NEXGEL Inc. Launches IPO on Nasdaq to Advance Hydrogel Innovations in Transdermal Drug Delivery, Wound Care, and Cosmetics

Hydrogels are a class of highly hydrophilic three-dimensional network gels that rapidly swell in water and can retain large volumes of water in this swollen state without dissolving. They play significant roles in various fields, including pharmaceuticals, medical devices, sensors, and cosmetics.

NEXGEL, a company specializing in the production of high-water-content, electron-beam crosslinked aqueous polymer hydrogels and gels, listed on Nasdaq on December 17. According to its prospectus, the net proceeds from this IPO will be used for marketing and development of gels, consumer products, NEXDrape, and other product pipelines, as well as for working capital and other purposes.

NEXGEL, based in Langhorne, Pennsylvania, USA, has over 20 years of experience in the development and manufacture of electron-beam cross-linked hydrogels. The company produces high-water-content, electron-beam cross-linked aqueous polymer hydrogels for applications in wound care, medical diagnostics, transdermal drug delivery, and cosmetics. To date, NEXGEL has incorporated more than 200 combinations of active ingredients into its hydrogel products.

NEXGEL Eye Patch Product, Image Source: NEXGEL Official Website

The company operates a 16,500-square-foot cGMP manufacturing facility, R&D center, and processing operations, enabling it to develop and manufacture unique hydrogels in compliance with stringent FDA regulations. At full capacity, NEXGEL’s plant can produce approximately 1.4 billion square inches of product annually. Additionally, NEXGEL recently completed $650,000 worth of facility upgrades, which will deliver higher-efficiency manufacturing capabilities.

NEXGEL has long served as a contract manufacturer, enabling third-party brands to integrate its gels into their own products. Both the gels and consumer goods manufactured by NEXGEL are produced using proprietary mixing, coating, and cross-linking technologies. These technologies allow NEXGEL to produce products that meet a variety of physical specifications, such as thickness, water content, adhesion, absorbency, moisture vapor transmission rate, and release rate.

Furthermore, NEXGEL possesses the manufacturing capability to offer a wide range of options for gel-coated patches. Consequently, NEXGEL and its clients can ensure tolerances for moisture vapor transmission rate (MVTR) and active ingredient release rates while meeting personalized requirements for color and texture. The competitive advantage of each NEXGEL hydrogel patch lies in its gentleness on the skin.

NEXGEL hydrogel is currently used in the following applications:

· Drug Delivery. Medications are delivered via hydrogel patches, which are minimally invasive and painless. These patches allow for drug release during pre-scheduled dosing intervals in a manner consistent with the body’s own glandular activity, thereby minimizing the side effects associated with injections or oral administration.

· Other Medical Applications. Hydrogel patches are being used for transdermal applications, such as hormone replacement therapy and contraception, treatment of acne, herpes zoster, diabetes, motion sickness, angina with nitroglycerin, and smoking cessation with nicotine and palliative agents.

· Over-the-Counter (OTC) Therapeutic Applications. Examples include OTC acne treatments, analgesics, dietary supplements, antitussives, treatments for warts, calluses, and corns, and pain relief.

· Moist Wound and Burn Dressings. Hydrogel dressings have long been used for the treatment of wounds and burns. Clinical trials have demonstrated the benefits of moist wound healing compared to traditional dressings, including anti-inflammatory effects, enhanced cellular mobility within the skin, reduced scarring, increased exudate absorption, and accelerated healing.

· Components of medical devices. Some medical devices use hydrogels as components, including applications for active drug delivery, such as iontophoresis, heating and cooling devices, medical electrodes, and various medical products designed for sensitive skin.

· Cosmetic Applications. Hydrogel patches and applications deliver cosmetic skincare products to consumers and skincare suppliers, for use in products including moisturizers, facial masks, cooling masks, and applicators.

Starting in the third quarter of 2020, NEXGEL began using its gel technology to manufacture its own consumer products and establish proprietary brands. NEXGEL currently offers nine different products, with a marketing focus on the MedaGel and LumaGel Beauty brands, and plans to introduce additional products after 2022.

SilverSeal, a product under the MedaGel brand, is indicated for over-the-counter wound care and the treatment of skin scars. According to clinical study data involving 40 patients under double-blind conditions, SilverSeal significantly reduces scar tissue compared to typical traditional dressings. The study divided the 40 patients into two groups of 20 each: one group received SilverSeal treatment, while the other received traditional dressing treatment. Scar outcomes in both groups were evaluated using the Patient and Observer Scar Assessment Scale (POSAS), which includes measurements of scar length and width. Compared with patients in the control group, those treated with SilverSeal demonstrated significant improvement in their POSAS scores.

In a recent validation study, SilverSeal was also found to be up to 99% effective in preventing common bacteria, fungi, and yeast after superficial skin injury. According to a report by Fior Markets, the scar treatment market is projected to grow to $45 billion by 2028.

Products sold under the LumaGel Beauty brand primarily focus on aesthetic and cosmetic solutions, such as anti-wrinkle treatments and skincare creams. Additionally, NEXGEL is developing a broader product portfolio that includes applications in the over-the-counter (OTC) drug delivery market, pain management, aesthetics and cosmetics, sports-related uses, cannabinoids (CBD/THC), and general podiatric care. NEXGEL has currently established a partnership with MPG Promotions to assist with the retail distribution of these products.

In terms of sales of its proprietary products, as of June 30, 2021, NEXGEL had no employees dedicated solely to sales functions; instead, other employees assumed sales responsibilities in addition to their primary duties. It was not until February 2021 that the Company began engaging two independent sales representatives to conduct sales activities for the year.

As disclosed in the prospectus, the increase in NEXGEL’s total revenue over the past year was primarily driven by sales of its branded products. NEXGEL’s annual revenue in 2020 was $674,000, representing a decrease of $43,000 compared to $717,000 in 2019. However, sales rebounded to higher levels in early 2021. As of September 30, 2021, its revenue reached $1.02 million, a year-over-year increase of $445,000. According to data from the Amazon platform, NEXGEL’s product sales have shown continuous monthly growth.

Source: NEXGEL Prospectus

Currently, NEXGEL has also entered the field of medical device development, which focuses on creating and developing medical devices that reduce skin pain and irritation and improve the maintenance of skin integrity, thereby providing more comfortable and safer devices and solutions for patients using medical devices. NEXGEL holds a patent in Europe for the use of lignin to inhibit restenosis and thrombosis, as well as for coated medical devices containing lignin.

In October 2020, NEXGEL established its wholly-owned subsidiary, NexGelRX, Inc., to conduct proof-of-concept studies for the development of its first medical device, NEXDrape, and has filed global patent applications for this device.

NEXDrape is a transparent, adhesive polyurethane film designed as a surgical dressing for patients with compromised skin. This film enhances skin breathability, thereby preventing moisture accumulation and liquefaction. During surgical procedures, the product adheres to the skin surrounding the wound edges. NEXDrape targets populations sensitive to adhesives—such as the elderly, diabetic patients, trauma patients, and individuals experiencing skin impairment due to certain medications—who may experience adverse reactions upon removal of adhesive tapes. These groups constitute a significant proportion of the market, where 3M Healthcare is the current leader. NEXGEL conducted proof-of-concept studies for NEXDrape involving animal models and two human cadavers. The company plans to submit the study results to the FDA to demonstrate the safety and efficacy of NEXDrape.

Additionally, NEXGEL is developing a medical tape called NEXDerm, designed to secure central venous catheters, intravenous infusion lines, and devices to patients before, during, and after medical procedures.

The Company is currently in the early stages of exploring and developing many other potential medical devices. Due to funding constraints, NEXGEL’s current strategy for its medical devices is not focused on commercialization, but rather on preparing for potential market entry through licensing and collaborations with third parties that possess the necessary resources and capabilities.

According to the prospectus, contract manufacturing of hydrogels is currently NEXGEL’s primary source of revenue. As of September 30, 2021, during the third quarter, three major customers accounted for approximately 95% of total revenue, with individual contributions of 33%, 38%, and 24%, respectively. This also highlights NEXGEL’s dependence on its customers.

Furthermore, as NEXGEL expands its consumer products and medical device businesses, it will face increased competition. Competitors include numerous manufacturers, distributors, marketers, and other retailers, as well as companies such as Johnson & Johnson, Pfizer, and Procter & Gamble. Most of NEXGEL’s competitors have longer operating histories, more developed and innovative sales and distribution channels and platforms, greater brand recognition, and larger established customer bases. Therefore, strategic partnerships are critical to NEXGEL’s success.

Currently, NEXGEL is implementing a new strategy that plans to leverage its hydrogel products and technology through select OTC brands to attract other OTC brands, particularly those in the beauty and cosmetics industry and their customers. Furthermore, NEXGEL is developing a new process whereby clients can create their own customized hydrogel products by paying development fees, marking a shift away from its traditional contract manufacturing business model.