Crescita Secures Contract Manufacturing Revenue of $US10 Million Over 4 Years

Rhea-AI Summary

Crescita Therapeutics Inc. (TSX: CTX, OTC US: CRRTF) has secured a contract manufacturing agreement worth US$10 million over 4 years with its largest CMO client, a global skin care company. The agreement, starting in 2025, involves manufacturing selected products from the client's largest franchises, with a minimum commitment of US$2.5 million per year. This deal addresses the uncertainty in Crescita's CMO pipeline announced in November 2023.

Key points:

• The client will reimburse Crescita up to US$1.2 million for unused inventory
• Crescita will invest approximately $0.8 million to upgrade its manufacturing facility
• Technology transfer for new products is expected to be completed by year-end

This agreement strengthens Crescita's position as a preferred supplier and is expected to contribute significantly to achieving and sustaining profitability.

Positive

• Secured US$10 million contract manufacturing agreement over 4 years
• Minimum commitment of US$2.5 million per year from 2025
• Reimbursement of up to US$1.2 million for unused inventory
• Strengthened position as preferred supplier for key products
• Expansion of partnership expected to contribute to achieving profitability

Negative

• Required capital investment of $0.8 million for facility upgrades
• Previous cancellation of certain purchase orders by the client

LAVAL, Quebec--(BUSINESS WIRE)-- Crescita Therapeutics Inc. (TSX: CTX and OTC US: CRRTF) (“Crescita” or the “Company”), a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house R&D and manufacturing capabilities, today announced the signing of an amendment to its contract manufacturer supply agreement (the “Amended Agreement”) with its largest CMO client (the “Client”), a global skin care company. The Amended Agreement expands the existing partnership between Crescita and the Client and is the result of ongoing discussions since the Company announced uncertainty in its CMO pipeline in November 2023, causing the cancellation of certain purchase orders by the Client.

Under the terms of the Amended Agreement, Crescita will manufacture selected products form the Client’s largest product franchises (the “New Products”), representing a minimum commitment of US$2.5 million per year during a four-year term, starting in 2025. Manufacturing volumes for the New Products will, in part, make up for previously cancelled purchase orders. The Client will support Crescita in the technology transfer for the manufacture, packaging and labeling of the New Products, which is anticipated to be completed before the end of the year.

In connection with the cancelled purchase orders and subject to certain conditions, the Client will reimburse Crescita an amount of up to US$1.2 million, mainly for the cost of unused inventory. In addition, to meet the New Products’ specifications and scale up its operations, Crescita will make certain capital investments, totaling approximately $0.8 million, to upgrade its manufacturing facility with specialized equipment by the end of the year.

“We are thrilled with the successful outcome of our discussions with the Client, securing our position as one of their preferred suppliers for key products in their largest franchises and strengthening our longstanding business relationship,” commented Serge Verreault, President and Chief Executive Officer of Crescita. “The expansion of our partnership sets a strong foundation of recurring revenue for Crescita and will be pivotal in achieving and sustaining profitability. We are confident that this opportunity represents a stepping stone for future mutually beneficial collaborations with the Client,” added Mr. Verreault.

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

All information in this press release, other than statements of current and historical fact, represents forward-looking information within the meaning of applicable securities laws and is qualified by this cautionary note. Forward-looking information can be identified by words such as: “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “aim”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “may”, “should”, “will”, “forecast”, and similar references to future periods. Forward-looking information in this press release includes but is not limited to statements with respect to the actual amounts reimbursed to Crescita for unused inventory in connection with the cancelled purchase orders, the successful and timely technology transfer of the manufacture, packaging and labeling of the New Products and Crescita’s ability to meet the New Products’ specifications.

Forward-looking information is neither historical fact nor an assurance of future performance. Instead, it is based only on current beliefs, expectations, and assumptions regarding the future of the Company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.

Because forward-looking information relates to the future, it is 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.

Actual results may differ materially from those indicated in forward-looking information. Therefore, you should not unduly rely on any forward-looking information. Important factors and risks that could cause actual results to differ materially from those indicated in forward-looking information include, among others:

• economic and market conditions including factors impacting global supply chains such as pandemics and geopolitical conflicts and tensions;
• the impact of inflation and fluctuating interest rates;
• the degree or lack of market acceptance of the New Products;
• reliance on third parties for marketing and distribution;
• the impact of changing conditions in the regulatory environment and product development processes;
• manufacturing, technology transfer and supply risks;
• the Company’s ability to meet its contractual obligations;
• the impact of product liability matters;
• the impact of litigation involving the Company and/or the New Products;
• the impact of changes in relationships with the Client;
• developments and changes in applicable laws and regulations;

As a result of the foregoing and other factors, no assurance can be given that future results, levels of activity or achievements indicated in any forward-looking information will actually be achieved. Any forward-looking information in this press release is based only on information currently available to management and speaks only as of the date on which it is provided. Except as required by applicable securities laws, Crescita 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240722421887/en/

FOR MORE INFORMATION, PLEASE CONTACT:



Investor Relations

Linda Kisa, CPA, CA

Vice-President, Reporting and Corporate Affairs

Email: lkisa@crescitatx.com

Source: Crescita Therapeutics

FAQ

What is the value of Crescita's new contract manufacturing agreement?

Crescita Therapeutics (CRRTF) has secured a contract manufacturing agreement worth US$10 million over 4 years, with a minimum commitment of US$2.5 million per year starting in 2025.

How will Crescita be compensated for cancelled purchase orders?

The client will reimburse Crescita up to US$1.2 million, mainly for the cost of unused inventory related to previously cancelled purchase orders.

What investments will Crescita make to support the new agreement?

Crescita will invest approximately $0.8 million to upgrade its manufacturing facility with specialized equipment by the end of the year to meet new product specifications and scale up operations.

When will the new contract manufacturing agreement with Crescita (CRRTF) begin?

The new contract manufacturing agreement for Crescita Therapeutics (CRRTF) will start in 2025 and run for a four-year term.