Sharps Technology, Inc. (the “Company”) (NASDAQ: “STSS” and
“STSSW”), an innovative medical device and drug delivery Company
offering patented, best-in-class syringe products, issues a
shareholder update from Robert Hayes, the Company’s Chief Executive
Officer.
Dear Fellow Shareholders:
I am pleased to update you on Sharps’ recently
signed Asset Purchase Agreement to acquire the InjectEZ facility, a
specialty prefillable syringe manufacturing facility, and the
associated $400 Million 10-year purchase agreement with Nephron
Pharmaceuticals. This is a transformative, strategic set of events
for Sharps and our shareholders, and I hope you share the
enthusiasm I have for our future. I remain committed to the vision
I had upon signing the partnership with Nephron and will stay the
course through the Company’s transition to commercialization in
early 2024. The signed agreements with Nephron advance the
manufacturing and research partnership that we announced in
November 2022, and reinforce our commitment to product innovation,
advanced manufacturing, and commercialization. In this letter, I
will provide key highlights about the Company’s vision, the
proposed transaction, and the Company’s ongoing operations.
Strategic Partnership with Nephron
Continues:Our relationship with Nephron has strengthened
since the signing of the initial agreement last year. Through the
successful completion of the Asset Purchase Agreement and the
10-year purchase agreement, we will have a full partnership that
will provide a strong baseline of revenue for Sharps for many
years, supported by the $400 Million commitment from Nephron for
the period. With full control of the InjectEZ facility through this
transaction and the capacity from our wholly owned manufacturing
facility in Hungary, Sharps will have the ability to supply Nephron
with their prefilled syringe needs and also commercialize our smart
safety syringe products to the broader healthcare syringe market.
The agreement will leverage synergies from both companies and
enable Sharps to commercially enter the prefilled syringe landscape
with strength and ahead of plan.
Long-Term Revenue Stability and
Growth: A key component of the InjectEZ acquisition is the
10-year purchase agreement with Nephron and their commitment for
minimum orders of more than $400 Million over the period. Nephron
has committed to purchasing 10mL and 50mL prefillable copolymer
syringes, with initial product delivery scheduled for the first
quarter of 2024 and revenue for the first twelve months totaling
approximately $30 Million. Subsequent shipments will continue until
at least December of 2033 with minimum annual revenue of
approximately $45 Million per year. In addition to the purchase
agreement, Sharps will benefit from supplying Nephron because of
their valued brand in the healthcare industry and leadership in
areas such as 503B outsourcing, respiratory medicine, diagnostic
kits, and specialty drug delivery solutions. As a company that is
transitioning from research and development to commercialization,
this is a significant development that will have a meaningful
impact on Sharps’ revenue and profitability. We anticipate
Nephron’s start-up volume to be approximately 60% of our initial
planned manufacturing capacity, which will provide Sharps with the
ability to fully service Nephron’s needs and to also sign purchase
orders for our products from other companies in the healthcare
market. Looking ahead, our team has begun working on expansion at
the InjectEZ operation to provide for the additional planned
capacity needed to service strategic customers in the branded and
specialty Pharma space. Through this transformation and growth, we
are committed to producing innovative drug delivery solutions for
the healthcare sector, including smaller specialty configurations
for biotech, ophthalmology, and cosmetic medicine.
Strength Through Acquiring
InjectEZ:Owning and operating the InjectEZ manufacturing
facility will be a game changer for Sharps. Located on Nephron’s
campus in West Columbia, South Carolina, the InjectEZ facility is a
state-of-the-art manufacturing facility and one of the only fully
dedicated specialized copolymer pre-filled syringe manufacturing
plants in North America. The operation has fully automated
prefillable syringe system manufacturing capabilities that include
ISO cleanrooms for all key areas including injection molding, high
speed automated assembly, and specialty packaging that include the
use of Husky molding machines and Hahn automation. Looking ahead,
our team has begun planning for expansion at InjectEZ to provide
for additional capacity and expand our ability to service customers
outside of Nephron. We have plans for expansion that will double
our capacity from the current 45 Million to 90 Million units per
year and expand the range of products to include specialty 0.5mL
and 1.0mL formats and custom configurations.
Financing Strategy: Our
capitalization strategy for the InjectEZ transaction will use debt
and preferred stock financing, while seeking to limit dilutive
financings to fund working capital needs. As stated in the press
release on September 26, 2023, we have worked through a multi-month
financing process that has resulted in a signed term sheet with a
leading middle-market lender for up to $75 Million in debt
financing. Proceeds from the financing will be used for the
acquisition of InjectEZ, non-dilutive working capital, and facility
enhancements. Through the recent $5.6 Million raise, we are in a
comfortable position with the working capital needed on hand as we
work to close the debt financing. We are working through this
process with diligence and will provide updates as developments
advance. We have also reached an agreement with Nephron’s Bill and
Lou Kennedy to let Sharps begin critical work on the facility and
start up product development activities prior to closing the deal.
This will allow for timely activities to be completed as soon as
possible, per the agreed upon schedule. We will use part of the
$5.6 Million raise to complete several of these milestones.
Increasing Capacity for a Growing
Prefillable Syringe Market: Current capacity levels at
InjectEZ will fully support orders from Nephron, as well as our
current projections for additional business from the open
healthcare market for 2024 through 2026. We have design plans in
place to double our capacity from 45 Million to 90 Million units
per year, which we are forecasting to be in place in late 2026. The
additional capacity will be used to serve our core business focus
within the 503B and pharmaceutical segments of the healthcare
industry, including specialty small volume pieces, infusion pumps,
and novel drug delivery systems. Market research is forecasting for
significant growth within the prefillable syringe segment, with
product demand outstripping supply for the foreseeable future. The
prefilled syringe market is a niche sub-industry within the
healthcare sector that is growing faster than GDP, specifically
within the copolymer segment of the market that Sharps will serve.
We are excited for the opportunities for Sharps within this
segment, as prefillable syringe capacity is at a premium due to the
global lack of capacity, increasing demand, and technical
challenges in production that our team has a wealth of experience
in.
Accelerating Operations in
Europe: Operations at our wholly owned facility in Hungary
are moving forward and hitting milestones as planned. We continue
to manufacture and export our patented line of ultra-low waste,
smart safety disposable syringe products for commercial use. In the
first half of 2024, Sharps will introduce the Sologard Locking Plus
syringe, a specialty FDA and WHO approved syringe system that will
be offered in 3mL to 10mL barrel volumes. The team is also working
to advance the facility to manufacture new product configurations
and have identified opportunities for specialized size and
technology options for our segment of the market. The facility has
sufficient capacity for our growing needs and will be vital in
supporting our efforts at the InjectEZ facility as we begin to
execute on commercialization. While we remain committed to
developing and commercializing disposable smart safety syringe
technologies for the healthcare market, the opportunity to
accelerate our prefillable syringe strategy, with support from the
Hungary facility, will take priority in the near term to support
our partnership with Nephron.
Conclusion: We are at a pivotal
time in our Company’s history and the recent transactions position
Sharps for exciting commercial growth. I would like to thank Bill
and Lou Kennedy at Nephron for their continued support and shared
commitment to bringing our specialized products to the market. We
look forward to providing updates as we move ahead with our plans.
I want to give my sincere thanks to our shareholders for their
continued support of Sharps Technology.
About Sharps Technology:Sharps
Technology is an innovative medical device and pharmaceutical
packaging company offering patented, best-in-class smart-safety
syringe products to the healthcare industry. The Company’s product
lines focus on providing ultra-low waste capabilities, that
incorporate syringe technologies that use both passive and active
safety features. Sharps also offers products that are designed with
specialized copolymer technology to support the prefillable syringe
market segment. The Company has a manufacturing facility in Hungary
and has partnered with Nephron Pharmaceuticals to expand its
manufacturing capacity in the U.S. For additional information,
please visit www.sharpstechnology.com.
Forward-Looking Statements:This
press release contains “forward-looking statements”.
Forward-looking statements reflect our current view about future
events. When used in this press release, the words “anticipate,”
“believe,” “estimate,” “expect,” “future,” “intend,” “plan,”
”poised” or the negative of these terms and similar expressions, as
they relate to us or our management, identify forward-looking
statements. Such statements, include, but are not limited to,
statements contained in this press release relating to our business
strategy, our future operating results and liquidity, and capital
resources outlook. Forward-looking statements are based on our
current expectations and assumptions regarding our business, the
economy, and other future conditions. Because forward–looking
statements relate to the future, they are subject to inherent
uncertainties, risks, and changes in circumstances that are
difficult to predict. Our actual results may differ materially from
those contemplated by the forward-looking statements. They are
neither statements of historical fact nor guarantees of assurance
of future performance. We caution you therefore against relying on
any of these forward-looking statements. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include, without limitation, our ability
to raise capital to fund continuing operations; our ability to
protect our intellectual property rights; the impact of any
infringement actions or other litigation brought against us;
competition from other providers and products; our ability to
develop and commercialize products and services; changes in
government regulation; our ability to complete capital raising
transactions; and other factors relating to our industry, our
operations and results of operations. Actual results may differ
significantly from those anticipated, believed, estimated,
expected, intended, or planned. Factors or events that could cause
our actual results to differ may emerge from time to time, and it
is not possible for us to predict all of them. We cannot guarantee
future results, levels of activity, performance, or achievements.
The Company assumes no obligation to update any forward-looking
statements in order to reflect any event or circumstance that may
arise after the date of this release.
Investor Relations: |
US Investor Relations: |
Adam Holdsworth, Managing Director |
Craig Brelsford, Specialist |
TraDigital IR |
RedChip Companies Inc. |
adam@tradigitalir.com |
craig@redchip.com |
Sharps Technology (NASDAQ:STSS)
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