Knight Therapeutics Inc.

Thank you, Elle. Good morning, everyone, and welcome to Knight Therapeutics first quarter 2025 conference call.

I'm joined on today's call with Amal Khouri, our Chief Business Officer; and Arvind Utchanah, our Chief Financial Officer. I'm pleased to announce that for the three months ended March 31, 2025, we reported revenues of $88 million and an adjusted EBITDA of over $12 million.

Our revenues increased by $2 million or 3% over the same period last year. The increase was mainly driven by our promoted portfolio, which accounts for over 75% of our total revenues.

During the quarter, this portfolio grew by $9 million or 16% on a constant currency basis. In addition, we continue to execute on the business development front.

As previously announced, we entered into an agreement with Endo to acquire all of the assets of Paladin for $100 million plus $20 million of inventory. Furthermore, Knight may pay future contingent payments of up to US$15 million upon achievement of certain milestones.

Also, we have expanded our relationship with Helsinn with the addition of Onicit for certain LatAm countries. Onicit is used for the prevention of chemotherapy-induced nausea and vomiting as well as the prevention of postoperative nausea and vomiting.

Moving to our pipeline. We continue to advance our portfolio with the regulatory submission of Tavalisse in Argentina and the regulatory approval of Pemazyre in Mexico.

In addition to the regulatory process during the quarter, we launched Minjuvi in Mexico and relaunched Onicit in Brazil and Mexico. On to the NCIB.

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

Thank you, Samira. When speaking of our financial results, I will refer to adjusted EBITDA and financial results at constant currency, which are non-IFRS measures as well as adjusted EBITDA per share, which is a non-IFRS ratio.

Knight defines adjusted EBITDA as operating income or loss, excluding amortization and impairment of non-current assets, depreciation, the impact of accounting under hyperinflation and acquisition and transaction costs, but to include costs related to leases. We define adjusted EBITDA per share as adjusted EBITDA over the number of common shares outstanding at the end of the respective period.

In addition, revenues and financial results at constant currency are also non-GAAP measures. Financial results at constant currency are obtained by translating the prior period results at the average foreign exchange rates in effect during the current period, except for Argentina, where we only exclude hyperinflation.

Furthermore, my discussion on the operating results will refer to figures that exclude hyperinflation unless otherwise indicated. For the first quarter of 2025, we delivered revenues of $88 million, representing an increase of $2 million or 3% versus Q1 last year.

On a constant currency basis, revenues increased by $6.6 million or 8%, driven by the growth of our key promoted products, partly offset by declines in our mature products. In the first quarter of 2025, our oncology and hematology portfolio delivered $32 million of revenues, a growth of $1 million or 3%.

On a constant currency basis, the portfolio grew by $2 million or 6% compared to the same period last year. This increase was driven by the continued growth of our key promoted brands, which contributed $4 million of incremental revenues, mainly coming from Lenvima, Akynzeo, Trelstar, Minjuvi as well as the addition of Onicit.

This growth was partially offset by a decline in our mature and branded generic products due to the life cycle and the market entrance of new competitors as well as the impact of LatAm currency depreciation. Our infectious disease portfolio delivered $36 million, a decrease of $2 million or 4%.

On a constant currency basis, the portfolio actually grew by $1 million or 3% compared to the same period last year. The increase was due to purchasing patterns of certain customers, including Ambisome's deliveries to the Ministry of Health in Brazil or MOH.

As a reminder, in January 2025, we signed a third contract with the MOH, and we expect to deliver $22.4 million in 2025, of which $13 million were already delivered in Q1 compared to $9 million in Q1 2024. Turning to our other specialty therapeutics areas.

The portfolio generated $20 million in revenues, representing an increase of $3 million or 18%, mainly driven by the launch of Imvexxy and Bijuva in Canada as well as purchasing patterns of certain customers. Now moving on to gross margin.

We reported $41 million or a gross margin percent of 47% of revenues in the first quarter of 2025, remaining relatively unchanged compared to the same period last year. I will now turn to our operating expenses, excluding amortization.

For the first quarter, our operating expenses were $30.2 million, an increase of $3 million or 10% compared to the same period last year. The increase in operating expenses was driven by an increase in commercial spend and structured behind our new launches, including Minjuvi, Imvexxy, Bijuva and Jornay PM as well as transaction fees related to the acquisition of Paladin.

Moving on to adjusted EBITDA. For the first quarter of 2025, we reported $12.1 million of adjusted EBITDA, a decrease of $1.5 million or 11% compared to the same period last year.

Our adjusted EBITDA per share was $0.12, a decrease of 8% compared to the same period last year. I will now cover our financial assets, which were valued at $127 million.

During the quarter, we recorded a total net loss of $3.8 million on our financial assets, driven by the mark-to-market revaluation of our strategic fund investments and the change in value of certain equities. As a reminder, our funds continue to be a source of cash.

And for the first quarter, we received a distribution of $3 million. Moving on to our cash flows.

At the end of Q1, we held $141 million in cash and marketable securities. During the quarter, we generated cash inflows from operations of $3.7 million and invested $11.5 million in working capital, driven by an increase in our accounts receivable due to the timing of collections from certain customers.

In addition, at the end of the quarter, our inventory was valued at $140 million, an increase of $37 million compared to the end of 2024. This investment is due to the growth of our portfolio, including our recent launches as well as timing of orders and deliveries of certain products, including Ambisome to the MOH.

Subsequent to the quarter, we closed a US$40 million working capital line of credit from Citibank, of which we have withdrawn US$35 million. The maturity date of the debt is at the end of September of this year.

The proceeds from the line of credit will be used to settle the accounts payable for the inventory purchase during the first quarter. I will now turn the call back to Samira.

Thank you, Arvind. On to our financial outlook for fiscal 2025.

I would like to remind everyone that this guidance includes the assumption that we will close the Paladin acquisition in the middle of 2025 and also assumes that there is no material adjustment due to 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 actual results may vary materially. We are reconfirming our outlook for fiscal 2025 and expect to generate revenues between $390 million to $405 million and adjusted EBITDA of approximately 13% of revenues.

Looking ahead, we are very excited that we can deliver to our stakeholders with our recent and upcoming launches as well as our pipeline products. In addition, the Paladin transaction, which we expect to close in the middle of this year, will add critical mass and significantly increase the size of our Canadian business while adding a portfolio of stable cash flow-generating products that will help fund our growth in Canada and Latin America.

The Paladin transaction and the addition of Onicit demonstrate our focused execution in building a balanced portfolio that includes innovative, growing product – promoted products and mature cash flow generating assets. We remain well positioned to continue to execute on our mission to acquire, in-license, develop and commercialize pharmaceutical products in Latin America and Canada.

Thank you for your support and confidence in the Knight team. This concludes our formal remarks.

I'd like to open the call for questions. Over to Elle.

Hey. Good morning, Samira and Arvind.

Congratulations on a strong quarter. I wonder if – I have a few questions here.

I wonder if you could – just thinking about your SG&A levels, how should we be thinking about your SG&A going forward, thinking and using this quarter's level, should we be using it as a base going forward? Or should we expect higher or lower?

Of course, mid-year, we should expect Paladin to be included in these financials. So I wonder if you could describe a bit of the SG&A contribution you might expect from that acquisition?

Sure. So as you know, we don't provide guidance on OpEx.

What we have provided in the guidance that we have is revenue and then EBITDA margin. And the guidance that we've provided includes closing Paladin in the middle of the year.

So kind of if you – and we don't guide on a quarter-by-quarter basis. So spending can be a bit lumpy.

It's fine. We're going to end the year with $390 million to $405 million of top-line and EBITDA margin of 13%, and the OpEx will move to deliver on those results.

Okay. All right.

Thanks very much. I wonder just on the Paladin acquisition process.

I wonder if you could provide any updates relating to how that deal is progressing, sort of more closing details perhaps with a finer point than midyear.

We don't really have anything more than just kind of that midyear. There is regulatory consents as well as regular consents that would be required – standard consents that would be required on a transaction like this.

And each of those is progressing to plan and so we believe that we'll be in the time lines that we forecasted.

Okay. That's great.

And if I could chewhorn just one more. I wonder if you could comment on typical seasonality across your jurisdictions.

We saw a steady year-over-year growth, but of course, we saw a quarter-over-quarter dip. I wonder if you could just review the factors that affect the seasonality?

Sure. So I'm going to say the place that we have normal seasonality is Canada, where Q4 is usually a bigger quarter.

We see buying patterns from wholesalers that load in advance. There's a little bit in Brazil and a little bit in Brazil impacts our business more given the size of that business in our business today.

The rest of the markets are pretty even. So there isn't that much seasonality.

And the reason I kind of bring this up is because as we add Paladin, we will start to see more seasonality in our business because it's really – it will be a bigger contributor.

Okay. Thank you very much.

I will pass it on now.

Thank you. Once again, thank you for the confidence in the Knight team and for joining our Q1 2025 conference call.

Have a great morning.