Knight Therapeutics Reports Third Quarter 2020 Results

 

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  
 

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