Knight Therapeutics Inc. (TSX:GUD) ("Knight"), a leading Canadian
specialty pharmaceutical company, today reported financial results
for its first quarter ended March 31, 2018. All dollar amounts are
in thousands except for share and per share amounts. All currencies
are Canadian unless otherwise specified.
Q1 2018
Highlights
Financials
- Revenues were $3,154, an increase of $1,404 or 80% over prior
period
- Net income was $6,909, an increase of $862 or 14% over prior
period
- Cash flows from operations at $6,864, an increase of $2,628 or
62% over prior period
- Cash, cash equivalents and marketable securities of $802,425 as
at March 31, 2018
Products
- Submitted Netildex™ for approval to Health Canada
- Entered into an exclusive Canadian licensing agreement with
Ardelyx to commercialize tenapanor
Strategic Lending and Investments
- Received US$22,757 from Medimetriks Pharmaceuticals Inc.
(“Medimetriks”) for partial loan repayment, interest and fees
- Received US$4,460 as a partial repayment of the 60⁰
Pharmaceuticals LLC (“60P”) loan
- Acquired an additional 754,716 common shares of Crescita
Therapeutics Inc. (“Crescita”) through a rights offering at $0.53
per share
- Exercised option to convert $500 debenture of Antibe
Therapeutics Inc. into 2,489,889 common shares
Key Subsequent Events
- Received regulatory approval from Health Canada for
Probuphine™
- Amended loan with 60P and committed to loan an additional
amount of up to US$2,100
“This past quarter we continued on our path to building a
leading specialty pharmaceutical company. We licensed tenapanor,
submitted Netildex™ and received regulatory approval for
Probuphine™”, said Jonathan Ross Goodman, CEO of Knight. “In the
meantime, we continue to leverage our balance sheet for GUD returns
as evidenced by repayments received from Medimetriks and 60P.”
Select Financial Results |
|
|
|
|
Change |
|
Q1-18 |
Q1-17 |
$1 |
|
%2 |
|
|
|
|
|
|
|
Revenues |
3,154 |
1,750 |
1,404 |
|
80 |
% |
Gross margin |
2,320 |
1,462 |
858 |
|
59 |
% |
Operating expenses |
3,373 |
3,247 |
(126 |
) |
4 |
% |
Interest income |
5,288 |
5,860 |
(572 |
) |
10 |
% |
Share of net income of
associate |
503 |
319 |
184 |
|
58 |
% |
Net income |
6,909 |
6,047 |
862 |
|
14 |
% |
Basic earnings per
share |
0.05 |
0.04 |
0.01 |
|
25 |
% |
1 A positive variance represents a positive impact to net
income and a negative variance represents a negative impact to net
income2 Percentage change is presented in absolute values
Revenue and gross margin:
Increase is mainly attributable to timing of sales orders for
Impavido® and increase in Movantik® sales. According to IQVIA data,
Movantik® sales in Canada were $301 for the three-month period
ended March 31, 2018 versus $168 for the same period last year.
Operating expenses: Increase
in the year is explained by commercial activities including
promotion of Movantik®, offset by a reduction in general and
administrative expenses mainly related to lower stock based
compensation expense.
Interest income: Interest
income is driven by the sum of interest income and interest
accretion. Interest income (excluding accretion) for Q1-18 was
$5,288, an increase of 10% or $506 compared to Q1-17 driven by an
increase in the average cash, cash equivalents and marketable
securities balances and an increase in interest rates, offset by a
lower average loan balance. As a result of the company’s adoption
of IFRS 9, there was no significant interest accretion in Q1-18
compared to $1,073 in prior period.
Net income: Net income for the
quarter was driven by the above-mentioned items as well as: (i)
other income of $1,351 (Q1-17: $308) due to the early repayment of
fees on the Medimetriks loan, (ii) a net gain on revaluation of
financial assets measured at fair value through profit or loss of
$541 (Q1-17: nil), and (iii) a foreign exchange gain of $2,597
(Q1-17: loss of $243) from the relative gains on certain U.S.
dollar denominated financial assets as Canadian dollar
weakened.
Product Updates
On February 15, 2018, Health Canada accepted Knight’s New Drug
Submission for Netildex™ for review. Netildex™ is a fixed
combination of netilmicin and dexamethasone for the treatment of
inflammatory ocular conditions of the anterior segment of the eye,
in presence or at risk of bacterial infection.
On March 13, 2018, Knight received a Notice of Non-Compliance
regarding its submission for Iluvien® and will respond to Health
Canada's issues within the prescribed 90-day window. Iluvien® is a
sustained release intravitreal implant for the treatment of
diabetic macular edema.
On March 16, 2018, Knight entered into an exclusive licensing
agreement with Ardelyx to commercialize tenapanor in Canada.
Tenapanor is a first-in-class small molecule treatment that has
completed Phase 3 development for IBS-C and is being
evaluated in a second Phase 3 study for hyperphosphatemia. Knight
expects to submit tenapanor to Health Canada in 2019.
On April 18, 2018, Probuphine™ was approved by Health Canada for
the treatment of opioid drug dependence. Probuphine™ is a subdermal
implant designed to deliver buprenorphine continuously for six
months following a single treatment, promoting patient compliance
and retention. Knight expects to launch Probuphine™ by the end of
2018.
Strategic Lending
Update
On April 24, 2018, Knight amended its loan agreement with 60P
and committed to lend an additional amount of up to US$2,100, at an
interest rate of 15%, to support the regulatory approval and
commercialization of tafenoquine. As consideration for the
amendment, 60P committed to pay Knight an additional US$3,000 plus
annual interest of 9% on April 23, 2023 (“60P Commitment”).
Under the terms of the 60P Commitment, Knight has the right to
convert the 60P Commitment into common shares of 60P at a
pre-determined exercise price at any time prior to the maturity
date. Furthermore, 60P and Knight will enter into an exclusive
license agreement granting Knight the right to commercialize
tafenoquine in Latin America.
Conference Call
Notice
Knight will host a conference call and audio webcast to discuss
its first quarter results today at 8:30 am ET. Knight cordially
invites all interested parties to participate in this call.
Date: Thursday, May 10,
2018Time: 8:30 a.m. ESTTelephone:
1-877-223-4471 or 647-788-4922Webcast:
www.gudknight.com or https://bit.ly/2JM9U3oThis 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 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, 2017. 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.
CONTACT INFORMATION:
Knight Therapeutics Inc. Samira Sakhia President and Chief
Financial Officer T: 514-678-8930 F: 514-481-4116
info@gudknight.com www.gudknight.com
INTERIM CONSOLIDATED BALANCE
SHEETS |
|
[In thousands of Canadian dollars] |
|
[Unaudited] |
|
As at |
March 31, 2018 |
December 31, 2017 |
|
|
|
ASSETS |
|
|
|
|
|
Current |
|
|
Cash and cash
equivalents |
583,408 |
496,460 |
Marketable
securities |
183,017 |
232,573 |
Trade and other
receivables |
10,046 |
9,176 |
Inventories |
994 |
1,224 |
Other current financial
assets |
25,167 |
58,848 |
Income
taxes receivable |
819 |
792 |
Total current assets |
803,451 |
799,073 |
|
|
|
Marketable
securities |
36,000 |
36,000 |
Property and
equipment |
675 |
633 |
Intangible assets |
15,906 |
12,576 |
Other financial
assets |
79,669 |
76,988 |
Investment in
associate |
77,697 |
75,983 |
Deferred
income tax assets |
3,455 |
4,730 |
Total assets |
1,016,853 |
1,005,983 |
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Current |
|
|
Accounts payable and
accrued liabilities |
4,592 |
5,025 |
Income taxes
payable |
7,962 |
7,599 |
Other balances
payable |
1,394 |
1,354 |
Deferred
other income |
251 |
282 |
Total current liabilities |
14,199 |
14,260 |
|
|
|
Deferred other
income |
104 |
167 |
Other balances
payable |
1,067 |
348 |
Total liabilities |
15,370 |
14,775 |
|
|
|
Shareholders’
equity |
|
|
Share capital |
761,546 |
761,490 |
Warrants |
785 |
785 |
Contributed
surplus |
12,741 |
12,196 |
Accumulated other
comprehensive income |
11,459 |
20,907 |
Retained
earnings |
214,952 |
195,830 |
Total shareholders’ equity |
1,001,483 |
991,208 |
Total liabilities and shareholders’ equity |
1,016,853 |
1,005,983 |
INTERIM CONSOLIDATED STATEMENTS OF
INCOME |
|
[In thousands of Canadian dollars, except for share and
per share amounts] |
|
[Unaudited] |
|
|
Three months ended March 31, |
|
|
2018 |
|
2017 |
|
|
|
|
Revenues |
3,154 |
|
1,750 |
|
Cost of
goods sold |
834 |
|
288 |
|
Gross margin |
2,320 |
|
1,462 |
|
|
|
|
Expenses |
|
|
Selling and
marketing |
789 |
|
363 |
|
General and
administrative |
2,095 |
|
2,468 |
|
Research
and development |
489 |
|
416 |
|
|
(1,053 |
) |
(1,785 |
) |
|
|
|
Depreciation of
property and equipment |
16 |
|
— |
|
Amortization of
intangible assets |
441 |
|
326 |
|
Interest income |
(5,288 |
) |
(5,860 |
) |
Other income |
(1,351 |
) |
(308 |
) |
Net gain on financial
assets |
— |
|
(3,375 |
) |
Net gain on financial
assets measured at fair value through profit or loss |
(541 |
) |
— |
|
Share of net income of
associate |
(503 |
) |
(319 |
) |
Foreign exchange (gain)
loss |
(2,597 |
) |
243 |
|
Income before income taxes |
8,770 |
|
7,508 |
|
|
|
|
Income tax
expense |
|
|
Current |
641 |
|
480 |
|
Deferred |
1,220 |
|
981 |
|
Net income for the period |
6,909 |
|
6,047 |
|
|
|
|
Attributable to shareholders of the Company |
|
|
|
Basic earnings per
share |
0.05 |
|
0.04 |
|
Diluted earnings per
share |
.05 |
|
0.04 |
|
|
|
|
|
|
Weighted average number of common shares
outstanding |
|
|
|
Basic |
142,813,358 |
|
142,720,536 |
|
Diluted |
143,220,006 |
|
143,526,773 |
|
INTERIM CONSOLIDATED STATEMENT OF CASH
FLOWS |
|
[In thousands of Canadian dollars] |
|
[Unaudited] |
|
|
|
Three-months ended March 31, |
|
|
|
2018 |
|
2017 |
|
OPERATING
ACTIVITIES |
|
|
|
Net income for
the period |
|
6,909 |
|
6,047 |
|
Adjustments reconciling
net income to operating cash flows: |
|
|
|
Deferred
tax |
|
1,220 |
|
981 |
|
Share-based compensation expense |
|
545 |
|
846 |
|
Depreciation and amortization |
|
457 |
|
326 |
|
Accretion
of interest |
|
— |
|
(1,078 |
) |
Realized
gain on financial assets |
|
— |
|
(976 |
) |
Unrealized gain on financial assets |
|
(541 |
) |
(2,399 |
) |
Foreign
exchange (gain) loss |
|
(2,597 |
) |
204 |
|
Share of
net income of associate |
|
(503 |
) |
(319 |
) |
Other
income |
|
— |
|
(155 |
) |
Deferred other income |
|
(94 |
) |
(146 |
) |
|
|
5,396 |
|
3,331 |
|
Changes in non-cash
working capital related to operations |
|
1,468 |
|
905 |
|
Cash inflow from operating activities |
|
6,864 |
|
4,236 |
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
Purchase of marketable
securities |
|
(50,755 |
) |
(44,291 |
) |
Purchase of
intangible |
|
(3,000 |
) |
— |
|
Purchase of property
and equipment |
|
(42 |
) |
— |
|
Purchase of
equities |
|
(400 |
) |
(2,819 |
) |
Investment in
funds |
|
(4,277 |
) |
(4,141 |
) |
Proceeds on maturity of
marketable securities |
|
101,318 |
|
20,486 |
|
Proceeds from
repayments of loans receivable |
|
33,440 |
|
28,058 |
|
Proceeds from disposal
of equities |
|
— |
|
709 |
|
Proceeds from
distribution of funds |
|
343 |
|
2,154 |
|
Cash inflow from investing activities |
|
76,627 |
|
156 |
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
Proceeds from exercise
of stock options |
|
— |
|
345 |
|
Proceeds from
contributions to share purchase plan |
|
49 |
|
43 |
|
Cash inflow from financing activities |
|
49 |
|
388 |
|
|
|
|
|
Increase in
cash during the period |
|
83,540 |
|
4,780 |
|
Cash and cash
equivalents, beginning of the period |
|
496,460 |
|
514,942 |
|
Net
foreign exchange difference |
|
3,408 |
|
(200 |
) |
Cash and cash
equivalents, end of the period |
|
583,408 |
|
519,522 |
|
Marketable securities, end of the period |
|
219,017 |
|
244,256 |
|
Cash, cash equivalents and marketable securities, end of
the period |
|
802,425 |
|
763,778 |
|
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