Knight Therapeutics Inc.
TSX : GUD

Knight Therapeutics Inc.

August 11, 2016 06:00 ET

Knight Reports Second Quarter 2016 Results

MONTREAL, QUEBEC--(Marketwired - Aug. 11, 2016) - Knight Therapeutics Inc. (TSX:GUD) ("Knight" or the "Company"), a leading Canadian specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2016.

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

Key Events in Second Quarter 2016

  • Announced and completed a bought deal at $8.00 per common share for gross proceeds of $230,000 including over-allotment exercise.

  • Received a Notice of Deficiency from Health Canada for ATryn®.

  • Entered into a distribution agreement with EMPA Healthcare LLC to commercialize Neuragen® in the United Arab Emirates and Kuwait.

Key Events Subsequent to the Quarter Ended June 30, 2016

  • 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.

  • Entered into a distribution agreement with S.I.F.I - Società Industria Farmaceutica Italiana S.p.A. to commercialize NETILDEX™ in Canada.

  • Entered into a licencing and distribution agreement with 3D Signatures Inc. ("3D Signatures") and Plicit Capital Corp. ("Plicit"). Knight also committed to a minimum equity investment of $1,000 pursuant to a business combination and public listing transaction between 3D Signatures and Plicit.

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

Financial Results Reported in Thousands of Canadian Dollars

For the quarter ended June 30, 2016, the Company reported revenues of $1,135 and net income of $4,446. As at June 30, 2016, the Company had $638,423 in cash, cash equivalents and marketable securities, total shareholders' equity of $861,965 and 132,480,708 common shares outstanding.

"This past quarter marked our 4th successful equity-raise in 28 months all at increasing valuations," said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. "We hope to demonstrate that we are as GUD at commercializing innovative pharmaceuticals that touch people's lives as we are at raising money. To this end, we have deployed or committed over $300 million since our founding in low risk, fair return opportunities that will improve the health of Canadians and help build Knight into Canada's leading specialty pharma company."

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 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 Sunday, September 11, 2016 at 11:59 pm ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 10254484.

Notice of Third Quarter 2016 Results

Knight expects to release its third quarter 2016 financial results on the morning of Thursday, November 10, 2016. 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 1-877-223-4471 (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 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 June 30, 2016 December 31, 2015
ASSETS
Current
Cash and cash equivalents 363,713 237,481
Marketable securities 274,710 233,726
Trade and other receivables 4,505 2,994
Inventories 833 1,460
Other current financial assets 36,763 23,588
Income taxes receivable 146 231
Total current assets 680,670 499,480
Property and equipment - 18
Intangible assets 5,956 3,320
Other financial assets 95,076 62,616
Investment in associate 81,393 81,027
Deferred income tax assets 4,904 2,527
Total assets 867,999 648,988
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 1,289 2,416
Income taxes payable 4,745 4,031
Deferred other income - 293
Total current liabilities 6,034 6,740
Deferred income tax liabilities - 186
Total liabilities 6,034 6,926
Shareholders' equity
Share capital 662,702 439,148
Warrants 161 161
Contributed surplus 7,712 6,772
Accumulated other comprehensive income 26,441 35,955
Retained earnings 164,949 160,026
Total shareholders' equity 861,965 642,062
Total liabilities and shareholders' equity 867,999 648,988

INTERIM CONSOLIDATED STATEMENTS OF INCOME

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

Three-months ended
June 30
Six-months ended
June 30
2016 2015 2016 2015
Revenues 1,135 333 2,203 580
Cost of goods sold 535 272 781 358
Gross margin 600 61 1,422 222
Expenses
Selling and marketing 154 - 168 -
General and administrative 2,055 2,446 4,234 5,123
Research and development 524 301 807 635
(2,133 ) (2,686 ) (3,787 ) (5,536 )
Depreciation of property and equipment 10 7 18 15
Amortization of intangible assets 122 21 163 42
Interest income (6,124 ) (3,596 ) (10,940 ) (7,562 )
Other income (354 ) (525 ) (1,453 ) (966 )
Net gain on financial assets (783 ) (6,495 ) (2,512 ) (14,024 )
Purchase gain on business combination - - - (550 )
Gain on settlement of loan receivable - (358 ) - (358 )
Share of net income of associate (805 ) - (1,659 ) -
Foreign exchange loss (gain) 357 592 4,127 (3,818 )
Income before income taxes 5,444 7,668 8,469 21,685
Income tax expense (recovery) 578 (1,053 ) 3,119 (1,053 )
Deferred income tax expense 420 201 427 402
Net income for the period 4,446 8,520 4,923 22,336
Attributable to shareholders of the Company
Basic earnings per share 0.04 0.09 0.05 0.24
Diluted earnings per share 0.04 0.09 0.05 0.24
Weighted average number of common shares outstanding
Basic 112,681,825 93,089,609 108,078,434 92,816,245
Diluted 113,112,999 93,222,325 108,410,280 93,028,011

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

[Unaudited] [In thousands of Canadian dollars]

Three-months ended
June 30
Six-months ended
June 30
2016 2015 2016 2015
Net income for the period 4,446 8,520 4,923 22,336
Realized gain reclassified to statement of income net of tax of $1 and $65 for the three and six-month period ended June 30, 2016 (net of tax of $810 and $1,300 for the three and six-month period ended June 30, 2015) (6 ) (5,206 ) (416 ) (8,050 )
Other comprehensive income (loss) to be reclassified to income or loss in subsequent periods:
Unrealized gain on available-for-sale financial instruments net of tax of $75 and $147 for the three and six-month period ended June 30, 2016 (net of tax of $72 and $404 for the three and six-month period ended June 30, 2015) 2,127 898 2,548 3,000
Unrealized (loss) gain on translating financial statements of foreign operations (668 ) (2,065 ) (11,646 ) 10,852
Other comprehensive income (loss) for the period 1,453 (6,373 ) (9,514 ) 5,802
Total comprehensive income (loss) for the period 5,899 2,147 (4,591 ) 28,138

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

[Unaudited] [In thousands of Canadian dollars]

Notes 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 - - - - 22,336 22,336
Realized gain reclassified to statement of income, net of tax of $1,300 - - - (8,050 ) - (8,050 )
Change in fair value of available-for-sale financial instruments, net of deferred tax of $404 - - - 3,000 - 3,000
Change in unrealized gain on translating financial statements of foreign operations - - - 10,852 - 10,852
Comprehensive income - 5,802 22,336 28,138
Share-based compensation expense - - 2,865 - - 2,865
Issuance of shares upon financing, net of costs and deferred tax of $2,200 14,573 - - - - 14,573
Issuance of shares upon exercise of stock options 1,487 - (553 ) - - 934
Issuance of warrants - 161 - - - 161
Exercise of compensation warrants 930 - (295 ) - - 635
Issuance of shares under share purchase plan 42 - - - - 42
Balance as at June 30, 2015 358,097 161 4,117 15,769 148,195 526,339
Balance as at January 1, 2016 439,148 161 6,772 35,955 160,026 642,062
Net income for the period - - - - 4,923 4,923
Realized gain reclassified to statement of income, net of tax for $65 - - - (416 ) - (416 )
Change in fair value of available-for-sale financial instruments, net of deferred tax of $147 2,548 2,548
Change in unrealized loss on translating financial statements of foreign operations - - - (11,646 ) - (11,646 )
Comprehensive income (loss) - - (9,514 ) 4,923 (4,591 )
Share-based compensation expense - - 1,883 - - 1,883
Issuance of shares upon bought deal, net of costs and deferred tax of $3,080 221,631 - - - - 221,631
Issuance of shares to associate 2,073 - (943 ) - - 1,130
Share purchase loans (200 ) - - - - (200 )
Issuance of shares under share purchase plan 50 - - - 50
Balance as at June 30, 2016 662,702 161 7,712 26,441 164,949 861,965

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

[Unaudited] [In thousands of Canadian dollars]

Six-month period ended June 30
2016 2015
OPERATING ACTIVITIES
Net income for the period 4,923 22,336
Adjustments reconciling net income to operating cash flows:
Deferred tax 427 403
Share-based compensation expense 1,883 2,865
Depreciation and amortization 181 57
Accretion of interest (2,846 ) (2,220 )
Realized gain on sale of other financial assets (142 ) (13,799 )
Unrealized gain on financial assets (2,370 ) (225 )
Gain on settlement of loan receivable - (358 )
Foreign exchange loss (gain) 4,127 (4,146 )
Purchase gain on business combination - (550 )
Share of net income from associate (1,659 ) -
Changes in non-cash working capital related to operations 963 (5,376 )
Deferred other income (293 ) (709 )
Cash inflow (outflow) from operating activities 5,194 (1,722 )
INVESTING ACTIVITIES
Purchase of marketable securities (283,125 ) (383,578 )
Purchase of financial assets (5,423 ) (2,356 )
Purchase of intangibles (2,924 ) -
Investment in funds (9,225 ) (8,295 )
Issuance of loans receivable (37,449 ) (31,347 )
Proceeds from repayments of loans receivable 2,023 10,028
Proceeds from disposal of financial assets 4,026 29,242
Proceeds from sale of marketable securities 234,104 420,691
Dividend income from associate 2,423 -
Consideration paid on business combination - (1,750 )
Cash (outflow) inflow from investing activities (95,570 ) 32,635
FINANCING ACTIVITIES
Issuance of shares upon bought deal 218,552 -
Proceeds from exercise of compensation warrants - 635
Proceeds from exercise of an over-allotment option - 12,424
Share option plan - 934
Share purchase plan 50 42
Share purchase loans (200 ) -
Cost related to prior period share issuance - (207 )
Cash inflow from financing activities 218,402 13,828
Increase in cash during the period 128,026 44,741
Cash and cash equivalents, beginning of the period 237,481 283,445
Net foreign exchange difference (1,794 ) 861
Cash and cash equivalents, end of the period 363,713 329,047
Supplemental cash flow information:
Interest received 6,821 4,991
Income taxes paid 2,334 2,068

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