Woundcare Firm Alliqua Makes $30M Acquisition

Wounds: They're not pretty, but their care is big business in this world of increasing rates of diabetes and obesity.

Nancy Crotti

In its quest to "change the standard of care in wound management," Langhorne, PA-based Alliqua BioMedical Inc. (NASDAQ: ALQA) has announced it will acquire Celleration, Inc. a privately held maker of FDA-approved, ultrasound-based, accelerated-healing devices. The initial $30.4 million cash-and-stock purchase price could increase by $20 million if Celleration meets certain milestones, according to a report in the Minneapolis St. Paul Business Journal.

Celleration (Eden Prairie, MN) has raised more than $50 million in venture capital since its inception in 1999, according to the Business Journal report. Its investorsinclude Minneapolis venture firms Sightline Partners and Affinity Capital Management. It received 510(k) clearance from the FDA in 2005 and CE certification in 2007.MIST therapy has been performed more than 1.2 million times on over 85,000 patients in the United States and the United Kingdom, according to the company. It generated total revenue of $8.7 million during fiscal 2014.

Celleration had been grooming itself for acquisition by conducting numerous clinical trials and working hard to land Medicare reimbursement for its MIST and UltraMIST devices, according to company spokesperson Terri Grant. Several companies were interested, Grant said.

The devices deliver non-contact, low frequency, ultrasound waves through a saline mist to the wound bed. The sound waves stimulate the cells within and below the wound bed to accelerate the normal healing process, according to the company.

"What's unique about it is that, in your body, bacterial cells are the only ones that have a rigid cell wall. As sound waves hit them, they crack," Grant explained. "A lot of these chronic wounds are heavily loaded with bacteria, and the ultrasound will work on that. We can help reduce that bacterial load. You see healing time in about half the time of standard care alone."

Celleration president and CEO Mark Wagner will join the Alliqua board of directors. Grant said she could not predict possible layoffs, and said the company will maintain a Minnesota presence.

"One of the reasons they bought us was for our sales organization and our R&D team," Grant said. Celleration sells in the U.S. and the United Kingdom.

The acquisition would double Alliqua's sales force, company CEO David Johnson said in a statement.

Alliqua started as contract manufacturer. Two of its products, SilverSeal and Hydress, received regulatory clearance from FDA in 2012.

The company makes hydrogels that feature a 3-D cross-linked network of water-soluble polymers. The network can be modified to suit specific applications in wound care and deliver drugs and cosmetic compounds.

Alliqua's electron-beam, cross-linked hydrogels are made solely of water and polymer--no irritating chemicals. It also makes a product called Silverseal for use on dry wounds. The dressings' high water content helps keep in moisture.

Alliqua generated about $1.5 million in revenue for the nine months ended September 30, including an 81% increase in revenue from its proprietary products from the previous quarter, to approximately $1 million.

"Celleration's innovative MIST therapy technology is positioned perfectly within Alliqua's business model," Johnson said.

"It's a fun technology," Grant said. "You get to do such great things for patients who have been struggling."

Nancy Crotti is a contributor to Qmed and MPMN.

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