Knight Reports Second Quarter 2017 Results

MONTREAL, QUEBEC--(Marketwired - August 10, 2017) - Knight Therapeutics Inc. (TSX:GUD) ("Knight"), a leading Canadian specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2017. All dollar amounts are in thousands except for per share amounts. All currencies are Canadian unless otherwise specified.

Q2-2017 Highlights

• Revenues reached $2,840, an increase of $1,345 or 119% over the same period in prior year
• Cash flows from operations were $3,371, an increase of $289 or 9% over the same period in prior year
• Submitted Probuphine™ for approval by Health Canada
• Issued additional secured loan tranches of US$1,807 to 60 Degree Pharmaceuticals ("60P")
• Contributed capital of $6,190 and received distributions of $1,222 from strategic fund investments

Subsequent Events

• Realized gain of $1,457 on disposal of common shares of Merus upon the close of its acquisition by Norgine B.V.
• Medison Biotech (1995) Ltd.'s ("Medison") board of directors declared and approved dividends of $2,466 [ILS7,068]
• Issued an additional secured loan of US$10,000 to Synergy CHC Corp. ("Synergy")

"This past quarter was highlighted by continued revenue growth, as well as the submission of Probuphine™ for approval by Health Canada, bringing a novel product one step closer to improving the health of Canadians," said Jonathan Ross Goodman, CEO of Knight. "In the quarters ahead, we will continue to be focused on advancing our pipeline and capitalizing on GUD opportunities for growth."

Financial Results

Revenue for Q2 2017 was $2,840, an increase of $1,345 or 119% versus Q2 2016. Revenue for the first half of 2017 was $4,230, an increase of $2,027 or 92% versus the first half of 2016. The increase is due to the addition of Movantik® as well as to an increase of Impavido® sales.

Operating expenses for Q2 2017 were $4,246, an increase of $1,513 or 55% versus Q2 2016. The increase is explained by commercial activities including sales force promotion of Movantik®, an increase in the number of employees as Knight expands commercialization and prepares to launch new products in Canada, and the fees related to the submission of Probuphine™ for regulatory approval by Health Canada.

Interest income for Q2 2017 was $5,698, a decrease of $426 or 7% versus Q2 2016. The decrease is driven by a lower average loan balance outstanding, offset by an increase in the average cash, cash equivalents and marketable securities balances due to proceeds from equity raises in June and December 2016.

Share of income of associate for Q2 2017 was $96, a decrease of $709 or 88% versus Q2 2016. The decrease 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.

Net income for Q2 2017 was $459, a decrease of $3,987 or 90% versus Q2 2016. Net income for the first half of 2017 was $6,506, an increase of $1,583 or 32% versus the first half of 2016.

As at June 30, 2017, Knight had $761,161 in cash, cash equivalents and marketable securities and 142,765,432 common shares outstanding. From this strong cash position, Knight will continue to pursue business and corporate development opportunities.

Product Updates

During the quarter, Knight submitted a new drug submission for Probuphine™ for approval by Health Canada. Probuphine™, indicated for the treatment of opioid drug dependence, is a subdermal implant designed to deliver buprenorphine continuously for six months following a single treatment, promoting patient compliance and retention. Knight entered into an exclusive licensing agreement with Braeburn to commercialize Probuphine™ in Canada in February 2016.

According to IMS data, Movantik® sales in Canada were $213 and $381 for the three and six-month periods ended June 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

During the three-month period ended June 30, 2017, Knight issued an additional US$1,356 to 60P. As at June 30, 2017, Knight had issued a total of US$4,197 to 60P as part of a secured loan agreement. The loan bears interest at 15% per annum and matures on December 31, 2020.

Subsequent to quarter end, Knight issued an additional secured loan of US$10,000 to Synergy which bears interest at 10.5% per annum and matures on August 9, 2020. As part of the transaction, Knight will receive a success fee paid at maturity, plus other consideration. In 2015, Knight issued two loans to Synergy totaling US$11,500 which have a current remaining balance of US$3,100 and are scheduled to be fully repaid by January 20, 2018.

Conference Call Notice

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

Date:	Thursday, August 10, 2017
Time:	8:30 a.m. EST
Telephone:	1-877-223-4471 or 647-788-4922
Webcast:	http://www.gudknight.com/ or http://bit.ly/2u1eeo9
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 http://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.

INTERIM CONSOLIDATED BALANCE SHEETS

[In thousands of Canadian dollars]

[Unaudited]

As at	June 30, 2017		December 31, 2016
ASSETS
Current
Cash and cash equivalents	527,879		514,942
Marketable securities	233,282		221,108
Trade and other receivables	7,598		6,440
Inventories	839		790
Other current financial assets	35,779		51,789
Income taxes receivable	5,456		4,683
Total current assets	810,833		799,752
Property and equipment	68		32
Intangible assets	13,482		14,153
Other financial assets	84,073		90,643
Investment in associate	78,003		80,113
Deferred income tax assets	5,521		6,077
Total assets	991,980		990,770
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	3,123		3,207
Income taxes payable	6,617		5,659
Other balances payable	610		537
Deferred other income	250		355
Total current liabilities	10,600		9,758
Deferred other income	292		417
Other balances payable	908		877
Total liabilities	11,800		11,052
Shareholders' equity
Share capital	761,063		760,447
Warrants	785		785
Contributed surplus	11,138		9,469
Accumulated other comprehensive income	22,102		30,431
Retained earnings	185,092		178,586
Total shareholders' equity	980,180		979,718
Total liabilities and shareholders' equity	991,980		990,770

INTERIM CONSOLIDATED STATEMENTS OF INCOME

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

[Unaudited]

	Three months ended June 30				Six months ended June 30
	2017		2016		2017		2016
Revenues	2,480		1,135		4,230		2,203
Cost of goods sold	472		535		760		781
Gross margin	2,008		600		3,470		1,422
Expenses
Selling and marketing	1,050		154		1,413		168
General and administrative	2,329		2,055		4,797		4,234
Research and development	867		524		1,283		807
	(2,238	)	(2,133	)	(4,023	)	(3,787	)
Depreciation of property and equipment	-		10		-		18
Amortization of intangible assets	320		122		646		163
Interest income	(5,698	)	(6,124	)	(11,558	)	(10,940	)
Other income	(334	)	(354	)	(642	)	(1,453	)
Net loss (gain) on financial assets	1,056		(783	)	(2,319	)	(2,512	)
Share of net income of associate	(96	)	(805	)	(415	)	(1,659	)
Foreign exchange loss	1,306		357		1,549		4,127
Income before income taxes	1,208		5,444		8,716		8,469
Income tax expense
Current	628		578		1,108		3,119
Deferred	121		420		1,102		427
Net income for the period	459		4,446		6,506		4,923
Attributable to shareholders of the Company
Basic earnings per share	0.003		0.039		0.046		0.046
Diluted earnings per share	0.003		0.039		0.045		0.045

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

[In thousands of Canadian dollars]

[Unaudited]

		Three months ended June 30				Six months ended June 30
		2017		2016		2017		2016
OPERATING ACTIVITIES
Net income for the period		459		4,446		6,506		4,923
Adjustments reconciling net income to operating cash flows:
	Deferred tax	121		420		1,102		427
	Share-based compensation expense	1,018		810		1,864		1,883
	Depreciation and amortization	320		132		646		181
	Accretion of interest	(1,106	)	(1,741	)	(2,184	)	(2,846	)
	Realized (gain) loss on financial assets	(665	)	514		(1,641	)	(142	)
	Unrealized (gain) loss on financial assets	1,721		(1,297	)	(678	)	(2,370	)
	Foreign exchange loss	1,344		367		1,549		4,127
	Share of net income from associate	(96	)	(805	)	(415	)	(1,659	)
	Other adjustments	71		(151	)	(231	)	(293	)
		3,187		2,695		6,518		4,231
Changes in non-cash working capital related to operations		(2,341	)	387		(1,436	)	963
Dividends from associate		2,525		-		2,525		2,423
Cash inflow from operating activities		3,371		3,082		7,607		7,617
INVESTING ACTIVITIES
Purchase of marketable securities		(98,182	)	(135,726	)	(142,473	)	(283,125	)
Purchase of intangibles		-		-		-		(2,924	)
Issuance of loans receivables		(1,807	)	(2,598	)	(1,807	)	(37,449	)
Purchase of equities		(120	)	(3,999	)	(2,939	)	(7,460	)
Investment in funds		(6,190	)	(3,392	)	(10,331	)	(9,225	)
Proceeds from sale of marketable securities		106,073		81,878		126,559		234,104
Proceeds from repayments of loans receivable		2,266		1,005		30,324		2,023
Proceeds from disposal of equities		2,806		616		3,515		6,235
Proceeds from distribution of funds		1,222		-		3,376		-
Cash inflow (outflow) from investing activities		6,068		(62,216	)	6,224		(97,821	)
FINANCING ACTIVITIES
Issuance of shares upon bought deal		-		218,552		-		218,552
Proceeds from share option plan		-		-		345		-
Proceeds from share purchase plan		50		22		93		50
Issuance of share purchase loans		-		(200	)	-		(200	)
Cash inflow from financing activities		50		218,374		438		218,402
Increase in cash during the period		9,489		159,240		14,269		128,198
Cash and cash equivalents, beginning of the period		519,522		204,785		514,942		237,481
Net foreign exchange difference		(1,132	)	(312	)	(1,332	)	(1,966	)
Cash and cash equivalents, end of the period		527,879		363,713		527,879		363,713
Marketable securities, end of the period		233,282		274,710		233,282		274,710
Cash, cash equivalents and marketable securities, end of the period		761,161		638,423		761,161		638,423