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, 2023 (“Q2-2023”). All amounts presented are
in thousands of Canadian dollars (“CAD”) unless otherwise
noted.
Financial Highlights
Q2-2023 vs. Q2-2022
- Revenue was $5,162 compared to $6,512, down $1,350;
- Gross profit was $3,069 compared to $3,647, down $578;
- Operating expenses were $3,295 compared to $3,447, down
$152;
- Adjusted EBITDA1 was $214 compared to $646, down $432;
- Ending cash was $10,226, down $49 for the quarter.
“We are pleased that our targeted investments in the Commercial
Skincare segment continue to yield higher demand for our products
and have resulted in the highest quarterly revenue to date,”
commented Serge Verreault, President and CEO of Crescita. “The
decrease in Manufacturing revenue year-over-year was mainly from
the fulfillment of large orders related to a new product launch by
a major customer in 2022. Manufacturing segment revenue can vary
significantly due to the quantity and timing of orders fulfilled in
any quarter,” added Mr. Verreault. “Our team is working toward
expanding and diversifying our CDMO customer base to reduce this
volatility and is also actively evaluating accretive product and
business acquisitions that are a strategic fit for our
business.”
Q2-2023 Corporate Developments
Update on Manufacturing Segment
- Certain manufacturing orders previously scheduled to be
delivered in the second half of fiscal 2023 are now expected to be
delivered in fiscal 2024, and as a result, segment revenue is
expected to be materially lower in the second half of 2023, versus
the comparable periods of 2022.
Re-Launch of Alyria® as a Direct-to-Consumer Brand
- We relaunched Alyria® as a direct-to-consumer medical-grade
dermocosmetic brand in the Canadian skincare market in Q1-2023,
following a complete rebranding and various product reformulations.
In Q2-2023, the brand was launched in retail outlets of Familiprix,
a Québec based chain of independently owned pharmacies. Alyria is
primarily targeted at millennials and also marketed and sold online
in Canada through Amazon.ca and alyriaskincare.com. The relaunch of
Alyria strengthens our omnichannel expansion and provides the
opportunity to engage with a new consumer group.
The Launch of ART FILLER®
- We launched the ART FILLER injectables (the “Fillers”) in the
Canadian medical aesthetic market through our new dedicated sales
force. ART FILLER is an exclusive collection of dermal fillers made
of hyaluronic acid (“HA”), designed to smooth and fill in wrinkles,
and create or restore the volumes and contours of the face. We
distribute the Fillers under an exclusive Canadian distribution and
promotion agreement with Laboratoires FILLMED.
Q2-F2023 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”) as at and for the three and
six months ended June 30, 2023, which are available 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,
2023
2022
2023
2022
$
$
$
$
Commercial Skincare
2,685
2,392
5,177
3,928
Licensing and Royalties
299
227
320
227
Manufacturing and Services
2,178
3,893
4,267
7,308
Revenues
5,162
6,512
9,764
11,463
Cost of goods sold
2,093
2,865
3,959
5,104
Gross profit
3,069
3,647
5,805
6,359
Gross margin (%)
59.5
%
56.0
%
59.5
%
55.5
%
Research and development
178
161
338
288
Selling, general and administrative
2,742
2,916
5,179
5,511
Depreciation and amortization
375
370
750
736
Total operating expenses
3,295
3,447
6,267
6,535
Operating profit (loss)
(226
)
200
(462
)
(176
)
Interest expense
21
48
44
109
Interest income
(116
)
(41
)
(237
)
(87
)
Foreign exchange loss
57
118
21
189
Share of (profit) loss of an associate
(9
)
17
(17
)
29
Net loss on convertible note measured
at
fair value through profit or loss
9
95
22
95
Loss before income taxes
Deferred income tax expense
(188
93
)
(37
-
)
(295
259
)
(511
-
)
Net loss
(281
)
(37
)
(554
)
(511
)
Adjusted EBITDA1
214
646
375
712
Loss per share
Basic and diluted
$
(0.01
)
$
(0.00
)
$
(0.03
)
$
(0.02
)
Weighted average number of common
shares outstanding
Basic and diluted
20,334,153
20,813,853
20,334,153
20,874,923
Selected Balance Sheet
Information
Cash and cash equivalents, end of
period
10,226
10,502
Selected Cash Flow Information
Cash provided by operating activities
81
80
2,212
739
Cash used in investing activities
-
(169
)
-
(214
)
Cash used in financing activities
(101
)
(1,185
)
(200
)
(1,353
)
1Please refer to the Non-IFRS Financial Measures section of this
press release.
Revenue
We have three reportable segments: 1) Commercial Skincare
(“Skincare”), which manufactures and sells our branded
non-prescription skincare products for the Canadian and
international markets, and also commercializes Pliaglis®, NCTF®,
ART FILLER®, and Obagi® Medical in Canada; 2) Licensing and
Royalties (“Licensing”), which primarily generates revenue from
licensing our intellectual property related to Pliaglis or our
transdermal delivery technologies; and 3) Manufacturing and
Services (“Manufacturing”), which generates revenue from contract
manufacturing and product development services.
For the three and six months ended June 30, 2023, total revenue
was $5,162 and $9,764 compared to $6,512 and $11,463 for the three
and six months ended June 30, 2022. The net year-over-year
decreases of $1,350 and $1,699, were mainly from the Manufacturing
segment, resulting from the partial fulfillment and completion of a
previously announced purchase order of approximately $7.0 million
in 2022. The purchase order related to our customer’s expansion in
new key markets, represented an initial order to adequately supply
distribution channels and may not be reflective of future orders.
During the same period, we also experienced continued growth in
Commercial Skincare from branded product sales across all channels,
mainly driven by new product launches and promotions, including the
launch of Alyria in select retail outlets in the province of
Québec.
Licensing revenue was $299 and $320 for the three and six months
ended June 30, 2023, compared to $227 for the comparable three and
six months of 2022, reflecting royalties above the annual
contractual minimum royalties under the Cantabria Agreement. The
results for the quarter and year-to-date periods of 2023 also
included a regulatory milestone under our licensing agreement with
Croma Pharma GmbH.
Gross Profit
For the three months ended June 30, 2023, gross profit was
$3,069, representing a gross margin of 59.5%, compared to $3,647
and 56.0%, respectively, for the three months ended June 30, 2022.
The net decrease in gross profit of $578 was mainly due to lower
overall revenue year-over-year, primarily in the Manufacturing
segment, while the gross margin increase of 3.5% was mainly the
result of favourable product and channel mix, as well as, to a
lesser extent, the favorable impact of cost savings.
For the six months ended June 30, 2023, gross profit was $5,805,
representing a gross margin of 59.5%, compared to $6,359 and 55.5%,
respectively, for the six months ended June 30, 2022. The net
decrease in gross profit of $554 and the increase in gross margin
increase of 4.0% were mainly due to the same factors as for the
quarter.
Operating Expenses
For the three and six months ended June 30, 2023, total
operating expenses were $3,295 and $6,267 compared to $3,447 and
$6,535, respectively for the three and six months ended June 30,
2022. Both the quarterly and year-to-date net decreases of $152 and
$268 were mainly due to lower SG&A expenses as a result of
lower headcount-related expenses, share-based compensation and
outsourcing expenses year-over-year.
Cash and Cash Equivalents
Cash and cash equivalents were $10,226 at June 30, 2023,
reflecting a slight decrease of $49 for the quarter.
Non-IFRS Financial Measures
We report our financial results in accordance with International
Financial Reporting Standards (“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, share of
(profit) loss of associates, fair value (gains) losses, share-based
compensation costs, goodwill and intangible asset impairment, and
foreign exchange (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. 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,
2023
2022
2023
2022
$
$
$
$
Net loss
(281
)
(37
)
(554
)
(511
)
Adjust for:
Depreciation and amortization
375
370
750
736
Interest expense, net
(95
)
7
(193
)
22
Deferred income tax expense
93
-
259
-
EBITDA
92
340
262
247
Adjust for:
Share-based compensation
65
76
87
152
Foreign exchange loss
57
118
21
189
Share of (profit) loss of an associate
(9
)
17
(17
)
29
Net loss on convertible note measured at
fair value through profit or loss
9
95
22
95
Adjusted EBITDA
214
646
375
712
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”) 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 early to commercial stage prescription
products. 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
This press release contains “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. Often, but not always, forward-looking
information can be identified by words such as: “anticipate”,
“intend”, “plan”, “goal”, “seek”, “believe”, “aim”, “project”,
“estimate”, “expect”, “strategy”, “future”, “likely”, “may”,
“should”, “will” and similar references to future periods. Examples
of forward-looking information include, but are not limited to,
statements made in this press release under the heading “Financial
Highlights”, and 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 an
assurance of future performance. Instead, it based only on current
beliefs, expectations, and assumptions regarding the future of the
Company’s business, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions.
Because forward-looking information relates to the future, it is
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 forward-looking information.
Therefore, you should not unduly rely on any forward-looking
information. Important factors that could cause Crescita’s actual
results and financial condition to differ materially from those
indicated in forward-looking information include, among others:
- economic and market conditions including the uncertainty in the
global economy;
- the impact of inflation and rising interest rates together with
the threats of stagflation and 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 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;
- the impact of the COVID-19 pandemic and the response thereto of
governments and consumers;
- 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.
As a result of the foregoing and other factors, no assurance can
be given that future results, levels of activity or achievements
indicated in any forward-looking information will actually be
achieved. Any forward-looking information in this press release is
based only on information currently available to management and
speaks only as of the date on which it is provided. Except as
required by applicable securities laws, Crescita 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809353669/en/
Investor Relations Linda Kisa, CPA, CA Email:
lkisa@crescitatx.com
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