Knight Therapeutics Inc.

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 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 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 a result of new information, future events, except as required by law. 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 at 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 Sakia. Please go ahead.

Thank you, Vanessa. Good morning, everyone, and welcome to Knight Therapeutics' first quarter 2026 conference call. I'm joined on today's call with Amal Khoury, our Chief Business Officer, and Arvind Uchina, 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 $148 million, and adjusted EBITDA was $28 million. In Q126, revenues grew by $69.6 million, or 68%, compared to the same period last year. The increase was 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 for regulatory approval in Brazil and in Argentina and Mexico for follicular lymphoma. Furthermore, we obtained Brazilian regulatory approval for second indication follicular lymphoma. Beyond our regulatory progress, so far in 2026, we have already executed four launches. namely Menjuvico Follicular Lymphoma in Brazil, Hemazir in Argentina, Akinzeo in Paraguay, and Vapostel in Colombia. Subsequently to the quarter, as a result of certain manufacturing changes by our partner, we unfortunately had to make the decision to withdraw the health standard on your direct submission for Calgary. However, we do expect to resubmit Calgary 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 HAF Canada. On to the NCIB. During the quarter, we purchased 1.3 million common shares at an average purchase price of $6.22 for aggregate cash consideration of $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 to provide an update on our financial results.

Thank you, Sandra. 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 hypertension. Refer to our press release and MD&A and CDL 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 matchbook products require lower levels of promotional activity and have already reached their peak potential. For the first quarter of 2026, as Tamara mentioned, we delivered record revenues of $148 million, an increase of $60 million, or 69%, compared to the same period last year. Of the $16 million of incremental revenues, the mature products from the Paladin and Sumitomo transactions contributed $17 million, the launch pipeline products, $13 million, and the strategy products grew by $28 million, of which Ambiso and MojSales contributed an incremental $14 million. The growth in the strategic products was driven by brands in our infectious disease and oncology portfolio, including Crescentva and Akinzeo. The growth in the launch pipeline products was driven by multiple launches in multiple countries over the past two years. This includes Minjuvi for DL-BCL in Brazil, Mexico, and Argentina, Minjuvi for Follicular Lipoma in Brazil, Temadia in Brazil and Mexico, Baposil in Colombia, and Invexi, Bijuva, JourneyPM, Excopre, MyFembre, and Orgovix in Canada. Now moving on to gross margin. The company achieved an adjusted gross margin of $70.6 million, or 48% of revenues in the first quarter of 2026, compared to $40.9 million, or 47% of revenues in the same period that 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 $43 million, an increase of $13 million, or 44%, compared to the same period last year. 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 $28 million of adjusted EBITDA, an increase of $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 $0.28, an increase of 133% compared to the same period last year. I will now cover financial assets, which are valued at $95 million. In the first quarter, we recorded a net loss of $2.8 million, driven by the mark-to-market revaluations of our strategic fund investments and our equity investments. As a reminder, our funds continue to be a source of cash and has generated $47 million since 2020. Turning to our liquidity and cash flows, during the quarter, we generated cash operating cash inflows of $41 million driven by our adjusted EBITDA and change in working capital. At the end of the first quarter, we held $127 million in cash and marketable securities and approximately $58 million in debt. Our net cash position continues to improve from $27 million at the end of 2025 to $69 million at the end of the first quarter of 2026. In fact, as of today, we have already repaid $14 million of the $60 million withdrawn from the revolving credit facility used to finance the Paladin transaction. At the end of June 26, our debt-registered EBITDA leverage ratio was under 0.7x. I will now send the call back to Summer.

Thank you, Arvind. Now 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. 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 2026 and expect to generate revenues between $510 million and $525 million, an 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 last-time currencies against the Canadian dollar. Our team has been extremely successful in building a profitable business by executing on our Pan-American XUS strategy of in-licensing and acquiring multiple innovative and mature products from 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 a 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 12 months, we have generated over $500 million in revenues, which is double the size of our business from five years ago. 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 NITE team. This concludes our formal remarks. I would like to now open up the calls for questions. Over to you, Vanessa.

And 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'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, please press star followed by the number one 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 two. And we have our first question from David Martin with Bloomberg.

Good morning and congratulations on the quarter. With regards to the withdrawal of the MDS for Calgary, Can you provide more color? I'm wondering what it is that you ran into that you couldn't address Health Canada's questions, and 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?

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. So 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 uh it does delay our launch altogether um like around a year maybe two but then we have a substantial dossier, hopefully minimal questions that we can get approved and lost.

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

So the issue, you have to recall, we started having the MOH contract a few years ago because another innovative branded competitor went on backorder, 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. So 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 that.

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

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

Okay.

Thank you.

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

Good morning. Congratulations on credit quarter. I wonder, you know, you described 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 two years? You know, you describe in your filings and in your deck, you know, a $200 million peak revenue opportunity from your pipeline. I wonder if you could put some more numbers around this.

Sure. So, In 2024, there were three launches. Last year, there was 10. We are going to outline the four launches that we've had so far this year. We expect 2026 to be approximately 10 launches. And if you look in our MD&A, we have a list of the pipeline, kind of the estimated years of approval. But when you look at kind of, let's say if we have for a certain product, Let's take NJV Folicular. For example, we might give a range, but there's multiple launches when it comes to NJV Folicular, 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. So every single time, there is an effort to launch, educate physicians, build a market, You look at a product like I Can Do, 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.

And like I said, there are 200 million.

The ones that we have launched in 24 to 26 are at least $100 million of revenue. these products have on a trailing 12-month basis have already generated $40 million of that 200 peak that we are estimating. So we're already 20% of the way there.

Okay. All right. Thank you for detailing that. I notice, you know, next balance sheet, to strengthen, you know, your more and more significant net cash position. I wonder how you're thinking about deployment of that capital. Of course, we noticed the NCIP activities, but how do you plan to use your cash?

So that's a great question. We are an 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 going to 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 going to continue to do.

And 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.

Hi, good morning. This is Amal. Yeah, the VD pipeline, I would say it's still normal course. So similar deal flow that we've been seeing in the last few 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. So There's ebbs and flows there, but in terms of the actual deal flow and pipeline, it remains very healthy.

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

There isn't really. We look to do deals that make sense with quality assets and good valuations. So 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. So in the last, if I take out last year, we've been adding on average three products per year. Last year was much higher than that, as you know, with the two acquisitions, with the two portfolios. But that aside, it's been an average, like excluding those two portfolios, it's been an average of three products per year.

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

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

Morning, everyone. Thanks for taking the questions. How do you feel? I think a lot of moving parts in the quarter with, you know, the new Paladin Sumitomo portfolio, Zambizome, and then kind of 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, kind of maybe year over year or however you want to quantify it, versus those acquired products and how kind of 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.

Sure. So one of the things that – We outlined within the quarter the Paladin mature product contributed about $17 million, and that really ties in with what we said was the size of the business when we acquired it. And that's going to remain flattish to decline because as we announced at the – when we announced before, some of those – there is an older product a few older products that are being returned, and that's about $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 $14 million on a year-over-year basis. If you look at the pipeline launch products, that also is growing on a year-over-year basis, and that's really what we're trying, that is what is our business, and that's what we're really trying to do. If I do include 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 going to be slower growth, but we're investing behind them because we know that we can retain and maybe grow, continue to grow. We saw growth in Crisamba. We continue to see growth in Ekinzeo, and those products will continue to grow, but not at the rapid rate that the newly launched product.

That's helpful. And 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 kind of into the discontinued pile?

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.

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 kind of continue to grow either in 26 and 27? And it may be beyond that. Where do you feel like you're getting into kind of equilibrium with all these launches and the new product portfolios?

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, Q4-25 looked like for this year. We may see some increases. The biggest component of the increase really comes from infrastructure, right? of field force, whether it's sales, market act, 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. So we will see that going up, but that's not going to be – when I look at the totality and the numbers, it's not going to be big swings like we had between, like, 2024 or 2025 and this year.

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

So 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 $5 to $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 we hope to do better.

Absolutely. That's fantastic.

Thanks for taking the questions.

As a reminder, if you wish to ask a question, please press star followed by the number one on your telephone keypad. And we have a question from David Martin with Bloom Burton.

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

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

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

So the ones Manufacturing problems, those are kind of if and when they come. And they're really small products. If I look at the big products that have, where we see branded generic competition, if you're in BIMA in Brazil, in a couple years you'll be in BIMA in Colombia, As we've discussed just a few minutes ago, there is Amazon branded generics under review in Brazil. But as we've seen, branded generics in LATAM decline, cause a decline of the brand at a much lower pace than you see in North America. So you lose market share, but it does take three to five years to really get to that 10 to 20% market share. And we're seeing, like, Landimers in our strategic promoted portfolio, despite it having a generic in Brazil, that portfolio is still growing, right? And that's really how we're trying to address not just the potential declines, but really accelerating beyond those potential declines and add more products to our portfolio.

Okay. Thanks.

And thank you. Our next question is from Doug Mine with RBC Capital Markets.

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

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

Okay, that's great. A question for Amal. When you think about the competitive environment in both Canada and in South America, Mexico, etc., 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, or... 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?

Sure. We haven't seen any negative impacts. So, if you look at assets with existing sales, so acquisition of these assets, the 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, they go through kind of, you know, periods where some of that they call in. a lot of debt through the acquisitions. They kind of need to digest it over a couple of years and then they go back in. So 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. 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. So the sector remains competitive. And again, this is primarily, I'm talking about LACAM across across both acquisitions of products that are in sync sales and licensing of assets. So we still see healthy competition, let's call it.

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

Thank you. Once again, if you wish to ask a question, please press star followed by the number one on your telephone keypad. And I see there are no further questions. At this time, I will now turn the call back over to Samira Sekia for closing remarks.

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

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