Q4 2021 Knight Therapeutics Inc Earnings Call
Welcome to Nice Therapeutics, Inc, fourth quarter and year end 2021 results conference call.
Before turning the call it over just the mirror Secchia, President and CEO of nice listeners are reminded that portions of today's discussion may by their nature by their nature necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward.
Welcome to Nice Therapeutics, Inc, fourth quarter and year end 2021 results conference call.
Before turning the call over just the mirror Secchia, President and CEO of nice listeners are reminded that portions of today's discussion may by their nature 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 by cautions that these assumptions regarding the future events, many of which are beyond the control of the company and its the psychiatrists, but ultimately.
Looking statements the company considers the assumptions on which these forward looking statements are based to be reasonable at the time. They were prepared by cautions that these assumptions regarding the future events.
It may ultimately prove to be incorrect the company disclaims any intention or obligation to update or revise any forward looking statements, whether result of new information future events, except as required by law. We would also like to remind you questions. During today's call will be taken from analysts only.
Many of which are beyond the control of the company and its subsidiary like ultimately.
It may ultimately prove to be incorrect the company disclaims any intention or obligation to update or revise any forward looking statements, whether result of new information future events, except as required by law. We would also like to remind you question during today's call will be taken from analysts only.
Should there be any further questions. Please contact Knight's Investor Relations Department via email to info at night T X dot com or via phone at 5144844483, I would like to remind everyone that this call is being recorded.
Should there be any further questions. Please contact Knight's Investor Relations Department via email to info at night, TX Dot com or via phone at 5144844483, I would like to remind everyone that this call is being recorded.
Today March 24th 2022.
And would now like to turn the meeting over to your host for today's call Samira Secchia. Please go ahead ma'am.
Thank you Ana good morning, and welcome to Knight Therapeutics fourth quarter and year end conference call I'm joined on today's call with them on Currie, Our Chief business Officer, Arvind <unk>, Our Chief Financial Officer, who recently moved to Uruguay and is participating for Monday video, Jeff Martin Our global VP of commercial who is.
Today March 24th 2022.
And would now like to turn the meeting over to your host for today's call Semira Secchia. Please go ahead ma'am.
Thank you Ana good morning, and welcome to Knight Therapeutics fourth quarter and year end conference call.
I'm joined on today's call with them on inquiry, our Chief business Officer, Marvin <unk>, Our Chief Financial Officer, who recently moved to year ago and is participating per month video, Jeff Martin Our global VP of commercial who is on the last leg of a three country tour and is joining the call from Bogota, Colombia.
On the last leg of the three country tour and is joining the call from Bogota, Colombia.
I'm excited to report that 2021 was a record setting year in its history. Despite the ongoing challenges posed by the pandemic during the year. We had we made significant strides with completing the integration of the group would be you're just gonna acquisition, all the while strengthening the team and processes and driving strong performance.
I am excited to report that 2021 was a record setting year in its history. Despite the ongoing challenges posed by the pandemic during.
During the year, we had we made significant strides with completing the integration of the group will be able to garner acquisition, all the while strengthening the team and processes and driving strong performance.
More specifically, we strengthened Knights management team with the addition of four new executives last year and I'm happy to announce that Leopoldo Bassano has recently joined night as VP of manufacturing and operations.
More specifically, we strengthened <unk> management team with the addition of four new executives last year and I'm happy to announce a Leopoldo goes Arnaud has recently joined <unk> as VP of manufacturing and operations.
<unk> has nearly 30 years of experience in operations management, including over 25 years in the pharmaceutical industry. He joined Tonight from drove it on Argentina, where he had been working since 2014, most recently as head of operations of lifetime.
<unk> has nearly 30 years of experience in operations management, including over 25 years in the pharmaceutical industry. He joined Tonight from drove it on Argentina, where he had been working since 2014, most recently as head of operations at that time.
What drove it and he was responsible for production and quality control quality assurance supply chain engineering maintenance across seven sites located in Argentina, Chile, Brazil, Colombia and Mexico.
<unk> he was responsible for production and quality control quality assurance supply chain engineering maintenance across seven sites located in Argentina, Chile, Brazil, Colombia and Mexico.
Prior to Gerardo Leopoldo was worked at H O B pharma, where he was industrial operations Director. In addition, he worked as general manager and V. P of UV vis Metro lab in Argentina. Prior to these roles there pulled or was that for some our squibb for many years in Argentina as well as in Panama, where he held.
Prior to <unk> Leopoldo was worked at each Obi pharma, where he was industrial operations Director. In addition, he worked as general manager and VP of UV vis Metro lab in Argentina. Prior to these roles there pull there was that Bristol Myers squibb for many years in Argentina, as well as in Panama, where he held.
Several roles, including planning supply chain procurement technical operations client management, and Jim for supply to middle and far East and Latin American markets.
Leopoldo is based in Vienna scientists.
Several roles, including planning supply chain procurement technical operations client management, and GM for supply to middle and far East and Latin American markets.
In addition to them as a management team changes. So we've made integration advances with the implementation of several global systems, including CRM Pharmacovigilance systems, HRS HR systems, and we have implemented our ERP system in 2014 entities in six countries, we expect to complete the.
Leopoldo is based in <unk>.
In addition to them as a management team changes, we made integration advances with the implementation of several global systems, including CRM Pharmacovigilance systems, HRS HR systems, and we have implemented our ERP system in 2014 entities in six countries, we expect to complete the.
ERP implementation and all into all entities, except the Argentinian affiliates by the end of 'twenty two.
On the existing portfolio, our regulatory team advanced our product pipeline with the approval of Halloween and learn bema in Colombia, as well as run rate Knights deciding that branded generic also for Colombia. We also obtained approval for neuro lengths in metastatic breast cancer, which is the second approved indication for neurotoxin.
DRP implementation and all into all entities, except the Argentinian affiliates by the end of 'twenty two.
On the existing portfolio, our regulatory team advanced our product pipeline with the approval of <unk> and learn bema in Colombia as well as run rate Knights does that in a branded generic also for Colombia. We also obtained approval for <unk> in metastatic breast cancer, which is the second approved indication for <unk>.
Got it all.
On the commercial side, our team continued to generate strong growth on our key brands delivering record revenues in 2021 .
Turning now to the anti <unk> and CIB during the N CIB during the year, we purchased approximately $12 3 million shares for aggregate cash consideration of $64.4 million at an average price of $5 23 per share subs.
Canada.
On the commercial side, our team continued to generate strong growth on our key brands delivering record revenues in 2021.
Turning now to the insight and CIB during the and CIB during the year repurchase approximately $12 3 million shares for aggregate cash consideration of $64 $4 million at an average price of $5 23 per share.
Subsequent to the Euro at Knight has purchased an additional 934000 common shares for aggregate cash consideration of $5 million or $5.35 per share.
Subsequent to the year at Knight has purchased an additional 934000 common shares for aggregate cash consideration of $5 million or $5 35 per share.
I will now turn the call over to Jeff.
Details on our product results.
Thank you Samira building on our hard work of 2020, our efforts in 2021 remained focused on execution excellence of our new product launches.
I will now turn the call over to Jeff.
On our product results.
Delivering competitive growth for our mature promoted portfolio.
Thank you Sarah.
Our hard work of 2020, our efforts in 2021 remained focused on execution excellence of our new product launches.
Overall the year ended December 31 2021.
Our revenues on a constant currency basis increased by $48 $3 million or.
Delivering competitive growth.
We're 26 versus the prior year.
Sure promoted portfolio.
Overall the year ended December 31 2021.
The growth in revenues is driven by $21 million, resulting from the addition of Exelon.
Revenues on a constant currency basis increased by $48 $3 million.
$50 million and net revenues related to the growth of our recently launched products.
426 versus the prior year.
And the balance due to incremental demand estimated to be between $13 five $2 $63 million.
The growth in revenues is driven by $21 million, resulting from the addition of Exelon.
$15 million and net revenues related to the growth of our recently launched products.
Primarily driven by our infectious disease products that treat invasive fungal infections associated with COVID-19.
And the balance due to incremental demand estimated to be between $13 five $2 $63 million.
As Alaska with wave dissipates our team in the field is excited to get back to normal post COVID-19 activities.
Primarily driven by our infectious disease products that treat invasive fungal infections associated with COVID-19.
That I'm happy to announce that we launched in the BMA and ramp rate in Colombia in February and launched Taliban also in Colombia in March of this year.
Alaska <unk> dissipate our team in the field is excited to get back to normal post COVID-19 activities.
I will now turn the call over to Arvind to go over our financial results.
With that I'm happy to announce that we launched in the bema and ramp rate in Colombia in February .
Thank you Jeff.
In the course of this conference call I will refer to EBITDA adjusted EBITDA as well as constant currency, which are non <unk> measures Knight defines it could be.
And launch Taliban also in Colombia in March of this year.
I'll now turn the call over to Arvind to go over our financial results.
Operating loss for income, excluding amortization and impairment of intangible assets depreciation purchase price accounting adjustments and the impact of accounting under hyperinflation between quick close related to leases.
Thank you Jeff.
The course of this conference call I will refer to EBITDA.
EBITDA as well as constant currency, which are non <unk> measures 95.
Operating loss for income, excluding amortization and impairment of intangible assets.
Adjusted EBITDA excludes acquisition costs and non recurring expenses.
<unk> purchase price accounting adjustments and the impact of accounting under hyperinflation between quick close related to leases.
Addition, constant currency is also a non-GAAP measure used to exclude foreign currency fluctuations.
Financials results at constant currency obtained by translating to prior period results.
Adjusted EBITDA excludes acquisition costs and nonrecurring expenses.
In addition constant currency is also a non-GAAP measure used to exclude foreign currency fluctuations.
Average foreign exchange rates in effect during the current period, except for Argentina, where we exclude the impact of hyperinflation.
Financials results at constant currency obtained by translating to prior period results.
For the quarter ended December 31st 2021, we reported revenues of $58 3 million an.
Average foreign exchange rates in effect during the current period, except for Argentina, where we only exclude the impact of hyperinflation.
An increase of $2 $9 million on a constant currency basis or 6% compared to the same period last year.
For the quarter ended December 31, 2021, and we reported revenues of $58 3 million, an increase of $2 $9 million on a constant currency basis or 6% compared to the same period last year.
The revenues in the fourth quarter were impacted by the bank by chance uncertain of our infectious diseases products.
It is estimated that about three two to $4 $2 million of such products were purchased in advance by our customers during the first quarter of 2021 .
The revenues in the fourth quarter were impacted by tariffs on certain of our infectious disease products.
For the 12 months ended December 31st 2021, we achieved record revenues of $243 $5 million, an increase of $48 8 million or 26%.
It is estimated that about three two to $4 $2 million of such products were purchased in advance by our customers during the third quarter of 2021.
For the 12 months ended December 31, 2021, we achieved record revenues of $243 $5 million, an increase of $48 8 million or 26% on a constant currency basis.
A constant currency basis.
The acquisition of Exelon, the proof of our recently launched products and increased demand of our infectious diseases product portfolio as a result of the pandemic.
As for gross margin for the quarter ended December 31st 2021, we reported $28 2 million or 48% of revenues compared to $21 million or 56% of revenues in the same period last year.
Due to the acquisition of Exelon the growth of our recently launched products and increased demand of our infectious diseases product portfolio as a result of the pandemic.
As for gross margin for the quarter ended December 31st 2021, we reported $28 2 million or 48% of revenues compared to $21 million or 56% of revenues in the same period last year.
For the full year gross margin was $115.4 million or 47%.
Compared to $81 $7 million or 41% in 2020.
For the full year gross margin was $115 $4 million or 47% compared to $81 $7 million or 41% in 2020.
Excluding the impact of hyperinflation, the gross margin would have been 51% for the quarter and 50% for the year.
The increase in gross margin is mainly due to the acquisition of <unk> alone and related revenues recorded in net profit transfer in addition to lower inventory provisions and a changing product mix offset by the renegotiation of certain license agreements and the depreciation of the Latam currencies.
Excluding the impact of hyperinflation, the gross margin would have been 51% for the quarter and 50% for the year.
The increase in gross margin is mainly due to the acquisition of a colo and related revenues recorded in best profit transfer. In addition to lower inventory provisions and a changing product mix offset by the renegotiation of associated license agreements and the depreciation of the Latam currencies.
Our total operating expenses, excluding the amortization of intangible assets of $25 8 million for the fourth quarter.
Increased by $2 million compared to the same period last year.
Our total operating expenses, excluding the amortization of intangible assets of 2500 $48 million for the full quarter.
The full year total operating expenses were 87 $401 million.
An increase of <unk> $9 million compared to the same period last year.
Increased by $2 million compared to the same period last year.
Excluding the nonrecurring costs, such as the unified tender offer cost incurred in 2020.
For the full year total operating expenses were 87 $401 million, an increase of zero point $9 billion compared to the same period last year.
The allowance for expected credit losses, and the acquisition cost the increase was $9 million or 13% on a constant currency basis, and it's mainly driven by an increase in variable costs, such as logistic expenses the annual incentive compensation plan.
Excluding the nonrecurring costs, such as the unified tender offer cost incurred in 2020, yes that one for expected credit losses, and the acquisition cost the increase was $9 million or 13% on a constant currency basis.
The extension of the expiry date of certain stock options.
Well as an increase in selling and marketing activities related to key promoted products, including Exelon.
And it's mainly driven by an increase in variable costs, such as logistic expenses the annual incentive compensation plan.
Moving on to adjusted EBITDA.
You mentioned of the expiry date of.
EBITDA was $5 7 million for the quarter, an increase of $4 3 million.
Stock options.
As well as an increase in selling and marketing activities related to key promoted products, including Exelon.
All credit and 21% on a constant currency basis compared to the same period last year.
Moving on to adjusted EBITDA.
Adjusted EBITDA was $5 $7 million for the quarter, an increase of $4 $3 million of credit and 21% on a constant currency basis compared to the same period last year.
For the 12 month period adjusted EBITDA.
EBITDA was $38 million, an increase of $24 million or 175% on a constant currency basis over last year.
The increase in EBITDA for the quarter and the full year is mainly due to the increase in gross margin.
For the 12 month period.
EBITDA was $38 million, an increase of $24 million or 175% on a constant currency basis over last year.
By an increasing operating expenses I, just stood for acquisition and transaction costs as well as nonrecurring expenses.
The increase in adjusted EBITDA for the quarter and the full year is mainly due to a decrease in gross margin.
Now moving on to net gains on our financial assets, which are not reflected in our adjusted EBITDA.
Set by an increasing operating expenses adjusted for acquisition and transaction costs as well as nonrecurring expenses.
In 2021 were recorded $18 9 million of net gain measured at fair value through profit doesn't dose, which is mainly coming from our strategic fund investments.
Now moving on to net gains on our financial assets, which are not reflected in our adjusted EBITDA.
Finally, Knight generated cash inflows from operations of $4 $7 million for the quarter and $44 $6 million for the 12 month period ended December 31st 2021.
In 2021, we recorded $18 $9 million of net gain measured at fair value through profit doesn't notice, which is mainly coming from our strategic fund investments.
Finally, <unk> generated cash flows from operations of $4 $7 million for the quarter at $44 $6 million for the 12 month period ended December 31st touch touch one.
The cash flow from operation generated are driven by our operating results.
I'll now turn over the call to amount to provide an update on business development activities.
Thank you Arvind as Samir I previously mentioned 2021 was a record setting year for Knight and that statement applies to the achievements of our business development efforts as the team executed on all of our growth strategies.
The cash flow from operation generated are driven by our operating results.
I will now turn over the call to allow us to provide an update on business development activities.
Thank you Arvind I assume you're I previously mentioned 2021 was a record setting year for Knight and that statement applies to the achievements of our business development efforts as the team executed on all of our growth strategies.
In the second quarter of 2021, we announced the acquisition of the exclusive rights of Exelon for Canada, and Latin America. This acquisition brought us our first global brand that we are selling across our entire territory and that is immediately accretive to both revenue and EBITDA and.
In the second quarter of 2021, we announced the acquisition of the exclusive rights of Exelon for Canada, and Latin America.
In addition to the excellent acquisition in the third quarter of 2021, we announced the signature of an exclusive supply and distribution agreement with the insight for Latin America for a deficit in that so sold as Martin jewelry in the U S and men's jewelry in Europe , and <unk> got in our marketing spend this year in the U S Europe and Japan.
This acquisition brought us our first global brand that we are selling across our entire territory and that is immediately accretive to both revenue and EBITDA.
In addition to the excellent acquisition in the third quarter of 2021, we announced the signature of an exclusive supply and distribution agreement with insight for Latin America for our deficits and that sold as modules in the U S and men's yoga in Europe , and <unk> got to knit marketed dependent here in the U S Europe and Japan.
Deficit come up and pay me got to nib, our innovative products that fit perfectly into our oncology and hematology portfolio and expertise we.
We expect to submit deficit them up in key countries in the second half of 2022 and <unk> in 2023.
Deficits amendment vaccinate of our innovative products that fit perfectly into our oncology and hematology portfolio and expertise.
Lastly, our team continued to build our branded generics portfolio.
We expect to submit deficit in lab in key countries in the second half of 2022 and <unk> <unk> in 2023.
And we look forward to announcing milestones in due time.
We'll continue to focus on leveraging our Pan American ex U S footprint to build our portfolio along our three pronged growth strategy, which includes acquiring products or companies with existing sales and licensing innovative pipeline assets and developing our branded generics portfolio I will now turn the call back to some euro for concluding remarks.
Lastly, our team continued to build our branded generics portfolio.
And we look forward to announcing milestones as you time.
We will continue to focus on leveraging our Pan American ex U S footprint to build our portfolio along our three pronged growth strategy, which includes acquiring products or companies with existing sales and licensing innovative pipeline assets and developing our branded generics portfolio.
Thank you.
Now turning to the financial outlook, we expect revenues to be in the range of $260 million to $265 million for 2020.
I'll now turn the call back to some euro for concluding remarks, Thank you Rob.
The guidance on revenues is is on a non-GAAP basis as it excludes the impact of Ias 29, or hyperinflation. This is due to the difficulty in predicting the argentinean inflation rates.
Now turning to the financial outlook, we expect revenues to be in the range of $260 million to $265 million for 2020.
The guidance on revenues.
<unk> is on a non-GAAP basis as it excludes the impact of Ias 29 hyperinflation. This is due to the difficulty in predicting the argentinean inflation rates.
<unk> is also based on a number of assumptions, which are described in more detail in our press release should any of those assumptions differ the financial outlook and the actual results may vary materially.
Our guidance is also based on a number of assumptions, which are described in more detail in our press release.
Looking ahead, we are committed to continuing to build the leading Pan American ex specialty pharmaceutical ex U S. Specialty pharmaceutical company, we have $150 million in cash cash equivalence and marketable securities and we generate cash from our operations, which positions us well to continue to execute on our strategy to in license and.
Any of those assumptions differ the financial outlook and the actual results may vary materially.
Looking ahead, we are committed to continuing to build a leading pan American ex specialty pharmaceutical ex U S. Specialty pharmaceutical company, we have $150 million in cash cash equivalents in marketable securities and we generate cash from our operations, which positions us well to continue to execute on our strategy to in license and acquire.
Our innovative pharmaceuticals, as well as developing our branded generic portfolio.
Thanks to the hard work of our employees that we have achieved unprecedented results in 2021 and we are entering 2022 with a stronger platform that is well equipped to continue delivering on future growth and success. Thank.
<unk> pharmaceuticals, as well as developing our branded generic portfolio.
It is thanks to the hard work of our employees that we had achieved unprecedented results in 2021, and we are entering 2022 with a stronger platform that is well equipped to continue to delivering on future growth and success.
Thank you to the support thank you for your support and confidence in the 19. This concludes my formal remarks, I'd now like to call up the call to open up the call for questions.
Uh huh.
Two the support thank you for your support and confidence in the 19. This concludes my formal remarks, I'd now like to call out.
Thank you before we begin May I, please remind you.
<unk> during today's call will be taken from analysts only should there be any further questions. Please contact Knight's Investor Relations Department via email.
I'll open up the call for questions.
Anna.
Thank you before we begin May I. Please remind you questions. During today's call will be taken from analysts only should there be any further questions. Please contact Knight's Investor Relations Department via email at.
Info at night T X dot com or via phone at 5144844483, if you would like to ask a question. Please press star followed by the number one on your telephone keypad, if you're using a speaker phone. Please lift the handset before pressing anarchy, if you would like to withdraw.
Info at night, TX dot com or via phone at 5144844483, if you.
Your question Please press.
I would like to ask a question. Please press star followed by the number one on your telephone keypad, if you're using a speaker phone. Please lift the handset before pressing any key if you would like to withdraw your question. Please press.
Pound.
Keith.
We will pause for a moment to allow people to queue.
Pound key.
Keith.
We will pause for a moment to allow people to queue.
Yeah.
We will now take our first question from Justin Keyword from Stifel. Please go ahead. Your line is open.
Yeah.
Hi, good morning, Thanks for taking my call.
We will now take our first question from Justin Keyword from Stifel. Please go ahead. Your line is open.
So the results showed a substantial improvement on a year over year basis, particularly EBITDA.
But did fall short of what we were expecting and was down sequentially or are you able just to describe what led to the difference sequentially. If there was any seasonal factors or other.
Hi, good morning, Thanks for taking my call.
So the results showed substantial improvement on a year over year basis, particularly EBITDA.
But did fall short of what we were expecting and was down sequentially are you able just to describe what led to the difference sequentially. If there was any seasonal factors or other.
Sure Justin So one of the things that you.
You, you, probably noted and especially in Q2 and Q3, we saw a significant spike related to some purchases of <unk> infectious disease products in Q2, and Q3 and as we announced in Q3, there was some inventory in the channel $3 million to $4 million worth.
Sure Justin.
One of the things that.
You, you, probably noted and especially in Q2 and Q3, we saw a significant spike related to some purchases of <unk> infectious disease products in Q2, and Q3 and as we announced in Q3, there was some inventory in the channel $3 million to $4 million worth.
Of purchases that related to those infectious disease products that was advanced buying related to Q4.
That ended up being advanced buying related to Q4, so that softened the results of Q4. So on an annual basis, we we did really well, but that led to the fluctuations in a lot of the folks what I can say when it comes to seasonality. Unfortunately due to COVID-19 normal seasonality has been.
Of purchasers that related to those infectious disease products that was advanced buying related to Q4.
That ended up being advanced buying related to Q4, so that softened the results of Q4. So on an annual basis, we did really well, but that led to the fluctuations in a lot of the folks what I can say when it comes to seasonality Unfortunately due to COVID-19 .
Really impacted so similar to Canada, we would normally see a higher Q4.
And some of the Latam markets this year and last year completely unpredictable.
Normal seasonality has been really impacted so similar to Canada, we would normally see a higher Q4.
Thank you that's helpful and for the infectious disease products that are using are being used to manage COVID-19 symptoms.
And some of the Latam market.
This year and last year completely unpredictable.
Also assume there could be some rebound as far as elective surgeries resuming.
Thank you that's helpful and for the infectious disease products that are using are being used to manage COVID-19 symptoms.
So how does that dynamic.
Lay out is there still inventory in the channel and when should we see the growth resume.
I also assume there could be some rebound as far as elective surgeries resume.
That's a great question, so actually what we were really happy with how kind of the market ended with inventory in the channel. We don't really see excess at the end of December this year and as the world opens up and we.
How does that dynamic play out is there still inventory in the channel and when should we see the growth resumed.
That's a great question, so actually what we were really happy with how kind of the market ended with inventory in the channel. We don't really see excess at the end of December this year and as the world opens up.
We see things going back to normal we expect normal purchases to come back.
Okay.
Then just one other question on the guidance in revenue.
We see things going back to normal we expect normal purchases to come back.
Is there any indication on what the.
The EBITDA could be for that level of revenue in the business.
Okay.
And then just one other question on the guidance in revenue.
So we don't guide towards towards EBITDA, We only guide towards revenue what you see this year as we ended the year with kind of a mid teens, EBITDA, which is significantly higher than than what we had last year.
Good.
Is there any indication on what the.
The EBITDA could be off of that level of revenue in the business.
So we don't guide towards.
Towards EBITDA, we only guide towards revenue what you see this year as we ended the year with kind of a mid teens EBITDA, which is significantly higher.
It's a level that we're comfortable with.
For now.
Right and is there potential operating leverage in the business in 2022.
And then what we had last year.
It's a level that we're comfortable with.
Given that the guided sales is still showing growth would there be a possible expansion on EBITDA or I know there has also been some expenses that you didn't have in 2021 are related to sales and marketing would that increase possibly indicating.
For now.
Great and is there a.
Potential operating leverage in the business in 2022.
Given that the guided sales is still showing growth would there be possible expansion on EBITDA or I know there has also been some expenses that you didn't have in.
The operating leverage potential.
So the we have a great platform and we can add more assets into this platform.
<unk> 2021.
Related to sales and marketing would that increase possibly indicating the operating leverage potential.
While we are growing top line one of the things is.
So the we have a great platform and we can add more assets into this platform.
We have been shut in our homes for a long time and as the world opens back up similar to Jeff doing.
While we are growing top line one of the things is.
Three country tour, our reps are now on the road, they're traveling and territories conferences are going to happen. So we do expect.
We have been shut in our homes for a long time and as the world opens back up similar to just doing.
SG&A to rise in 2022.
Three country tour, our reps are now on the road, they're traveling and territories conferences are going to happen. So we do expect.
Okay understood. Thank you for taking my questions.
Thank you we will now take our next question from <unk> <unk>.
SG&A to rise in 2022.
<unk> from National Bank. Please go ahead.
Okay understood. Thank you for taking my questions.
Hi, Good morning, Thanks for taking my question first one for me its guidance.
Thank you we will now take our next question from Ana <unk> from National Bank. Please go ahead.
You had a couple of points that are known and we'll get the first one the discontinuation of certain distribution agreement that does not include that and the other one unforeseen government mandated price regulation. So I was wondering if you can expand a little bit on those.
Hi, Good morning, Thanks for taking my question first one for me is on guidance.
You had a couple of points.
With regards to discontinuation distribution agreements with what could the impact be.
I think we'll get the first one the discontinuation of certain distribution agreement that does not include that and the other one unforeseen government mandated price regulations I was wondering if you can expand a little bit on those.
Should dose.
To happen.
And on the government pricing regulations.
With regards to discontinuation distribution agreements what could the impact be.
Are there any specific countries that we should monitor are more of a concern there.
Should those.
Sure no. So on the termination of agreement what we did we know that we when it comes to our HIV and HCV portfolio. We did announce that we are transitioning out of those products during the year.
To happen.
And on the government pricing regulations are there any specific countries that we should monitor or a more of a concern here.
Sure. So on the termination of agreement what we did we know that we when it comes to our HIV and HCV portfolio.
And it's going to have a couple of points not significant on the on the top line.
We did announce that we are transitioning out of those products during the year.
And it's really a normal course of looking at our portfolio, what's the strategic products, what's the growth and profitability and we determined that didn't make sense for us to continue to to be promoting those products and we came to an agreement with gilead on that.
And it's going to have a couple of points not significant on the on the top line and it's really a normal course of looking at our portfolio, what's the strategic products, what's the growth and profitability and we determined that didn't make sense for us to continue to to be.
When it comes and that's a normal process that with a perfect size of portfolio that we have is to continue to monitor what we are commercializing and where we're commercializing it.
Promoting those products and we came to an agreement with Gilead on that.
When it comes and that's a normal process that with the size of portfolio that we have is to continue to monitor what we are commercializing and where we're commercializing it.
As for government regulations, one of the things that.
Theres nothing specific but what we know is a lot of governments spent a lot of money during COVID-19 and as payers look to manage their budgets, they're going to try and see where they can cut spend and one of the places that is an easy place to look at it.
As for government regulations, one other thing that.
There is nothing specific but what we know is a lot of governments spent a lot of money during COVID-19 and as payers look to manage their budgets.
As pharma pricing and that that is something that it's not just going to impact night. It is an industry impact and thats something that we continue to monitor and be aware of and be concerned about.
We're going to try and see where they can cut spend and one of the places that.
Is an easy place to look at is pharma pricing and that is something that it's not just going to impact night. It is an industry impact and thats something that we continue to monitor and be aware of and be concerned about.
Okay, great. Thank you for the color Scott.
I mean, you did flag that you could see some.
Higher operating expenses because of travel all of which also lead to more sales, but the question I have there is more on.
Okay, great. Thank you for the color Scott.
Question I had I mean, you did flag that you could see some higher operating expenses because of travel all of which also lead to more sales but.
You had highlighted logistics fees and higher compensation.
What what you got for those in Q4 would that be a good run rate for 2022 or can we expect those two items to tick up a bit more.
I have there is more on.
You had highlighted logistics fee and higher compensation.
So logistics fees is really the more we sell the horror logistics, we pay so it'll go higher.
What what you got for those in Q4 was that a good run rate for 2022 or can we expect those two items to pick up a bit more.
When it comes to the compensation impact it's more on a comparative basis between Q4 and Q4 and that's really because we are.
So logistics fees is really the more we sell the more logistics, we pay so it will go higher.
When it comes to the compensation impact is more on a comparative basis between Q4, and Q4 and that's really because we.
Given the results in 2020, there was little to no.
Bonuses given to executives or employees, whereas this year, there was a bit more.
Given the results in 2020, there was little to no.
Okay. Thank you Ed the last one for me you mentioned that is that continues.
Bonuses given to executives or employees, whereas this year, there was a bit more.
And just to be active and youre looking forward to in license or acquire any color.
All the color that you can give there on what youre seeing in the landscape is there any more or less activity and any changing multiples in that regard.
Okay. Thank you and the last one for me you did mention that that continues.
Understood the ask Steven you're looking forward to the license part you'll acquire any color.
Good morning, Andrew This is al.
<unk> color that you can keep their I mean, what youre seeing in the landscape is more or less activity in any changing multiples in that regard.
That so we haven't seen any changes whether it's in terms of strategy. Our focus is the same.
So if you recall, we're really looking at our three growth strategies acquiring existing sales or bolt on M&A.
Good morning, Andrew This is Michael I'll take that so we haven't seen any changes whether it's in terms of strategy with our focus is the same.
The second one is on the innovative pipeline to build that and the third one is for our branded generics portfolio. So we haven't the focus remains.
So if you recall, we're really looking at.
Three growth strategies acquiring existing sales or bolt on M&A.
<unk> focus on the therapeutic areas as well that we have highlighted in the past and deal flow continues to be quite a quite happy. The team is very busy and so so no changes really in our on the BT side will continue to be quite a busy and optimistic.
The second one is on the innovative pipeline to build that and the third one is for our branded generics portfolio. So we havent the focus remains.
<unk> focus on the therapeutic areas as well is that we have highlighted in the past and deals will continues to be quite quite happy the team is very busy.
Okay, great. Thank you that's it for me.
So no changes really in.
Thank you.
There are no further questions I will turn the call back to your host.
On the VITAS side will continue to be quite.
Optimistic.
Perfect. Thank you for the confidence in the Knight team and for joining our Q4 and your end conference call.
Okay, great. Thank you.
Thank you.
There are no further questions I will turn the call back to your host.
Please stay healthy and safe and we'll speak to you next Q.
Perfect. Thank you for the confidence in the <unk> and for joining our Q4 and urine conference call.
This concludes today's call. Thank you for your participation you may now disconnect.
Please stay healthy and safe and we'll speak to you next Q.
Okay.
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This concludes today's call. Thank you for your participation you may now disconnect.
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