Delivra Corp
TSX VENTURE : DVA

May 17, 2016 16:00 ET

Delivra Announces Q1 2016 Financial Results

Strong Growth Continues and Forward Momentum Accelerating

TORONTO, ONTARIO--(Marketwired - May 17, 2016) - Delivra Corp. (TSX VENTURE:DVA) ("Delivra" or the "Company") is pleased to announce its financial results for the three months ended March 31, 2016.

Q1 2016 Developments

Significant areas of development included:

Continued Strong Sales Growth

Q1 2016 brought record revenues, at $992,682, the highest quarterly sales ever for the Company. This was driven by continued growth in the sales of the Company's flagship pain products in Canada, building on the momentum established in 2015. During this period, the Company also solidified its position as having the #1 Selling Natural Pain Cream in Canada and the #1 Selling Nerve Pain Cream in Canada1. The Company believes that, given the tremendous efficacy of its products and in the presence of strong marketing and advertising programs, there is considerable room for further growth in the Canadian market.

US Market Readiness Accelerating

Efforts ramped up in Q1 2016, relating to the planning and preparation for the entry of the Company's leading Pain and Nerve Pain products into the US market in 2016. Initial entry will be through an aggressive digital strategy to drive on-line sales, followed by a focus on retail channels. As US entry is a major strategic mandate for the Company through 2016 and 2017, significant on-going effort and resources will be dedicated to this program.

Technology Licensing Activity

The Company's efforts towards engagement of the pharmaceutical community continued through Q1 2016. Based on the research and planning and foundational work done in 2015, the Company has focused on migrating selected applications closer to the status of a "product" ready for licensing. The premise of this focus is to move beyond platform technology discussions and present to potential pharma partners very specific and highly evolved product licensing proposals, to expedite transaction opportunities.

Clinical Solutions for Diabetes Challenges

As an example of the foregoing, during the quarter, the Company announced its successful development of a new modality for the treatment of diabetic wounds. Diabetic wound healing is a very large, globally pervasive, and historically very challenging market. In work done at The Mayer Institute, a leading center for advanced diabetic wound treatment, the Company's transdermal delive ry system was successfully deployed at the core of a new therapeutic modality that has shown promising results for diabetic patients. Specifically, the tetracycline antibiotic known as doxycycline hyclate, was formulated in the Delivra system for application to diabetic, lower limb wounds.

The Company announced this development as the first step in showcasing a strong suite of treatment options for diabetes and diabetes-related conditions, currently under development. Notably, this also represents an early but excellent example of the Company's ability to rapidly and at low cost, re-purpose existing drugs for new uses via its transdermal delivery technology, to open immediate and global market opportunities that would otherwise not be available. The Company has filed a provisional United States patent on its unique doxycycline formulation.

Continued R&D Success

The very strong work of the Company's team of scientists was, as always, a centerpiece of the activity in Q1. This included moving several additional projects further down the development curve, and filing two additional patents after the end of the quarter. This brings the total number of patents pending to ten, all filed within the past year. Additional filings are in the pipeline, as the Company continues to showcase the prolific reach and broad applicability of its delivery system.

"This was another strong quarter for the Delivra team, with significant progress on multiple fronts," said Chris Schnarr, President of Delivra. "Our core growth in Canada continues, we are moving forward strategically on our US launch, and our continued development efforts are showcasing the strength, breadth, and value of our platform technology for out-licensing opportunities. We will continue to execute on plan and accelerate our forward momentum to build value for our shareholders."

Results of Operations

Revenues

Revenue for the first quarter was $992,682, the highest ever quarterly sales for the Company, up 19% against the comparable prior year period at $836,174. The main driver of this growth was increased sales of the Company's pain products in Canada, including repeat purchases and new customer acquisitions resulting from the Company's on-going marketing and advertising efforts.

Gross Profit

Gross Profit for the quarter was up 22% against the comparable prior year period, at $673,168 versus $550,837 in Q1 2015, as a result of increased revenues and gross margins (68% in Q1 2016 versus 63% in Q1 2015). The Company targets long -term gross margins between 65% and 70% for its business.

Operating Expenses

Operating expenses for the quarter were $1,371,931, up from $1,036,651 in the comparative quarter. The increase is a result of the alignment of expenditures with the Company's major strategic initiatives. Specifically, higher marketing and selling costs associated with successful growth and brand-building investments in Canada. The increase in G&A expenses over the comparable period is mainly a result of compliance, investor relations and professional fees associated with Q1 being the Company's first quarter listed on the TSX-V. Share-based compensation was also higher versus the prior year period. R&D expenses for the period decreased over the comparable period, as a result of the Company beginning to capitalize certain projects in 2016, as these projects are now nearer to commercialization.

The following table presents a summary of the Company's Operating Expenses for the current and comparative quarter.

Q1 2016 Q1 2015
General and administrative $ 385,911 $ 150,347
Research and development (gross) $ 226,943 $ 323,302
Research and development (net) $ 113,289 $ 305,377
Selling and marketing $ 664,092 $ 539,056
Share-based compensation $ 154,639 $ 41,871

Net Loss

The Net loss and comprehensive loss for the quarter was $684,839 versus $506,244 in the comparative period. On a per share basis, the net loss was $0.02 for the quarter, versus $0.02 in the comparative quarter. The increased loss results from the various factors discussed above, primarily increased share-based compensation and public company G&A costs.

Working Capital and Liquidity

The Company's working capital and liquidity position, in the context of its current operations, remained strong through Q1. As at March 31, 2016, current assets were $4,512,300, including cash and cash equivalents of $2,345,089. Against current liabilities of $611,091, this resulted in net working capital of $3,901,209. This compares to current assets of $5,360,247 and net working capital of $4,344,046 at December 31, 2015.

Cash Flow Used in Operations

Cash flow used in operations for Q1 was $757,000 versus $638,300 in the comparable prior year period. The increase was mainly due to the reduction of accounts payable and accrued liabilities during the period.

Cash Flow Used in Investing Activities

Cash flow used in investing activities for Q1 was $418,025 versus $nil in the comparable prior year period. This increase was due to the purchase of equipment, patent filings and development costs incurred on some of the Company's projects.

Cash Flow From Financing Activities

Cash flow from financing activities for Q1 was $383,867 versus $11,724 in the comparable prior year period. This increase was due to the exercise of warrants and receipt of government loans, slightly offset by the repayment of government loans during the period.

ABOUT DELIVRA CORP.

Delivra Corp. is a developer of transdermal technologies for the delivery of pharmaceutical and natural molecules through the skin, rather than via pills. Delivra manufactures and sells a growing line of natural topical creams under the LivRelief™ brand, for conditions such as joint and muscle pain, nerve pain, varicose veins, wound healing, and sports performance. LivRelief ™ products are available in pharmacies, grocery chains, and independent health food stores across Canada, and on-line at www.livrelief.com. In parallel with its consumer products business, Delivra also has a mandate to license its unique, proven, and patent-pending delivery platform to global pharmaceutical companies for the transdermal delivery of third party active ingredients to treat a broad range of conditions. Delivra is headquartered in Burlington, Ontario and has a research and development laboratory in Charlottetown, PEI.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

Certain information in this press release may constitute forward-looking information. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Corporation assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Corporation. Additional information identifying risks and uncertainties is contained in the Corporation's filings with the Canadian securities regulators, which filings are available at www.sedar.com.

(1) Delivra Inc. calculation based in part on data reported by Nielsen through its MarketTrack Service for the Topical Analgesic category for the 52-week period ending April 2nd, 2016 for the National market and Grocery Banner plus Drug plus Mass Merchandizer channel, according to the Health Canada NPN Natural Health Product registration product hierarchy. Copyright © 2016, The Nielsen Company

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