PITTSBURGH - Carmell Corporation (NASDAQ:CTCX), a company specializing in skin and hair health, has announced the divestiture of its subsidiary, Axolotl Biologix (AxoBio), to refocus its business strategy on its core aesthetic products. The transaction involves the sale of AxoBio back to its initial sellers in exchange for a combination of Carmell common and preferred stock, and notes payable totaling $8 million.
The sale marks Carmell's strategic exit from the tissue graft industry, allowing the company to concentrate on the upcoming launch of its skincare line, starting this month and extending through the summer. Rajiv Shukla, CEO of Carmell, stated that this move is intended to sharpen the company's focus on high-margin aesthetic products with shorter paths to commercialization.
In August 2023, Carmell acquired AxoBio for $65 million, a deal that included $8 million in unsecured promissory notes and Carmell stock. AxoBio's portfolio included a commercial-stage amnion graft, a pre-commercial hospital use product, and other products in various stages of development.
Since Shukla's appointment as CEO in September 2023, Carmell has undertaken several initiatives aimed at driving profitability. These include discontinuing certain clinical trials to save over $20 million in three years, realizing annual cost savings from organizational restructuring, and realigning the company's Board of Directors.
Carmell's financial position is expected to improve post-sale, with a $4 million reduction in annualized cash burn, a $15.6 million cut in debt, and a 29% decrease in EPS dilution due to the return of 8.09 million common shares on a fully diluted basis.
The company's first aesthetic product, the Gold Limited Edition Exclusive (G.L.E.E.), is set for commercial launch this month, followed by nine other advanced skincare products scheduled for release through the summer.
Carmell's technology includes the Carmell SecretomeTM, containing growth factors and proteins, and a novel micellar nanoparticle formulation for delivering active ingredients without relying on potentially harmful excipients.
This divestiture is based on a press release statement and reflects Carmell's strategic decision to streamline its operations and focus on its core bio-aesthetics business. The completion of the sale is subject to customary closing conditions.
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