the OTC portfolio. The new company, TO
Pharma, is expected to trade on Nasdaq and we estimate the
transaction will close in Q1 of 2019. If this transaction closes as
planned, Alliqua shareholders will be issued new equity in TO
Pharma, allowing them to participate in this fast growth market of
FDA approved cannabis-based therapies.
Finally, after satisfying transaction expenses related to the
Adynxx and TO Pharma mergers and all of our other financial
commitments, we intend to pay a special dividend to shareholders in
the range of $1.00 to $1.20 per share. We anticipate the record
date will be just prior to the close of the Adynxx merger and the
dividend will be paid within 30 days following the close of the
transaction. Taking into account both merger transactions, our
intent continues to be to return all of the unused capital back to
shareholders. Given the time that it has taken to evaluate and
execute two separate transactions, the projected cash dividend is
slightly lower than our original projection at the time of the
asset sale to Celularity in May of 2018. Considering the combined
value of two merger transactions and the cash dividend, we believe
we have maximized our working capital to provide meaningful value
for our shareholders in multiple ways.
Yes, we have been busy at Alliqua with one goal in mind:
maximizing shareholder value. As an Alliqua shareholder, if both
transactions close as planned, you will have equity in two exciting
companies and of course will be entitled to receive the intended
cash dividend.
Thanks for your interest in Alliqua Biomedical.
Dave JohnsonCEOAlliqua Biomedical
Safe Harbor Statements
Additional Information about the Adynxx Merger and Where
to Find It
In connection with the Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”), pursuant to which, among
other things, subject to the satisfaction or waiver of the
conditions set forth in the Merger Agreement, Embark Merger Sub
Inc. will merge with and into Adynxx. Inc. (“Adynxx”), with Adynxx
becoming a wholly-owned subsidiary of the Company and the surviving
corporation of the merger (the “Merger”), the Company intends to
file relevant materials with the SEC, including a definitive proxy
statement for its stockholders containing the information with
respect to the Merger and the Merger Agreement specified in
Schedule 14A promulgated under the Securities Exchange Act of 1934,
as amended, and describing the proposed Merger. The preliminary
proxy statement and other relevant materials (when they become
available), and any other documents filed by the Company with the
SEC, may be obtained free of charge at the SEC’s website at
www.sec.gov. In addition, investors and security holders may obtain
free copies of the documents filed with the SEC by the Company by
directing a written request to: Alliqua BioMedical, Inc., 2150
Cabot Boulevard West, Suite B, Langhorne, Pennsylvania 19047.
Investors and security holders are urged to read the proxy
statement and the other relevant materials when they become
available before making any voting or investment decision with
respect to the Merger.
Participants in SolicitationThe Company and its
directors and executive officers and Adynxx and its directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of the Company in
connection with the proposed transaction. Information regarding the
special interests of these directors and executive officers in the
Merger will be included in the proxy statement referred to above.
Additional information regarding the directors and executive
officers of the Company is also included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2017 and the
proxy statement for the Company’s 2018 Annual Meeting of
Stockholders. These documents are available free of charge at the
SEC’s website at www.sec.gov and from the Companyat the address
described above.
Cautionary Statement Regarding Forward-Looking
StatementsThis press release contains forward-looking
statements for the purposes of the safe harbor provisions under The
Private Securities Litigation Reform Act of 1995 and other federal
securities laws. The use of words such as “may,” “might,” “will,”
“expect,” “plan,” “anticipate,” “believe,” “intend,” “future,” or
“continue” and other similar expressions are intended to identify
forward-looking statements. Such statements include, but are not
limited to, statements regarding the structure, timing and
completion of our proposed merger with Adynxx; statements regarding
the structure, timing and completion of our proposed merger with TO
Pharmaceuticals; our expectations regarding the capitalization,
resources and ownership structure of the Alliqua and TO Pharma
following thetransactions; our expectations regarding our and TO
Pharma’s ability to trade on the Nasdaq Capital Market; the
executive officer and board structure of the each organization; and
the expectations regarding voting by Alliqua and Adynxx
stockholders. Alliqua, AquaMed, TO Pharmaceuticals and/or Adynxx
may not actually achieve the proposed mergers, or any plans or
product development goals in a timely manner, if at all, or
otherwise carry out the intentions or meet the expectations or
projections disclosed in our forward-looking statements, and you
should not place undue reliance on these forward-looking
statements. These statements are also subject to a number of
material risks and uncertainties that are described in Alliqua
BioMedical, Inc.’s preliminary proxy statement, filed with the
Securities and Exchange Commission on November 26, 2018. Any
forward-looking statement speaks only as of the date on which it
was made. We undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required
by law.
Contact:
Joe Warusz
215-702-1677
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