The Conversation (0)
Knight Therapeutics Inc. (TSX: GUD) ("Knight" or "the Company"), a leading pan-American (ex-US) specialty pharmaceutical company, today reported financial results for its third quarter ended September 30, 2020. All currency amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.
Q3 2020 Highlights
Financials
- Revenues were $45,239, an increase of $41,209 or 1,023% over prior year.
- Gross margin was $19,533 or 43% compared to $3,301 or 82% in prior year.
- Interest income generated of $3,188 a decrease of $2,870 or 47% over prior year.
- Adjusted earnings 1 of $6,582, an increase of $1,020 or 18% over prior year.
- Net income for the period was $17,492 compared to a net loss of $2,959 in prior year.
Corporate Developments
- Launched a normal course issuer bid ("NCIB") in July 2020 and purchased 797,952 common shares for an aggregate cost of $4,745.
- Completed the tender offer process and acquired all of the outstanding Brazilian Depositary Receipts ("BDR") of Biotoscana Investments S.A. ("GBT").
Products
- Obtained regulatory approval for Lenvima ® and Halaven ® in Ecuador.
- Received regulatory approval from Health Canada for Imvexxy™ and Bijuva ® .
- Submitted a supplement to a New Drug Submission ("NDS") of Nerlynx for HER2-positive metastatic breast cancer.
Strategic Investments
- Received distributions of $14,887 from strategic fund investments and realized a gain of $9,348.
Key Subsequent Event
- Signed a new exclusive distribution agreement with Gilead for the continued commercialization of AmBisome® in Brazil, effective January 1, 2021.
"We are pleased to have completed the GBT acquisition and are knee deep in needed integration work which is complicated by COVID-19. In addition, we remain focused on execution of business development initiatives to in-license and acquire innovative pharmaceuticals for the Canadian and Latin American markets", said Jonathan Ross Goodman, CEO of Knight Therapeutics Inc.
_____________________
1 Adjusted earnings is not a defined term under IFRS, refer to the definition below for additional details.
SELECT FINANCIAL RESULTS & BALANCE SHEET ITEMS
[In thousands of Canadian dollars]
| Change | Change | |||||||||||||||
| Q3-20 | Q3-19 | $ 1 | % 2 | YTD-20 | YTD-19 | $ 1 | % 2 | |||||||||
| Revenues | 45,239 | 4,030 | 41,209 | 1,023 | % | 144,328 | 10,190 | 134,138 | 1,316 | % | ||||||
| Gross margin | 19,533 | 3,301 | 16,232 | 492 | % | 61,630 | 8,519 | 53,111 | 623 | % | ||||||
| Selling and marketing | 7,763 | 1,146 | (6,617 | ) | 577 | % | 26,928 | 3,341 | (23,587 | ) | 706 | % | ||||
| General and administrative | 10,835 | 4,761 | (6,074 | ) | 128 | % | 27,424 | 12,339 | (15,085 | ) | 122 | % | ||||
| Research and development | 2,967 | 892 | (2,075 | ) | 233 | % | 8,035 | 2,502 | (5,533 | ) | 221 | % | ||||
| Amortization of intangible assets | 5,703 | 424 | (5,279 | ) | 1,245 | % | 17,546 | 1,273 | (16,273 | ) | 1,278 | % | ||||
| Operating loss | (7,735 | ) | (3,922 | ) | (3,813 | ) | 97 | % | (18,303 | ) | (10,936 | ) | (7,367 | ) | 67 | % |
| Interest income | (3,188 | ) | (6,058 | ) | (2,870 | ) | 47 | % | (11,515 | ) | (18,108 | ) | (6,593 | ) | 36 | % |
| Interest expense | 822 | — | (822 | ) | N/A | 3,070 | — | (3,070 | ) | N/A | ||||||
| Foreign exchange loss | 703 | 638 | (65 | ) | 10 | % | 9,666 | 3,315 | (6,351 | ) | 192 | % | ||||
| Net income (loss) | 17,492 | (2,959 | ) | 20,451 | N/A | 23,527 | 21,186 | 2,341 | 11 | % | ||||||
| Basic net earnings (loss) per share | 0.138 | (0.021 | ) | 0.159 | N/A | 0.256 | 0.150 | 0.106 | 71 | % | ||||||
| Adjusted earnings 3 | 6,582 | 5,562 | 1,020 | 18 | % | 23,510 | 14,755 | 8,755 | 59 | % | ||||||
| 1 Includes fair value adjustments recorded on the business combination | ||||||||||||||||
| 2 A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income | ||||||||||||||||
| 3 Percentage change is presented in absolute values | ||||||||||||||||
| Change | ||||||||
| 09-30-20 | 12-31-19 | $ | % 1 | |||||
| Cash, cash equivalents, restricted cash and marketable securities | 392,352 | 536,182 | (143,830 | ) | 27 | % | ||
| Trade and other receivables | 65,611 | 108,182 | (42,571 | ) | 39 | % | ||
| Inventory | 61,783 | 70,870 | (9,087 | ) | 13 | % | ||
| Financial assets | 173,116 | 159,151 | 13,965 | 9 | % | |||
| Accounts payable, accrued and other liabilities | 44,128 | 96,156 | (52,028 | ) | 54 | % | ||
| Bank loans | 43,407 | 55,579 | (12,172 | ) | 22 | % | ||
| 1 Percentage change is presented in absolute values | ||||||||
Revenue: For the quarter ended September 30, 2020, GBT's financial results accounted for $40,574 of incremental revenues ($16,020 in Brazil, $8,497 in Argentina, $7,659 in Colombia and $8,398 in the rest of the Latin American region). The remainder of the growth in revenues of $635 attributable to timing of sales of Impavido ® and the in-licensing of Trelstar ® . The increase in year-to-date revenues is primarily attributed to consolidation of GBT's financial results as well as the growth in sales of Movantik ® , timing of sales of Impavido ® , and in-licensing of Trelstar ® .
Gross margin: For the quarter ended September 30, 2020, the gross margin decreased to 43% compared to the same period in the prior year due to consolidation of GBT's results and an inventory provision of $1,871 due to impact of COVID-19 on certain new product launches. The gross margin would have been 46%, an increase of 3%, from 43% after excluding the adjustment of hyperinflation accounting in accordance with IAS 29.
Selling and marketing: The increase of $6,617 for the quarter is primarily driven by the consolidation of GBT.
General and administrative: The increase in general and administrative expenses of $6,074 for the quarter ended September 30, 2020 is due to consolidation of GBT's financial results which accounted for $4,710 of incremental general and administrative expenses for the three-month ended September 30, 2020. In addition, in Q3-2020 Knight incurred $3,490 in legal and advisory fees in relation to the unified tender offer compared to $2,476 in Q3-2019 for the acquisition of 51.2% of GBT.
Research and development: GBT's financial results accounted for $2,006 of incremental research and development expenses for the three-month period ended September 30, 2020.
Amortization of intangible assets: Increase due to the amortization of the definite-life intangible assets acquired in the GBT acquisition.
Interest income: Interest income is the sum of interest income on financial instruments measured at amortized costs and other interest income. For the quarter, interest income was $3,188 a decrease of 47% or $2,870 compared to the same period prior year. The decrease is due to lower interest rates, average cash and marketable securities balances and average loan balance.
Interest expense: The consolidation of GBT's financial results accounted for $822 of incremental interest expense for the three-month period ended September 30, 2020 mainly related to interest on its bank loans.
Net income or loss: For the quarter net income was $17,492 an increase of $20,451 compared to the same period last year. The variance mainly resulted from the above-mentioned items as well as (i) net gain on the revaluation of financial assets measured at fair value through profit or loss of $12,873 (Q3-19 loss of $4,883), (ii) net gain on mandatory tender offer ("MTO") liability of $10,502 mainly driven by the public shareholders of GBT tendering their shares using the Alternative Offer Price at BRL 10.40 per share, (iii) loss on hyperinflation of $401 due to net monetary positions under hyperinflation accounting.
Adjusted Earnings : For the three-month period ended September 30, 2020, adjusted earnings were $6,582 an increase of $1,020 or 18% compared to the same period last year. The variance is mainly explained by the incremental adjusted earnings of the GBT acquisition offset by a decline in interest income.
Cash, cash equivalents, restricted cash and marketable securities : As at September 30, 2020, Knight had $392,352 in cash, cash equivalents and marketable securities, a decrease of $143,830 or 27% as compared to December 31, 2019. The variance is primarily due to cash outflows related to the acquisition of the outstanding BDRs of GBT, shares repurchased through NCIB and changes in working capital.
Trade and other receivables : As at September 30, 2020, Knight had $65,611 in trade and other receivables, a decrease of $42,571 compared to December 31, 2019 which primarily relates to the net collection of receivables of $24,494 as well as depreciation of Latin American ("LATAM") currencies of $9,445, and an increase in estimated credit loss provision recorded in 2020 of $2,819. The remaining difference is mainly due to collection of a distribution receivable from a fund investment, a decrease in interest receivable due to timing of the maturities of the marketable securities as well as a decline in interest rates.
Inventory: Overall decrease in inventories of $9,087 as compared to December 31, 2019 is due to increase of $1,516 related net inventory purchases (purchases offset by cost of goods sold) driven by the timing of inventory purchases and new product launches, offset by $3,806 of decrease related to depreciation of LATAM currencies and $6,797 of additional inventory provision recorded in the period ending September 30, 2020.
Financial assets: The increase of $13,965 as compared to December 31, 2019 in financial assets is due to the following: (i) increase of $3,859 attributable to loans and receivables as a result of additional loans issued and $883 of gain on foreign exchange (ii) decrease in equity investments, warrants and derivatives of $5,673 due to disposal and revaluation, and (iii) increase of $15,779 attributable to fund investments due to capital calls, foreign exchange gains and mark to market adjustments partially offset by distribution received.
Accounts payable, accrued, and other liabilities: Decrease in accounts payable and accrued liabilities balance of $52,028, or 54% is mainly due payments of inventory purchases, GBT transaction fees, the depreciation of LATAM currencies and lower accrual balance as compared to December 31, 2019 due to timing.
Bank Loans: As at September 30, 2020, bank loans were at $43,407, a decrease of $12,172 mainly due to loan repayment of $8,219 and the foreign exchange revaluation, partially offset by additional loan issued to a subsidiary of GBT.
Product Updates
In September 2020, Knight announced that it has submitted a supplemental NDS to Health Canada for neratinib in combination with capecitabine for the treatment of patients with HER2-positive metastatic breast cancer who have failed two or more prior lines of HER2-directed treatments.
On July 31, 2018, Knight entered into an exclusive licensing agreement for the commercial rights of Imvexxy™ and Bijuva™ in Canada and Israel. Both Imvexxy™ and Bijuva™ were approved by Health Canada during Q3-20. Imvexxy™, an estradiol vaginal inserts, has been approved for the treatment of postmenopausal moderate-to-severe dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar and vaginal atrophy (VVA), due to menopause. Bijuva™, a once-daily combination of estradiol and progesterone in a single oral capsule, was approved for the treatment of moderate-to-severe vasomotor symptoms due to menopause. The Company expects to launch both products in 2022
In July 2020, Knight obtained regulatory approval for Lenvima ® (lenvatinib) in Ecuador for the treatment of (i) unresectable hepatocellular carcinoma (HCC); (ii) advanced renal cell carcinoma (RCC), in combination with everolimus; and (iii) differentiated thyroid cancer (DTC). In addition, in August 2020, the Company obtained regulatory approval for Halaven® in Ecuador for the treatment of patients with metastatic breast cancer. Through its acquisition of GBT, Knight has the license to Halaven® and Lenvima ® from Eisai for all Latin America excluding Mexico.
On October 26, 2020, the Company announced a new exclusive agreement with Gilead for the commercialization of AmBisome ® . The new agreement is effective starting January 1, 2021. AmBisome ® is a liposomal amphotericin B that is used to treat antifungal infections. This product has been part of Knight's Brazilian affiliate's portfolio for over twenty years.
NCIB
On July 10, 2020, the Company announced that the Toronto Stock Exchange approved its notice of intention to make a NCIB. Under the terms of the NCIB, Knight may purchase for cancellation up to 10,856,710 common shares of the Company which represented 10% of its public float as at July 6, 2020. The NCIB commenced on July 14, 2020 and will end on the earlier of July 13, 2021 or when the Company completes its maximum purchases under the NCIB. Furthermore, Knight entered into an agreement with a broker to facilitate purchases of its common shares under the NCIB. Under Knight's automatic share purchase plan, the broker may purchase common shares which would ordinarily not be permitted due to regulatory restrictions or self-imposed blackout periods. During the three-month period ended September 30, 2020, the Company purchased 797,952 common shares, for an aggregate cash consideration of $4,745, of which $1,009 remains to be settled and 172,642 shares remain to be cancelled as at September 30, 2020.
Acquisition of GBT
On July 15, 2020, Knight announced the launch of the tender offer for the acquisition and delisting of the remaining 48.8% Brazilian Depository Receipts ("BDRs") of GBT. The public shareholders had the choice between the following two tender options:
- BRL11.23 per BDR with an amount equivalent to 20% deposited in an escrow account to secure the sellers' indemnification obligations under the purchase agreement for the GBT Transaction, provided that BRL 0.91 of the escrow amount shall be mandatorily paid on or at any time prior to November 29, 2022. The escrow amount will be released equally over a period of three years from closing, net of claims in accordance with the terms and conditions of the Share Purchase Agreement.
- BRL10.40 per BDR in cash on the settlement date ("Alternative Offer Price").
Upon close of the tender offer process, 99.6% of the public shareholders tendered their BDRs through the Alternative Offer Price. The Company paid an aggregate purchase price of $170,855 [BRL 537,523] and acquired all the BDRs outstanding. On October 23, 2020, the BDR program of GBT was cancelled by the Brazilian Securities and Exchange Commission.
COVID-19 Update
The recent outbreak of the coronavirus, or COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. Certain countries where the Company has significant operations, have required entities to limit or suspend business operations and have implemented travel restrictions and quarantine measures. Knight is continuing to work to alleviate some of the pressure that the global COVID-19 pandemic has placed on our healthcare systems and ensure that we maintain supply of our medicines to patients. The Company and its employees have transitioned to working remotely, including our field sales and medical teams. The Company has taken steps to establish digital and virtual channels to ensure that physicians and patients continue to receive continued support. Knight is developing return to field or office protocols on a country by country basis. Furthermore, the Company has not faced any inventory shortages and has sufficient liquidity to meet all operating requirements for the foreseeable future. As the date hereof, the outbreak has not had a material impact on the Company's results.
Conference Call Notice
Knight will host a conference call and audio webcast to discuss its third quarter results today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.
Date: November 13, 2020
Time: 8:30 a.m. ET
Telephone: Telephone: Dial-in information will be provided to participants following pre-registration
Webcast: www.gud-knight.com or Webcast
This is a listen-only audio webcast. Media Player is required to listen to the broadcast.
Replay: An archived replay will be available for 30 days at https://www.gud-knight.com
Please pre-register in advance of the call.
This method will allow you to join the call seconds before it goes live without having to hold for a live agent to pick up your line, which has proven to be an issue with the influx of callers during
the COVID-19 pandemic.
Online pre-registration: https://www.directeventreg.com/registration/event/4687537
Phone pre-registration: 1-(888)-869-1189 and provide the Conference ID: 4687537 to the Live Agent who will take your details.
Once you register, you will receive a confirmation which will have the dial in number and both the Direct Event Passcode and your unique Registrant ID to join this call. For security reasons, please do NOT share this information with anyone else.
About Knight Therapeutics Inc.
Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing innovative pharmaceutical products for Canada and Latin America. Knight owns a controlling stake in Grupo Biotoscana, a pan-Latin American specialty pharmaceutical company. Knight Therapeutics Inc.'s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the company's web site at www.gud-knight.com or www.sedar.com .
Forward-Looking Statement
This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations are discussed in Knight Therapeutics Inc.'s Annual Report and in Knight Therapeutics Inc.'s Annual Information Form for the year ended December 31, 2019 as filed on www.sedar.com . Knight Therapeutics Inc. 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.
CONTACT INFORMATION:
| Investor Contact: | |
| Knight Therapeutics Inc. | |
| Samira Sakhia | Arvind Utchanah |
| President & Chief Operating Officer | Chief Financial Officer |
| T: 514.484.4483 ext.122 | T. 514.484.4483 ext. 115 |
| F: 514.481.4116 | F. 514.481.4116 |
| Email: info@knightt x .com | Email: info@knightt x .com |
| Website: www.gud-knight.com | Website: www.gud-knight.com |
IMPACT OF HYPERINFLATION
[In thousands of Canadian dollars]
The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company's Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation. If the Company did not apply IAS 29, the effect on the Company's operating income would be as follows:
Q3-20
| Reported under IFRS | Excluding impact of IAS 29 | Variance | ||||||
| $ 1 | % 2 | |||||||
| Revenues | 45,239 | 45,847 | (608 | ) | 1 | % | ||
| Cost of goods sold | 25,706 | 24,765 | (941 | ) | 4 | % | ||
| Gross margin | 19,533 | 21,082 | (1,549 | ) | 7 | % | ||
| Gross margin (%) | 43 | % | 46 | % | ||||
| Expenses | ||||||||
| Selling and marketing | 7,763 | 7,604 | (159 | ) | 2 | % | ||
| General and administrative | 10,835 | 10,883 | 48 | 0 | % | |||
| Research and development | 2,967 | 3,026 | 59 | 2 | % | |||
| Amortization of intangible assets | 5,703 | 5,756 | 53 | 1 | % | |||
| Operating Loss | (7,735 | ) | (6,187 | ) | (1,548 | ) | 25 | % |
| 1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29 | ||||||||
| 2 Percentage change is presented in absolute values | ||||||||
YTD-20
| Reported under IFRS | Excluding impact of IAS 29 | Variance | ||||||
| $ 1 | % 2 | |||||||
| Revenues | 144,328 | 145,860 | (1,532 | ) | 1 | % | ||
| Cost of goods sold | 82,698 | 78,792 | (3,906 | ) | 5 | % | ||
| Gross margin | 61,630 | 67,068 | (5,438 | ) | 8 | % | ||
| Gross margin (%) | 43 | % | 46 | % | ||||
| Expenses | ||||||||
| Selling and marketing | 26,928 | 27,021 | 93 | 0 | % | |||
| General and administrative | 27,424 | 26,656 | (768 | ) | 3 | % | ||
| Research and development | 8,035 | 8,175 | 140 | 2 | % | |||
| Amortization of intangible assets | 17,546 | 17,407 | (139 | ) | 1 | % | ||
| Operating Loss | (18,303 | ) | (12,191 | ) | (6,112 | ) | 50 | % |
| 1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29 | ||||||||
| 2 Percentage change is presented in absolute values | ||||||||
RECONCILIATION TO ADJUSTED EARNINGS
[In thousands of Canadian dollars]
Non-IFRS measure: EBITDA and Adjusted earnings
The Company discloses non-IFRS measures that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company's financial performance and in interpreting the effect of the GBT Transaction on the Company. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.
The Company uses the following non-IFRS measures:
EBITDA: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.
Adjusted earnings: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, acquisition costs, non-recurring expenses incurred but to include interest income earned net of interest expenses and costs related to leases.
Adjustments to operating (loss) income include the following:
- With the adoption of IFRS 16, the lease payments of Knight are not reflected in operating expenses. The IFRS 16 adjustment approximates the cash outflow related to leases of Knight.
- Acquisition costs relate to expenses of $3,490 for the quarter, for the acquisition of GBT.
- Other non-recurring expenses relate to expenses incurred by Knight that are not due to, and are not expected to occur in, the ordinary course of business. For the quarter ended September 30, 2020, Knight recorded one-time costs of $595 related to restructuring activities including severance to certain employees as part of restructuring and integration of GBT
- Interest income Includes "Interest income on financial instruments measured at amortized cost" and "Other interest income". Primarily from interest earned on loans, cash and cash equivalents, marketable securities and accretion on loans receivable.
- Interest expense on bank loans includes GBT's interest expense mainly related to interest on its bank loans and excludes Knight's interest accretion
For the three-month and nine-month periods ended September 30, 2020, the Company calculated adjusted earnings as follows:
| Q3-20 | Q3-19 | YTD-20 | YTD-19 | |||||
| Operating (loss) income | (7,735 | ) | (3,922 | ) | (18,303 | ) | (10,936 | ) |
| Adjustments to operating (loss) income: | ||||||||
| Amortization of intangible assets | 5,703 | 424 | 17,546 | 1,273 | ||||
| Depreciation of property, plant and equipment | 1,382 | 112 | 4,916 | 305 | ||||
| Lease costs (IFRS 16 adjustment) | (820 | ) | (122 | ) | (2,405 | ) | (274 | ) |
| Impact of PPA accounting | — | — | 865 | — | ||||
| Impact of IAS 29 | 1,601 | — | 5,973 | — | ||||
| EBITDA | 131 | (3,508 | ) | 8,592 | (9,632 | ) | ||
| Acquisition costs | 3,490 | 2,476 | 3,810 | 2,476 | ||||
| Other non-recurring expenses | 595 | 536 | 2,663 | 3,803 | ||||
| Interest income | 3,188 | 6,058 | 11,515 | 18,108 | ||||
| Interest expense on bank loans | (822 | ) | — | (3,070 | ) | — | ||
| Adjusted earnings | 6,582 | 5,562 | 23,510 | 14,755 | ||||
INTERIM CONSOLIDATED BALANCE SHEETS
[In thousands of Canadian dollars]
[Unaudited]
| 09-30-20 | 12-31-19 | |||
| ASSETS | ||||
| Current | ||||
| Cash, cash equivalents and restricted cash | 218,091 | 174,268 | ||
| Marketable securities | 158,944 | 235,045 | ||
| Trade receivables | 51,894 | 85,845 | ||
| Other receivables | 11,809 | 17,622 | ||
| Inventories | 61,783 | 70,870 | ||
| Prepaids and deposits | 2,927 | 3,306 | ||
| Other current financial assets | 26,248 | 26,303 | ||
| Income taxes receivable | 6,439 | 8,265 | ||
| Total current assets | 538,135 | 621,524 | ||
| Marketable securities | 15,317 | 126,869 | ||
| Trade receivables | 1,908 | 4,715 | ||
| Prepaids and deposits | 4,066 | 4,652 | ||
| Right-of-use Asset | 4,651 | 6,409 | ||
| Property, plant and equipment | 21,979 | 22,639 | ||
| Investment properties | 1,439 | 1,740 | ||
| Intangible assets | 156,641 | 173,372 | ||
| Goodwill | 77,770 | 88,262 | ||
| Other financial assets | 146,868 | 132,848 | ||
| Deferred income tax assets | 1,123 | 3,991 | ||
| Other long-term receivables | 41,582 | 41,582 | ||
| 473,344 | 607,079 | |||
| Assets held for sale | 2,484 | 76,700 | ||
| Total assets | 1,013,963 | 1,305,303 | ||
INTERIM CONSOLIDATED BALANCE SHEETS (continued)
[In thousands of Canadian dollars]
[Unaudited]
| 09-30-20 | 12-31-19 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | 42,475 | 94,406 | ||||
| Lease liabilities | 1,089 | 1,788 | ||||
| Other liabilities | 1,270 | 1,750 | ||||
| Other financial liabilities | — | 184,023 | ||||
| Bank loans | 41,567 | 50,557 | ||||
| Income taxes payable | 11,828 | 15,447 | ||||
| Other balances payable | 802 | 2,833 | ||||
| Total current liabilities | 99,031 | 350,804 | ||||
| Accounts payable and accrued liabilities | 383 | — | ||||
| Lease liabilities | 3,351 | 4,812 | ||||
| Bank loan | 1,840 | 5,022 | ||||
| Other balances payable | 8,495 | 1,699 | ||||
| Deferred income tax liabilities | 18,641 | 27,860 | ||||
| Total liabilities | 131,741 | 390,197 | ||||
| Equity | ||||||
| Share capital | 695,066 | 723,832 | ||||
| Warrants | 117 | 785 | ||||
| Contributed surplus | 18,203 | 16,463 | ||||
| Accumulated other comprehensive income | 2,530 | 17,405 | ||||
| Retained earnings | 166,306 | 52,246 | ||||
| Attributable to shareholders of the Company | 882,222 | 810,731 | ||||
| Non-controlling interests | — | 104,375 | ||||
| Total equity | 882,222 | 915,106 | ||||
| Total liabilities and Equity | 1,013,963 | 1,305,303 | ||||
INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
| Three months ended September 30 | Nine months ended September 30 | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Revenues | 45,239 | 4,030 | 144,328 | 10,190 | ||||
| Cost of goods sold | 25,706 | 729 | 82,698 | 1,671 | ||||
| Gross margin | 19,533 | 3,301 | 61,630 | 8,519 | ||||
| Expenses | ||||||||
| Selling and marketing | 7,763 | 1,146 | 26,928 | 3,341 | ||||
| General and administrative | 10,835 | 4,761 | 27,424 | 12,339 | ||||
| Research and development | 2,967 | 892 | 8,035 | 2,502 | ||||
| Amortization of intangibles | 5,703 | 424 | 17,546 | 1,273 | ||||
| Operating loss | (7,735 | ) | (3,922 | ) | (18,303 | ) | (10,936 | ) |
| Interest income on financial instruments measured at amortized cost | (1,754 | ) | (4,825 | ) | (7,477 | ) | (14,651 | ) |
| Other interest income | (1,434 | ) | (1,233 | ) | (4,038 | ) | (3,457 | ) |
| Interest expense | 822 | — | 3,070 | — | ||||
| Other income | (243 | ) | (1,579 | ) | (133 | ) | (1,949 | ) |
| Net (gain) loss on financial instruments measured at fair value through profit or loss | (12,873 | ) | 4,883 | (22,642 | ) | (19,649 | ) | |
| Net gain on mandatory tender offer liability | (10,502 | ) | — | (12,072 | ) | — | ||
| Realized gain on sale of asset held for sale | — | — | (2,948 | ) | — | |||
| Realized gain on automatic share purchase plan | — | — | (4,168 | ) | — | |||
| Share of net income of associate | — | (128 | ) | — | (448 | ) | ||
| Foreign exchange loss | 703 | 638 | 9,666 | 3,315 | ||||
| Loss on hyperinflation | 401 | — | 1,205 | — | ||||
| Income before income taxes | 17,145 | (1,678 | ) | 21,234 | 25,903 | |||
| Income tax | ||||||||
| Current | (3,079 | ) | 999 | 1,386 | 3,168 | |||
| Deferred | 2,732 | 282 | (3,679 | ) | 1,549 | |||
| Income tax (recovery) expense | (347 | ) | 1,281 | (2,293 | ) | 4,717 | ||
| Net income for the period | 17,492 | (2,959 | ) | 23,527 | 21,186 | |||
| Attributable to: | ||||||||
| Shareholders of the Company | 18,094 | (2,959 | ) | 33,834 | 21,186 | |||
| Non-controlling interests | (602 | ) | — | (10,307 | ) | — | ||
| Attributable to shareholders of the Company | ||||||||
| Basic (loss) earnings per share | 0.138 | (0.021 | ) | 0.256 | 0.150 | |||
| Diluted (loss) earnings per share | 0.138 | (0.021 | ) | 0.256 | 0.150 | |||
| Weighted average number of common shares outstanding | ||||||||
| Basic | 130,867,769 | 137,783,892 | 132,346,922 | 141,147,239 | ||||
| Diluted | 131,051,220 | 138,154,629 | 132,614,809 | 141,519,892 | ||||
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]
| Three months ended September 30, | Nine months ended September 30, | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| OPERATING ACTIVITIES | |||||||||
| Net income for the period | 17,492 | (2,959 | ) | 23,527 | 21,186 | ||||
| Adjustments reconciling net income to operating cash flows: | |||||||||
| Deferred income tax expense (recovery) | 2,732 | 282 | (3,679 | ) | 1,549 | ||||
| Share-based compensation expense | 725 | 484 | 1,422 | 1,639 | |||||
| Depreciation and amortization | 7,085 | 536 | 22,462 | 1,578 | |||||
| Net (gain) loss on financial instruments | (12,873 | ) | 4,883 | (22,642 | ) | (19,649 | ) | ||
| Net gain on mandatory tender offer liability | (10,502 | ) | — | (12,072 | ) | — | |||
| Realized gain on sale of asset held for sale | — | — | (2,948 | ) | — | ||||
| Realized gain on automatic share purchase plan | — | — | (4,168 | ) | — | ||||
| Interest expense | 822 | — | 3,070 | — | |||||
| Foreign exchange loss | 703 | 638 | 9,666 | 3,315 | |||||
| Loss on hyperinflation | 401 | — | 1,205 | — | |||||
| Share of net income of associate | — | (128 | ) | — | (448 | ) | |||
| Other adjustments | 424 | (180 | ) | (50 | ) | (363 | ) | ||
| 7,009 | 3,556 | 15,793 | 8,807 | ||||||
| Changes in non-cash working capital and other items | (15,413 | ) | 472 | (30,974 | ) | 2,368 | |||
| Other long-term receivable | — | — | — | (18,242 | ) | ||||
| Dividends from associate | — | — | — | 4,159 | |||||
| Interest payments on bank loans | (8 | ) | — | (1,321 | ) | — | |||
| Cash (outflow) inflow from operating activities | (8,412 | ) | 4,028 | (16,502 | ) | (2,908 | ) | ||
| INVESTING ACTIVITIES | |||||||||
| Acquisition of shares through mandatory tender offer | (170,855 | ) | — | (170,855 | ) | — | |||
| Purchase of marketable securities | (662 | ) | (20,300 | ) | (37,778 | ) | (203,445 | ) | |
| Purchase of intangible assets | (1,191 | ) | (328 | ) | (14,024 | ) | (2,317 | ) | |
| Purchase of property and equipment | (861 | ) | — | (3,119 | ) | (4 | ) | ||
| Exercise of warrant investments | — | — | (397 | ) | — | ||||
| Issuance of loans receivables | — | (1,987 | ) | (7,364 | ) | (20,038 | ) | ||
| Purchase of equity investments | — | — | — | (6 | ) | ||||
| Investment in funds | (2,010 | ) | (5,864 | ) | (15,010 | ) | (18,434 | ) | |
| Proceeds on sale of asset held for sale | — | — | 77,000 | — | |||||
| Proceeds on maturity of marketable securities | 32,440 | 90,543 | 226,999 | 362,091 | |||||
| Proceeds from repayments of loans receivable | 17 | 873 | 7,786 | 3,574 | |||||
| Proceeds from disposal of equity investments | — | 1,676 | 2,919 | 1,676 | |||||
| Proceeds from distribution of funds | 14,887 | 8,500 | 26,996 | 9,177 | |||||
| Cash (outflow) inflow from investing activities | (128,235 | ) | 73,113 | 93,153 | 132,274 | ||||
| FINANCING ACTIVITIES | |||||||||
| Proceeds from exercise of stock options | 115 | — | 595 | — | |||||
| Proceeds from contributions to share purchase plan | 62 | 62 | 175 | 178 | |||||
| Proceeds from repayment of share purchase loans | — | 425 | — | 425 | |||||
| Proceeds from bank loans | — | — | 10,998 | — | |||||
| Repurchase of common shares through Normal Course Issuer Bid | (3,736 | ) | (54,181 | ) | (35,001 | ) | (54,181 | ) | |
| Principal repayment of lease liabilities | (888 | ) | (68 | ) | (2,406 | ) | (205 | ) | |
| Principal repayments on bank loans | (701 | ) | — | (8,219 | ) | — | |||
| Cash outflow from financing activities | (5,148 | ) | (53,762 | ) | (33,858 | ) | (53,783 | ) | |
| (Decrease) increase in cash and cash equivalents during the period | (141,795 | ) | 23,379 | 42,793 | 75,583 | ||||
| Cash, cash equivalents and restricted cash, beginning of the period | 359,593 | 294,911 | 174,268 | 244,785 | |||||
| Net foreign exchange difference | 293 | 835 | 1,030 | (1,243 | ) | ||||
| Cash, cash equivalents and restricted cash, end of the period | 218,091 | 319,125 | 218,091 | 319,125 | |||||
| Cash and cash equivalents | 218,091 | 319,125 | |||||||
| Short-term marketable securities | 158,944 | 243,790 | |||||||
| Long-term marketable securities | 15,317 | 137,177 | |||||||
| Total cash, cash equivalents and marketable securities | 392,352 | 700,092 | |||||||
