LANGHORNE, Pa., Jan. 03, 2019 (GLOBE NEWSWIRE) --

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 Johnson
CEO
Alliqua Biomedical