Q2 2025 Knight Therapeutics Inc Earnings Call
During the call over to semi refs, Ikea, President and CEO of Knight listeners are reminded that portions of today's discussion may 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.
They were prepared but caution that these assumptions regarding the future events, many of which are beyond the control of the company and subsidiaries ultra.
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.
We will like to remind you questions during today's call will be taken from analysts only.
Will there be any further questions. Please contact Knight's Investor Relations Department via email to IR at night, TX Dot com or via phone at 5144844483.
I would like to remind everyone that this call is being recorded today August seven 2025.
And we will now like to turn the meeting over to your host for today's call semi Refs Ikea. Please go ahead.
Thank you Sir.
Good morning, everyone and welcome to Knight Therapeutics second quarter 2025 conference call.
Im joined on todays call with a luxury our chief business Officer, and Arvind <unk>, our Chief Financial Officer.
I'm excited to announce that for the first half of 2025, we achieved a record high adjusted revenues of $197 million driven by our innovative promoted product portfolio, which delivered organic growth of 15% on a constant currency basis.
Adjusted EBITDA for the six months of 2025 was $27 $6 million.
In addition to driving strong results, we continue to execute on the business development front with the pilot in Sumitomo transactions, we added over 50 products to our portfolio, including five pipeline in early <unk> early launch assets, which will further accelerate the growth trajectory of our <unk>.
Median business.
We also continue to strengthen our relationships and partnerships earlier this year, we expanded our agreement with health and relaunched honest set in Brazil and Mexico.
In addition earlier this week, we announced that we added two innovative pipeline pipeline products in oncology.
<unk> lab.
<unk> and access till I mab for Latam from insights.
Moving to the pipeline, we continue to advance our portfolio with the regulatory submissions have been choosy for Follicular lymphoma in Brazil, as well as <unk> in Canada and Mexico in.
In addition, we obtained the approval of <unk> in Argentina, and ran gray or does that net and Sheila.
Now talking about our and CIB Knight completed the NCB launched in July 2024, and during the 12 months period. During that 12 month period, we purchased 2 million shares at an average price of $5 48 four.
For an aggregate consideration of $11 million.
Finally, we have secured a 50 million U S dollar revolving credit facility with National Bank, we have launched a syndication process to increase the size of the facility to up to $100 million U S dollars with an additional accordion of $50 million.
This facility will ensure that we remain well positioned to continue to transact and execute on our mission to acquire in license to develop and commercialize pharmaceutical products in Canada and Latin America.
Ill now turn the call over to <unk> to cover our results.
Thank you Sandra.
When speaking of our financial results I will refer to adjusted EBITDA and financial results at constant currency, which are non <unk> measures as well as I, just said EBITDA per share, which is a <unk> ratio.
<unk> defines adjusted EBITDA as operating or loss, excluding amortization and impairment of non current assets depreciation.
Pack of accounting under hyperinflation acquisition and transaction cost inventory step up expense and other nonrecurring expenses, but to include costs related to leases.
We define adjusted EBITDA per share of adjusted EBITDA over the number of common shares outstanding at the end of their respective period.
In addition revenues in financial results at constant currency also non-GAAP measures.
Financial results at constant currency or obtained by translating to prior period results average foreign exchange rates in effect during the period, except for Argentina, where we exclude hyperinflation.
Furthermore, my discussion on the operating results, we refer to figures that exclude hyperinflation unless otherwise indicated.
For the second quarter of 2025, we delivered revenues of $108.5 million, representing an increase of $14 million or <unk> 15 per cent compared to the same quarter last year.
On a constant currency basis.
<unk> increased by approximately $19 million or 21%.
This increase was driven by the growth of our key promoted products, which grew by $13 $5 million or 20%.
As well as incremental revenues of over $2 million from the <unk> to more transaction as well as buying patterns of certain products.
Moving on to revenues by therapeutic area.
The oncology hematology portfolio delivered $45.5 million in Q2 25.
Excluding the termination of a non strategic distribution agreement in Colombia, the portfolio increased by approximately $2 1 million on a constant currency basis compared to the same period last year.
This growth was primarily driven by I can view the launch of minerals.
And the addition of over VIX and honestly, it's which was offset by a decline in our mature and branded generic products through to their lifecycle.
Our infectious disease portfolio delivered $45 million, an increase of $7.5 million or 20%.
On a constant currency basis, the portfolio grew by $9 $5 million or 26% compared to the same period last year.
The increase was due to the growth of Chris Samba additional I'd be some deliveries to the ministry of health in Brazil.
By purchasing patterns of certain products.
Turning to our other specialty therapeutic areas.
The portfolio generated approximately $28 million in revenues, an increase of $7 million or <unk> 44 per cent.
On a constant currency basis, the portfolio grew by $8 million or 42% compared to the same period last year.
The increase was mainly driven by the launch of <unk> and <unk>.
Sure and so Paula Deen and distribute some of products as well as the purchasing patterns of certain customers.
Now moving onto gross margin.
Posted $49 million or a gross margin of 46% of I just did revenue in Q2, 25 compared to $45 million or 48% of adjusted revenue in the same period last year.
The decrease in the gross margin percent was mainly explained by the product mix.
Well as severance costs related to the closures of nights HIV and respiratory to refi sweetie.
Antena.
All the key products produced in that manufacturing facility were transferred to certain contract manufacturers.
I will now turn to our operating expenses excluding amortization.
For the second quarter, our operating expenses were $38 $4 million, an increase of $8 million or 27% compared to the same period last year.
Excluding the acquisition costs related to the Paladin transaction.
Our operating expenses increased by approximately $5 million or 15%.
The increase in operating expenses was driven by prelaunch and launch investments behind the launch of <unk> in Mexico joined RPM in Canada, and increasing activities in China with key promoted products incremental costs related to the Palatin infrastructure.
Well as an increase in share based compensation following periodic reassessment of vesting targets.
Moving onto I, just stood a bit though.
The second quarter of 2025, we reported $15 $5 million of EBITDA or 16 cents.
For sure, which was relatively unchanged compared to the same period last year.
I will now cover our financial assets, which are valued at $303 million as at June 30 of 2025.
In the second quarter, we settle the synergy loan receivable in exchange for $13 $8 million in cash and $1 $1 million in warrants.
Subsequent to the quarter, we collected $3 $8 million to settle its night last strategic loan receivable will be life Science company.
As of to date <unk> collected all of its strategic loan receivable.
Now moving on to our funds and equities in the second quarter, we recorded a net loss of $5 7 million, mainly driven by the mark to market revaluations of our strategic fund investments, partly offset by the change in value of certain equities.
As a reminder, our funds continue to be a source of cash received net proceeds of $5 million in 2025 and $44 million since 2020.
Moving on to our cash position and cash flows.
At the end of Q2, our net debt position was $6 $5 million, we held $97 $7 million in debt and $91 $2 million in cash and marketable securities.
During the quarter, we generated cash inflows from accretion of $20 million driven by our operating results as well as a decrease of $13 million in working capital as a result of our collections.
Accounts receivable.
In terms of our investing activities, we deployed $141 million in the collagen and Sumitomo transaction and received $15 $8 million from our strategic loans and funds.
A portion of the Paladin acquisition was financed by the withdrawal of $60 million from the revolving credit facility with National Bank.
In addition, as announced previously we had withdrawn $45 million.
U S dollars from our C T working capital line of credit.
Amount was repaid in full during the quarter.
I will now turn the call over to our model.
Thank you Arvind and 2025 continues to be a very productive year for our business development team.
This week, we announced that we expanded our existing relationship with insight and added exclusive lifetime rights to <unk>, which is sold as scientists in the U S in Europe, and <unk>, which is sold as Nick tens or in the U S.
Rocky family Mob is approved in the U S and Europe for the treatment of adult patients with metastatic or recurrent locally advanced Merkel cell carcinoma, our MCC.
Which is a rare and aggressive type of skin cancer.
Based on epidemiological data from some Brazilian registries. There are an estimated 550 to 250, new cases, each year across Brazil, Mexico, Colombia and Argentina.
Right behind them up its also approved by the FDA.
Combination with Carboplatin and Paclitaxel for the first line treatment of adult patients with inoperable locally recurrent or metastatic squamous cell carcinoma of the annual canal or SGA.
In addition, the FDA approved ready finally map as a single agent for the treatment of adult patients with locally recurrent or metastatic SCA with disease.
This progression on or intolerance to platinum based chemotherapy.
Well epidemiological data for <unk> in Latam is limited there are an estimated 2700 to 4000, new cases of Sce's each year in Brazil, Mexico, Colombia and Argentina.
The second product <unk> is approved in the U S for the treatment of chronic graft versus host disease or gvhd. After failure of at least two prior lines of systemic therapy in adult and pediatric patients weighing at least 40 kilograms.
Gvhd is a serious complication of allogeneic stem cell transplantation in which the donors immune cells attack the recipients tissues potentially affecting multiple organs, such as the skin liver lung and gastrointestinal tract.
There are approximately 1400 to 1800 reported allogeneic transplants in Brazil last year.
The expansion of this existing relationship with insight and earlier this year with health and reflect our ability to deliver and market success.
Regulatory submissions approvals the commercial execution. In addition, the Paladin and Sumitomo transactions illustrate our ability to build a balanced portfolio that includes both innovative growing promoted products as well as profitable mature cash flow generating products I will now turn it over.
The call back to Samir.
Thank you and well now.
Now onto our financial outlook in fiscal for fiscal 2025, I would like to remind everyone that the guidance provided earlier. This year included the close of the Paladin acquisition in mid 2025, and also assume that there is no material adjustment gauge of hyperinflation accounting in Argentina.
In addition, our guidance is based on a number of assumptions, which are described in our press release.
Should any of these assumptions differ the financial outlook and the actual results may vary materially.
We are increasing our outlook for financials for fiscal 2025, and expect to generate revenues between $410 million to $420 million up from $390 million.
$405 million, we expect our EBITDA to remain.
Proximately, 13% of revenues.
The change in our revenue outlook is driven by better performance in the first half of the year and the incremental revenues from the Sumitomo transaction.
Looking ahead, we are very excited with what we can deliver to our stakeholders with our recent and upcoming launches as well as our pipeline products. In addition, the polygon and Sumitomo transaction to Mark a pivotal step in accelerating our growth and strengthening our position in the Canadian market.
With our expanded portfolio increased operational scale and capital flexibility, we remain well positioned to drive long term value and deliver on our mission to acquire in license to develop and commercialize pharmaceutical products for Canada and Latin America.
Thank you for your support and confidence in the 19 that concludes our formal remarks I would now like to open the call for questions.
Back to you soon here.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your thoughts on the phone you'll hear a prompt that Johan has been race should you wish to the claim from the volume process. Please press the star followed by the number to.
If you are using a speaker phone please lift the handset before pressing any guess.
One moment please for your first.
Sure.
Your first question comes from Michael Freedman from Raymond James. Please go ahead.
Hey, good morning, Sameer Arvind.
Congratulations on this quarter and all in all the business development and launch activity.
<unk> been doing recently it looks like it's been a busy year.
Mike My first question it looked like there was a a significant order.
From the Brazilian Moh this quarter.
I Wonder if you could describe.
Whether you expect more orders from the Moh during the rest of the Europe.
Thats completed.
Contract that was contemplated for 2025 and then in addition, I Wonder if you could tell us about when a potential 2026 contract would be negotiated.
That's a great question, we did see a bigger purchase than we originally expected.
As for 10 day by more than the rest of the year.
Today, we don't really have a commitment from them to purchase yesterday are allowed to purchase more but we haven't seen it yet.
They may purchase more buddy.
It will be a small amount probably maximum in a four to six range.
And as for next year's contracts, we expect to have more information later in the call.
Okay alright, thank you.
Now I Wonder if you could.
Give us an update on your integration of holiday and we saw a few transaction costs here.
Also saw that R&D.
Increased as a result of some palate and related activity I wonder.
Yes, if you could provide us that update and then if you could if you could give us a.
Our expectation of what R&D levels might be for the rest of the year.
So what you see the what you see in the G&A is really the transaction cost not really integration costs.
And that's really.
Legal bank.
And kind of either.
Pfizer indices that we had enough in the process and for the year.
For the six months that was in the <unk> range.
It comes to R&D, or G&A or sales and marketing, it's kind of spread throughout the various opex lines.
When it comes to transition our teams have run.
Really fast through it and are continuing to raise through it because as we've talked about before part of the kind of the return thesis is bringing opex under control.
We are now as it's in our MD&A is two days, we have restructured the organization by about 25% of the head counts, we do expect a little bit more.
And as we said in the Sumitomo call.
It will not be us.
As high as we originally expected because there will be.
In connection with generally in connections with the brands that we just brought on with Sumitomo a few more positions.
And those gaps will be filled by the apology.
Okay.
Right.
Yes. Thank you very much I'll pass the line here.
Thank you.
A reminder, if you wish to ask a question. Please press star one.
Your next question comes from.
David Martin from Bloom Burton. Please go ahead.
Good morning, and congratulations on the quarter.
The business development activity seems to have really stepped up recently I'm wondering if opportunities become more attractive and you know what has changed to make them more attractive or is this because the company completed the integration and streamlining of biotech scanner and that position them.
Or to increase the BD.
So David what I meant to say is we have been extremely productive over the last five years, if I was to probably go back and pull the transcript. This time last year, everybody said, we've been more productive than we had been in the previous year.
And as a mall has always sad.
There is ebbs and flows but.
We have been executing since 2000 22021.
On transactions, we will continue and as you see we we are yes, we've used up our cash that we have begun a process to be to continue to have financial flexibility. We ended the quarter with.
Is $90 million of cash we are expanding our debt facility that could give us anywhere between an additional $70 million and $150 million. So that we can continue to execute.
Okay great.
Second question.
With Howard and then the new drug launches that you've got queued up that should be good for topline growth and gross margin expansion moving forward, but in the near term you've got drug launch costs and the pallet and overhead how do you expect these moving parts to effect the EBITDA margin in 2026 versus <unk>.
18% you're forecasting for this year.
We'll guide to 2026 later in the year in early 2006, but.
Yes holiday and we'll have a better margin, but it is relatively small when you compare to the entire business. What I do expect is as we move through the next couple of years and I am talking about 26, 27, 28, we will see step ups small inquiry.
He says over the next couple of years, and then really a relatively bigger increase as the product that products that are launching start to become a real large contributors.
Okay and just one last quick question are there plans for any further share buybacks.
So as you know over the last few years, we've invested over $250 million in our stock. We continue to believe that Nate is of good value, we're going to continue to evaluate and if we if we think that there is a there is an opportunity.
We will be.
Launching the NTIC.
Okay. Thank you that's it for me.
Thank you.
Your next question comes from Mr Hill singer from RBC. Please go ahead.
Hi, Good morning, this is Todd in for Doug.
Two questions.
One is on the Sumitomo portfolio can you remind us what's the current run rate.
Our top line.
Our total new and what growth are you anticipating in 2026.
And second question I have is on business development related to after the Paladin acquisition that you've closed now do you.
Should we expect more.
Acquisition, and then given that you have a larger commercial footprint.
Thank you.
Sure. So I'll take the first one and I'll turn the second one over to Amar.
So when we have this call when we when we announced Sumitomo, we had said that the portfolio had.
Approximately $11 million in sales for the last year, we expected that number to be the same for this year.
We didn't and so really we have a half year impact of that $11 million in 2025.
We didn't really guide to the growth of those specific products. What I can tell you is in the case of <unk> or <unk>.
He is an antagonist in a market in a large market there.
There is one other antagonist in the market today, which is from.
That's an injection there is an advantage of <unk>, which is an oral.
And the injection.
Is not listed does not have public reimbursement in Alberta, and B C and it does approximately sales of about $8 million in Canada.
So you can kind of project out. This was a product that was just launched or <unk> does have reimbursement is going big has pass through PPA. It has reimbursement we have today signed up Ontario, Quebec BC, a couple of the smaller provinces and we expect.
To get rest of Canada over the next year.
Actually I should talk about my friend, Greg Alright. My salary is is also an early launch products.
It has a couple of different competitors or Elisa, which is really kind of another oral does about $9 million of sales, mostly private and it was launched in 2018.
There is more to this market through them LHRH agonist for women, but if you kind of look at or at least say it does about $9 million of sales. My February was just launched about a year ago, we expect that product to continue to go out and what's great about these two products.
Is they are a great fit in the case of <unk> with <unk>, an indication of my sundry ways in vaccine and Baidu maps, and we already have reps in the field.
For these products.
For these physicians, we will be expanding the teens slightly and that's why I'm, saying that there will be team additions more to have better reach in places that we don't have today.
Listen I'll take your second question from a BD perspective, I think your question was with the Paladin transaction does that change or what does that mean for further acquisitions well. The answer is really simple as we've been saying. This is really what you guys have been seeing over the last year.
At year end in the last five years is the continuing execution of our strategy, So and nothing will change there we will continue to look for.
Both acquisitions, whether it's specific products or portfolios of products or companies as well as in licensing additional products for our pipeline. So none of that will change we have the capacity to execute and we will continue to execute as we have been.
Okay, great. Thank you so much we're thinking of taking our questions.
Thank you.
There are no further questions at this time I will now turn the call over to somebody else I care for closing remarks. Please go ahead.
Thank you Sergio once again, thank you for the confidence in the 19 for joining our Q2 'twenty five conference call have a great morning.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation you may now disconnect.