MONTREAL, May 09, 2024 (GLOBE NEWSWIRE) -- Knight Therapeutics Inc. (TSX: GUD) ("Knight" or “the Company”), a leading pan-American (ex-US) specialty pharmaceutical company, today reported financial results for its first quarter ended March 31, 2024. All currency amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

2024 Highlights

Financial results

• Revenues were $86,604, an increase of $4,007 or 5% over the same period in prior year driven by the growth of our key promoted products offset by our mature branded generic products.
• Gross margin was $41,699 or 48% compared to $40,762 or 49% in the same period in prior year.
• Adjusted EBITDA¹ was $13,589, a decrease of $4,648 or 25% over the same period in prior year reflecting higher marketing spend for the launches of Imvexxy^®, Bijuva^® and Minjuvi^® as well as development costs on our pipeline products.
• Adjusted EBITDA per share¹ was $0.13, a decrease of $0.04 or 24% over the same period in prior year.
• Net loss on financial assets measured at fair value through profit or loss was $16,267 driven mainly by unrealized losses on the valuation of certain private investments in our strategic funds.
• Net loss was $4,546, compared to $3,937 in the same period in prior year.
• Cash inflow from operations was $30,881, an increase of $26,565 or 616% over the same period in prior year driven by operating results and a decrease in working capital.

Corporate developments

• Promoted Henrique Dias and Melanie Groleau to Global VP Marketing and Global VP Medical and Clinical, respectively.

Products

• In-licensed IPX203 (carbidopa and levodopa extended-release capsules) for Canada and Latin America.
• Submitted fostamatinib for ANVISA approval in Brazil.
• Obtained regulatory approval for Karfib^® (carfilzomib) in Colombia.
• Launched Minjuvi^® (tafasitamab) in Brazil.
• Launched Imvexxy^® (estradiol vaginal inserts) and Bijuva^® (estradiol and progesterone) in Canada.

Subsequent to quarter-end

• Entered into exclusive supply and distribution agreement for JORNAY PM^® (methylphenidate HCI extended-release capsules) for Canada and Latin America.
• Shareholders re-elected Jonathan Ross Goodman, Samira Sakhia, James C. Gale, Robert N. Lande, Michael J. Tremblay, Nicolás Sujoy, and Janice Murray on the Board of Directors.

“I am pleased to report that for the three months ended March 31, 2024, revenues were over $86 million, a growth of 5% over the same period prior year. In addition, we are investing for the future growth of our portfolio with the launch of three products and the in-licensing of two products for Canada and Latin America. We launched Bijuva^® and Imvexxy^® in Canada and Minjuvi^® in Brazil. Furthermore, we have strengthened our neurology portfolio with the addition of Qelbree^TM, IPX203 and JORNAY PM^® and will be leveraging our infrastructure behind Exelon^®,” said Samira Sakhia, President and Chief Executive Officer of Knight Therapeutics Inc.

Revenues

For the quarter ended March 31, 2024, revenues were $85,795, an increase of $3,128 or 4% mainly driven by a growth of $7,163 or 13% from our promoted innovative products offset by the decline on our mature branded generic portfolio. The table below provides revenues by therapeutic area.

The increase in revenues excluding the impact of hyperinflation is explained by the following:

• Oncology/Hematology: The oncology/hematology portfolio grew by approximately $4,600 primarily due to the growth of key promoted products including Lenvima^®, Trelstar^®, Akynzeo^® and Palbocil^® as well due to the launch of Minjuvi^® in Brazil. The increase is offset by a reduction of approximately $2,850 in revenues of our mature and branded generics products due to their lifecycle including the entrance of new competitors.
   
• Infectious Diseases: The infectious disease portfolio grew by $7,166 driven by the growth of our key promoted products including AmBisome^® and Cresemba^® partly offset by the timing of demand for certain products including Impavido^®. The increase included $6,800 of incremental revenues related to the contract with MOH for AmBisome^®.
  
  MOH Contract: The Company signed a contract with the Ministry of Health of Brazil for AmBisome^® in December 2022 ("2022 MOH Contract"). Knight delivered a total of $34,600 under the MOH Contract as follows: $7,000 in 2022, $25,200 in 2023 ($2,400 in Q1-23, $18,000 in Q2-23 and $4,800 in Q4-23) and $2,400 in Q1-24. In December 2023, Knight signed a new contract with the MOH ("2024 MOH Contract") and it is expected that $16,500 will be delivered in 2024 of which $6,800 was delivered in Q1-24. The total MOH sales for AmBisome^® delivered in Q1-24 was $9,200.

• Other Specialty: The Other Specialty portfolio decreased by approximately $5,788 mainly due to advance purchases of Exelon^® in Q1-23, due to the commercial transition from Novartis to Knight in certain countries as well as the purchasing patterns for certain products.

Gross margin

For the quarter ended March 31, 2024, gross margin, as a percentage of revenues, was 48% compared to 49% in Q1-23. Excluding IAS 29, gross margin, as a percentage of revenues, was 47% in Q1-24 and 50% in Q1-23. The decrease in gross margin, as a percentage of revenues was due to product mix.

Selling and marketing (“S&M”) expenses: For the quarter ended March 31, 2024, S&M expenses were $12,649, an increase of $1,984 or 19%, compared to the same period in prior year. Excluding the impact of IAS 29, the increase was $1,780 or 17%. The increase was mainly due to the marketing spend for the launches of Imvexxy^® and Bijuva^® in Canada as well as Minjuvi^® in Brazil.

General and administrative (“G&A”) expenses: For the quarter ended March 31, 2024, G&A expenses were $10,538 an increase of $1,432 or 16%, compared to the same period in prior year. Excluding the impact of IAS 29, G&A expenses increased by $1,325 or 15% driven by increase in structure and compensation expenses.

Research and development (“R&D”) expenses: For the quarter ended March 31, 2024, R&D expenses were $4,980, an increase of $793 or 19%, compared to the same period in prior year. Excluding the impact of IAS 29, the increase was $738 or 18%. The increase was driven by an increase in product development activities in connection with our pipeline products and medical initiatives related to key promoted products. Knight invested $587 in Q1-24, an increase of $575 versus the prior year on its pipeline development activities. All costs related to development activities have been expensed which typically include regulatory submissions, analytical method transfers, stability studies and bio equivalence studies.

Adjusted EBITDA¹

For the three-month period ended March 31, 2024, adjusted EBITDA was $13,589, a decrease of $4,648 or 25%. The decrease in adjusted EBITDA was driven by an increase in operating expenses due to investments on new product launches and pipeline.

Net loss

For the quarter ended March 31, 2024, the net loss was $4,546 compared to a net loss of $3,937 for the same period in prior year. The variance mainly resulted from the above-mentioned items and a net loss on the revaluation of financial assets measured at fair value through profit or loss of $16,267 versus a net loss of $11,847 in the same period in prior year mainly driven by unrealized losses in the fair value of financial assets, partly offset by (1) the foreign exchange gain of $1,934 in Q1-24 compared to a foreign exchange gain of $73 in Q1-23, and (2) income tax recovery of $2,598 in Q1-24 and $1,009 in Q1-23 mainly driven by the recognition of certain deferred tax assets due to tax losses generated in certain jurisdictions and timing differences related to our financial assets.

Trade and other receivables: As at March 31, 2024, trade and other receivables were at $136,580, a decrease of $5,104 or 4% compared to December 31, 2023, mainly due to the timing of the collection of payments from customers.

Inventories: As at March 31, 2024, inventories were at $95,400, an increase of $3,566 or 4%. Excluding the impact of IAS 29, inventories decreased by $4,192 or 5% driven by the timing of sales and purchases of inventory.

Financial assets: As at March 31, 2024, financial assets were at $116,214, a decrease of $12,155 or 9%, compared to December 31, 2023 mainly driven by unrealized losses on the valuation of certain private investments of our strategic funds.

Accounts payable and accrued liabilities: As at March 31, 2024, accounts payable and accrued liabilities were $94,711, an increase of $4,094 or 5%. In addition, as at December 31, 2023, the accounts payable and accrued liabilities included $5,283 of payables related to sales milestones on certain products and the acquisition of property, plant and equipments ("Capital Expenditure Payables"). Excluding the Capital Expenditure Payables, the accounts payable and accrued liabilities increased by $9,377 or 10% compared to December 31, 2023 driven by the purchase of inventory for our key promoted products which is expected to be settled in Q2-24.

Cash, cash equivalents and marketable securities: As at March 31, 2024, Knight had $181,859 in cash, cash equivalents and marketable securities, an increase of $20,034 or 12% compared to December 31, 2023. The increase is mainly due to cash inflows from operations partially offset by the settlement of upfront and milestone payments in connection with product licensing agreements including Qelbree^TM, IPX203, and Cresemba^®. The cash inflows from operating activities were $30,881, driven by the operating results adjusted for noncash items such as depreciation, amortization as well as decrease in working capital of $15,508. The decease in working capital was mainly due to the increase in accounts payable and a decrease in inventory excluding the impact of IAS 29. 

Product Updates

Regulatory submissions, approvals and product launches

Fostamatinib

During the quarter, Knight submitted a marketing authorization for regulatory approval in Brazil for fostamatinib for the treatment of thrombocytopenia in adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment.

Karfib^® (carfilzomib)

During the quarter, Knight obtained the regulatory approval for Karfib^® in Colombia for the treatment of patients with relapsed or refractory multiple myeloma who have received one or more previous lines of therapy. Karfib^® is expected to be launched in H2 2024.

Imvexxy^® (estradiol vaginal inserts) and Bijuva^® (estradiol and progesterone)

During the quarter, Knight launched Bijuva^® and Imvexxy^® in Canada. Bijuva^® is indicated for the treatment of moderate-to-severe vasomotor symptoms due to menopause. Imvexxy^® is indicated for the treatment of moderate-to-severe dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar and vaginal atrophy (VVA), due to menopause. Imvexxy^® is competing in the VVA market which was over 90 million dollars in 2023 and grew at a CAGR of 9% since 2020, according to IQVIA.

Minjuvi^® (tafasitamab)

During the quarter, Knight launched Minjuvi^® in Brazil. Minjuvi^® in combination with lenalidomide followed by tafasitamab monotherapy is indicated for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL), including DLBCL due to low-grade lymphoma, who are not eligible for autologous stem cell transplantation (ASCT). Knight expects to file for private reimbursement in Brazil in Q2-24 and is expecting to file for private reimbursement in Q2-24.

Expansion of Pipeline

IPX203

During the quarter, Knight in-licensed IPX203 for Canada and Latin America. IPX203 is a novel, oral formulation of carbidopa/levodopa ("CD/LD") extended-release capsules designed for the treatment of Parkinson’s disease. IPX203 contains immediate-release (IR) granules and extended-release (ER) coated beads. The IR granules consist of CD and LD, with a disintegrant polymer to allow for rapid dissolution. The ER beads consist of LD, coated with a sustained release polymer to allow for slow release of the drug, a mucoadhesive polymer to keep the granules adhered to the area of absorption longer, and an enteric coating to prevent the granules from disintegrating prematurely in the stomach. IPX203 was studied in the RISE-PD clinical study which was a 20-week, randomized, double-blind, double-dummy, active-controlled, phase 3 clinical trial with 630 patients. The RISE-PD study met its primary and secondary endpoints and showed that treatment with IPX203 demonstrated statistically significant improvement in daily “Good On” time with fewer doses of IPX203 compared with immediate-release carbidopa-levodopa (least squares mean, 0.53 hours; 95% CI, 0.09-0.97). In that study, IPX203 was dosed an average of three times per day versus 5 times per day for immediate-release carbidopa-levodopa¹. IPX203 is expected to compete in a market valued at over $50,000 in Canada and over $120,000 in Brazil, according to IQVIA.

Financial Outlook

Knight provides guidance on revenues on a non-GAAP basis. This is due to both the difficulty in predicting Argentinian inflation rates and its IAS 29 impact.

Knight reconfirmed its guidance targets for fiscal 2024. Knight expects to generate between $335 million to $350 million in revenues and adjusted EBITDA¹ to be approximately 17% of revenues. The guidance is based on a number of assumptions, including but not limited to the following:

• no revenues for business development transactions not completed as at May 8, 2024
• no unforeseen termination to our license, distribution & supply agreements
• no interruptions in supply whether due to global supply chain disruptions or general manufacturing issues
• no new generic entrants on our key pharmaceutical brands
• no unforeseen changes to government mandated pricing regulations
• successful commercial execution on product listing arrangements with HMOs, insurers, key accounts, and public payers
• successful execution and uptake of newly launched products
• no material increase in provisions for inventory or trade receivables
• foreign currency exchange rates with the exception of Argentina remaining similar to 2023
• inflation remaining within forecasted ranges

Should any of the assumptions differ, the financial outlook and the actual results may vary materially. Refer to the risks and assumptions referred to in the Forward-Looking Statements section of this news release for further details

Conference Call Notice 

Knight will host a conference call and audio webcast to discuss its first quarter ended March 31, 2024, today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

Date: Thursday, May 9, 2024
Time: 8:30 a.m. ET
Telephone: Toll Free: 1-800-836-8184 or International 1-289-819-1350
Webcast: www.knighttx.com or Webcast
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 www.knighttx.com

About Knight Therapeutics Inc. 

Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing pharmaceutical products for Canada and Latin America. Knight's Latin American subsidiaries operate under United Medical, Biotoscana Farma and Laboratorio LKM. 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.knighttx.com or www.sedarplus.ca.

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, 2023 as filed on www.sedarplus.ca. Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information or future events, except as required by law.

CONTACT INFORMATION:

References:

1.       Hauser RA et al. JAMA Neurol. 2023 Oct 1;80(10):1062-1069.

IMPACT OF HYPERINFLATION
[In thousands of Canadian dollars]

Hyperinflation

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.

Financial results excluding the impact of hyperinflation

If the Company did not apply IAS 29, the effect on the Company's operating income would be as follows:

NON-GAAP MEASURES
[In thousands of Canadian dollars]

The Company discloses non-GAAP measures and ratios 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. Non-GAAP financial measures and adjusted EBITDA per share ratio 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-GAAP measures:

Revenues and Financial results excluding the impact of hyperinflation under IAS 29: Revenues and financial results under IFRS are adjusted to remove the impact of hyperinflation under IAS 29. The impact of hyperinflation under IAS 29 is calculated by applying an appropriate general price index to express the effects of inflation. After applying the effects of translation, the statement of loss is converted using the closing foreign exchange rate of the month.

Revenues and Financial results at constant currency: Revenues and financial results at constant currency are obtained by translating the prior period revenues and financial results from the functional currencies to CAD using the conversion rates in effect during the current period. Furthermore, with respect to Argentina, the Company excludes the impact of hyperinflation and translates the revenues and results at the average exchange rate in effect for each of the periods.

Revenues and financial results at constant currency allow the results to be viewed without the impact of fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of revenues and financial results under constant currency is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

Adjusted Gross Margin: Adjusted gross margin excludes the impact of IAS 29.

EBITDA: Operating income or loss adjusted to exclude amortization and impairment of non-current assets, depreciation, purchase price allocation accounting adjustments, the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.

Adjusted EBITDA: EBITDA adjusted for acquisition costs and non-recurring expenses.

Adjusted EBITDA per share: Adjusted EBITDA over number of common shares outstanding at the end of the respective period.

Reconciliation to EBITDA, adjusted EBITDA and adjusted EBITDA per share

For the three-month period March 31, 2024, the Company calculated EBITDA and adjusted EBITDA as follows:

The Company calculated adjusted EBITDA per share as follows: