Ceapro Inc. Reports 2021 Third Quarter and Nine-Month Financial Results and Operational Highlights

– Increased R&D activities focused on the completion of a clinical trial for oat beta glucan as a potential cholesterol reducer and on the development of yeast beta glucan as a potential inhalable therapeutic for COVID-19 –

Q3 2021 record sales of $4,523,000 compared to $3,476,000 for Q3 2020, representing a 30% increase –

– Net profit of $875,000 for Q3 2021 vs. net profit of $192,000 for Q3 2020, a 356% increase –

Achieved record production levels despite COVID-19 pandemic situation –

EDMONTON, Alberta, Nov. 17, 2021 (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 third quarter and the first nine months ended September 30, 2021.

“Progress continues on all fronts from production operations to research and development, allowing us to advance our pipeline while expanding our business model. We are extremely proud of our employees who worked tirelessly since the beginning of the year to maintain operations and deliver these very solid results despite the COVID-19 pandemic. As we continue to move forward, our focus remains on the health and safety of our associates, followed by business continuity,” stated Gilles Gagnon, M.Sc., MBA, President and CEO.

Corporate and Operational Highlights

Pipeline Development:

  • Pursued the development of new PGX-dried chemical complexes for potential applications under various forms like pills, capsules, fast dissolving strips and face masks. Alginate and yeast beta glucan to become key products of Ceapro’s portfolio.
  • Resumed bioavailability studies with University of Alberta for new chemical complexes yeast beta glucan-CoQ10, alginate-CoQ10 and newly formed alginate yeast beta glucan-CoQ10.
  • Announced research agreement with Boston-based Angiogenesis Foundation to assess in vivo bioefficacy of oat beta glucan and avenanthramides in angiogenesis, blood vessel repairs, wound healing and tissue regeneration in various inflammation-based diseases and conditions like COVID-19 presenting damages of the lung blood vessels.
  • Expanded collaboration with Montreal Heart Institute to initiate a Phase 1 clinical trial to assess safety and tolerability of pharmaceutical grade avenanthramides powder formulation.
  • Conducting in vivo studies with McMaster University with yeast beta glucan as a potential inhalable therapeutic.

Technology:

  • Pursued installment in Edmonton of a commercial scale unit for impregnation of bioactives with PGX-processed biopolymers.
  • Ongoing engineering design for PGX processing commercial unit.

Production Operations:

  • Achieved record levels with production of over 70 MT of finished products during the last quarter reliably providing our customers essential high quality products.

Subsequent to Quarter:

  • Announced discovery of a new mechanism of action for PGX processed yeast beta glucan (PGX-YBG) as a potential inhalable therapeutic for lung fibrotic diseases including COVID-19 patients.
    • PGX-YBG binds to specific receptors (Dectin 1) located on macrophages responsible for the cascade of immunomodulating events when activated.
    • McMaster’s research team demonstrates ability of PGX-YBG to reprogram macrophages on its own.
  • Reported preliminary results from clinical trial evaluating oat beta glucan in patients with high cholesterol levels. The study did not achieve the expected primary endpoint related to a decrease of low-density lipoproteins cholesterol when using Ceapro’s pill dosage form. While there was no statistically significant difference between the placebo group and the different dosages of beta glucan, there were positive signals that beta glucan nutraceutical formulation may offer appreciable health benefits as indicated with approved Health Canada’s beta glucan monograph (Natural Product Division)

Financial Highlights for the Third Quarter and Nine-Month Period Ended September 30, 2021

  • Total sales of $4,523,000 for the third quarter of 2021 and $13,633,000 for the first nine months of 2021 compared to $3,476,000 and $12,415,000 for the comparative periods in 2020. The 10% increase in sales for the first nine months is mainly due to a significant increase in sales of avenanthramides in the USA compared to the same period in 2020.
  • Net profit of $875,000 for the third quarter of 2021 and $2,067,000 for the first nine months of 2021 compared to a net profit of $192,000 and $2,395,000 for the comparative periods in 2020. Increased net profit for the third quarter of 2021 comes from improved margin of 65.2% as compared to 47.8% in 2020. Improved margins in 2021 result from the buying of excellent source material and from the diligent work of highly skilled personnel operating in only one site as compared to two sites in 2020.
  • R&D investments were $1,400,000 for Q3 2021 compared to $479,000 for the same period in 2020. The significant increase being due to payments made to Montreal Heart Institute for a clinical trial for the assessment of oat beta glucan as a potential cholesterol reducer by almost $1.0 million during Q3 2021.
  • Cash flows generated from operations of $2,837,000for the first nine months in 2021 vs $4,777,000 in 2020.
  • Positive working capital balance of $10,367,000 as of September 30, 2021.

“Looking ahead, while considering the ongoing potential economic impact related to COVID-19, evolving consumption trends and escalating inflationary levels we believe Ceapro is well-positioned to once again deliver a strong growth in sales well in line with the positive trend achieved over the last years. While we have experienced a “bump in the road” with the beta glucan trial, our solid base business and expanded pipeline will enable us to pursue the expansion of our business model to the nutraceutical sector with avenanthramides and yeast beta glucan for which we are going to conduct more preclinical assays before investing at large scale levels. With a strong balance sheet, a group of dedicated people, and a solid base business, coupled with the innovative technologies and products that we have developed to enable us to expand, Ceapro is poised to emerge as a successful life science company,” concluded Mr. Gagnon.

         
CEAPRO INC.        
Condensed Interim Consolidated Balance Sheets        
Unaudited        
         
  September 30,   December 31,  
  2021   2020  
  $   $  
         
ASSETS        
Current Assets        
Cash and cash equivalents 7,410,214   5,369,029  
Trade receivables 2,716,058   2,019,723  
Other receivables 39,522   102,224  
Inventories (note 3) 1,532,271   1,210,079  
Prepaid expenses and deposits 133,760   348,845  
         
Total Current Assets 11,831,825   9,049,900  
         
Non-Current Assets        
Investment tax credits receivable 607,700   607,700  
Deposits 82,124   82,124  
Licences (note 4) 16,292   18,514  
Property and equipment (note 5) 17,776,791   18,591,189  
Deferred tax assets 874,304   874,304  
         
Total Non-Current Assets 19,357,211   20,173,831  
         
TOTAL ASSETS 31,189,036   29,223,731  
         
LIABILITIES AND EQUITY        
Current Liabilities        
Accounts payable and accrued liabilities 1,097,645   1,067,622  
Current portion of lease liabilities (note 6) 286,608   250,658  
Current portion of CAAP loan (note 8) 80,811   72,263  
         
Total Current Liabilities 1,465,064   1,390,543  
         
Non-Current Liabilities        
Long-term lease liabilities (note 6) 2,432,682   2,648,917  
Deferred tax liabilities 874,304   874,304  
         
Total Non-Current Liabilities 3,306,986   3,523,221  
         
TOTAL LIABILITIES 4,772,050   4,913,764  
         
Equity        
Share capital (note 7 (b)) 16,557,401   16,511,067  
Contributed surplus (note 7 (e)) 4,676,456   4,682,393  
Retained earnings 5,183,129   3,116,507  
         
Total Equity 26,416,986   24,309,967  
         
TOTAL LIABILITIES AND EQUITY 31,189,036   29,223,731  

CEAPRO INC.
Condensed Interim Consolidated Statements of Net Income and Comprehensive Income
Unaudited
     
  Quarters   Nine Months  
  Ended September 30,   Ended September 30,  
  2021   2020   2021   2020  
  $   $   $   $  
           
Revenue (note 14) 4,522,980   3,475,625   13,633,354   12,414,970  
Cost of goods sold 1,573,655   1,814,080   5,787,608   5,794,573  
           
Gross margin 2,949,325   1,661,545   7,845,746   6,620,397  
           
Research and product development 1,403,186   478,993   3,050,544   1,381,332  
General and administration 766,605   791,217   2,431,659   2,494,514  
Sales and marketing 4,957   12,395   34,557   89,830  
Finance costs (note 11) 37,684   43,066   169,938   189,258  
           
Income from operations 736,893   335,874   2,159,048   2,465,463  
           
Other (expenses) income (note 10) 138,381   (144,251 ) (92,426 ) (70,746 )
           
Income before tax 875,274   191,623   2,066,622   2,394,717  
           
Income taxes        
           
Total comprehensive income for the period 875,274   191,623   2,066,622   2,394,717  
           
Net income per common share (note 17):          
Basic 0.01   0.00   0.03   0.03  
Diluted 0.01   0.00   0.03   0.03  
           
Weighted average number of common shares outstanding (note 17):          
Basic 77,684,017   77,610,113   77,669,747   77,585,679  
Diluted 78,740,532   78,700,415   78,694,469   78,039,105  

CEAPRO INC.
Condensed Interim Consolidated Statements of Cash Flows
Unaudited
     
  2021   2020  
Nine Months Ended September 30, $   $  
OPERATING ACTIVITIES    
Net income for the period 2,066,622   2,394,717  
Adjustments for items not involving cash    
Finance costs 106,390   117,237  
Transaction costs   1,108  
Depreciation and amortization 1,408,392   1,382,838  
Gain on disposal of equipment (5,000 )  
Accretion 8,548   15,913  
Share-based payments 13,672   122,902  
Net income for the period adjusted for non-cash items 3,598,624   4,034,715  
CHANGES IN NON-CASH WORKING CAPITAL ITEMS    
Trade receivables (696,335 ) 1,821,449  
Other receivables 62,702   (96,375 )
Inventories (322,192 ) (522,670 )
Prepaid expenses and deposits 137,618   12,471  
Accounts payable and accrued liabilities relating to operating activities 163,017   (355,552 )
Total changes in non-cash working capital items (655,190 ) 859,323  
Net income for the period adjusted for non-cash and working capital items 2,943,434   4,894,038  
Interest paid (106,390 ) (117,237 )
CASH GENERATED FROM OPERATIONS 2,837,044   4,776,801  
INVESTING ACTIVITIES    
Purchase of property and equipment (494,833 ) (222,610 )
Purchase of leasehold improvements (19,472 )  
Proceeds from sale of equipment 5,000   353  
Accounts payable and accrued liabilities relating to investing activities (132,994 ) 14,161  
CASH USED IN INVESTING ACTIVITIES (642,299 ) (208,096 )
FINANCING ACTIVITIES    
Stock options exercised 26,725   3,013  
Repayment of long-term debt   (112,973 )
Repayment of lease liabilities (180,285 ) (197,537 )
CASH USED IN FINANCING ACTIVITIES (153,560 ) (307,497 )
Increase in cash and cash equivalents 2,041,185   4,261,208  
     
Cash and cash equivalents at beginning of the period 5,369,029   1,857,195  
     
Cash and cash equivalents at end of the period 7,410,214   6,118,403  
     

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: [email protected]

This press release does not express or imply that the Company claims its product has the ability to eliminate, cure or contain the SARS-2-CoV-2 (COVID-19) at this time.

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.

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