Knight Therapeutics Inc.

Good morning ladies and gentlemen, my name is Sergio and I will be your operator today. Welcome to Knight Therapeutics, second quarter 2025 results conference call. Before turning the call over to Samira Sakia, president and CEO of Knight, designers are reminded that portions of today's discussion may, by their nature, necessarily involve risk 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, and they were prepared, but caches 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 the information, future events, except as required by law. We would also like to remind you, questions during today's call will be taken from Analyst Only. Should there be any further questions, please contact Knight's Investor Relations Department via email

to

IR at knightdx.com or via phone at -484-4483. I would like to remind everyone that this call is being recorded today, August 7th, 2025. And we'll now like to turn the meeting over to your host for today's call, Samira Sekia. Please go ahead, Ms. Sekia.

Thank you, Sergio. Good morning, everyone, and welcome to Knight Therapeutics' second quarter 2025 conference call. I'm joined on today's call with Amal Khoury, our Chief Business Officer, and Arvind Uchena, our Chief Financial Officer. I'm excited to announce that for the first half of 2025, we achieved a record high adjusted revenues of $197 million driven by our innovative promoter product portfolio, which delivered organic growth of 15% on a constant currency basis. Our adjusted EBITDA for the six months of 2025 was $27.6 million. In addition to driving strong results, we continue to execute on the business development front. With the Paladin and Sumitomo transactions, we added over 50 products to our portfolio, including five pipeline and early launch assets, which will further accelerate the growth trajectory of our Canadian business. We also continue to strengthen our relationships and partnerships. Earlier this year, we expanded our agreement with Helsan and relaunched Onasit in Brazil and Mexico. In addition, earlier this week, we announced that we added two innovative pipeline products in oncology, RetiFanLimab and AXA-TiLimab for last time from Insight. Moving to the pipeline, we continue to advance our portfolio with the regulatory submissions of Minjuvi for follicular lymphoma in Brazil, as well as Crexon in Canada and Mexico. In addition, we obtained the approval of Pemisir in Argentina and Rembre or Dasatne in Chile. Now talking about our NCIB. NYC completed the NCIB launch in July 2024, and during that 12-month period, we purchased two million shares at an average price of $5.48 for an aggregate consideration of $11 million. Finally, we have secured a $50 million US dollar revolving credit facility with National Bank. We have launched a syndication process to increase the size of the facility to up to $100 million US dollars with an additional accordion of $50 million US dollars. This facility will ensure that we remain well-positioned to continue to transact and execute on our mission to acquire, in-license, develop, and commercialize pharmaceutical products in Canada and Latin America.

I'll now turn the call over to Argen to cover our results.

Thank you, Samira.

Thank you. 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. NIGHT defines adjusted EBITDA as operating or loss, excluding amortization and impairment of non-current assets, depreciation, the impact of accounting on the high inflation, acquisition and transaction costs, inventory step-up expense, and other non-recurring expenses, 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 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 second quarter of 2025, we delivered revenues of $108.5 million, representing an increase of $14 million or 15% compared to the same quarter last year. On a constant currency basis, revenues increased by approximately $19 million or 21%. This increase was driven by the growth of our key promoted products, which grew by $13.5 million or 20%, as well as incremental revenues of over $2 million from the Paladin and Sumitomo transaction, as well as buying patterns of certain products. Moving on to revenues by a therapeutic area. The oncology hematology portfolio delivered $35.5 million in Q225. Excluding the termination of a non-strategic distribution agreement in Colombia, the portfolio increased by approximately $2.1 million on a constant currency basis compared to the same period last year. This growth was primarily driven by Akinsayo, the launch of Minjavi, and the addition of Ogilvyx and Onisit, which was offset by a decline in our machu and branded generic products due to the lifecycle. Our infectious disease portfolio delivered $45 million, an increase of $7.5 million or 20%. On a constant currency basis, the portfolio grew by $9.5 million or 26% compared to the same period last year. The increase was due to the growth of Cresamba, additional ambiton deliveries to the Ministry of Health in Brazil, offset by purchasing patterns of certain products. Turning to our other specialty therapeutics areas. The portfolio generated approximately $28 million in revenues, an increase of $7 million or 34%. On a constant currency basis, the portfolio grew by $8 million or 42% compared to the same period last year. The increase was mainly driven by the launch of Invexie and Bijouva, the additions of Paladin and the Sumitomo products, as well as purchasing patterns of certain customers. Now moving on to gross margin. We reported $49 million or a gross margin of 46% of adjusted revenue in Q225 compared to $45 million or 48% of adjusted revenue in the same period last year. The decrease in the gross margin percent was mainly explained by the product mix, as well as severance costs related to the closures of Knight's HIV and respiratory facility in Argentina. All the key products produced in that manufacturing facility were transferred to certain contract manufacturers. I will now turn to our operating expenses, excluding amortization. For the second quarter, our operating expenses were $38.4 million and increase of $8 million or 27% compared to the same period last year. Excluding the acquisition costs related to the Paladin transaction, our operating expenses increased by approximately $5 million or 15%. The increase in operating expenses was driven by pre-launch and launch investments behind the launch of Minjoovi in Mexico, Join APM in Canada, an increase in activities behind our key promoted products, incremental costs related to the Paladin infrastructure, as well as an increase in share-based compensation following period degree assessment of vesting targets. Moving on to adjusted EBITDA. For the second quarter of 2025, we reported $15.5 million of adjusted EBITDA or 16 cents per share, which is relatively unchanged compared to the same period last year. I will now cover our financial assets, which are valued at $103 million as at June 30th, 2025. In the second quarter, we settled the Synergy Loan Receivable in exchange for $13.8 million in cash and $1.1 million in warrants. In addition, subsequent to the quarter, we collected $3.8 million to settle Knight Last Strategic Loan Receivable with a life science company. As of today, Knight has collected all of its strategic loan receivable. Now moving on to our funds and equities. In the second quarter, we recorded a net loss of $5.7 million, mainly driven by the -to-market revaluations of our strategic fund investments, partly offset by the change in value of certain equities. As a reminder, our funds continue to be a source of cash. We received net proceeds of $5 million in 2025 and $44 million since 2020. Moving on to our cash position and cash flows. At the end of Q2, our net debt position was $6.5 million. We held $97.7 million in debt and $91.2 million in cash and marketable securities. During the quarter, we generated cash inflows from operations of $20 million driven by our operating results, as well as a decrease of $13 million in working capital as a result of collections in our accounts receivable. In terms of our investing activities, we deployed $131 million in the Paladin and Sumitomo transaction and received $15.8 million from our strategic loans and funds. A portion of the Paladin acquisition was financed by the withdrawal of $60 million from the revolving credit facility with National Bank. In addition, as announced previously, we had withdrawn $35 million US dollars from our CT working capital line of credit. That amount was repaid in full during the quarter. I will now turn the call over to Amal.

Thank you, Arvind. 2025 continues to be a very productive year for our business development team. This week, we announced that we expanded our existing relationship with Insight and added exclusive Latam rights to Reti Fan Limab, which is sold as Zainis in the US and Europe, and Axa Tilimab, which is sold as Nictimzo in the US. Reti Fan Limab is approved in the US and Europe for the treatment of adult patients with metastatic or recurrent locally advanced Merkel cell carcinoma or MCC, which is a rare and aggressive type of skin cancer. Based on epidemiological data from two Brazilian registries, there are an estimated 550 to 1,250 new cases of MCC each year across Brazil, Mexico, Colombia, and Argentina. Reti Fan Limab is also approved by the FDA in combination with Carboplatin and Paclitaxel for the first line treatment of adult patients with inoperable locally recurrent or metastatic squamous cell carcinoma of the anal canal or SCAC. In addition, the FDA approved Reti Fan Limab as a single agent for the treatment of adult patients with locally recurrent or metastatic SCAC with disease progression on or intolerance to platinum-based chemotherapy. While epidemiological data for SCAC in Latin is limited, there are an estimated 2,700 to 4,000 new cases of SCAC each year in Brazil, Mexico, Colombia, and Argentina. The second product, Axa Tilimab, is approved in the US for the treatment of chronic graft versus host disease or CGVHD after failure of at least two prior lines of systemic therapy in adult and pediatric patients weighing at least 40 kilograms. CGVHD is a serious complication of allogeneic stem cell transplantation in which the donor's immune cells attack the recipient's tissues, potentially affecting multiple organs such as the skin, liver, lungs, and gastrointestinal tract. There are approximately 1,400 to 1,800 reported allogeneic transplants in Brazil every year. The expansion of this existing relationship with InSight and earlier this year with HealthIn reflect our ability to deliver in-market success from regulatory submissions to approvals to commercial execution. In addition, the Paladin and Sumitomo transactions illustrate our ability to build a balanced portfolio that includes both innovative growing promoted products as well as profitable mature cashflow generating products. I will now turn over the call back to Samir.

Thank you, Amal. Now onto our financial outlook for fiscal 2025. I would like to remind everyone that the guidance provided earlier this year included the close of the Paladin acquisition in mid-2025 and also assumed 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. We are increasing our outlook for fiscal 2025 and expect to generate revenues between $410 million to $420 million up from $390 million to $405 million. We expect our EBITDA to remain at approximately 13% of revenues. The change in our revenue outlook is driven by better performance in the first half of the year and the incremental revenues from the Sumitomo transaction. Looking ahead, we are very excited with what we can deliver to our stakeholders with our recent and upcoming launches as well as our pipeline products. In addition, the Paladin and Sumitomo transactions mark a pivotal step in accelerating our growth and strengthening our position in the Canadian market. With our expanded portfolio, increased operational scale and capital flexibility, we remain well positioned to drive long-term value and deliver on our mission to acquire, in-license, develop and commercialize pharmaceutical products for Canada and Latin America. Thank you for your support and confidence in the NIC team. This concludes our formal remarks. I would now like to open the call for questions. Back

to you, Sergio.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star, followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star, followed by the number two. If you are using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your

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

Hey, good morning, Sumitomo. Congratulations on this quarter and all the business development and launch activity you've been doing recently. It looks like it's been a busy year. My first question, it looked like there was a significant order from the Brazilian MOH this quarter. I wonder if you could describe whether you expect more orders from the MOH during the rest of the year if this completed the contract that was contemplated for 2025. And then, in addition, I wonder if you could tell us when a potential 2026 contract would be negotiated.

That's a great question. We did see a bigger purchase than we originally expected. As for can they buy more in the rest of the year, as of today, we don't really have a commitment from them to purchase. Yes, they are allowed to purchase more, but we haven't seen it yet. They may purchase more, but it will be a small amount, probably maximum in the four to six range. As for next year's contract, we expect to have more information later in the fall.

Okay, all right, thank you, Sumitomo. And now I wonder if you could give us an update on your integration of Paladin. We saw a few transaction costs here. We also saw that R&D increased as a result of some Paladin-related activity. I wonder, yeah, if you could provide us that update, and then if you could give us your expectation of what R&D levels might be for the rest of the

year. So what

you see in the GNA is really the transaction costs, not really integration costs. And that's really legal bank fees and kind of other advisory fees that we had in the process. And for the year, for kind of the six months, that was in the four-ish million range. As it comes to R&D or GNA or sales and marketing, it's kind of spread throughout the various OPEX lines. When it comes to transition, our teams have run really fast through it and are continuing to race through it, because as we've talked about before, part of the kind of the return thesis is bringing OPEX under control. As we know, as it's in our MDNA, to date, we have restructured the organization by about 25% of the headcount. We do expect a little bit more. And as we said in the Sumitomo call, it will not be as high as we originally expected because there will be in connection with Gernet, in connections with the brands that we just brought on with Sumitomo, a few more positions, and

those gaps will be filled by the Palo Alto team.

Okay, all right. Yeah, thank you very much. I'll pass the line here. Thank you. As a reminder, if you wish to ask a question,

please press star one. Your next question comes from David Martin from Bloomberg. Please go ahead.

Good morning and congratulations on the quarter. The business development activity seems to have really stepped up recently. I'm wondering, have opportunities become more attractive and what has changed to make them more attractive? Or is this because the company completed the integration and streamlining of Biotascana and that position them better to increase the BD?

So David, what I'm gonna say is we have been extremely productive over the last five years. If I was to probably go back and pull the transcript this time last year, everybody said we've been more productive than we had been in the previous year. And as Amal has always said, there is ebbs and flows, but we have been executing since 2020, 2021, on transactions, we will continue. And as you see, yes, we've used up our cash, but we have begun a process to continue to have financial flexibility. We ended the quarter with $90 million of cash. We are expanding our debt facility that could give us anywhere between an additional 70 million and 150 million, so that we can continue to execute.

Okay, great. Second question, with Paladin and the new drug launches that you've got queued up, that should be good for top line growth and gross margin expansion moving forward. But in the near term, you've got drug launch costs and the Paladin overhead. How do you expect these moving parts to affect the EBITDA margin in 2026 versus the 13% you're forecasting for this year?

Well, guys, in 2026, later in the year, in early 26, but yes, Paladin will have a better margin, but it is relatively small when you compare to the entire business. What I do expect is as we move through the next couple of years, and I'm talking about 26, 27, 28, we will see step ups, small increases over the next couple of years, and then really a relatively bigger increase as the products that are launching start

to become real large contributors.

Okay, and just one last quick question. Are there plans for any further share buybacks?

So as you know, over the last few years, we've invested over $250 million in our stock. We continue to believe that NIGHT is of good value. We're gonna continue to evaluate, and if we think that there is an opportunity, we will be relaunching

the NCIB.

Thank you, that's it for me. Thank you.

Your next question comes from Sahil Singra from RBC. Please go ahead.

Hi, good morning, this is Sahil for Doug. I have two questions. One is on the Sumitomo portfolio. Can you remind us what's the current run rate for top line for that portfolio, and what growth are you anticipating in 2026? And the second question I have is is business development related? So after the Paladin acquisition that you've closed now, do you and should we expect more acquisitions in Canada, given that you have a larger commercial footprint? Thank you.

Sure, so I'll take the first one, and I'll turn the second one over to Amal. So when we had this call, when we announced Sumitomo, we had said that the portfolio had approximately $11 million in sales for the last year. We expected that number to be the same for this year. We didn't, and so really we have a half year impact of that 11 million in 2025. We didn't really guide to the growth of those specific products. What I can tell you is in the case of Orgovix, Orgovix is an antagonist in a large market. There is one other antagonist in the market today, which is Fermilon. That's an injection. There is an advantage of Orgovix, which is an oral. And the injection is not listed, does not have public reimbursement in Alberta and BC, and it does approximately sales of about $8 million in Canada. So if you can kind of project out, this was a product that was just launched, Orgovix does have reimbursement. It has passed through PCPA. It has reimbursement. We have today signed up Ontario, Quebec, BC, a couple of the smaller provinces,

and we expect to get rest of Canada over the next year. Actually, I should talk about my ephemera, sorry. My ephemera

is also an early launch product. It has a couple of different competitors. Oralisa, which is really kind of another oral, does about $9 million of sales, mostly private, and it was launched in 2018. There is more to this market through LHR agonists for women, but if you kind of look at Oralisa, it does about $9 million of sales. My ephemera was just launched about a year ago. We expect that product to continue to grow. And what's great about these two products is they are a great fit in the case of Orgovix with Trellstar, and in the case of my ephemera, with Invexi and Bijuva. So we already have reps in the field for these product, for these physicians, we will be expanding the teams slightly, and that's why I'm saying that there will be team additions to have better reach in places that we don't have today.

Sahil, this is Amal. I'll take your second question from a VD perspective. I think your question was with the Paladin transactions, does that change or what does that mean for further acquisitions? The answer is really simple. As we've been saying, this is really what you guys have been seeing over the last year and the last five years is the continuing execution of our strategy, so, and nothing will change there. We will continue to look for both acquisitions, whether it's of specific products or portfolios of products or companies, as well as in licensing additional products. For our pipeline, so none of that will change. We have the capacity to execute and we'll continue to execute as we have been.

Okay, great. Thank you so much for taking our questions. Thank you. There are

no further questions at this time. I will now turn the call over to Samaria Sakia for closing remarks. Please go ahead, Ms. Sakia.

Thank you, Sergio. Once again, thank you for the confidence in the 19 for joining our Q225

conference call. Have a great morning.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.