Knight Therapeutics Inc.

Samira Sakhia – President Jeffrey Kadanoff – Chief Financial Officer

Lennox Gibbs – TD Securities David Martin – Bloom Burton Hossein Aram – RGMP

Thank you, Sophie. Good morning and welcome to Knight Therapeutics’ first quarter 2017 conference call.

I am joined today – on today's call with Jeff Kadanoff, our CFO and Amal Khouri, our VP of Business Development. Jonathan is not able to join today’s call as he’s traveling to Israel for meetings with Medison.

I'm pleased to report that for the quarter ended March 31, 2017, we reported revenues of $1.75 million, a growth of $682,000 or 64% as compared to Q1 2016. This growth is primarily due to Impavido which includes both sales in the U.S.

as well as the rest of the world and Canadian sales of Movantik. As you know, we in-licensed Movantik from AstraZeneca in December of 2016 and Q1 represents the first full Q of revenues with Movantik.

In addition, we reported net income of $6 million for the quarter. At the end of Q1 2017, we had over $763 million of cash, cash equivalents and marketable securities on hand.

And net asset value of $983 million. Q1 has been a GUD that is GUD quarter for Knight.

We announced our launch of commercial activities behind Movantik. As of mid-March, we have a dedicated contract sales force of a dozen sales representatives across Canada promoting the Movantik to over 3,000 physicians.

According to QuintilesIMS, sales of Movantik in Canada were $167,000 for Q1 2017. Also in the quarter, we announced that Health Canada had accepted for review our new drug submission for Iluvien, a sustained release intravitreal implant to treat diabetic macular edema.

Knight in-licensed Iluvien in July of 2016 from Alimera and the product is approved and commercialized in the U.S. and certain European countries.

During the quarter, we announced that we received a Notice of Deficiency Withdrawal from Health Canada regarding our submission for ATryn. We're currently assessing next steps with respect to these niche products and may determine that we may not resubmit.

Turning to Knight strategic loan and fund investments, we learned this quarter that strategic loans do payoff. We received full repayment on the balance of our secured loans including all interest from Apicore and from the assignment of our loan to Pro Bono Bio.

I would like to add that while our loan to Pro Bono has been fully repaid. Knight maintains a product distribution rights to certain Pro Bono products in Canada and Israel.

As at quarter end, we had a nominal value of $54 million receivable from eight strategic loan partners. In addition, as part of our strategy to secure product growth, innovative pharmaceuticals we have committed $125 million to venture capital funds of which approximately $99 million remains to be called as at March 31, 2017.

In conclusion, in Q1 we took our first steps in becoming a specialty pharma company with the commercial launch of Movantik and the submission of Iluvien. As we look forward to the rest of 2017, we remain focused on continuing our commercial assets of Movantik in Canada advancing our product pipeline including submitting Probuphine and Netildex for approval by Health Canada obtaining regulatory approval of Movantik in Israel and with over 600 million of uncommitted cash we are well positioned to capitalize on GUD product and corporate acquisition of core opportunities.

Thank you for your confidence in the Knight team. This concludes my formal remarks.

I'd like to now open up the call to questions.

Good morning, thank you. Just with respect to just a bit of a policy question.

With respect to Ontario’s recent decision to extend free prescription drug benefits to the under 24 population, can you step us through potential positives and negatives as you see them for Knight maybe Knight just today but as you continue to build out as a Canadian specialty pharma company. And your response can you touch on issues like tying the formulary inclusion, price and so on.

That’s the first question.

Thanks, Lennox. We are continuing to monitor because at this point, this is a commitment that the government has made it has – become policy and as you would have probably noted from what has been written out there.

It’s not going to have that major and impacts of a change, in the sense that the additional cost for the government is not that much more significant. Again, it’s still too early to see how this policy ends up rolling out.

Okay. And then sort of a second half to that, I've also – we heard some chatter that Ontario may just be the first in a trend towards perhaps a trend towards a National Pharma benefit or at least a similar benefits and broader benefits in other provinces if not national.

What is your sense as to where this ultimately goes?

So the National Pharmacare is something that has been in the chatter for several years. Again too early to say where the politicians will land on that.

Thank you. But broadly speaking can you say – if you see this as a – can you identify maybe some risks or benefits and that were it to happen from that perspective.

There is and I’ll show you how significantly it will change things at this point, because it currently already working together, it is rather is not National Pharmacare, the reimbursement they are working together. Because there is a Pan-Canadian pricing that does happen so when you do go for reimbursement, it is one of the provinces negotiates and then the balance of the province is kind of accepts that and it rolls out into the rest of the provinces accordingly.

The big thing that may change if Canada moves to National Pharmacare you have the buying power of one group and that’s really it. Again, we don’t – this is something that’s been talked about now for several years they have not aligned on a policy to that effect yet.

Thanks very much.

Good morning and thanks for taking my questions. Just have one actually one on the timeline, I was wondering if you can give me an at least rough timeline from when do you expect to file for Probuphine and Netildex and make a decision on ATryn as well.

That’s all I have thanks.

So Probuphine what we had announced is that we would file in the first half of this year, so I guess its really this Q. Netildex, we had said it was second half it takes about a year for a product to get approved.

As I mentioned on my call, when it comes to ATryn while we are looking at it, we don't believe at the – right now the way we're thinking is it's unlikely that we would resubmit this product.

Great, thanks.

Hi, a couple of questions. The first one is you said Movantik sales were around $167,000 the remainder of your revenues for the quarter, can you give us some idea of a split between Impavido and Synergy?

So we don't really disclose our sales by product. But as you know, as you've probably seen from the last two Qs, the Impavido really does bear the larger chunk of our sales.

At this time it is, we do sell it globally and it is now approving in the U.S. we do have sales coming from the U.S.

as well.

Okay.

And just to add the $167,000 is IMS sales and these are not Knight sales.

Okay, okay. The second question, the share of net income of Medison is quite a bit lower than last year and last year Q1 and I check Q3 as well it was around $1 million now about $398,000.

Why is that was there something one-time that happens in this quarter that less than or have they seen some genericizations of major products and their revenues have gone down?

They have actually no significant change, it just kind of quarterly fluctuation that revenues and expenses were actually in line with our expectations for the quarter.

Okay. And last question, Movantik you selling through a contract sales force at what point do you decide start building your own sales force?

When we have critical mass I can fund that where we have enough products that are going through the sales force that we can bring them in-house. Obviously, our long-term strategy is to be fully commercial and have our sales force.

Sales force is potentially in-house and but at this time it doesn't make sense with just one product.

Yes, okay. Thank you.

Hi, good morning and thanks for taking my call. I have a question regarding the interesting comment, net gain financial assets do you think for the next quarter and remaining of the year, you're going to see the positive trend that experienced in the first quarter and it's possible broad perspective of your outstanding loan book and investment in the loan that you have?

Thank you.

So, in terms of net income I mean that – from our interest income, it’s really driven by two things. Our cash balance and our loan book outstanding and so we’ve updated that with the financial results.

We’ve released today in terms of $760 million plus of cash and cash equivalents and marketable securities and our loan book approximately $55 million as well. So those trends will change as our loan book and our cash balance go up and down.

Gain on financial assets is usually episodic and specific to performance of some of our investment. So it’s less difficult or it’s more difficult to try to predict what those would be going forward.

Okay, thank you.

Thank you, everyone for joining Knight’s Q1 conference call and have a GUD and of course that is GUD morning.