Skin Elements Faces Cashflow Pressure Amid Commercialisation Push and Rights Issue

Quarterly Progress in Natural Biotechnology

Australian natural biotechnology company Skin Elements Limited (ASX: SKN) has released its quarterly activity report for the period ending 31 December 2024, showcasing steady advancements across its core product lines and a strategic capital raise to support ongoing development. The company continues to build momentum in commercialising its proprietary SE Formula biotechnology, which underpins a portfolio of plant-based, natural products targeting global markets.

Skin Elements' SE Formula, developed over 16 years, remains the cornerstone of its business, forming the basis for four key product ranges: Soléo Organics sunscreen, SuprCuvr hospital-grade disinfectant, ECO-Nurture plant bio stimulant, and PapayaActivs therapeutic skincare. Each product is positioned as a natural alternative to chemical-based solutions in their respective sectors.

Product Development and Market Trials

The quarter saw continued deployment of ECO-Nurture, a sustainable horticultural bio stimulant, with 930 litres delivered for spray programs across over 120 kiwi fruit orchards in New Zealand. Notably, ECO-Nurture has been added to Zespri’s approved spray list, a significant endorsement given Zespri's status as the world’s largest kiwifruit marketer with annual sales exceeding $4 billion. This inclusion paves the way for broader adoption within the kiwifruit industry.

SuprCuvr, Skin Elements’ 100% plant-based, TGA-registered hospital-grade disinfectant, is undergoing evaluation in public health and transport sectors, including Melbourne secondary schools and urban train stations. Its chemical-free formulation offers a compelling alternative for large-scale disinfection needs, aligning with growing demand for sustainable and non-toxic cleaning solutions.

Meanwhile, Soléo Organics, the company’s award-winning natural sunscreen, is progressing through Phase 3 commercialisation negotiations with a leading UK health retail group. Independent laboratory testing is underway to validate key performance metrics such as SPF50 broad spectrum protection, 5-Star UVA rating, water resistance, and shelf life, benchmarks rarely achieved by natural organic sunscreens. Success here could unlock significant retail pharmacy distribution opportunities.

On the therapeutic front, PapayaActivs is completing Phase 2 development, with small-scale Phase 3 test marketing conducted via the company’s online store. This product targets relief for skin conditions and mild pain, leveraging natural pawpaw extract and other active ingredients, and is listed on the Australian Register of Therapeutic Goods.

Financial Position and Capital Raising

Skin Elements reported net operating cash outflows of $298,000 for the quarter, reflecting ongoing investment in product manufacturing, R&D, and corporate costs. The company prudently manages its cashflows, supported by a $182,000 advance on its FY2025 R&D tax rebate and repayment of $798,000 on its Radium R&D facility.

To bolster its cash reserves and fund continued commercialisation efforts, Skin Elements announced a non-renounceable entitlement issue on a 1-for-5 basis, aiming to raise approximately $513,000. This capital raise, expected to close mid-February 2025, is designed to extend the company’s operational runway to approximately 2.7 quarters, providing breathing room to advance distribution agreements and scale production.

Executive Chairman Peter Malone emphasised the company’s disciplined approach: "Skin Elements continues to carefully manage its operational cashflows through reduced corporate and operating costs as it transitions to bringing large scale commercialisation opportunities to fruition. Our commitment to a formal three-phase approach to research and development enables the Company to qualify for the Research and Development Tax Rebate on ongoing funding during the quarter."

Looking Ahead

As Skin Elements moves deeper into Phase 3 commercialisation across its product lines, the market will be watching closely for material updates on distribution agreements, particularly for Soléo Organics in the UK and SuprCuvr’s adoption in institutional settings. The company’s ability to convert its innovative natural biotechnology into scalable revenue streams will be critical in validating its long-term growth thesis.