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Ceapro Inc. Reports Financial Results for First Quarter 2024 and Provides Corporate Update

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Ceapro Inc. reported its Q1 2024 financial results, showing a decrease in sales to $2.8 million from $3.5 million in Q1 2023. The company highlighted significant progress in R&D, particularly in its Phase 1 clinical study for avenanthramides and the scale-up of PGX technology. The company announced a merger with Aeterna Zentaris, expected to finalize in Q2 2024. The company's gross margin dropped to 44% from 46%, and net loss widened to $1.9 million from $385,000 year-over-year, due to lower sales and increased R&D and G&A expenses. Ceapro maintains a positive working capital of $10.2 million as of March 31, 2024.

Looking ahead, Ceapro aims to complete key projects using its cash reserves and capitalize on the merger benefits.

Positive
  • Significant progress in R&D projects for avenanthramides and PGX technology.
  • Gross margin of 44% in Q1 2024.
  • Positive working capital balance of $10.2 million as of March 31, 2024.
  • Merger with Aeterna Zentaris anticipated to finalize in Q2 2024, offering potential growth.
Negative
  • Q1 2024 sales decreased to $2.8 million from $3.5 million in Q1 2023.
  • Net loss increased to $1.9 million from $385,000 year-over-year.
  • Gross margin decreased from 46% in Q1 2023 to 44% in Q1 2024.
  • Higher costs to produce avenanthramides and increased G&A expenses.

Q1 2024 marked by significant advancement of R&D projects focused on avenanthramide Phase 1-2a clinical study and the processing of yeast beta glucan along with the building of pilot scale units for PGX Technology

Q1 2024 sales of $2,800,000 vs $3,500,000 in Q1 2023

– Announced approval by shareholders of merger of equals with Aeterna Zentaris to create a diversified biopharmaceutical company; expected to close in the second quarter of 2024, subject to the closing conditions

EDMONTON, Alberta, May 29, 2024 (GLOBE NEWSWIRE) -- Ceapro Inc. (TSX-V: CZO; OTCQX: CRPOF) (“Ceapro” or the “Company”), a growth-stage biotechnology company focused on the development and commercialization of active ingredients for healthcare and cosmetic industries, today announced financial results and operational highlights for the first quarter ended March 31, 2024.

“We are excited by the advancement of several key milestones related to new product and technology development. We are making progress on multiple fronts including the team at Montreal Heart Institute completing the first arm of the Phase 1 clinical study with avenanthramides and the team at Ceapro working to complete the scale-up of the PGX Technology at the Edmonton facility using fully defined yeast beta glucan. With the return of the re-ordering pattern from one major customer and the expected shared benefits that should result from the upcoming merger of equals with Aeterna Zentaris, we believe we are poised to significantly propel the Company into its next phase of growth and unlock value as a diversified biopharmaceutical company,” stated Gilles Gagnon, M.Sc., MBA, President and CEO of Ceapro.

Corporate and Operational Highlights

Pipeline Development

Focus maintained on the development of avenanthramides and the scale-up of the PGX Technology

Avenanthramides:

Clinical

  • Significantly advanced the Phase 1 safety and tolerability study with healthy volunteers at Montreal Heart Institute (MHI):
    • The first arm of the single ascending dose (SAD) phase of the study has been completed. 6 groups of 8 subjects per group received doses ranging from 30mg to 960mg per group per day. No significant adverse reactions have been observed during this SAD phase. Based on full report to be completed shortly, members of the Data Safety Monitoring Board will decide on conducting the next step of the Phase 1 study consisting of three additional groups of 8 subjects per group where each subject will receive multiple ascending dose (MAD). The Company expects to initiate the MAD arm during the summer 2024. This is the first-in-human clinical study to assess safety, tolerability, and pharmacokinetics of single and multiple ascending oral doses of avenanthramides.

Formulation, Stability Studies and Analytics

  • Additional GMP clinical batches of the selected 30mg and 240mg pills formulation of the drug product were manufactured by Corealis Inc. GMP Manufacturing Services (“Corealis”). Stability studies for the pills are ongoing.
  • Bioassays for the detection of avenanthramides in the blood and urine successfully developed and standardized. Ceapro is the owner of these bioassays currently used for the pharmacokinetics profile of avenanthramides.

Yeast Beta Glucan (YBG)

Specifications have been standardized and the product is being used for the PGX scale-up projects in Edmonton and Austria.

Technology:

Pressurized Gas eXpanded Technology (PGX):

  • Edmonton Main Facility – PGX Scale-Up 50 Liters Vessel: Construction and installation were completed during Q1 2024. Several trial runs of yeast beta glucan have been performed as part of the last commissioning “fine tuning” phase. Given that the Edmonton site license is for natural products, yeast beta glucan produced from this facility will be offered as a nutraceutical. Subject to approval by Health Canada, this product could be launched by end of 2024.
  • Natex Facility, Austria – PGX Scale-Up 100 Liters Vessel: The project is on schedule. Commissioning is expected to be completed by end of Q3 2024.

Corporate:

  • Announced on March 12, 2024 approval of merger with Aeterna Zentaris by Securityholders at special meeting.
  • Received on March 28, 2024 the final court approval for merger with AeternaZentaris to create a diversified biopharmaceutical company; expected to close in the second quarter of 2024; subject to the closing conditions.

Financial Highlights for the First Quarter Ended March 31, 2024

  • Total sales of $2,800,000 for the first quarter of 2024 compared to $3,500,000 for the comparative quarter in 2023. The decrease compared to last year was primarily due to a significant decrease in product sales of oat oil. One major customer is gradually resuming ordering pattern with flagship product, avenanthramides.
  • Gross margin of 44% in Q1 2024 compared to 46% in Q1 2023 mostly due to higher costs to produce avenanthramides which represented most of the sales during Q1 2024.
  • Net loss of $1,900,000 in Q1 2024 compared to a net loss of $385,000 in Q1 2023. Loss was incurred due to lower sales, increased R&D investments as well as non-recurrent increased G&A expenses mostly due to professional fees incurred for the expected merger with Aeterna Zentaris.
  • Positive working capital balance of $10,219,022 as of March 31, 2024.

“As we expect renewed growth with our active ingredients revenue generating base business and subject to the closing and successful integration of the merger with Aeterna Zentaris, the Company expects to complete prioritized projects using cash on hand while continuing to assess different market initiatives to bring new business and unlock value,” concluded Mr. Gagnon.

 
CEAPRO INC.
Condensed Interim Consolidated Balance Sheets
Unaudited
      
  March 31, December 31, 
  2024 2023 
  $ $ 
ASSETS     
Current Assets     
Cash 4,746,901 8,843,742 
Trade receivables 1,677,934 167,295 
Other receivables 204,911 216,763 
Inventories (note 3) 4,778,701 5,308,987 
Prepaid expenses and deposits 485,826 310,191 
Total Current Assets 11,894,273 14,846,978 
Non-Current Assets     
Restricted cash 10,000 10,000 
Investment tax credits receivable 984,200 984,200 
Deposits 74,369 74,369 
Licences (note 4) 8,884 9,625 
Property and equipment (note 5) 15,783,093 15,421,884 
Deferred tax assets 654,850 98,778 
Total Non-Current Assets 17,515,396 16,598,856 
TOTAL ASSETS 29,409,669 31,445,834 
LIABILITIES AND EQUITY     
Current Liabilities     
Accounts payable and accrued liabilities 1,273,963 1,342,156 
Current portion of lease liabilities (note 6) 401,288 396,232 
Total Current Liabilities 1,675,251 1,738,388 
Non-Current Liabilities     
Long-term lease liabilities (note 6) 1,750,106 1,852,345 
Total Non-Current Liabilities 1,750,106 1,852,345 
TOTAL LIABILITIES 3,425,357 3,590,733 
Equity     
Share capital (note 7 (b)) 16,721,867 16,721,867 
Contributed surplus 4,982,466 4,963,067 
Retained earnings 4,279,979 6,170,167 
Total Equity 25,984,312 27,855,101 
TOTAL LIABILITIES AND EQUITY 29,409,669 31,445,834 


CEAPRO INC.
Condensed Interim Consolidated Statements of Net Loss and Comprehensive Loss
Unaudited
    
  2024 2023 
Three Months Ended March 31, $ $ 
Revenue (note 13) 2,773,788 3,494,811 
Cost of goods sold 1,555,382 1,888,973 
Gross margin 1,218,406 1,605,838 
Research and product development 1,432,824 573,687 
General and administration 2,229,528 1,521,445 
Sales and marketing 4,559 8,179 
Finance costs (note 9) 84,419 88,800 
Loss from operations (2,532,924)(586,273)
Other income (note 10) (86,664)(95,875)
Loss before income taxes (2,446,260)(490,398)
Deferred tax benefit (556,072)(105,348)
Net loss and comprehensive loss for the period (1,890,188)(385,050)
Net loss per common share (note 16):   
Basic (0.02)(0.00)
Diluted (0.02)(0.00)
Weighted average number of common shares outstanding (note 16):   
Basic 78,293,177 78,251,844 
Diluted 78,293,177 78,251,844 


CEAPRO INC.
Condensed Interim Consolidated Statements of Cash Flows
Unaudited
    
  2024 2023 
Three Months Ended March 31, $ $ 
OPERATING ACTIVITIES   
Net loss for the period (1,890,188)(385,050)
Adjustments for items not involving cash   
Finance costs 29,419 33,800 
Depreciation and amortization 484,351 485,253 
Deferred income tax benefit (556,072)(105,348)
Share-based payments 19,399 134,083 
  (1,913,091)162,738 
CHANGES IN NON-CASH WORKING CAPITAL ITEMS   
Trade receivables (1,510,639)(90,938)
Other receivables 11,852 10,389 
Inventories 530,286 (488,465)
Prepaid expenses and deposits (161,825)(34,397)
Accounts payable and accrued liabilities relating to operating activities (165,513)(646,806)
  (1,295,839)(1,250,217)
Net loss for the period adjusted for non-cash and working capital items (3,208,930)(1,087,479)
Interest paid (29,419)(33,800)
CASH USED IN OPERATIONS (3,238,349)(1,121,279)
INVESTING ACTIVITIES   
Purchase of property and equipment (747,499)(24,643)
Deposits relating to the purchase of equipment (13,810)(17,419)
CASH USED IN INVESTING ACTIVITIES (761,309)(42,062)
FINANCING ACTIVITIES   
Stock options exercised - 2,000 
Repayment of lease liabilities (97,183)(86,188)
CASH USED IN FINANCING ACTIVITIES (97,183)(84,188)
Decrease in cash (4,096,841)(1,247,529)
Cash at beginning of the period 8,843,742 13,810,998 
Cash at end of the period 4,746,901 12,563,469 
    

The complete financial statements are available for review on SEDAR at https://sedar.com/Ceapro and on the Company’s website at www.ceapro.com.

About Ceapro Inc.

Ceapro Inc. is a Canadian biotechnology company involved in the development of proprietary extraction technology and the application of this technology to the production of extracts and “active ingredients” from oats and other renewable plant resources. Ceapro adds further value to its extracts by supporting their use in cosmeceutical, nutraceutical, and therapeutics products for humans and animals. The Company has a broad range of expertise in natural product chemistry, microbiology, biochemistry, immunology and process engineering. These skills merge in the fields of active ingredients, biopharmaceuticals and drug-delivery solutions. For more information on Ceapro, please visit the Company’s website at www.ceapro.com.

Forward-looking information

The information in this news release has been prepared as at May 29, 2024. Certain statements made herein, including statements relating to matters that are not historical facts and statements of the Company’s beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information relates to future events or future performance, reflect current expectations or beliefs regarding future events and is typically identified by words such as “aim”, “anticipate”, “assume”, “believe”, “continue”, “could”, “expect”, “forecast”, “future”, “intend”, “maintain”, “may”, “outlook”, “plan”, “potential”, “project”, “synergies”, “will”, and similar expressions suggesting future outcomes or statements regarding an outlook.

Forward-looking information is based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of the Company or the combined company to be materially different from future results, performance or achievements expressed or implied by such information. There can be no assurance that such information will prove to be accurate. Such information being based on numerous assumptions.

Readers are cautioned not to place undue reliance on forward-looking information, which speak only as of the date made. For a more detailed discussion of such risks and other factors that may affect Ceapro’s ability to achieve the expectations set forth in the forward-looking information contained in this news release, see Ceapro’s management information circular dated February 9, 2024, MD&A filed under Ceapro’s profile on SEDAR+ at www.sedarplus.ca, as well as Ceapro’s other filings with the Canadian securities regulators. Other than as required by law, the Company does not intend, and does not assume any obligation to, update the forward-looking information in this news release.

For more information contact:

Issuer:
Gilles R. Gagnon, M.Sc., MBA
President & CEO
T: 780-421-4555

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


FAQ

What were Ceapro's Q1 2024 sales?

Ceapro's Q1 2024 sales were $2.8 million, down from $3.5 million in Q1 2023.

What caused Ceapro's increase in net loss in Q1 2024?

Ceapro's net loss increased due to lower sales, increased R&D investments, and higher G&A expenses.

What is the status of Ceapro's merger with Aeterna Zentaris?

The merger with Aeterna Zentaris has been approved by shareholders and is expected to close in Q2 2024.

What were Ceapro's gross margins in Q1 2024?

Ceapro's gross margins were 44% in Q1 2024, down from 46% in Q1 2023.

How did Ceapro's R&D progress in Q1 2024?

Ceapro made significant advancements in its Phase 1 clinical study for avenanthramides and in scaling up PGX technology.

CEAPRO INC

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13.31M
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Biotechnology
Healthcare
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United States of America
Edmonton