MONTREAL, QUEBEC–(Marketwired – May 13, 2015) – Knight Therapeutics Inc. (TSX:GUD) (“Knight” or the “Company”), a leading Canadian specialty pharmaceutical company, today reported its first quarter ended March 31, 2015 financial results.
First Quarter 2015 Highlights
- On January 1, 2015, Knight acquired NeurAxon Inc. (“NeurAxon”) for $1.75 million and amalgamated the company into Knight that same day.
- On January 14, 2015, a syndicate of underwriters acquired 1,932,420 common shares of Knight at a price of $6.75 per share for gross proceeds of $13,043,835 pursuant to their exercise in full of the over-allotment option granted per Knight’s last equity offering.
- On January 22, 2015, Knight entered into a senior secured debt financing agreement with Synergy Strips Corp., whereby it issued a secured loan of $7.4 million [US$6.0 million] that will bear interest at 15% per annum and matures on January 20, 2017.
- On March 25, 2015, Knight received early repayment of $10.0 million [US$7.9 million] of its secured loan of $34.0 million [US$30 million] from CRH Medical Corporation (“CRH”). During the three months ended March 31, 2015, Knight sold all of its 3 million common shares of CRH, which were received as part of this secured loan with CRH, for gross proceeds of $9.9 million.
- On March 31, 2015, Knight purchased $1.25 million of secured debentures offered by Pediapharm Inc., as part of a $5.50 million offering, which bear interest at a rate of 12% per annum paid quarterly and which mature on March 30, 2019.
Subsequent to the quarter ended March 31, 2015:
- On April 3, 2015, Knight entered into an agreement with HarbourVest Partners LLC, whereby Knight committed to invest $10.0 million into HarbourVest Canada Growth Fund L.P. This brings Knight’s commitment to life sciences venture capital fund investments to approximately $120 million out of the $130 million Knight intends to commit to its long-term licensing strategy.
- On April 30, 2015, Knight entered into several agreements with Profound Medical Inc. (“Profound”) which are subject to a number of conditions including, but not limited to, TSX Venture Exchange acceptance: i) Knight entered into a secured loan of $4.0 million to Profound which would bear interest at 15.0% per annum for an initial term of 4 years, ii) Knight purchased $2.0 million as part of a $24.0 million offering of subscription receipts at a price of $1.50 per subscription receipt, and iii) Knight entered into a distribution, license and supply agreement with Profound pursuant to which Knight will act as the exclusive distributor of the Company’s TULSA-PRO system, an investigational phase device used in a minimally invasive treatment for localized prostate cancer currently being assessed in clinical trials, in Canada for an initial ten year term.
First Quarter 2015 Financial Results Reported in Canadian Dollars
The Company’s financial statements for the period ended March 31, 2015 have been prepared in accordance with IAS 34, Interim Financial Reporting.
For the quarter ended March 31, 2015, the Company reported revenues of $247,356 and net income of $13,816,190. As at March 31, 2015, the Company had $452.2 million in cash and marketable securities and 92,539,843 common shares outstanding.
“This quarter was marked by a one-time $10 million realized gain generated from the execution of our secured lending strategy. After selling our priority review voucher for US$125M, this now makes us a two hit wonder,” said Jonathan Ross Goodman, President and CEO of Knight Therapeutics Inc. “Every day, the Knight team is aggressively, yet patiently pursuing opportunities to build our pipeline of innovative specialty pharmaceutical products. I assure you that GUD things come to those who wait.”
Conference Call Notice
Knight will host a conference call to discuss its first quarter results today at 8:30 am ET. Investors and other interested parties may call 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 a.m. ET until Wednesday, June 10, 2015 at 11:59 p.m. ET. To access the replay, please call 1-800-585-8367 or 416-621-4642 and use access code 46121470.
Notice of Second Quarter 2015 Results
Knight expects to release its second quarter 2015 financial results on the morning of Wednesday, August 12, 2015. 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 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’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 the Company 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. The Company 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 the Company 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 the Company’s Annual Report and in the Company’s Annual Information Form for the year ended December 31, 2014. The Company 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.
Knight Therapeutics Inc.
INTERIM CONSOLIDATED BALANCE SHEETS
As at
[in Canadian dollars]
[unaudited]
| March 31, | December 31, | |
| 2015 | 2014 | |
| $ | $ | |
| ASSETS | ||
| Current | ||
| Cash and cash equivalents | 301,293,007 | 283,445,451 |
| Marketable securities | 150,893,400 | 133,411,500 |
| Accounts receivable | 748,696 | 740,545 |
| Investment tax credits receivable | 200,000 | – |
| Inventory | 1,255,303 | 601,780 |
| Other current financial assets | 3,510,236 | 10,089,462 |
| Other current assets | 425,721 | 283,867 |
| Total current assets | 458,326,363 | 428,572,605 |
| Property and equipment | 40,187 | 47,728 |
| Intangible assets | 3,039,416 | 845,761 |
| Other financial assets | 64,017,965 | 57,147,077 |
| Total assets | 525,423,931 | 486,613,171 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
| Current | ||
| Accounts payable and accrued liabilities | 1,600,280 | 2,089,911 |
| Income taxes payable | 3,795,791 | 4,492,701 |
| Deferred revenue | 577,072 | 1,039,825 |
| Total current liabilities | 5,973,143 | 7,622,437 |
| Shareholders’ equity | ||
| Share capital | 354,515,466 | 341,065,000 |
| Contributed surplus | 3,118,518 | 2,100,025 |
| Accumulated other comprehensive income | 22,141,742 | 9,966,837 |
| Retained earnings | 139,675,062 | 125,858,872 |
| Total shareholders’ equity | 519,450,788 | 478,990,734 |
| Total liabilities and shareholders’ equity | 525,423,931 | 486,613,171 |
INTERIM CONSOLIDATED STATEMENTS OF INCOME
[in Canadian dollars]
[unaudited]
| Three month period ended | ||||
| March 31, | March 31, | |||
| 2015 | 2014 | |||
| $ | $ | |||
| Revenue | 247,356 | 1,441 | ||
| Cost of goods sold | 86,239 | – | ||
| Gross margin | 161,117 | 1,441 | ||
| Expenses | ||||
| General and administrative | 2,676,651 | 77,272 | ||
| Research and development | 334,590 | 15,037 | ||
| (2,850,124 | ) | (90,868 | ) | |
| Depreciation of property and equipment | 7,542 | 493 | ||
| Amortization of intangible assets | 21,121 | 6,324 | ||
| Interest expense | – | 19,040 | ||
| Interest income | (3,966,030 | ) | (40,983 | ) |
| Other income | (441,177 | ) | – | |
| Net gain on financial assets | (7,528,588 | ) | – | |
| Purchase gain on acquisition | (550,000 | ) | – | |
| Foreign exchange gain | (4,410,545 | ) | – | |
| Income (loss) before income taxes | 14,017,553 | (75,742 | ) | |
| Deferred income tax expense | 201,363 | – | ||
| Net income (loss) for the period | 13,816,190 | (75,742 | ) | |
| Basic and diluted earnings (loss) per share | 0.15 | (0.01 | ) | |
| Weighted average number of common sharesoutstanding | ||||
| Basic | 92,539,843 | 8,079,889 | ||
| Diluted | 92,820,153 | 8,079,889 | ||
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[in Canadian dollars]
[unaudited]
| Three month period ended | ||||
| March 31, | March 31, | |||
| 2015 | 2014 | |||
| $ | $ | |||
| Net income (loss) for the period | 13,816,190 | (75,742 | ) | |
| Realized gain reclassified to statement of income (net of tax of $ $440,585) | (2,844,143 | ) | – | |
| Other comprehensive income to be reclassified toincome or loss in subsequent periods: | ||||
| Unrealized gain on available-for-sale financial instruments (net of tax of $332,130) | 2,101,857 | – | ||
| Unrealized gain on translating financial statements of foreign operations | 12,917,191 | – | ||
| Other comprehensive income for the period | 12,174,905 | – | ||
| Comprehensive income (loss) for the period | 25,991,095 | (75,742 | ) | |
[in Canadian dollars]
[unaudited]
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
| Share capital |
Warrants | Contributed surplus |
Accumulated other comprehensive income |
Retained earnings (Deficit) |
Total shareholders’ equity |
||||
| $ | $ | $ | $ | $ | $ | ||||
| Balance on Incorporation and as at January 1, 2014 | 1 | – | – | – | – | 1 | |||
| Net income (loss) for the period | – | – | – | – | (75,742 | ) | (75,742 | ) | |
| Issuance of common shares as part of Business Separation Agreement | 11,909,000 | – | – | – | – | 11,909,000 | |||
| Issuance of warrants, net of costs and deferred tax | – | 71,617,703 | 491,877 | – | – | 72,109,580 | |||
| Warrant purchase loans | – | (450,000 | ) | – | – | – | (450,000 | ) | |
| Balance as at March 31, 2014 | 11,909,001 | 71,167,703 | 491,877 | – | (75,742 | ) | 83,492,839 | ||
| Share capital |
Warrants | Contributed surplus |
Accumulated other comprehensive income |
Retained earnings |
Total shareholders’ equity |
||||
| $ | $ | $ | $ | $ | $ | ||||
| Balance as at January 1,2015 | 341,065,000 | – | 2,100,025 | 9,966,837 | 125,858,872 | 478, 990,734 | |||
| Net income for the period | – | – | – | – | 13,816,190 | 13,816,190 | |||
| Realized gain reclassified to statement of income, net of tax of $ $440,585 | – | – | – | (2,844,143 | ) | – | (2,844,143 | ) | |
| Change in fair value ofavailable-for-sale financial instruments, net of tax of $332,130 |
– |
– |
– |
2,101,857 |
– |
2,101,857 |
|||
| Unrealized gain ontranslating financialstatements of foreign operations |
– |
– |
– |
12,917,191 |
– |
12,917,191 |
|||
| Share-based compensation expense | – | – | 1,313,620 | – | – | 1,313,620 | |||
| Issuance of shares upon financing, net of costs anddeferred tax of $92,908 |
12,510,318 |
– |
– |
– |
– |
12,510,318 |
|||
| Exercise of compensation warrants | 930,227 | – | (295, 127 | ) | – | – | 635,100 | ||
| Issuance of shares under share purchase plan | 9,921 | – | – | – | – | 9,921 | |||
| Balance as at March 31,2015 | 354,515,466 | – | 3,118,518 | 22,141,742 | 139,675,062 | 519,450,788 |
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
[in Canadian dollars]
[unaudited]
| Three month period ended | ||||
| March 31, 2015 | March 31, 2014 | |||
| $ | $ | |||
| OPERATING ACTIVITIES | ||||
| Net income (loss) | 13,816,190 | (75,742 | ) | |
| Adjustments reconciling net income to operating cash flows: | ||||
| Deferred tax | 201,363 | – | ||
| Share-based compensation | 1,313,620 | – | ||
| Depreciation of property and equipment | 7,542 | 493 | ||
| Amortization of intangible assets | 21,121 | 6,324 | ||
| Accretion of interest | (1,318,296 | ) | – | |
| Gain on sale of other current financial assets | (7,551,244 | ) | – | |
| Purchase gain on business combination | (550,000 | ) | – | |
| Unrealized loss on derivative | 22,656 | – | ||
| Unrealized foreign exchange gain | (4,398,899 | ) | – | |
| Changes in non-cash working capital related to operations | (1,990,070 | ) | 43,157 | |
| Deferred revenue | (462,752 | ) | – | |
| Cash outflow from operating activities | (888,769 | ) | (25,768 | ) |
| INVESTING ACTIVITIES | ||||
| Purchase of marketable securities | (273,932,700 | ) | – | |
| Proceeds from disposal of marketable securities | 267,504,500 | – | ||
| Purchase of other current financial assets | (355,937 | ) | – | |
| Proceeds from disposal of other current financial assets | 12,226,511 | – | ||
| Investment in funds | (311,885 | ) | – | |
| Issuance of loans and debentures receivable | (8,524,922 | ) | – | |
| Proceeds from repayments on loans receivable | 9,971,017 | – | ||
| Purchase of property and equipment | – | (35,982 | ) | |
| Consideration paid on business combination | (1,750,000 | ) | – | |
| Cash inflow from investing activities | 4,826,584 | (35,982 | ) | |
| FINANCING ACTIVITIES | ||||
| Net impact of Business Separation Agreement | – | 1,000,000 | ||
| Net proceeds from warrants issuance | – | 72,461,125 | ||
| Proceeds from exercise of Over-Allotment Option | 12,424,253 | – | ||
| Proceeds from exercise of compensation warrants | 635,100 | – | ||
| Costs related to prior period share financing | (206,828 | ) | – | |
| Share purchase plan | 9,921 | – | ||
| Share purchase loans | – | (450,000 | ) | |
| Loan from related party | – | 2,500,000 | ||
| Cash inflow from financing activities | 12,862,446 | 75,511,125 | ||
| Increase in cash during the period | 16,800,261 | 75,449,375 | ||
| Cash, beginning of year | 283,445,451 | 1 | ||
| Net foreign exchange difference | 1,047,295 | – | ||
| Cash, end of year | 301,293,007 | 75,449,376 | ||
| The following amount is classified within operating activities: | ||||
| Interest received | 2,587,201 | – | ||
