Crescita Therapeutics™ Reports 2018 First Quarter Results

Revenue up 75%
Positive EBITDA¹

LAVAL, QC, May 9, 2018 /CNW Telbec/ - 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 first quarter ended March 31, 2018.  

Q1-F2018 Year-over-Year Financial and Operational Highlights

• Positive Adjusted EBITDA¹ of $0.1 million, up $ 2.4 million versus Q1-17;
• Revenue of $3.6 million, up $1.6 million versus Q1-17;
• Operating expenses reduced by $1.1 million versus Q1-17;
• Net loss per share from continuing operations improved by $0.20 to $(0.03), versus Q1-17;
• Ended the quarter with cash of $9.5 million;
• Announced the launch of Pliaglis in the U.S., recognizing $1.4 million in royalty revenue in the quarter;
• Successfully completed a Rights Offering, raising net proceeds of approximately $3.5 million in equity funding to support our growth;
• Appointed Mr. Serge Verreault as CEO;

"Our disciplined approach to executing our growth strategy is starting to produce visible results that are in line with our operational plan to make Crescita profitable and to deliver value to our customers and shareholders," said Serge Verreault President and Chief Executive Officer of Crescita.

Mr. Verreault added "We are encouraged by the growth prospects in the U.S. market following the launch of Pliaglis by our licensing partner during the quarter, as it represents a significant expansion opportunity for Crescita. We continued to streamline our operations by reducing our SG&A costs by $1.3 million versus Q1-F2017; we strengthened our financial position by adding $3.5 million in cash to our balance sheet through our Rights Offering and we reported positive Adjusted EBITDA of $0.1 million in the quarter."

¹Adjusted EBITDA is a non-IFRS measure. This term is defined as earnings (loss) from continuing operations before interest, income taxes (recovery), depreciation and amortization, gain on debt renegotiations, net, equity-settled stock-based compensation (SBC), goodwill and intangible assets impairment, accretion on the fair value of inventory, and foreign currency (gains) and losses, as applicable.  Please refer to the Non-IFRS Financial Measures and Adjusted EBITDA Reconciliation sections of this press release.

Q1-F2018 Financial Results 

Note: All figures are in Canadian dollars. The first quarter 2018 MD&A, condensed consolidated interim 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 earnings per share	Three months ended March 31,
	2018	2017	Change
Revenue	3,649	2,080	1,569
Cost of goods sold	1,306	1,031	275
Research & Development	229	386	(157)
Selling, general & administrative	2,395	3,705	(1,310)
Interest expense, net	147	49	98
Total Operating Expenses	4,077	5,171	(1,094)
Other (income) expenses	(4)	39	(43)
Net loss from continuing operations	(424)	(3,130)	2,706
Net loss from discontinued operations	-	(63)	63
Net loss	(424)	(3,193)	2,769
Net loss from continuing operations per share	(0.03)	(0.23)	0.20
Weighted Average number of common shares	15,715	13,935	1,780
Selected Cash Flow Information
Cash and cash equivalents, end of period	9,455	13,772	(4,317)
Cash used in operating activities	(1,070)	(3,516)	2,446
Cash used in investing activities	-	(43)	43
Cash (used in) provided by financing activities	3,520	(1,000)	4,520

Cash and Cash Equivalents
Cash and cash equivalents were $9.5 million as at March 31, 2018 compared to $5.2 million at March 31, 2017. In the prior year's quarter, the Company had $8.6 million of restricted short-term investments held as collateral for the Company's letter of credit. The restriction on these funds was lifted as part of the Knight Loan amendment in the third quarter of 2017. The current quarter includes $3.5 million in net proceeds from the Company's Rights Offering. By adjusting each quarter's cash balance for these non-recurring items, the respective total cash balances, on a comparable basis, would have been $5.9 million in Q1-18 and $13.8 million in Q1-17.  For the three months ended March 31, 2018, the Company significantly reduced its cash utilization from $4.6 million in Q1-17 to $1.1 million.   

Revenue
Total revenue, consisting of product sales, out-licensing and services revenue, was $3.6 million for the quarter ended March 31, 2018, compared to $2.1 million for the three months end March 31, 2017, representing an increase of $1.5 million.  During the quarter, the Company recognized $1.4 million (US$1.0 million) in royalty revenue from the launch of Pliaglis in the U.S. market by its licensing partner.  Q1-18 revenue also includes the incremental revenue of $0.2 million from the acquisition of the Alyria product line from Sanofi Consumer Health Inc., concluded on August 8, 2017.

Operating Expenses
Total operating expenses for the three months ended March 31, 2018 were $4.1 million, compared to $5.2 million for the three months ended March 31, 2017, representing a decrease of $1.1 million or 21%. The decrease was mainly due to savings in SG&A of $1.3 million, and to a lesser extent savings in R&D expenses of $0.2 million. The improvement in SG&A was mainly driven by a reduction in headcount-related costs following the reorganization of various corporate functions in connection with 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.

Net Loss from Continuing Operations
Loss from continuing operations for the quarter ended March 31, 2018 was $0.4 million, compared to $3.1 million in the prior year's quarter.  The year-over-year improvement of $2.7 million was primarily driven by the recognition in the quarter of net royalty revenues from the U.S. launch of Pliaglis in the amount of $1.2 million, the net contribution from the incremental sales of Alyria for $0.1 million as well a combined reduction of $1.5 million in SG&A and R&D expenses as a result of the Company's sustained efforts at rationalizing its cost structure. 

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.

Adjusted EBITDA is a non-IFRS measure. This term is defined as earnings (loss) from continuing operations before interest, income taxes (recovery), depreciation and amortization, gain on debt renegotiations, equity-settled stock-based compensation (SBC), goodwill and intangible assets impairment, accretion on the fair value of inventory, and foreign currency (gains) and losses, 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 the adjusted EBITDA to its closest IFRS measure can be found below.

Adjusted EBITDA Reconciliation

In thousands of CAD dollars	Three months ended March 31,
	2018	2017	Change
Net loss from continuing operations	(424)	(3,130)	2,706
Add:
Depreciation and amortization	290	281	9
interest expense	168	74	94
Equity-settled stock-based compensation	82	77	5
Accretion on fair value of inventory	-	371	(371)
Foreign currency loss	-	39	(39)
Less:
Interest income	21	25	(4)
Foreign currency gain	4	-
Adjusted EBITDA	91	(2,313)	2,404

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 audited consolidated financial statements, notes to the financial statements, 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.

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 most recent Annual Information Form dated March 27, 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.

SOURCE Crescita Therapeutics Inc.

Investor Relations, Email: [email protected]

Related Links

http://www.crescitatherapeutics.com