MISSISSAUGA, ON, May 10, 2016 /CNW/ - Crescita Therapeutics Inc. (TSX:CTX) (Crescita or the Company), a drug development company that owns topical products for treating medical conditions in dermatology and pain, today announced its financial and operational results for the first quarter ended March 31, 2016.
First Quarter and Recent Corporate Developments:
Nuvo Research Inc. (Nuvo) Reorganization
- On March 1, 2016, the reorganization of Nuvo into two separate publicly traded companies was completed and Crescita commenced operations as a stand-alone entity;
- On March 7, 2016, Crescita commenced trading on the Toronto Stock Exchange; and
- As part of the reorganization, Crescita received all of Nuvo's development stage assets, as well as $35.0 million in cash. Crescita also retains the rights to the commercial asset Pliaglis. In October 2016, Galderma S.A. (Galderma) will return the North American rights for Pliaglis to Crescita. Crescita will continue to receive a modest royalty on net sales by Galderma in all other relevant licensed territories.
- In February 2016, the Board of Directors of Nuvo unanimously approved a proposal to initiate a divestiture or orderly wind-down of the Company's Immunology Group segment. The Immunology Group includes the Company's wholly owned subsidiary Nuvo Research AG and its subsidiaries Nuvo Manufacturing GmbH and Nuvo Research GmbH;
- In parallel with the Company's divestiture or wind-down of its Immunology Group, the Company is also conducting a review of all of its drug development activities, including in-licensing, merger and acquisition activities, or some combination thereof, related to new product opportunities;
- As part of the strategic review, Crescita is evaluating its best options to optimize product sales for Pliaglis in Canada, the United States and Mexico;
- The Company recently received written feedback from the U.S. Food and Drug Administration (FDA) on a potential neuropathic pain development program for its Flexicaine product. The FDA is requesting extensive clinical and non-clinical programs for the development of Flexicaine. Based on the feedback from the FDA, the Company is undergoing a review of its development options for the product. The Company will update the markets when the review is completed; and
- Crescita has a strong balance sheet with significant cash and no debt.
Q1 Financial Review
For further details on the results, please refer to the Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements which are available on the Company's website (www.crescitatherapeutics.com).
Cash was $32.6 million at March 31, 2016 compared to $0.5 million at December 31, 2015. Prior to March 1, 2016, Crescita was economically dependent on and relied on Nuvo for funding to support its operations. As part of the reorganization, Crescita received $35.0 million from Nuvo to fund its operations. In the month of March 2016, Crescita used $2.4 million in cash which included $0.5 million of payments made on behalf of Nuvo, which will be reimbursed to Crescita, a $0.2 million deposit as security for the corporate office lease and a $0.4 million unrealized loss on Crescita's U.S. cash balances. The remainder of the spend related to the operations of Crescita.
Total revenue, consisting of product sales, royalties and contract revenue remained unchanged at $0.2 million for the three months ended March 31, 2016 and 2015. A slight decrease in product sales was offset by an increase in contact revenue for services provided to Nuvo as part of the transition services agreement.
Total operating expenses for the three months ended March 31, 2016 increased to $5.9 million compared to $2.5 million for the three months ended March 31, 2015. The increase in operating expenses was primarily due to an increase in stock-based compensation expenses related to the adjustment to market value for outstanding deferred stock units at February 29, 2016 and stock appreciation rights, an increase in professional fees related to the reorganization, costs incurred for a potential transaction that the Company is no longer pursuing and an increase in cost of goods sold.
For the periods prior to March 1, 2016, the Company's expenses reflect Nuvo's drug development operations as if Crescita had always operated as a stand-alone entity and include an allocation of Nuvo's corporate costs. Crescita and Nuvo considered these general corporate expense allocations to be a reasonable reflection of the underlying nature of the operations of these entities and of the utilization of services provided. The allocations may not, however, reflect the expense Crescita would have incurred as a stand-alone company. Actual costs which may have been incurred if Crescita had been a stand-alone public company in 2016 and 2015 would depend on a number of factors, including how Crescita chose to organize itself, what if any functions were outsourced or performed by Crescita employees and strategic decisions in areas such as infrastructure.
Net loss was $6.1 million for the three months ended March 31, 2016 compared to $2.3 million for the three months ended March 31, 2015.
The number of common shares outstanding as at March 31, 2016 was 11,487,184.
About Crescita Therapeutics Inc.
Crescita (TSX:CTX) is a publicly traded, Canadian drug development company that owns topical products for treating medical conditions in dermatology and 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. Crescita has one commercial product, Pliaglis that is licensed globally (except for Canada, the United States and Mexico where Crescita owns the rights). Crescita was created on March 1, 2016 by the reorganization of Nuvo Research Inc. into two separate publicly traded companies. Crescita common shares commenced trading on the TSX on March 7, 2016. Crescita's board and management team have demonstrated success in building Crescita's predecessor company, Nuvo Research Inc., including developing multiple drugs that are now approved and commercialized and negotiating multiple licensing transactions. For additional information, please visit www.crescitatherapeutics.com.
Certain statements in this press release constitute forward-looking information and/or forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements include, but are not limited to, management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "believe", "should" or "plans", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include, but are not limited to, general business and economic uncertainties and adverse market conditions; uncertainties related to Crescita's ability to realize the anticipated benefits of the Reorganization; the expected future attributes and success of Crescita; the successful execution of Crescita's priorities and strategies; the reliability of Nuvo Research's historical financial information as an indicator of Crescita's historical or future results; as well as other risk factors included in Nuvo Reseach's Management Information Circular dated December 31, 2015 (the Reorganization Circular) and most recent Crescita Annual Information Form dated March 23, 2016 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. Certain risks and uncertainties specific to the Reorganization and Crescita are further described in the Reorganization Circular. 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 neither Crescita nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. The forward-looking statements contained herein are made as of the date of this press release and, except as required by applicable law, Crescita undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE Crescita Therapeutics Inc.