LAVAL, QC, March 21, 2019 /CNW/ - Crescita Therapeutics Inc.
(TSX: CTX) (Crescita or the Company), a commercial
dermatology company with a portfolio of non-prescription skincare
and prescription drug products for the treatment and care of skin
conditions, diseases and their symptoms, today reported its
financial results for the fourth quarter and fiscal year ended
December 31, 2018.
Financial Highlights
Q4-F2018
- Revenue of $6.2 million, up
$3.8 million or 163.3% versus
Q4-F2017;
- Revenue includes $1.4 million of
royalties on the U.S. net sales of Pliaglis and $2.0 million in sales and development
milestones;
- Adjusted EBITDA1 of $1.8 million, up $3.8
million versus Q4-F2017;
- Ending cash position of $8.6
million versus $7.0 million as
at December 31, 2017;
F2018
- Revenue of $16.6 million, up
$4.6 million or 38.4% versus
F2017;
- Revenue includes $4.1 million of
royalties on the U.S. net sales of Pliaglis and $3.3 million in sales and development
milestones;
- Operating expenses of $16.7
million, down $1.6 million or
8.6% versus F2017;
- Adjusted EBITDA1 of $1.5 million, an improvement of $5.9 million versus F2017;
Operational and Corporate Developments of F2018
- Announced the U.S. launch of Pliaglis in Q1, by our partner
Taro Pharmaceutical Inc. ("Taro");
- Recognized two out of four sales milestones, totaling
$2.6 million (US$2.0 million) following the achievement by Taro
of cumulative sales targets;
- Announced the U.S. FDA's approval to remove the "Not for Home
Use" label restriction on Pliaglis, triggering a $0.7 million (US$0.5
million) milestone;
- Successfully completed a Rights Offering on March 9, 2018, raising $3.5 million in net equity financing;
- Reported favourable results from a skin permeation study using
our patented technologies, MMPE™ and DuraPeel™, demonstrating
significantly increased transdermal permeation of CBD over the
control formulation by up to 14- and 6-fold, respectively;
- Launched five product innovations in our non-Rx business,
leveraging our MMPE technology;
Subsequent Events
- On February 4, 2019, the Company
entered into an agreement with Tetra Natural Health ("Tetra"), a
subsidiary of Tetra Bio-Pharma, a leader in cannabinoid-derived
drug discovery and development, to develop an enhanced version of
Tetra's dermatology portfolio using Crescita's patented transdermal
delivery technologies: MMPE and DuraPeel.
"Our Q4 results were extremely positive as we reported record
revenues and Adjusted EBITDA, fueled not only by milestone and
royalty revenue but by our delivery of significant operational
improvements in our business," said Serge Verreault, President and CEO of Crescita.
"As we look ahead to 2019, the quarterly revenues will continue
to vary depending on the timing of milestones and royalty revenues.
We are committed to continued growth and improvements in all of our
revenue channels and we are well positioned, strategically and
financially, to continue to build Crescita into a strong,
profitable dermatology company."
|
1
|
Please refer to the
Non-IFRS Financial Measures and EBITDA and Adjusted EBITDA
Reconciliation sections of this press release.
|
Q4-F2018 and F2018 Financial Results
Note: All figures are in Canadian dollars.
The fiscal 2018 MD&A, Consolidated Audited Financial Statements
and accompanying notes can be found on
www.crescitatherapeutics.com/investors and have been filed with
SEDAR.
In thousands of
CAD dollars except per share amounts and number of
shares
|
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2018
|
|
2017
|
Change
|
|
2018
|
|
2017
|
Change
|
Revenue
|
|
6,204
|
|
2,356
|
3,848
|
|
16,628
|
|
12,014
|
4,614
|
Cost of goods
sold
|
|
1,858
|
|
1,799
|
59
|
|
5,539
|
|
4,940
|
599
|
Research &
Development
|
|
293
|
|
170
|
123
|
|
1,063
|
|
1,112
|
(49)
|
Selling, general
& administrative
|
|
2,701
|
|
2,750
|
(49)
|
|
10,063
|
|
12,176
|
(2,113)
|
Total Operating
Expenses
|
|
4,852
|
|
4,719
|
133
|
|
16,665
|
|
18,228
|
(1,563)
|
Operating Profit
(loss)
|
|
1,352
|
|
(2,363)
|
3,715
|
|
(37)
|
|
(6,214)
|
6,177
|
Other income
(expenses)
|
|
(12)
|
|
(5,846)
|
5,834
|
|
686
|
|
(5,044)
|
5,730
|
Income (loss) from
continuing operations before income taxes
|
|
1,340
|
|
(8,209)
|
9,549
|
|
649
|
|
(11,258)
|
11,907
|
Income tax
(recovery)
|
|
(1,773)
|
|
-
|
1,773
|
|
(1,773)
|
|
-
|
1,773
|
Net income (loss)
from continuing operations
|
|
3,113
|
|
(8,209)
|
11,322
|
|
2,422
|
|
(11,258)
|
13,680
|
Net loss from
discontinued operations
|
|
(1)
|
|
(48)
|
47
|
|
(26)
|
|
(205)
|
179
|
Net income
(loss)
|
|
3,112
|
|
(8,257)
|
11,369
|
|
2,396
|
|
(11,463)
|
13,859
|
Net income (loss)
from continuing operations per share
|
$
|
0.15
|
$
|
(0.59)
|
0.74
|
$
|
0.12
|
$
|
(0.81)
|
0.93
|
Weighted Average
number of common shares
|
|
21,016
|
|
14,003
|
7,013
|
|
19,707
|
|
13,960
|
5,747
|
Selected Cash Flow
Information
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
8,589
|
|
6,997
|
1,592
|
|
8,589
|
|
6,997
|
1,592
|
Cash (used) in
provided by operating activities
|
|
617
|
|
(1,687)
|
2,304
|
|
(1,478)
|
|
(7,402)
|
5,924
|
Cash (used in)
investing activities
|
|
(29)
|
|
-
|
(29)
|
|
(144)
|
|
7,844
|
(7,988)
|
Cash (used in)
provided by financing activities
|
|
(240)
|
|
(100)
|
(140)
|
|
3,186
|
|
(3,259)
|
6,445
|
Revenue
Total revenue, composed of product sales,
out-licensing and services revenue, was $16.6 million for the twelve months ended
December 31, 2018, compared to
$12.0 million for the twelve months
ended December 31, 2017, representing
an increase of $4.6 million or 38.4%.
The increase came primarily from our out-licensing business,
accounting for $3.9 million of the
increase, and was almost exclusively from milestone and royalty
revenue related to the commercialization of Pliaglis in the U.S by
Taro. To a lesser extent, revenue from product sales also grew by
$0.6 million, mainly as a result of
our contract development and manufacturing business and medical
aesthetic brands.
Operating Expenses
Total operating expenses for the
twelve months ended December 31, 2018
were $16.7 million, compared to
$18.2 million for the twelve months
ended December 31, 2017, representing
a decrease of $1.6 million or 8.6%.
The decrease was primarily driven by savings in selling, general
and administrative ("SG&A") as a result of the
reorganization of various corporate functions and the
centralization of the Company's operations to its Laval facility; a reduction in professional
and accounting fees in connection with regulatory matters involving
the INTEGA Acquisition as well as savings in logistics costs,
partly offset by higher cost of goods sold as a result of
incremental sales over fiscal 2017.
Net Income (Loss) from Continuing Operations before Income
Taxes
Net income from continuing operations before income
tax recovery was $0.6 million for the
twelve months ended December 31,
2018, compared to a net loss of $(11.3) million, reported for the twelve months
ended December 31, 2017. The
year-over-year improvement of $11.9
million was mainly attributable to: 1) the incremental gross
margin on out-licensing revenue of $3.4
million; 2) the incremental gross margin on product sales of
$0.9 million; 3) the benefit of the
gain on settlement and other income of $1.1
million recognized during the current year; 4) the benefit
of the reduction in SG&A of $2.1
million versus the prior year; as well as the 5) the
non-cash goodwill and intangible asset impairment charge of
$5.7 million incurred at the end of
fiscal 2017, which did not repeat in the current year, partly
offset by; 6) the gain on debt renegotiations of $1.1 million in the prior year.
Income Tax Recovery
The Company recognized an income tax asset of $1.8 million primarily in respect of Canadian
non-capital loss carry-forwards and deductible temporary
differences between the asset carrying amounts used for accounting
purposes and the amounts used for tax purposes. The recognition of
the income tax recovery was supported by a high probability, based
on management's best estimate, that future taxable income against
which to deduct the loss carry-forwards and temporary differences
will be available.
Cash and Cash Equivalents
Total cash generated during
the year was $1.6 million, resulting
in an ending cash and cash equivalents balance of $8.6 million as at December 31, 2018, compared to $7.0 million at December
31, 2017. The year-end cash balance included $3.5 million in net proceeds from the Company's
Rights Offering concluded in March of 2018.
Non-IFRS Financial Measures
The Company reports
its 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 from both a financial and operational standpoint. 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 (loss) from continuing operations
before interest, income taxes, depreciation and amortization.
- Adjusted EBITDA is defined as earnings (loss) from continuing
operations before interest, income taxes, depreciation and
amortization, gain on settlement, other income, equity-settled
stock-based compensation ("SBC"), gain on debt renegotiations,
goodwill and intangible assets impairment, accretion on the fair
value of inventory and foreign currency gains (losses), 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.
A reconciliation of EBITDA and adjusted EBITDA to their closest
IFRS measure can be found below.
In thousands of
CAD dollars
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
Net Income (loss)
from continuing operations
|
3,113
|
(8,209)
|
11,322
|
2,422
|
(11,258)
|
13,680
|
Add:
|
|
|
|
|
|
|
Depreciation and
amortization
|
282
|
308
|
(26)
|
1,146
|
1,161
|
(15)
|
Interest expense,
net
|
113
|
151
|
(38)
|
493
|
357
|
136
|
EBITDA
|
3,508
|
(7,750)
|
11,258
|
4,061
|
(9,740)
|
13,801
|
Equity-settled
stock-based compensation
|
145
|
49
|
96
|
342
|
251
|
91
|
Goodwill and
intangible asset impairment
|
-
|
5,670
|
(5,670)
|
-
|
5,670
|
(5,670)
|
Foreign currency
loss
|
-
|
25
|
(25)
|
-
|
96
|
(96)
|
Accretion on fair
value
|
-
|
-
|
-
|
-
|
371
|
(371)
|
Less:
|
|
|
|
|
|
|
Other
income
|
3
|
-
|
3
|
1,105
|
1,079
|
26
|
Foreign currency
gain
|
98
|
-
|
98
|
74
|
-
|
74
|
Income tax
recovery
|
1,773
|
-
|
1,773
|
1,773
|
-
|
1,773
|
Adjusted
EBITDA
|
1,779
|
(2,006)
|
3,785
|
1,451
|
(4,431)
|
5,882
|
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, notes thereto, MD&A and Annual
Information Form ("AIF") reports.
About Crescita
Therapeutics Inc.
Crescita (TSX: CTX) is a
publicly traded, Canadian commercial dermatology company with a
portfolio of non-prescription skincare products for the treatment
and care of skin conditions and diseases and their symptoms and
prescription drug products for the treatment of pain. Crescita
owns multiple proprietary drug delivery platforms that support the
development of patented formulations that can facilitate the
delivery of active drugs into or through the skin. For
additional information, please visit
www.crescitatherapeutics.com.
About MMPE™
The MMPE technology uses synergistic
combinations of pharmaceutical excipients included on the FDA's
Inactive Ingredient Guide for improved topical delivery of active
pharmaceutical ingredients (APIs) into or through the
skin. The benefits of this technology include the potential
for increased penetration of APIs with the possibility of improved
efficacy, lower API concentration and/or reduced dosing. Issued
U.S. patents provide intellectual property protection
through March 6, 2027. U.S. and Patent Treaty Cooperation
("PCT") applications are pending with the latest expiry date in
2036.
About Peel and DuraPeel™
The Peel and DuraPeel
technologies are self-occluding, film-forming cream/gel
formulations that provide extended release delivery to the site of
application. The cream/gel contains a drug, that when applied to a
patient's skin, forms a pliable layer that releases the active
ingredient into the skin for up to 12 hours. The benefits of the
Peel and DuraPeel technologies include proven compatibility with a
variety of active pharmaceutical ingredients ("APIs"). A
self-occluding film reduces product transference risk, provides
fast drying time, facilitates easy application and removal, and
enables application to large and irregular skin surfaces. While the
Peel technology typically involves a single solvent that dries to
form a pliable film, the DuraPeel technology involves a two-solvent
system which includes: 1) a volatile solvent component that dries
to form a self-occluding film and 2) a non-volatile solvent
component that remains in the formulation to facilitate prolonged
release of the active from the formulation into the skin. Peel
technology patents have been issued in 21 countries including the
US, with the latest expiring in 2031. Patent applications are
pending in 3 countries. DuraPeel patents have been issued in
Australia, Canada, Japan
and the U.S. with the latest expiry in 2027. The European patent
application is pending.
Forward-Looking Statements
This Press Release
contains "forward-looking statements" within the meaning of
applicable securities laws. Forward-looking statements can be
identified by words such as: "anticipate," "intend," "plan,"
"goal," "seek," "believe," "project," "estimate," "expect,"
"strategy," "future," "likely," "may," "should," "will" and similar
references to future periods. Forward-looking statements are
neither historical facts nor assurances of future performance.
Instead, they are based only on the Company's current beliefs,
expectations and assumptions, the future of its business, future
plans and strategies, projections, anticipated events and trends,
the economy and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of the Company's
control. Crescita's actual results and financial condition may
differ materially from those indicated in the forward-looking
statements. Therefore, readers should not rely on any of these
forward-looking statements. Important factors that could cause
Crescita's actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, the risk factors included in Crescita's Management's
Discussion and Analysis for the year ended December 31, 2018, under the heading "Risks
Factors", and as described from time to time in the reports and
disclosure documents filed by Crescita with Canadian securities
regulatory agencies and commissions. These and other factors should
be considered carefully, and readers should not place undue
reliance on Crescita's forward-looking statements. As a result of
the foregoing and other factors, no assurance can be given as to
any such future results, levels of activity or achievements and
none of Crescita or any other person assumes responsibility for the
accuracy and completeness of these forward-looking statements. Any
forward-looking statement made by the Company in this Press Release
is based only on information currently available to it and speaks
only as of the date on which it is made. Except as required by
applicable securities laws, Crescita undertakes no obligation to
publicly update any forward-looking statement, whether written or
oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
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SOURCE Crescita Therapeutics Inc.