Crescita Therapeutics acquires INTEGA Skin Sciences

INTEGA, financially backed by Knight Therapeutics (TSX:GUD) and Bloom Burton Healthcare Lending Trust, owns the Canadian distribution rights for a number of well-known and established skin care brands, including Laboratoire Dr. Renaud.

Key Benefits of the Transaction:

Provides Crescita with a revenue-generating, fully integrated commercial skin care business, manufacturing facilities, and the capability to market prescription and over-the-counter (OTC) skin care products through established distribution channels;

Provides Crescita with distribution rights to well-known and established skin care brands: Laboratoire Dr Renaud, Pro-Derm, Premiology and ISDIN;

Provides Crescita with a commercial infrastructure capable of promoting its prescription drug Pliaglis in Canada;

Allows Crescita to leverage its topical delivery technologies for the development of potential new OTC and/or prescription skin care products;

Allows Crescita to leverage its business development capabilities to out-license INTEGA owned brands outside Canada, including the U.S; and

Significant cash on hand in order to make additional acquisitions.

Crescita chairman Dan Chicoine said: "With the acquisition of INTEGA, paid in Crescita common shares valued at $2.44 per share, Crescita becomes an integrated commercial skin care company while maintaining a strong balance sheet to finance our continued growth. 

"Our goal is to utilize the combined attributes of both businesses, in manufacturing, distribution, marketing and research and development, to become a dominant player in the $15.0 billion Canadian and U.S. skin care industry."

"I am thrilled to be integrating INTEGA into Crescita as the first step to becoming a leading dermatology specialty pharmaceutical company," said Greg Orleski, founder and CEO of INTEGA.

Jonathan Goodman, CEO of Knight Therapeutics, added, "As shareholders of INTEGA and now Crescita, we are supportive of this acquisition.  We believe that INTEGA's established commercial brands and unique distribution capabilities combined with Crescita's technology, experienced management and strong balance sheet, will facilitate accelerated organic growth and support future consolidation opportunities."

Transaction Terms

The aggregate purchase price paid by the Company for 100% of INTEGA's equity consists of $8.0 million (subject to customary adjustments), plus up to an additional $2.0 million in milestones if certain financial targets are achieved by INTEGA in 2016 and 2017.  The first $5.9 million of the purchase price was paid today through the issuance of 2,402,314 Crescita common shares at a price of $2.44 per share (representing approximately 17.3% of Crescita's outstanding common shares post-issuance). 

The balance of the purchase price (other than $1.0 million that is conditional on a 2017 earn-out and, if earned, will be paid in the second quarter of 2018) will be paid within 30 days following Crescita's next annual shareholders meeting, which is expected to be held in the second quarter of 2017. 

Subject to obtaining the approval of Crescita's shareholders at its next annual meeting, all or a portion of the balance of the purchase price will also be paid through the issuance of Crescita common shares.  Crescita also issued 457,986 common share purchase warrants in exchange for INTEGA's outstanding warrants, each of which permits the holder thereof to acquire one Crescita common share at a price of $2.44 per share. 

Crescita has provided a limited recourse guarantee of INTEGA's obligations under its $7.0 million term loan from Knight Therapeutics Inc.  The Company repaid a bridge loan at closing of $3.0 million. 

Management Changes

Gregory Orleski, the former Chief Executive Officer of INTEGA, has been appointed Chief Executive Officer of Crescita effective September 1, 2016 and will become a member of the Crescita board of directors.  Mr. Orleski replaces Dan Chicoine as Chief Executive Officer.  Mr. Chicoine will remain as Crescita's Executive Chairman and member of the Company's board of directors. 

"We are very pleased to welcome Greg to Crescita," said Mr. Chicoine.  "He has exemplary credentials and significant pharmaceutical experience and his vision for Crescita aligns with our plans to make it the premier skin care company in North America." 

Mario Laflamme has been appointed Crescita's new Chief Financial Officer effective September 6, 2016 replacing Stephen Lemieux who has resigned to pursue other opportunities.  Mr. Laflamme is a seasoned CFO with experience in both public and private companies.

Board of Director Changes

In addition to Mr. Orleski, Mr. Thomas Schlader will also be joining the Crescita board of directors.