Diabetes app co Labstyle raises $8.5m on Nasdaq

Erez Raphael

The Israeli company's device makes it possible to measure blood sugar with a cellphone.

LabStyle Innovations Corporation (Bulletin Board: DRIO), which develops and markets the Dario product, designed to detect blood sugar levels using the myDario smart cellphone device, is moving from the over the counter listing to the regular Nasdaq listing under its DRIO ticker. The company completed a financing round, raising $8.5 million (gross), and issued 1.3 million shares at $4.51 a share and the same number of options valid for five years, as well as conducting a $2.5 million private placement. Company management and its current investors accounted for 40% of the investment in the round.

The HC Wainwright & Co. and Joseph Gunnar & Co. investment bankers led the round overseas, and Clal Finance Undwriting led it in Israel. The Labstyle share price plummeted 42% to $3.65 in trading on Friday following the offering, reflecting a market cap of less than $20 million.

Two and a half months ago, Labstyle received permission to market its product in the US. The US Food and Drug Administration (FDA) approved marketing the product in the (K)510 framework, an expedited track for approval of a medical device. In addition to the US, Labstyle operates in Australia, Canada, the UK, the Netherlands, and other countries.

Dario measures the level of sugar in fresh blood samples taken from the fingertips. It includes both the device itself and the cellular application adapted to Android or iPhone devices. Through the application, a website, and a sugar meter, patients, doctors, and therapists can test and process blood sugar data in real time.

Following the financing round, Labstyle plans to launch another product, DarioCare, this April. This cloud computing-based product enables clinics and private and public insurers to optimize their treatment of diabetics. Labstyle says that since MyDario was launched in 2015, its sales have been rising every quarter. The company's fourth quarter sales totaled $500,000.

Labstyle reported a $7.14 million net loss for 2015, compared with a $12.9 million loss in 2014. Founded in 2010, Labstyle held its IPO in 2013, raising $10 million at a $51 million company value. The company's market cap then plunged, but the share surged in 2015, following progress in the development and launching of its product. Labstyle currently has 25 employees: 20 in Israel and five in the branch it recently opened in Boston.

Speaking with "Globes," Labstyle CEO Erez Raphael said, "The financing round was designed mainly to launch the product in the US. The company is also planning to extend the launch of its product to Asian countries such as India and the Philippines, and to continue expanding its launch in Europe. We have a small kit, and we're taking the world of diabetes patients and connecting it to the digital world. On the other hand, we're also providing software to clinics and nurses, so that a patient coming to the clinic can be immediately connected to the system, and can be monitored."

Globes: Can use be confined to the application, or is the sugar measure also needed?

Raphael: "The application can be used in its own right. After several days, however, most of the patients, and we now have tens of thousands of patients worldwide, order our whole kit."

How much does it cost per patient?

"The average cost per juvenile diabetes patient is around $600-800 a year, including the meters. We have agreements with countries like the UK, the Netherlands, and Australia, where it's actually free for patients, because they're insured."

Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2016

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

Erez Raphael
Erez Raphael
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