Q1 2025 Knight Therapeutics Inc Earnings Call

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El: Good morning, ladies and gentlemen. My name is Elle, and I will be your operator today. Welcome to Knight Therapeutics' first quarter 2025 results conference call.

Before turning the call over to Samira Sakhia,

President, and CEO of Knight.

El: These scenarios are reminded that the portions of the basic discussion made by their nature necessarily involve risks and are certain things that could cause actual results to differ materially from those contemplated but a forward-looking statement.

El: to be resulable at the time they were prepared. But questions that these assumptions regarding the future events, many of which are being on the control of the company and its sub-sahe diaries may ultimately prove to be incorrect.

El: 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.

El: We would also like to remind you, questions during today's call will be taken from analysts only.

El: Should there be any further questions? Please contact Knight's Investor Relations Department.

El: via email to IR at 9TX.com or via phone at 514-484-4483.

El: I would like to remind everyone that this call is being recorded today, May 8, 2025, and would now like to turn the meeting over to your host.

Speaker Change: For today's call, Samira Sakhia, please go ahead, Ms. Sakhia. Thank you, Elle. Good morning, everyone, and welcome to Knight Therapeutics' first quarter 2025 conference call.

Speaker Change: I'm joined on today's call with Amal Khouri, Artif Business Officer, and Arvind Utchanah, Artif Financial Officer.

Speaker Change: I'm pleased to announce that for the three month ended March 31st, 2025, we reported revenues of $88 million and an adjusted EBITDA of over $12 million. Our revenues increased by $2 million or 3% over the same period last year.

Speaker Change: The increase was mainly driven by our promoted portfolio, which accounts for over 75% of our total revenues.

Speaker Change: During the quarter, this portfolio grew by $9 million or 16% on a constant currency basis.

Speaker Change: In addition, we continue to execute on the business development front. As previously announced, we entered into an agreement with Endo to acquire all of the assets of Paladin for $100 million plus $20 million of inventory.

Speaker Change: Furthermore, Knight may pay future contingent payments of up to US $50 million upon achievement of certain milestones.

Speaker Change: Also, we have expanded our relationship with Helsinki, with the addition of Honestit for certain lifetime countries. Honestit is used for the prevention of chemotherapy-induced nausea and vomiting, as well as the prevention of post-operative nausea and vomiting.

Moving to our pipeline.

Speaker Change: We continue to advance our portfolio with the regulatory submission of Cavalese in Argentina and the regulatory approval of Pemissier in Mexico. In addition to the regulatory process during the quarter, we launched Minjuvi in Mexico and relaunched Honestit in Brazil and Mexico.

Speaker Change: On to the NCIB. During the quarter, we purchased 605,000 common shares under the NCIB at an average purchase price of $5.53 for aggregate cash consideration of $3.3 million. I will now turn the call over to Arvind to provide an update on our financial results.

Arvind: Thank you, Samira. When speaking of our financial results, I will refer to adjusted EBITDA and financial results at constant currency, which are non-AFRS measures.

Arvind: As well as, I just got a bit of a share, which is a non-high first week ratio.

Arvind: Knight defines adjusted every day as operating income or loss, excluding amortization and impairment of non-current assets, depreciation, the impact of accounting on the high penetration, and acquisition and transaction costs, but we include costs related to leases.

Arvind: We define adjusted Abida for share as adjusted Abida over the number of common shares outstanding at the end of the respective period.

Arvind: In addition, revenues and financial results at constant currency are also non-GAAP measures .

Arvind: Financial results at constant currency are obtained by translating the prior period results at the average point exchange rates, in effect during the current period, except for Argentina, where we only exclude high inflation.

Arvind: For the more my discussion on the operating results, we refer to figures that exclude health inflation unless otherwise indicated.

Arvind: For the first quarter of 2025, we delivered revenues of $88 million, representing an increase of $2 million or 3% versus Q1 last year.

Arvind: On a constant currency basis, revenues increased by $6.6 million or 8% driven by the growth of our key promoted products, partly offset by declines in our mature products.

Arvind: In the first quarter of 2025, our oncology anti-mythology portfolio delivered $32 million of revenues, a growth of $1 million of 3%.

Arvind: On a constant currency basis, the portfolio grew by $2 million or 6% compared to the same period last year.

Arvind: This increase was driven by the continued growth of our tea promoted brands, which contributed four million dollars of king chromatorepineuse mainly coming from Landima, Akineo, Tralstar, Mindruvi, as well as the addition of Oneset.

Arvind: This roof was partially upset by declining our match to and grounded generic products due to the life cycle and the market entrance of new competitors, as well as the impact of atom currencies depreciation.

Arvind: Our infectious disease portfolio delivered $36 million, a decrease of $2 million or 4%.

Arvind: On a constant currency basis, the portfolio actually grew by $1 million or 3% compared to the same period larger. [inaudible]

Arvind: The increase was due to purchasing veterans of certain customers, including ambisons, deliveries to the Ministry of Health in Brazil or MWH.

Arvind: As a reminder in January 2025, we signed a third contract with the MOH and we expect to deliver 22.4 million dollars in 2025, of which 13 million dollars were already delivered into one compared to 9 million dollars in 2021-2024.

Turning to our other special theatre of critics, R.S.

Arvind: The portfolio generated $20 million in revenues, representing an increase of $3 million, or 18%, mainly driven by the launch of INVACC and Bidruva in Canada as well as purchasing patterns of certain customers.

Thank you. Thank you. Thank you.

Arvind: Now moving on to gross margin. We reported $41 million or gross margin per set of 47% of revenues in the first quarter of 2025, remaining relatively unchanged compared to the same period last year.

I will now turn to our operating expenses, excluding amortization.

Arvind: For the first quarter, our operating expenses were $50.2 million and increased of $3 million or 10% compared to the same period last year.

Arvind: The increase in operating expenses was driven by an increase in commercial spend and structure behind our new launches, including Minju V, Invexi, Vijuva, and Johnny Piem, as well as transaction fees related to the acquisition of Power Day.

Arvind: Moving on to Agistad Evidah, for the first quarter of 2025, we reported $12.1 million of Agistad Evidah, a decrease of $1.5 million or 11% compared to the Samira Sakhia. Our Agistad Evidah per share was $12.00, a decrease of 8% compared to the Samira Sakhia.

Arvind: I will now cover our financial assets, which were valued at $127 million.

Arvind: During the quota, we recorded a total net loss of $3.8 million on our financial assets, driven by the mark-to-market evaluation of our strategic fund investments and the change in value of certain equities.

Arvind: As a reminder, our funds continue to be a source of cash, and for the first quarter, we receive a distribution of premium million dollars.

Arvind: Moving on to our cash flows. At the end of Q1, we held $141 million in cash and marketable securities. During the quarter, we generated cash and flows from operations of $3.7 million and invested $11.5 million in working capital.

Arvind: Driven by an increase in our accounts receivable due to the timing of collections from sodium customers.

Arvind: In addition, at the end of the quarter, our inventory was valued at $140 million and increased so $37 million compared to the end of 2024.

Arvind: This investment is due to the growth of our portfolio, including our recent launches, as well as timing of orders and deliveries of certain products, including Ambison to the average.

Arvind: Subsequent to the quarter, we close a US $40 million working capital line of credit from Citibank, of which we have withdrawn US $35 million.

Arvind: They're used to settle the accounts pay their bulk within ventry purchase during the first quarter.

Arvind: 13% of revenues.

Arvind: Looking ahead, we are very excited that we can deliver to our stakeholders with our recent and upcoming launches as well as our pipeline products. In addition, the Paladin transaction, which we expect to close in the middle of this year, we'll add critical mass and significantly increase the size of our Canadian business, while adding a portfolio of stable cash.

Arvind: Generating products that will help fund our growth in Canada, and Latin America.

Arvind: Pilot in transaction and the addition of Omnicell, which demonstrate our focus on execution and building a balanced portfolio that includes innovative growing product promoted products and mature cash flow generating assets.

Arvind: We remain well positioned to continue to execute on our mission to acquire in license to develop and commercialize pharmaceutical products in Latin America and Canada.

Arvind: Thank you for your support and confidence in the Knight team. This concludes our formal remarks I'd like to open up the call for questions.

Arvind: Okay.

Arvind: So over to al.

James: Before we begin may I flip to your mind you questions. James in this call will be taken from analysts on the should there be any further questions. Please contact Knight's Investor Relations Department via email.

James: At night X dot com or via phone at 514 or 844 for each city.

James: If you would like to ask a question. Please press star followed by the number one on your telephone keypad.

James: If you are using a speaker phone please.

James: Handset before pressing anarchy, if he would like to withdraw your question. Please press star.

James: One moment. Please for your first question.

Michael Freedman: Your first question comes from Michael Freedman of Raymond James.

James: Please go ahead.

Michael Freedman: Hey, good morning, Samira them, all Arvind congratulations on that.

James: One quarter.

James: I Wonder if a few questions here I wonder if you could.

James:

James: Just thinking about your SG&A levels, how should we be thinking about your SG&A going forward thinking.

James: And using this quarter's level.

James: Should we be using as a base going forward.

James: Or should it be should we expect higher or lower.

James: That's right of course mid year, we should expect palatin to be included.

James: And these financials. So I wonder if you could describe a bit of the SG&A contribution you might expect from that acquisition.

James: Sure. So as you know we don't provide guidance on Opex, what we have provided in the guidance that we have is revenue and then our EBITDA margin and the guidance that we've provided includes closing paladin in the middle of the year, So kind of if you and we do.

James: Don't guide on a quarter by quarter basis.

James: <unk> you.

James: Spending can be a bit lumpy, it's fine we're going to end the year with 390 to four or five of topline and EBITDA margin of 13% and the Opex will move to deliver on those results.

Speaker Change: Okay, alright, thanks very much.

Speaker Change: I Wonder just on the Paladin acquisition process I Wonder if you could provide any updates.

Speaker Change: <unk> two.

Speaker Change: How that deal is progressing sort of more.

Speaker Change: Closing details, perhaps with a finer point in midyear.

Speaker Change: But we don't really have anything more than just kind of that mid year.

Speaker Change: It did there is regulatory consents as well as regular pinch sense that would be required standard conjuncture. It would be required on the on a transaction like this and each of those is progressing to plan and so we believe that will be in the timelines that we forecasted.

Speaker Change: Okay. That's great and then if I could shoehorn, just one more I wonder if you could comment on typical seasonality across your jurisdictions.

Speaker Change: <unk>.

Speaker Change: Steady year over year growth, but of course, we saw quarter over quarter just wondering.

Speaker Change: I Wonder if you could just review the factors that impact the seasonality.

Speaker Change: Sure So I'm going to say the place that we have normal seasonality.

Speaker Change: Is Canada, where Q4 is usually a bigger quarter, we see buying patterns from wholesalers that load in advance there's a little bench in Brazil, and a little bit in Brazil impacts of our business more given the size of that business in our <unk>.

Speaker Change: Business today.

Speaker Change: The rest of the markets are pretty even.

Speaker Change: So there isn't there isn't that much seasonality and the reason I kind of bring this up is because as we add palette and there we will start to see more seasonality in our business because it's really a it'll be a bigger contributor.

Speaker Change: Okay.

Speaker Change: Okay. Thank you very much I'll pass it on now.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Again, if you would like to ask a question Nice press the star followed by the number one on your telephone keypad.

Speaker Change: Yeah.

Speaker Change: There are no further questions at this time at least convenient niseko.

Speaker Change: Thank you once again, thank you for the confidence in the 19 and for joining our Q1 'twenty five conference call have a great morning.

Speaker Change: Yeah.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.