Ceapro Inc. Reports Financial Results for First Quarter 2023 and Provides Corporate Update

– Q1 2023 sales of $3,500,000 vs $6,172,000 in Q1 2022

– Ended the quarter with $12.6 million in cash allowing funding for planned pipeline development

EDMONTON, Alberta, May 25, 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 first quarter ended March 31, 2023.

“Our team significantly advanced toward several key milestones related to new product development as well as strategic corporate initiatives. While sales orders were lower during the first quarter of 2023 as compared to the previous all-time record first quarter in 2022, we continue to leverage our solid base business to enable the development of new products and technologies. The priorities being the assessment of avenanthramides as anti-inflammatory products in a Phase 1-2a clinical trial, the scale-up of our PGX Technology for the development of yeast beta glucan as an immune modulator and the commercial scale-up of a malting technology to enable the production and selling of enriched formulations with high concentration of avenanthramides to serve some nutraceutical market segments. In pursuing our objective to successfully position Ceapro as a biopharmaceutical company, the Company expects to advance these projects using our cash on hand while continuing our discussions to assess different market capitalization initiatives and corporate opportunities to unlock value,” commented Gilles Gagnon, M.Sc., MBA, President and CEO.

Corporate and Operational Highlights

Pipeline Development

Clinical Development:

Avenanthramides

• Protocol for Phase 1-2a clinical trial, “A Double-Blind, Placebo-Controlled, Randomized, Adaptive, First-in-Human Study to Assess Safety, Tolerability, and Pharmacokinetics of Single and Multiple Ascending Oral doses of Avenanthramide,” is ready to go at the Montreal Heart Institute. Full approval was received from the Ethics committee and GMP clinical batches were completed by Corealis. Up to 96 subjects may be included in the study and dosages will escalate from 30 mg to 960 mg according to response. Recruitment is expected to commence in Q2 2023.

Pre-Clinical Development:

Avenanthramides & Oat Beta Glucan

• Announced positive results from animal studies conducted by Angiogenesis Foundation on a wound healing model. Both avenanthramides and oat beta glucan stimulated wound healing in mice, significantly improved the speed and quality of the healing process and decreased scar formation. More specifically, avenanthramides suppressed inflammatory cells and beta glucan promoted epithelial progenitor (stem) cells at the scar level making the treated skin look more normal than the untreated skin. This is a major discovery in tissue regeneration and these results will support additional claims for commercial and new products formulated with Ceapro’s oat-based products.

Yeast Beta Glucan (YBG)

• Subsequent to quarter, announced positive results from research collaboration with McMaster University researchers demonstrating that PGX-processed YBG is respirable and able to safely and reliably reprogram macrophages in the lungs in pre-clinical mouse models. These results mark another step forward to a go/no-go decision for further evaluation of PGX-YBG microparticles in a Phase 1 clinical study as a potential much-needed therapeutic option for a broad spectrum of fibrotic diseases.

Yeast Beta Glucan/Alginate (YBG-ALG)

• Pursued the development of novel drug delivery systems focusing specifically on alginates (ALG) and yeast beta glucan (YBG), generating composites and cross-linked polymers with tuneable properties, which can form strips, pads, masks, or fast-dissolving orodispersible films. Over 100 runs have been performed with PGX YBG-ALG on the PGX Demo scale and these new chemical complexes appear to be currently the most promising commercial application from a cost evaluation and market potential perspective. The Company believes that the exciting results obtained with YBG and/or ALG formulations impregnated with CoQ10 showing superior bioavailability data than commercially available CoQ10 products are appealing for potential licensing partners.

Technology:

• Malted technology(Avenanthramides): Significantly advanced the scale up for the commercial production of enriched formulations with high concentration of avenanthramides to serve some nutraceutical markets.
• Pressurized Gas eXpanded Technology (PGX): Significantly advanced the design of the PGX-100 pilot plant in collaboration with a European specialized engineering firm and equipment manufacturer and with a local Alberta based engineering procurement and contract management firm (EPCM), which can handle the local building modifications, electrical work and regulatory requirements. This project includes three phases: (1) the design, (2) modifications of the building at Agri Food Discovery Place (AFDP) in Edmonton and detailed design and construction of the PGX modular skids; and (3) the installation testing and commissioning of the PGX-100 in the AFDP building which is anticipated to occur in the first half of 2024. The PGX-100 pilot plant will be a major step towards commercialization of products coming from the use of the Technology.

Corporate:

• Ceapro Inc. recognized as a Top 50 TSX Venture Exchange company.
• Pursued licensing discussions with potential partners mostly for YBG-ALG/CoQ10 new chemical entity.
• Subsequent to quarter, 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.

Financial Highlights for the First Quarter Ended March 31, 2023

• Total sales of $3,500,000 for the first quarter of 2023 compared to $6,172,000 for the comparative period in 2022. The decrease compared to last year was primarily due to a significant decrease in product sales of avenanthramides in USA and to postponed shipments of beta glucan to a major Chinese customer.
• Gross margin of 46% in Q1 2023 compared to 64% in Q1 2022 mostly due to inflationary costs and the lower yield derived from the oats used in this quarter as compared to the oats used in the prior quarter which were of exceptionally high quality.
• Net loss of $385,000 in Q1 2023 compared to a net profit of $1,813,000 in Q1 2022. Loss was incurred due to lower sales, increased R&D investments as well as increased G&A expenses mostly due to professional fees incurred for assessments of corporate opportunities.
• Cash on hand of $12.6 million as of March 31, 2023.
• Positive working capital balance of $18,496,554 as of March 31, 2023.

“Despite the fact that inflation is prevailing on all fronts and that sales were mainly impacted by lower orders from USA for avenanthramides, for which we expect the reordering pattern should resume upon completion of re-organization resulting from the spinoff of the consumer division from one major customer, management believes the prospects for the Company remain positive. While we are looking for additional sources of revenues, we feel fortunate to benefit from the support of our long-time partner, Symrise, with whom we have strengthened our relationship in 2022 through the signing of a renewable three-year supply and distribution agreement. This includes minimum annual volumes providing visibility and sustainability of cash flows that will help us to pursue developments and growth opportunities,” concluded Mr. Gagnon.

CEAPRO INC.
Condensed Interim Consolidated Balance Sheets
Unaudited
	March 31,	December 31,
	2023	2022
	$	$
ASSETS
Current Assets
Cash and cash equivalents	12,563,469	13,810,998
Trade receivables	2,911,238	2,820,300
Other receivables	54,419	64,808
Inventories (note 4)	4,245,505	3,757,040
Prepaid expenses and deposits	186,949	135,133
Total Current Assets	19,961,580	20,588,279
Non-Current Assets
Investment tax credits receivable	854,895	854,895
Deposits	76,954	76,954
Licences (note 5)	11,847	12,588
Property and equipment (note 6)	15,741,886	16,201,755
Total Non-Current Assets	16,685,582	17,146,192
TOTAL ASSETS	36,647,162	37,734,471
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued liabilities	1,083,571	1,730,377
Current portion of lease liabilities (note 7)	381,455	370,460
Total Current Liabilities	1,465,026	2,100,837
Non-Current Liabilities
Long-term lease liabilities (note 7)	2,151,394	2,248,577
Deferred tax liabilities	990,620	1,095,968
Total Non-Current Liabilities	3,142,014	3,344,545
TOTAL LIABILITIES	4,607,040	5,445,382
Equity
Share capital (note 8 (b))	16,697,712	16,694,625
Contributed surplus (note 8 (e))	4,847,400	4,714,404
Retained earnings	10,495,010	10,880,060
Total Equity	32,040,122	32,289,089
TOTAL LIABILITIES AND EQUITY	36,647,162	37,734,471

 

CEAPRO INC.
Condensed Interim Consolidated Statements of Net (Loss) Income and Comprehensive (Loss) Income
Unaudited
	2023		2022
			Restated
			(note 3)
Three Months Ended March 31,	$		$
Revenue (note 14)	3,494,811		6,171,624
Cost of goods sold	1,888,973		2,457,102
Gross margin	1,605,838		3,714,522
Research and product development	573,687		355,281
General and administration	1,521,445		769,045
Sales and marketing	8,179		5,299
Finance costs (note 10)	88,800		88,035
(Loss) income from operations	(586,273	)	2,496,862
Other (income) expense (note 11)	(95,875	)	123,038
Loss (income) before tax	(490,398	)	2,373,824
Deferred tax (benefit) expense	(105,348	)	560,895
Total net (loss) income and comprehensive (loss) income for the period	(385,050	)	1,812,929
Net (loss) income per common share (note 17):
Basic	(0.00	)	0.02
Diluted	(0.00	)	0.02
Weighted average number of common shares outstanding (note 17):
Basic	78,251,844		77,686,576
Diluted	78,251,844		78,333,335

 

CEAPRO INC.
Condensed Interim Consolidated Statements of Cash Flows
Unaudited
	2023		2022
			Restated
			(note 3)
Three Months Ended March 31,	$		$
OPERATING ACTIVITIES
Net (loss) income for the period	(385,050	)	1,812,929
Adjustments for items not involving cash
Finance costs	33,800		33,035
Depreciation and amortization	485,253		462,456
Deferred income tax (benefit) expense	(105,348	)	560,895
Share-based payments	134,083		14,914
	162,738		2,884,229
CHANGES IN NON-CASH WORKING CAPITAL ITEMS
Trade receivables	(90,938	)	(1,447,715	)
Other receivables	10,389		(30,108	)
Inventories	(488,465	)	139,629
Prepaid expenses and deposits	(34,397	)	(135,299	)
Accounts payable and accrued liabilities relating to operating activities	(646,806	)	(77,608	)
	(1,250,217	)	(1,551,101	)
Net (loss) income for the period adjusted for non-cash and working capital items	(1,087,479	)	1,333,128
Interest paid	(33,800	)	(33,035	)
CASH (USED IN) GENERATED FROM OPERATIONS	(1,121,279	)	1,300,093
INVESTING ACTIVITIES
Purchase of property and equipment	(24,643	)	(180,897	)
Deposits relating to the purchase of equipment	(17,419	)	-
Accounts payable and accrued liabilities relating to investing activities	-		(47,754	)
CASH USED IN INVESTING ACTIVITIES	(42,062	)	(228,651	)
FINANCING ACTIVITIES
Stock options exercised	2,000		360
Repayment of lease liabilities	(86,188	)	(71,219	)
CASH USED IN FINANCING ACTIVITIES	(84,188	)	(70,859	)
(Decrease) Increase in cash and cash equivalents	(1,247,529	)	1,000,583
Cash and cash equivalents at beginning of the period	13,810,998		7,780,989
Cash and cash equivalents at end of the period	12,563,469		8,781,572

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