Knight Reports First Quarter 2018 Results

MONTREAL, May 10, 2018 (GLOBE NEWSWIRE) -- Knight Therapeutics Inc. (TSX:GUD) ("Knight"), a leading Canadian specialty pharmaceutical company, today reported financial results for its first quarter ended March 31, 2018. All dollar amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

Q1 2018 Highlights 

Financials

• Revenues were $3,154, an increase of $1,404 or 80% over prior period
• Net income was $6,909, an increase of $862 or 14% over prior period
• Cash flows from operations at $6,864, an increase of $2,628 or 62% over prior period
• Cash, cash equivalents and marketable securities of $802,425 as at March 31, 2018

Products

• Submitted Netildex™ for approval to Health Canada
• Entered into an exclusive Canadian licensing agreement with Ardelyx to commercialize tenapanor

Strategic Lending and Investments

• Received US$22,757 from Medimetriks Pharmaceuticals Inc. (“Medimetriks”) for partial loan repayment, interest and fees
• Received US$4,460 as a partial repayment of the 60⁰ Pharmaceuticals LLC (“60P”) loan
• Acquired an additional 754,716 common shares of Crescita Therapeutics Inc. (“Crescita”) through a rights offering at $0.53 per share
• Exercised option to convert $500 debenture of Antibe Therapeutics Inc. into 2,489,889 common shares

Key Subsequent Events

• Received regulatory approval from Health Canada for Probuphine™
• Amended loan with 60P and committed to loan an additional amount of up to US$2,100

“This past quarter we continued on our path to building a leading specialty pharmaceutical company. We licensed tenapanor, submitted Netildex™ and received regulatory approval for Probuphine™”, said Jonathan Ross Goodman, CEO of Knight. “In the meantime, we continue to leverage our balance sheet for GUD returns as evidenced by repayments received from Medimetriks and 60P.”

Select Financial Results
			Change
	Q1-18	Q1-17	$1		%2
Revenues	3,154	1,750	1,404		80	%
Gross margin	2,320	1,462	858		59	%
Operating expenses	3,373	3,247	(126	)	4	%
Interest income	5,288	5,860	(572	)	10	%
Share of net income of associate	503	319	184		58	%
Net income	6,909	6,047	862		14	%
Basic earnings per share	0.05	0.04	0.01		25	%

¹ A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income
² Percentage change is presented in absolute values

Revenue and gross margin: Increase is mainly attributable to timing of sales orders for Impavido® and increase in Movantik® sales. According to IQVIA data, Movantik® sales in Canada were $301 for the three-month period ended March 31, 2018 versus $168 for the same period last year.

Operating expenses: Increase in the year is explained by commercial activities including promotion of Movantik®, offset by a reduction in general and administrative expenses mainly related to lower stock based compensation expense. 

Interest income: Interest income is driven by the sum of interest income and interest accretion. Interest income (excluding accretion) for Q1-18 was $5,288, an increase of 10% or $506 compared to Q1-17 driven by an increase in the average cash, cash equivalents and marketable securities balances and an increase in interest rates, offset by a lower average loan balance. As a result of the company’s adoption of IFRS 9, there was no significant interest accretion in Q1-18 compared to $1,073 in prior period.

Net income: Net income for the quarter was driven by the above-mentioned items as well as: (i) other income of $1,351 (Q1-17: $308) due to the early repayment of fees on the Medimetriks loan, (ii) a net gain on revaluation of financial assets measured at fair value through profit or loss of $541 (Q1-17: nil), and (iii) a foreign exchange gain of $2,597 (Q1-17: loss of $243) from the relative gains on certain U.S. dollar denominated financial assets as Canadian dollar weakened.

Product Updates

On February 15, 2018, Health Canada accepted Knight’s New Drug Submission for Netildex™ for review. Netildex™ is a fixed combination of netilmicin and dexamethasone for the treatment of inflammatory ocular conditions of the anterior segment of the eye, in presence or at risk of bacterial infection.

On March 13, 2018, Knight received a Notice of Non-Compliance regarding its submission for Iluvien® and will respond to Health Canada's issues within the prescribed 90-day window. Iluvien® is a sustained release intravitreal implant for the treatment of diabetic macular edema.

On March 16, 2018, Knight entered into an exclusive licensing agreement with Ardelyx to commercialize tenapanor in Canada. Tenapanor is a first-in-class small molecule treatment that has completed Phase 3 development for   IBS-C and is being evaluated in a second Phase 3 study for hyperphosphatemia. Knight expects to submit tenapanor to Health Canada in 2019.

On April 18, 2018, Probuphine™ was approved by Health Canada for the treatment of opioid drug dependence. Probuphine™ is a subdermal implant designed to deliver buprenorphine continuously for six months following a single treatment, promoting patient compliance and retention. Knight expects to launch Probuphine™ by the end of 2018.

Strategic Lending Update 

On April 24, 2018, Knight amended its loan agreement with 60P and committed to lend an additional amount of up to US$2,100, at an interest rate of 15%, to support the regulatory approval and commercialization of tafenoquine. As consideration for the amendment, 60P committed to pay Knight an additional US$3,000 plus annual interest of 9% on April 23, 2023 (“60P Commitment”).  Under the terms of the 60P Commitment, Knight has the right to convert the 60P Commitment into common shares of 60P at a pre-determined exercise price at any time prior to the maturity date. Furthermore, 60P and Knight will enter into an exclusive license agreement granting Knight the right to commercialize tafenoquine in Latin America.

Conference Call Notice 

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

Date: Thursday, May 10, 2018
Time: 8:30 a.m. EST
Telephone: 1-877-223-4471 or 647-788-4922
Webcast: www.gudknight.com or https://bit.ly/2JM9U3o
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, 2017. 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
[email protected]
www.gudknight.com

INTERIM CONSOLIDATED BALANCE SHEETS
[In thousands of Canadian dollars]
[Unaudited]
As at	March 31, 2018	December 31, 2017
ASSETS
Current
Cash and cash equivalents	583,408	496,460
Marketable securities	183,017	232,573
Trade and other receivables	10,046	9,176
Inventories	994	1,224
Other current financial assets	25,167	58,848
Income taxes receivable	819	792
Total current assets	803,451	799,073
Marketable securities	36,000	36,000
Property and equipment	675	633
Intangible assets	15,906	12,576
Other financial assets	79,669	76,988
Investment in associate	77,697	75,983
Deferred income tax assets	3,455	4,730
Total assets	1,016,853	1,005,983
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities	4,592	5,025
Income taxes payable	7,962	7,599
Other balances payable	1,394	1,354
Deferred other income	251	282
Total current liabilities	14,199	14,260
Deferred other income	104	167
Other balances payable	1,067	348
Total liabilities	15,370	14,775
Shareholders’ equity
Share capital	761,546	761,490
Warrants	785	785
Contributed surplus	12,741	12,196
Accumulated other comprehensive income	11,459	20,907
Retained earnings	214,952	195,830
Total shareholders’ equity	1,001,483	991,208
Total liabilities and shareholders’ equity	1,016,853	1,005,983

INTERIM CONSOLIDATED STATEMENTS OF INCOME
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
	Three months ended March 31,
	2018		2017
Revenues	3,154		1,750
Cost of goods sold	834		288
Gross margin	2,320		1,462
Expenses
Selling and marketing	789		363
General and administrative	2,095		2,468
Research and development	489		416
	(1,053	)	(1,785			)
Depreciation of property and equipment	16		—
Amortization of intangible assets	441		326
Interest income	(5,288	)	(5,860			)
Other income	(1,351	)	(308			)
Net gain on financial assets	—		(3,375			)
Net gain on financial assets measured at fair value through profit or loss	(541	)	—
Share of net income of associate	(503	)	(319			)
Foreign exchange (gain) loss	(2,597	)	243
Income before income taxes	8,770		7,508
Income tax expense
Current	641		480
Deferred	1,220		981
Net income for the period	6,909		6,047
Attributable to shareholders of the Company
Basic earnings per share	0.05		0.04
Diluted earnings per share	.05		0.04
Weighted average number of common shares outstanding
Basic	142,813,358		142,720,536
Diluted	143,220,006		143,526,773

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]
		Three-months ended March 31,
		2018		2017
OPERATING ACTIVITIES
Net income for the period		6,909		6,047
Adjustments reconciling net income to operating cash flows:
Deferred tax		1,220		981
Share-based compensation expense		545		846
Depreciation and amortization		457		326
Accretion of interest		—		(1,078	)
Realized gain on financial assets		—		(976	)
Unrealized gain on financial assets		(541	)	(2,399	)
Foreign exchange (gain) loss		(2,597	)	204
Share of net income of associate		(503	)	(319	)
Other income		—		(155	)
Deferred other income		(94	)	(146	)
		5,396		3,331
Changes in non-cash working capital related to operations		1,468		905
Cash inflow from operating activities		6,864		4,236
INVESTING ACTIVITIES
Purchase of marketable securities		(50,755	)	(44,291	)
Purchase of intangible		(3,000	)	—
Purchase of property and equipment		(42	)	—
Purchase of equities		(400	)	(2,819	)
Investment in funds		(4,277	)	(4,141	)
Proceeds on maturity of marketable securities		101,318		20,486
Proceeds from repayments of loans receivable		33,440		28,058
Proceeds from disposal of equities		—		709
Proceeds from distribution of funds		343		2,154
Cash inflow from investing activities		76,627		156
FINANCING ACTIVITIES
Proceeds from exercise of stock options		—		345
Proceeds from contributions to share purchase plan		49		43
Cash inflow from financing activities		49		388
Increase in cash during the period		83,540		4,780
Cash and cash equivalents, beginning of the period		496,460		514,942
Net foreign exchange difference		3,408		(200	)
Cash and cash equivalents, end of the period		583,408		519,522
Marketable securities, end of the period		219,017		244,256
Cash, cash equivalents and marketable securities, end of the period		802,425		763,778