TSX : CTX - INVESTOR PRESENTATION - September 2020 - Crescita Therapeutics
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INVESTOR PRESENTATION
TSX : CTX
September 2020
FORWARD-LOOKING STATEMENTS Certain information contained in these materials and to be discussed during this presentation constitute forward-looking information within the meaning of applicable securities laws, including, among others, statements concerning Crescita Therapeutics Inc.’s (“Crescita” or the “Company”) objectives and strategies to achieve those objectives, sales of the Company’s products, the Company’s product candidates and the timeline for their development and commercialization, the Company’s future financial condition and performance, potential acquisition and licensing transactions, as well as other statements with respect 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. Such forward-looking information reflect management’s current beliefs as of the date hereof and are based on information currently available to management. Although the forward-looking information contained in these materials and to be discussed during this presentation 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. Forward-looking information is based on the Company’s estimates and assumptions, and is subject to risks and uncertainties, that could cause actual results to differ materially from such forward-looking information, including those described in the Company’s annual information form, management discussion and analysis and other documents filed with Canadian securities regulators, copies of which are available under the Company’s profile at www.sedar.com. Except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
NON-IFRS 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 presentation 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 found in our continuous disclosure documents. Adjusted EBITDA is a non-IFRS measure. This term is defined as earnings (loss) 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. 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.
CRESCITA AT A GLANCE
COMMERCIAL DERMATOLOGY COMPANY SERVING
NON-RX MARKET RX MARKET
4 Skincare Brands Plant & CDMO* RX Product
Services Pipeline
TWO PATENTED DRUG DELIVERY TECHNOLOGIES
*Contract Development and Manufacturing Organization 4
COMMERCIAL SKINCARE – 4 BRANDS
AESTHETIC MEDICAL AESTHETIC
• Optimize cosmetic
• Based on biomimicry procedures
• Innovative complexes • Combine botanical extracts
• Combines science and pure essential oils
& aesthetics • Free from parabens, dyes
and other harsh chemicals
• Developed exclusively
for the Chinese market • Science-based skincare
• Effective concentrations • Effective concentrations
of advanced actives of advanced ingredients
• Solutions for hydration, • Proven formulations
anti-ageing and
brightness
5
MANUFACTURING & SERVICES – A TURNKEY SOLUTION
INNOVATIVE CLIENT SOLUTIONS
TURNKEY SOLUTIONS
R&D CAPABILITIES MANUFACTURING CAPABILITIES TECHNOLOGIES &
▪ Recognized skincare A modern 50,000 sqf Health Canada FORMULATIONS
expertise compliant facility in Laval, Québec, Canada. ▪ 2 patented delivery
▪ Analytical chemists and We offer manufacturing with integrated: technologies
formulation experts ▪ In-house R&D ▪ 250+ proprietary
▪ Franz cell for formulation ▪ Supply Chain
formulations
delivery performance
▪ Quality Assurance; and
▪ Quality Control
R&D + technology Needs analysis Ingredient sourcing Processing Packaging Delivery
6
PLIAGLIS IS AN FDA-APPROVED RX PRODUCT
APPROVED IN >25 COUNTRIES
Description • The only FDA-approved, phase-changing, self-occluding topical
anesthetic cream with the highest concentration of 7% Tetracaine
and 7% Lidocaine
• Uses our Peel technology
Indication • Local dermal anesthesia for superficial dermatological procedures
APPLY
Patent Status • Expired in U.S. 9/28/19 • Enhanced Formulations until 2031*
PAUSE
Uses • Dermal filler injections • Laser-assisted tattoo removal
PEEL
• Pulsed-dye laser therapy • Non-ablative laser facial resurfacing
Commercial • Exclusive licensing agreement with :
Status - Taro Pharmaceuticals for U.S. rights; and
- Cantabria Labs for Italy, France, Spain and Portugal
* See Note 4 on slide 10 7
PLIAGLIS® – ACCELERATED RETURNS IN THE U.S.
RX
Business
$6.3M in royalties and milestone
2019+ revenue in 2019
$7.1M - U.S. launch + significant
2018 royalties and milestones
Only FDA-approved,
anesthetic cream with the
$2.7M - Out-licensed to
HIGHEST CONCENTRATION
of Tetracaine and Lidocaine
2017 Taro Pharmaceuticals Inc.
7% / 7%
Reacquired rights from
2015 Galderma S.A. for U.S.,
Canada and Mexico
8
DEAL WITH CANTABRIA LABS IS ACCRETIVE
RX
Business
Double-Digit royalty
2020+ and milestone revenue
Net positive cash impact Out-licensed 4 EU
of $2.7M from up-front April 22 countries to Cantabria Labs
payments in 2019 2019
Reacquired Pliaglis ROW
April 1 rights from Galderma S.A.
Italy – France – Spain – Portugal 2019 Approved for sale in
>25 ROW countries
9
RX PRODUCT PIPELINE
PRE-CLINICAL PHASE 1 PHASE 2 PHASE 3 COMMERCIAL
Enhanced Formulations of Pliaglis4
CTX-1011,2,3
CTX-1021,2,3
1 Crescita is responsible for formulation development / IP and providing its proprietary MMPE™ technology. Development is mainly funded by our partner Ferndale Laboratories and a
leading U.S. Contract Research Organization. Economic benefits to be shared between partners upon out-licensing. In Q2-19, Crescita provided additional funding to support the
advancement of the Phase 3 studies for CTX-101.
2 CTX-101 is a topical corticosteroid for plaque psoriasis. MiCal 2 indication has not yet been disclosed.
3 Patents granted in the U.S. expiring in 2027. Applications pending in Australia, Canada, Europe, Mexico, New Zealand and the U.S. through 2036.
4 Patents granted in Australia, Canada, China, Austria, Belgium, Switzerland, Germany, Spain, France, Great Britain, Greece, Italy, Luxembourg, Netherlands, Poland, Turkey, Hong-
Kong, Japan, Mexico, Russian Federation and the U.S., with latest expiring in 2031. Application pending in Brazil through 2031. 10CTX-101 – PHASE 3 TOPICAL PLAQUE PSORIASIS PRODUCT
CTX-101 USES OUR MMPE™ TECHNOLOGY
• Novel ultra-potent topical corticosteroid product using our MMPE™ technology
• Unique topical dosage form with: (1) rapid absorption into target skin lesions
Description and “dry-down”, (2) ease of application to large target areas via convenient
packaging design, and (3) 4-week treatment duration.
• Ideal for treatment of larger body surface areas
API / Indication • Halobetasol propionate 0.05% • Plaque psoriasis
Terms • Increased penetration of API’s • Possible lower dosing requirements
• Potential for improved efficacy • Easy application and novel packaging
Development Status • Phase 3 in partnership with development partners
The collaboration is a joint venture between Ferndale Laboratories Inc. and a leading
U.S. contract research company to develop two topical dermatology products based on the Company’s
patented MMPE™ technology.
11TOPICAL DELIVERY TECHNOLOGIES USED IN RX & NON-RX
PEEL AND DURAPEEL™
• Phase-changing cream using self-occlusion to deliver actives into or through the skin
• Proven capability with a variety of actives
• Fast drying and extended drug delivery
• Multiple patents with latest expiring in 2027 (DuraPeelTM)
• Can be used for Rx and non-Rx products
• Currently used in Pliaglis (Peel) and dermo-cosmetic portfolio
Peel DuraPeel™
• Single-solvent • Two solvent system (volatile and non-volatile) Potential Dermatological Applications
system • Volatile solvent evaporates resulting in • Acne • Warts
• Currently used flexible patch • Psoriasis • Basal Cell
in Pliaglis • Wound healing Carcinoma (BCC)
• Flexible patch adheres to skin, maintaining
• Anti-viral • Rosacea
drug delivery for desired application time
• Anti-bacterial
12TOPICAL DELIVERY TECHNOLOGIES USED IN RX & NON-RX
MULTIPLEXED MOLECULAR PENETRATION ENHANCER
Description • Uses synergistic combinations of certain specific FDA-approved
(MMPE™) excipients to provide enhanced delivery into or through the skin
• Can be used for Rx and non-Rx products
• Currently used in CTX-101 & 102 & dermo-cosmetic portfolio
Indication / • Wrinkle reduction / anti-aging • Skin lightening
Skincare actives • Firming of skin • Acne / inflammation
• Exfoliation • Moisturizing
Benefits • Increased penetration of API’s • Lower API concentration
• Possible improved efficacy • Possible lower dosing
Patent Status • U.S. Patent until 2027. PCT applications pending – latest in 2036
13WE HAVE AN INTERNATIONAL REVENUE FOOTPRINT
HEADQUARTERS
LAVAL, QC
~70 EMPLOYEES
Represents countries where Crescita currently derives revenue either through direct sales or out-licensing revenues from partners. 14KEY MESSAGES
A repositioned company, Transformation well advanced
now profitable + cash flow & adj. EBITDA
Well-positioned Core assets provide
to grow strong growth platform
Successfully executing
Delivering concrete results
our growth strategy
15OUR HISTORY
Mar-16
COMPANY
Throughout 2017
CREATED Sept-16 REDEFINED
SPIN-OFF from
NUVO Research Inc. ACQUIRED CRESCITA
INTEGA Skin Sciences • New IGNITED CHANGE
• 2 patented
• 3 skincare brands management Apr-17 Out-licensed
technologies
• Plant • New vision Pliaglis U.S.
• Pliaglis – Rx brand
• Commercial & strategy Aug-17 Acquired
• MiCal 1 & 2
infrastructure Alyria®
• Cash
2016: REORGANIZE + STABILIZE 2017: DRIVE CHANGE
16WE ARE REPOSITIONED AND DELIVERING RESULTS
PROFITABILITY & BUILDING MOMENTUM
INNOVATION Apr-19 Signed out-licensing agreement with
FY-18 U.S. launch of Pliaglis by Cantabria Labs for Pliaglis in 4 EU countries
Taro, generating $7.1M Jul-19 USPTO* issued U.S. patent covering enhanced
and overall profit formulation of Pliaglis to 2031
Mar-18 Rights Offering raising Oct-19 Exclusive partnership with Sundial Growers Inc.
$3.5M @ $0.53 to develop cannabis/hemp topicals
Nov-19 U.S. FDA approved enhanced formulation
Nov-18 Launched 5 skincare
of Pliaglis
innovations
2018: SCALE & GROW 2 0 1 9 - 2 0 2 0 : T R A N S FO R M
* USPTO stands for United States Patent and Trademark Office. 17WE CONTINUED TO DELIVER RESULTS
▪ Dec-19 – Repaid long-term debt of $3.6 million to Knight Therapeutics
▪ Jan-20 – Signed exclusive Canadian distribution agreement with Laboratoires FILLMED for the
ART-FILLER® injectables range and (NCTF®)
▪ Jan-20 – Secured Line of Credit with RBC for $3.5M
▪ Jan-20 – Awarded Cannabis Research License from Health Canada
▪ Feb-20 – Announced positive top line results of two pivotal Phase 3 clinical studies for CTX-101,
our lead product candidate for patient with plaque psoriasis
▪ Jly-20 – Amendment to U.S. license Agreement for Pliaglis, entitles CTX to one-time cash
payment of US$3.9 million (~CAD$5.2 million)
18REVENUE CATALYSTS IN RX & TECHNOLOGIES
✓ Anticipated launch
by Sundial Growers
of cannabinoid
products using CTX’s ✓ NCTF® Launch –
MMPE™ technology new revenue stream
(Royalties) in medical aesthetics
2020 – H2 2021 2022-23
✓ Pliaglis launch in ✓ CTX-101 out- ✓ CTX-102 out-
European country by licensing (royalties licensing (royalties
Cantabria (milestone and/or up-fronts) and/or up-fronts)
+ royalties)
✓ Pliaglis ROW
✓ Pliaglis ROW Agreements (up-fronts
Agreements (up- – milestones –
fronts – milestones – royalties)
royalties)
193 YEARS OF STEADY REVENUE GROWTH
In millions of CAD $25 +34.3% Tot: $22.3M*
~14% increase in royalty +38.4%
revenue FY19 vs. FY18
$20
Tot: $16.6M $4.8
$15 Tot: $12.0M
$4.2 $7.3
Milestone & Upfronts >2X $0.5
increase FY19 vs FY18 $10 $3.3 $3.3
~12% increase in $5
$8.1 $9.1 $10.2
product and CDMO sales
FY19 vs FY18 $-
FY2017 FY2018 FY2019
* Includes $5.5 million in up-front ($3.7 million) and
future minimum guaranteed royalties related to the Product and CDMO Sales Milestones & Up-Fronts Royalties & Service Revenue
Cantabria Agreement.
20REVENUE TYPE TREND – LAST 8 QUARTERS
In thousands of CAD
Cantabria Upfront
Commercial Skinare
+ Future min.
Licensing - Royalties Guaranteed
Licensing - Milestones Royalties =
$10,000
Mfg & Services tot: $5.5M
$9,000 $696
Covid Impact
$8,000 + Future min.
Guaranteed
$7,000 $3,721 Royalties $0.4M
$6,000 $826
$5,000
$1,982 $665
$4,000 $653
$728
$2,979 $1,324 $583 $823
$3,000 $1,303 $-
$1,459 $1,321 $988
$1,212 $36 $1,453 $16
$2,000 $1,076 $482
$413
$1,000 $1,937 $1,966 $2,213
$1,432 $1,718 $1,705 $1,539 $1,304
$-
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20
21IMPROVING PROFITABILITY INDICATORS – LAST 4 YRS
In millions of CAD
Adj. EBITDA Cash Flow from Operations
8.0 7.0
5.0 4.0
$7.0 $5.3
2.0 1.0
$1.5
-2.0
-1.0 $(1.5)
-5.0
-4.0 $(4.4) $(7.4)
-8.0 DELIVERED
-7.0 ~$20M POSITIVE
INCREASE -11.0
CASH FLOW
-10.0 IN ADJ. EBITDA IN 2019
-14.0
$(13.4) SINCE 2016
-13.0
-17.0 $(18.6)
-16.0 -20.0
2016* 2017 2018 2019 2016* 2017 2018 2019
*Fiscal 2016 reflects 10 months of operations and 4 months of results from INTEGA.
22ADJ. EBITDA – Q2-20 AND YTD
In millions of CAD
Quarter Year-to-Date
900.0
5,200.0
$5,083 800.0
700.0
$6,039
4,200.0
600.0
3,200.0 500.0
400.0
$(6,708)
2,200.0
300.0 VS. YTD-2019
$(5,864) 200.0
1,200.0 VS. Q2-19
$112 100.0
200.0 0.0
$(669)
$(781) -100.0
-800.0 -200.0
Q2-20 Q2-19 Q1-20 YTD 2020 YTD 2019
23STRONG CASH BALANCE AND DEBT MANAGEMENT
PAID DOWN
LT DEBT WITH In millions of CAD
14 Available Cash and Cash Equivalents Total Debt Obligations $13.0 KNIGHT
THERAPEUTICS
FOR
12
$11.7 $3.6M
$10.9
10
$8.9 $9.3 $9.3 $9.3
$8.2
8
* *
6 $5.1 $5.7 $5.4 $5.4 *
$4.8
*
4
$1.7
*
$1.8
* $1.6
*
2
0
*
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20
* Total debt obligations are defined as the sum of the long and short-term portions of long-term debt, convertible debentures, lease and other
obligations. On January 1, 2019, the Company adopted IFRS 16 – Leases.
24KEY MESSAGES
A repositioned company, Transformation well advanced
now profitable + cash flow & adj. EBITDA
Well-positioned Core assets provide
to grow strong growth platform
Successfully executing
Delivering concrete results
our growth strategy
254 CORE ASSETS TO MAXIMIZE GROWTH
RX Skincare
Technologies CDMO
Business Business
Maximizing MMPE™ 3 skincare brands In-house R&D and
Pliaglis manufacturing
DuraPeel™ / Peel Sold to aesthetic
capabilities
Product Pipeline spas and medical
Used in Rx and
• MiCal1 aesthetic clinics cGMP compliant
Non-Rx Business
• MiCal2
Fully integrated Turnkey solutions
Compatible with
go-to-market
various molecules
Available for export
26PLIAGLIS ROW – SIGNIFICANT UNTAPPED POTENTIAL
RX
Business
>20 ROW GROWTH BD TEAM
countries still available is actively looking
for out-licensing POTENTIAL for partners
Opportunities for
27WE PROVIDE AN EDGE IN TOPICAL CBD PRODUCTS
Technologies Differentiating Factors
✓Supported by scientifically rigorous study
✓Amount of actives delivered to target
tissues can be optimized
✓Local or systemic delivery of actives
✓Strong IP and formulation expertise is
attractive to partners
DURAPEEL: Study demonstrated MMPE:
by 6X increased permeation of CBD by 14X
using our technologies
28SUNDIAL – AN EXCLUSIVE PARTNER IN CANNABIS
Sundial will
Who? ✓ Fund the development and formulation
Sundial Growers Inc. costs and will have the worldwide marketing
is a Canadian licensed & distribution rights for the new products.
producer of cannabis
(Nasdaq: SNDL) ✓ Support CTX in applying for an obtaining
the Health Canada Standard Processing
License for cannabis.
What?
A development and
license agreement granting CTX will
Sundial the worldwide rights ✓ Earn tiered royalties on net worldwide
to CTX’s transdermal delivery sales of newly developed products.
technologies, M2PETM ✓ Retain the right to leverage its IP for its
and DurapeelTM
brands.
29HOW WE WILL GROW OUR SKINCARE BUSINESS
Skincare
Business
1 Expand geographically in U.S and China
2 Increase number of customers throughout Canada
3 Launch innovative products leveraging in-house technologies
4 Strategic M&A transaction
30TARGETING AN ACQUISITION IN MEDICAL AESTHETICS
Skincare Growth Drivers
Business
Acquisition Profile
• Topline of $5-25M CAD
• Immediately accretive to EBITDA
Acquisition • Synergistic
International in Medical
Expansion – Sector • Strategic Business Fit
Asia
- fillers and toxins
Expand - medical devices
Aesthetic Innovation - dermo-cosmetic
Client Base
- prescription dermatology
31IN-HOUSE R&D & PRODUCTION IS A REVENUE DRIVER
CDMO
5 person R&D team › 50,000 Sqf cGMP facility › 4 million units/year capacity
3-YEAR Unutilized
CAGR +29% 75% capacity
32KEY MESSAGES
A repositioned company, Transformation well advanced
now profitable + cash flow & adj. EBITDA
Well-positioned Core assets provide
to grow strong growth platform
Successfully executing
Delivering concrete results
our growth strategy
33HIGHLY COMMITTED MANAGEMENT TEAM
Serge Verreault Jose DaRocha Wade Hull Isabelle Alain Dugal
President & CEO CFO VP Research & VP Manufacturing
Villeneuve
Development VP Strategy Quality & Logistics
+20 years in the pharma +25 years in public
industry. corporations in the & Innovation
+20 years of experience +25 years in operations.
cosmetic and pharma in medical device and
Previously Serge was industries. +30 years of experience
pharmaceutical Much of Alain’s career
Executive Director of and a recognized leader in
development. has been spent in GMP
Business Development at Previously Jose was innovation and market environments including
Valeant Canada and Senior Finance Lead – intelligence, Isabelle has
Previously, Wade held Molson, Kraft, Whitehall
during his tenure served Business Development developed and formulated
similar positions at Nuvo Robins-Pfizer, Groupe
General Manager of at Valeant Canada and over OTC and cosmetic
Research and ZARS Marcelle and Pharmetics
Laboratoire Dr Renaud. Senior Finance Director products in Canada, Europe
Pharma.
at Coty Canada. and the United States. B. Sc. Biochemistry and
BA, MBA
MEng, MBA Molecular Biology
CPA, CA Master’s in Biochemistry
and a Master 2 in Industrial
Pharmacology, specializing
in Cosmetology
34CRESCITA IS WELL-POSITIONED FOR THE FUTURE
Building Disciplined execution of our growth
Credibility strategy has delivered concrete results
Maximizing Leveraging core assets provides a
our Assets strong foundation
Monetize Pliaglis ROW, Expand CDMO,
Executing Key win customers and expand medical
Initiatives aesthetics business
35FINANCIAL SNAPSHOT
STOCK SYMBOL TSX : CTX
Market Cap (as at September 25, 2020 ) $10.5M
Share Price (close as at September 25, 2020 ) $0.51
Shares Outstanding (as at September 25, 2020 ) 20.6M
Fully Diluted Shares Outstanding (June 30, 2020) 21.9M
Knight Therapeutics Inc. Ownership1 9.5%
Bloom Burton Entities Ownership2 ~12.6%
Insider Ownership3 12.0%
1 Knight ownership assuming the exercise of the 396,000 share purchase warrants by Knight only would be 11.0%.
2 Includes separately managed accounts that are not aggregated for regulatory reporting purposes.
3 Insiders include the senior management team and Board of Directors.
36TSX : CTX Thank you
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