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Knight Reports 2017 Fourth Quarter and Year End Results

MONTREAL, CANADA--(Marketwired – March 15, 2018) - Knight Therapeutics Inc. (TSX: GUD) ("Knight"), a leading Canadian specialty pharmaceutical company, today reported financial results for its fourth quarter and year ended December 31, 2017. All dollar amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

2017 Highlights

Financial Results

•Revenues were $8,634, an increase of $2,694 or 45% over prior year

•Net income was $17,244, a decrease of $1,316 or 7% versus prior year

•Cash flows from operations at $23,457, an increase of $8,719 or 59% over prior year

 

Products

•Announced the commercialization of Movantik® in Canada

•Submitted Iluvien® for approval for the treatment of diabetic macular edema to Health Canada, and received a Notice of Non-Compliance from Health Canada related to the submission subsequent to year end

•Submitted Probuphine® for approval for the treatment of opioid drug dependence to Health Canada

 

Strategic Lending and Investments

•Issued additional loans of US$16,303 to Synergy CHC Corp (“Synergy”) and 60⁰ Pharmaceuticals LLC (“60P”)

•Received a total of US$19,283 on early repayment of strategic loans from Apicore Inc. and Pro Bono Bio plc.

•Amended loan with Crescita Therapeutics Inc. (“Crescita”) resulting in an early repayment of $2,488

•Received additional 1,577,363 common shares of Medimetriks Pharmaceuticals Inc. (“Medimetriks”) initially valued at US$2,453

•Received dividends of $4,984 from Medison Biotech (1995) Ltd. (“Medison”)

•Received distributions of $8,083 from strategic fund investments and realized a gain of $2,077

•Realized gain of $1,457 on disposal of common shares of Merus Labs International Inc. upon the close of its acquisition by Norgine B.V.

 

Key Subsequent Events

•Submitted Netildex™ for approval for the treatment of inflammatory ocular conditions of the anterior segment of the eye to Health Canada

•Received US$22,757 from Medimetriks including the early payment of principal of US$20,000, interest and fees

•Received US$4,460 as a partial repayment of the 60P loan

 

 “We are pleased to report that 2017 marked a pivotal year for Knight’s simple yet meaningful mission to make people better through the products we sell. In 2017, we launched our first commercial prescription pharmaceutical in Canada,” said Jonathan Ross Goodman, CEO of Knight. “While we continue to advance our pipeline, building Canada’s leading specialty pharmaceutical company is a marathon, not a sprint, and will take time. We continue to view our balance sheet as a significant competitive advantage and remain confident that our patience and focus on securing the rights to innovative products at fair prices will pay healthy dividends in the future.”

 

As at December 31, 2017, Knight had over $765,000 in cash, cash equivalents and marketable securities. From this strong cash position, Knight will continue to pursue business and corporate development opportunities.

 

Financial Results

 

 

Q4-17

Q4-16

Change

2017

2016

Change

 

$1

%2

$1

%2

 

 

 

 

 

 

 

 

 

Revenues

2,544

1,845

699

38%

8,634

5,940

2,694

45%

Gross margin

2,056

1,372

684

50%

7,049

4,390

2,659

61%

Operating expenses

3,266

3,692

426

12%

14,326

11,789

(2,537)

22%

Interest income

7,783

6,099

1,684

28%

26,300

24,414

1,886

8%

Share of net income of associate

341

38

303

797%

854

2,793

(1,939)

69%

Net income

7,145

7,939

(794)

10%

17,244

18,560

(1,316)

7%

Basic earnings per share

0.05

0.06

(0.01)

17%

0.12

0.15

(0.03)

20%

 

1       A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income

2       Percentage change is presented in absolute values

 

Revenue and gross margin: Increase in 2017 is due to addition and growth of Movantik® and an increase in Impavido® sales.

 

Operating expenses: Increase in the year is explained by commercial activities including promotion of Movantik®, and an increase in the number of employees as Knight expands commercialization and prepares to launch new products in Canada.

Share of net income of associate: Decrease in 2017 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.

 ________________________________________

 

Product Updates

 

According to IQVIA data, Movantik® sales in Canada grew by 68% in 2017 and were $936. 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).

 

Knight has submitted three products for approval by Health Canada approval since the start of 2017. Probuphine® is a subdermal implant designed to deliver buprenorphine continuously for six months for the treatment of opioid drug dependence, promoting patient compliance and retention. Iluvien® is a sustained release intravitreal implant for the treatment of diabetic macular edema. 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. If approved, the launch of the Iluvien®, Probuphine® and Netildex™ will be key to the continued expansion of our commercial presence in Canada. Subsequent to year end, Knight received a Notice of Non-Compliance from Health Canada regarding its submission for Iluvien. Knight plans to respond to Health Canada's issues within the prescribed 90-day window.

 

Strategic Lending and Investment Updates 

 

On August 9, 2017, Knight issued an additional three-year secured loan of US$10,000 with an annual interest rate of 10.5% to Synergy. As part of the transaction, Knight will receive a success fee upon maturity of the loan.

 

On August 14, 2017, Knight amended its loan with Crescita. The amendment resulted in an early repayment of $2,488 reducing the principal balance to $4,100. Additionally, Knight agreed to amend the collateral on the loan with the release of a letter of credit in exchange for a general security interest over Crescita's assets. The interest rate of 9% per annum and maturity date of January 22, 2022 remain unchanged. On March 12, 2018, Knight subscribed for 754,716 shares of Crescita for $400 following the exercise of rights received as part of a Crescita rights offering. As at March 14, 2018, Knight owns a total of 2,834,689 common shares of Crescita representing approximately 13.5% of its common shares oustanding. 

 

During 2017, Knight issued an additional US$6,303 under its loan agreement with 60P. As at December 31, 2017, Knight had issued a total of US$9,145 to 60P at an interest rate of 15% per annum with a maturity date of December 31, 2020. On February 8, 2018, 60P repaid US$4,460 of the outstanding loan amount. In addition, pursuant to its loan agreements with Medimetriks, Knight received an additional 1,577,363 common shares of Medimetriks in 2017, increasing its ownership to 15.6% on a fully diluted basis as at December 31, 2017. On March 7, 2018, Knight received an early repayment from Medimetriks for principal of US$20,000 and interest and fees. ________________________________________

 

Conference Call Notice 

 

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

 

Date: Thursday, March 15, 2018

Time: 8:30 a.m. EST

Telephone: 1-877-223-4471 or 647-788-4922

Webcast: www.gudknight.com or http://bit.ly/2tmGaa8

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 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
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.gudknight.com

 

 

CONSOLIDATED BALANCE SHEETS

[In thousands of Canadian dollars]

 

As at December 31,

 

2017

2016

ASSETS

 

 

 

Current

 

 

 

Cash and cash equivalents

 

496,460

514,942

Marketable securities

 

232,573

221,108

Trade and other receivables

 

9,176

6,440

Inventories

 

1,224

790

Other current financial assets

 

58,848

51,789

Income taxes receivable

 

792

4,683

Total current assets

 

799,073

799,752

 

 

 

 

Marketable securities

 

36,000

Property and equipment

 

633

32

Intangible assets

 

12,576

14,153

Other financial assets

 

76,988

90,643

Investment in associate

 

75,983

80,113

Deferred income tax assets

 

4,730

6,077

Total assets

 

1,005,983

990,770

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current

 

 

 

Accounts payable and accrued liabilities

 

5,025

3,207

Income taxes payable

 

7,599

5,659

Other balances payable

 

1,354

537

Deferred other income

 

282

355

Total current liabilities

 

14,260

9,758

 

 

 

 

Deferred other income

 

167

417

Other balances payable

 

348

877

Total liabilities

 

14,775

11,052

 

 

 

 

Shareholders’ equity

 

 

 

Share capital

 

761,490

760,447

Warrants

 

785

785

Contributed surplus

 

12,196

9,469

Accumulated other comprehensive income

 

20,907

30,431

Retained earnings

 

195,830

178,586

Total shareholders’ equity

 

991,208

979,718

Total liabilities and shareholders’ equity

 

1,005,983

990,770

 

 


CONSOLIDATED STATEMENTS OF INCOME

[In thousands of Canadian dollars, except for share and per share amounts]

 

 

 

2017

2016

 

 

 

 

Revenues

 

8,634

5,940

Cost of goods sold

 

1,585

1,550

Gross margin

 

7,049

4,390

 

 

 

 

Expenses

 

 

 

Selling and marketing

 

3,378

532

General and administrative

 

8,198

9,302

Research and development

 

2,750

1,955

 

 

(7,277)

(7,399)

 

 

 

 

Depreciation of property and equipment

 

8

18

Amortization of intangible assets

 

1,621

419

Interest income

 

(26,300)

(24,414)

Other income

 

(1,527)

(3,894)

Net gain on financial assets

 

(6,734)

(1,659)

Impairment on financial assets

 

1,621

Share of net income of associate

 

(854)

(2,793)

Foreign exchange loss

 

3,689

1,451

Income before income taxes

 

21,199

23,473

 

 

 

 

Income tax expense

 

 

 

Current

 

1,897

4,190

Deferred

 

2,058

723

Net income for the year

 

17,244

18,560

 

 

 

 

Attributable to shareholders of the Company

 

Basic earnings per share

 

0.12

0.15

Diluted earnings per share

 

0.12

0.15

 

Weighted average number of common shares outstanding

 

Basic

 

142,763,730

120,723,270

Diluted

 

143,416,666

121,263,522

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS

[In thousands of Canadian dollars]

 

 

 

2017

2016

OPERATING ACTIVITIES

 

 

 

Net income for the year

 

17,244

18,560

Adjustments reconciling net income to operating cash flows:

 

 

 

Deferred tax

 

2,058

723

Share-based compensation expense

 

3,038

3,640

Depreciation and amortization

 

1,629

437

Accretion of interest

 

(5,382)

(6,201)

Realized gain on financial assets

 

(4,421)

(2,569)

Unrealized (gain) loss on financial assets

 

(2,313)

910

Impairment on financial assets

 

1,621

Foreign exchange loss

 

3,689

1,451

Share of net income from associate

 

(854)

(2,793)

Other income

 

(563)

(1,274)

Deferred other income

 

(323)

479

 

 

15,423

13,363

Changes in non-cash working capital related to operations

 

3,050

(3,462)

Dividends from associate

 

4,984

4,837

Cash inflow from operating activities

 

23,457

14,738

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Purchase of marketable securities

 

(314,358)

(535,685)

Purchase of intangibles

 

(9,853)

Purchase of property and equipment

 

(126)

(7)

Issuance of loans receivables

 

(20,112)

(43,274)

Purchase of equities

 

(2,939)

(16,371)

Investment in funds

 

(21,314)

(16,503)

Proceeds from sale of marketable securities

 

259,067

544,812

Proceeds from repayments of loans receivable

 

38,835

11,324

Proceeds from disposal of equities

 

12,872

9,572

Proceeds from distribution of funds

 

8,083

4,610

Proceeds from disposal of derivatives

 

2,157

Cash outflow from investing activities

 

(39,992)

(49,218)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Proceeds from share issuance, net of costs

 

313,574

Proceeds from exercise of stock options

 

551

Proceeds from contributions to share purchase plan

 

195

105

Issuance of share purchase loans

 

(350)

Cash inflow from financing activities

 

746

313,329

 

 

 

 

(Decrease) increase in cash during the year

 

(15,789)

278,849

Cash and cash equivalents, beginning of the year

 

514,942

237,481

Net foreign exchange difference

 

(2,693)

(1,388)

Cash and cash equivalents, end of the year

 

496,460

514,942

Marketable securities, end of the year

 

268,573

221,108

Cash, cash equivalents and marketable securities, end of the year

 

765,033

736,050

 

 

 

 

 

 

 

 

 

 

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