MONTREAL, QUEBEC--(Marketwired - Aug. 12, 2015) - Knight Therapeutics Inc. (TSX:GUD) ("Knight" or the "Company"), a leading Canadian specialty pharmaceutical company, today reported its second quarter ended June 30, 2015 financial results.
Second Quarter 2015 Highlights
- On April 2, 2015, Knight entered into an agreement with HarbourVest Partners LLC, whereby the Company committed to invest $10.0 million into HarbourVest Canada Growth Fund L.P.
- On June 4, 2015, Knight extended a secured loan of $4.0 million to Profound Medical Inc. ("Profound") which bears interest at 15.0% per annum for an initial 4 year term. In addition, Knight purchased $2.0 million of equity in Profound and entered into an agreement with Profound pursuant to which Knight will act as the exclusive Canadian distributor of the its TULSA-PRO system.
- On June 24, 2015, Knight acquired the assets related to Neuragen® following default by Origin BioMed Inc. under its secured loan agreement with Knight. Neuragen® is the first all-natural, non-prescription topical treatment for rapid relief of pain associated with diabetic and peripheral neuropathy, approved for sale in Canada and the U.S.
- On June 26, 2015, Knight entered into a sale agreement with Synergy CHC Corp. related to the U.S. rights to Neuragen® acquired on June 24, 2015, for minimum aggregate consideration of $1.5 million [US$1.2 million]. Knight retains Canadian rights and other ex-U.S. global rights to Neuragen®.
- On June 26, 2015, Knight issued a secured loan of $18.5 million [US$15 million] to Pro Bono Bio PLC ("Pro Bono Bio") which bears interest at 12.0% per annum and matures on June 25, 2018. In conjunction with the loan, Knight acquired the exclusive Quebec and Israeli rights to commercialize Pro Bono Bio's Flexiseq™ range of pain relief products and its SEQuaderma™ derma-cosmetic range of products, as well as the exclusive Canadian and Israeli rights to two earlier stage product groups.
- On June 26, 2015, Knight issued a secured loan of $800,000 to Extenway Solutions Inc. which bears interest at 15.0% per annum and matures on June 25, 2021.
- On June 30, 2015 Knight entered into an agreement with Sectoral Asset Management Inc. ("Sectoral"), whereby the Company committed to invest $12.6 million [US$10.0 million] into New Emerging Medical Opportunities Fund III, Ltd. This was subsequent to Knight receiving earlier in the quarter a partial distribution of $17.0 million [US$13.6 million] related to an investment in Sectoral's New Emerging Medical Opportunities Fund II, Ltd.
- On June 30, 2015, Knight, through one of its wholly owned-subsidiaries, entered into an agreement with TVM Capital Life Science, whereby the Company committed to invest $2.0 million [US$1.6 million] into TVM Life Science Venture VII.
Subsequent to the Quarter Ended June 30, 2015 Highlights:
- On July 9, 2015, Knight invested in the Bloom Burton Healthcare Lending Trust managed by Stratigis Capital Advisors Inc. by subscribing for $500,000 as part of a $15.9 million private placement.
- On July 21, 2015, Knight entered into an agreement with Alimera Sciences, Inc. pursuant to which Knight acquired the exclusive Canadian distribution rights to ILUVIEN®, a sustained release intravitreal implant for the treatment of diabetic macular edema.
- On July 24, 2015, Knight entered into an agreement with Akorn, Inc. pursuant to which Knight acquired the exclusive Canadian distribution rights to AzaSite®, an eye drop solution for topical treatment of bacterial conjunctivitis, commonly known as pink eye.
- On August 5, 2015, Knight issued a secured loan of $1.3 million [US$1 million] to Ember Therapeutics Inc. ("Ember") which bears interest at 12.5% per annum for a one year term. Knight also acquired the exclusive rights to commercialize Ember's promising Bone Morphogenetic Protein-7 pipeline, including targeted therapies for osteoarthritis and kidney fibrosis, in Canada, Israel, Russia and Sub-Saharan Africa.
- On August 6, 2015, Knight's New Drug Submission (NDS) was accepted for review by Health Canada for ATryn® (Antithrombin (Recombinant)) for the prevention of peri-operative and peri-partum thromboembolic events in hereditary antithrombin deficient patients.
Second Quarter 2015 Financial Results Reported in Canadian Dollars
The Company's financial statements for the period ended June 30, 2015 have been prepared in accordance with IAS 34, Interim Financial Reporting.
For the quarter ended June 30, 2015, the Company reported revenues of $333 thousand and net income of $8.5 million. For the six-month period ended June 30, 2015, the Company reported revenues of $580 thousand and net income of $22.3 million. As at June 30, 2015, the Company had $437.0 million in cash and marketable securities and 93,095,823 common shares outstanding.
"During and subsequent to the quarter, we added a total of nine innovative specialty pharmaceuticals, OTC products and medical devices to our pipeline thanks to the relentless execution of our proven strategies," said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. "Looking ahead, we plan to continue building our pipeline while also focusing our attention on the re-launch Neuragen® in Canada."
Conference Call Notice
Knight will host a conference call to discuss its second 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).
A taped replay of the conference call will be available from today at 11:30 a.m. ET until Wednesday, September 9, 2015 at 11:59 p.m. ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 47058125.
Notice of Third Quarter 2015 Results
Knight expects to release its third quarter 2015 financial results on the morning of Wednesday, November 11, 2015. Knight expects to hold a conference call at 8:30 am ET on the morning of the release. All interested parties are cordially invited to attend. 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 select international markets. Knight'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 the Company 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. The Company 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 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 Annual Report and in the Company's Annual Information Form for the year ended December 31, 2014. 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.
Knight Therapeutics Inc.
INTERIM CONSOLIDATED BALANCE SHEETS
As at
[in Canadian dollars]
[unaudited]
| June 30, 2015 |
December 31, 2014 |
|
| $ | $ | |
| ASSETS | ||
| Current | ||
| Cash and cash equivalents | 329,047,144 | 283,445,451 |
| Marketable securities | 107,949,722 | 133,411,500 |
| Accounts receivable | 1,452,227 | 740,545 |
| Investment tax credits receivable | 200,000 | - |
| Inventory | 1,528,923 | 601,780 |
| Other current financial assets | 6,924,454 | 10,089,462 |
| Other current assets | 433,612 | 283,867 |
| Total current assets | 447,536,082 | 428,572,605 |
| Property and equipment | 32,642 | 47,728 |
| Intangible assets | 3,277,207 | 845,761 |
| Other financial assets | 76,689,550 | 57,147,077 |
| Deferred income tax assets | 2,600,276 | - |
| Total assets | 530,135,757 | 486,613,171 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current | ||
| Accounts payable and accrued liabilities | 1,502,514 | 2,089,911 |
| Income taxes payable | 1,963,435 | 4,492,701 |
| Deferred revenue | 330,716 | 1,039,825 |
| Total current liabilities | 3,796,665 | 7,622,437 |
| Shareholders' equity | ||
| Share capital | 358,097,490 | 341,065,000 |
| Warrants | 161,329 | - |
| Contributed surplus | 4,116,779 | 2,100,025 |
| Accumulated other comprehensive income | 15,768,857 | 9,966,837 |
| Retained earnings | 148,194,637 | 125,858,872 |
| Total shareholders' equity | 526,339,092 | 478,990,734 |
| Total liabilities and shareholders' equity | 530,135,757 | 486,613,171 |
Knight Therapeutics Inc.
INTERIM CONSOLIDATED STATEMENTS OF INCOME
[in Canadian dollars]
[unaudited]
| Three-month period ended | Six-month period ended | ||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||
| $ | $ | $ | $ | ||||||
| Revenue | 332,674 | 247,373 | 580,030 | 248,814 | |||||
| Cost of goods sold | 271,856 | - | 358,095 | - | |||||
| Gross margin | 60,818 | 247,373 | 221,935 | 248,814 | |||||
| Expenses | |||||||||
| General and administrative | 2,446,822 | 693,360 | 5,123,473 | 770,632 | |||||
| Research and development | 300,124 | 112,736 | 634,714 | 127,773 | |||||
| (2,686,128 | ) | (558,723 | ) | (5,536,252 | ) | (649,591 | ) | ||
| Depreciation of property and equipment | 7,545 | 6,515 | 15,087 | 7,008 | |||||
| Amortization of intangible assets | 20,927 | 18,970 | 42,048 | 25,294 | |||||
| Interest expense | - | 4,500 | - | 23,540 | |||||
| Interest income | (3,595,573 | ) | (878,744 | ) | (7,561,603 | ) | (919,727 | ) | |
| Other income | (525,541 | ) | (104,859 | ) | (966,718 | ) | (104,859 | ) | |
| Net gain on financial assets | (6,495,488 | ) | - | (14,024,076 | ) | - | |||
| Purchase gain on business combination | - | - | (550,000 | ) | - | ||||
| Gain on settlement of loan receivable | (358,204 | ) | - | (358,204 | ) | - | |||
| Foreign exchange loss (gain) | 592,771 | (1,210 | ) | (3,817,774 | ) | (1,210 | ) | ||
| Income before income taxes | 7,667,435 | 396,105 | 21,684,988 | 320,363 | |||||
| Income tax (recovery) expense | (1,053,503 | ) | 5,488 | (1,053,503 | ) | 5,488 | |||
| Deferred income tax expense | 201,363 | - | 402,726 | - | |||||
| Net income for the period | 8,519,575 | 390,617 | 22,335,765 | 314,875 | |||||
| Basic and diluted earnings per share | 0.09 | 0.006 | 0.24 | 0.009 | |||||
| Weighted average number of common shares outstanding | |||||||||
| Basic | 93,089,609 | 63,066,993 | 92,816,245 | 35,725,338 | |||||
| Diluted | 93,222,325 | 63,166,988 | 93,028,011 | 35,784,315 | |||||
Knight Therapeutics Inc.
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[in Canadian dollars]
[unaudited]
| Three-month period ended |
Six-month period ended |
||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||
| $ | $ | $ | $ | ||||
| Net income for the period | 8,519,575 | 390,617 | 22,335,765 | 314,875 | |||
| Realized gain reclassified to statement of income (net of tax of $810,435 and $1.3 million for the three and six-month periods ended June 30, 2015) | (5,206,098 | ) | - | (8,050,242 |
) | - | |
| Other comprehensive income to be reclassified to income or loss in subsequent periods: | |||||||
| Unrealized gain on available-for-sale financial instruments (net of tax of $71,842 and $403,972 for the three and six-month periods ended June 30, 2015, respectively and $265,929 for the three and six-month periods ended June 30, 2014) | 897,855 | 1,711,235 | 2,999,712 |
1,711,235 | |||
| Unrealized (loss) gain on translating financial statements of foreign operations | (2,064,641 | ) | - | 10,852,550 |
- | ||
| Other comprehensive (loss) income for the period | (6,372,884 | ) | 1,711,235 | 5,802,020 | 1,711,235 | ||
| Comprehensive income for the period | 2,146,691 | 2,101,852 | 28,137,785 | 2,026,110 | |||
Knight Therapeutics Inc.
[in Canadian dollars]
[unaudited]
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
| Share capital |
Warrants | 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 | - | - | - | 1,711,235 | 314,875 | 2,026,110 | |||
| Stock based compensation expense | - | - | 258,467 | - | - | 258,467 | |||
| 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 | - | 244,320,699 | 491,877 | - | - | 244,812,576 | |||
| Deemed exercise of Special Warrants into common shares | 244,320,699 | (244,320,699 | ) | - | - | - | - | ||
| Share purchase loans | (450,000 | ) | - | - | - | - | (450,000 | ) | |
| Balance as at June 30, 2014 | 225,779,700 | - | 750,344 | 1,711,235 | 314,875 | 258,556,154 |
| Share capital |
Warrants | Contributed surplus | Accumulated other comprehensive income | Retained earnings | Total shareholders' equity | ||||
| $ | $ | $ | $ | $ | $ | ||||
| Balance as at January 1, 2015 | 341,065,000 | - | 2,100,025 | 9,966,837 | 125,858,872 | 478,990,734 | |||
| Net income for the period | - | - | - | - | 22,335,765 | 22,335,765 | |||
| Realized gain reclassified to statement of income, net of tax of $1.3 million | - | - | - | (8,050,242 | ) | - | (8,050,242 | ) | |
| Change in fair value of available-for-sale financial instruments, net of tax of $403,972 | - | - | - | 2,999,712 | - | 2,999,712 | |||
| Unrealized gain on translating financial statements of foreign operations | - | - | - | 10,852,550 | - | 10,852,550 | |||
| Share-based compensation expense | - | - | 2,865,363 | - | - | 2,865,363 | |||
| Issuance of shares upon financing, net of costs and includes deferred tax of $2.2 million | 14,573,364 | - | - | - | - | 14,573,364 | |||
| Issuance of shares upon exercise of stock options | 1,486,982 | - | (553,482 | ) | - | - | 933,500 | ||
| Issuance of warrants | - | 161,329 | - | - | - | 161,329 | |||
| Exercise of compensation warrants | 930,227 | - | (295,127 | ) | - | - | 635,100 | ||
| Issuance of shares under share purchase plan | 41,917 | - | - | - | - | 41,917 | |||
| Balance as at June 30, 2015 | 358,097,490 | 161,329 | 4,116,779 | 15,768,857 | 148,194,637 | 526,339,092 |
Knight Therapeutics Inc.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
[in Canadian dollars]
[unaudited]
| Six-month period ended | ||||
| June 30, 2015 | June 30, 2014 | |||
| $ | $ | |||
| OPERATING ACTIVITIES | ||||
| Net income | 22,335,765 | 314,875 | ||
| Adjustments reconciling net income to operating cash flows: | ||||
| Deferred tax | 402,726 | - | ||
| Share-based compensation | 2,865,363 | 258,467 | ||
| Depreciation of property and equipment | 15,087 | 7,008 | ||
| Amortization of intangible assets | 42,048 | 25,294 | ||
| Accretion of interest | (2,219,887 | ) | - | |
| Gain on disposal of other financial assets | (13,799,211 | ) | - | |
| Gain on settlement of loan receivable | (358,204 | ) | - | |
| Purchase gain on business combination | (550,000 | ) | - | |
| Unrealized loss on derivative | (224,865 | ) | - | |
| Unrealized foreign exchange gain | (4,145,730 | ) | - | |
| Changes in non-cash working capital related to operations | (5,375,802 | ) | (364,230 | ) |
| Deferred revenue | (709,108 | ) | - | |
| Cash inflow (outflow) from operating activities | (1,721,818 | ) | 241,414 | |
| INVESTING ACTIVITIES | ||||
| Purchase of marketable securities | (383,577,657 | ) | - | |
| Proceeds from disposal of marketable securities | 420,690,955 | - | ||
| Purchase of other current financial assets | (2,356,037 | ) | - | |
| Proceeds from disposal of other financial assets | 29,242,137 | - | ||
| Investment in funds | (8,294,952 | ) | (10,664,025 | ) |
| Issuance of loans and debentures receivable | (31,346,858 | ) | - | |
| Proceeds from repayments on loans receivable | 10,027,773 | - | ||
| Purchase of property and equipment | - | (64,484 | ) | |
| Consideration paid on business combination | (1,750,000 | ) | - | |
| Cash inflow (outflow) from investing activities | 32,635,361 | (11,578,509 | ) | |
| FINANCING ACTIVITIES | ||||
| Net impact of Business Separation Agreement | - | 1,000,000 | ||
| Net proceeds from warrants issuance | - | 245,294,330 | ||
| Proceeds from exercise of Over-Allotment Option | 12,424,253 | - | ||
| Proceeds from exercise of compensation warrants | 635,100 | - | ||
| Costs related to prior period share financing | (206,828 | ) | - | |
| Share option plan | 933,500 | - | ||
| Share purchase plan | 41,917 | - | ||
| Share purchase loans | - | (450,000 | ) | |
| Loan from related party | - | 2,500,000 | ||
| Cash inflow from financing activities | 13,827,942 | 245,844,330 | ||
| Increase in cash during the period | 44,741,485 | 234,507,235 | ||
| Cash, beginning of year | 283,445,451 | 1 | ||
| Net foreign exchange difference | 860,208 | - | ||
| Cash, end of year | 329,047,144 | 234,507,236 | ||
Contact Information:
Jeffrey Kadanoff, P.Eng., MBA
Chief Financial Officer
514-484-GUD1 (4831)
514-481-4116 (FAX)
info@gud-knight.com
www.gud-knight.com