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KNIGHT REPORTS THIRD QUARTER 2014 RESULTS

KNIGHT REPORTS THIRD QUARTER 2014 RESULTS

Montreal, Canada – November 12, 2014 - Knight Therapeutics Inc. ("Knight") (TSX: GUD) today reported its financial results for the quarter ended September 30, 2014.

Third Quarter 2014 Highlights

  • On July 3, 2014, Knight entered into a secured debt agreement whereby it issued a secured loan of $6.9 million [US$6.5 million] to Apicore Inc. and Apigen Investments Limited (collectively “Apicore”) bearing interest at a rate of 12% per annum and maturing on June 30, 2018.
  • On September 2,2014, Knight entered into an asset purchase agreement with Orphan Canada Inc. (“Orphan”) related to the Canadian rights for ATryn® and PHOTOFRIN® (porfimer sodium), two innovative pharmaceutical products approved for sale in multiple jurisdictions
  • Also on September 2, 2014, the Company announced that Bourne Partners, a leading healthcare-focused merchant banking firm, has been engaged by Knight to assist with its corporate development efforts.

Subsequent to the quarter ended September 30, 2014:

  • On October 2, 2014, Knight entered into an agreement with Forbion Capital Partners (“Forbion”) whereby the Company will be investing $27.5 million [EUR19.5 million] into Forbion Capital Fund III C.V. (“FCF III”). 
  • On October 28, 2014, Knight entered into an agreement with Teralys Capital (“Teralys”) whereby the Company will be investing $30 million into Teralys Capital Innovation Fund LP (“Teralys Fund”). 

To date, Knight has allocated $70 million out of the $130 million that the Company intends to invest in successful life science funds. These investments including Sectoral Asset Management, Forbion and Teralys have an ability to leverage their broad life sciences industry experience and existing relationships with key life science companies, including well placed introductions to their investee companies, to help secure Canadian product rights for the Company.

Third Quarter 2014 Financial Results Reported in Canadian Dollars 

The Company’s financial statements for the period ended September 30, 2014 have been prepared in accordance with IAS 34, Interim Financial Reporting.

For the three-month period ended September 30, 2014, the Company reported Revenues of $6,901 and Net Income of $562,558. For the nine-month period ended September 30, 2014, the Company reported Revenues of $255,715 and Net Income of $877,434. As at September 30, 2014, the Company had $227.2 million of cash and 77,818,403 common shares outstanding.

 “We are making GUD progress on becoming a Paladin 2.0. In the last nine months, we have 1) committed $70 million toward our fund strategy to secure Canadian rights to innovative products, 2) licensed in two late stage products through the acquisition of Orphan Canada, 3) lent $8 million on a secured basis to two life science companies, 4) received approval for Impavido in the U.S. by the FDA, 5) were granted the fourth priority review voucher ever issued by the FDA and hired a banker to monetize it, and most importantly 6) built a team of excellence to make it all happen.” said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. 

Conference Call Notice 

Knight will host a conference call to discuss its third 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).

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 world markets. For more information about Knight Therapeutics Inc., please visit the Company's website at www.gud-knight.com or at www.sedar.com.

FOR MORE INFORMATION, PLEASE CONTACT: 

Jeffrey Kadanoff, P.Eng., MBA

Chief Financial Officer 

Knight Therapeutics Inc.

Tel: 514-484-4831

Fax: 514-481-4116 

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Website:

This press release may contain forward-looking statements and predictions. 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 that these assumptions regarding the 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 final application for listing on TSX Venture Exchange and in two Short Form Prospectuses which can be found on SEDAR at www.sedar.com, which investors should consult for additional information. 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.

Neither TSX nor its Regulation Services Providers (as that term is defined in policies of TSX) accepts responsibility for the adequacy or accuracy of this release.

Knight Therapeutics Inc.

INTERIM CONDENSED CONSOLIDATED

 BALANCE SHEETS

As at

[In Canadian dollars]

[unaudited]

 

 

September 30,
2014

December 31, 2013

 

 

$

$

ASSETS

 

 

 

Current assets

 

 

 

Cash 

 

  227,223,348 

1

Interest, royalties and other receivable 

 

527,477

Other current assets 

 

238,795

Total current assets 

 

227,989,620

1

 

 

 

 

Property and equipment 

 

55,274

Intangible assets

 

864,731

Intangible asset held for sale 

 

10,000,000

Other financial assets 

 

22,704,212

Total assets

 

261,613,837

1

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable and accruals 

 

755,990

Deferred revenue

 

280,308

Total current liabilities 

 

1,036,298

Shareholders’ equity

 

 

 

Share capital

 

256,312,458

1

Contributed surplus

 

1,501,760

Accumulated other comprehensive income

 

1,885,887

Retained earnings

 

877,434

Total shareholders’ equity

 

260,577,539

1

Total liabilities and shareholders’ equity

 

261,613,837

1

Knight Therapeutics Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

[In Canadian dollars except for share amounts]

[unaudited]

 

 

Three months ended September 30, 2014

 

Nine months ended September 30, 2014

 

 

$

 

$

REVENUE 

 

 

 

 

Royalty income

 

6,901

 

255,715

EXPENSES

 

 

 

 

General and administrative

 

1,227,438

 

1,998,070

Research and development

 

686,517

 

814,290

 

 

(1,907,054)

 

(2,556,645)

Depreciation of property and equipment

 

7,401

 

14,409

Amortization of intangible assets

 

18,970

 

44,264

Interest expense

 

 

23,538

Interest income

 

(1,134,970)

 

(2,054,697)

Other income

 

(329,295)

 

(434,153)

Foreign exchange gain

 

(976,145)

 

(977,355)

Income before income taxes

 

506,985

 

827,349

Income tax (recovery) expense

 

(1,177)

 

4,311

Deferred income tax recoverable 

 

(54,396)

 

(54,396)

Net income for the period 

 

562,558

 

877,434

Basic and diluted earnings per share 

 

0.007

 

0.018

Weighted average number of common shares outstanding 

 

 

 

 

Basic

 

77,781,587

 

49,898,141

Diluted

 

77,869,627

 

49,963,080

Knight Therapeutics Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

[In Canadian dollars]

[unaudited]

 

 

Three months ended September 30, 2014

 

Nine months ended September 30, 2014

 

 

$

 

$

 

 

 

 

 

Net income for the period

 

562,558

 

877,434

 

 

 

 

 

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

 

 

 

 

Change in fair value of available-for-sale financial instruments (net of tax

 of $27,141 and $293,070 for the three and nine month-periods, respectively)

 

174,651

 

1,885,887

Other comprehensive income for the period

 

174,651

 

1,885,887

Comprehensive income for the period 

 

737,209

 

2,763,321

 Knight Therapeutics Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the nine months ended September 30, 2014

[In Canadian dollars]

[unaudited]

 

 

Share
capital

Warrant

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

 

1,885,887

877,434

2,763,321

Stock based compensation expense 

 

1,009,883

1,009,883

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 recoverable

 

244,559,373

491,877

245,051,250

Deemed exercise of Special Warrants into common shares

 

244,559,373

(244,559,373)

 

Share purchase loans

 

(450,000)

(450,000)

Issuance of shares for acquisition of product rights

  

294,084

294,084

Balance as at September 30, 2014

 

256,312,458

1,501,760

1,885,887

877,434

260,577,539

Knight Therapeutics Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

[In Canadian dollars]

[unaudited]

 

 

 

 

 

Nine months ended September 30, 2014

 

 

 

 

 

$

OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

 

 

 

877,434

Deferred income tax recovery

 

 

 

 

(54,396)

Stock based compensation

 

 

 

 

1,009,883

Acquisition of product rights

 

 

 

 

294,084

Depreciation of property and equipment

 

 

 

 

14,409

Amortization of intangible assets

 

 

 

 

44,264

Other income

 

 

 

 

(289,762)

Unrealized foreign exchange gain

 

 

 

 

(988,518)

Changes in non-cash working capital related to operations

 

 

 

 

(315,918)

Cash inflow from operating activities

 

 

 

 

591,480

INVESTING ACTIVITIES

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

(69,683)

Loans receivable

 

 

 

 

(7,790,700)

Investment in fund

 

 

 

 

(11,202,290)

Cash outflow from investing activities 

 

 

 

 

(19,062,673)

FINANCING ACTIVITIES

 

 

 

 

 

Net impact of Business Separation Agreement 

 

 

 

 

1,000,000

Net proceeds from warrants issuance

 

 

 

 

245,144,540

Share purchase loans 

 

 

 

 

(450,000)

Loan from related party

 

 

 

 

2,500,000

Repayment of loan from related party

 

 

 

 

(2,500,000)

Cash inflow from financing activities 

 

 

 

 

245,694,540

Increase in cash during the period

 

 

 

 

227,223,347

Cash, beginning of period

 

 

 

 

1

Cash, end of period

 

 

 

 

227,223,348

 

The following amounts are classified within operating activities:

 

Interest received

 

 

 

 

1,571,548

Interest paid

 

 

 

 

22,534

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