CTX Crescita Therapeutics Inc

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 fourth quarter and fiscal year ended December 31, 2024 (“Q4-2024” and “F2024”). All amounts presented are in thousands of Canadian dollars (“CAD”) unless otherwise noted and in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

Financial Highlights

Q4-2024 vs. Q4-2023

• Revenue was $6,902 compared to $4,725, up $2,177;
• Gross profit was $2,995 compared to $3,060, down $65;
• Operating expenses were $3,263 compared to $3,173, up $90;
• Net loss was $(162) compared to $(150), up $12;
• Adjusted EBITDA1 was $151 compared to $245, down $94.

F2024 vs. F2023

• Revenue was $19,580 compared to $17,522, up $2,058;
• Gross profit was $9,608 compared to $10,364, down $756;
• Operating expenses were $12,823 compared to $12,320, up $503;
• Net loss was $(2,750) compared to $(1,986), up $764;
• Adjusted EBITDA1 was $(1,541) compared to $(368), up $1,173;
• Ending cash of $9,273 compared to $9,385, down $112.

“While 2024 financial results reflected some past business challenges, we made progress on initiatives that we believe strengthen Crescita’s future,” said Serge Verreault, President and Chief Executive Officer of Crescita. “We expanded our product portfolio with the acquisition of Aquafolia, which was immediately accretive to our bottom line, secured key manufacturing and medical aesthetics partnerships, and signed a new U.S. distribution agreement for Pliaglis, which we expect will be relaunched in the U.S. this year.

“Diligent cash management continues to be a top priority. Considering cash deployment of over $2.0 million in 2024 to fund the acquisition of strategic assets and the upgrade of plant equipment, we ended the year with a strong cash balance of $9.3 million. Our cash position affords us agility, as we continue to explore opportunities to enhance revenue and profits,” concluded Mr. Verreault.

Operational and Corporate Developments

For the three months and year ended December 31, 2024 and up to the date of this press release:

New Distribution Agreement with IPG Pharmaceuticals Inc. for Pliaglis® in the United States

• In December, we entered into an exclusive Distribution Agreement with IPG Pharmaceuticals Inc. (“IPG”) for the rights to Pliaglis in the United States (U.S.). The agreement has an initial term of two years, and an option to renew for an additional two years, upon mutual approval by the parties. Under the terms of the agreement, Crescita will supply Pliaglis at a pre-determined transfer price and will be eligible to receive double-digit royalties on net sales. The parties have agreed to equally share regulatory fees payable to the U.S. Food and Drug Administration (“FDA”). IPG expects to commence selling Pliaglis in late 2025.

Normal Course Issuer Bid (“NCIB”)

• On September 24, we announced that the Toronto Stock Exchange (the “TSX”) approved the Company’s proposed normal course issuer bid (the “NCIB”) to purchase up to a maximum of 1,478,854 common shares (“Common Shares”) for cancellation. The NCIB commenced on September 27, 2024 and will end on September 26, 2025, or such earlier date as the Company completes its purchases pursuant to the NCIB or provides notice of termination. In order to facilitate purchases of Common Shares under the NCIB, we entered into an automatic securities purchase plan with a broker.

Amendment to Contract Manufacturer Supply Agreement, Securing US$10M over Four Years

• In July, we signed an amendment to our Contract Manufacturer Supply Agreement (the “Amended Agreement”) with our largest manufacturing segment client (the “Manufacturing Client”), a global skincare company. The Amended Agreement expands our existing partnership with the Manufacturing Client and is the result of ongoing discussions since we announced the cancellation of certain purchase orders by the Manufacturing Client in Q4-2023. Under the terms of the Amended Agreement, Crescita will manufacture selected products from the Manufacturing Client’s largest product franchises (the “New Products”), representing a minimum commitment of US$2.5 million per year during a four-year term. Manufacturing volumes of the New Products made up, in part, for previously cancelled purchase orders. In connection with the cancelled purchase orders, the Manufacturing Client reimbursed Crescita US$1.2 million in Q4-2024, mainly for the cost of unused inventory. To date, we have invested approximately $1.2 million in manufacturing equipment to meet the New Products’ specifications and scale up our operations.

Exclusive Manufacturing and Supply Agreement with Leading Canadian Healthcare Services Provider

• In July, we signed an exclusive Manufacturing and Supply Agreement (the “Agreement”) with a leading Canadian diversified healthcare services provider (the “Client”) to supply sanitary products, including hand sanitizer, hand soap, and hand lotion (together the “Products”), for onward distribution to a network of publicly funded healthcare organizations, represented by a buying group (the “Buying Group” and the “Buying Group Members”). The Agreement is for an initial term of five years with a three-year renewal option exercisable by the Buying Group. Based on the volumes forecasted by the Buying Group, annual revenue under the Agreement may reach up to $6.0 million by the end of the initial term. Crescita’s manufacturing revenue will be contingent on the Client’s ability to convert Buying Group Members from their existing solutions to its new sanitizer dispensing solution. As its exclusive manufacturing partner, Crescita will support the Client in developing the public sector healthcare market for the Products through competitive bidding processes with other buying groups in Canada.

Exclusive Distribution Agreement with NanoPass Technologies Ltd.

• In July, we signed an exclusive Distribution Agreement with NanoPass Technologies Ltd. (“NanoPass”), a pioneer in the development and commercialization of an advanced intradermal delivery device, to launch and distribute MicronJetTM600 (“MicronJet”) in the Canadian medical aesthetics market. MicronJet is an innovative intradermal injection device, leveraging the proven Micro Electro Mechanical Systems (“MEMS”) technology, that offers a highly effective, consistent and virtually pain-free delivery of aesthetic products and therapeutic substances. With three 0.6mm, silicon crystal-made delivery pyramids, MicronJet can be attached to standard syringes and provides aesthetic clinicians with minimally invasive and precise intradermal delivery, allowing administration to delicate and sensitive areas such as around the eyes, neck and décolleté area, as well as to the full face, for optimal patient outcomes. MicronJet was approved by Health Canada and launched in Q1-2025 through our medical aesthetics sales force.

Acquisition of Strategic Assets of Occy Laboratoire Inc.

• On June 26, we completed the acquisition of all of the non-real estate business assets of Occy Laboratoire Inc. (“Occy”), a Laval-based manufacturer and distributor of high-quality dermocosmetic products (the “Transaction”). The Transaction, conducted pursuant to the voluntary proceedings initiated by Occy under the Bankruptcy and Insolvency Act and having received an Approval and Vesting Order rendered by the Québec Superior Court on June 19, 2024, enhances our product offering and client base. As a precursor step leading to the Transaction, Crescita entered into a subrogation agreement with Occy’s former banker to purchase its outstanding loan to Occy at a price significantly less than the principal amount of the then outstanding debt and assumed the first-ranking secured creditor rights. The assets, acquired for total cash consideration of $0.9 million, comprise manufacturing equipment, inventory, customer network and intellectual property and have an estimated fair value of $1.7 million. Occy’s revenue for fiscal 2023, its most recently completed year-end, was approximately $1.5 million.

Update on Licensing Agreement for Pliaglis® in China

• In April, the National Medical Products Administration (the “NMPA”, formerly the China Food and Drug Administration or “CFDA”) confirmed the need for a local clinical trial to support the registration of Pliaglis in China. Our licensing partner, Juyou Bio-Technology Co. Ltd. (“Juyou”) is finalizing the protocol for the clinical trial and the manufacture of required clinical study test articles. Juyou is assessing the timeline for the clinical trial, subsequent registration stages, and the projected launch date. Under the commercialization and development license agreement, Juyou is contractually responsible for all expenses related to obtaining regulatory approval in China and conducting the required clinical trials. Crescita will supply Pliaglis at a pre-determined transfer price and is eligible for potential regulatory and sales milestones that could exceed US$2.2 million, as well as for tiered double-digit royalties should the product’s retail price surpass specified thresholds. In Q4-2024, we received a US$0.1 million regulatory milestone from Juyou.

Q4-2024 and F2024 Summary Financial Results

Note: Select financial information is outlined below and should be read in conjunction with Crescita's Consolidated Audited Financial Statements and related Management's Discussion and Analysis (“MD&A”) for the fiscal year ended December 31, 2024, which are available on Crescita’s profile 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

Quarter ended December 31,

Year ended December 31,

 

2024

 

2023

 

2024

 

2023

 

$

$

$

$

Commercial Skincare

 

3,230

 

2,851

 

11,440

 

10,440

Licensing and Royalties

 

303

 

1,547

 

1,251

 

2,030

Manufacturing and Services

 

3,369

 

327

 

6,889

 

5,052

Revenues

 

6,902

 

4,725

 

19,580

 

17,522

Cost of goods sold

 

3,907

 

1,665

 

9,972

 

7,158

Gross profit

 

2,995

 

3,060

 

9,608

 

10,364

Gross margin (%)

 

43.4%

 

64.8%

 

49.1%

 

59.1%

Research and development (“R&D”)

 

156

 

218

 

646

 

699

Selling, general and administrative (“SG&A”)

 

2,742

 

2,576

 

10,811

 

10,115

Depreciation and amortization

 

365

 

379

 

1,366

 

1,506

Total operating expenses

 

3,263

 

3,173

 

12,823

 

12,320

Operating loss

 

(268)

 

(113)

 

(3,215)

 

(1,956)

Interest income, net

 

(119)

 

(137)

 

(431)

 

(422)

Foreign exchange (gain) loss

 

91

 

(33)

 

41

 

(10)

Share of (profit) loss of an associate

 

44

 

10

 

47

 

(16)

Net (gain) loss on convertible note measured at

fair value through profit or loss

 

(108)

 

-

 

(108)

 

22

Income (loss) before income taxes

 

(176)

 

47

 

(2,764)

 

(1,530)

Deferred income tax (recovery) expense

 

(14)

 

197

 

(14)

 

456

Net loss

 

(162)

 

(150)

 

(2,750)

 

(1,986)

Adjusted EBITDA1

 

151

 

245

 

(1,541)

 

(368)

Weighted average number of common shares outstanding

Basic and diluted

 

19,124,184

 

19,987,774

 

19,356,979

 

20,255,285

Loss per share

 

Basic and diluted

$

(0.01)

$

(0.01)

$

(0.14)

$

(0.10)

Selected Balance Sheet Information

 

 

 

 

Cash and cash equivalents, end of period

 

 

 

9,273

 

9,385

Selected Cash Flow Information

 

 

 

 

Cash provided by (used in) operating activities

 

1,376

 

(261)

 

2,725

 

2,076

Cash used in investing activities

 

(353)

 

(105)

 

(2,019)

 

(133)

Cash used in financing activities

 

(240)

 

(258)

 

(861)

 

(782)

Revenue

We have three reportable segments: 1) Commercial Skincare (“Skincare”), which generates revenue from the commercialization of our branded non-prescription skincare products, manufactured in-house, in Canada and in certain international markets, as well as other brands under exclusive distribution agreements; 2) Licensing and Royalties (“Licensing”), which currently derives revenue from licensing our intellectual property related to Pliaglis®; and 3) Manufacturing and Services (“Manufacturing”), which generates revenue from contract manufacturing and product development services.

For the quarter ended December 31, 2024, total revenue was $6,902, compared to $4,725 for the quarter ended December 31, 2023. The net increase of $2,177 was mainly driven by the reimbursement of $1,620 (US$1,200) received under the terms of the Amended Agreement with our largest Manufacturing client (the “Reimbursement”), the deferral of purchase orders from Q4-2023 to Q1-2024 by this client, and higher Skincare revenue resulting from an increase in domestic sales from our core brands and incremental revenue from Aquafolia which was acquired in June 2024. This was partly offset by our last entitlement to minimum guaranteed royalties under the U.S. licensing agreement with Taro Pharmaceuticals Inc. in the amount of $1,343 (US$1,000) (the “Taro Royalties”) which was recorded in Q4-2023.

For the year ended December 31, 2024, total revenue was $19,580, compared to $17,522 for the year ended December 31, 2023. The net increase of $2,058 was mainly driven by the Reimbursement, the fulfillment of production volumes under the Amended Agreement with our largest Manufacturing client, and growth in our Skincare segment, as a result of the same factors as for the quarter, partly offset by the Taro Royalties that did not repeat.

Gross Profit and Gross Margin

For the quarter ended December 31, 2024, gross profit was $2,995, representing a gross margin of 43.4%, compared to $3,060 and 64.8%, respectively, for the quarter ended December 31, 2023. The net decrease in gross profit of $65 was mainly due to the Taro Royalties that did not repeat, partly offset by revenue from higher production volumes and favourable product mix in the Manufacturing segment, as well as the increase in Skincare revenue. The decrease in gross margin of 21.4% year-over-year was mainly a result of the Reimbursement, as described above, and the Taro Royalties in Q4-2023, partly offset by margin improvements in our Skincare segment, driven by favourable product and channel mix and lower obsolescence charges in the quarter. The Reimbursement was recorded in revenue with an equal corresponding charge to COGS, thus only impacting gross margin.

For the year ended December 31, 2024, gross profit was $9,608, representing a gross margin of 49.1%, compared to $10,364 and 59.1%, respectively, for the year ended December 31, 2023. The net decrease in gross profit of $756 was mainly due to the impact of the full margin Taro Royalties that did not repeat, as well as the fulfilment in 2023 of higher-margin Manufacturing purchase orders, partly offset by higher revenue in our Skincare segment driven by the same factors as the quarter. The decrease in gross margin of 10% year-over-year was mainly due to same drivers as for the gross profit, as well as the impact of the Reimbursement during the last quarter of the year.

Operating Expenses

For the quarter and year ended December 31, 2024, total operating expenses were $3,263 and $12,823, compared to $3,173 and $12,320 for the quarter and year ended December 31, 2023. The net increase of $503 for the year was due to higher SG&A expenses, mainly from increased consulting and commercial partnership fees to support our digital strategy, headcount-related costs, and share-based compensation costs, as well as incremental acquisition-related and integration costs incurred in connection with the acquisition of Occy’s assets, partially offset by lower advertising and promotion spend.

Cash and Cash Equivalents

Cash and cash equivalents were $9,273 at December 31, 2024, compared to $9,385 at December 31, 2023. The net decrease of $112 was mainly driven by the investments made in manufacturing equipment, as well as for the acquisition of the non-real estate business assets of Occy in June 2024, partly offset by cash generated from operating activities.

Non-IFRS Financial Measures

We report our 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. 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:

1. 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.
2. 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) losses of associates, fair value (gains) losses, share-based compensation, restructuring, acquisition-related and integration costs, and goodwill and intangible asset impairment, 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

Quarter ended December 31,

Year ended December 31,

2024

2023

2024

2023

$

$

$

$

Net loss

(162)

(150)

(2,750)

(1,986)

Adjust for:

 

 

 

 

Depreciation and amortization

365

379

1,366

1,506

Interest income, net

(119)

(137)

(431)

(422)

Deferred income tax (recovery) expense

(14)

197

(14)

456

EBITDA

70

289

(1,829)

(446)

Adjust for:

 

 

 

 

Acquisition-related and integration costs

37

-

127

-

Share-based compensation

17

(21)

181

82

Foreign exchange (gain) loss

91

(33)

41

(10)

Share of (profit) loss of an associate

44

10

47

(16)

Net (gain) loss on convertible note measured at

fair value through profit or loss

(108)

-

(108)

22

Adjusted EBITDA

151

245

(1,541)

(368)

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”), all of 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

Certain statements in this press release constitute forward-looking statements and/or forward-looking information (collectively “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.

Forward-looking information may relate to the Company’s future financial outlook and anticipated events or results and may include information regarding the Company’s financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans, objectives, and expectations. Such information is provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company’s anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Often, but not always, forward-looking information can be identified by the use of forward-looking terminology such as: “outlook”, “objective”, “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “aim”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “may”, “should”, “will”, “growth strategy”, “future”, “prospects”, “continue”, and similar references to future periods or suggesting future outcomes or events. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information.

Examples of forward-looking information include, but are not limited to, statements made in this press release under the heading “Financial Highlights”, including statements 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 assurance of future performance. Instead, it reflects management’s current beliefs, expectations and assumptions and is based only on information currently available to us. Forward-looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable by the management of the Company as of the date of this press release, are inherently subject to significant business, economic, and competitive uncertainties and contingencies that are difficult to predict and many of which are outside of our control.

The Company’s estimates, beliefs and assumptions, which may prove to be incorrect, include various assumptions regarding, among other things: the Company’s future growth potential, results of operations, future prospects and opportunities; the Company’s ability to retain and recruit, as applicable, customers, members of management and key personnel; industry trends; legislative or regulatory matters, including expected changes to laws and regulations and the effects of such changes; future levels of indebtedness; availability of capital; the Company’s ability to secure additional capital and source and complete acquisitions; the Company’s ability to maintain and expand its market presence and geographic scope; economic and market conditions, including the imposition of and adverse changes to tariffs and other trade protection measures; the impact of currency exchange and interest rates; the Company’s ability to maintain existing financing and insurance on acceptable terms; the Company’s ability to execute on, and the impact of, its environmental, social and governance initiatives; the impact of competition; and the Company’s ability to respond to changes to its industry and the global economy.

Forward-looking information involves risks and uncertainties that could cause Crescita’s actual results and financial condition to differ materially from those contemplated by such forward-looking information. Important factors that could cause such differences include, among others:

• economic and market conditions, including factors impacting global supply chains such as pandemics, geopolitical conflicts and tensions, and trade protection measures, like the imposition of tariffs and retaliatory tariffs by the United States and Canada;
• the impact of inflation and fluctuating interest rates;
• 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 variations in the values of the Canadian dollar in relation to the U.S. dollar and Euro;
• the impact of the volatility in financial markets;
• the Company’s ability to retain members of its management team and key personnel;
• 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;
• 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.

If any risks or uncertainties with respect to the above materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. This list is not exhaustive of the factors that may impact the Company’s forward-looking information. Although management has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known or that management believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking information, which speaks only as of the date provided, and is subject to change after such date. Except as required by applicable securities laws, the Company 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.

1Please refer to the Non-IFRS Financial Measures section of this press release.

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FOR MORE INFORMATION, PLEASE CONTACT: Linda Kisa, CPA, CA Vice-President, Reporting and Corporate Affairs Email: lkisa@crescitatx.com