Knight Therapeutics Q1 2026 Earnings Call Transcript

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May 7, 2026

Key Takeaways

  • Positive Sentiment: Reported record Q1 results with CAD 148 million in revenues (≈69% YoY growth) and CAD 28 million adjusted EBITDA (≈130% YoY), driven by acquired portfolios and promoted products.
  • Positive Sentiment: Raised 2026 guidance to CAD 510–525 million in revenues and targeted adjusted EBITDA of ~15% of revenues, citing stronger promoted-product performance and improved LatAm FX.
  • Positive Sentiment: Pipeline and commercialization momentum: regulatory submissions for Niktimvo (Brazil) and Minjuvi (Argentina, Mexico), Brazilian approval of Minjuvi’s second indication, four launches completed in 2026 so far and management expects roughly ~10 launches in 2026.
  • Negative Sentiment: Withdrew the Health Canada NDS for Kalbi due to partner manufacturing changes; resubmission and launch are expected later (management estimated a ~1–2 year delay), deferring near-term Canadian revenue from this product.
  • Positive Sentiment: Balance sheet and cash flow strengthened: CAD 127 million in cash/marketable securities, net cash of ~CAD 69 million, CAD 41 million operating cash inflow in Q1, ongoing NCIB purchases and capacity to fund further BD/acquisitions.
AI Generated. May Contain Errors.
Earnings Conference Call
Knight Therapeutics Q1 2026
00:00 / 00:00

There are 8 speakers on the call.

Speaker 5

Good morning, ladies and gentlemen. My name is Vanessa, and I will be your operator today. Welcome to Knight Therapeutics first quarter 2026 results conference call. Before turning the call over to Samira Sakhia, 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 forward-looking statements. The company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding future events, many of which are beyond the control of the company and its subsidiaries, may ultimately prove to be incorrect. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether the result of new information, future events, except as required by law.

Speaker 5

We would also like to remind you that questions during today's call will be taken from analysts only. Should there be any further questions, please contact Knight's Investor Relations department via email to ir@knighttx.com or via phone at 514-484-4483. I would like to remind everyone that this call is being recorded today, May 7, 2026. I would now like to turn the meeting over to your host for today's call. Samira Sakhia, please go ahead.

Speaker 6

Thank you, Vanessa. Good morning, everyone. Welcome to Knight Therapeutics first quarter 2026 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 excited to announce that in the first quarter of 2026, we reported record revenues and record-adjusted EBITDA. Our revenues were CAD 148 million. Adjusted EBITDA was CAD 28 million. In Q1 2026, revenues grew by CAD 69.6 million or 68% compared to the same period last year. The increase is due to the incremental revenues from the Sumitomo and Paladin portfolios, the growth of our promoted products, and purchasing patterns of certain customers. In addition to achieving record financial results, we further advanced our pipeline. We submitted Niktimvo for regulatory approval in Brazil and Minjuvi in Argentina and Mexico for follicular lymphoma.

Speaker 6

Furthermore, we obtained Brazilian regulatory approval for Minjuvi's second in-indication follicular lymphoma. Beyond our regulatory progress, so far in 2026, we have already executed four launches, namely Minjuvi for follicular lymphoma in Brazil, Pemazyre in Argentina, our AKYNZEO in Paraguay, and Bapocil in Colombia. Subsequent to the quarter, as a result of certain manufacturing changes by our partner, we unfortunately had to make the decision to withdraw the Health Canada New Drug Submission for Kalbi. However, we do expect to resubmit Kalbi for approval at a later date. The resubmission is expected to include both the data required for the manufacturing changes as well as the additional information previously requested by Health Canada. On to the NCIB.

Speaker 6

During the quarter, we purchased 1.3 million common shares at an average purchase price of CAD 6.22 for aggregate cash consideration of CAD 8.2 million. Under the current NCIB, to date, we have purchased 2 million shares and can still purchase an additional 4.2 million shares until August 2026. I will now turn the call over to Arvind Utchanah to provide an update on our financial results.

Speaker 1

Thank you, Samira. When speaking of our financial results, I will refer to certain non-IFRS measures, including adjusted EBITDA per share, adjusted gross margin, and constant currency results. This quarter, I will refer to revenues as there is no material difference with adjusted revenues due to hyperinflation. Refer to our press release and MD&A and SEDAR filings for their definitions. Starting in 2026, we have redefined our product categories as follows: promoted, mature, and discontinued. Within the promoted, we have the promoted launch pipeline products and promoted strategic products. The launch pipeline products are in the early stage of launch, typically within five years of commercial entry, while the strategic products were launched more than five years ago and are either close to or have reached their peak potential. Finally, the mature products require lower levels of promotional activity and have already reached their peak potential.

Speaker 1

For the first quarter of 2026, as Samira mentioned, we delivered record revenues of CAD 148 million, an increase of CAD 60 million or 69% compared to the same period last year. Of the CAD 60 million of incremental revenues, the mature products from the Paladin and Sumitomo transaction contributed CAD 17 million. The launch pipeline products, CAD 13 million, and the strategic products grew by CAD 28 million, of which AmBisome and which sales contributed an incremental CAD 14 million. The growth in the strategic products was driven by brands in our infectious disease and oncology portfolio, including CRESEMBA and AKYNZEO. The growth in the launch pipeline products was driven by multiple launches in multiple countries over the past two years.

Speaker 1

This includes Minjuvi for DLBCL in Brazil, Mexico, and Argentina, Minjuvi for follicular lymphoma in Brazil, Pemazyre in Brazil and Mexico, Bapocil in Colombia, and IMVEXXY, BIJUVA, JORNAY PM, XCOPRI, Mydayis, and ORGOVYX in Canada. Now, moving on to gross margin. The company achieved an adjusted gross margin of CAD 70.6 million or 48% of revenues in the first quarter of 2026, compared to CAD 40.9 million or 47% of revenues in the same period last year. The increase in the adjusted gross margin is explained by the growth in revenues. I will now turn to our operating expenses, excluding amortization. For the first quarter, our operating expenses were CAD 43 million, an increase of CAD 13 million or 44% compared to the same period last year.

Speaker 1

The increase in operating expenses was mainly driven by the expansion in structure and spend required to support our larger portfolio. Moving on to adjusted EBITDA. For the first quarter of 2026, we reported a record CAD 28 million of adjusted EBITDA, an increase of CAD 15.8 million or 130% compared to the same period last year. The increase was driven by higher adjusted gross margin, partly offset by higher operating expenses. Our adjusted EBITDA per share was CAD 0.28, an increase of 133% compared to the same period last year. I will now cover our financial assets, which are valued at CAD 95 million. In the first quarter, we recorded a net loss of CAD 2.8 million, driven by the mark-to-market revaluations of our strategic fund investments and our equity investments.

Speaker 1

As a reminder, our funds continue to be a source of cash and has generated CAD 47 million since 2020. Turning to our liquidity and cash flows. During the quarter, we generated cash, operating cash inflows of CAD 41 million, driven by our adjusted EBITDA and change in working capital. At the end of the first quarter, we held CAD 127 million in cash and marketable securities and approximately CAD 58 million in debt. Our net cash position continues to improve from CAD 27 million at the end of 2025 to CAD 69 million at the end of the first quarter of 2026. In fact, as of today, we have already repaid CAD 40 million of the CAD 60 million withdrawn from the revolving credit facility used to finance the Paladin transaction.

Speaker 1

At the end of Q1 2026, our debt to adjusted EBITDA leverage ratio was under 0.7x. I will now turn the call back to Samira Sakhia.

Speaker 6

Thank you, Arvind. On to our financial outlook for fiscal 2026. I would like to remind everyone this guidance is based on the assumption that there is no material adjustment due to hyperinflation accounting in Argentina. 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 fiscal 2026 and expect to generate revenues between CAD 510 million and CAD 525 million and adjusted EBITDA of approximately 15% of revenues. The increase in our financial outlook is driven primarily by the better performance of our promoted products across multiple countries, including Canada, Mexico, and Colombia, as well as an improvement in forecasted LatAm currencies against the Canadian dollar.

Speaker 6

Our team has been extremely successful in building a profitable business by executing on our Pan-American ex-US strategy of in-licensing and acquiring multiple innovative and premature products for multiple territories, submitting and obtaining approvals for these products across multiple countries and successfully launching and growing them across all of our markets. Our results in cash flow reflect the contribution from the growth of our promoted products, including our 15 launches over the last two years, as well as the incremental revenues from the cash flow-generating mature products acquired last year. Over the last twelve months, we have generated over CAD 500 million in revenues, which is double the size of our business from five years ago.

Speaker 6

We remain committed and well-positioned to continue to execute on our strategy, bringing innovative products that make a difference in the lives of patients in Canada and Latin America while driving long-term shareholder value. Thank you for your support and confidence in the Knight team. This concludes our formal remarks. I would like to now open up the calls for questions. Over to you, Vanessa.

Speaker 5

Thank you. We will now begin our question and answer session. Before we begin, may I please remind you that questions during today's call will be taken from analysts only. Should there be any further questions, please contact Knight Therapeutics' Investor Relations department via email to ir@knighttx.com or via phone at 514 484 4483. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you're using a speakerphone, please lift up your handset before pressing any key. If you would like to withdraw your question, please press star then 2. We have our first question from David Martin with Bloom Burton.

Speaker 2

Good morning, congratulations on the quarter. With regards to the withdrawal of the NDS for Qelbree, can you provide more color? I'm wondering what it is that you ran into that you couldn't address Health Canada's questions. You do say that you think you will submit it again in the future. What has to be done, and why do you think it can be done in the future if it can't be done now?

Speaker 6

That's a great question. One of the things that we knew was that our partner was working through some manufacturing changes. We were planning that we could answer the questions and address the manufacturing changes post-launch. Given the time that we're at, that delay in submission approval launch, because of the manufacturing changes, would have actually delayed our launch. It's better for us to withdraw the dossier, have all these manufacturing changes as well as the technical information that was previously requested all done at the same time, have a dossier that we can submit and launch all in one shot. It does delay our launch altogether, around a year, maybe 2, we have a substantial dossier, hopefully minimal questions that we can get approved and launched.

Speaker 2

Okay, got it. moving to AmBisome. year after year, you get this MOH contract. You've kept competition at bay. Could this be perpetual? What is it about AmBisome that generics can't make it to market?

Speaker 6

The issue, you have to recall, we started having the MOH contract a few years ago because another innovative branded competitor went on back order, and they have not been able to come back to the market. The reason we have this contract is because that competitor has not returned. The issue that we continue to monitor is that there are generics. There are several generics that are approved in the U.S. We do see generics under review in Brazil. At this point in time, they are not approved. There is, as they get approved, the likelihood is high to almost certain that we will not retain the contract. But until they're approved, MOH has no other source of amphotericin B other than Knight.

Speaker 2

Is it really difficult to manufacture? Is that why your competition went on back order and like I understand some have been approved, generics in the U.S., but it's difficult. They've had difficulty supplying that as well.

Speaker 6

Yeah. Actually, that's exactly the issue. Liposomal amphotericin B is very difficult to manufacture. That is why it has taken companies generics a long time to be able to formulate. That's why they continue to have manufacturing issues. That's why AmBisome has been able to retain such large scale.

Speaker 2

Okay. Thank you.

Speaker 5

We have our next question from Michael Freeman with Raymond James.

Speaker 4

Hi, good morning. Congratulations on quite a quarter. I wonder, you described 15, more than 15 launches that Knight's benefited from over the last two years. Could you describe, you know, or quantify the number of launches you estimate happening in the next year, maybe 2 years? You know, you describe in your filings and in your deck, you know, a CAD 200 million peak revenue opportunity from your pipeline. I wonder if you could put some more numbers around this.

Speaker 6

Sure. In 2024, there was 3 launches. Last year, there was 10. Arvind Utchanah outlined the 4 launches that we've had so far this year. We expect 2026 to be approximately 10 launches. If you look at our MD&A, we have a list of the pipeline, kind of the estimated years of approval. When you look at kind of, let's say, if we have for a certain product, let's take Minjuvi, for example. We might give a range, but there's multiple launches when it comes to Minjuvi because there's a launch in Brazil, there's a launch in Mexico, there's a launch in Argentina. We are considering it for some of the smaller territories. Every single time there is an effort to launch, educate physicians, build a market.

Speaker 6

You look at a product like AKYNZEO, which we launched in Paraguay. Some of these smaller territories may not be big drivers, but every single time we have a launch, it's incremental revenues that we would not have otherwise. Like I said, like there are CAD 200 million. The ones that we have launched in 2024 to 2026 are at least CAD 100 million of revenue. These products have on a year, like a trailing-12-month basis, have already generated CAD 40 million of that CAD 200 peak that we are estimating. We're already 20% of the way there.

Speaker 4

Okay. All right. Thank you for detailing that. I notice Knight's balance sheet continues to strengthen. You're accumulating a more and more significant net cash position. I wonder how you're thinking about deployment of that capital. Of course, we noticed the NCIB activities. How do you plan to use your cash?

Speaker 6

That's a great question. We are a acquiring and in-licensing organization. I think around this time last year, I was getting a lot of questions of, 'You're putting debt on the balance sheet. You don't have a lot of cash. How are you gonna execute acquisitions?' We had the borrowing capacity. Now, not only do we have the borrowing capacity, but we have the cash to continue to execute on acquiring assets, in-licensing, submitting, and launching products, and that's what we're gonna continue to do.

Speaker 4

I guess associated with that, I wonder if you or Amal could describe, I guess your BD or acquisition pipeline in the near and medium term.

Operator

Hi. Good morning. This is Amal. Yeah, the BD pipeline, I would say it's still normal course. Similar deal flow that we've been seeing in the last two years, so that continues. Of course, as you know, in terms of, you know, deals getting to that finish line and being announced, that's not something that's completely consistent. There's ebbs and flows there. In terms of the actual deal flow and pipeline, it remains very healthy.

Speaker 4

Just quickly, what would you describe as a target, number of transactions per year that the company sets out to do if there is a target?

Operator

There isn't really. We look to do deals that make sense with quality assets at good valuations. This is really the target for us. We don't set a target of number of transactions per year because that really does not make sense for the business. A deal has to be a good deal. If you're looking to get a sense of what to expect, I think you can look back at what we've done to date. In the last, if I take out last year, we've been adding on average 3 products per year. Last year was much higher than that, as you know, with the 2 acquisitions, with the 2 portfolios. That aside, excluding those 2 portfolios, it's been an average of 3 products per year.

Speaker 4

Thank you very much. I'll pass the line now.

Speaker 5

Thank you. We have our next question from Scott McAuley with Paradigm Capital.

Speaker 7

Morning, everyone. Thanks for taking the questions. Obviously, I think a lot of moving parts in the quarter with, you know, the new Paladin Sumitomo portfolio, AmBisome, and then kinda the organic growth of, you know, these launches. I don't know if you could maybe give a bit more color how you see the organic growth kinda maybe year-over-year or however you wanna quantify it versus those acquired products, and how kinda you see the growth moving obviously for this year, but into next year as well once, you know, that increase from the acquisitions kind of smooths over.

Speaker 6

Sure. One of the things that we outlined was in the quarter, the Paladin mature products contributed about CAD 17 million. That really ties in with what we said was the size of the business when we acquired it. That's gonna remain flattish to decline because as we had announced when we announced Q4, there is older products, a couple of, a few older products that are being returned, and that's about CAD 7 million on an annual basis. If you look at our strategic products, even if you exclude the one-time MOH increase in there, they grew CAD 14 million on a year-over-year basis.

Speaker 6

If you look at the pipeline launch products, that also is growing on a year-over-year basis. That is what is our business, and that's what we're really trying to do. If you move to those, the promoted brands, what we expect is the pipeline launch products are going to grow at a very high rate. The products that are in that strategic product bundle, that is gonna be slower growth. We're investing behind them because we know that we can retain and maybe grow, continue to grow. We saw growth in Crysvita. We continue to see growth in AKYNZEO. Those products will continue to grow, but not at the rapid rate that the newly launched products are.

Speaker 7

That's, yeah, that's helpful. Do you see the mature, the products in the mature bucket, are those fairly stable, or do you see some products falling off of that in the coming year or two kinda into the discontinued pile?

Speaker 6

We're always looking at what's in the mature. If it continues to make sense to distribute, have it manufactured, the complexity. This bundle of products is, I'm going to say, flat to slightly declining. In some years, maybe we can take price increases. In some years, if we're having manufacturing issues or, it's too complex, we may choose to discontinue.

Speaker 7

Got it.

Speaker 7

Absolutely. Makes sense. Maybe a bit on the operating expenses obviously increases with the rapid flurry of launches and bringing on those new portfolios. How do you see that rate kinda continuing to grow either in 2026 and 2027 and then maybe beyond that? Like where do you feel like you're getting into, you know, kinda equilibrium on with all these launches and the new product portfolios?

Speaker 6

I think we're actually nearly there. Like, one of the things that we said in our Q4 call is kind of the run rate of OpEx is what Q4 looked like, Q4 2025 looked like for this year. We may see some increases. The biggest component of the increase really comes from infrastructure of field force, whether it's sales, key account management, or medical. In the majority of our countries now, especially with the acquisitions that we did in Canada, most of our countries are built out. The place where we are continuing to add resources as we add portfolio is Mexico. We will see that going up. When I look at the totality and the numbers, it's not gonna be big swings like we had between 2024, 2025, and this year.

Speaker 7

Yeah, definitely. No, that's helpful. Maybe just lastly on the improved 2026 revenue targets, which is always great. I don't know if you could quantify or some comments around the relative impact of the kind of currency improvements that we've seen, even quite recently, versus the kind of underlying growth of the portfolio.

Speaker 6

When I kind of think about in our forecast how much is FX, it's really what we're seeing in the last few weeks of the quarter where FX, especially in Brazil, seems to have improved. It's adding about CAD 5 million-CAD 10 million of that increase in the range. The rest is all coming from products and hopefully that, which is what product revenues is what we have control over, and hope to do better.

Speaker 7

Absolutely. That's fantastic. Thanks for taking my questions.

Speaker 5

As a reminder, if you wish to ask a question, please press star followed by 1 on your telephone keypad. We have a question from David Martin with Bloom Burton.

Speaker 2

Thanks. I forgot to ask, are there any more MOH AmBisome orders expected for the rest of the year, or is that all done now?

Speaker 6

There is in Q2. Our initial estimate when we announced Q4 was that the full or that they would purchase about CAD 32 million-ish. It's between FX and the likelihood we are now estimating that that's CAD 46 million. Normally they order kind of over, kind of rapidly, so we'll see the rest of it coming through in Q2.

Speaker 2

Okay. Okay. Also, I don't know if you can put a number on this, but if these new launches are estimated to generate CAD 200 million a peak, what's the offset over that period of revenue declines for products that you're currently selling that'll be facing generic competition or manufacturing problems?

Speaker 6

The ones manufacturing problems, those are kind of if and when they come. They're really small products. If I look at kind of the big products where we see branded generic competition, it's LENVIMA in Brazil. In a couple years, LENVIMA in Colombia. As we've discussed just a few minutes ago, there is a AmBisome branded generics under review in Brazil. As we've seen, branded generics in LATAM decline, cause a decline of the brand at a much slower pace than we see in North America. You, you lose market share, but it does take 3-5 years to really get to that 10%-20% market share. You're seeing like LENVIMA is in our strategic promoted portfolio despite it having a generic in Brazil.

Speaker 6

That portfolio is still growing, right? That's really how we're trying to address not just the potential declines, but really accelerating beyond those potential declines and adding more products to our portfolio.

Speaker 2

Okay. Thanks.

Speaker 5

Thank you. Our next question is from Douglas Miehm with RBC Capital Markets.

Speaker 3

Good morning, everyone. First question for me. Samira, you did talk about the last 5 years and how the company's grown quite dramatically from CAD 250 million to over CAD 500 million today. I'm just wondering if you could give us some thoughts on where the company could be in another 5 years. Are we thinking that you could double that number again to over CAD 1 billion? Just curious.

Speaker 6

I think that's a question for Amal Khouri. We are about continuing to grow. We are financially disciplined, we're gonna do what makes sense for the business driving value, making sure that we're bringing products that make a difference. That's what we're doing all day, every day. That's what everyone in our team is doing all day, every day. Do we want to be a billion-dollar company? Absolutely. Am I gonna commit to that in the next five years? Not just yet.

Speaker 3

Okay, that's great. A question for Amal. When you think about the competitive environment in both Canada and in South America, Mexico, et cetera, has there been any impact on the potential buyers of assets, whether they be companies or products, given what's happening in the alt credit market? I guess what I'm asking is, have there been any changes in the competitive dynamic around those that are trying to in-license or buy these assets?

Operator

Sure. We haven't seen any negative impacts. If you look at assets with existing sales, acquisition of these assets, the buyers in Latam particularly have been and continue to be privately held companies. These are, you know, family-run companies that have been around for years. And they, of course, some of them, you know, go through kind of, you know, periods where some of them take on a lot of debt through big acquisitions. They kind of need to digest it over a couple of years, and then they go back in. You have kind of that up and down depending on the company. But overall, we really don't see kind of a sector impact per se.

Operator

On the licensing side, as you know, the kind of the upfronts are not massive. Like, the big purchase prices are more on acquisitions of products with existing sales. The sector remains competitive. Again, this is primarily, I'm talking about Latam, across both, again, acquisitions of products with existing sales and in licensing of assets. We still see healthy competition, let's call it.

Speaker 3

Healthy competition. Okay, that's great. Thank you very much.

Speaker 5

Thank you. I see there are no further questions. At this time, I will now turn the call back over to Samira Sakhia for closing remarks.

Speaker 6

Thank you, Vanessa. Once again, thank you for your confidence in the Knight team and for joining our Q1 2026 conference call. Have a great morning.

Speaker 5

Thank you, ladies and gentlemen. This concludes today's conference call. We thank you for your participation. You may now disconnect.

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