Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Knight Therapeutics Inc (KHTRF, Financial) reported record revenues of over $271 million and adjusted EBITDA of over $42 million for the nine months ended September 30, 2024.
- The company's innovative promoted portfolio delivered a growth of 17% on a constant currency basis, driven by key products like Lenvima, Trelstar, and Cresemba.
- Knight Therapeutics Inc (KHTRF) advanced its pipeline with regulatory approval of Minjuvi in Mexico and expects to launch it in the first half of 2025.
- The company has a strong cash position with over $150 million in cash, cash equivalents, and marketable securities at the end of the quarter.
- Knight Therapeutics Inc (KHTRF) maintains its financial guidance for 2024, expecting revenues between $355 million to $365 million and an adjusted EBITDA of approximately 16% of revenues.
Negative Points
- The company experienced a decrease in gross margin percentage from 52% to 47% due to a product mix with a higher proportion of lower-margin sales.
- Operating expenses increased by 11% compared to the same period last year, driven by higher marketing spend and R&D costs.
- Adjusted EBITDA for the third quarter decreased by 13% compared to the same period last year, impacted by higher operating expenses.
- The company faces currency headwinds, with foreign exchange depreciation impacting financial results, particularly in Brazil.
- There is potential risk from generic competition for key products like Lenvima, which could impact future revenues, especially in markets like Brazil and Chile.
Q & A Highlights
Q: Can you provide more details on the investments in sales and marketing for new product launches?
A: We are currently in launch mode for Minjuvi in Brazil, involving physician education, conferences, and reimbursement efforts. Similar activities are ongoing for Veova, and we are preparing for Journey PM in Canada and Minjuvi in Mexico. We will expand our sales force in both Mexico and Canada to support these efforts. β Samira Sakhia, President, CEO
Q: Is the Ministry of Health contract in Brazil completed, and will it be renewed next year?
A: We expect a potential small shipment in Q4, possibly between $2 to $4 million. Discussions for 2025 are in early stages, and we are not aware of any competitor re-entry. β Samira Sakhia, President, CEO
Q: Should we expect ongoing expansion of inventory for new product launches in the next few quarters?
A: Yes, there will be purchases of inventory for launches, but the significant fluctuations are due to purchasing patterns for existing products like AmBisome and Lenvima. The impact will not be dramatic and will normalize quickly. β Samira Sakhia, President, CEO
Q: What are your plans for monetizing financial assets, particularly after the Synergy IPO?
A: We have a six-month lock-up period post-IPO. Beyond that, we will focus on maximizing shareholder value. Our funds have exit dates maturing over the next 3 to 7 years, and we will collect cash as they mature. β Arvind Utchanah, CFO
Q: Can you provide numbers on the sales and marketing personnel additions in Canada and Latin America?
A: We are adding between 4 to 7 people in Mexico for Minjuvi and 8 to 12 people in Canada for ADHD products. The cost of teams in Canada is higher than in Latin America. Future additions will depend on portfolio shifts. β Samira Sakhia, President, CEO
Q: How does hyperinflation affect your margins?
A: Hyperinflation impacts all line items in the P&L, especially cost of sales and gross margin. We exclude hyperinflation impacts from adjusted EBITDA figures. β Arvind Utchanah, CFO
Q: What is the risk of generic entry for Lenvima in Brazil and Chile, and its impact on revenues?
A: Generic entry in Latin America is not as steep as in Canada. The decline is gradual over 3 to 5 years. We expect minimal impact in Q4 and will continue efforts to retain market share. In Chile, we are already engaging with customers to maintain our product's value. β Samira Sakhia, President, CEO
Q: Can you quantify the revenue impact of Lenvima going generic?
A: We do not provide product-specific revenue information. The impact this year is immaterial, and we do not expect significant impact next year. β Samira Sakhia, President, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
