MONTREAL, QUEBEC–(Marketwired – Nov. 9, 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.
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 | – | ||||
Jeffrey Kadanoff, P.Eng., MBA
Chief Financial Officer
514-484-GUD1 (4831)
514-481-4116 (FAX)
[email protected]
www.gud-knight.com
