MISSISSAUGA, ON, July 27, 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 second quarter ended June 30, 2016. The Company commenced operations on a stand-alone basis on March 1, 2016, the effective date of a reorganization of the former Nuvo Research Inc. (Nuvo Research) pursuant to which certain development stage products and assets were "spun out" from Nuvo Research to the Company.
Immunology Group Wind-down
- In February 2016, the Board of Directors of Nuvo Research 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 (German Manufacturing Operation) and Nuvo Research GmbH;
- In July 2016, the Company sold its German Manufacturing Operation that produces the active ingredient in WF10™ and Oxoferin™, and certain intellectual property related to WF10 and Oxoferin for nominal proceeds to Dr. Friedrich-Wilhelm Kuehne, a former minority shareholder of Nuvo Research AG. The Company will no longer earn product revenue or be responsible for ongoing operational costs of the German Manufacturing Operation;
- In July 2016, Dr. Henrich Guntermann, who was responsible for all Immunology Group activities, resigned from his position as President, Europe and Autoimmune Group. Dr. Guntermann will remain a member of Crescita's Board of Directors; and
- The Company is winding-down its Leipzig office and expects this process to be completed by the end of 2016.
- Crescita is evaluating strategies to optimize product sales in Canada, the United States and Mexico of Pliaglis, its commercial stage product that has received approval for marketing by the United States Food and Drug Administration (FDA) and by Health Canada. The Company is transitioning these rights from Galderma S.A. and expects this process to be completed early in the fourth quarter;
- The Company received feedback from the FDA on a potential neuropathic pain development program for Flexicaine. 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 no longer pursuing the development of Flexicaine for the neuropathic pain indication. The Company is evaluating new indications for this product; and
- The Company is assessing in-licensing, merger and acquisition activities, or some combination thereof, related to new product opportunities.
Q2 Financial Review
The Company commenced operations on a stand-alone basis on March 1, 2016, the effective date of a reorganization of Nuvo Research pursuant to which certain development stage products and assets were "spun out" from Nuvo Research to the Company. For the periods prior to March 1, 2016, the Company's expenses reflect Nuvo Research's drug development operations as if Crescita had always operated as a stand-alone entity and include an allocation of Nuvo Research's corporate costs. Crescita and Nuvo Research 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.
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 $30.0 million at June 30, 2016 compared to $32.6 million at March 31, 2016 and $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.
Total revenue, consisting of product sales, royalties and contract revenue was $0.2 million and $0.4 million for the three and six months ended June 30, 2016 compared to $0.3 million and $0.5 million for the three and six months ended June 30, 2015. In the quarter, the decrease in product sales and royalties was partially offset by an increase in contract revenue for services provided to Nuvo as part of the transition services agreement with Nuvo.
Total operating expenses for the three and six months ended June 30, 2016 were $3.2 million and $9.1 million, compared to $5.7 million and $8.2 million for the three and six months ended June 30, 2015.
In the quarter, the $2.5 million decrease in operating expenses related to lower research and development (R&D) expenses as the Company cancelled all of the Immunology Group's R&D programs, partially offset by an increase in general and administrative expenses related to costs incurred for the reorganization and a potential transaction that the Company is no longer pursuing.
Net loss was $3.1 million and $9.1 million for the three and six months ended June 30, 2016 compared to $5.4 million and $7.7 million for the three and six months ended June 30, 2015.
The number of common shares outstanding as at June 30, 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.