Knight Therapeutics Inc. (GUD) Q3 2026 Earnings Call Transcript

Good morning, ladies and gentlemen. My name is Marissa, and I will be your operator today. Welcome to Knight Therapeutics' third quarter 2026 results conference call. Before turning the call over to Samira Sakia, 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 the 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 the 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 a result of new information, future events, except as required by law. We would also like to remind you 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 at knighttx.com or via phone at 514-484-4483. I would like to remind everyone that this call is being recorded today, November 5, 2026, and would now like to turn the meeting over to your host for today's call, Samira Sakia. Please go ahead, Ms. Sakia.

Thank you, Marissa. Good morning, everyone, and welcome to Knight Therapeutics' third quarter 2026 conference call. I'm joined in today's call by Amal Khoury, our Chief Business Officer, and Arvind Uchina, our Chief Financial Officer. I'm pleased to report that this morning, not only did we announce record results for the first nine months of 2026, we also raised our revenue and adjusted EBITDA guidance for the year and increased the peak revenue potential of our pipeline and launch pipeline products. Thanks. We reported $430 million and... of revenues and adjusted EBITDA of over $76 million, representing a growth of 36% and 57%, respectively, compared to the same period last year. In fact, adjusted EBITDA for the first nine months of 2026 exceeded the adjusted EBITDA we reported for all of 2025. This strong performance is the result of our commercial execution, which drove a 39% growth in our promoted portfolio. On the business development front, we signed an exclusive distribution agreement with Kiowa Karen International for Portalizer for certain LATAM countries, further strengthening our oncology and hematology portfolio. We also continue to advance our pipeline. Since the beginning of the third quarter, we submitted Gemteza for regulatory approval in Canada, as well as Minjuvi for first-line diffused large B-cell lymphoma in Brazil. We obtained regulatory approval for TAVALIS in Colombia, NICTEMBO in Brazil, and Minjuvi for follicular lymphoma in Mexico. We also launched Winsora in Canada, Cavalese in Brazil, Jurivast in Colombia and Peru, and Minjuvi for follicular lymphoma in Mexico. We have now executed 22 product launches since January of 2024. As we had previously disclosed, Knight had identified two generic submissions for liposomal amphotericin B under review by Anvisa. In September, a competitor received... Approval for a generic and a branded generic to Ambizome. We expect the launch of these products to negatively impact sales and adjusted EBITDA contribution of Ambizome in Brazil starting in 2027. We completed the program launched in August 2025 with a total purchase of nearly 2 million common shares at an average purchase price of $6.21 for aggregate cash consideration of $12 million.

I will now turn the call over to Amal to provide more details on Patelajjo. Thank you, Samira. As Samira mentioned, this quarter we announced the signature and exclusive distribution agreement with Kiowa Kirin International for the commercialization of Boteligil across certain Latin American countries. Boteligil, or mogamolizumab, is a first-in-class humanized monoclonal antibody that targets CCR4, which is a receptor expressed on malignant T cells. Once Boteligil binds to CCR4 on these malignant cells, It increases the attraction of immune cells to destroy them. But ELIGA is approved in the United States and Europe for adults with relapsed or refractory mycosis fungoids or cesarean syndrome after at least one prior systemic therapy. These two diseases are the most common subtypes of cutaneous T-cell lymphoma, which is a rare form of non-Hodgkin lymphoma. Petelaijo's approval is supported by the Maverick study, the largest randomized trial in the station population, in which the product demonstrated significantly longer progression-free survival and a higher overall response rate compared to Vernostat. The in-licensing of Petelaijo illustrates Knight's position as a partner of choice and is the result of our continued focus on building our pipeline while leveraging our infrastructure. We are seeking this much-needed treatment option available to patients in Latin America and we plan to submit to Telaiju for approval over the coming months. I will now turn the call to Arvind to provide an update on our financial results.

Thank you, Amal. When speaking of our financial results, I will refer to certain non-IRS measures, including adjusted revenues, adjusted gross margin, adjusted EBITDA, and adjusted EBITDA per share, as well as constant currency results. Refer to our press release and MD&A and CIDAR Plus filings for their definitions. For the third quarter of 2026, we delivered revenue of $138 million, an increase of $16 million, or 13%, compared to the same period last year. On a constant currency basis, the increase in revenues was $5 million, or 4%. The increase was driven by our promoted products, which grew by 10% in the quarter. Our launch pipeline products delivered $21 million in revenues, an increase of $12 million, or 137% on a constant currency basis, driven by our product launchers in Canada and Latin America, including OrgoVix, Invexi, Excopri, MyFembre, JourneyPM, and MinJuvie. As for our promoted strategic products, they delivered $65 million in the third quarter. On a constant currency basis, the portfolio decreased by $5 million, or 7%, driven by the purchasing patterns of certain customers and lower revenues of Lendvima in Colombia, following its inclusion in the direct price control regime in August. The portfolio grew by $2 million, excluding the impact of purchasing patterns, driven by our promoted brands, including Grasemba, Akinzeo, and Envarsus, which more than offset the impact of the price reduction in Lendvima. Finally, our match rule portfolio delivered $52 million, remaining relatively stable compared to the same period last year. Now, moving on to gross margin. We delivered an adjusted gross margin of $70 million, or 51% of revenues in Q326, compared to $60 million, or 49% of revenues in the same period last year. The increase in the gross margin percentage was driven by the change in product mix. I will now turn to our operating expenses. For the third quarter, our sales and marketing, G&A, and R&D expenses were $48 million, an increase of $8 million, or 21%, compared to the same period last year. The increase was mainly driven by the expansion of our sales structure to support our launches and relaunches in Canada, Brazil, and Mexico, as well as additional promotional spend for our launch pipeline products, including Ogovix, MyFembre, Excopri, and Minjuvi. It also reflects a larger administrative structure to support our expanded portfolio and higher legal fees related to our tax litigation in Canada and Brazil. Moving on to adjusted EBITDA. For the third quarter of 2026, we reported $24 million of adjusted EBITDA, an increase of $3 million, or 13%, compared to the same period last year. Our adjusted EBITDA per share was $0.24, an increase of 15%, compared to the same period last year. The increase was mainly driven by our higher revenues and gross margin, partly offset by higher operating expenses. Turning to our liquidity and cash flows, our revenue and EBITDA growth continues to translate into strong cash generation. In the first nine months of the year, we generated $96 million of operating cash flows. We ended the quarter with $137 million in cash and marketable securities and a net cash position of $115 million compared to a net debt position just a year ago. With our strong balance sheet, $140 million of committed capacity under our credit facility, and an additional $140 million available to its accordion feature, we are well positioned to fund future growth. I will now turn the call over to Samira.

Thank you, Arvind. Now on to our financial outlook for fiscal 2026. I would like to remind everyone that this guidance is based on the assumption 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 the actual results may vary materially. As I mentioned earlier, we raised our 2026 outlook for both revenues and adjusted EBITDA. We now expect to generate revenues between $560 and $570 million, representing top-line growth of at least 24% versus 2025. We also expect 2026 adjusted EBITDA to be approximately 17.5% of revenues, representing EBITDA growth of at least 34% versus 2025. The increase in our financial outlook is driven primarily by the stronger performance of our promoted products. Thank you. In 2022, we expected our then-pipeline of 20 product launches to deliver at least $50 million of peak sales. Today, we have increased that potential sixfold. The strong seller performance of our business development team adding more products to our pipeline, as well as the focused execution by our regulatory, quality, medical, and commercial teams in getting these products approved, launched, reimbursed, and prescribed. The pipeline now covers more than 75 product launches across Canada and Latin America, 22 of which have already been executed. Our launch pipeline products generated over $67 million in revenues, or more than 22% of our new peak revenue estimate. NICE's mission is to acquire and license, develop, and commercialize pharmaceutical products for Canada and Latin America. Let me put our pro... Knight started in 2014 following Endo's acquisition of Paladin Labs. In 2013, Paladin's Canadian business generated $145 million in revenues. Knight's Canadian business today has already surpassed that level over the last 12 months and is continuing to grow. Today, Knight has built a strong platform in Canada and in Latin America. This year, we are on track to record revenues of $560. to $570 million and adjusted of nearly $100 million. A launch pipeline and pipeline product We're going to generate peak annual revenues of over $300 million, majority of which are coming from products that are already approved, and we have a solid cash position to fund our future growth. We are a growing, profitable, and cash-generating business, and we are delivering on our mission of acquiring and licensing, developing, and commercializing pharmaceutical products in Canada and in Latin America. This concludes our formal remarks. I will now open up the call for questions. Over to you, Marissa.

Thank you. Before we begin, may I please remind you questions during today's call will be taking from analysts only. Should there be any further questions, please contact Knight's Investor Relations Department via email to ir at knighttx.com or via phone at 514-484-4483. If you would like to ask a question on this call, please press star followed by the number one on your telephone keypad. If you're using a speakerphone, please lift your handset before pressing any keys, and if you would like to withdraw your question, you may press star 2. Just a moment for your first question. Your first question comes from David Martin with Bloom Burton. Please go ahead.

Good morning and congratulations on the quarter. I'm just wondering, were there any sales of Ambizone to the Brazilian MOH this quarter or in Q3? And regarding the generic approval, has the 2027 MOH contract gone to the generic?

David, thank you for your question. So, as we had announced previously, the 2026 contract had been completed by the end of Q2. So, there were no Q3 sales to MOH. The contract for 2027 has not been granted to the generic. In fact, our teams are in advanced negotiations, and hopefully they conclude that. Over the next couple of weeks, and we will retain the majority of that contract.

Okay, that's great. We had expected your EBITDA margins to compress moderately in the second half of 26 as you were building out commercial infrastructure in Mexico and pre-launch spends on Tavalis in Brazil. But your EBITDA margin actually ticked up a bit versus Q2. Why haven't we seen the tick down in EBITDA margin, and is that expected to persist through Q4?

So we announced $17.5 for the year. The way we're seeing it is our expenses are actually in line with our expectations. Our brands are performing better than our expectations, and we expect that to continue, and that is why we're raising guidance on the top line, on the bottom line, and as you saw, we're also raising guidance for the pipeline products because of the performance of the products that we've seen so far.

Okay, great. I'll get back in the queue. Thanks.

Your next question comes from Doug Meem with RBC Capital Markets. Please go ahead.

Yeah, great quarter, and even more importantly, better increase in guidance, and that's where I'd like to start with my initial question. When you look at the $200 million to $300 million increase, How much of that would be due to Potelugio versus the existing suite of products that you're launching right now?

We don't really provide by product. What I can tell you is the majority of the increases and the majority of the contribution for the $300 million is coming from... The products that are already approved, the majority of the approved products are already commercialized. So this is really coming from that. As you know, we are extremely – when our teams are doing their initial forecasts, we are conservative. We also don't include a lot of the second-tier countries like Chile or Peru. And as we have been – The smaller countries are starting to also be submitted and preparing for launch. So there's a whole bunch of different factors that are driving the increase from the 200 to the 300 and not just Puch Elisha.

And then, as we think about margins, not necessarily for Q4, but as we think further out into 27 and beyond, and we think about Ambizone, you indicated that you're going to retain the majority of that contract. Number one, is that going to be at existing pricing that you enjoyed in 26? And as a result of that, I'm just wondering how we should be thinking about margins for next year. Because, yes, when you're launching products, there can be a lack of profitability, but it seems you're doing better than that. So, just directionally, should we be thinking a step back, the same, or could things even improve? I'll leave it to you, thanks.

Great question, Doug. As you've seen, a lot of our products that are in the launch pipeline have actually been on market for several years, so their contribution going into next year will be a higher level, and our launch pipeline products are newer agreements as opposed to the legacy distribution type agreements that we had when we acquired Yota Scana. So the margins on the growth It is better on these products. While we do expect that ambisome sales will decline, it is a lower margin product. Our higher margin products will be contributing more. Our expectation is even though we're investing into next year, we should be remaining consistent over the next couple of years, and then all of these launches start to contribute more, and that's like Three years out, we should expect EBITDA margins to start accelerating.

Okay. That's great. Thank you.

Your next question comes from Michael Freeman with Raymond James. Please go ahead.

Hey, good morning, team, and congratulations on another extremely strong quarter and a very positive outlook. I wanted to talk about business development. This engine seems to be very much humming, $150 million net cash, plenty of credit. Thank you. Wondering if you could speak to how the opportunity set is evolving when it comes to business development, when it comes to product acquisitions or further licensing transaction. How has your view on the market of their changed given your strengthening position?

Good morning, Michael. This is Amal. Thank you for the question. I think I'm going to give you a somewhat boring answer, which is really we're looking at things the same way. We're really going to continue executing the same way we have. The type of opportunities we're looking at are similar to how we've, you know, all the transactions we've done in the past which are delivering the performance that you guys are seeing quarter over quarter. So we're going to continue looking at growth assets in terms of pipeline, new launches. We're going to continue looking at acquisitions of Those with existing sales, that would really kind of, you know, provide the cash flow to help us fund the investment while minimizing impact on the bottom line. It's really what we've been doing that has been delivering these great results. We're going to continue doing more of the same going forward. And as you know, the SVE balance sheet we have, access to cash and the credits we have, there are no restrictions. We can continue to do the same. We continue to see a lot of opportunities in our markets.

I'm just going to add another thing is the fact that we are extremely active. We are also becoming the partner of choice for certain partners, and what you've seen is the multiple additions to the portfolio with insight and kind of having this amazing stable of partners. And I...the more we do of this, the...