LabStyle Innovations seeks to raise $11.5m

Lab Technician.  Photo: Reuters

LabStyle's device for measuring blood sugar using a smartphone recently received FDA approval.

After receiving approval for selling its device in the US, medical device company LabStyle Innovations Corp. (OTCQB: DRIO), seeks to raise capital, and to upgrade its stock from the Nasdaq OTC market. The company, which has developed and sells a device called Dario for monitoring blood sugar levels using a smartphone, has a market cap of $20 million, and seeks to raise $11.5 million. For the purposes of calculating commissions, the company stated in its prospectus the possibility of raising more than double that amount - $23.8 million - but its intention is to make do with $11.5 million. According to the prospectus filed by the company, it will raise the funds through an offering of shares and warrants. The underwriters are Rodman & Renshaw and Joseph Gunnar.

Caesarea-based LabStyle Innovations was founded in 2010. It became a public company in 2013 when it listed for over-the-counter trading, and later raised $10 million in the US at a valuation of $51 million. Since hitting a low in late 2014, the company's share price has jumped by more than 200%. Nevertheless, in comparison with the price when it listed on Nasdaq, the stock is down 97%.

The largest shareholders in LabStyle before the offering are former Psagot brokerage vice president David Edery's Dicilyon Consulting and Investment, with 26.9%; and Shmuel Farhi, with 18.4%.

LabStyle Innovations has earmarked the funds to be raised for expanding its production capacity, further development of its software, and sales and marketing efforts in the US and other markets. A month ago, the company received FDA approval for selling its product in the US, in a fast-track procedure for approving medical devices. Among the investment risks that the company lists in its prospectus are its high dependence on a single product and on the acceptance of that product by the market, and competition from companies with much greater resources such as Abbott Laboratories, Bayer, Johnson & Johnson, Roche, and Sanofi.

At present, the company is still posting negative cash flow on its activity. At the end of the third quarter of 2015 it had $1.9 million cash, and its financial statements carried a going concern qualification. At the end of 2014 it started to post revenue, which totaled $515,000 in the first nine months of 2015. It made a net loss in that period of $5.5 million, compared with $9.3 million in the corresponding period of 2014.

Published by Globes [online], Israel business news - www.globes-online.com - on January 19, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

 
Lab Technician.  Photo: Reuters
Lab Technician. Photo: Reuters
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