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Knight Reports First Quarter 2016 Results

MONTREAL, CANADA--(Marketwired - May 10, 2016) - Knight Therapeutics Inc. (TSX:GUD) ("Knight" or the "Company"), a leading Canadian specialty pharmaceutical company, today reported financial results for its first quarter ended March 31, 2016. In thousands of Canadian dollars except for share and per share amounts.

First Quarter 2016 Highlights 

•On January 4, 2016, Knight issued to 60⁰ Pharmaceuticals LLC (“60P”) US$1.5 million as a second tranche of a secured loan of up to US$4 million. Knight entered into the secured loan agreement with 60P and issued the first tranche of US$0.5 million on December 10, 2015. The loan bears interest at 15.0% per annum and will mature on December 31, 2020.

•On January 22, 2016, Knight extended secured loans in the aggregate amount of $9 million to INTEGA Skin Sciences Inc. (“INTEGA”) to support its acquisition of Valeant Groupe Cosméderme Inc.  In conjunction with the financing transaction, Knight entered into an exclusive distribution, license and supply agreement to commercialize all INTEGA’s current and future products, to the extent that INTEGA possesses the right to commercialize such products, in Israel, Romania, Russia, Sub-Saharan Africa and the Caribbean. Subject to conditions, Knight may also receive rights to certain future products in Canada.

•On February 1, 2016, Knight entered into an exclusive licensing agreement with Braeburn Pharmaceuticals, Inc. to commercialize PROBUPHINE® in Canada. PROBUPHINE® is an investigational subdermal implant designed to deliver buprenorphine continuously for six months following a single treatment, promoting patient compliance and retention as well as helping to prevent accidental paediatric exposure.

On February 17, 2016, Knight announced that it had agreed to issue a secured loan of up to US$20 million to Medimetriks Pharmaceuticals, Inc. (“Medimetriks”) to support its acquisition of the exclusive U.S. development and commercialization rights for OPA-15406 from Otsuka Pharmaceutical Co., Ltd. In addition to the secured loan, Knight and Medimetriks have entered into a license and distribution agreement whereby Knight will be Medimetriks' exclusive distribution partner in Canada, Israel, Romania, Russia, Sub-Saharan Africa and the Caribbean for future Medimetriks products. Medimetriks currently does not have rights to any products in these territories.

On March 15, 2016, Knight announced that it had terminated its agreement with Paladin Labs (Barbados) Inc., (an affiliate of Endo International plc) related to the distribution and sale of Impavido® in all countries other than the U.S.

On March 22, 2016, Knight, through one of its wholly-owned subsidiaries, announced that its U.S. commercialization partner, Profounda Inc. (“Profounda”), has launched Impavido® (miltefosine) in the United States. Knight entered into an exclusive distribution agreement with Profounda in September 2015 to commercialize Impavido®, an oral treatment for visceral, mucosal and cutaneous leishmaniasis in the U.S.

•On March 23, 2016, Knight, through one of its wholly-owned subsidiaries, announced the receipt of a ILS 7.1 million [$2.4 million] dividend from Medison Biotech (1995) Ltd.

Subsequent to the Quarter Ended March 31, 2016 Highlights

•On April 25, 2016, Knight, through one of its wholly-owned subsidiaries announced that it had entered into an exclusive distribution agreement with EMPA Healthcare LLC (“EMPA”) to commercialize Neuragen®, in the United Arab Emirates and Kuwait. 

•On April 25, 2016, Knight, announced that it had received a Notice of Deficiency for its ATryn® New Drug Submission. In its notice, Health Canada requested additional technical information on ATryn® in order to complete its assessment of the product.

Financial Results Reported in Thousands of Canadian Dollars 

For the quarter ended March 31, 2016, the Company reported revenue of $1,068 and net income of $477. As at March 31, 2016, the Company had $426,235 in cash, cash equivalents and marketable securities and 103,478,063 common shares outstanding.

"We are off to a GUD start in 2016 having signed long-term partnerships with Braeburn, EMPA, INTEGA and Medimetriks,” said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. "Rest assured that the Knight team is working diligently toward deploying capital in low risk, fair return opportunities.” 

Conference Call Notice 

Knight will host a conference call to discuss its first 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 a.m. ET until Friday, June 10, 2016 at 11:59 p.m. ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 77734316. 

Notice of Second Quarter 2016 Results 

Knight expects to release its second quarter 2016 financial results on the morning of Thursday, August 11, 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.comor 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. 

CONTACT INFORMATION:

Knight Therapeutics Inc.
Jeffrey Kadanoff, P.Eng., MBA
Chief Financial Officer
514-484-GUD1 (4831)
Fax: 514-481-4116
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.gud-knight.com

 

INTERIM CONSOLIDATED BALANCE SHEETS

[In thousands of Canadian dollars]

As at

 

 

[Unaudited]

 

 

 

 

March 31,

December 31,

 

2016

2015

 

 

$

$

ASSETS

 

 

Current

 

 

Cash and cash equivalents

204,785

237,481

Marketable securities

221,450

233,726

Accounts receivable

2,983

2,994

Inventory

1,339

1,460

Other current financial assets

31,222

23,588

Income taxes receivable

197

231

Total current assets

461,976

499,480

Property and equipment

10

18

Intangible assets

6,079

3,320

Other financial assets

88,492

62,616

Investment in associate

79,458

81,027

Deferred income tax assets

2,321

2,527

Total assets

638,336

648,988

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current

 

 

Accounts payable and accrued liabilities

1,294

2,416

Income taxes payable

4,218

4,031

Deferred revenue

151

293

Total current liabilities

5,663

6,740

Deferred income tax liabilities

-

186

Total liabilities

5,663

6,926

 

Shareholders' equity

 

 

Share capital

439,176

439,148

Warrants

161

161

Contributed surplus

7,845

6,772

Accumulated other comprehensive income

24,988

35,955

Retained earnings

160,503

160,026

Total shareholders' equity

632,673

642,062

Total liabilities and shareholders' equity

638,336

648,988

INTERIM CONSOLIDATED STATEMENTS OF INCOME

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

For the period ended March 31

 

 

 

 

[Unaudited]

 

 

 

 

 

 

 

2016

 

2015

 

 

$

 

$

 

Revenue

1,068

 

247

 

Cost of goods sold

246

 

86

 

Gross margin

822

 

161

 

Expenses

 

 

 

 

General and administrative

2,193

 

2,677

 

Research and development

283

 

334

 

 

(1,654

)

(2,850

)

Depreciation of property and equipment

8

 

8

 

Amortization of intangible assets

41

 

21

 

Interest income

(4,816

)

(3,966

)

Other income

(1,099

)

(441

)

Net gain on financial assets

(1,729

)

(7,529

)

Purchase gain on acquisition

-

 

(550

)

Share of net income of associate

(854

)

-

 

Foreign exchange loss (gain)

3,770

 

(4,410

)

Income before income taxes

3,025

 

14,017

 

Income tax expense

2,541

 

-

 

Deferred income tax expense

7

 

201

 

Net income for the period

477

 

13,816

 

Attributable to shareholders of the Company

 

 

 

 

Basic earnings per share

$0.005

 

$0.15

 

Fully diluted earnings per share

$0.005

 

$0.15

 

Weighted average number of common shares outstanding

 

 

 

 

Basic

103,475,043

 

92,539,843

 

Diluted

103,688,167

 

92,820,153

 

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

[In thousands of Canadian dollars]

For the period ended March 31

 

 

 

 

[Unaudited]

 

 

 

 

 

2016

 

2015

 

 

$

 

$

 

 

 

Net income for the period

477

 

13,816

 

Realized gain reclassified to statement of income (net of tax of $64 and $440 as at March 31, 2015)

(410

)

(2,844

)

Other comprehensive income to be reclassified to income in subsequent periods:

 

 

 

 

Change in fair value of available-for-sale financial instruments (net of tax of $72 and $332 as at March 31, 2015)

421

 

2,102

 

Unrealized (loss) gain on translating financial statements of foreign operations

(10,978

)

12,917

 

Other comprehensive (loss) income for the period

(10,967

)

12,175

 

Comprehensive (loss) income for the period

(10,490

)

25,991

 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

[In thousands of Canadian dollars]

[Unaudited]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

other

 

 

Total

 

 

Share

 

Contributed

 

comprehensive

 

Retained

shareholders'

 

 

capital

Warrants

surplus

 

income

 

earnings

equity

 

 

$

$

$

 

$

 

$

$

 

Balance on January 1, 2015

341,065

-

2,100

 

9,967

 

125,859

478,991

 

Net income for the period

-

-

-

 

-

 

13,816

13,816

 

Realized gain reclassified to statement of income, net of tax of $440

-

-

-

 

(2,844

)

-

(2,844

)

Change in fair value of available-for-sale financial instruments, net of tax of $332

-

-

-

 

2,102

 

-

2,102

 

Unrealized gain on translating financial statements of foreign operations

-

-

-

 

12,917

 

-

12,917

 

Comprehensive Income

-

-

-

 

22,142

 

139,675

504,982

 

Share-based compensation expense

-

-

1,314

 

-

 

-

1,314

 

Issuance of shares upon financing, net of costs and deferred tax of $93

12,510

-

-

 

-

 

-

12,510

 

Exercise of compensation warrants

930

-

(295

)

-

 

-

635

 

Issuance of shares under share purchase plan

10

-

-

 

-

 

-

10

 

Balance as at March 31, 2015

354,515

-

3,119

 

22,142

 

139,675

519,451

 

 

 



Share
capital




Warrants



Contributed
surplus

Accumulated
other
comprehensive
income

 



Retained
earnings


Total
shareholders'
equity

 

 

$

$

$

$

 

$

$

 

Balance on January 1, 2016

439,148

161

6,772

35,955

 

160,026

642,062

 

Net income for the period

-

-

-

-

 

477

477

 

Realized gain reclassified to statement of income, net of tax of $64

-

-

-

(410

)

-

(410

)

Change in fair value of available-for-sale financial instruments, net of tax of $72

-

-

-

421

 

-

421

 

Change in unrealized loss on translating financial statements of foreign operations

-

-

-

(10,978

)

-

(10,978

)

Comprehensive Income

-

-

-

24,988

 

160,503

631,572

 

Share-based compensation expense

-

-

1,073

-

 

-

1,073

 

Issuance of shares under share purchase plan

28

-

-

-

 

-

28

 

Balance as at March 31, 2016

439,176

161

7,845

24,988

 

160,503

632,673

 

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

[In thousands of Canadian dollars]

 

For the period ended March 31

 

 

 

 

[Unaudited]

 

 

 

 

 

2016

 

2015

 

 

$

 

$

 

OPERATING ACTIVITIES

 

 

 

 

Net income

477

 

13,816

 

Adjustments reconciling net income to operating cash flows:

 

 

 

 

Deferred tax

7

 

201

 

Share-based compensation

1,073

 

1,313

 

Depreciation of property and equipment

8

 

8

 

Amortization of intangible assets

41

 

21

 

Accretion of interest

(1,105

)

(1,318

)

Gain on sale of other financial assets

(656

)

(7,551

)

Unrealized (gain) loss on derivatives

(1,073

)

23

 

Unrealized foreign exchange gain (loss)

3,760

 

(4,399

)

Purchase gain on business combination

-

 

(550

)

Share of net income from associate

(854

)

-

 

Changes in non-cash working capital related to operations

(969

)

(1,990

)

Deferred revenue

(142

)

(463

)

Cash inflow (outflow) from operating activities

567

 

(889

)

 

 

INVESTING ACTIVITIES

 

 

 

 

Purchase of marketable securities

(147,399

)

(273,933

)

Purchase of financial assets

(3,633

)

(356

)

Purchase of intangible assets, net

(2,924

)

-

 

Investment in funds

(5,833

)

(312

)

Issuance of loans receivable

(34,851

)

(8,525

)

Proceeds from repayments of loans receivable

1,018

 

9,971

 

Proceeds from disposal of financial assets

3,410

 

12,227

 

Proceeds from sale of marketable securities

152,226

 

267,505

 

Dividend income from associate

2,423

 

-

 

Consideration paid on business combination

-

 

(1,750

)

Cash (outflow) inflow from investing activities

(35,563

)

4,827

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

Cost related to prior period share issuance

-

 

(207

)

Proceeds from exercise of compensation warrants

-

 

635

 

Proceeds from exercise of an over-allotment option

-

 

12,424

 

Share purchase plan

28

 

10

 

Cash inflow from financing activities

28

 

12,862

 

Increase (decrease) in cash during the period

(34,968

)

16,800

 

Cash, beginning of period

237,481

 

283,445

 

Net foreign exchange difference

2,272

 

1,048

 

Cash, end of period

204,785

 

301,293

 

The following amounts are classified within operating activities:

 

 

 

 

Interest received

3,773

 

2,587

 

Income taxes paid

2,334

 

-

 

 

 

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