Q1 2024 Knight Therapeutics Inc Earnings Call
Yeah.
Operator: Good morning, ladies and gentlemen. My name is Liz, and I'll be your operator today. Welcome to Knight Therapeutics' first quarter 2024 results conference call. Before turning the call over to Samira Sakhia, President and CEO of Knight, with me, I'm reminded that this is a presentation made in May by the National Society of Health and Human Services that could cause actual results to differ materially from those contemplated by the forward-looking statement. The company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were produced but cautions 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.
Good morning, 50 central.
It might be your uncle.
Operator: 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. We would also like to remind you that 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@knighttx.com or via phone at 514-484-4483. I would like to remind everyone that this call is being recorded today, May 9, 2024, and would now like to turn the meeting over to your host for today's call, Samira Sakhia. Please go ahead, Ms. Sakhia.
Welcome to Knight Therapeutics first quarter 2024 gets all its purpose.
Uh huh.
Speaker Change: Before turning the call over Richardson you won't forget.
Speaker Change: You're right.
Speaker Change: And then my dad.
Speaker Change: Yep.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: That could cause actual results to differ materially from those contemplated by the forward looking statements.
Speaker Change: But he considers the assumptions on which these forward looking statements are beast.
Speaker Change: Reasonable at the time, they were prepared but cautions that these assumptions regarding the future events, many of which are beyond the control of the company and its subsidiaries.
Speaker Change: Ultimately prove to be incorrect the company disclaims any intention or obligation to update or revise any forward looking statements, whether a result of new information future events, except as required by law.
Speaker Change: Also like to remind you questions during today's call will be taken from analysts.
Speaker Change: Should there be any further questions. Please contact Knight's Investor Relations Department via email to infill at night, TX Dot com or via phone at 514 or eat four or 48 three.
Some Euro: I'd like to remind everyone that this call is being recorded today may 19, 2024, and would now like to turn the meeting over to your host for todays call. Some Euro soccer. Please go ahead Mr. <unk>.
Speaker Change: Thank you Louis.
Samira Sakhia: Good morning, everyone, and welcome to Knight Therapeutics' first quarter 2020 conference call. On today's call, I am joined by Amal Khouri, our Chief Business Officer, and Arvind Utchanah, our Chief Financial Officer.
Some Euro: Good morning, everyone and welcome to Knight Therapeutics first quarter 'twenty 'twenty four conference call.
Louis: Today's call I'm joined by a mockery, our chief business Officer, and are rich <unk>, our chief Financial Officer.
Samira Sakhia: I'm pleased to report that in Q1 2024, we delivered revenues of over $85 million, a growth of $3 million or 4% over the same period last year, including 13% or $7.1 million growth from our promoted portfolio. In addition, during the first quarter, we launched three products in two different territories, Vaxi and Bajuva in Canada and Minjuvi in Brazil. Beyond delivering growth across our promoted portfolio, we have advanced our pipeline with the regulatory submission in Brazil for fostamatinib, which we licensed from RIGEL, and the approval of CARFIB, our branded generic carfilzomib in Colombia.
Speaker Change: I'm pleased to report that in Q1, 'twenty 'twenty four we delivered revenues of over $85 million, a growth of $3 million or 4% over the same period last year.
Speaker Change: <unk>, 13% or $7 $1 million growth from our promoted portfolio.
Speaker Change: In addition, during the first quarter, we launched three products into different territories and vaccine, but you ran Canada and been jewelry in Brazil.
Speaker Change: Beyond delivering growth across our promoted portfolio, we have advanced our pipeline with the regulatory submission in Brazil for fast Imatinib, which we license from Rachel and the car fits our branded generic of Carfilzomib in Colombia.
Samira Sakhia: At the end of Q1, we had nine products, including Journey PM, under regulatory review in various countries across our region. In parallel to advancing our products towards regulatory approval and launch, we are continuing to strengthen our pipeline and to add to our portfolio through business development. This year, so far, we have added two products for Canada and LATAM, IPX203, a novel formulation of carbidopa-levodopa for Parkinson's disease, and, as you saw this morning, we have added JournAPM, a novel formulation of methylphenidate for ADHD.
Speaker Change: At the end of Q1, we had nine products, including journey P. M under regulatory review in various countries across our region.
Speaker Change: In parallel to advancing our products towards regulatory approval and launch we are continuing to strengthen our pipeline and to add to our portfolio through business development.
Speaker Change: This year, so far we have added two products for Canada, and lifetime IPX, two or three a novel formulation of carbon joke, but levodopa for Parkinson's disease and as you saw this morning, we have added journey P. M. A novel formulation of methylphenidate for ADHD.
Samira Sakhia: With these two products and Calvary, which we added at the end of 2023, we are well on our way to building a strong neurology portfolio, allowing us to leverage our existing Exelon infrastructure. I will now turn the call over to Arvind to provide an update on our financial results.
Speaker Change: With these two products and Calgary, we have added which we added at the end of 2023, we are well on our way to building a strong neurology portfolio, allowing us to leverage our existing exelon infrastructure.
Arvind Utchanah: When speaking of our financial results, I will refer to EBITDA and Adjusted EBITDA, which are non-IFRS measures, as well as Adjusted EBITDA per share, which is a non-IFRS ratio. Knight defines EBITDA as operating income or loss, excluding amortization and impairment of non-current assets, depreciation, purchase price accounting adjustments, and the impact of accounting on hyperinflation, but including costs related Registered EBITDA excludes acquisition costs and non-recurring expenses. Knightly finds adjusted EBITDA per share as EBITDA, divided by the number of common shares outstanding at the end of the respective periods. Furthermore, my discussion of the operating results will refer to figures that exclude hyperflexion.
Speaker Change: I will now turn the call over to Arne to provide an update on our financial results.
Arne: Thank you Samira.
Arne: When speaking of our financial results I will refer to EBITDA and adjusted EBITDA, which are non <unk> measures as well as I just said.
Speaker Change: Sure.
Arne: Oh, sorry.
Arne: Knight defines EBITDA as operating income or loss, excluding amortization and impairment of non current assets.
Arne: Appreciation purchase price accounting adjustments and the impact of accounting under hyperinflation.
Arne: But to include costs related to leases.
Arne: Adjusted EBITDA excludes acquisition costs and nonrecurring expenses.
Arne: Nike finds I just EBITDA per share is EBITDA.
Arne: But the number of common shares outstanding at the end of the respective jobs.
Arne: Furthermore, my discussion on the operating results, we will refer to figures that exclude hyperinflation.
Arvind Utchanah: For the first quarter of 2024, we delivered revenues of over $85 million, an increase of $3 million or 4% versus the prior year. Our infectious disease portfolio contributed $38 million of revenues, an increase of $7 million or 23% compared to the same period last year. This was driven by our key promoted products, including Ambisom and Crescemba, partly offset by the timing of demand for certain products, including Impervit. During this quarter, we sold a total of $9.2 million of Ambison under our sales contract with the Ministry of Health or MOH in Brazil, an incremental $6.8 million compared to MOH sales in the same period last year. During 2024, we expect to deliver approximately $18.9 million to MOH, including the $9.2 million already delivered in Q1 2024. Now moving to our Oncology and Hematology Disease Portfolio
Arne: For the first quarter of 2024, we delivered revenues of over $85 million, an increase of $3 million or 4% versus prior year.
Arne: Our infectious disease portfolio contributed to $48 million of revenues, an increase of $7 million or 23% compared to the same period last year.
Arne: This was driven by our key promoted products, including Amazon and Chris Samba, partly offset by the timing of demand for certain products, including <unk>.
Arne: During this quarter, we saw it towards totaled $9 $2 million.
Arne: Under our sales contract with the Ministry of Health for.
Arne: Each in Brazil.
Arne: An incremental six $8 million compared to the sales in the same period last year.
Arne: During 2020 for what we expect to deliver approximately $18 $9 million to our voyage, including the $9 2 million already delivered in Q1 2020.
Arne: Now moving to our oncology and hematology disease portfolio, we have.
Arvind Utchanah: We generated $30.8 million in the quarter, a growth of approximately $2 million or 6% compared to the same period last year. Our key promoted brands, including Landima, Trotter, Akinzeo, Balboasil, and the launch of Menjuvi, contributed approximately $5 million of incremental revenue. This increase was offset by a decline of approximately $3 million in the sales of our mature and branded generic products due to the life cycle of these products, turning to our other specialty portfolio.
Arne: Generated $32 $8 million in the quarter a growth of approximately $2 million was 6% compared to the same period last year.
Arne: Our key promoted brands, including Glenn Bema trusts are I can see you all go and launch of injury contributed approximately $5 million of incremental revenues.
Arne: This increase was offset by a decline of approximately $3 million in the sales of our mature and branded generic products due to the lifecycle.
Arne: Turning to our specialty portfolio.
Arvind Utchanah: During the quarter, the portfolio generated $17 million in revenues, a decrease of $6 million or 26% compared to the same period last year. The decrease is mainly due to advanced purchases of Exelon in the first quarter of 2023, driven by the transition of commercial activities from Novartis to Knight, as well as the purchasing patterns of certain customers. Now moving on to cross-margin.
Arne: During the quarter the portfolio generated $17 million in revenues, a decrease of $6 million or 26% compared to the same period last year.
Arne: The decrease is mainly due to advanced purchases of Exelon in the first quarter of 2023.
Arne: Driven by the transition of commercial activities from Novartis Tonight, as well as the purchasing patterns of certain customers.
Arne: Now moving onto gross margin in.
Arvind Utchanah: In the first quarter of 2024, we reported a gross margin of $40.7 million, or 47% of revenues, compared to $41.4 million, or 50% of revenues, versus Q1 last year. The decrease in gross margin as a percentage of revenues was due to product management. I will now turn to our operating expenses, excluding amortization. Our operating expenses were approximately $27.5 million in Q1'24, an increase of $3.8 million, or 16%, compared to the same period last year.
Arne: In the first quarter of 2024, we reported a gross margin of $47 million or 47% of revenues compared to $41 4 million or 50% of revenues versus Q1 last year.
Arne: The decrease in gross margin as a percentage of revenues was due to product mix.
Arne: I will now turn to our operating expenses excluding amortization.
Arne: Our operating expenses were approximately $27 $5 million in Q1, 24, an increase of $3 $8 million or 16%.
Arne: You get to the same period last year.
Arvind Utchanah: The increase was driven by higher marketing spend for the launches of Imvaxine, Vijuva, and Minjuvi and increased G&A costs due to our structure and higher compensation expenses, as well as development costs for our pipeline products.
Arne: The increase was driven by higher market expand to the launches of <unk> and <unk>.
Arne: An increase in our G&A costs due to our structure at higher compensation expenses as well as development costs for our pipeline products.
Arvind Utchanah: Moving on to adjusted EBITDA, for the first quarter of 2024, we reported $13.6 million of adjusted EBITDA, a decrease of $4.6 million, or 25%, compared to the same period last year, driven by the investment in our product launches and pipelines. Our adjusted EBITDA per share was $0.13 for the quarter. I will now cover the unrealized losses on our financial assets, which are not reflected in our adjusted debit. In Q1 2014, we reported a net loss of approximately $16 million.
Arne: Moving on to adjusted EBITDA.
Arne: For the first quarter of 2024, we reported $14 $6 million.
Arne: EBITDA, a decrease of $4 $6 million or 25% compared to the same period last should be run by the investments in our product launches and pipeline.
Arne: Adjusted EBITDA per share was <unk> 13 cents for the quarter.
Arne: I will now cover the unrealized losses on our financial assets, which are not reflected in our adjusted EBITDA.
Arne: In Q1, 'twenty four we reported a net loss of approximately $16 million driven by the unrealized losses on the valuation of certain private investments of our strategic funds.
Arne: Finally on to our cash flows.
Arvind Utchanah: Driven by the unrealized losses on the valuation of certain private investments in our strategic funds. Finally, on to our cash flows. During Q1 2049, we generated cash inflows from operations of $30.8 million, driven by our operating results, as well as a decrease in working capital. Our working capital decreased by $15.5 million due to an increase in our accounts payable and a decrease in our trade receivable and inventory levels compared to December 31st, 2023.
Arne: Q1, 'twenty four nine generated cash inflows from operations of $38 million driven by our operating results as well as a decrease in working capital.
Arne: Working capital decreased by $15 $5 million due to an increase in our accounts payable and a decrease in our trade receivable and inventory levels compared to December 31 2023.
Arne: Yes.
Arvind Utchanah: Our accounts payable, excluding all investment activities, increased by $9.4 million due to the purchases of inventory of our key promoted products. We expect to settle those bills in the second quarter of this year. I will now turn the call over to Amal to provide more details on our product pipeline.
Arne: Our accounts payable excluding all the investment activities increased by $9 $4 million due to the purchases of inventory of our.
Arne: Key promoted products, we expect to settle those payables in the second quarter of this year.
Speaker Change: I will now turn the call over to amount to provide more details on our product pipeline.
Amal Khouri: Earlier this morning, we announced an exclusive supply and distribution agreement for Journey PM for Canada and Latin America. Journey PM is a highly innovative and differentiated product and is the first and only evening dose methylphenidate product that is commercially available in the United States. Treats attention deficit hyperactivity disorder or ADHD in patients six years of age and older. Journey PM is an extended release formulation of methylphenidate, a stimulant medication used for the treatment of ADHD.
Amount: Thank you Arvind earlier.
Amount: Earlier this morning, we announced an exclusive supply and distribution agreement for Germany PM for Canada, and Latin America.
Amount: Johnny P M as a highly innovative and differentiated product and it's the first and only you think dose methylphenidate product that is commercially available in the United States.
Speaker Change: The trees attention deficit hyperactivity disorder, or ADHD in patients six years of age and older.
Speaker Change: Johnny P. M is an extended release formulation of methylphenidate stimuli.
Speaker Change: Stimulant medication use towards the treatment of ADHD journey PFS formulation consists of microbial.
Amal Khouri: Journey PM's formulation consists of microbeads. So, the delayed release layer and an extended release layer. The 1st layer delays the release of the active ingredients until the next morning, while the extended release layer controls the release of the active ingredients from the early morning and throughout the entire day.
Speaker Change: So the delayed release layer and an extended release later.
Speaker Change: The first layer it delays the release of the active ingredient until the next morning.
Speaker Change: While the extended release layer.
Speaker Change: The release of the active ingredients from the early morning and throughout the entire day.
Amal Khouri: This unique formulation provides a pharmacokinetic profile that allows a dose-dependent duration of effects and control of ADHD symptoms from the time the patient wakes up until they go to bed. Journey PM was studied in two randomized, double-blind, placebo-controlled, phase three clinical trials. Both studies met their primary and key secondary endpoints, demonstrating a statistically significant and clinically meaningful improvement in ADHD symptoms during the early morning and the late afternoon or evening. Journey PM was submitted to Canada for regulatory approval in November 2026.
Speaker Change: This unique formulation provides pharmacokinetics profile that allows a dose dependent duration of effect and control of ADHD symptoms from the time the patient wakes up until that goes with that.
Speaker Change: Jeremy P. M was studied in two randomized double blind placebo controlled phase III clinical trials.
Speaker Change: Both studies met their primary and key secondary endpoints, demonstrating a statistically significant and clinically meaningful improvement in ADHD symptoms. During the early morning, and late afternoon or evening.
Speaker Change: Joining P. M was submitted in Canada for regulatory approval in November 2023.
Amal Khouri: Following the unlicensed use of Calgary, a non-stimulant medication for ADHD, as well as IPX-303, the novel extended release formulation of carbidopa levodopa for Parkinson's disease, Jordan PM represents the third neurology asset that we have licensed in the last six months. These deals illustrate our focused execution in building our pipeline in a disciplined way that leverages our infrastructure, and they demonstrate our positioning as a partner of choice with deep capabilities in our key therapeutic areas.
Speaker Change: Following the in licensing of calibration and non stimulant medications for ADHD as well as IPX deal fee.
Speaker Change: The novel extended release formulation of <unk> for Parkinson's disease.
Speaker Change: <unk> represents a third neurology asset that we in license in the last six months.
Amal Khouri: These deals illustrates our focused execution and building our pipeline in the disciplined way that leverages, our infrastructure and they demonstrate our positioning as a partner of choice with deep capabilities in our key therapeutic area.
Amal Khouri: We will continue to execute on our strategy of leveraging our unique platform to enlicense and acquire innovative products for Canada and Latin America. I will now turn the call back to Samira for closing. Thank you, Amal.
Amal Khouri: We will continue to execute on our strategy of leveraging our unique platform to in license and acquire innovative products for Canada and Latin America.
Samira Sakhia: I will now turn the call back for Cheniere for concluding remarks.
Samira Sakhia: Thank you, Amal, and congratulations to you and your team on closing JourneyPM and adding another neurology aspect. Now on to our Financial Outlook for Fiscal 2024. I would like to remind everyone that this guidance is provided on a non-GAAP basis due to the difficulty in predicting Argentinian inflation. We are reconfirming our outlook for fiscal 2024 and expect to generate revenues between $335 million and $350 million and adjusted EBITDA of approximately 17% of revenue.
Samira Sakhia: Thank you and congratulations to you and your team on closing journey, Pam and adding another neurology assets.
Samira Sakhia: This guidance is based on a number of assumptions which are described in our press release, including foreign currency exchange rates remaining at the same level as 2023, with the exception of Argentina. Considering the volatility of last-time currencies, we will continue to monitor and revise our foreign exchange assumptions, which may materially impact our results and forecast. Should any of the other assumptions differ, the financial outlook and the actual results may vary materially.
Samira Sakhia: Now onto our financial outlook for fiscal 2024, I would like to remind everyone that this guidance is provided on a non-GAAP basis due to the difficulty in predicting Argentinian inflation rates.
Samira Sakhia: We are reconfirming, our outlook for fiscal 2024, and expect to generate revenues between 335 million to $350 million and adjusted EBITDA of approximately 17% of revenues. This guidance is based on a number of assumptions, which are described in our press release, including foreign currency exchange rates remaining at the same level.
Samira Sakhia: As 2023 with the exception of Argentina.
Samira Sakhia: Considering the volatility of Latam currencies, we will continue to monitor and revise our foreign exchange assumptions, which may materially impact our results and forecast.
Samira Sakhia: Should any of the other assumptions differ the financial outlook and the actual results may vary materially.
Operator: We have a profitable and cashflow-generating business, and with approximately $182 million in cash, cash equivalents, and marketable securities at the end of the quarter, we remain well-positioned to continue to execute on our strategy to in-license and acquire innovative and branded generic pharmaceuticals, as well as develop our own branded generic product portfolio. Looking ahead, we remain committed to continuing to build a leading Pan-American ex-U.S. specialty pharmaceutical company. Over the last several months, we've announced three product submissions in multiple territories, two product approvals, three product launches, and a total of $1.5 million in revenue.
Samira Sakhia: We have a profitable and cash flow generating business and with approximately $182 million in cash cash equivalents in marketable securities at the end of the quarter, we remain well positioned to continue to execute on our strategy to in license and acquire innovative and branded generic pharmaceuticals.
Operator: Well develop our own branded generic product portfolio.
Operator: Looking ahead, we remain committed to continuing to build a leading pan American ex U S specialty pharmaceutical company over the last several months, we've announced three product submissions in multiple territories two product approvals three product launches and we have added three pipeline assets from three new partners.
Operator: We have a pipeline of 18 products that are expected to generate over $150 million in revenue and should they achieve our estimated peak sales.
Operator: And we have added three pipeline assets from three new partners. We have a pipeline of 18 products that are expected to generate over $150 million in revenue, and should they achieve our estimated peak sales, this demonstrates not only our commitment, but also our ability to execute on our strategy. This concludes our formal remarks. I would now like to turn the call for questions over to you, Liz.
Operator: Demonstrating not only our commitment, but also our ability to execute on our strategy.
Liz: This concludes our formal remarks, I would now like to turn the call.
Operator: For questions over to you Liz.
Operator: Okay.
Operator: Thank you. And before we begin, may I please remind you that questions during today's call will be taken from analysts only. Should there be any further questions, please contact Knight's Investment Relations Department by email at info@knighttx.com or via phone at 514-484-4483. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad. If you are using a speakerphone, please lift your handset before pressing any key. If you would like to withdraw your question, please press star again. And your first question comes from the line of Andre Uddin from Research. Please go ahead.
Liz: Thank you and before we begin May I. Please remind you questions. During today's call will be taken from a U S.
Operator: The only should there be any further questions. Please contact Knight's Investor Relations Department.
Operator: The email to infill at night, TX dot com or via phone at 514.
Andre Uddin: For work.
Andre Uddin: We would like to ask a question. Please press star followed by the number one on your telephone keypad. If you are using a speaker phone. Please lift your handset before pressing and.
Operator: If you would like to withdraw your question. Please press star two.
Operator: Yeah.
Operator: Yeah.
Andre Uddin: And your first question comes from the line of Andrea.
Operator: From recent.
Andre Uddin: Please go ahead.
Samira Sakhia: Good morning, everyone. You reported some nice Q1 revenues. Was that primarily due to the CPI of Argentina dropping and also the Argentinian peso doing better relative to Q4, just looking at Q1 to Q4. Or was that because some products did very well this quarter?
Operator: Yeah.
Andre Uddin: Good morning, everyone.
Samira Sakhia: You reported some nice Q1 revenues was that primarily due to.
Samira Sakhia: The CPR of Argentina, dropping and also the Argentinean peso doing better relative to Q4, just looking at Q1 to Q4.
Samira Sakhia: And.
Andre Uddin: Or was that because some products did very well this quarter.
Samira Sakhia: So I'm going to start and then I'll ask Arvind to conclude on this. So, if you look at our revenues, over 50% of our revenues actually come from Brazil, and Argentina is a much smaller part of our business. The growth is really coming from our promoted products. However, if you look at our oncology portfolio, we see a bit of a decline. We see an increase in our infectious diseases portfolio. And a lot of this is really buying patterns, Q1, like, if I look at Q4 versus Q1, there is seasonality that has come back into the business, which is the normal kind of post COVID.
Samira Sakhia: Thanks.
Speaker Change: So I'm going to start and then I'll ask Arvind to conclude on this this is too.
Arvind Utchanah: So if you if you look at our revenues over 50% of our revenues actually come from Brazil, and Argentina is a much smaller part of our business. The growth is really coming from our promoted products. If you look at our oncology portfolio, we see a bit of a.
Samira Sakhia: And we see an increase in our infectious diseases portfolio.
Samira Sakhia: And a lot of this is really buying patterns Q1, like if I look at Q4 versus Q1 there.
Samira Sakhia: So it was a lighter quarter in certain categories. We had a big shipment out to the Ministry of Health during the quarter. That contract is $18.9 million, and we shipped almost half of it this quarter. Yeah, no. If I can add to answer the point on FX, I would say between the two quarters, Q4 and Q1, FX was very stable. Argentina, there were some changes, obviously, but that did not really impact our results, as we've seen.
Arvind Utchanah: There is seasonality that has come back into the business, which is normal kind of post COVID-19. So it is a lighter quarter in certain categories. We had a bit of we had a big shipment out to the Ministry of health also in the quarter that contract is $18 $9 million and we shipped almost.
Samira Sakhia: Half of it this quarter.
Speaker Change: Yeah, Andrew if I can.
Samira Sakhia: I think to answer your point on FX I would say between the two quarters Q4 and Q1.
Samira Sakhia: Capex was very stable.
Samira Sakhia: Argentina, there was some changes obviously, but that did not really impact our results as we reported.
Samira Sakhia: Great. And, just if I look at your portfolio, your pipeline portfolio, given your new licensing agreement today, what would you say are your top three new product launches that are coming up in the next say six to 12 months? Prioritize those top three. That'd be great, thanks.
Speaker Change: Okay, that's great.
Samira Sakhia: And just if I look at your portfolio your pipeline portfolio given your new in licensing agreement today.
Samira Sakhia: And so the big launches that the couple big launches are right now are Minjuvi and Invex. I mean, juvie is launched in Brazil, and it'll really think, your one year of a launch is always a light year, and then it starts to pick up. In the case of Minjuvi, we only launched it in Brazil, and other territories will start coming online next year. We also have Fosamatinib in our portfolio. Behind that, we've got Calbary, we've got JournA, we've got IPX. All of these products are going to be very meaningful. And I'm not going to really comment on the brand generics because some of them can also be meaningful. And each one of these adds up.
Speaker Change: What would you say are your top three new product launches that are coming up in the next say six to 12 months and if you could.
Speaker Change: Aratana is those top three that'd be great. Thanks.
Samira Sakhia: So the big launch that the couple of big launches or right now are men Juvie Ana and vaccine.
Samira Sakhia: I mean do these launched in Brazil, and it'll really think.
Samira Sakhia: You're one of our launch is always a light year and then it starts to pick up in the case of mean, Judy we only launched Brazil in other territories will start coming online.
Samira Sakhia: Next year the Euro aster.
Samira Sakhia: We also have <unk> in our portfolio behind that we've got Calgary, We've got journey. We've got IPX. All of these products are are going to be very meaningful and I'm not going to really comment on the branded generics because some of them can also be meaningful.
Samira Sakhia: And each one of these adds up.
Samira Sakhia: Okay, that's great. Thanks, Samira. That's it for me.
Speaker Change: Okay. That's great. Thanks, that's it for me.
Samira Sakhia: Yeah.
Samira Sakhia: Yeah.
Operator: Thank you. And your next question comes from the line of Rahul Sarugaser. Excerpt from Raymond Clements.
Speaker Change: Thank you and your next question comes from the line of Rouse hierarchies.
Operator: Casey.
Rahul Sarugaser: The main themes.
Operator: Okay.
Operator: Good morning, Samira, Arvind, and Amal. Thanks so much for taking our questions and for this morning's announcement about APS. So given that you haven't had a lot of time to dig into that particular drug, can you perhaps give us a sense for its sales trajectory, market, and where do you expect that market share that it currently engenders to be able to replicate in your market?
Unknown Attendee: Good morning, Thanks, so much.
Operator: Questions.
Operator: On this morning's announced.
Operator: <unk>.
Operator: So given that we haven't had a lot.
Speaker Change: I'll get into that but could you, perhaps give us a sense for.
Operator: Sales trajectory.
Operator: At market.
Operator: And whether you expect that that market share, but its frankly and genders.
Operator: Able to replicate that same thing with Walmart.
Operator: Mark.
Operator: Yeah.
Operator: I'm really sorry, Rahul, but I'm going to ask you something. I'm not sure if you're on a speaker, but we're having a really hard time hearing you.
Speaker Change: I'm really sorry railroad, but I'm going to ask you I am not sure if you're on a speaker, but we're having a really hard time hearing you.
Operator: Is that any better.
Operator: Much better. Okay, sorry about that. So, I will try and remember my question. First, I said good morning. Thank you. So, congratulations on the joint APM. I guess, given that we haven't had a chance to dig into that drug yet, could you perhaps give us a sense for the sales and market penetration in its current markets and how you expect to replicate that in your lifetime in Canadian markets?
Speaker Change: Much better.
Operator: Sorry about that so I'll try and remember my question.
Operator: So of course I said good morning. Thank you. So congratulations on that on the join a P. M. I guess given that we haven't had a chance to dig into that the drug yet could you, perhaps give us a sense for the.
Operator: Sales and market penetration in this current market and how you expect to replicate that in a in your lifetime.
Operator: Indian market.
Amal Khouri: So Journey, we got the rights to Journey for Canada and Latin America. The biggest market potential for this product right now, in our, our, our base case assumptions are in Canada. In Canada, the ADHD market is approximately a billion dollars, and methylphenidate is just over 400 million and is growing at a 15% CAGR over the last four years. The other thing that we saw in this market, the last launch that happened in this market, Pre-reimbursement, that product was doing about $30 million.
Operator: So journey. So we got the rights for journey for Canada, and Latin America, the biggest market potential for this product right now and are are our base case assumptions are in Canada.
Amal Khouri: In Canada, the ADHD market is approximately $1 billion.
Amal Khouri: And methylphenidate is just over 400 million and growing at 15% CAGR over the last four years.
Amal Khouri: The other thing that we saw in in this market. The last launch that happened in this market pre reimbursement that product was doing about $30 million.
Amal Khouri: So, we're really, we're not going to have, we don't, we are not forecasting coverage in Canada. We are also being conservative on our label at this point. So, it may not reach that number, but we are excited about it. This product, the market in Mexico, which is the second market that we are forecasting, is not as big as in Canada, but it is growing rapidly, and we expect to take a significant share there as well.
Amal Khouri: So we're really we're not gonna have Kevin we don't we're not forecasting coverage in Canada.
Amal Khouri: We are also being conservative on our label at this point.
Amal Khouri: So it may not reach that number but we are excited about this.
Amal Khouri: This product the market in Mexico, which is the second market that we are forecasting is not as big as in Canada, but growing rapidly and we expect to take a significant share there as well.
Amal Khouri: Great, that's really helpful. I'm sorry, I meant to also ask, I assume this fits within the current guidance of 120 million and is approximately off the peak, what proportion contribution do you expect the new drug to make?
Speaker Change: Great. That's really helpful and sorry, I meant also ask I assume this fits within the current guidance of $120 million and approximately off the peak.
Amal Khouri: What proportion contribution do you expect a new drug to contribute.
Amal Khouri: So, we updated as of this morning, and we're guiding to just over $150 million. And this will be this, we're not given kind of how much of a proportion that this is going to be
Speaker Change: So we updated as of this morning, and we're guiding to just over $150 million.
Amal Khouri: And this will be this we're not giving kind of how much of a proportion that this is going to be.
Amal Khouri: Looking at the BGX portion of the portfolio, we see a little dip this last quarter. Is that seasonal? How should we be thinking about BGX for the remainder of the year?
Amal Khouri: Okay fair enough and sorry for missing that thank you very much and then one last quick question I'm just looking at the BG X a proportion of the portfolio, we see a little dip. This last quarter is that seasonal or how should we be thinking about <unk> for the remainder of the year.
Amal Khouri: So, we expect our BGX portfolio to decline from last year to this year. In Q1, there are two factors. One is the regular decline because of pricing that we expected because of competitors. The second is that there is a bit of seasonality in Q1.
Amal Khouri: So we expect <unk> portfolio to decline from last year to this year in Q1. There is two factors one is the.
Amal Khouri: The regular declined because of pricing that we expected because of competitors. The second is there is a bit of seasonality in Q1.
Operator: Great. That's very helpful. Thanks so much for taking our questions. We'll get back to you.
Speaker Change: Great. That's very helpful. Thanks, so much for taking my questions will get back in the queue.
Speaker Change: Thank you.
Operator: Yeah.
Operator: And as a reminder, if you wish to ask a question, please press star followed by the number one. The next question comes from Scott Macaulay from Paradigm Capital.
Speaker Change: And as a reminder, if you wish to ask a question.
Operator: Star followed by the number one.
Scott Macaulay: The next question comes from.
Scott Macaulay: Scott Mccauley from paradigm capital. Please go ahead.
Operator: Good morning, everyone. Thanks for taking the questions. First, just on the new agreement. Before we go on, I just wanted to confirm that you have the license in Canada and Latin America. For Latin America, that includes all the countries that you currently have operations in.
Scott Macaulay: Hi, good morning, good morning.
Scott Macaulay: Everyone. Thanks for taking the questions first just on the new agreement.
Operator: This may be kind.
Operator: Kind of obvious but just wanted to confirm are you, saying you have the license in Canada and Latin America. So for Latin America that includes essentially all of the countries that you currently have operations.
Scott Macaulay: Yes, it does.
Operator: Second, on the cash flow, noting that significant increase year-over-year and the change in working capital, moving forward, is that a one-time change? Is that something that could be sustained in the coming quarters as you adjust the receivables, expenditures, and inventory? Or is that something that would go back down for the rest of the year?
Scott Macaulay: Excellent congratulations on that.
Operator: And then second.
Operator: Second on the cash flow.
Operator: Kind of noting that significant increase year over year and the change in working capital.
Operator: Hum.
Operator: How like moving forward is that kind of a one time change is that something that could be sustained in the coming quarters as you adjust kind of the.
Operator: Receivables expenditures in inventory.
Operator: Or is that something that would go back down for the rest of the year.
Arvind Utchanah: Okay, so typically, we have a high cash to EBITDA conversion ratio, just as a reminder. So in the quarter, there was an improvement in the cash flow from operations because we had an increase in our payables, about $9 million. That that is really driven by the timing. So that's $9 million. We will be paying for this in Q2, and that will lead to a decrease in investment in working capital in Q2. So you should expect lumpiness between the porters based on the purchasing of inventory, but overall, cash flow from operations will remain positive, and you should expect to see high cash to EBITDA conversion rates.
Speaker Change: Okay. So typically we have a high cash to EBITDA conversion ratio.
Arvind Utchanah: As a reminder, so in the quarter there was an improvement in the cash flow from operations, because we are having an increase in our payables of about $9 million.
Arvind Utchanah: It's really driven by the timing of payments, so that $9 million.
Arvind Utchanah: We'll be doing this in Q2.
Arvind Utchanah: That will lead to a decrease in <unk>.
Arvind Utchanah: As mentioned working capital in Q2, so you should expect lumpiness between the quarters based on purchasing of inventory.
Arvind Utchanah: Overall cash flow from operations will remain positive and you should expect to see high high cash to EBITDA conversion ratio.
Speaker Change: That's great I think my other questions have already been answered so congrats on the quarter and thanks for taking my questions.
Operator: That's great. I think my other questions have already been answered, so congrats on the quarter and thanks for taking the questions.
Speaker Change: Thank you.
Operator: Thank you. And your next question comes from Doug Meehm from RBC Capital Markets.
Operator: Thank you and your next question comes from the line of Doug Meehan from RBC capital markets.
Operator: Yeah, good morning. A little bit more detail on Journey. Could you walk us through half of the products in the U.S. since it was launched and what expectations might be for it. And then the other question I have for you is can you give us a bit of detail on the financial position of the company that developed it?
Douglas Miehm: Yes, good morning.
Operator: A little bit more detail on Germany could you walk us through half of the product in the U S.
Amal Khouri: Sure, this is Amal. So on the financial performance of the product, as you know, Ironshore is a private company, so they haven't really disclosed the sales expectations for the product, but we have access to some US market data, and I'm sure you guys do as well. So you can see here that the product is doing pretty well. I think initially they launched during COVID, so that really impacted the launch, just like it impacted all launches during that time period.
Amal Khouri: But then you see an acceleration post-COVID, and they've had a change as well within Ironshore in terms of management and kind of how they're running the company and the product, and you really see that in the results of the product. So the product is doing well in the US. And again, I'd like to invite you to look at the market data, and you can compare it to other launches. It is still performing pretty well.
Amal Khouri: Mmh as well with an iron or in terms of management and kind of how they're running the company and the product and you really see that on the results of the products what the product is doing well in the U S.
Amal Khouri: You might need to look at market data and you can compare it to other other launches. It is this is it is still performing pretty well and part you're the second part of your question I mean part of our diligence, we usually intelligence that just a product that the partner as well.
Amal Khouri: And the second part of your question, I mean, as part of our diligence, we usually diligence not just the product but the partner as well. And we don't have any concerns. We're quite comfortable with the situation of the company. And again, the product is doing well, so we don't have any concerns.
Amal Khouri: And where we we don't have any concerns before quite comfortable with the the the situation that the company and and again the product is doing well. So we don't have any concerns move forward.
Amal Khouri: Has there been any update on the political situation in various countries in South America and how it may impact the company over the next year or two?
Speaker Change: Okay Fantastic and then.
Speaker Change: Perhaps for <unk>.
Amal Khouri: Has there been any updates on political situation in various countries in South America, and Helen May impact the company over the next year or two.
Amal Khouri: So far, it's business as usual. What we see, I mean, I read a note this morning that there's probably going to be a union strike in Buenos Aires. We had one earlier, but the political landscape is stable. So far, they have not been able to get Congress approval, and things are stalled. And we continue to monitor.
Amal Khouri: So far.
Amal Khouri: It's business as usual, what we see I mean, I I I read a note. This morning, there's probably going to be a union strike and when his Irish we had one earlier, but the <unk> the the political landscape is stable.
Amal Khouri: There's really nothing also like if I take kind of our big major markets.
Amal Khouri: Tina is stable he has almost 50 per cent approval rating <unk>.
Amal Khouri: Brazil is doing fine for monitoring and also in Colombia. The issue there is not really political stability, but health care reforms that they are looking to put into place. So far they have not been able to get Congress approval and things are stalled and we can.
Amal Khouri: <unk> you to monitor.
Operator: Okay, great. Thank you. Thank you. And as a reminder, if you wish to,
Speaker Change: Okay, great. Thank you.
Operator: Thank you. And as a reminder, if you wish to ask a question, please press star one. There are no further questions at this time. We will now close the question and answer session. And I would now like to hand the meeting back over to Samira Sakhia for closing remarks. Thank you for helping, Sakhia.
Speaker Change: Thank you and as a reminder, English to ask a question. Please press start one.
Speaker Change: [noise] alright.
Samira Sakhia: At this time, we will now close the question and answer Simpson.
Samira Sakhia: I would now like to have the meeting back feel free to send me a <unk>.
Operator: Remarks.
Operator: Okay.
Samira Sakhia: Thank you. Once again, thank you for your confidence in the Knight team and for joining our Q1 2024 conference call. Have a great morning.
Samira Sakhia: Thank you once again, thank you for your confidence in the 19th and for joining R. Q1, 2024 conference call have a great morning.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call you mean disconnect.
Operator: [noise].