Newcastle’s SkinBio buys Bio-Tech of Yorkshire

Newcastle-based SkinBioTherapeutics announced the acquisition of Driffield, Yorkshire-based Bio-Tech Solutions Ltd (BTS) for a total enterprise consideration of £1.25 million payable in cash on closing.

The acquisition is being funded through debt and equity provided by long term shareholder David Brierwood as well as group cash reserves.

“In addition, the company has entered into a subscription agreement with the same investor to subscribe for 2,349,624 new ordinary shares at 10.64p raising £250,000,” said the Newcastle firm.

SkinBioTherapeutics shares rose as much as 14% to around 13p to give the company a stock market value of £29 million.

“BTS is the second acquisition of the group’s M&A strategy and brings the capabilities of manufacturing and packaging of health, hygiene and personal care products, and a future development platform for advanced topical creams,” said SkinBioTherapeutics.

“The acquisition is being funded by a loan of £950,000 with an existing shareholder and a subscription for 2,349,624 new ordinary shares at 10.64p raising £250,000, as well as utilisation of group cash reserves.”

SkinBioTherapeutics said BTS is a well-established manufacturer and supplier of health, hygiene and personal care products.

“The business has capacity to produce liquids, topical creams and lotions as well as tablets and capsules, manufactures to GMP standards, and the company is ISO certified – 9001-2015 and ISO 13485 – 2016 (Medical Devices) with quality control facilities,” said the Newcastle firm.

“The company has 23 employees involved in manufacturing, packaging, formulation, regulatory affairs and back office.

“BTS delivered £2.1m of revenue and £0.5m of EBITDA for the year ending 30 June 2024.  Based on latest management accounts, it is forecasted to deliver £3.0m of proforma revenue and £0.9m of proforma EBITDA in the 2024/25 financial year.

“Management anticipates that it will provide cost synergies to the group, initially through the manufacture of Dermatonics products which has been established as part of the due diligence process. This acquisition also provides the potential for a future development platform for advanced topical creams and capsules.”

SkinBioTherapeutics also provided an overall financial update for the period to the end of September 2024.

It said: “Following the fundraising in August 2024 the cash position of the group at end September 2024 was £1.9m. Having acquired BTS, the group now has sufficient cash runway to support its operations through to Summer 2026 without any additional income from Croda or other joint development agreements.

“Following the successful completion of the clinical studies by Sederma (Croda plc) and the commencement of full commercialisation, the Group has not altered its view on forecasts and revenue expectations. Please note that any forecasts are in the control of Sederma and management cannot forward forecast, so must await the outcome of commercial discussions in October/November.”

SkinBioTherapeutics CEO Stuart Ashman said: “This is the second acquisition we have made as part of our buy and build strategy to generate immediate and longer-term benefits to the SkinBioTherapeutics Group.

“As with our acquisition of Dermatonics earlier this year, this deal brings in revenues, positive EBITDA and cash, as well as providing the group with cost synergies. We gain access to an important and varied customer base in the healthcare space with an excellent team which we intend to retain.

“The main rationale for the deal is obtaining regulatory approved manufacturing facilities which will underpin the expansion of our product portfolio. BTS brings us the capability to manufacture products ourselves and supports our other pillars for the longer term.

“In December 2023, I talked about ‘transforming the group’. It may have taken slightly longer than we had intended to deliver the second acquisition, however with a projected annualised group turnover in excess of £6.3m before any revenue from the Croda partnership these two acquisitions provide us with a strong product portfolio and integrated manufacturing.

“I believe we can claim that the “transformation” has well and truly begun. This is another building block to the solid scientific and financial foundations of the group and, with the successful completion of the Croda clinical studies, we are moving rapidly towards group profitability.

“I’d like to thank David Brierwood for his help in completing this deal. He has been a long-term supporter of both SkinBioTherapeutics and our strategy to transform the Group through acquisitions of complementary businesses.”

Brierwood said: “I have long admired SkinBioTherapeutics’ ambitions to transform the skin healthcare market, and have watched with increasing conviction as the business model has evolved over the past few years.

“I am delighted to have been able to support the Group to achieve this next milestone acquisition and enabling the transformation of SkinBioTherapeutics from an R&D company to a revenue-generating, profitable commercial group.”

Ian Moulds, Founder of Bio-Tech Solutions, said: “Building up BTS has been a life’s work. As I reach retirement, I’m very happy to be handing it over to the SkinBioTherapeutics team, where it can be become a fundamental part of a bigger entity.

“Stuart and his team have done extensive due diligence and during this process we have got to know each other very well. I fully support SkinBioTherapeutics’ growth plans in the skin and personal healthcare sectors; BTS and its team are passing into good hands.”