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Knight Reports Second Quarter 2015 Results

MONTREAL, CANADA - (August 12, 2015) - Knight Therapeutics Inc. (TSX:GUD) (“Knight” or the “Company”), a leading Canadian specialty pharmaceutical company, today reported its second quarter ended June 30, 2015 financial results. 

Second Quarter 2015 Highlights

•On April 2, 2015, Knight entered into an agreement with HarbourVest Partners LLC, whereby the Company committed to invest $10.0 million into HarbourVest Canada Growth Fund L.P. 

•On June 4, 2015, Knight extended a secured loan of $4.0 million to Profound Medical Inc. (“Profound”) which bears interest at 15.0% per annum for an initial 4 year term. In addition, Knight purchased $2.0 million of equity in Profound and entered into an agreement with Profound pursuant to which Knight will act as the exclusive Canadian distributor of the its TULSA-PRO system.

•On June 24, 2015, Knight acquired the assets related to Neuragen® following default by Origin BioMed Inc. under its secured loan agreement with Knight. Neuragen® is the first all-natural, non-prescription topical treatment for rapid relief of pain associated with diabetic and peripheral neuropathy, approved for sale in Canada and the U.S. 

•On June 26, 2015, Knight entered into a sale agreement with Synergy CHC Corp. related to the U.S. rights to Neuragen® acquired on June 24, 2015, for minimum aggregate consideration of $1.5 million [US$1.2 million]. Knight retains Canadian rights and other ex-U.S. global rights to Neuragen®.

•On June 26, 2015, Knight issued a secured loan of $18.5 million [US$15 million] to Pro Bono Bio PLC (“Pro Bono Bio”) which bears interest at 12.0% per annum and matures on June 25, 2018. In conjunction with the loan, Knight acquired the exclusive Quebec and Israeli rights to commercialize Pro Bono Bio’s Flexiseq™ range of pain relief products and its SEQuaderma™ derma-cosmetic range of products, as well as the exclusive Canadian and Israeli rights to two earlier stage product groups.

•On June 26, 2015, Knight issued a secured loan of $800,000 to Extenway Solutions Inc. which bears interest at 15.0% per annum and matures on June 25, 2021. 

•On June 30, 2015 Knight entered into an agreement with Sectoral Asset Management Inc. (“Sectoral”), whereby the Company committed to invest $12.6 million [US$10.0 million] into New Emerging Medical Opportunities Fund III, Ltd. This was subsequent to Knight receiving earlier in the quarter a partial distribution of $17.0 million [US$13.6 million] related to an investment in Sectoral’s New Emerging Medical Opportunities Fund II, Ltd.

•On June 30, 2015, Knight, through one of its wholly owned-subsidiaries, entered into an agreement with TVM Capital Life Science, whereby the Company committed to invest $2.0 million [US$1.6 million] into TVM Life Science Venture VII.

Subsequent to the Quarter Ended June 30, 2015 Highlights:

•On July 9, 2015, Knight invested in the Bloom Burton Healthcare Lending Trust managed by Stratigis Capital Advisors Inc. by subscribing for $500,000 as part of a $15.9 million private placement. 

•On July 21, 2015, Knight entered into an agreement with Alimera Sciences, Inc. pursuant to which Knight acquired the exclusive Canadian distribution rights to ILUVIEN®, a sustained release intravitreal implant for the treatment of diabetic macular edema. 

•On July 24, 2015, Knight entered into an agreement with Akorn, Inc. pursuant to which Knight acquired the exclusive Canadian distribution rights to AzaSite®, an eye drop solution for topical treatment of bacterial conjunctivitis, commonly known as pink eye. 

•On August 5, 2015, Knight issued a secured loan of $1.3 million [US$1 million] to Ember Therapeutics Inc. (“Ember”) which bears interest at 12.5% per annum for a one year term. Knight also acquired the exclusive rights to commercialize Ember’s promising Bone Morphogenetic Protein-7 pipeline, including targeted therapies for osteoarthritis and kidney fibrosis, in Canada, Israel, Russia and Sub-Saharan Africa. 

•On August 6, 2015, Knight’s New Drug Submission (NDS) was accepted for review by Health Canada for ATryn® (Antithrombin (Recombinant)) for the prevention of peri-operative and peri-partum thromboembolic events in hereditary antithrombin deficient patients. 

Second Quarter 2015 Financial Results Reported in Canadian Dollars 

The Company’s financial statements for the period ended June 30, 2015 have been prepared in accordance with IAS 34, Interim Financial Reporting.

For the quarter ended June 30, 2015, the Company reported revenues of $333 thousand and net income of $8.5 million. For the six-month period ended June 30, 2015, the Company reported revenues of $580 thousand and net income of $22.3 million. As at June 30, 2015, the Company had $437.0 million in cash and marketable securities and 93,095,823 common shares outstanding.

“During and subsequent to the quarter, we added a total of nine innovative specialty pharmaceuticals, OTC products and medical devices to our pipeline thanks to the relentless execution of our proven strategies,” said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. “Looking ahead, we plan to continue building our pipeline while also focusing our attention on the re-launch Neuragen® in Canada.”

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 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 Wednesday, September 9, 2015 at 11:59 p.m. ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 47058125. 

Notice of Third Quarter 2015 Results 

Knight expects to release its third quarter 2015 financial results on the morning of Wednesday, November 11, 2015. 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 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'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 the Company 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. The Company 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 the Company 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 the Company’s Annual Report and in the Company’s Annual Information Form for the year ended December 31, 2014. The Company 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. 

For further information please contact

Knight Therapeutics Inc.
Jeffrey Kadanoff, P.Eng., MBA
Chief Financial Officer
Tel: 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

 

As at

[in Canadian dollars]

[unaudited] 

 

June 30, 2015

December 31, 2014

 

$

$

ASSETS

 

 

Current

 

 

Cash and cash equivalents

329,047,144

283,445,451

Marketable securities

107,949,722

133,411,500

Accounts receivable

1,452,227

740,545

Investment tax credits receivable

200,000

Inventory

1,528,923

601,780

Other current financial assets

6,924,454

10,089,462

Other current assets

433,612

283,867

Total current assets

447,536,082

428,572,605

Property and equipment

32,642

47,728

Intangible assets

3,277,207

845,761

Other financial assets

76,689,550

57,147,077

Deferred income tax assets

2,600,276

Total assets

530,135,757

486,613,171

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current

 

 

Accounts payable and accrued liabilities

1,502,514

2,089,911

Income taxes payable

1,963,435

4,492,701

Deferred revenue

330,716

1,039,825

Total current liabilities

3,796,665

7,622,437

 

 

 

Shareholders’ equity

 

 

Share capital

358,097,490

341,065,000

Warrants

161,329

Contributed surplus

4,116,779

2,100,025

Accumulated other comprehensive income

15,768,857

9,966,837

Retained earnings

148,194,637

125,858,872

Total shareholders’ equity

526,339,092

478,990,734

Total liabilities and shareholders’ equity

530,135,757

486,613,171

 INTERIM CONSOLIDATED STATEMENTS OF INCOME 

[in Canadian dollars]

[unaudited]

 

 

Three-month period ended

Six-month period ended

 

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

 

$

$

$

$

 

 

 

 

 

Revenue

332,674

247,373

580,030

248,814

Cost of goods sold

271,856

358,095

Gross margin

60,818

247,373

221,935

248,814

 

 

 

 

 

Expenses

 

 

 

 

General and administrative

2,446,822

693,360

5,123,473

770,632

Research and development

300,124

112,736

634,714

127,773

 

(2,686,128)

(558,723)

(5,536,252)

(649,591)

Depreciation of property and equipment

7,545

6,515

15,087

7,008

Amortization of intangible assets

20,927

18,970

42,048

25,294

Interest expense

4,500

23,540

Interest income

(3,595,573)

(878,744)

(7,561,603)

(919,727)

Other income

(525,541)

(104,859)

(966,718)

(104,859)

Net gain on financial assets

(6,495,488)

(14,024,076)

Purchase gain on business combination

(550,000)

Gain on settlement of loan receivable

(358,204)

(358,204)

Foreign exchange loss (gain)

592,771

(1,210)

(3,817,774)

(1,210)

Income before income taxes

7,667,435

396,105

21,684,988

320,363

Income tax (recovery) expense

(1,053,503)

5,488

(1,053,503)

5,488

Deferred income tax expense

201,363

402,726

Net income for the period

8,519,575

390,617

22,335,765

314,875

Basic and diluted earnings per share

0.09

0.006

 

0.24

 

0.009

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

Basic

93,089,609

63,066,993

92,816,245

35,725,338

Diluted

93,222,325

63,166,988

93,028,011

35,784,315

 

                                                                                                                    

 


                                                                                                                                                                                                           

 INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

[in Canadian dollars]

[unaudited]                                                                                                                      

 

Three-month

period ended

Six-month

 period ended

 

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

 

$

$

$

$

 

 

 

 

 

Net income for the period

8,519,575

390,617

 

22,335,765

314,875

 

 

 

 

 

Realized gain reclassified to statement of income

(net of tax of $810,435 and $1.3 million for the three and six-month periods ended June 30, 2015)

(5,206,098)

 

 

 

 

 

(8,050,242)

 

 

 

 

 

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

 

 

 

 

Unrealized gain on available-for-sale financial instruments (net of tax of $71,842  and $403,972 for the three and six-month periods ended June 30, 2015, respectively and $265,929 for the three and six-month periods ended June 30, 2014)

897,855

1,711,235

 

 

 

 

 

 

 

2,999,712

1,711,235

Unrealized (loss) gain on translating financial statements

of foreign operations

(2,064,641)

 

 

10,852,550

Other comprehensive (loss) income for the period

(6,372,884)

1,711,235

 

 

5,802,020

1,711,235

Comprehensive income for the period

2,146,691

2,101,852

 

28,137,785

2,026,110

  

[in Canadian dollars]

[unaudited]

 INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

 

Share
capital

Warrants

Contributed surplus

Accumulated other comprehensive income

Retained earnings

Total shareholders’ equity

 

$

$

$

$

$

$

Balance on Incorporation and as at January 1, 2014

1

 

 

1

Net income and comprehensive income for the period

1,711,235

314,875

2,026,110

Stock based compensation expense

 

258,467

258,467

Issuance of common shares as part of Business Separation Agreement

11,909,000

11,909,000

Issuance of warrants, net of costs and deferred tax

244,320,699

491,877

244,812,576

Deemed exercise of Special Warrants into common shares

244,320,699

(244,320,699)

Share purchase loans

(450,000)

(450,000)

Balance as at June 30, 2014

255,779,700

750,344

1,711,235

314,875

258,556,154

 

 

Share
capital

Warrants

Contributed surplus

Accumulated other comprehensive income

Retained earnings

Total shareholders’ equity

 

$

$

$

$

$

$

Balance  as at January 1, 2015

341,065,000

2,100,025

9,966,837

125,858,872

478,990,734

Net income for the period

22,335,765

22,335,765

Realized gain reclassified to statement of income, net of tax of $1.3 million

(8,050,242)

(8,050,242)

Change in fair value of available-for-sale financial instruments, net of tax of $403,972

2,999,712

2,999,712

Unrealized gain on translating financial statements of foreign operations

10,852,550

10,852,550

Share-based compensation expense

2,865,363

2,865,363

Issuance of shares upon financing, net of costs and includes deferred tax of $2.2 million

14,573,364

14,573,364

Issuance of shares upon exercise of stock options

1,486,982

(553,482)

933,500

Issuance of warrants

161,329

161,329

Exercise of compensation warrants

930,227

(295,127)

635,100

Issuance of shares under share purchase plan

41,917

41,917

Balance as at June 30, 2015

358,097,490

161,329

4,116,779

15,768,857

148,194,637

526,339,092

 

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

[in Canadian dollars]

[unaudited]          

 

Six-month period ended

 

June 30, 2015

June 30, 2014

 

$

$

OPERATING ACTIVITIES

 

 

Net income

22,335,765

314,875

Adjustments reconciling net income to operating cash flows:

 

 

Deferred tax

402,726

Share-based compensation

2,865,363

258,467

Depreciation of property and equipment

15,087

7,008

Amortization of intangible assets

42,048

25,294

Accretion of interest

(2,219,887)

Gain on disposal of other financial assets

(13,799,211)

Gain on settlement of loan receivable

(358,204)

Purchase gain on business combination

(550,000)

Unrealized loss on derivative

(224,865)

Unrealized foreign exchange gain

(4,145,730)

Changes in non-cash working capital related to operations

(5,375,802)

(364,230)

Deferred revenue

(709,108)

Cash inflow (outflow) from operating activities

(1,721,818)

241,414

INVESTING ACTIVITIES

 

 

Purchase of marketable securities

(383,577,657)

Proceeds from disposal of marketable securities

420,690,955

Purchase of other current financial assets

(2,356,037)

Proceeds from disposal of other financial assets

29,242,137

Investment in funds

(8,294,952)

(10,664,025)

Issuance of loans and debentures receivable

(31,346,858)

(850,000)

Proceeds from repayments on loans receivable

10,027,773

Purchase of property and equipment

(64,484)

Consideration paid on business combination

(1,750,000)

Cash inflow (outflow) from investing activities

32,635,361

(11,578,509)

FINANCING ACTIVITIES

 

 

Net impact of Business Separation Agreement

1,000,000

Net proceeds from warrants issuance

245,294,330

Proceeds from exercise of Over-Allotment Option

12,424,253

Proceeds from exercise of compensation warrants

635,100

Costs related to prior period share financing

(206,828)

Share option plan

933,500

Share purchase plan

41,917

Share purchase loans

(450,000)

Loan from related party

Cash inflow from financing activities

13,827,942

245,844,330

Increase in cash during the period

44,741,485

234,507,235

Cash, beginning of year

283,445,451

1

Net foreign exchange difference

860,208

Cash, end of year

329,047,144

234,507,236

 

 

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