CTX.TO - Crescita Therapeutics

[snowball82]

Current price : $ 1.23 CAD

Market Cap : $ 17,7 M

Shares outstanding : 14 M (some dilution to come after the Intega closing)

 

Crescita Therapeutics Inc. is a Canadian commercial dermatology company with a portfolio of over-the-counter (OTC) and prescription products for the treatment and care of skin conditions. 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.

 

The vision is the execution of an in-licensing and acquisition roll up growth strategy to create a large profitable skin care products company.

 

The company is the result of a reorganization on March 1, 2016, Nuvo Research Inc. completed a transaction pursuant to which Nuvo was reorganized into two separate publicly traded companies, Nuvo and Crescita. As part of the Reorganization, Nuvo Research Inc. changed its name to "Nuvo Pharmaceuticals Inc.” Nuvo is a commercial healthcare companyr with a portfolio of commercial products and pharmaceutical manufacturing capabilities. Crescita is a commercial dermatology business with a pipeline of topical and transdermal products focusing on pain and dermatology and multiple drug delivery platforms that support the development of patented formulations that can deliver actives into or through the skin. The Company’s acquisition of INTEGA on September, 2016 provides the worldwide distribution rights to INTEGA’s well-known and established skin care brands: Laboratoire Dr Renaud™, Pro-Derm™, Premiology™ and ISDIN® (the trademark is owned by ISDIN S.A. and is being used under license by INTEGA Skin Sciences Inc.).

 

http://www.crescitatherapeutics.com/

 

http://www.crescitatherapeutics.com/wp-content/uploads/2016/11/2016-11-03_Crescita_Investor_Presentation.pdf

 

INTEGA is a fully integrated commercial skin care products company with marketing and sales, R&D, manufacturing and distribution capabilities. The company is interesting as INTEGA markets 4 distinct product lines with growing sales and new launches to come. This company is totally unknown despite well-known and recognized trademarks in the skin care industry. Its $ 23 million in cash, the growth strategy and the fact that it is leasing an impressive building in a Laval Industrial Park in Quebec (Canada) that is not in full use suggest that the company has the means of its ambitions.

 

The integration revenues of Intega Skins have not yet been consolidated and this is a promising development base. For example, Dr. Renaud products are available in an established network of health specialists and represent products recognized for decades in the province of Quebec. It is not unusual for these small cream with active ingredients to be sell over $ 75 for a bottle of less than 100 ml.

 

The opportunity could be significant because Intega plans to market its brands on a global scale and this is very plausible now that the core activities of this company are the skin care products. If you followed the history of the highly indebted company Valeant (VRX.to who owned these brands before the transaction), it is easy to understand that these small businesses were not in its core business and were possibly not the priority. There really is a huge market in the skin care market. The brands and excellent products of the company are only waiting for the execution of an effective growth strategy.

 

The current stock price is below cash per share and the company owns huge assets. The company has $ 23 M cash and 14 M shares and the profitability for Intega is likely. If we look the «AMENDED AND RESTATED LOAN AGREEMENT Dated as of September 1, 2016 among KNIGHT THERAPEUTICS INC. as Lender – and – INTEGA SKIN SCIENCES INC. as Borrower – and – CRESCITA THERAPEUTICS INC. as Guarantor » we can find some informations about the likely profitability.

 

"The Loan. Subject to the terms and conditions of this Agreement and the other Loan Documents, the Lender agrees to loan to the Borrower in lawful money of Canada the principal amount of $6,841,163 to or for the account of the Borrower (the “Loan”). 2.2 Loan Maturity Date. (a) The maturity date of the Loan (the “Loan Maturity Date”) shall be the day falling six years after the Original Closing Date. (b) Notwithstanding Section 2.2(a), the Lender may advance the Loan Maturity Date by one year (the “Lender’s Option”) in the event that (i) in the 12-month period ending December 31, 2017, the Borrower does not achieve Net Sales of at least $12,800,000 and EBITDA of at least $2,000,000, and (ii) in the 12-month period ending December 31, 2018, the Borrower does not achieve Net Sales of at least 11 $16,200,000 and EBITDA of at least $3,300,000. The Net Sales and EBITDA for the Borrower must be delivered to the Lender by February 14, 2019. The Lender’s Option must be exercised before March 1, 2019. Should the Lender exercise the Lender’s Option, the then outstanding principal amount on the Loan, together with all accrued and unpaid interest thereon and any other accrued and unpaid Obligations shall be repaid on a straight-line monthly basis taking into account the shortened maturity date.

 

The market targeted is massive and the vision to consolidate by an experimented management supported by Knight Therapeutics (GUD.to, the largest shareholder) is credible.

 

« With the acquisition of INTEGA, paid in Crescita common shares valued at $2.44 per share, Crescita becomes an integrated commercial skin care company while maintaining a strong balance sheet to finance our continued growth," commented Dan Chicoine, Crescita's Chairman.  "Our goal is to utilize the combined attributes of both businesses, in manufacturing, distribution, marketing and research and development, to become a dominant player in the $15.0 billion Canadian and U.S. skin care industry."

 

INTEGA has a growth strategy with 3 pillars : Organic growth, acquisitions of products/companies and international markets. That said, while the grow through strategic acquisitions of products and/or companies  and further develop international markets I think the organic is more likely in the short time.

 

The focus on organic growth of existing product lines and those upcoming milestones should generate significant growth over next quarters :

 

• Launch of first batch of ISDIN products Q4 2016

• Out-licensing of Pliaglis for U.S. market Q4 2016

• Launch Pliaglis in Canada Q1 2017

• Launch of second batch of ISDIN products Q3 2017

 

The company has the potential to reach significant sales with close 50 % gross margins. Based only on current Intega sales, current sales are close $ 10 M. 

 

The SG&A costs are high for now, even if we assume that half of the trailing 9 months of SG&A was from reorganization and M&A costs. So an interesting potential here but we will have to wait one or two quarters to see the earning power behind transition costs and how they evolve to become a consolidator for the sector.

 

Let see the execution. 

 

 

I own positions in CTX.to and GUD.to.

 

[snowball82]

Valeant announced that it has entered into an agreement to sell its CeraVe, AcneFree and AMBI skincare brands to L'Oréal for $1.3 billion in cash.It have annualized revenue of approximately of $168 million.

 

http://www.wsj.com/articles/valeant-to-sell-skincare-brands-to-loreal-1484038804

 

 

CTX bought Intega including Valeant Groupe Cosméderme (with Laboratoire Dr Renaud brand).

 

http://www.newswire.ca/fr/news-releases/intega-skin-sciences-inc-aquires-laboratoire-dr-renaud-pro-derm-and-premiology-brands-from-valeant-566427261.html

 

Valeant acquired Laboratoire Dr. Renaud for around $23 million in 2009.

 

http://financial-advices.com/valeant-canada-divests-aesthetics-unit-to-montreals-intega-skinsciences/

 

CTX current market cap : $ 20 M

 

 

 

 

[snowball82]

ISDIN products are now available in 200 pharmacies. Nice start for that new channel. A good addition to others brands in Institutes.

 

Crescita Therapeutics™ Announces Launch of ISDIN® Product Line at Brunet Pharmacy

 

- Nutratopic™ ProAMP for babies and toddlers with atopic dermatitis

Acnisdin™ Calm to alleviate symptoms related to acne medication -

MISSISSAUGA, ON, Jan. 26, 2017 /CNW/ - Crescita Therapeutics Inc. (TSX:CTX) (Crescita or the Company), a commercial dermatology company with a portfolio of over-the-counter and prescription products for the treatment and care of skin diseases and their symptoms, today announced that the newly acquired, INTEGA Skin Sciences (INTEGA), a Montreal-based dermatology company which develops, manufactures, sells and markets science-based quality skincare products has launched the ISDIN® Acnisdin and Nutratopic product lines at Brunet pharmacy chains throughout Québec.  The Company anticipates that a number of other categories in the ISDIN product line will be launched by the end of this year in pharmacies across Canada.  In addition to the ISDIN products, the INTEGA skincare brands include, Laboratoire Dr Renaud™, Pro-Derm™ and Premiology™.

"We are excited that we have achieved this milestone," said Loic Lefebvre, INTEGA's Vice President, Sales and Marketing.  "ISDIN, an international benchmark in skin treatment, provides consumers with a complete range of dermatological solutions and skin care products with the highest quality standard."

ISDIN's focus is to offer a complete range of innovative dermatology solutions to consumers with the highest quality standards and strong clinical evidence.  The lead products alleviate symptoms of skin pathologies: dry skin, sun care, atopic dermatitis, women's health, baby skin, acne, oily skin, psoriasis, hygiene and sun damage repair.  ISDIN is the market leader in skincare in Spain and was formed in 1975 through a joint venture between Esteve & Puig.  ISDIN is well established in Europe, Latin America and Asia with more than 14 brand families and a leading-market position.  INTEGA has the exclusive rights to market and sell ISDIN products in Canada.

 

[GroupePretoria]

Thats a great idea snowball.  I've taken a small position and may increase following revenu integration following acquisition.

As soon as the company turns profitable, this stock will provide tremendeous return!

 

Disclosure : Long GUD & CTX

[GroupePretoria]

 

The SG&A costs are high for now, even if we assume that half of the trailing 9 months of SG&A was from reorganization and M&A costs. So an interesting potential here but we will have to wait one or two quarters to see the earning power behind transition costs and how they evolve to become a consolidator for the sector.

 

Let see the execution. 

 

That's the key I think.  They historically badly managed the SG&A for having digged themself a cumulative net loss.  Let's hope they'll change shortly.  As soon as they break-even, I'll put way more value into this investment.

[snowball82]

Thats a great idea snowball.  I've taken a small position and may increase following revenu integration following acquisition.

As soon as the company turns profitable, this stock will provide tremendeous return!

 

Disclosure : Long GUD & CTX

 

Thanks Groupepretoria, time will tell if the management will build the integrated profitable skin products company as they wrote in the investor presentation and be good capital allocators. I didn't see the financials goals from management yet.

 

Like you know CTX has launched ISDIN Acnisdin and Nutratopic product lines in Brunet pharmacy chains. Maybe some of those products :

 

http://www.isdin.com/eng/products/nutratopic

 

https://www.isdin.com/us/productall (see Acnisdin)

 

CTX also said they want to launch a number of other categories in the ISDIN product line by the end of this year in pharmacies across Canada ... and they also have to out-licensing Pliaglis in US. For Pliaglis, the plan was to do a deal  during Q4 but I didn't see anything about it.

 

Maybe someone in our community has more info to share about the management or the sector / segment.

 

[snowball82]

Crescita Therapeutics™ Announces Management and Board Changes

 

MISSISSAUGA, ON, Feb. 10, 2017 /CNW/ - Crescita Therapeutics Inc. (TSX:CTX) (Crescita or the Company), a commercial dermatology company with a portfolio of over-the-counter and prescription products for the treatment and care of skin diseases and their symptoms, today announced that Ms. Muneerah Kanji, MBA, CPA, CA, Crescita's Corporate Controller, has assumed the role of Interim Chief Financial Officer replacing Mr. Mario Laflamme who has resigned for health-related family reasons. Crescita has commenced a formal search process for a new Chief Financial Officer.

"Ms. Kanji brings a wealth of global financial and operations experience to Crescita and we look forward to her input in her new role," said Dan Chicoine, Crescita's Executive Chairman and Interim Chief Executive Officer. "We appreciate Mr. Laflamme's efforts and contributions to the Company and wish him well."

Prior to joining Crescita, Ms. Kanji was the Vice President, Finance for Remedy Holdings Inc., and has held senior roles in Finance in the healthcare sector at MDS Inc. and Baxter Canada with responsibilities for planning, reporting, information technology, human resources, tax, treasury and mergers and acquisitions. Ms. Kanji is a Chartered Professional Accountant and holds a Master of Business Administration from Queen's University.

Dr. Theodore Stanley, MD has resigned from the Crescita Board of Directors and Corporate Governance, Compensation and Nominating Committee. Dr. Stanley is a co-founder of ZARS Pharma Inc. (ZARS) and joined the Board of Directors of Nuvo Research Inc. (Nuvo) (Crescita was spun out from Nuvo in March 2016) when ZARS was acquired by Nuvo in May 2011.

"We would like to thank Dr. Stanley for his dedicated service to Nuvo and most recently to Crescita," said Mr. Chicoine. "We wish him continued success in his future endeavours."

[snowball82]

If I understand well, no futur R&D cost related with this.

 

Crescita Therapeutics™ Announces Signing of a Licensing Agreement Utilizing its MMPE™ Technology

 

 

 

MISSISSAUGA, ON, March 21, 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 it has signed an exclusive license agreement with a U.S.-based, major dermatological contract research company (CRO) (the Licensee) to develop prescription treatments of skin diseases utilizing Crescita's patented Multiplexed Molecular Penetration Enhancer (MMPE™) technology.

Crescita Therapeutics Inc. (CNW Group/Crescita Therapeutics Inc.)

Under the terms of the agreement, the Licensee will be responsible for developing up to three dermatological products.  The Licensee will oversee and fund the cost of all development activities until commercialization partner(s) for the products are secured.  Crescita is entitled to a share of royalties and other consideration received by the Licensee from such partners based on a formula that includes compensation to Crescita for granting the Licensee the exclusive license to the MMPE technology.

"This agreement is a good illustration of Crescita's continuing ability to capitalize on our existing drug technologies, as we work to build the non-prescription side of the business," said Dan Chicoine, Crescita's Chairman and Interim CEO.  "Crescita will not incur any research and development costs under the terms of the license, but the Company stands to gain an attractive return if the development activities of our licensing partner are successful."

 

[GroupePretoria]

You're faster than me I was going to post this here stating that there was no R & D fees to develop three new products!

I don't know what is the potentiel with this technology around the world.  It may be huge.  A big upside that comes at no cost.

I really start to feel like we got something here.

[Yours Truly]

Got any idea as to how much stock management owns in the company?

[gurpaul88]

Q2: Crescita anticipates that its current cash will be sufficient to funds its operations into 2017.

Q3: Management believes the Company needs funding to operate through 2017 and beyond.

[GroupePretoria]

Q4: The Company anticipates that its current cash and the revenue it expects to generate from product sales and

milestone payments related to out-licensing its products, in addition to royalty payments on the global net sales

of Pliaglis may not fund Crescita’s operations as currently planned through 2017. Management is pursuing

various financing alternatives to raise additional funds for operations and future potential acquisitions.

[snowball82]

The company is a bit slow to reduce the cost structure. Do they still have 80 employees for that sale level and need offices in Montreal and Toronto ?

[GroupePretoria]

Crescita Therapeutics™ Announces

Agreement with Taro Pharmaceuticals

for Pliaglis®

Mississauga, Ontario, Canada – April 25, 2017 – Crescita Therapeutics Inc. (TSX:CTX) (Crescita or the

Company), a commercial dermatology company with a portfolio of non-prescription skincare products and

prescription drugs, today announced it has entered into a development and commercialization license

agreement (the Agreement) with Taro Pharmaceuticals Inc. (Taro), the Canadian subsidiary of Taro

Pharmaceutical Industries Ltd. (NYSE:TARO). Under the terms of the Agreement, Crescita has granted Taro

an exclusive license (Taro License) to the rights to sell and distribute Pliaglis in the U.S. market and for a

second-generation enhanced version with patent pending (the Enhanced Formulation). In consideration of

the rights granted under the Agreement, Taro will make the following payments to Crescita:

(i) an upfront, non-dilutive payment of US$2.0 million;

(ii) up to US$5.75 million in non-dilutive development and sales milestone payments; and

(iii) tiered royalties on net sales of products licensed under the Agreement.

In addition, Crescita and Taro have entered into a fee-for-service development agreement, whereby, the

Company will provide services related to further development of Pliaglis and the Enhanced Formulation.

Crescita will receive these fees based on services performed.

Crescita retains all rights to Pliaglis in Canada and Mexico and will look to maximize the value of Pliaglis in

those markets for the benefit of Crescita stakeholders.

[GroupePretoria]

What do you think of the last of developments snowball?

 

I think the move to have this contract cash flow come in is a good thing but losses are still high.

[snowball82]

What do you think of the last of developments snowball?

 

I think the move to have this contract cash flow come in is a good thing but losses are still high.

 

I don't own this stock currently. They still have a great vision but great vision without execution/ profitability is not attractive.

 

 

[spartansaver]

Not sure if anyone has looked into Nuvo Pharmaceuticals. 18.6mm in cash, 50mm market cap, earnings of ~6-7mm (patent for drug Nuvo has exclusive manufacturing rights to expires in 2029), and Nuvo owns a patent related to the primary drug they manufacture internationally. 2Q and 3Q are likely to experience losses as the company installs new equipment related to serializing drugs. 

[snowball82]

The execution is an issue here. Much better owning GUD.to.

[Alan00]

Hello - wondered if anyone is still following Crescita Therapeutics?

 

There was an interesting VIC write-up here: https://www.valueinvestorsclub.com/idea/CRESCITA_THERAPEUTICS_INC/4228253105

 

Their Q3 results showed royalty revenue (related to Pliaglis) at c. CAD 1.1m, and they also got a CAD 1.3m sales milestone payment.  The royalty number, if they can continue / grow it, is very significant for such a small company.

 

Appears to me the thesis suggested on VIC, could well play out.  If it does then stock could multi-bag.

 

I'm long, and particularly interested in hearing arguments against / the bear side.  Seems stock is largely ignored / not much interest.

 

[snowball82]

"Key Board member/shareholder with long history of value creation in Canadian pharma/healthcare" ? Who and how much value creation by this or the previous management ?

[Alan00]

I think that statement relates to Knight Therapeutics being a shareholder (and therefore linking to Jonathan Goodman), with board representation at Crescita through Samira Sakhia, Knight's President & CFO.

[snowball82]

I think that statement relates to Knight Therapeutics being a shareholder (and therefore linking to Jonathan Goodman), with board representation at Crescita through Samira Sakhia, Knight's President & CFO.

 

Well not sure we can say the previous or the current management build value per share.

 

Some investors could also say Synergy CHC (SNYR) is a good comparable ..GUD is also involved. The current stock price is now $ 0.10 vs close $ 0.50 few months ago.

[Alan00]

I’m not sure how much of the VIC write-up you’ve read, or if you’ve looked at their recent results.  The fact GUD are involved was one of the plus points, but there was a lot more to the write up than that.

 

Eg what do you think to the Pliaglis opportunity, and the recent progress they have made with that?

[DeepValuePlay]

Hello - wondered if anyone is still following Crescita Therapeutics?

 

There was an interesting VIC write-up here: https://www.valueinvestorsclub.com/idea/CRESCITA_THERAPEUTICS_INC/4228253105

 

Their Q3 results showed royalty revenue (related to Pliaglis) at c. CAD 1.1m, and they also got a CAD 1.3m sales milestone payment.  The royalty number, if they can continue / grow it, is very significant for such a small company.

 

Appears to me the thesis suggested on VIC, could well play out.  If it does then stock could multi-bag.

 

I'm long, and particularly interested in hearing arguments against / the bear side.  Seems stock is largely ignored / not much interest.

 

This is taken from the MD&A of 3rd quarter:

 

"In 2017, Taro completed the study to support the removal of the Pliaglis “Not for Home Use” label restriction and filed the FDA submission with the proposed label change on June 8, 2018. While there is a mandated six-month  FDA  review  period  for such  applications,  there  can  be  no  assurance  that  the  FDA  will  complete  its review within that timeframe. The approval of this submission would trigger a milestone of US$0.5 million.

 

In  2018,  Taro  also  successfully  completed  the  transfer  of the  manufacturing  process  and  analytical  test  methods  for  Pliaglis  to  its  manufacturing  facility  in  Brampton,  Ontario. A  Manufacturing  Site  Change Supplement seeking approval for Taro’s facility to manufacture Pliaglis was submitted to the FDA on July 6, 2018.  The  FDA  approved  the  site  addition  on  September  4,  2018.  As  a  result,  Taro  will  be  able  to  supply commercial batches of Pliaglis for the US market once the process validation is complete. This is expected to occur in fourth quarter 2018".

 

I don'y know what to make of this.

[Alan00]

Hi DeepValuePlay - I'm not really sure what you are asking, do you have a question?