Knight Therapeutics Inc.
TSX : GUD

Knight Therapeutics Inc.

November 10, 2016 06:00 ET

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 -

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