MONTREAL, QUEBEC–(Marketwired – Aug 11, 2016) – Knight Therapeutics Inc. (TSX:GUD) (“Knight” or the “Company”), a leading Canadian specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2016.
All figures are in thousands of Canadian dollars except for share and per share amounts.
Key Events in Second Quarter 2016
- Announced and completed a bought deal at $8.00 per common share for gross proceeds of $230,000 including over-allotment exercise.
- Received a Notice of Deficiency from Health Canada for ATryn®.
- Entered into a distribution agreement with EMPA Healthcare LLC to commercialize Neuragen® in the United Arab Emirates and Kuwait.
Key Events Subsequent to the Quarter Ended June 30, 2016
- Acquired 11,470,920 common shares of Pediapharm Inc. in exchange for 221,126 common shares and 221,126 four-year warrants of Knight with an exercise price of $10.00.
- Entered into a distribution agreement with S.I.F.I – Società Industria Farmaceutica Italiana S.p.A. to commercialize NETILDEX™ in Canada.
- Entered into a licencing and distribution agreement with 3D Signatures Inc. (“3D Signatures”) and Plicit Capital Corp. (“Plicit”). Knight also committed to a minimum equity investment of $1,000 pursuant to a business combination and public listing transaction between 3D Signatures and Plicit.
- Expanded distribution agreement with Ember Therapeutics Inc. (“Ember”) to include the territories of Romania and the Caribbean and acquired the rights to two newly-acquired Ember products: Migralex™ and RHY/Vavelta®.
Financial Results Reported in Thousands of Canadian Dollars
For the quarter ended June 30, 2016, the Company reported revenues of $1,135 and net income of $4,446. As at June 30, 2016, the Company had $638,423 in cash, cash equivalents and marketable securities, total shareholders’ equity of $861,965 and 132,480,708 common shares outstanding.
“This past quarter marked our 4th successful equity-raise in 28 months all at increasing valuations,” said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. “We hope to demonstrate that we are as GUD at commercializing innovative pharmaceuticals that touch people’s lives as we are at raising money. To this end, we have deployed or committed over $300 million since our founding in low risk, fair return opportunities that will improve the health of Canadians and help build Knight into Canada’s leading specialty pharma company.”
Conference Call Notice
Knight will host a conference call to discuss its second quarter results today at 8:30 am ET. Investors and other interested parties may call 1-877-223-4471 (Operator Assisted Toll-Free) or 647-788-4922 (local or international).
A taped replay of the conference call will be available from today at 11:30 am ET until Sunday, September 11, 2016 at 11:59 pm ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 10254484.
Notice of Third Quarter 2016 Results
Knight expects to release its third quarter 2016 financial results on the morning of Thursday, November 10, 2016. Knight expects to hold a conference call at 8:30 am ET on the morning of the release. All interested parties are cordially invited to attend. Investors and other interested parties may call 1-877-223-4471 (Operator Assisted Toll-Free) or 647-788-4922 (local or international).
About Knight Therapeutics Inc.
Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and select international markets. Knight Therapeutics Inc.’s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the company’s web site at www.gud-knight.com or www.sedar.com.
Forward-Looking Statement
This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. These forward looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations are discussed in Knight Therapeutics Inc.’s Annual Report and in Knight Therapeutics Inc.’s Annual Information Form for the year ended December 31, 2015. Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events, except as required by law.
INTERIM CONSOLIDATED BALANCE SHEETS
[Unaudited] [In thousands of Canadian dollars]
| As at | June 30, 2016 | December 31, 2015 |
| ASSETS | ||
| Current | ||
| Cash and cash equivalents | 363,713 | 237,481 |
| Marketable securities | 274,710 | 233,726 |
| Trade and other receivables | 4,505 | 2,994 |
| Inventories | 833 | 1,460 |
| Other current financial assets | 36,763 | 23,588 |
| Income taxes receivable | 146 | 231 |
| Total current assets | 680,670 | 499,480 |
| Property and equipment | – | 18 |
| Intangible assets | 5,956 | 3,320 |
| Other financial assets | 95,076 | 62,616 |
| Investment in associate | 81,393 | 81,027 |
| Deferred income tax assets | 4,904 | 2,527 |
| Total assets | 867,999 | 648,988 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
| Current | ||
| Accounts payable and accrued liabilities | 1,289 | 2,416 |
| Income taxes payable | 4,745 | 4,031 |
| Deferred other income | – | 293 |
| Total current liabilities | 6,034 | 6,740 |
| Deferred income tax liabilities | – | 186 |
| Total liabilities | 6,034 | 6,926 |
| Shareholders’ equity | ||
| Share capital | 662,702 | 439,148 |
| Warrants | 161 | 161 |
| Contributed surplus | 7,712 | 6,772 |
| Accumulated other comprehensive income | 26,441 | 35,955 |
| Retained earnings | 164,949 | 160,026 |
| Total shareholders’ equity | 861,965 | 642,062 |
| Total liabilities and shareholders’ equity | 867,999 | 648,988 |
INTERIM CONSOLIDATED STATEMENTS OF INCOME
[Unaudited] [In thousands of Canadian dollars, except for share and per share amounts]
| Three-months ended June 30 |
Six-months ended June 30 |
|||||||
| 2016 | 2015 | 2016 | 2015 | |||||
| Revenues | 1,135 | 333 | 2,203 | 580 | ||||
| Cost of goods sold | 535 | 272 | 781 | 358 | ||||
| Gross margin | 600 | 61 | 1,422 | 222 | ||||
| Expenses | ||||||||
| Selling and marketing | 154 | – | 168 | – | ||||
| General and administrative | 2,055 | 2,446 | 4,234 | 5,123 | ||||
| Research and development | 524 | 301 | 807 | 635 | ||||
| (2,133 | ) | (2,686 | ) | (3,787 | ) | (5,536 | ) | |
| Depreciation of property and equipment | 10 | 7 | 18 | 15 | ||||
| Amortization of intangible assets | 122 | 21 | 163 | 42 | ||||
| Interest income | (6,124 | ) | (3,596 | ) | (10,940 | ) | (7,562 | ) |
| Other income | (354 | ) | (525 | ) | (1,453 | ) | (966 | ) |
| Net gain on financial assets | (783 | ) | (6,495 | ) | (2,512 | ) | (14,024 | ) |
| Purchase gain on business combination | – | – | – | (550 | ) | |||
| Gain on settlement of loan receivable | – | (358 | ) | – | (358 | ) | ||
| Share of net income of associate | (805 | ) | – | (1,659 | ) | – | ||
| Foreign exchange loss (gain) | 357 | 592 | 4,127 | (3,818 | ) | |||
| Income before income taxes | 5,444 | 7,668 | 8,469 | 21,685 | ||||
| Income tax expense (recovery) | 578 | (1,053 | ) | 3,119 | (1,053 | ) | ||
| Deferred income tax expense | 420 | 201 | 427 | 402 | ||||
| Net income for the period | 4,446 | 8,520 | 4,923 | 22,336 | ||||
| Attributable to shareholders of the Company | ||||||||
| Basic earnings per share | 0.04 | 0.09 | 0.05 | 0.24 | ||||
| Diluted earnings per share | 0.04 | 0.09 | 0.05 | 0.24 | ||||
| Weighted average number of common shares outstanding | ||||||||
| Basic | 112,681,825 | 93,089,609 | 108,078,434 | 92,816,245 | ||||
| Diluted | 113,112,999 | 93,222,325 | 108,410,280 | 93,028,011 | ||||
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[Unaudited] [In thousands of Canadian dollars]
| Three-months ended June 30 |
Six-months ended June 30 |
|||||||
| 2016 | 2015 | 2016 | 2015 | |||||
| Net income for the period | 4,446 | 8,520 | 4,923 | 22,336 | ||||
| Realized gain reclassified to statement of income net of tax of $1 and $65 for the three and six-month period ended June 30, 2016 (net of tax of $810 and $1,300 for the three and six-month period ended June 30, 2015) | (6 | ) | (5,206 | ) | (416 | ) | (8,050 | ) |
| Other comprehensive income (loss) to be reclassified to income or loss in subsequent periods: | ||||||||
| Unrealized gain on available-for-sale financial instruments net of tax of $75 and $147 for the three and six-month period ended June 30, 2016 (net of tax of $72 and $404 for the three and six-month period ended June 30, 2015) | 2,127 | 898 | 2,548 | 3,000 | ||||
| Unrealized (loss) gain on translating financial statements of foreign operations | (668 | ) | (2,065 | ) | (11,646 | ) | 10,852 | |
| Other comprehensive income (loss) for the period | 1,453 | (6,373 | ) | (9,514 | ) | 5,802 | ||
| Total comprehensive income (loss) for the period | 5,899 | 2,147 | (4,591 | ) | 28,138 | |||
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
[Unaudited] [In thousands of Canadian dollars]
| Notes | Share capital |
Warrants | Contributed surplus |
Accumulated other comprehensive income |
Retained earnings |
Total shareholders’ equity |
|||||
| Balance as at January 1, 2015 | 341,065 | – | 2,100 | 9,967 | 125,859 | 478,991 | |||||
| Net income for the period | – | – | – | – | 22,336 | 22,336 | |||||
| Realized gain reclassified to statement of income, net of tax of $1,300 | – | – | – | (8,050 | ) | – | (8,050 | ) | |||
| Change in fair value of available-for-sale financial instruments, net of deferred tax of $404 | – | – | – | 3,000 | – | 3,000 | |||||
| Change in unrealized gain on translating financial statements of foreign operations | – | – | – | 10,852 | – | 10,852 | |||||
| Comprehensive income | – | 5,802 | 22,336 | 28,138 | |||||||
| Share-based compensation expense | – | – | 2,865 | – | – | 2,865 | |||||
| Issuance of shares upon financing, net of costs and deferred tax of $2,200 | 14,573 | – | – | – | – | 14,573 | |||||
| Issuance of shares upon exercise of stock options | 1,487 | – | (553 | ) | – | – | 934 | ||||
| Issuance of warrants | – | 161 | – | – | – | 161 | |||||
| Exercise of compensation warrants | 930 | – | (295 | ) | – | – | 635 | ||||
| Issuance of shares under share purchase plan | 42 | – | – | – | – | 42 | |||||
| Balance as at June 30, 2015 | 358,097 | 161 | 4,117 | 15,769 | 148,195 | 526,339 | |||||
| Balance as at January 1, 2016 | 439,148 | 161 | 6,772 | 35,955 | 160,026 | 642,062 | |||||
| Net income for the period | – | – | – | – | 4,923 | 4,923 | |||||
| Realized gain reclassified to statement of income, net of tax for $65 | – | – | – | (416 | ) | – | (416 | ) | |||
| Change in fair value of available-for-sale financial instruments, net of deferred tax of $147 | 2,548 | 2,548 | |||||||||
| Change in unrealized loss on translating financial statements of foreign operations | – | – | – | (11,646 | ) | – | (11,646 | ) | |||
| Comprehensive income (loss) | – | – | (9,514 | ) | 4,923 | (4,591 | ) | ||||
| Share-based compensation expense | – | – | 1,883 | – | – | 1,883 | |||||
| Issuance of shares upon bought deal, net of costs and deferred tax of $3,080 | 221,631 | – | – | – | – | 221,631 | |||||
| Issuance of shares to associate | 2,073 | – | (943 | ) | – | – | 1,130 | ||||
| Share purchase loans | (200 | ) | – | – | – | – | (200 | ) | |||
| Issuance of shares under share purchase plan | 50 | – | – | – | 50 | ||||||
| Balance as at June 30, 2016 | 662,702 | 161 | 7,712 | 26,441 | 164,949 | 861,965 |
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
[Unaudited] [In thousands of Canadian dollars]
| Six-month period ended June 30 | ||||
| 2016 | 2015 | |||
| OPERATING ACTIVITIES | ||||
| Net income for the period | 4,923 | 22,336 | ||
| Adjustments reconciling net income to operating cash flows: | ||||
| Deferred tax | 427 | 403 | ||
| Share-based compensation expense | 1,883 | 2,865 | ||
| Depreciation and amortization | 181 | 57 | ||
| Accretion of interest | (2,846 | ) | (2,220 | ) |
| Realized gain on sale of other financial assets | (142 | ) | (13,799 | ) |
| Unrealized gain on financial assets | (2,370 | ) | (225 | ) |
| Gain on settlement of loan receivable | – | (358 | ) | |
| Foreign exchange loss (gain) | 4,127 | (4,146 | ) | |
| Purchase gain on business combination | – | (550 | ) | |
| Share of net income from associate | (1,659 | ) | – | |
| Changes in non-cash working capital related to operations | 963 | (5,376 | ) | |
| Deferred other income | (293 | ) | (709 | ) |
| Cash inflow (outflow) from operating activities | 5,194 | (1,722 | ) | |
| INVESTING ACTIVITIES | ||||
| Purchase of marketable securities | (283,125 | ) | (383,578 | ) |
| Purchase of financial assets | (5,423 | ) | (2,356 | ) |
| Purchase of intangibles | (2,924 | ) | – | |
| Investment in funds | (9,225 | ) | (8,295 | ) |
| Issuance of loans receivable | (37,449 | ) | (31,347 | ) |
| Proceeds from repayments of loans receivable | 2,023 | 10,028 | ||
| Proceeds from disposal of financial assets | 4,026 | 29,242 | ||
| Proceeds from sale of marketable securities | 234,104 | 420,691 | ||
| Dividend income from associate | 2,423 | – | ||
| Consideration paid on business combination | – | (1,750 | ) | |
| Cash (outflow) inflow from investing activities | (95,570 | ) | 32,635 | |
| FINANCING ACTIVITIES | ||||
| Issuance of shares upon bought deal | 218,552 | – | ||
| Proceeds from exercise of compensation warrants | – | 635 | ||
| Proceeds from exercise of an over-allotment option | – | 12,424 | ||
| Share option plan | – | 934 | ||
| Share purchase plan | 50 | 42 | ||
| Share purchase loans | (200 | ) | – | |
| Cost related to prior period share issuance | – | (207 | ) | |
| Cash inflow from financing activities | 218,402 | 13,828 | ||
| Increase in cash during the period | 128,026 | 44,741 | ||
| Cash and cash equivalents, beginning of the period | 237,481 | 283,445 | ||
| Net foreign exchange difference | (1,794 | ) | 861 | |
| Cash and cash equivalents, end of the period | 363,713 | 329,047 | ||
| Supplemental cash flow information: | ||||
| Interest received | 6,821 | 4,991 | ||
| Income taxes paid | 2,334 | 2,068 | ||