x min read

Skyline Medical Inc (NASDAQ:SKLN) Looks To Regulatory Approval For Catalysts

Skyline Medical Inc (NASDAQ:SKLN) Looks To Regulatory Approval For Catalysts
Written by
Chris Sandburg
Published on
July 18, 2016
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook
InsidrFinancial

Skyline Medical Inc (NASDAQ:SKLN) gained close to 10% after the bell on Friday, and with a few key announcements hitting press over the last several weeks, looks like it could be winding up for some medium term strength. There's plenty of potential upside catalysts ahead, and while there's some pretty murky capital structure risk, as a quick turnaround position the company looks attractive. Here's why.First, a quick introduction to the company. Skyline is a Minnesota based medical device company, with a current focus on waste management in the healthcare space. Its lead product is called the Streamway fluid management system, and it's designed to streamline the process through which healthcare related waste is processed.At present, around 50 million canisters of disease infected waste are dumped in to landfills in the US each year, and this has obvious implications going forward. With Streamway, Skyline is attempting to reduce this number. It's essentially a wall mounted suction system that allows for the bypassing of cannisters by directing waste straight to a drainage system.The company already has FDA approval for the device, and it's in more than 50 facilities across the US, with around 100 units installed total. This isn’t a huge number, given that there are nearly 6,000 hospitals in the US, but it's a start, and brings us to the latest announcement – the appointment of Peter D. Alex as VP sales. He's a product launch guy, and his remit on this one is essentially to drive the team that are targeting the close to 6,000 facilities that Streamline is not yet in.Interim CEO, Schwartz, had this to say in support of our interpretation of this remit:

"Peter is exceptionally qualified to establish and execute our sales and distribution plans for the STREAMWAY System. We expect his in-depth knowledge and experience at both multinational and emerging companies will help the STREAMWAY System gain market share in the U.S. and Canada over the near term, and in Europe in the future"

As far as near term catalysts go, Skyline just picked up ISO 13485 Certification for its Streamline device, and combined with the 510(k) clearance it already has from the FDA, is targeting a Health Canada approval before the end of the year. For those not familiar with Health Canada, it's the FDA's counterpart north of the border, and it's the entity that will have the final say on Streamline. If Skyline can successfully push for a marketing authorization in Canada, it's going to have a far wider market to target. There are somewhere in the region of 2,000 hospitals in Canada, so the approval is adding around a third on to the total potential in North America as a whole.As we've said, however, there are some risks that might make this one a little too opaque for the risk averse investor. Burn is high, and while this is to be expected for a company seeking to establish its product, it necessitates some degree of dilutive financing going forward. There are a lot of warrants out there, with the latest issue being an end April conversion that saw the company issue 18,059,671 new Series B Warrants in exchange for 1,770,556 Series A Warrants, with the goal being to simplify capital structure. More than 18 million outstanding warrants could have a pretty dilutive impact on early stage holdings, and this is likely just the beginning of the numerous capital shuffles Skyline is going to need to put together across the coming few years, while it pushes Streamline to physicians.Revenues at last count (Q1, 2016) came in at $97K, down on the $183K recorded a quarter earlier, but this is a pretty standard pattern for the healthcare space and is rooted in facility spend trends.Health Canada approval is what we're watching as the next big upside catalyst, so we've got our ears to the ground in case any rumors hint at an outcome before it hits press.Stick with us for SKLN updates by subscribing to our newsletter using the box below.Disclosure: We have no position in SKLN and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.