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Knight Reports Third Quarter 2016 Results

MONTREAL, CANADA--(Marketwired - November 10, 2016) - Knight Therapeutics Inc. (TSX:GUD) ("Knight" or the "Company"), a leading Canadian specialty pharmaceutical company, today reported financial results for its third quarter ended September 30, 2016.

All figures are in thousands of Canadian dollars except for share and per share amounts.

Third Quarter 2016 Highlights

•Reported revenues and net income for the nine months of $4,095 and $10,621, respectively.

•Received dividends of $2,414 from strategic partner Medison Biotech (1995) Ltd.

•Samira Sakhia, former CFO of Paladin Labs Inc., joined Knight as President and member of the Board of Directors.

•Entered into an exclusive Canadian distribution and licensing agreement with Società Industria Farmaceutica Italiana S.p.A. to commercialize NETILDEX™.

•Expanded existing distribution agreement with Ember Therapeutics Inc. (“Ember”) to include the territories of Romania and the Caribbean, and acquired the distribution rights to two newly-acquired Ember products: Migralex™ and RHY/Vavelta®.

•Entered into a licensing and distribution agreement with 3D Signatures Inc. (“3D”) for its diagnostic and prognostic products in Canada and select international markets, and invested $1,000 of equity in 3D pursuant to a business combination and public listing transaction between 3D and Plicit Capital Corp.

•Following the acquisition of INTEGA Skin Sciences Inc. (“Intega”) by Crescita Therapeutics Inc., received repayment of $3,000 Intega bridge loan, and amended and restated $6,000 Intega term loan. 

•Acquired 11,470,920 common shares of Pediapharm Inc. in exchange for 221,126 common shares and 221,126 four-year warrants of Knight with an exercise price of $10.00 per share.

•Committed to invest $1,000 in the Genesys Ventures III LP, a Canadian-based life sciences venture capital fund managed by Genesys Capital Management, Inc.

•Invested $1,000 in the Bloom Burton Healthcare Lending Trust II managed by Stratigis Capital Advisors Inc.

Financial Results

For the quarter ended September 30, 2016, Knight reported revenues of $1,892, an increase of $1,778 over the same period last year, and net income of $5,698, a decrease of $579 over the same period last year. As at September 30, 2016, the Company had over $645,054 in cash, cash equivalents and marketable securities.

"In the third quarter of 2016, we continued to make GUD progress toward building Knight into Canada’s leading speciality pharma company by increasing revenues and growing our pipeline,” said Jonathan Ross Goodman, CEO of Knight Therapeutics Inc. “Moreover, we bolstered our management team with the addition of Samira Sakhia as President, who brings 14 years of successfully commercializing pharmaceutical products in Canada to Knight’s round table.”

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 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 am ET until December 10, 2016 at 11:59 pm ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 63541816. 

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.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, 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
T: 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

[Unaudited]                                                      [In thousands of Canadian dollars

As at

 

September 30, 2016

December 31, 2015

ASSETS

 

 

 

Current

 

 

 

Cash and cash equivalents

 

389,402

237,481

Marketable securities

 

255,652

233,726

Trade and other receivables

 

5,758

2,994

Inventories

 

785

1,460

Other current financial assets

 

34,193

23,588

Income taxes receivable

 

3,237

231

Total current assets

 

689,027

499,480

Property and equipment

 

18

Intangible assets

 

6,276

3,320

Other financial assets

 

98,112

62,616

Investment in associate

 

80,075

81,027

Deferred income tax assets

 

4,414

2,527

Total assets

 

877,904

648,988

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current

 

 

 

Accounts payable and accrued liabilities

 

1,870

2,416

Income taxes payable

 

5,587

4,031

Deferred other income

 

369

293

Total current liabilities

 

7,826

6,740

Deferred other income

 

479

Deferred income tax liabilities

 

186

Total liabilities

 

8,305

6,926

 

 

 

 

Shareholders’ equity

 

 

 

Share capital

 

664,561

439,148

Warrants

 

785

161

Contributed surplus

 

8,477

6,772

Accumulated other comprehensive income

 

25,129

35,955

Retained earnings

 

170,647

160,026

Total shareholders’ equity

 

869,599

642,062

Total liabilities and shareholders’ equity

 

877,904

648,988

 


 

INTERIM CONSOLIDATED STATEMENTS OF INCOME

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

 

 

 

Three-months ended September 30

Nine-months ended

September 30

 

 

2016

2015

2016

2015

 

 

 

 

 

 

 

 

Revenues

 

1,892

114

4,095

694

 

Cost of goods sold

 

296

18

1,077

376

 

Gross margin

 

1,596

96

3,018

318

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Selling and marketing

 

94

262

 

General and administrative

 

2,358

2,123

6,592

7,247

 

Research and development

 

436

1,819

1,243

2,453

 

 

 

(1,292)

(3,846)

(5,079)

(9,382)

 

 

 

 

 

 

 

 

Depreciation of property and equipment

 

7

18

22

 

Amortization of intangible assets

 

100

22

263

64

 

Interest income

 

(7,375)

(4,297)

(18,315)

(11,858)

 

Other income

 

(2,081)

(376)

(3,534)

(1,343)

 

Net loss (gain) on financial assets

 

2,914

(1,965)

402

(15,989)

 

Purchase gain on business combination

 

(550)

 

Gain on settlement of loan receivable

 

(358)

 

Share of net income of associate

 

(1,096)

(95)

(2,755)

(95)

 

Foreign exchange (gain) loss

 

(1,132)

(3,658)

2,995

(7,476)

 

Income before income taxes

 

7,378

6,516

15,847

28,201

 

 

 

 

 

 

 

 

Income tax expense (recovery)

 

1,288

143

4,407

(911)

 

Deferred income tax expense

 

392

96

819

499

 

Net income for the period

 

5,698

6,277

10,621

28,613

 

 

 

 

 

 

 

 

Attributable to shareholders of the Company

 

 

 

 

Basic earnings per share

 

0.04

0.07

0.09

0.31

 

Diluted earnings per share

 

0.04

0.07

0.09

0.30

 

 

Weighted average number of common shares outstanding

 

 

 

 

Basic

 

132,668,637

95,570,089

116,334,998

93,744,281

 

Diluted

 

133,198,829

95,737,299

116,746,093

93,961,953

 

 

 

 

 

 

 

 

               

 

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

[Unaudited]                                                     [In thousands of Canadian dollars]

 

 

Three-months ended September 30

Nine-months ended September 30

 

2016

2015

2016

2015

 

 

 

 

 

Net income for the period

5,698

6,277

10,621

28,613

 

 

 

 

 

Realized gain reclassified to statement of income net of tax of $32 and $97 for the three and nine-month periods ended September 30, 2016 (net of tax of $109 and $1,368 for the three and nine-month periods ended September 30, 2015)

(207)

(755)

(623)

(8,805)

 

 

 

 

 

Other comprehensive (loss) income to be reclassified to statement of income in subsequent periods:

 

 

 

 

Unrealized (loss) gain on available-for-sale financial instruments net of tax of $140 and $287 for the three and nine-month periods ended September 30, 2016 (net of tax of $70 and $482 for the three and nine-month periods ended September 30, 2015)

(3,683)

125

(1,135)

3,125

Unrealized gain (loss) on translation of foreign operations

2,563

10,557

(9,068)

21,410

Other comprehensive (loss) income for the period

(1,327)

9,927

(10,826)

15,730

Total comprehensive income (loss) for the period

4,371

16,204

(205)

44,343

 

 

 

 

 

 

             


 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

[Unaudited]                                                       [In thousands of Canadian dollars]

 

 

 

Share capital

Warrants

Contributed surplus

Accumulated other comprehensive income

Retained earnings

Total shareholders’ equity

Balance as at January 1, 2015

 

341,065

2,100

9,967

125,859

478,991

Net income for the period

 

28,613

28,613

Realized gain reclassified to statement of income, net of tax of $1,368

 

(8,805)

(8,805)

Change in fair value of available-for-sale financial instruments, net of deferred tax of $482

 

3,125

3,125

Unrealized gain on translation of foreign operations

 

21,410

21,410

Comprehensive income

 

15,730

28,613

44,343

Share-based compensation expense

 

3,808

3,808

Issuance of shares upon financing, net of costs and deferred tax of $2,200

 

14,573

14,573

Issuance upon investments in associate

 

80,684

1,100

81,784

Issuance due to share-based payment

 

165

165

Exercise of stock options

 

1,487

(553)

934

Issuance of warrants

 

161

161

Exercise of compensation warrants

 

930

(295)

635

Issuance under share purchase plan

 

56

56

Balance as at September 30, 2015

 

438,960

161

6,160

25,697

154,472

625,450

 

 

 

 

 

 

 

 

Balance as at January 1, 2016

 

439,148

161

6,772

35,955

160,026

642,062

Net income for the period

 

10,621

10,621

Realized gain reclassified to statement of income, net of tax for $97

 

(623)

(623)

Change in fair value of available-for-sale financial instruments, net of deferred tax of $287

 

(1,135)

(1,135)

Unrealized loss on translation of foreign operations

 

(9,068)

(9,068)

Comprehensive (loss) income

 

(10,826)

10,621

(205)

Share-based compensation expense

 

2,648

2,648

Issuance upon bought deal, net of costs and including deferred tax of $3,083

 

221,620

221,620

Issuance of shares to associate

 

2,073

(943)

1,130

Issuance upon investment

 

1,846

624

 

 

 

2,470

Share purchase loans

 

(200)

(200)

Issuance under share purchase plan

 

74

 

74

Balance as at September 30, 2016

 

664,561

785

8,477

25,129

170,647

869,599

 

 

 

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

[Unaudited]                                                       [In thousands of Canadian dollars]

 

 

 

Three-month period ended September 30

Nine-month period ended September 30

 

 

2016

2015

2016

2015

OPERATING ACTIVITIES

 

 

 

 

 

Net income for the period

 

5,698

6,277

10,621

28,613

Adjustments reconciling net income to operating cash flows:

 

 

 

 

 

Deferred tax

 

392

96

819

499

Share-based compensation expense

 

765

943

2,648

3,808

Depreciation and amortization

 

100

29

281

86

Accretion of interest

 

(2,129)

(1,154)

(4,975)

(3,373)

Other income

 

(1,271)

(1,271)

Realized gain on financial assets

 

(367)

(1,575)

(509)

(15,376)

Unrealized loss (gain) on financial assets

 

3,281

(390)

911

(615)

Gain on settlement of loan receivable

 

(358)

Foreign exchange (gain) loss

 

(1,132)

(3,282)

2,995

(7,426)

Purchase gain on business combination

 

(550)

Share of net income from associate

 

(1,096)

(95)

(2,755)

(95)

Dividends from associate

 

2,414

4,837

Deferred other income

 

848

200

555

(510)

 

 

7,503

1,049

14,157

4,703

Changes in non-cash working capital related to operations

 

(3,115)

(2,024)

(2,152)

(7,400)

Cash inflow (outflow) from operating activities

 

4,388

(975)

12,005

(2,697)

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

Purchase of marketable securities

 

(161,913)

(76,790)

(445,038)

(460,369)

Purchase of financial assets

 

(5,073)

(10,496)

(2,356)

Purchase of intangibles

 

(367)

(3,291)

Investment in funds

 

(4,917)

(738)

(14,142)

(9,032)

Issuance of loans receivable

 

(1,027)

(583)

(38,476)

(31,929)

Proceeds from repayments of loans receivable

 

5,916

1,083

7,939

11,111

Proceeds from sale of marketable securities

 

182,896

(8,746)

417,000

411,944

Proceeds from distribution of funds

 

1,974

2,023

1,974

19,038

Proceeds from disposal of financial assets

 

3,337

7,363

12,227

Consideration paid on business combination

 

(1,750)

Investment in associate

 

(212)

(212)

Cash inflow (outflow) from investing activities

 

20,826

(83,963)

(77,167)

(51,328)

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

Issuance of shares upon bought deal

 

(16)

218,536

Proceeds from exercise of compensation warrants

 

635

Proceeds from exercise of an over-allotment option

 

12,424

Share option plan

 

934

Share purchase plan

 

24

13

74

55

Share purchase loans

 

(200)

Cost related to prior period share issuance

 

(207)

Cash inflow from financing activities

 

8

13

218,410

13,841

Increase (decrease) in cash during the period

 

25,222

(84,295)

153,248

(40,184)

Cash and cash equivalents, beginning of the period

 

363,713

329,047

237,481

283,445

Net foreign exchange difference

 

467

2,484

(1,327)

3,345

Cash and cash equivalents, end of the period

 

389,402

246,606

389,402

246,606

Supplemental cash flow information:

 

 

 

 

 

Interest received

 

3,671

2,527

10,492

7,518

Income taxes paid

 

3,531

5,865

 

 

 

 

 

 

                 

 

 

 

 

 

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