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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Crescita Therapeutics Inc | TSX:CTX | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.02 | 3.23% | 0.64 | 0.54 | 0.64 | 0.64 | 0.62 | 0.62 | 2,020 | 20:59:59 |
Secures Manufacturing Contract of US$10 Million over 4 Years
Completes Strategic Asset Acquisition
Crescita Therapeutics Inc. (TSX: CTX and OTC US: CRRTF) (“Crescita” or the “Company”), a growth-oriented, innovation-driven Canadian commercial dermatology company, today reported its financial results for the second quarter ended June 30, 2024 (“Q2-2024”). All amounts presented in this press release are in thousands of Canadian dollars (“CAD”) unless otherwise noted and are in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.
Financial Highlights
Q2-2024 vs. Q2-2023
“The second quarter results remained challenging due to previously announced headwinds in our Manufacturing segment,” commented Serge Verreault, President and Chief Executive Officer of Crescita. “I am pleased with the performance of our Skincare business, which grew 10.7% year-over-year, as well as our strong balance sheet, which affords us the opportunity to make the required investments to create long-term value for our shareholders.
“The key milestones we announced shortly following the end of the quarter demonstrate our team’s commitment to bringing Crescita to sustained profitability. The acquisition of the strategic assets of Occy Laboratoire, the expansion of our portfolio with industry-leading products like MicronJet™, and the growth in our contract manufacturing pipeline as a result of an agreement amendment with a major client and the signing of an exclusive supply agreement with a leading Canadian healthcare services provider, represent important steps in achieving our goal of profitability,” concluded Mr. Verreault.
Operational and Corporate Developments
For the three and six months ended June 30, 2024 and up to the date of this press release:
Amendment to Contract Manufacturer Supply Agreement, Securing US$10M over Four Years
Exclusive Manufacturing and Supply Agreement with Leading Canadian Healthcare Services Provider
Exclusive Distribution Agreement with NanoPass Technologies Ltd
Acquisition of Strategic Assets of Occy Laboratoire Inc.
Update on Licensing Agreement for Pliaglis® in China
Repurchases under our Normal Course Issuer Bid (“NCIB”)
Q2-2024 Summary Financial Results
Note: Select financial information is outlined below and should be read in conjunction with Crescita's Condensed Consolidated Interim Financial Statements and related Management's Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2024, which are available on Crescita’s profile on SEDAR+ at www.sedarplus.ca and on Crescita’s website at www.crescitatherapeutics.com.
In thousands of CAD, except per share data and number of shares
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
$
$
$
$
Commercial Skincare
2,972
2,685
5,507
5,177
Licensing and Royalties
491
299
491
320
Manufacturing and Services
625
2,178
3,086
4,267
Revenues
4,088
5,162
9,084
9,764
Cost of goods sold
1,853
2,093
4,438
3,959
Gross profit
2,235
3,069
4,646
5,805
Gross margin (%)
54.7%
59.5%
51.1%
59.5%
Research and development (“R&D”)
163
178
333
338
Selling, general and administrative (“SG&A)
2,812
2,742
5,399
5,179
Depreciation and amortization
304
375
689
750
Total operating expenses
3,279
3,295
6,421
6,267
Operating loss
(1,044)
(226)
(1,775)
(462)
Interest income, net
(100)
(95)
(216)
(193)
Foreign exchange (gain) loss
(16)
57
(14)
21
Share of (profit) loss of an associate
(2)
(9)
7
(17)
Net loss on convertible note measured at
fair value through profit or loss
-
9
-
22
Loss before income taxes
Deferred income tax expense
(926)
-
(188)
93
(1,552)
-
(295)
259
Net loss
(926)
(281)
(1,552)
(554)
Adjusted EBITDA1
(686)
214
(1,011)
375
Loss per share
Basic and diluted
$ (0.05)
$ (0.01)
$ (0.08)
$ (0.03)
Weighted average number of common shares outstanding
Basic and diluted
19,442,819
20,334,153
19,517,363
20,334,153
Selected Balance Sheet Information
Cash and cash equivalents, end of period
9,012
10,226
Selected Cash Flow Information
Cash provided by operating activities
547
81
925
2,212
Cash used in investing activities
(912)
-
(912)
-
Cash used in financing activities
(158)
(101)
(394)
(200)
Revenue
We have three reportable segments: 1) Commercial Skincare (“Skincare”), which generates revenue from the commercialization of our branded non-prescription skincare products, manufactured in-house, in Canada and in certain international markets, as well as other brands under exclusive distribution agreements; 2) Licensing and Royalties (“Licensing”), which currently derives revenue from licensing our intellectual property related to Pliaglis®; and 3) Manufacturing and Services (“Manufacturing”), which generates revenue from contract manufacturing and product development services.
Total revenue for the three and six months ended June 30, 2024, was $4,088 and $9,084 compared to $5,162 and $9,764 for the three and six months ended June 30, 2023. The net year-over-year decreases of $1,074 and $680, were primarily driven by lower Manufacturing segment revenue due to the cancellation of certain purchase orders by our largest Manufacturing client. These decreases were partly offset by growth in our Skincare segment, from incremental domestic sales of our aesthetic and medical aesthetic product portfolios, and to a lesser extent from our Licensing segment, which mainly reflected royalties above the annual contractual minimum under our agreement with Cantabria Labs Inc.
Gross Profit and Gross Margin
For the three months ended June 30, 2024, gross profit was $2,235, representing a gross margin of 54.7%, compared to $3,069 and 59.5%, respectively, for the three months ended June 30, 2023. The net decrease in gross profit of $834 was mainly due to lower overall revenue year-over-year, while the gross margin decrease of 4.8% was primarily driven by the fulfilment in the prior year of higher-margin purchase orders in our Manufacturing segment which did not repeat, lower manufacturing volumes, and the incremental cost of goods sold (“COGS”) from supplying Pliaglis under a licensing agreement in Q2-2024.
For the six months ended June 30, 2024, gross profit was $4,646, representing a gross margin of 51.1%, compared to $5,805 and 59.5%, respectively, for the six months ended June 30, 2023. The net decreases in gross profit of $1,159 and in gross margin of 8.4%, respectively, were mainly due to the same factors as for the quarter, as well as the impact of pricing concessions relating to a purchase order from our largest Manufacturing client that was deferred from 2023 into Q1-2024.
Operating Expenses
For the three months ended June 30, 2024 and 2023, total operating expenses were $3,279 and $3,295, respectively, remaining essentially flat year-over-year. For the six months ended June 30, 2024 and 2023, total operating expenses were $6,421 and $6,267, respectively, representing a net increase of $154. The increase was mainly due to higher advertising and promotion spend, consulting fees, and commercial partnership fees to support our digital strategy.
Cash and Cash Equivalents
Cash and cash equivalents were $9,012 at June 30, 2024, reflecting a net decrease of $519 in the quarter, mainly as a result of the acquisition of all of the non-real estate business assets of Occy, partly offset by the cash provided by operating activities of $547.
Non-IFRS Financial Measures
We report our financial results in accordance with IFRS. However, we use certain non-IFRS financial measures to assess our Company’s performance. We believe these to be useful to management, investors, and other financial stakeholders in assessing Crescita’s performance. The non-IFRS measures used in this press release do not have any standardized meaning prescribed by IFRS and are therefore not comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. The following are the Company’s non-IFRS measures along with their respective definitions:
Management believes that Adjusted EBITDA is an important measure of operating performance and cash flow and provides useful information to investors as it highlights trends in the underlying business that may not otherwise be apparent when relying solely on IFRS measures. Below is a reconciliation of EBITDA and Adjusted EBITDA to their closest IFRS measures.
In thousands of CAD dollars
Three months ended
June 30,
Six months ended
June 30,
2024
2023
2024
2023
$
$
$
$
Net loss
(926)
(281)
(1,552)
(554)
Adjust for:
Depreciation and amortization
304
375
689
750
Interest income, net
(100)
(95)
(216)
(193)
Deferred income tax expense
-
93
-
259
EBITDA
(722)
92
(1,079)
262
Adjust for:
Share-based compensation
54
65
75
87
Foreign exchange (gain) loss
(16)
57
(14)
21
Share of (profit) loss of an associate
(2)
(9)
7
(17)
Net loss on convertible note measured at
fair value through profit or loss
-
9
-
22
Adjusted EBITDA
(686)
214
(1,011)
375
Caution Concerning Limitations of Summary Financial Results Press Release
This summary earnings press release contains limited information meant to assist the reader in assessing Crescita’s performance, but it is not a suitable source of information for readers who are unfamiliar with Crescita and is not in any way a substitute for the Company's Consolidated Audited Financial Statements and notes thereto, MD&A and latest Annual Information Form (“AIF”), all of which can be found on the Company’s profile on SEDAR+ at www.sedarplus.ca.
About Crescita Therapeutics Inc.
Crescita (TSX: CTX and OTC US: CRRTF) is a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house R&D and manufacturing capabilities. The Company offers a portfolio of high-quality, science-based non-prescription skincare products and a commercial stage prescription product. We also own multiple proprietary transdermal delivery platforms that support the development of patented formulations to facilitate the delivery of active ingredients into or through the skin. For more information visit, www.crescitatherapeutics.com.
Forward-looking Information
Certain statements in this press release constitute forward-looking statements and/or forward-looking information (collectively “forward-looking information”) within the meaning of applicable securities laws. All information in this press release, other than statements of current and historical fact, represents forward-looking information and is qualified by this cautionary note.
Forward-looking information may relate to the Company’s future financial outlook and anticipated events or results and may include information regarding the Company’s financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans, objectives, and expectations. Such information is provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company’s anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
Often, but not always, forward-looking information can be identified by the use of forward-looking terminology such as: “outlook”, “objective”, “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “aim”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “may”, “should”, “will”, “growth strategy”, “future”, “prospects”, “continue”, and similar references to future periods or suggesting future outcomes or events. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information.
Examples of forward-looking information include, but are not limited to, statements made in this press release under the heading “Financial Highlights”, including statements regarding the Company’s objectives, plans, goals, strategies, growth, performance, operating results, financial condition, business prospects, opportunities and industry trends, and similar statements concerning anticipated future events, results, circumstances, performance or expectations.
Forward-looking information is neither historical fact nor assurance of future performance. Instead, it reflects management’s current beliefs, expectations and assumptions and is based only on information currently available to us. Forward-looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the Company as of the date of this press release, are inherently subject to significant business, economic, and competitive uncertainties and contingencies that are difficult to predict and many of which are outside of our control.
The Company’s estimates, beliefs and assumptions, which may prove to be incorrect, include various assumptions regarding, among other things: the Company’s future growth potential, results of operations, future prospects and opportunities; the Company’s ability to retain and recruit, as applicable, customers, members of management and key personnel; industry trends; legislative or regulatory matters, including expected changes to laws and regulations and the effects of such changes; future levels of indebtedness; availability of capital; the Company’s ability to secure additional capital and source and complete acquisitions; the Company’s ability to maintain and expand its market presence and geographic scope; current economic conditions; the impact of currency exchange and interest rates; the Company’s ability to maintain existing financing and insurance on acceptable terms; the Company’s ability to execute on, and the impact of, its environmental, social and governance initiatives; the impact of competition; and the Company’s ability to respond to changes to its industry and the global economy.
Forward-looking information involves risks and uncertainties that could cause Crescita’s actual results and financial condition to differ materially from those contemplated by such forward-looking information. Important factors that could cause such differences include, among others:
If any risks or uncertainties with respect to the above materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. This list is not exhaustive of the factors that may impact the Company’s forward-looking information. Although management has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known or that management believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking information, which speaks only as of the date provided, and is subject to change after such date. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update any forward-looking information, whether written or oral, that may be provided from time to time, whether as a result of new information, future developments or otherwise.
1Please refer to the Non-IFRS Financial Measures section of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807575035/en/
FOR MORE INFORMATION, PLEASE CONTACT: Linda Kisa, CPA, CA Vice-President, Reporting and Corporate Affairs Email: lkisa@crescitatx.com
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