Skyline Medical Inc (NASDAQ:SKLN): Another Win, Further Upside On Offer From Here

Earlier this month, we highlighted Skyline Medical Inc (NASDAQ:SKLN) as being undervalued based on markets focusing on the wrong thing for the company. Management had put forward a proxy to get a reverse split approved, along with some dilution to raise capital, and shareholders (and wider markets alike) saw both these items as wholly bearish. The resulting sentiment – of course – weighed heavy on the company. We noted that both the reverse split and the potential dilutive raise wasn’t ideal, but that they served as conduits to allowing the company to start capitalizing on what essentially is a game changing product, and further, that if it could start producing a positive news stream, any value lost through either of the aforementioned actions would likely quickly be negated.Well, the company did affect its reverse split (something that, in the interest of full disclosure, we suggested it might not end up doing) and the question post-split became can it maintain an above threshold price and – in turn – its NASDAQ listing.Those who followed the split will already be aware of what happened immediately after it took effect – the company lost a little over 31% of its market capitalization, and concerns that short pressure would push Skyline below threshold (basically a nightmare scenario for shareholders, and their reason for voting against a reverse split in the first place) came into play.As this week kicked off, the decline stemmed, and the company did what we had hoped it would do – start to capitalize on developments and get a positive news stream flowing.Details of the latest development, a distribution deal with a UK-based pharmaceutical sales organization, first hit press back in September. Back then, the arrangement focused on the UK distributor – GLG Pharma – developing and retaining diagnostics tests that use the fluid collected by Skyline's technology, the Streamway System, to identify biomarkers for cancer and other infectious diseases. For us, this was an interesting development because it expanded the application of Streamway beyond that which Skyline used as its initial pitch. To put this another way, if a company developed diagnostics tests that work in tandem with Streamway, and specifically, if these tests build on the current standard of care options in terms of speed and accuracy, then a sales team entering a physician's office has a nice kicker with which to improve the chances of collecting revenues on the product.That in itself was a bonus. Now, however, the company has also announced that GLG has exclusive rights to market the product in the UK (something that was mentioned previously, but not signed and sealed). This aligns GLG's interests directly with those of Skyline not only from a sales volume perspective, but also from a speed of development of these diagnostics tools perspective, and strengthens the agreement considerably in our opinion. News of this signing and sealing has had an impact that falls in line with our interpretation of its implications, and the company is up around the $2.60 a share mark, higher than its post split and looking like a dead cert for maintaining its listing on the NASDAQ.So the question now becomes, where do things go from here?The company is going to raise money soon, there's no doubt about that, but we expect any announcement in line with this raise to be delayed until Skyline secures maintenance of its NASDAQ listing. A dilutive announcement will hit the company, and that's the last thing it needs while it's trying to maintain a minimum bid. When this raise comes, however, and we expect between now and announcing there will be a number of positive releases to maintain flow, it could offer a nice secondary opportunity to buy on the dip.The bottom line here is that Skyline has an excellent product, and its problem to date has been collecting revenues and making sales. Management expects to boost its sales team, and through agreements such as the one just announced, we expect topline to start improving by a considerable degree over the coming quarters. For this reason, we consider dilution well worth stomaching in light of, and head of, potential for growth.We will be updating our subscribers as soon as we know more. For the latest updates on SKLN, sign up below!Disclosure: We have no position in SKLN and have not been compensated for this article.