Ceapro Inc. Reports 2023 Second Quarter and Six-Month Financial Results and Provides Corporate Update
- $5.5 million first six-month 2023 sales vs. $11.7 million for the same period in 2022; sales lagging by one quarter due to stocking campaign by one major customer in 2022 and further Marketplace reorganization
- Ended the quarter with $11.3 million in cash allowing funding for planned pipeline and technology developments
- Ongoing strategic corporate discussions progressing and continued planning for uplisting to Nasdaq
EDMONTON, Alberta, Aug. 29, 2023 (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 second quarter and six months ended June 30, 2023.
“While sales from the base business are trailing by one quarter for the first half of 2023 as compared to the previous all-time record period last year, we are very encouraged by the significant advancements in new products and technologies development. Further, over the past quarter we remained very active with our activities related to strategic corporate initiatives. Our business remains solid, and we believe we are positioned now for the return of a more consistent re-ordering pattern from one of our major customers. We are also very pleased with the recent signing of an extended supply and distribution agreement reinforcing our relationship with longtime partner Symrise while securing our base business for the upcoming years,” stated Gilles Gagnon, M.Sc., MBA, President and CEO.
Corporate and Operational Highlights
Pipeline Development
The Company’s focus is on avenanthramides, beta glucan from oat and yeast and new chemical complexes/delivery systems.
Clinical Development:
Avenanthramides (AVS)
Formulation:
- Stability studies are ongoing for the 30mg and 240mg pills formulation manufactured, packaged and labeled by Corealis Inc. GMP Manufacturing Services.
Phase 1-2a Clinical Trial:
- Recruitment and enrollment of healthy subjects for Phase 1 is planned for mid-November 2023 upon the complete development of a bioassay for the “live” analytical measurement of avenanthramides in blood and urine during the hospital stay of healthy subjects. Testing AVS in urine has never been done before and this newly developed test requires standardized stability data.
Pre-Clinical Development:
Avenanthramides & Oat Beta Glucan
Wound Healing-Tissue Regeneration:
- Announced positive results from animal studies conducted by the Angiogenesis Foundation. Studies showed statistically significant results characterizing the bioactivity of both Ceapro’s oat-derived bioactive products on wound healing and tissue regeneration. Tissue treated with Avenanthramides (“AV”) and oat beta glucan (“BG”) bioactives at concentration as low as 1% healed to become more like normal skin as compared to untreated scar tissue. These unprecedented results will not only support additional claims for commercially available formulations using Ceapro’s oat-based products but should also trigger interest from medical supply companies.
- Subsequent to the quarter, announced next steps with new studies with the Angiogenesis Foundation to focus on speed of healing and molecular profiling of tissue regeneration induced by oat-derived bioactive products.
Yeast Beta Glucan (YBG) - Potential Inhalo-Therapeutic
- Announced encouraging results from research collaboration study with McMaster University evaluating PGX-processed YBG (PGX-YBG) for interstitial lung diseases. Data presented in May 2023 at two major international conferences (American Thoracic Society in Washington and at the Pharmaceutical Science annual symposium in Toronto) demonstrated that PGX-YBG is respirable and able to safely and reliably reprogram macrophages in the lungs in pre-clinical mouse models.
- Following discussions with experts, while it is desirable to immediately initiate the design of the protocol for a Phase 1 trial, a required next step is to conduct toxicological studies with a contract research organization before presenting a file to Health Authorities for a Phase 1 clinical study to assess PGX-YBG microparticles as a potential much-needed therapeutic option for a broad spectrum of fibrotic lung diseases.
Immune/energy booster:
- Completed specifications for YBG as a natural health product.
- Achieved batch to batch consistency at demo level.
- Ongoing studies for testing and standardization of loading capacity of CoQ10 by YBG which is a requirement for dose selection when assessing safety and efficacy.
Yeast beta glucan is the product that will be used for the PGX scale-up project at pilot scale levels of 50L and 100L vessels.
Technology
Malted Technology (Avenanthramides)
- Successfully achieved the malting procedure for a first batch at small commercial scale level. Obtention of batch-to-batch consistency should allow for the offer of enriched formulations with high concentration of avenanthramides to serve some nutraceutical markets.
Pressurized Gas eXpanded Technology (PGX)
- Fully reassessed the pilot scale-up project. Instead of doing it sequentially from demo scale 10L to pilot 50L and 100L, the pilot scale-up project is now designed to be conducted in parallel in two different locations. The 50 Liters will be installed and tested in Edmonton while the 100 Liters will be developed and tested within the facility of a European based global leader in design, construction and commissioning of high-pressure supercritical processing plants. This approach should save time and money. The 50L should be installed by year-end and commissioned during the first quarter of 2024 while the 100L should be ready during Q3, 2024. Yeast beta glucan will be used for the pilot testing at all levels. Successful results from these experiments would pave the way for commercialization of YBG as an immune booster and as a basis for the construction of a large commercial scale unit in Canada.
Corporate
- Appointed Mr. Michel Regnier as Senior Vice President, Technical Operations. Mr. Regnier is an experienced and respected Operations Executive and Professional Engineer with 20+ years of progressive technical and leadership experience in the medical device, pharmaceutical and aerospace materials manufacturing industries.
- Continued to assess possible corporate strategies to support the accelerated growth of the Company along with stated objective of uplisting to Nasdaq.
Subsequent to the Quarter
- Signed an extended supply and distribution agreement reinforcing vote of confidence and relationship with long time partner, Symrise.
Financial Highlights for the Second Quarter and the Six-Month Period Ended June 30, 2022
- Sales of $1,869,000 for the second quarter of 2023 and $5,364,000 for the first six months of 2023 compared to $5,500,000 and $11,672,000 for the comparative periods in 2022. The decrease in sales revenue for the first 6 months was primarily driven by an overall decrease in sales volume of 61% mainly due to a one-time stocking campaign by one major customer in 2022.
- Net loss after tax of $1,154,000 for the second quarter of 2023 and $1,539,000 for the first six months of 2023 compared to an after-tax net profit of $1,805,000 and $3,618,000 for the comparative periods in 2022.
- Cash used in operations of $2,213,000 for the first six months of 2023 vs cash generated from operations of $3,958,000 in 2022.
- Positive working capital balance of $17,425,000 as of June 30, 2023.
- Cash on hand of $11,306,000 as of June 30, 2023. ($11,368,000 in 2022)
“Despite a slower start to the year, our business remains solid, and we expect the reordering pattern from one major customer to resume shortly. Given our healthy balance sheet and the re-affirmed vote of confidence from our longtime partner Symrise, we will continue to leverage on our base business to enable the development of new products and technologies like the planned Phase 1-2a clinical trial with avenanthramides, the scale-up of the PGX Technology for the development of YBG as an immune modulator and the commercial scale-up of a malting technology to enable the production and selling of enriched oat flour with high concentration of avenanthramides to serve important nutraceutical market segments. The Company expects to complete these projects using cash on hand in 2023 while continuing to assess different, strategic market initiatives to unlock value,” concluded Mr. Gagnon.
| CEAPRO INC. | ||
| Condensed Interim Consolidated Balance Sheets | ||
| Unaudited | ||
| June 30, | December 31, | |
| 2023 | 2022 | |
| $ | $ | |
| ASSETS | ||
| Current Assets | ||
| Cash and cash equivalents | 11,306,260 | 13,810,998 |
| Trade receivables | 1,563,404 | 2,820,300 |
| Other receivables | 77,132 | 64,808 |
| Inventories (note 4) | 5,144,636 | 3,757,040 |
| Prepaid expenses and deposits | 143,961 | 135,133 |
| Total Current Assets | 18,235,393 | 20,588,279 |
| Non-Current Assets | ||
| Investment tax credits receivable | 854,895 | 854,895 |
| Deposits | 76,954 | 76,954 |
| Licences (note 5) | 11,106 | 12,588 |
| Property and equipment (note 6) | 15,304,089 | 16,201,755 |
| Total Non-Current Assets | 16,247,044 | 17,146,192 |
| TOTAL ASSETS | 34,482,437 | 37,734,471 |
| LIABILITIES AND EQUITY | ||
| Current Liabilities | ||
| Accounts payable and accrued liabilities | 424,283 | 1,730,377 |
| Current portion of lease liabilities (note 7) | 386,316 | 370,460 |
| Total Current Liabilities | 810,599 | 2,100,837 |
| Non-Current Liabilities | ||
| Long-term lease liabilities (note 7) | 2,052,972 | 2,248,577 |
| Deferred tax liabilities | 674,772 | 1,095,968 |
| Total Non-Current Liabilities | 2,727,744 | 3,344,545 |
| TOTAL LIABILITIES | 3,538,343 | 5,445,382 |
| Equity | ||
| Share capital (note 8 (b)) | 16,697,712 | 16,694,625 |
| Contributed surplus (note 8 (e)) | 4,905,808 | 4,714,404 |
| Retained earnings | 9,340,574 | 10,880,060 |
| Total Equity | 30,944,094 | 32,289,089 |
| TOTAL LIABILITIES AND EQUITY | 34,482,437 | 37,734,471 |
| CEAPRO INC. | ||||||||
| Condensed Interim Consolidated Statements of Net (Loss) Income and Comprehensive (Loss) Income | ||||||||
| Unaudited | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Restated | Restated | |||||||
| (note 3) | (note 3) | |||||||
| $ | $ | $ | $ | |||||
| Revenue (note 14) | 1,868,758 | 5,500,399 | 5,363,569 | 11,672,023 | ||||
| Cost of goods sold | 798,488 | 1,674,091 | 2,687,461 | 4,131,193 | ||||
| Gross margin | 1,070,270 | 3,826,308 | 2,676,108 | 7,540,830 | ||||
| Research and product development | 926,775 | 543,924 | 1,500,462 | 899,205 | ||||
| General and administration | 1,625,066 | 1,069,275 | 3,146,511 | 1,838,320 | ||||
| Sales and marketing | 13,458 | 9,248 | 21,637 | 14,547 | ||||
| Finance costs (note 10) | 32,644 | 32,175 | 121,444 | 120,210 | ||||
| (Loss) income from operations | (1,527,673 | ) | 2,171,686 | (2,113,946 | ) | 4,668,548 | ||
| Other income (note 11) | (57,389 | ) | (191,841 | ) | (153,264 | ) | (68,803 | ) |
| (Loss) income before tax | (1,470,284 | ) | 2,363,527 | (1,960,682 | ) | 4,737,351 | ||
| Deferred tax (benefit) expense | (315,848 | ) | 558,461 | (421,196 | ) | 1,119,356 | ||
| Total net (loss) income and comprehensive (loss) income for the period | (1,154,436 | ) | 1,805,066 | (1,539,486 | ) | 3,617,995 | ||
| Net (loss) income per common share (note 17): | ||||||||
| Basic | (0.01 | ) | 0.02 | (0.02 | ) | 0.05 | ||
| Diluted | (0.01 | ) | 0.02 | (0.02 | ) | 0.05 | ||
| Weighted average number of common shares outstanding (note 17): | ||||||||
| Basic | 78,253,177 | 77,734,865 | 78,252,514 | 77,710,854 | ||||
| Diluted | 78,253,177 | 78,474,139 | 78,252,514 | 78,405,883 | ||||
| CEAPRO INC. | ||||
| Condensed Interim Consolidated Statements of Cash Flows | ||||
| Unaudited | ||||
| 2023 | 2022 | |||
| Restated | ||||
| (note 3) | ||||
| Six Months Ended June 30, | $ | $ | ||
| OPERATING ACTIVITIES | ||||
| Net (loss) income for the period | (1,539,486 | ) | 3,617,995 | |
| Adjustments for items not involving cash | ||||
| Finance costs | 66,444 | 65,210 | ||
| Depreciation and amortization | 971,183 | 939,191 | ||
| Deferred income tax (benefit) expense | (421,196 | ) | 1,119,356 | |
| Share-based payments | 192,491 | 39,924 | ||
| (730,564 | ) | 5,781,676 | ||
| CHANGES IN NON-CASH WORKING CAPITAL ITEMS | ||||
| Trade receivables | 1,256,896 | (1,267,909 | ) | |
| Other receivables | (12,324 | ) | (44,873 | ) |
| Inventories | (1,387,596 | ) | (418,152 | ) |
| Prepaid expenses and deposits | 35,116 | (7,059 | ) | |
| Accounts payable and accrued liabilities relating to operating activities | (1,307,917 | ) | (20,582 | ) |
| (1,415,825 | ) | (1,758,575 | ) | |
| Net (loss) income for the period adjusted for non-cash and working capital items | (2,146,389 | ) | 4,023,101 | |
| Interest paid | (66,444 | ) | (65,210 | ) |
| CASH (USED IN) GENERATED FROM OPERATIONS | (2,212,833 | ) | 3,957,891 | |
| INVESTING ACTIVITIES | ||||
| Purchase of property and equipment | (72,035 | ) | (239,995 | ) |
| Deposits relating to the purchase of equipment | (43,944 | ) | - | |
| Accounts payable and accrued liabilities relating to investing activities | 1,823 | (47,754 | ) | |
| CASH USED IN INVESTING ACTIVITIES | (114,156 | ) | (287,749 | ) |
| FINANCING ACTIVITIES | ||||
| Stock options exercised | 2,000 | 60,160 | ||
| Repayment of lease liabilities | (179,749 | ) | (143,294 | ) |
| CASH USED IN FINANCING ACTIVITIES | (177,749 | ) | (83,134 | ) |
| (Decrease) increase in cash and cash equivalents | (2,504,738 | ) | 3,587,008 | |
| Cash and cash equivalents at beginning of the period | 13,810,998 | 7,780,989 | ||
| Cash and cash equivalents at end of the period | 11,306,260 | 11,367,997 | ||
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.
For more information contact:
Jenene Thomas
JTC Team, LLC
Investor Relations and Corporate Communications Advisor
T (US): +1 (833) 475-8247
E: czo@jtcir.com
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
Released August 29, 2023