Mr. Serge Verreault reports

CRESCITA REPORTS FIRST QUARTER 2024 RESULTS

Crescita Therapeutics Inc. has released its financial results for the first quarter ended March 31, 2024 (Q1 2024). All amounts presented are in thousands of Canadian dollars unless otherwise noted, and in accordance with international financial reporting standards (IFRS), as issued by the International Accounting Standards Board.

Financial highlights

Q1 2024 versus Q1 2023:

• Revenue was $4,996 compared with $4,602, up $394;
• Gross profit was $2,411 compared with $2,736, down $325;
• Operating expenses were $3,142 compared with $2,972, up $170;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $325 compared with $161, down $486;
• Ending cash was $9,531, up $146 for the quarter.

Commenting on the company's results for the first quarter of 2024, Serge Verreault, Crescita's president and chief executive officer, said:

"Our skin care segment continues to represent a strong commercial focus and reflects the impacts of the Art Filler launch and growth in on-line sales. During the quarter, we fulfilled a previously deferred purchase order in our manufacturing segment, which mainly drove the quarter's incremental volumes and the 8.6 per cent improvement in our top-line sales year-over-year.

"We continue to advance discussions for a new commercial partnership for Pliaglis in the U.S., and to support our international Pliaglis licensees in recent and upcoming launches, including Poland and the Middle East. With a solid balance sheet, we are poised to take advantage of growth opportunities and return Crescita to profitability."

Operational and corporate developments

Update on licensing agreement for Pliaglis in China:

• In April, 2024, the National Medical Products Administration (NMPA, formerly the China Food and Drug Administration (CFDA)) confirmed the need for a local clinical trial to support the registration of Pliaglis in China. The company's licensing partner, Juyou Bio-Technology Co. Ltd., has initiated plans to finalize the protocol for the clinical trial and to manufacture the required test articles. Juyou is presently assessing the timeline for the clinical trial, subsequent registration stages and the projected launch date. Under the commercialization and development licence agreement entered into in November, 2020, Juyou is responsible for and shall bear all expenses related to obtaining regulatory approval in China and conducting the required clinical trials. Crescita will supply Pliaglis at a predetermined transfer price, including a profit margin, and is eligible for potential regulatory and sales milestones that could exceed $2.2-million (U.S.), as well as for tiered double-digit royalties should the product's retail price surpass specified threshold amounts.

Repurchases under the company's normal course issuer bid (NCIB):

• In Q1 2024, Crescita repurchased 166,508 common shares through its NCIB at a weighted-average purchase price per share of 47 cents for total cash consideration of $78.

Q1 2024 summary financial results

Note: Select financial information is outlined herein and should be read in conjunction with Crescita's condensed consolidated interim financial statements, and related management's discussion and analysis (MD&A) for the three months ended March 31, 2024, which are available on Crescita's profile on SEDAR+ and on Crescita's website.

Revenue

Crescita has three reportable segments: (1) commercial skin care, which manufactures the company's branded non-prescription skin care products for sale in Canada and certain international markets, and also commercializes Pliaglis, NCTF Boost 135 HA, Art Filler and Obagi Medical in Canada; (2) licensing and royalties, which currently derives revenue from licensing the company's intellectual property related to Pliaglis; and (3) manufacturing and services, which generates revenue from contract manufacturing and product development services.

For the three months ended March 31, 2024, total revenue was $4,996 compared with $4,602 for the three months ended March 31, 2023. The year-over-year increase of $394 was primarily driven by incremental revenue in Crescita's manufacturing segment in the amount of $372, mainly due to the fulfilment of a previously deferred purchase order initially scheduled for delivery in the second half of 2023, and reflects pricing concessions on volume. Skin care sales remained essentially flat year-over-year, posting a slight increase of $43, while licensing segment revenue was nil for the quarter.

Gross profit and gross margin

For the three months ended March 31, 2024, gross profit was $2,411, representing a gross margin of 48.3 per cent, compared with $2,736 and 59.5 per cent, respectively, for the three months ended March 31, 2023. The net decreases in gross profit and gross margin of $325 and 11.2 per cent, respectively, were primarily a result of pricing concessions in the company's manufacturing segment relating to a purchase order deferred from 2023 into Q1 2024.

Operating expenses

For the three months ended March 31, 2024, total operating expenses were $3,142 compared with $2,972 for the three months ended March 31, 2023, representing a net increase of $170. The increase was mainly driven by higher SG&A (selling, general and administrative) expenses of $150, primarily due to higher headcount-related expenses and commercial partnership fees to support the company's digital strategy, partly offset by lower advertising and promotion spend.

Cash and cash equivalents

Cash and cash equivalents were $9,531 at March 31 2024, reflecting a net increase of $146 for the quarter, mainly due to a favourable net change in non-cash working capital.

About Crescita Therapeutics Inc.

Crescita is a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house research and development and manufacturing capabilities. The company offers a portfolio of high-quality, science-based non-prescription skincare products and early-to-commercial-stage prescription products. It also owns multiple proprietary transdermal delivery platforms that support the development of patented formulations to facilitate the delivery of active ingredients into or through the skin.

We seek Safe Harbor.