MISSISSAUGA, ON, Aug. 14, 2017 /CNW/ - Crescita Therapeutics Inc. (TSX:CTX) (Crescita or the Company), a commercial dermatology company with a portfolio of non-prescription skincare products and prescription drug products for the treatment and care of skin conditions and diseases and their symptoms, today announced its financial and operational results for the second quarter ended June 30, 2017.
Second Quarter 2017 Highlights
- Realized a profit in the quarter with net income of $0.5 million and total revenue of $4.9 million.
- In April, Crescita entered into a development and commercialization license agreement (the Agreement) with Taro Pharmaceuticals Inc. (Taro), the Canadian subsidiary of Taro Pharmaceutical Industries Ltd for the exclusive license to the rights to sell and distribute Pliaglis® in the U.S. and for a second-generation enhanced version of Pliaglis (Flexicaine). Taro made an upfront payment of US$2.0 million ($2.7 million) to Crescita. The Company could also receive up to US$5.75 million in development and sales milestone payments and tiered royalties on net sales of products licensed under the Agreement. In July 2017, the United States Patent and Trademark Office granted a patent relating to the Flexicaine composition resulting in a US$0.5 million ($0.6 million) milestone payment from Taro, which is expected to be received during the third quarter.
- Crescita announced it had amended the terms of its loan agreement with Knight Therapeutics Inc. (Knight). Under the terms of the amended loan agreement, the Company will immediately repay $2.5 million of the loan (reducing the principal amount to $4.1 million) and Knight has agreed to release a letter of credit that previously secured the loan in exchange for a general security interest over all of the Company's assets. As a result, the Company now has access to an additional $6.0 million of its cash to fund its operations (after the repayment described above), that was previously restricted under the terms of the letter of credit.
- Crescita entered into a binding commitment letter with Bloom Burton & Co. (Bloom Burton) pursuant to which funds managed by Bloom Burton have agreed to invest $1.0 million in the Company in exchange for a convertible debenture that will bear interest at 9% (payable in cash) and is convertible into common shares at the option of the holder at a conversion price of $1.00 per share.
See August 14, 2017 Crescita Press Release Announcing Amended Loan Agreement with Knight Therapeutics for additional details regarding the amended Knight loan agreement and the proposed Bloom Burton financing.
- On August 8, 2017, Crescita announced the acquisition of Alyria® skincare products. Alyria is a high-quality, non-prescription, line of medical skincare products sold into medical spas. The Company purchased Alyria for cash consideration of $1.7 million, consisting of a combination of fixed cash installments, of which $0.8 million will be paid in 2017, as well as a royalty agreement based on a threshold of annual net sales of Alyria over a nine-year period starting in 2020.
The Company will continue to assess in-licensing and merger and acquisition opportunities related to new products. The Company's goal is to leverage its current sales and manufacturing infrastructure to facilitate growth.
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).
Second Quarter Financial Review
At June 30, 2017, cash and short-term investments were $12.7 million compared to $18.4 million at December 31, 2016 of which $8.6 million was restricted cash. As discussed above, a portion of the restricted cash has since been used to pay down the Knight loan and the balance has been released and is available to the Company to fund its operations.
Total revenue, consisting of product sales, out-licensing and services revenue, for the three and six months ended June 30, 2017 was $4.9 million and $6.9 million compared to $0.1 million and $0.2 million for the three and six months ended June 30, 2016. The increase in revenue in the current quarter related to the upfront payment of US$2.0 million ($2.7 million) for the U.S. rights to sell and distribute Pliaglis and Flexicaine, as well as product sales of non-prescription skincare products resulting from the INTEGA acquisition.
Total operating expenses for the three and six months ended June 30, 2017 were $4.3 million and $9.5 million compared to $2.4 million and $7.1 million for the three and six months ended June 30, 2016. The increase in operating expenses related primarily to the inclusion of INTEGA's operations including product costs, as well as costs related to the restructuring of the business, offset by synergies from integration.
Net Income (Loss)
Net income was $0.5 million for the three months ended June 30, 2017 compared to a net loss of $3.1 million in the comparative quarter, primarily resulting from the upfront payment from Taro, offset by the net loss from discontinued operations of $0.7 million for the three months ended June 30, 2016. Net loss was $2.7 million for the six months ended June 30, 2017 compared to $9.1 million for the six months ended June 30, 2016. The net loss for the six months ended June 30, 2017 was higher by $4.7 million from continuing operations and $1.7 million from discontinued operations as discussed above.
The number of common shares outstanding as at June 30, 2017 was 13,935,638.
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.
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 regarding the completion of the convertible debenture financing and use of proceeds, the Company's future obligations under the INTEGA purchase agreement, the Company's ability to comply with the terms of the amended Knight loan, 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, among others, the conditions to the convertible debenture financing, the risk factors included in Crescita's most recent Annual Information Form dated March 29, 2017 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.
SOURCE Crescita Therapeutics Inc.