$10M 4 yr contract Crescita Secures Contract Manufacturing Revenue of $US10 Million Over 4 Years
LAVAL, Quebec--(BUSINESS WIRE)--July 22, 2024--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.