Alliqua Biomedical Inc (NASDAQ:ALQA) has reportedly struck an agreement to sell its AquaMed Technologies subsidiary as part of merger plans. Alliqua plans to sell the AquaMed subsidiary as part of ongoing merger plans with TO Pharmaceuticals of Israel (TOP) which develops cannabis-based products. AquaMed makes hydrogel products that are used for under-skin cosmetic products delivery or for treating wounds. The subsidiary has its headquarters in Langhorne. The merger will result in a public biopharma known as TO Pharma. Its primary focus will be creating and distributing cannabinoid-based products FDA-regulated recommendations. They will be sold in various over-the-counter markets. TOP shareholders will assume control of the majority of the conglomerate’s shares while Alliqua shareholders will own the remaining shares. Additionally, the conglomerate’s common stock will be listed on the Nasdaq market. “We are extremely excited to form this exciting new company in a fast-growing sector of the market,” stated Alliqua CEO Dave Johnson.
Johnson also described TOP as a cannabinoid therapy leader and that his company looks forward to making TO Pharma, a leader in the sector. TOP CEO Seth Yakatan also pointed out that his company was pleased to be part of TOP’s research and technology. He believes that AquaMed’s hydrogel technology will play a pivotal role in making To Pharma a significant player in the global pharmaceutical industry. Yakatan is also confident that the development arising from the merger will boost shareholder value. Tikun Olam Ltd., an Israeli company that owns the intellectual property for medical cannabis development has already licensed TO Pharmaceuticals.
It is also worth noting that Alliqua has announced the new merger as it finalizes its reverse merger with a San Francisco-based firm called Adynxx. The latter is a biopharmaceutical company that makes non-opioid pain treatment medicine. The two companies had agreed to the deal as part of the plan for Adynxx to go public. Meanwhile, Alliqua expects to finalize its AquaMed spinoff as well as the merger with TOP within the Q1 2019. Yakatan will become TO Pharma’s CEO once the deal is completed.
Tapping into the Cannabis industry
Alliqua decided to merge with TOP so that it can take advantage of the many opportunities in the cannabis industry. Medical research over the past years has proved that cannabis extracts have a wide range of therapeutic benefits. There is also a massive global market for cannabis-based treatment and thus the company’s growing interest in the sector. Alliqua has big plans for the cannabinoid therapy sector, and it believes that a merger is the best way to secure significant market share.
As for Alliqua’s financial performance, it reported a 30.26 percent revenue decline in Q3 of 2018 compared to its revenue in Q3 of 2017. The firm’s income for the quarter was $348,000 while its net loss was (-$754,000). Zacks Investment Research forecasts that Alliqua’s earnings per share for the current quarter will be $-0.02. The estimate is lower than the $-0.02 EPS that the company reported in Q4 in 2017. TOP is a biopharma that deals with the discovery, development, and commercialization of new cannabinoid-based therapeutics. The company has its proprietary platform for cannabinoid product development. It also has numerous clinical indications that are are FDA-regulated. Its exclusive license from Tikun Olam Limited allows it to distribute its products globally and thus puts it at an advantageous position.
TOP, therefore, has a lot to offer to the merger and it makes it Alliqua’s ideal partner. The two companies hope to bring their resources together moving forward so that they can propel PO Pharma towards great heights. This means that the conglomerate will develop and market its products to the global market.