LAVAL, Quebec--(BUSINESS WIRE)-- 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 first quarter ended March 31, 2024 (“Q1-2024”). All amounts presented are in thousands of Canadian dollars (“CAD”) unless otherwise noted, and in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.
Financial Highlights
Q1-2024 vs. Q1-2023
Revenue was $4,996 compared to $4,602, up $394;
Gross profit was $2,411 compared to $2,736, down $325;
Operating expenses were $3,142 compared to $2,972, up $170;
Adjusted EBITDA1 was $(325) compared to $161, down $486;
Ending cash was $9,531, up $146 for the quarter.
Commenting on the Company's results for the first quarter of 2024, Crescita's President and Chief Executive Officer, Serge Verreault, said:
“Our Skincare segment continues to represent a strong commercial focus and reflects the impacts of the ART FILLER launch and growth in online sales. During the quarter, we fulfilled a previously deferred purchase order in our Manufacturing segment, which mainly drove the quarter’s incremental volumes and the 8.6% improvement in our topline sales year-over-year.
“We continue to advance discussions for a new commercial partnership for Pliaglis in the U.S. and to support our international Pliaglis licensees in recent and upcoming launches, including Poland and the Middle East. With a solid balance sheet, we are poised to take advantage of growth opportunities and return Crescita to profitability.”
Operational and Corporate Developments
Update on Licensing Agreement for Pliaglis® in China
In April 2024, the National Medical Products Administration (the “NMPA”, formerly the China Food and Drug Administration or “CFDA”) confirmed the need for a local clinical trial to support the registration of Pliaglis in China. Our licensing partner, Juyou Bio-Technology Co. Ltd. (“Juyou”) has initiated plans to finalize the protocol for the clinical trial and to manufacture the required test articles. Juyou is presently assessing the timeline for the clinical trial, subsequent registration stages, and the projected launch date. Under the commercialization and development license agreement entered into in November 2020, Juyou is responsible for and shall bear all expenses related to obtaining regulatory approval in China and conducting the required clinical trials. Crescita will supply Pliaglis at a pre-determined transfer price including a profit margin and is eligible for potential regulatory and sales milestones that could exceed US$2.2 million, as well as for tiered double-digit royalties should the product’s retail price surpass specified threshold amounts.
Repurchases under our Normal Course Issuer Bid (“NCIB”)
In Q1-2024, we repurchased 166,508 common shares through our NCIB at a weighted average purchase price per share of $0.47 for total cash consideration of $78.
Q1-2024 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 months ended March 31, 2024, which are available on Crescita’s pro SEDAR+ at and on Crescita’s website at .
In thousands of CAD, except per share data and number of shares
Three months ended March 31,
2024
2023
Change
$
$
$
Commercial Skincare
2,535
2,492
43
Licensing and Royalties
-
21
(21)
Manufacturing and Services
2,461
2,089
372
Revenues
4,996
4,602
394
Cost of goods sold
2,585
1,866
719
Gross profit
2,411
2,736
(325)
Gross margin (%)
48.3%
59.5%
-11.2%
Research and development (“R&D”)
170
160
10
Selling, general and administrative (“SG&A”)
2,587
2,437
150
Depreciation and amortization
385
375
10
Total operating expenses
3,142
2,972
170
Operating loss
(731)
(236)
(495)
Interest income, net
(116)
(98)
(18)
Foreign exchange (gain) loss
2
(36)
38
Share of (profit) loss of an associate
9
(8)
17
Net loss on convertible note measured at
fair value through profit or loss
-
13
(13)
Loss before income taxes
(626)
(107)
(519)
Deferred income tax expense
-
166
(166)
Net loss
(626)
(273)
(353)
Adjusted EBITDA1
(325)
161
(486)
Loss per share
Basic and diluted
$ (0.03)
$ (0.01)
$ (0.02)
Weighted average number of common shares outstanding
Basic and diluted
19,591,906
20,334,153
(742,247)
Selected Balance Sheet Information
Cash and cash equivalents, end of period
9,531
10,275
(744)
Selected Cash Flow Information
Cash provided by operating activities
378
2,131
(1,753)
Cash provided by (used in) investing activities
-
-
-
Cash used in financing activities
(236)
(99)
(137)
Revenue
We have three reportable segments: 1) Commercial Skincare (“Skincare”), which manufactures our branded non-prescription skincare products for sale in Canada and certain international markets, and also commercializes Pliaglis®, NCTF® Boost 135 HA, ART FILLER® and Obagi® Medical in Canada; 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.
For the three months ended March 31, 2024, total revenue was $4,996 compared to $4,602 for the three months ended March 31, 2023. The year-over-year increase of $394 was primarily driven by incremental revenue in our Manufacturing segment in the amount of $372, mainly due to the fulfillment of a previously deferred purchase order initially scheduled for delivery in the second half of 2023 and reflects pricing concessions on volume. Skincare sales remained essentially flat year-over-year, posting a slight increase of $43, while Licensing segment revenue was $nil for the quarter.
Gross Profit and Gross Margin
For the three months ended March 31, 2024, gross profit was $2,411, representing a gross margin of 48.3%, compared to $2,736 and 59.5%, respectively, for the three months ended March 31, 2023. The net decreases in gross profit and gross margin of $325 and 11.2%, respectively, were primarily a result of pricing concessions in our Manufacturing segment relating to a purchase order deferred from 2023 into Q1-2024.
Operating Expenses
For the three months ended March 31, 2024, total operating expenses were $3,142 compared to $2,972 for the three months ended March 31, 2023, representing a net increase of $170. The increase was mainly driven by higher SG&A expenses of $150, primarily due to higher headcount-related expenses and commercial partnership fees to support our digital strategy, partly offset by lower advertising and promotion spend.
Cash and Cash Equivalents
Cash and cash equivalents were $9,531 at March 31 2024, reflecting a net increase of $146 for the quarter mainly due to a favorable net change in non-cash working capital.
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:
EBITDA is defined as earnings before interest, income taxes, depreciation of property, plant and equipment, and amortization of right-of-use asset and intangible assets.
Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation of property, plant and equipment and amortization of right-of-use asset and intangible assets, foreign exchange (gains) losses, share of (profit) loss of associates, fair value (gains) losses, share-based compensation costs, restructuring costs, and goodwill and intangible asset impairment, as applicable.
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 March 31,
2024
2023
Change
$
$
$
Net loss
(626)
(273)
(353)
Adjust for:
Depreciation and amortization
385
375
10
Interest income, net
(116)
(98)
(18)
Deferred income tax expense
-
166
(166)
EBITDA
(357)
170
(527)
Adjust for:
Share-based compensation
21
22
(1)
Foreign exchange (gain) loss
2
(36)
(38)
Share of (profit) loss of an associate
9
(8)
17
Net loss on convertible note measured at
fair value through profit or loss
-
13
(13)
Adjusted EBITDA
(325)
161
(486)
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 pro SEDAR+ at .
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, .
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:
economic and market conditions, including factors impacting global supply chains such as pandemics and geopolitical conflicts and tensions, including the uncertainty created by the war in Ukraine and the Israel-Hamas war;
the impact of inflation and rising interest rates together with the threats of stagflation or recession;
the Company’s ability to execute its growth strategies;
the degree or lack of market acceptance of the Company’s products;
reliance on third parties for marketing, distribution and commercialization, and clinical trials;
the impact of variations in the values of the Canadian dollar in relation to the U.S. dollar and Euro;
the impact of the volatility in financial markets;
the Company’s ability to retain members of its management team and key personnel;
the impact of changing conditions in the regulatory environment and product development processes;
manufacturing and supply risks;
increasing competition in the industries in which the Company operates;
the Company’s ability to meet its contractual obligations;
the impact of product liability matters;
the impact of litigation involving the Company and/or its products;
the impact of changes in relationships with customers and suppliers;
the degree of intellectual property protection of the Company’s products;
developments and changes in applicable laws and regulations, and;
other risk factors described from time to time in the reports and disclosure documents filed by Crescita with Canadian securities regulatory agencies and commissions, including the sections entitled “Risk Factors” in the Company’s most recent annual MD&A and AIF.
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.
1 Please refer to the Non-IFRS Financial Measures section of this press release.
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Contacts
FOR MORE INFORMATION, PLEASE CONTACT:
Linda Kisa, CPA, CA
Vice-President, Reporting and Corporate Affairs
Email: lkisa@crescitatx.com
Source: Crescita Therapeutics
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