Knight Reports Third Quarter 2016 Results

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		-