Q1 2020 Highlights
Financials
- Revenues were
$45,839 , an increase of$42,883 or 1,451% over prior year. - Interest income generated of
$4,649 a decrease of$1,241 or 21% over prior year. - Net loss for the period was
$9,477 compared to net income for the period of$5,189 in prior year. - Adjusted earnings1 of
$6,435 , an increase of$1,806 or 39% over prior year.
Corporate Developments
- Purchased 2,326,083 common shares through its Normal Course Issuer Bid (“NCIB”) for an aggregate cost of
$14,286 . - Disposed the shares of Medison Biotech (1995) Ltd. (“Medison”) for a cash consideration of
$77,000 . - Ensuring the supply of medicines and safety of our employees during the COVID-19 pandemic.
Products
- Launched Cresemba®, indicated for the treatment of invasive aspergillosis and invasive mucormycosis, in
Brazil .
Strategic Investments
- Disposed of 111,355 common shares of Profound for total proceeds of
$1,825 . - Received distributions of
$2,090 from strategic fund investments and realized a gain of$907 .
Key Subsequent Events
- Completed the NCIB with a total purchase of 12,053,692 common shares at an average price of
$7.14 per share. - Received
US$5,000 ($7,094 ) for the full repayment of the strategic loan issued toTriumvira Immunologics Inc. - Amended strategic loan issued to Synergy and loaned an additional
US$2,500 ($3,547 ). - Received regulatory approval from
Health Canada for Ibsrela™ for the treatment of Irritable Bowel Syndrome with Constipation (“IBS-C”). - Obtained the exclusive Canadian commercial rights Trelstar®, approved for the treatment of advanced prostate cancer.
- Accepted the resignation of
Nancy Harrison ,Sylvie Tendler andKevin Cameron and appointedJanice Murray andNicolás Sujoy on the Board of Directors.
“We are pleased to report on Knight’s continued progress on its mission to become a “rest of world” specialty pharmaceutical company” said
_________
1 Adjusted earnings is not a defined term under IFRS, refer to the definition below for additional details.
Select Financial Results
Q1-20 | Change | |||||
KNIGHT3 | GBT3 | TOTAL | Q1-19 | $1 | %2 | |
Revenues | 3,172 | 42,667 | 45,839 | 2,956 | 42,883 | 1,451% |
Gross margin | 2,608 | 17,252 | 19,860 | 2,271 | 17,589 | 775% |
Selling and marketing | 1,196 | 8,918 | 10,114 | 847 | (9,267) | 1,094% |
General and administrative | 2,518 | 5,900 | 8,418 | 3,695 | (4,723) | 128% |
Research and development | 768 | 1,981 | 2,749 | 626 | (2,123) | 339% |
Amortization of intangible assets | 322 | 5,717 | 6,039 | 426 | (5,613) | 1,318% |
Operating Loss | (2,196) | (5,264) | (7,460) | (3,323) | (4,137) | 124% |
Interest income | 4,649 | — | 4,649 | 5,890 | (1,241) | 21% |
Interest expense | 2,016 | 1,140 | 3,156 | — | (3,156) | N/A |
Net income (loss) | 6,445 | (15,922) | (9,477) | 5,189 | (14,666) | N/A |
Basic net (loss) earnings per share | 0.05 | (0.06) | (0.01) | 0.04 | (0.05) | N/A |
Adjusted earnings | 3,011 | 3,424 | 6,435 | 4,629 | 1,806 | 39% |
1 A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income 2 Percentage change is presented in absolute values 3 Refer to operating segment disclosure in Section 22 of management discussion and analysis for the quarter ended |
Revenue: GBT’s financial results accounted for
Gross margin: Change in gross margin was mainly attributable to the consolidation of GBT’s financial results, which accounted for
Selling and marketing: GBT’s financial results accounted for
General and administrative: GBT’s financial results accounted for
Research and development: GBT’s financial results accounted for
Amortization of intangible assets: The amortization of the definite-life intangible assets acquired in the GBT transaction represents
Interest income: Interest income is the sum of interest income on financial instruments measured at amortized costs and other interest income. Interest income for Q1-20 was
Interest expense: GBT’s financial results accounted for
Foreign exchange gain or loss: GBT’s financial results accounted for
Net income or loss: Net loss for the quarter was
Adjusted Earnings: For the three-month period ended
Product Updates
On
In
In Q1 2020, GBT launched Cresemba® (isavuconazonium sulfate), an azole antifungal agent indicated for use in adults for the treatment of invasive aspergillosis and invasive mucormycosis, in
Strategic Lending Update
On
On
NCIB Update
On
Subsequent to the quarter, Knight completed its NCIB and purchased a cumulative total of 12,053,692 common shares at an average price of
Other Corporate Developments
On
COVID-19 Update
The recent outbreak of the coronavirus, or COVID-19, which has been declared by the
Conference Call Notice
Knight will host a conference call and audio webcast to discuss its first quarter results today at
Date:
Time:
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Webcast: www.gud-knight.com or Webcast
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About Knight Therapeutics Inc.
Forward-Looking Statement
This document contains forward-looking statements for
CONTACT INFORMATION:
Investor Contact:
President
T: 514-678-8930
F: 514-481-4116
Email: info@gudknight.com
Website: www.gud-knight.com
Arvind Utchanah
Chief Financial Officer
T. 514.484.4483 ext. 115
F. 514.481.4116
Email: info@gudknight.com
Website: www.gud-knight.com
IMPACT OF HYPERINFLATION
[In thousands of Canadian dollars]
The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company’s Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation. If the Company did not apply IAS 29, the effect on the Company’s operating income would be as follows:
Reported under IFRS | Excluding impact of IAS 29 | Variance | ||
$1 | %2 | |||
Revenues | 45,839 | 45,488 | 351 | 1% |
Cost of goods sold | 25,979 | 25,015 | (964) | 4% |
Gross margin | 19,860 | 20,473 | (613) | 3% |
Gross margin (%) | 43% | 45% | ||
Expenses | ||||
Selling and marketing | 10,114 | 9,988 | (126) | 1% |
General and administrative | 8,418 | 8,334 | (84) | 1% |
Research and development | 2,749 | 2,721 | (28) | 1% |
Amortization of intangible assets | 6,039 | 5,559 | (480) | 9% |
Operating Loss | (7,460) | (6,129) | (1,331) | 22% |
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29 2 Percentage change is presented in absolute values |
The Company has provided an explanation of the basics of accounting under Hyperinflation (IAS 29). Refer to the investor relations section at www.gudknight.com for a copy of the presentation.
RECONCILIATION TO ADJUSTED EARNINGS
[In thousands of Canadian dollars]
Non-IFRS measure: EBITDA and Adjusted earnings
The Company discloses non-IFRS measures that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance and in interpreting the effect of the GBT Transaction on the Company. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.
The Company uses the following non-IFRS measures:
EBITDA: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases. In addition, EBITDA does not reflect the portion of GBT’s adjusted earnings attributable to the non-controlling interests.
Adjusted earnings: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, acquisition costs, non-recurring expenses incurred but to include interest income earned net of interest expenses and costs related to leases. In addition, the adjusted earnings does not reflect the portion of GBT’s adjusted earnings attributable to the non-controlling interests.
Adjustments to operating (loss) income include the following:
- With the adoption of IFRS 16, the lease payments of Knight are not reflected in operating expenses. The IFRS 16 adjustment approximates the cash outflow related to leases of Knight.
- Acquisition costs relate to expenses of
$216 for the quarter on legal and consulting, for the acquisition of GBT. - Other non-recurring expenses relate to expenses incurred by Knight that are not due to, and are not expected to occur in, the ordinary course of business. During the quarter, Knight recorded one-time costs of
$1,764 related to (i) restructuring activities for$252 , (ii) inventory destruction due to a temperature excursion during transportation for$874 and (iii) bad debt against accounts receivable for$638 . - Interest income Includes “Interest income on financial instruments measured at amortized cost” and “Other interest income”. Primarily from interest earned on loans, cash and cash equivalents, marketable securities and accretion on loans receivable.
- Interest expense on bank loans includes GBT’s interest expense mainly related to interest on its bank loans and excludes Knight’s interest accretion.
For the three-month period ended
Q1-20 | ||||||||
KNIGHT1 | GBT1,2 | TOTAL | Q1-19 | |||||
Operating loss | (2,196 | ) | (5,264 | ) | (7,460 | ) | (3,323 | ) |
Adjustments to operating (loss) income: | ||||||||
Amortization of intangible assets | 322 | 5,717 | 6,039 | 426 | ||||
Depreciation of property, plant and equipment | 101 | 1,623 | 1,724 | 97 | ||||
Lease costs (IFRS 16 adjustment) | (81 | ) | (753 | ) | (834 | ) | (76 | ) |
Impact of purchase price allocation accounting | — | 632 | 632 | — | ||||
Impact of IAS 29 | — | 851 | 851 | — | ||||
EBITDA | (1,854 | ) | 2,806 | 952 | (2,876 | ) | ||
Acquisition costs | 216 | — | 216 | — | ||||
Other non-recurring expenses | — | 1,764 | 1,764 | 1,615 | ||||
Interest income | 4,649 | — | 4,649 | 5,890 | ||||
Interest expense on bank loans | — | (1,146 | ) | (1,146 | ) | — | ||
Adjusted earnings | 3,011 | 3,424 | 6,435 | 4,629 | ||||
1 Refer to operating segment disclosure in Section 22 of management discussion and analysis for the quarter ended March31, 2020 for definition of “Knight” and “GBT” 2 Not adjusted for the non-controlling interest of 48.8% |
INTERIM CONSOLIDATED BALANCE SHEETS
[In thousands of Canadian dollars]
[Unaudited]
As at | ||
ASSETS | ||
Current | ||
Cash, cash equivalents and restricted cash | 286,942 | 174,268 |
Marketable securities | 246,575 | 235,045 |
Trade receivables | 78,691 | 85,845 |
Other receivables | 19,767 | 17,622 |
Inventories | 72,125 | 70,870 |
Prepaids and deposits | 2,878 | 3,306 |
Other current financial assets | 22,450 | 26,303 |
Income taxes receivable | 5,588 | 8,265 |
Total current assets | 735,016 | 621,524 |
Marketable securities | 59,061 | 126,869 |
Trade receivables | 2,212 | 4,715 |
Prepaids and deposits | 4,606 | 4,652 |
Right-of-use assets | 5,831 | 6,409 |
Property, plant and equipment | 23,289 | 22,639 |
Investment properties | 1,456 | 1,740 |
Intangible assets | 164,439 | 173,372 |
84,341 | 88,262 | |
Other financial assets | 138,629 | 132,848 |
Deferred income tax assets | 4,113 | 3,991 |
Other long-term receivable | 41,582 | 41,582 |
529,579 | 607,079 | |
Assets held for sale | 2,540 | 76,700 |
Total assets | 1,267,135 | 1,305,303 |
INTERIM CONSOLIDATED BALANCE SHEETS (continued)
[In thousands of Canadian dollars]
[Unaudited]
As at | ||
LIABILITIES AND EQUITY | ||
Current | ||
Accounts payable and accrued liabilities | 79,770 | 94,406 |
Lease liabilities | 1,746 | 1,788 |
Other liabilities | 1,688 | 1,750 |
Automatic share purchase plan liability | 18,278 | — |
Other financial liabilities | 183,413 | 184,023 |
Bank loans | 54,207 | 50,557 |
Income taxes payable | 14,039 | 15,447 |
Other balances payable | 3,329 | 2,833 |
Total current liabilities | 356,470 | 350,804 |
Lease liabilities | 4,447 | 4,812 |
Long-term accounts payable and other liabilities | 278 | — |
Bank loans | 4,246 | 5,022 |
Other balances payable | 1,947 | 1,699 |
Deferred income tax liabilities | 23,386 | 27,860 |
Total liabilities | 390,774 | 390,197 |
Equity | ||
Share capital | 698,249 | 723,832 |
Warrants | 785 | 785 |
Contributed surplus | 16,933 | 16,463 |
Accumulated other comprehensive income | 26,834 | 17,405 |
Retained earnings | 40,760 | 52,246 |
Attributable to shareholders of the Company | 783,561 | 810,731 |
Non-controlling interests | 92,800 | 104,375 |
Total equity | 876,361 | 915,106 |
Total liabilities and equity | 1,267,135 | 1,305,303 |
INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
Three months ended | ||||
2020 | 2019 | |||
Revenues | 45,839 | 2,956 | ||
Cost of goods sold | 25,979 | 685 | ||
Gross margin | 19,860 | 2,271 | ||
Expenses | ||||
Selling and marketing | 10,114 | 847 | ||
General and administrative | 8,418 | 3,695 | ||
Research and development | 2,749 | 626 | ||
Amortization of intangibles | 6,039 | 426 | ||
Operating loss | (7,460 | ) | (3,323 | ) |
Interest income on financial instruments measured at amortized cost | (3,383 | ) | (4,925 | ) |
Other interest income | (1,266 | ) | (965 | ) |
Interest expense | 3,156 | — | ||
Other income | (25 | ) | (353 | ) |
Net loss (gain) on financial instruments measured at fair value through profit or loss | 6,730 | (4,777 | ) | |
Net gain on mandatory tender offer liability | (1,522 | ) | — | |
Realized gain on sale of asset held for sale | (2,948 | ) | — | |
Realized gain on automatic share purchase plan | (2,869 | ) | — | |
Share of net income of associate | — | (692 | ) | |
Foreign exchange loss | 4,907 | 1,653 | ||
Loss on hyperinflation | 277 | — | ||
(Loss) Income before income taxes | (10,517 | ) | 6,736 | |
Income tax | ||||
Current | 3,001 | 1,531 | ||
Deferred | (4,041 | ) | 16 | |
Income tax (recovery) expense | (1,040 | ) | 1,547 | |
Net (loss) income for the period | (9,477 | ) | 5,189 | |
Attributable to: | ||||
Shareholders of the Company | (1,709 | ) | 5,189 | |
Non-controlling interests | (7,768 | ) | — | |
Attributable to shareholders of the Company | ||||
Basic (loss) earnings per share | (0.01 | ) | 0.04 | |
Diluted (loss) earnings per share | (0.01 | ) | 0.04 | |
Weighted average number of common shares outstanding | ||||
Basic | 135,144,152 | 142,852,246 | ||
Diluted | 135,436,500 | 143,245,443 | ||
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]
Three months ended | ||||
2020 | 2019 | |||
OPERATING ACTIVITIES | ||||
Net (loss) income for the period | (9,477 | ) | 5,189 | |
Adjustments reconciling net income to operating cash flows: | ||||
Deferred income tax (recovery) expense | (4,041 | ) | 16 | |
Share-based compensation expense | 470 | 457 | ||
Depreciation and amortization | 7,763 | 523 | ||
Net loss (gain) on financial instruments | 6,730 | (4,777 | ) | |
Net gain on mandatory tender offer liability | (1,522 | ) | — | |
Realized gain on sale of Asset held for sale | (2,948 | ) | — | |
Realized gain on automatic share purchase plan | (2,869 | ) | — | |
Interest expense on MTO | 2,009 | — | ||
Foreign exchange loss | 4,907 | 1,653 | ||
Loss on hyperinflation | 277 | — | ||
Share of net income of associate | — | (692 | ) | |
Deferred other income | — | (170 | ) | |
Other adjustments | 167 | — | ||
1,466 | 2,199 | |||
Changes in non-cash working capital and other items | (22,472 | ) | 2,496 | |
Other long-term receivable | — | (18,242 | ) | |
Dividends from associate | — | 4,159 | ||
Interest payments on bank loans | (161 | ) | — | |
Cash outflow from operating activities | (21,167 | ) | (9,388 | ) |
INVESTING ACTIVITIES | ||||
Purchase of marketable securities | (13,415 | ) | (98,893 | ) |
Purchase of intangibles assets | (2,314 | ) | (1,989 | ) |
Purchase of property and equipment | (376 | ) | — | |
Exercise of warrants | (386 | ) | — | |
Issuance of loans receivables | — | (17,850 | ) | |
Purchase of equity investments | (397 | ) | — | |
Investment in funds | (5,555 | ) | (1,707 | ) |
Proceeds on sale of asset held for sale | 77,000 | — | ||
Proceeds on maturity of marketable securities | 76,446 | 120,964 | ||
Proceeds from repayments of loans receivable | 18 | 657 | ||
Proceeds from disposal of equity investments | 2,919 | — | ||
Proceeds from distribution of funds | 2,091 | 676 | ||
Cash inflow (outflow) from investing activities | 136,030 | (3,542 | ) | |
FINANCING ACTIVITIES | ||||
Proceeds from contributions to share purchase plan | 73 | 60 | ||
Proceeds from bank loans | 11,922 | — | ||
Repurchase of common shares through Normal Course Issuer Bid | (13,311 | ) | — | |
Principal repayment of lease liabilities | (827 | ) | (67 | ) |
Principal repayments on bank loans | (731 | ) | — | |
Cash outflow from financing activities | (2,874 | ) | (7 | ) |
Increase (decrease) in cash and cash equivalents during the period | 111,989 | (12,937 | ) | |
Cash and cash equivalents, beginning of the period | 174,268 | 244,785 | ||
Net foreign exchange difference | 685 | (738 | ) | |
Cash and cash equivalents, end of the period | 286,942 | 231,110 | ||
Cash and cash equivalents | 286,942 | 231,110 | ||
Short-term marketable securities | 246,575 | 235,045 | ||
Long-term marketable securities | 59,061 | 126,869 | ||
Total cash, cash equivalents and marketable securities | 592,578 | 593,024 |
Source: Thérapeutique Knight inc.
2020 GlobeNewswire, Inc., source