Artrya on Track for FDA Application Submission Following Second Q-Submission Meeting

Financial Results

• Delivered record revenues of $95,573, an increase of $5,668 or 6% over the same period in prior year driven by growth of our key promoted products partly offset by our mature products.
• Gross margin of $47,337 or 50% of revenues compared to $37,493 or 42% of revenues in the same period in prior year.
• Adjusted EBITDA ¹ was $15,744, an increase of $1,475 or 10% over the same period in prior year.
• Adjusted EBITDA per share ¹ of $0.16, an increase of $0.03 or 23% over the same period in prior year.
• Net loss was $1,942, compared to net income of $1,840 in the same period in the prior year.
• Cash outflow from operations was $1,086, compared to $1,486 in the same period in prior year.

Corporate Developments

• Completed the NCIB launched in July 2023 with a total purchase of 5,999,524 shares at an average price of $4.87 for aggregate cash consideration of $29,231.
• Shareholders re-elected Jonathan Ross Goodman, Samira Sakhia, James C. Gale, Robert N. Lande, Michael J. Tremblay, Nicolás Sujoy and Janice Murray on the Board of Directors.

Products

• Entered into an exclusive supply and distribution agreement for Jornay PM™ (methylphenidate HCI extended-release capsules) for Canada and Latin America.

Subsequent to quarter- end

• Launched a NCIB in July to purchase up to 5,312,846 common shares of the Company over the next year.

“I am excited to report that for the six months ended June 30, 2024, we delivered record revenues of over $180 million and adjusted EBITDA of over $29 million. This strong performance is the result of the growth of our key promoted products and of our commercial execution across Canada and Latin America. In addition, we have expanded and strengthened our pipeline and will be leveraging our existing neurology infrastructure with the in-licensing of Jornay PM ^TM , our third neurology product added in the last nine months,” said Samira Sakhia, President and Chief Executive Officer of Knight Therapeutics Inc.

¹ Adjusted EBITDA and Adjusted EBITDA per share are non-GAAP measures. Refer to section Non-GAAP measures for additional details.

¹ A positive variance represents a positive impact to net income (loss) and a negative variance represents a negative impact to net income (loss)
² Percentage change is presented in absolute values

¹ Financial results excluding the impact of IAS 29, EBITDA, adjusted EBITDA and adjusted EBITDA per share are non-GAAP measures. Refer to section ” Non- GAAP measures” for additional details.

Revenues
For the quarter ended June 30, 2024, revenues excluding the impact of IAS 29 were $94,121 an increase of $3,721 or 4% mainly driven by a growth of $7,125 or 11% from our key promoted products offset by a decline in our mature products. The table below provides revenues by therapeutic area.

¹ Revenues excluding the impact of IAS 29 is a non-GAAP measure, refer to section ” Non-GAAP measures” for additional details.

The increase in revenues is explained by the following:

• Oncology/Hematology : The oncology/hematology portfolio grew by $7,690 due to the continued growth of key promoted products including Lenvima ^® , Akynzeo ^® , Trelstar ^® and the launch of Minjuvi ^® in Brazil.
• Infectious Diseases: The infectious diseases portfolio decreased by $7,743 driven mainly by the timing of orders for Ambisome ^® under the MOH contract, a decrease in the demand of Impavido ^® partly offset by the growth of our key promoted products including Cresemba ^® and timing of orders for certain products. During Q2-24 the Company delivered $8,900 of Ambisome ^® to MOH compared to $18,000 in Q2-23.
• MOH Contract : The Company signed a contract with the Ministry of Health of Brazil for Ambisome ^® in December 2022 (“2022 MOH Contract”). Knight delivered a total of $34,600 under the 2022 MOH Contract as follows: $7,000 in 2022, $25,200 in 2023 ($2,400 in Q1-23, $18,000 in Q2-23 and $4,800 in Q4-23) and $2,400 Q1-24. In December 2023, Knight signed a new contract with the MOH (“2024 MOH Contract”) and delivered $6,800 in Q1-24 and $8,900 in Q2-24. The total MOH sales Ambisome ^® delivered in Q2-24 and YTD-24 was $8,900 and $18,100, respectively.

• Other Specialty : The other specialty portfolio increased by $3,774, primarily driven by the commercial transition of Exelon ^® from Novartis to Knight. As a result of advanced purchases by certain customers in Q1-23, the revenues of Exelon ^® were negatively impacted in Q2-23.

Gross margin
Excluding the impact of IAS 29, gross margin as a percentage of revenues was 48% in Q2-24 compared to 45% in Q2-23. The increase in the Q2-24 gross margin, as a percentage of revenues, was due to product mix including a lower proportion of Ambisome ^® sales to MOH.

Selling and marketing (“S&M”) expenses: For the quarter ended June 30, 2024 S&M expenses excluding the impact of IAS 29, were $12,968 in Q2-24 compared to $12,985 in Q2-23, a decrease of $17. There was no significant variance.

General and administrative (“G&A”) expenses: For the quarter ended June 30, 2024 G&A expenses excluding the impact of IAS 29, were $11,578 in Q2-24 compared to $9,188 in Q2-23, an increase of $2,390 or 26%. The increase was mainly driven by an increase in structure and compensation expenses.

Research and development (“R&D”) expenses: For the quarter ended June 30, 2024 R&D expenses excluding the impact of IAS 29, were $5,577 in Q2-24 compared to 4,623 in Q2-23, an increase of $954 or 21%. The increase was driven by an increase in product development activities in connection with our pipeline products and medical initiatives related to key promoted products. Knight invested $815 in Q2-24, an increase of $795 versus the prior year on its pipeline development activities. All costs related to development activities have been expensed which typically include regulatory submissions, analytical method transfers, stability studies and bio equivalence studies.

Adjusted EBITDA
For the quarter ended June 30, 2024, adjusted EBITDA increased by $1,475 or 10%. The increase was driven by a higher gross margin partly offset by higher G&A expenses, mainly related to structure and compensation increase and an increase in R&D expenses mainly due to an increase in our product development activities behind our pipeline.

Cash, cash equivalents and marketable securities : As at June 30, 2024, Knight had $152,668 in cash, cash equivalents and marketable securities, a decrease of $9,157 or 6% as compared to December 31, 2023. The decrease is mainly due to the settlement of upfront and milestone payments in connection with product licensing agreements including Qelbree™, IPX203, Jornay PM™ and Cresemba ^® , principal and interest payments on bank loans and repurchase of shares through the NCIB, partly offset by the cash inflows from operations. The cash inflows from operating activities were $29,795 driven by the operating results adjusted for noncash items such as depreciation, amortization as well as decrease in working capital of $3,576. The decrease in working capital was mainly due to a decrease in accounts receivable driven by the timing of collections from customers and an increase in inventory excluding the impact of IAS 29 driven by the timing of sales and purchases of inventory.

Bank loans: As at June 30, 2024, bank loans were at $50,952, a decrease of $10,914 or 18% as compared December 31, 2023 due to principal repayments of bank loans as well as the depreciation of the Brazilian Real and Colombian Pesos.

Corporate Updates

NCIB

On July 11, 2024, the Company announced that the Toronto Stock Exchange approved its notice of intention to launch a NCIB (“2024 NCIB”). Under the terms of the 2024 NCIB, Knight may purchase for cancellation up to 5,312,846 common shares of the Company which represented 10% of its public float as at June 30, 2024. The 2024 NCIB commenced on July 15, 2024 and will end on the earlier of July 14, 2025 or when the Company completes its maximum purchases under the NCIB. Furthermore, Knight entered into an agreement with a broker to facilitate purchases of its common shares under the NCIB.

During the three-month period ended June 30, 2024, the Company purchased 205,661 common shares at an average price of $6.04 for aggregate cash consideration of $1,242 under the 2023 NCIB. Subsequent to the quarter-end up to July 31, 2024, the Company purchased an additional 165,000 common shares at an average purchase price of $5.67 for an aggregate cash consideration of $936.

The Company has purchased an aggregate of 42.5 million shares at an average price of $5.70 since the launch of its share buy back program in 2019.

Financial Outlook Update

Financial Outlook

Knight provides guidance on revenues on a non-GAAP basis. This is due to both the difficulty in predicting Argentinian inflation rates and its IAS 29 impact.

For fiscal 2024, Knight has increased its financial guidance on revenues and now expects to generate between $355 million to $365 million in revenues up from $335 to $350 million. The adjusted EBITDA ¹ is expected to be approximately 16% of revenues. The change in the financial outlook is primarily due to an improvement in forecasted LATAM currencies against the Canadian dollar as well as an acceleration of investments on our pipeline products. The guidance is based on a number of assumptions, including but not limited to the following:

• no revenues or expenses for business development transactions not completed as at August 7, 2024
• no unforeseen termination to our license, distribution & supply agreements
• no interruptions in supply whether due to global supply chain disruptions or general manufacturing issues
• no new generic entrants on our key pharmaceutical brands
• no unforeseen changes to government mandated pricing regulations
• successful commercial execution on product listing arrangements with HMOs, insurers, key accounts, and public payers
• successful execution and uptake of newly launched products
• no material increase in provisions for inventory or trade receivables
• no significant variations of forecasted foreign currency exchange rates
• inflation remaining within forecasted ranges

Should any of the assumptions differ, the financial outlook and the actual results may vary materially. Refer to the risks and assumptions referred to in the Forward-Looking Statements section of this news release for further details.

¹ Revenues excluding the impact of IAS 29 and adjusted EBITDA are a non-GAAP measure. Refer to the definitions in section “Non-GAAP measures” for additional details.

Conference Call Notice

Knight will host a conference call and audio webcast to discuss its second quarter ended June 30, 2024, today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

Date: Thursday, August 8, 2024
Time: 8:30 a.m. ET
Telephone : Toll Free: 1-800-836-8184 or International 1-289-819-1350
Webcast: www.knighttx.com or Webcast
This is a listen-only audio webcast. Media Player is required to listen to the broadcast.

Replay: An archived replay will be available for 30 days at www.knighttx.com

About Knight Therapeutics Inc.

Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing pharmaceutical products for Canada and Latin America. Knight’s Latin American subsidiaries operate under United Medical, Biotoscana Farma and Laboratorio LKM. Knight Therapeutics Inc.’s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the Company’s web site at www.knighttx.com or www.sedarplus.ca .

Forward-Looking Statement

This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations are discussed in Knight Therapeutics Inc.’s Annual Report and in Knight Therapeutics Inc.’s Annual Information Form for the year ended December 31, 2023 as filed on www.sedarplus.ca . Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information or future events, except as required by law.

CONTACT INFORMATION:

NON-GAAP MEASURES
[In thousands of Canadian dollars]

The Company discloses non-GAAP measures and ratios that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance. Non-GAAP financial measures and adjusted EBITDA per share ratio do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.

The Company uses the following non-GAAP measures.

Revenues and Financial results excluding the impact of hyperinflation under IAS 29

The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company’s Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation.

Revenues and financial results under IFRS are adjusted to remove the impact of hyperinflation under IAS 29. The impact of hyperinflation under IAS 29 is calculated by applying an appropriate general price index to express the effects of inflation. After applying the effects of translation, the statement of income is converted using the closing foreign exchange rate of the month.

Revenues and financial results excluding the impact of hyperinflation under IAS 29 allow results to be viewed without the impact of IAS 29 thereby facilitating the comparison of results period over period. The presentation of revenues and financial results excluding the impact of hyperinflation under IAS 29 is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following tables are reconciliations of financial results under IFRS to financial results excluding the impact of hyperinflation under IAS 29.

Revenues and Financial results at constant currency
Revenues and financial results at constant currency are obtained by translating the prior period revenues and financial results from the functional currencies to CAD using the conversion rates in effect during the current period. Furthermore, with respect to Argentina, the Company excludes the impact of hyperinflation and translates the revenues and results at the average exchange rate in effect for each of the periods.

Revenues and financial results at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of revenues and financial results under constant currency is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following tables are reconciliations of financial results under IFRS to financial results and financial results at constant currency.

EBITDA

EBITDA is defined as operating income or loss adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.

EBITDA allows results to be viewed without the impact of amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of EBITDA is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

Adjusted EBITDA

Adjusted EBITDA is defined EBITDA adjusted for acquisition costs and non-recurring expenses.

Adjusted EBITDA allows results to be viewed without the impact of amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation), acquisition costs and non-recurring expenses but to include costs related to leases fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of adjusted EBITDA is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following table is a reconciliation of operating income (loss) to EBITDA and adjusted EBITDA.

Adjusted EBITDA per share

Adjusted EBITDA per share is defined as Adjusted EBITDA over number of common shares outstanding at the end of the respective period. The presentation of adjusted EBITDA per share is considered to be a non-GAAP ratio and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following table calculates adjusted EBITDA per share as follows:

¹ Financial results at constant currency is a non-GAAP measure. Refer to section “Non-GAAP measures” for additional details.