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Knight Reports Third Quarter 2017 Results

MONTREAL, CANADA--(Marketwired - November 9, 2017) - Knight Therapeutics Inc. (TSX: GUD) ("Knight"), a leading Canadian specialty pharmaceutical company, today reported financial results for its third quarter ended September 30, 2017. All dollar amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

Q3 2017 Highlights

•Revenues were $1,860, a decrease of $32 or 2% versus the same period in prior year

•Cash flows from operations were $10,736, an increase of $6,348 or 145% over the same period in prior year

•Issued additional loans of US$12,504 to Synergy CHC Corp (“Synergy”) and 60⁰ Pharmaceuticals LLC (“60P”)

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

•Received dividends of $2,459 from Medison Biotech (1995) Ltd. (“Medison”)

•Received distributions of $1,063 from a strategic fund investment and realized a gain of $276

•Recorded an unrealized gain of $3,049 on investment in Forbion Capital Partners (“Forbion”) following the announcement of Merck’s acquisition of Rigontec 

•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.

Subsequent Events

•Received 566,471 common shares of Crescita pursuant to a share transfer agreement increasing ownership to approximately 14.9% 

•Accepted the resignation of Jeffrey Kadanoff and appointed Samira Sakhia as Chief Financial Officer 

•Received a distribution of €2,144 from Forbion upon close of the acquisition of Rigontec

“This past quarter our team was focused on advancing our product pipeline and evaluating opportunities to build our portfolio of innovative pharmaceuticals,” said Jonathan Ross Goodman, CEO of Knight. “In the quarters ahead, we will look to capitalize on GUD opportunities for growth.”

As at September 30, 2017, Knight had over $760,000 in cash, cash equivalents and marketable securities and 142,772,805 common shares outstanding.  From this strong cash position, Knight will continue to pursue business and corporate development opportunities.


 Financial Results

 

 

Q3-17

Q3-16

Change

YTD-17

YTD-16

Change

 

$

%

$

%

 

 

 

 

 

 

 

 

 

Revenues

1,860

1,892

(32)

(2%)

6,090

4,095

1,995

49%

Operating expenses

3,567

2,888

679

24%

11,060

8,097

2,963

37%

Interest income

6,959

7,375

(416)

(6%)

18,517

18,315

202

1%

Share of net income of associate

98

1,096

(998)

(91%)

513

2,755

(2,242)

(81%)

Net income

3,593

5,698

(2,105)

(37%)

10,099

10,621

(522)

(5%)

Earnings per share

0.03

0.04

(0.01)

(25%)

0.07

0.09

(0.02)

(22%)

 

Revenue: Revenue in Q3 2017 was in line with the same period last year, while the increase for the nine-month period is due to the addition of Movantik® and an increase of Impavido® sales.

 

Operating expenses: Increase in Q3 2017 is explained by commercial activities including sales force promotion of Movantik®, and an increase in the number of employees as Knight expands commercialization and prepares to launch new products in Canada.

 

Interest income: Decrease in Q3 2017 is driven by a lower average loan balance outstanding, offset by higher interest income earned on cash, cash equivalents and marketable securities.

 

Share of net income of associate: Decrease in Q3 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 Update

 

According to IMS data, Movantik® sales in Canada were $255 and $634 for the three and nine-month periods ended September 30, 2017. 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).

 

Strategic Lending 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. The loan will be used for acquisitions and general working capital purposes. Additionally, Knight agreed to provide an ongoing credit facility for an aggregate of up to US$20,000 to be granted at Knight’s sole discretion. As part of the transaction, the Knight will receive a success fee payable at 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. In addition, Knight surrendered its 293,163 warrants of Crescita exercisable at $2.44 per share and was issued 216,000 warrants exercisable at a price of $0.75 per share and 180,000 warrants exercisable at a price of $1.00 per share, in each case for a term of six years.

 

During Q3 2017, Knight issued an additional loan of US$2,504 to 60P. Knight has issued a total of US$6,700 to 60P at an interest rate of 15% per annum and a maturity date of December 31, 2020. In addition, pursuant to its loan agreements with Medimetriks Pharmaceuticals Inc. (“Medimetriks”), Knight received 286,955 common shares of Medimetriks increasing its ownership of to 10% on a fully diluted basis.


 

Conference Call Notice 

 

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

 

Date: Thursday, November 9, 2017

Time: 8:30 a.m. EST

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

Webcast: www.gudknight.com or http://bit.ly/2iG5Zgk

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, 2016. 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

 

INTERIM CONSOLIDATED BALANCE SHEETS

[In thousands of Canadian dollars]

 

[Unaudited]

 

As at

 

September 30, 2017

December 31, 2016

ASSETS

 

 

 

Current

 

 

 

Cash and cash equivalents

 

506,839

514,942

Marketable securities

 

218,248

221,108

Trade and other receivables

 

8,123

6,440

Inventories

 

653

790

Other current financial assets

 

30,960

51,789

Income taxes receivable

 

2,448

4,683

Total current assets

 

767,271

799,752

 

 

 

 

Marketable securities

 

36,000

Property and equipment

 

60

32

Intangible assets

 

12,713

14,153

Other financial assets

 

95,725

90,643

Investment in associate

 

75,642

80,113

Deferred income tax assets

 

6,056

6,077

Total assets

 

993,467

990,770

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current

 

 

 

Accounts payable and accrued liabilities

 

4,146

3,207

Income taxes payable

 

7,008

5,659

Other balances payable

 

587

537

Deferred other income

 

250

355

Total current liabilities

 

11,991

9,758

 

 

 

 

Deferred other income

 

229

417

Other balances payable

 

799

877

Total liabilities

 

13,019

11,052

 

 

 

 

Shareholders’ equity

 

 

 

Share capital

 

761,127

760,447

Warrants

 

785

785

Contributed surplus

 

11,900

9,469

Accumulated other comprehensive income

 

17,951

30,431

Retained earnings

 

188,685

178,586

Total shareholders’ equity

 

980,448

979,718

Total liabilities and shareholders’ equity

 

993,467

990,770

 


INTERIM CONSOLIDATED STATEMENTS OF INCOME

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

[Unaudited]

 

 

 

Three months ended September 30

Nine months ended September 30

 

 

2017

2016

2017

2016

 

 

 

 

 

 

Revenues

 

1,860

1,892

6,090

4,095

Cost of goods sold

 

337

296

1,097

1,077

Gross margin

 

1,523

1,596

4,993

3,018

 

 

 

 

 

 

Expenses

 

 

 

 

 

Selling and marketing

 

834

94

2,247

262

General and administrative

 

2,147

2,358

6,944

6,592

Research and development

 

586

436

1,869

1,243

 

 

(2,044)

(1,292)

(6,067)

(5,079)

 

 

 

 

 

 

Depreciation of property and equipment

 

18

Amortization of intangible assets

 

539

100

1,185

263

Interest income

 

(6,959)

(7,375)

(18,517)

(18,315)

Other income

 

(871)

(2,081)

(1,513)

(3,534)

Net (gain) loss on financial assets

 

(1,317)

2,914

(3,636)

402

Share of net income of associate

 

(98)

(1,096)

(513)

(2,755)

Foreign exchange loss (gain)

 

2,695

(1,132)

4,244

2,995

Income before income taxes

 

3,967

7,378

12,683

15,847

 

 

 

 

 

 

Income tax expense (recovery)

 

 

 

 

 

Current

 

490

1,288

1,598

4,407

Deferred

 

(116)

392

986

819

Net income for the period

 

3,593

5,698

10,099

10,621

 

 

 

 

 

 

Attributable to shareholders of the Company

 

 

 

Basic earnings per share

 

0.03

0.04

0.07

0.09

Diluted earnings per share

 

0.03

0.04

0.07

0.09

 


 

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

[In thousands of Canadian dollars]

[Unaudited]

 

 

 

Three months ended September 30

Nine months ended September 30

 

 

2017

2016

2017

2016

OPERATING ACTIVITIES

 

 

 

 

 

Net income for the period

 

3,593

5,698

10,099

10,621

Adjustments reconciling net income to operating cash flows:

 

 

 

 

 

Deferred tax

 

(116)

392

986

819

Share-based compensation expense

 

762

765

2,626

2,648

Depreciation and amortization

 

539

100

1,185

281

Accretion of interest

 

(1,197)

(2,129)

(3,381)

(4,975)

Realized gain on financial assets

 

(1,761)

(367)

(3,402)

(509)

Unrealized loss (gain) on financial assets

 

444

3,281

(234)

911

Foreign exchange loss (gain)

 

2,695

(1,132)

4,244

2,995

Share of net income from associate

 

(98)

(1,096)

(513)

(2,755)

Other income

 

(871)

(1,271)

(872)

(1,271)

Deferred other income

 

(63)

848

(293)

555

 

 

3,927

5,089

10,445

9,320

Changes in non-cash working capital related to operations

 

4,350

(3,115)

2,914

(2,152)

Dividends from associate

 

2,459

2,414

4,984

4,837

Cash inflow from operating activities

 

10,736

4,388

18,343

12,005

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

Purchase of marketable securities

 

(103,273)

(161,913)

(245,746)

(445,038)

Purchase of intangibles

 

(367)

(3,291)

Issuance of loans receivables

 

(15,164)

(1,027)

(16,971)

(38,476)

Purchase of equities

 

(5,073)

(2,939)

(10,496)

Investment in funds

 

(4,987)

(4,917)

(15,318)

(14,142)

Proceeds from sale of marketable securities

 

77,170

182,896

203,729

417,000

Proceeds from repayments of loans receivable

 

5,985

5,916

36,309

7,939

Proceeds from disposal of equities

 

9,357

3,337

12,872

7,363

Proceeds from distribution of funds

 

510

1,974

3,886

1,974

Cash (outflow) inflow from investing activities

 

(30,402)

20,826

(24,178)

(77,167)

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from share issuance, net of costs

 

(16)

218,536

Proceeds from exercise of stock options

 

345

Proceeds from contributions to share purchase plan

 

61

24

154

74

Issuance of share purchase loans

 

(200)

Cash inflow from financing activities

 

61

8

499

218,410

(Decrease) increase in cash during the period

 

(19,605)

25,222

(5,336)

153,248

Cash and cash equivalents, beginning of the period

 

527,879

363,713

514,942

237,481

Net foreign exchange difference

 

(1,435)

467

(2,767)

(1,327)

Cash and cash equivalents, end of the period

 

506,839

389,402

506,839

389,402

Marketable securities, end of the period

 

254,248

255,652

254,248

255,652

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

 

761,087

645,054

761,087

645,054

               


 

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