MONTREAL, QUEBEC–(Marketwired – August 10, 2017) – Knight Therapeutics Inc. (TSX:GUD) (“Knight”), a leading Canadian specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2017. All dollar amounts are in thousands except for per share amounts. All currencies are Canadian unless otherwise specified.

Q2-2017 Highlights

  • Revenues reached $2,840, an increase of $1,345 or 119% over the same period in prior year
  • Cash flows from operations were $3,371, an increase of $289 or 9% over the same period in prior year
  • Submitted Probuphine™ for approval by Health Canada
  • Issued additional secured loan tranches of US$1,807 to 60 Degree Pharmaceuticals (“60P”)
  • Contributed capital of $6,190 and received distributions of $1,222 from strategic fund investments

Subsequent Events

  • Realized gain of $1,457 on disposal of common shares of Merus upon the close of its acquisition by Norgine B.V.
  • Medison Biotech (1995) Ltd.’s (“Medison”) board of directors declared and approved dividends of $2,466 [ILS7,068]
  • Issued an additional secured loan of US$10,000 to Synergy CHC Corp. (“Synergy”)

“This past quarter was highlighted by continued revenue growth, as well as the submission of Probuphine™ for approval by Health Canada, bringing a novel product one step closer to improving the health of Canadians,” said Jonathan Ross Goodman, CEO of Knight. “In the quarters ahead, we will continue to be focused on advancing our pipeline and capitalizing on GUD opportunities for growth.”

Financial Results

Revenue for Q2 2017 was $2,840, an increase of $1,345 or 119% versus Q2 2016. Revenue for the first half of 2017 was $4,230, an increase of $2,027 or 92% versus the first half of 2016. The increase is due to the addition of Movantik® as well as to an increase of Impavido® sales.

Operating expenses for Q2 2017 were $4,246, an increase of $1,513 or 55% versus Q2 2016. The increase is explained by commercial activities including sales force promotion of Movantik®, an increase in the number of employees as Knight expands commercialization and prepares to launch new products in Canada, and the fees related to the submission of Probuphine™ for regulatory approval by Health Canada.

Interest income for Q2 2017 was $5,698, a decrease of $426 or 7% versus Q2 2016. The decrease is driven by a lower average loan balance outstanding, offset by an increase in the average cash, cash equivalents and marketable securities balances due to proceeds from equity raises in June and December 2016.

Share of income of associate for Q2 2017 was $96, a decrease of $709 or 88% versus Q2 2016. The decrease is due to Medison’s lower net income mainly attributable to increases in marketing and selling expenses linked to new product launches as well as to an increase in the amortization of fair value adjustments recorded by Knight.

Net income for Q2 2017 was $459, a decrease of $3,987 or 90% versus Q2 2016. Net income for the first half of 2017 was $6,506, an increase of $1,583 or 32% versus the first half of 2016.

As at June 30, 2017, Knight had $761,161 in cash, cash equivalents and marketable securities and 142,765,432 common shares outstanding. From this strong cash position, Knight will continue to pursue business and corporate development opportunities.

Product Updates

During the quarter, Knight submitted a new drug submission for Probuphine™ for approval by Health Canada. Probuphine™, indicated for the treatment of opioid drug dependence, is a subdermal implant designed to deliver buprenorphine continuously for six months following a single treatment, promoting patient compliance and retention. Knight entered into an exclusive licensing agreement with Braeburn to commercialize Probuphine™ in Canada in February 2016.

According to IMS data, Movantik® sales in Canada were $213 and $381 for the three and six-month periods ended June 30, 2017. In December 2016, Knight entered into an agreement with AstraZeneca for the rights to Movantik® in Canada and Israel under which Knight is responsible for all commercial, regulatory and certain supply chain activities. Movantik® is the first once-daily oral peripherally-acting mu-opioid receptor antagonist for the treatment of opioid-induced constipation in adult patients with non-cancer pain who have had an inadequate response to laxative(s).

Strategic Lending Updates

During the three-month period ended June 30, 2017, Knight issued an additional US$1,356 to 60P. As at June 30, 2017, Knight had issued a total of US$4,197 to 60P as part of a secured loan agreement. The loan bears interest at 15% per annum and matures on December 31, 2020.

Subsequent to quarter end, Knight issued an additional secured loan of US$10,000 to Synergy which bears interest at 10.5% per annum and matures on August 9, 2020. As part of the transaction, Knight will receive a success fee paid at maturity, plus other consideration. In 2015, Knight issued two loans to Synergy totaling US$11,500 which have a current remaining balance of US$3,100 and are scheduled to be fully repaid by January 20, 2018.

Conference Call Notice 

Knight will host a conference call and audio webcast to discuss its second quarter results today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

Date: Thursday, August 10, 2017
   
Time: 8:30 a.m. EST
   
Telephone: 1-877-223-4471 or 647-788-4922
   
Webcast: http://www.gudknight.com/ or http://bit.ly/2u1eeo9
   
This is a listen-only audio webcast. Media Player is required to listen to the broadcast. 
 
Replay: An archived replay will be available for 30 days at http://www.gudknight.com/.

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.gudknight.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, 2016. 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
 
[In thousands of Canadian dollars]
 
[Unaudited]
 
As at June 30, 2017   December 31, 2016
ASSETS      
       
Current      
Cash and cash equivalents 527,879   514,942
Marketable securities 233,282   221,108
Trade and other receivables 7,598   6,440
Inventories 839   790
Other current financial assets 35,779   51,789
Income taxes receivable 5,456   4,683
Total current assets 810,833   799,752
       
Property and equipment 68   32
Intangible assets 13,482   14,153
Other financial assets 84,073   90,643
Investment in associate 78,003   80,113
Deferred income tax assets 5,521   6,077
Total assets 991,980   990,770
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current      
Accounts payable and accrued liabilities 3,123   3,207
Income taxes payable 6,617   5,659
Other balances payable 610   537
Deferred other income 250   355
Total current liabilities 10,600   9,758
Deferred other income 292   417
Other balances payable 908   877
Total liabilities 11,800   11,052
       
Shareholders’ equity      
Share capital 761,063   760,447
Warrants 785   785
Contributed surplus 11,138   9,469
Accumulated other comprehensive income 22,102   30,431
Retained earnings 185,092   178,586
Total shareholders’ equity 980,180   979,718
Total liabilities and shareholders’ equity 991,980   990,770
       
       
INTERIM CONSOLIDATED STATEMENTS OF INCOME
 
[In thousands of Canadian dollars, except for share and per share amounts]
 
[Unaudited]
 
  Three months ended June 30   Six months ended June 30  
  2017   2016   2017   2016  
                 
Revenues 2,480   1,135   4,230   2,203  
Cost of goods sold 472   535   760   781  
Gross margin 2,008   600   3,470   1,422  
                 
Expenses                
Selling and marketing 1,050   154   1,413   168  
General and administrative 2,329   2,055   4,797   4,234  
Research and development 867   524   1,283   807  
  (2,238 ) (2,133 ) (4,023 ) (3,787 )
                 
Depreciation of property and equipment   10     18  
Amortization of intangible assets 320   122   646   163  
Interest income (5,698 ) (6,124 ) (11,558 ) (10,940 )
Other income (334 ) (354 ) (642 ) (1,453 )
Net loss (gain) on financial assets 1,056   (783 ) (2,319 ) (2,512 )
Share of net income of associate (96 ) (805 ) (415 ) (1,659 )
Foreign exchange loss 1,306   357   1,549   4,127  
Income before income taxes 1,208   5,444   8,716   8,469  
                 
Income tax expense                
Current 628   578   1,108   3,119  
Deferred 121   420   1,102   427  
Net income for the period 459   4,446   6,506   4,923  
                 
Attributable to shareholders of the Company              
Basic earnings per share 0.003   0.039   0.046   0.046  
Diluted earnings per share 0.003   0.039   0.045   0.045  
                 
                 
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
 
[In thousands of Canadian dollars]
 
[Unaudited]
 
  Three months ended June 30   Six months ended June 30  
  2017   2016   2017   2016  
OPERATING ACTIVITIES                
Net income for the period 459   4,446   6,506   4,923  
Adjustments reconciling net income to operating cash flows:                
  Deferred tax 121   420   1,102   427  
  Share-based compensation expense 1,018   810   1,864   1,883  
  Depreciation and amortization 320   132   646   181  
  Accretion of interest (1,106 ) (1,741 ) (2,184 ) (2,846 )
  Realized (gain) loss on financial assets (665 ) 514   (1,641 ) (142 )
  Unrealized (gain) loss on financial assets 1,721   (1,297 ) (678 ) (2,370 )
  Foreign exchange loss 1,344   367   1,549   4,127  
  Share of net income from associate (96 ) (805 ) (415 ) (1,659 )
  Other adjustments 71   (151 ) (231 ) (293 )
  3,187   2,695   6,518   4,231  
Changes in non-cash working capital related to operations (2,341 ) 387   (1,436 ) 963  
Dividends from associate 2,525     2,525   2,423  
Cash inflow from operating activities 3,371   3,082   7,607   7,617  
                 
INVESTING ACTIVITIES                
Purchase of marketable securities (98,182 ) (135,726 ) (142,473 ) (283,125 )
Purchase of intangibles       (2,924 )
Issuance of loans receivables (1,807 ) (2,598 ) (1,807 ) (37,449 )
Purchase of equities (120 ) (3,999 ) (2,939 ) (7,460 )
Investment in funds (6,190 ) (3,392 ) (10,331 ) (9,225 )
Proceeds from sale of marketable securities 106,073   81,878   126,559   234,104  
Proceeds from repayments of loans receivable 2,266   1,005   30,324   2,023  
Proceeds from disposal of equities 2,806   616   3,515   6,235  
Proceeds from distribution of funds 1,222     3,376    
Cash inflow (outflow) from investing activities 6,068   (62,216 ) 6,224   (97,821 )
                 
FINANCING ACTIVITIES                
Issuance of shares upon bought deal   218,552     218,552  
Proceeds from share option plan     345    
Proceeds from share purchase plan 50   22   93   50  
Issuance of share purchase loans   (200 )   (200 )
Cash inflow from financing activities 50   218,374   438   218,402  
Increase in cash during the period 9,489   159,240   14,269   128,198  
Cash and cash equivalents, beginning of the period 519,522   204,785   514,942   237,481  
Net foreign exchange difference (1,132 ) (312 ) (1,332 ) (1,966 )
Cash and cash equivalents, end of the period 527,879   363,713   527,879   363,713  
Marketable securities, end of the period 233,282   274,710   233,282   274,710  
Cash, cash equivalents and marketable securities, end of the period 761,161   638,423   761,161   638,423