On March 23, 2023 Knight Therapeutics Inc. (TSX: GUD) ("Knight" or "the Company"), a leading Pan-American (ex-US) specialty pharmaceutical company, reported financial results for its fourth quarter and year ended December 31, 2022. All currency amounts are in thousands except for share and per share amounts (Press release, Knight Therapeutics, MAR 23, 2023, View Source [SID1234629254]). All currencies are Canadian unless otherwise specified.

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Financial information as at and for the year ended December 31, 2022 is unaudited.

2022 Highlights

Financials

Revenues were $293,563, an increase of $50,085 or 21% over prior year.
Gross margin of $138,061 or 47% of revenues compared to $115,412 or 47% of revenues in prior year.
Adjusted EBITDA1 was $54,032, an increase of $16,027 or 42% over prior year.
Net loss on financial assets measured at fair value through profit or loss of $20,677.
Net loss was $29,892, compared to net income of $15,675 in prior year.
Cash inflow from operations was $40,481, compared to a cash inflow from operations of $44,618 in prior year.
Corporate Developments

Entered into a five-year secured loan of $52,416 (US$38,500) loan denominated in select LATAM currencies with International Finance Corporation ("IFC").
Executed a settlement agreement with former controlling shareholders of GBT and received $6,030 (US$4,600).
Launched a NCIB in July 2022 to purchase up to 7,988,986 common shares of the Company over the next 12 months.
Purchased 5,649,189 common shares through Knight’s through Normal Course Issuer Bid ("NCIB") at an average price of $5.34 for an aggregate cash consideration of $30,069.
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.
Hired Leopoldo Bosano as VP Manufacturing and Operations.
Products

Launched Lenvima, Halaven and Rembre in Colombia in Q1-22.
Entered into exclusive license and supply agreements with Rigel Pharmaceuticals to commercialize fostamatinib in LATAM in May 2022.
Entered into an exclusive license, distribution and supply agreement with Helsinn for AKYNZEO oral/IV (netupitant/palonosetron/fosnetupitant/palonosetron) in Canada, Brazil and select LATAM countries and ALOXI oral/IV (palonosetron) in Canada in May 2022.
Relaunched AKYNZEO in Canada, Brazil and Argentina, and ALOXI oral/IV in Canada in second half of 2022.
Transferred marketing authorization of Exelon (rivastigmine) and assumed commercial activities in Brazil, Colombia, Argentina, Mexico, Chile, Peru, Ecuador, Canada and re-launched Exelon in Brazil and certain other LATAM countries.
Submitted tafasitamab in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT) to ANVISA for regulatory approval in Brazil and Colombia in Q4-22 and Argentina in Q1-23.
In-license three branded generics products for key territories in LATAM.
Obtained regulatory approval for Palbocil (palbociclib) in Argentina in Q4-22.
Submitted two branded generic products (palbociclib and pomalidomide) for regulatory approval in Chile and Colombia in Q4-2022.
Subsequent Event

Purchased an additional 1,279,900 common shares through NCIB for an aggregate cash consideration of $6,577.
_______________________

1 Adjusted EBITDA is a non-GAPP measure, refer to the definitions below in section "Non-Gaap measures" for additional details

"I am excited to announce that we delivered another record year in 2022, with revenues of over $290,000, an increase of 21% over last year and record adjusted EBITDA of over $54,000, an increase of 42% over last year. This growth was generated by the full year effect of Exelon and the continued performance of our recent launches, including Lenvima, Halaven and Rembre in Colombia. While delivering on record results, we have completed the transfer of the commercial activities to Knight for Exelon and Akynzeo in our key markets. We continued to advance our pipeline with the regulatory submission of tafasitamab in Brazil, Colombia and Argentina as well as two branded generic products in Chile and Colombia. In addition, to the in-licensing of Akynzeo, we have expanded our pipeline portfolio in our key Latin America markets with fostamatinib and three branded generic products," said Samira Sakhia, President and Chief Executive Officer of Knight Therapeutics Inc.

SELECT FINANCIAL RESULTS REPORTED UNDER IFRS
[In thousands of Canadian dollars]

[Unaudited]

Change Change
Q4-22 Q4-21 $1 %2 YTD-22 YTD-21 $1 %2
Revenues 81,655 58,273 23,382 40 % 293,563 243,478 50,085 21 %
Gross margin 36,888 28,195 8,693 31 % 138,061 115,412 22,649 20 %
Operating expenses4 67,938 42,829 (25,109 ) 59 % 179,105 128,244 (50,861 ) 40 %
Net (loss) income (15,188 ) (8,301 ) (6,887 ) 83 % (29,892 ) 15,675 N/A N/A
EBITDA3 13,330 4,101 9,229 225 % 53,541 35,865 17,676 49 %
Adjusted EBITDA3 13,821 5,696 8,125 143 % 54,032 38,005 16,027 42 %
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
3 EBITDA and adjusted EBITDA are non-GAAP measures, refer to the definitions in section "Non-Gaap measures" for additional details
4 Operating expenses include selling and marketing expenses, general and administrative expenses, research and development expenses, amortization and impairment of non current assets

SELECT FINANCIAL RESULTS AT CONSTANT CURRENCY
[In thousands of Canadian dollars]

[Unaudited]

Q4-22 Q4-21 Variance YTD-22 YTD-21 Variance
Excluding impact of IAS 293
Constant Currency3 $1 %2 Constant Currency3 $1 %2
Revenues 83,806 58,370 25,436 44 % 291,770 243,731 48,039 20 %
Gross margin 41,931 29,692 12,239 41 % 150,359 120,694 29,665 25 %
Operating expenses4 46,173 42,509 (3,664 ) 9 % 151,158 124,865 (26,293 ) 21 %
EBITDA3 13,330 4,258 9,072 213 % 53,541 36,376 17,165 47 %
Adjusted EBITDA3 13,821 5,884 7,937 135 % 54,032 38,551 15,481 40 %
1 A positive variance represents a positive impact to adjusted EBITDA and a negative variance represents a negative impact to adjusted EBITDA
2 Percentage change is presented in absolute values
3 Financial results at constant currency and excluding impact of IAS 29, EBITDA and adjusted EBITDA are non GAAP measures, refer to the specific sections for additional details
4 Operating expenses include selling and marketing expenses, general and administrative expenses, research and development expenses, amortization and impairment of non-current assets

SELECT BALANCE SHEET ITEMS
[In thousands of Canadian dollars]

[Unaudited]

Change
12-31-22 12-31-21 $ %1
Cash, cash equivalents and marketable securities 172,674 149,502 23,172 15 %
Trade and other receivables 151,669 103,875 47,794 46 %
Inventory 92,489 72,397 20,092 28 %
Financial assets 176,563 192,443 (15,880 ) 8 %
Accounts payable and accrued liabilities 108,730 65,590 43,140 66 %
Bank loans 70,072 35,927 34,145 95 %
1 Percentage change is presented in absolute values

Revenues: For the quarter ended December 31, 2022, excluding the impact of hyperinflation, revenues increased by $27,448 or 49% compared to the same period in prior year. The increase in revenues excluding the impact of hyperinflation is explained by the following:

Excluding impact of IAS 293
Q4-22 Q4-21 Change
Therapeutic Area $ $ $1 %2
Oncology/Hematology 29,343 23,534 5,809 25 %
Infectious Diseases 32,744 20,211 12,533 62 %
Other Specialty 21,760 12,613 9,147 73 %
Total 83,806 56,358 27,448 49 %
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29
2 Percentage change is presented in absolute values
3 Revenues excluding the impact of IAS 29 is a non-GAAP measure, refer to section "Non-GAAP measures" for additional details.

Oncology/hematology: The increase in revenues of $5,809 is driven by growth in our key promoted brands, including new launches of Lenvima and Halaven in Colombia in Q1-22, the growth of key promoted products including Lenvima and Trelstar and the assumption of commercial activities of Akynzeo in Brazil and Canada. This increase is offset by a reduction in revenues of our branded generics products due to their lifecycle including the market entrance of new competitors.
Infectious disease: The portfolio grew by approximately $15,900, excluding the impact of the planned transition and termination of the Gilead Amendment. This growth is due to an increase in patient treatments as our markets reduce COVID-19 restrictions, growth of our key promoted products and a one-time sales contract with the Ministry of Health in Brazil for Ambisome ("MOH Contract"). Knight recorded $7,500 in revenues, which represents 40% of the expected deliveries under the MOH contract in Q4-22 and the balance of the contract is expected to be delivered in the first six months of 2023
Other specialty: The growth is mainly due to the incremental revenue of $5,092 due to the change in accounting treatment of Exelon from net profit transfer from Novartis to revenues with related cost of sales upon the transition of commercial activities to Knight as well as the timing of purchases of products by certain customers.
For the year ended December 31, 2022, excluding the impact of hyperinflation, revenues increased by $52,532 or 22% compared to the same period in prior year. The growth in revenues excluding the impact of hyperinflation is explained by the following:

Excluding impact of IAS 293
YTD-22 YTD-21 Change
Therapeutic Area $ $ $1 %2
Oncology/Hematology 105,464 89,079 16,385 18 %
Infectious Diseases 116,530 101,650 14,880 15 %
Other Specialty 69,776 48,509 21,267 44 %
Total 291,770 239,238 52,532 22 %
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29
2 Percentage change is presented in absolute values
3 Revenues excluding the impact of IAS 29 is a non-GAAP measure, refer to section "Non-GAAP measures" for additional details

Oncology/hematology: The increase in revenues of $15,960 is driven by growth in our key promoted brands, including the launches of Lenvima and Halaven in Colombia in Q1-22, the continued growth of key promoted products including Lenvima, Halaven and Trelstar and the assumption of commercial activities of Akynzeo in Brazil and Canada. This increase is offset by a reduction in revenues of our branded generics products due to their lifecycle including the market entrance of new competitors.
Infectious disease: The portfolio grew by approximately $29,080 due to increase in patient treatments as our markets reduce COVID-19 restrictions, growth of our key promoted products and a one-time sales contract with the Ministry of Health in Brazil for Ambisome ("MOH Contract"). Knight recorded $7,500 in revenues, which represents 40% of the expected deliveries under the MOH contract in Q4-22 and the balance of the contract is expected to be delivered in the first six months of 2023. The growth is offset by an estimated $14,200 due to lower demand for certain of our infectious diseases products to treat invasive fungal infections associated with COVID-19 as well as the planned transition and termination agreement of the Gilead Amendment effective July 1, 2022.
Other specialty: The increase is mainly driven by the timing of the acquisition of Exelon as well as a change in the accounting treatment of Exelon. The full year effect of the Exelon transaction executed on May 26, 2021, represents an incremental revenue of $15,282. The change in accounting treatment from net profit transfer from Novartis to recognition of revenues with related cost of sales upon transition of commercial activities to Knight led to an increase of $6,427 in revenues.
Gross margin: For the quarter ended December 31, 2022, gross margin as a percentage of revenues was 45% compared to 48% in the same prior year period. The decrease in the gross margin, as a percentage of revenues, is explained by the impact of hyperinflation. Excluding the impact of IAS 29, gross margin, as a percentage of revenues, was 50% in Q4-22 and 51% in Q4-21.

For the year ended December 31, 2022, there was no significant difference in gross margin, as a percentage of revenues, compared to the same prior year period. Excluding the impact of IAS 29, gross margin, as a percentage of revenues, was 52% for year ended December 31, 2022 compared to 50% in prior year. The increase in the gross margin is explained by the change in product mix including the full year effect of the acquisition of Exelon.

Selling and marketing: For the quarter ended December 31, 2022, S&M increased by $2,111 or 17%. Excluding the impact of IAS 29, the increase was $3,162 or 27% driven by an increase in compensation expenses including severance cost of $1,116 due to certain restructuring activities, an increase in selling and marketing activities related to key promoted products including spend on Exelon and Akynzeo as well as certain variable costs such as logistics fees due to higher sales.

For the year ended December 31, 2022, S&M increased by $9,396 or 24%. Excluding the impact of IAS 29, the increase is $9,827 or 26% mainly driven by an increase in compensation expenses including severances of $1,146, an increase in selling and marketing activities related to key promoted products including the spend on Exelon and Akynzeo as well as certain variable costs such as logistics fees due to higher sales.

General and administrative: For the quarter ended on December 31, 2022, there was no significant variation in General and administrative expenses. For the year ended December 31, 2022, G&A increased by $4,852 or 14%. Excluding the impact of IAS 29, the increase is $3,721 or 11%, mainly driven by an increase in compensation expense certain consulting and professional fees offset by the lower costs related to the long-term incentive plan.

Research and development expenses: For the quarter ended on December 31, 2022, there was no significant variation in Research and development expenses. For the year ended December 31, 2022, R&D increased by $2,063 or 16%. Excluding the impact of IAS 29, the increase is $1,653 or 14%, mainly driven by an increase in compensation expenses and medical initiatives.

Amortization of intangible assets: For the year ended December 31, 2022, amortization of intangible assets increased by $10,566 or 26%, mainly explained by the amortization of $11,667 related to the full year effect of the acquisition of Exelon.

Impairment of non-current assets: Under hyperinflation accounting, non-monetary assets including property plant and equipment, right-of-use assets and intangible assets are adjusted by the inflation index and converted back to Canadian Dollar ("CAD") at the closing rate of the reporting period. During a period where the inflation index is higher than devaluation of the Argentine peso relative to the CAD, the value of the non-monetary assets increases when converted to CAD. During 2022, the increase in the value of non-monetary assets in Argentina due to hyperinflation accounting, resulted in an impairment of $21,654. The loss represents a write-down of certain right-of-use assets, property, plant and equipment in Argentina, and intangible assets related to branded generics intellectual property to its recoverable amount.

In addition, during 2022, the Company recorded an additional impairment loss of $2,330 representing the write-down of the upfront and certain milestones payments made under certain product license agreements as a result of changes in commercial expectations.
Interest income: Interest income is the sum of interest income on financial instruments measured at amortized cost and other interest income. For the quarter and year ended December 31, 2022, interest income was $4,263 and $10,632, an increase of 94% or $2,067 and 44% or $3,250 respectively, compared to the same period in prior year due to higher interest rates on cash and marketable securities as well as interest earned on strategic loans.

Interest expense: The increase for the quarter and year ended December 31, 2022, is due to the increase of the Certificados de Depositos Interfinancieros (Brazil interbank lending rate) ("CDI") and Indicador Bancario de Referencia (Colombia interbank lending rate) ("IBR") rates throughout 2022, partially offset by lower average loan balance due to partial repayment of Itaú Unibanco Brasil and Bancolombia bank loans.

In December 2022, the Company entered into a loan with IFC for an amount of $52,416 denominated in BRL, COP, CLP and MXN with interest rates ranging between 7.86% and 15.83% ("IFC Loan"). The interest expense on bank loans is expected to increase in 2023 due the IFC Loan as well as any future increases in variable interest rates.

Adjusted EBITDA: For the quarter ended December 31, 2022, adjusted EBITDA increased by $8,125 or 143%. The growth in adjusted EBITDA is driven by an increase in gross margin of $8,693, offset by an increase in operating expenses.

For the year ended December 31, 2022 adjusted EBITDA increased by $16,027 or 42%. The growth in adjusted EBITDA is driven by an increase in gross margin of $22,649 offset by an increase in operating expenses.

Net loss or income: For the quarter ended December 31, 2022, net loss was $15,188 compared to net loss of $8,301 for the same period last year. The increase in net loss mainly resulted from the above-mentioned items and (1) an increase in income tax recovery of $1,824 in the fourth quarter of 2022 due to the recognition of certain deferred tax assets as well as (2) a higher net gain on the revaluation of financial assets measured at fair value through profit or loss of $8,824 in the fourth quarter of 2022 versus a net gain of $2,300 in the prior year period mainly due to unrealized gains on revaluation of the strategic fund investments resulting from positive mark-to-market adjustments as a result of the increase in the share prices of one of the publicly-traded equities held by one of the funds, (3) foreign exchange loss of $1,633 versus a loss of $3,485 in the prior year period due to appreciation of the CAD versus the US dollar, and (4) a other expense for the quarter ended December 31, 2022 increase by $2,285 compared to the same period in prior year mainly due to the increase in a provision related to certain import tax claims.

For the year ended December 31, 2022, net loss was $29,892 compared to net income of $15,675 in prior year. The variance mainly resulted from the above-mentioned items and (1) an income tax recovery of $17,125 in 2022 due to the recognition of certain deferred tax assets due to timing differences related to our financial assets, impairment of certain non-current assets and certain intercompany transactions, compared to a prior year income tax recovery of $8,985, (2) a lower net loss on the revaluation of financial assets measured at fair value through profit or loss of $20,677 in 2022 versus a net gain of $18,944 in prior year mainly due to unrealized losses on revaluation of the strategic fund investments as a result of the decline in the share prices of the publicly-traded equities held by our strategic fund investments due to general market conditions, as well as (3) foreign exchange gain of $7,442 versus a loss of $3,737 in the prior year period due to appreciation of the US dollar compared to CAD in 2022, and (4) gain of $6,030 as a result of execution of settlement agreement and general release with the former shareholders of GBT, partially offset by expense due to the change in an accounting provision for a potential liability.

Cash, cash equivalents and marketable securities: As at December 31, 2022, Knight had $172,674 in cash, cash equivalents and marketable securities, including $18,961 [USD 14,000] pledged as restricted cash collateral under the IFC Loan. The increase of $23,172 or 15% as compared to December 31, 2022 primarily relates to cash generated through operating activities and funds received under the IFC Loan offset by cash outflows from shares purchased through the NCIB, the in-licensing of AKYNZEO and ALOXI from Helsinn as well as fostamatinib from Rigel, repayments on bank loans and foreign exchange gain on cash and cash equivalents.

Financial assets: As at December 31, 2022, financial assets were at $176,563, a decrease of $15,880 or 8%, as compared to the prior year, mainly due to a negative mark-to-market adjustments of $23,325 driven mostly by the decline in the share prices of the publicly-traded equities held by our strategic fund investments due to general market conditions, fund distributions of $6,478, decrease in equity investments and derivatives of $1,918 mainly due to disposal of Medimetriks offset by capital calls of $6,307, loans issued of $2,723 and foreign exchange gains of $6,245.

Bank Loans: As at December 31, 2022, bank loans were at $70,072, an increase of $34,145 or 95% as compared to the prior period, mainly due to the IFC loan offset by loan repayments.

Product Updates

Commercial Execution

In the first quarter of 2022, Knight launched three products in Colombia in Oncology/Hematology namely Lenvima for differentiated thyroid cancer and unresectable hepatocellular carcinoma, Halaven for metastatic breast cancer and soft tissue sarcoma and Rembre, a branded generic product, for chronic myeloid leukemia.

As at March 22, 2023, the marketing authorizations of Exelon for Brazil, Colombia, Argentina, Mexico, Chile, Peru, Ecuador and Canada were transferred to Knight. In addition, Knight has assumed the commercial activities of Exelon in Colombia in Q2-22, Brazil, Argentina & Chile in Q3-22 and Mexico, Peru, Ecuador & Canada in Q4-22.

On May 12, 2022, Knight entered into an exclusive license, distribution and supply agreement with Helsinn for AKYNZEO oral/IV (netupitant/palonosetron / fosnetupitant/palonosetron) in Canada, Brazil and select LATAM countries and ALOXI oral/IV (palonosetron) in Canada. Knight has assumed commercial activities and re-launched AKYNZEO in Brazil and Argentina in July 2022 and in Canada in Q4-22.

On July 1, 2022, Knight has entered into a transition and termination agreement with Gilead for a portfolio of HIV and HCV products ("Gilead Amendment"). The portfolio is currently distributed by Knight in one or more of the following countries: Colombia, Peru, Ecuador, Bolivia and Paraguay. As part of the Gilead Amendment, Knight distributes the products under a mutually agreed amended commercial and financial terms, until the earlier of April 30, 2023 and the completion of the regulatory, logistical and commercial transition on a per country and product basis. The Gilead Amendment does not impact any products distributed by the Company on behalf of Gilead in Brazil.

Advancing our pipeline portfolio

Knight submitted tafasitamab (sold as Monjuvi in the United States and Minjuvi in Europe) in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT) for regulatory approval to ANVISA in Brazil in October 2022, INVIMA in Colombia in December 2022 and ANMAT in Argentina in January 2023. Knight expects to submit tafasitamab in other key LATAM countries in the first half of 2023.

In December 2022, Knight obtained the regulatory approval for Palbocil (palbociclib) in Argentina. Knight launched Palbocil in Argentina in March 2023 and filed for regulatory approval for Bapocil (palbociclib) in Colombia and Chile in Q4-2022. Palbocil is indicated for the treatment of patients with hormone receptor (HR)positive, human epidermal growth factor receptor 2 (HER2)-negative locally advanced or metastatic breast cancer in combination with an aromatase inhibitor as initial endocrine-based therapy in post-menopausal women or fulvestrant in patients with disease progression after prior endocrine therapy.

In addition, during the fourth quarter of 2022, Knight also submitted a branded generic of for regulatory approval in Chile and Colombia. Furthermore, the Company has in-licensed three branded generic products for our key markets in Latin America.

NCIB

On July 12, 2022, the Company announced that the Toronto Stock Exchange approved its notice of intention to launch a NCIB ("2022 NCIB"). Under the terms of the 2022 NCIB, Knight may purchase for cancellation up to 7,988,986 common shares of the Company which represented 10% of its public float as at June 30, 2022. The 2022 NCIB commenced on July 14, 2022 and will end on the earlier of July 13, 2023 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. Under Knight’s automatic share purchase plan, the broker may purchase common shares which would ordinarily not be permitted due to regulatory restrictions or self-imposed blackout periods.

For the year ended December 31, 2022, the Company purchased 5,649,189 (2021: 12,321,864) common shares at an average price of $5.34 (2021: $5.23) for aggregate cash consideration of $30,069 (2021: $64,415). Subsequent to December 31, 2022, the Company purchased an additional 1,279,900 common shares at an average purchase price of $5.14 for an aggregate cash consideration of $6,577.

Financial Outlook

Knight provides guidance on revenues1 on a non-GAAP basis. This is due to both the difficulty in predicting Argentinian inflation rates and its IAS 29 impact.

For fiscal 2023, Knight expects to report $280 to $300 million in revenue and adjusted EBITDA, as a percentage of revenues, between 13% to 15% of revenue. The guidance is based on a number of assumptions, including but not limited to the following:

no revenues for business development transactions not completed as of March 22, 2023
discontinuation of certain distribution 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 significant restrictions or economic shut down due to the COVID-19 pandemic
foreign currency exchange rates 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.

"Our team has been successfully executing on our pan-American ex US strategy and has built a profitable business with a unique platform and a strong foundation from where to continue growing over the long term. We ended 2022 by delivering record revenues and adjusted EBITDA as a result of growing the current portfolio as well as adding new products that leverage our existing infrastructure. Looking ahead, while we will face headwinds with the entrance of new competitors on certain of our banded generic products as well as incur investments related to promoted products, Knight is expected to continue to generate strong cash flows from operations and with over $150,000 of cash and $175,000 of financial assets, we remain well positioned to execute on our mission to acquire, in-license, develop and commercialize pharmaceutical products in Latin America and Canada." said Jonathan Ross Goodman, Executive Chairman of Knight Therapeutics Inc.

1 Revenues excluding the impact of IAS 29 is 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 fourth quarter and year-end results today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

Date: Thursday, March 23, 2023
Time: 8:30 a.m. ET
Telephone: Toll Free: 1-888-256-1007 or International 1-647-484-0475
Webcast: www.gud-knight.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.gud-knight.com

On March 23, 2023 Xenetic Biosciences, Inc. (NASDAQ: XBIO) ("Xenetic" or the "Company"), a biopharmaceutical company focused on advancing innovative immune-oncology technologies addressing hard to treat cancers, reported its financial results for the full year 2022 and provided a business update (Press release, Xenetic Biosciences, MAR 23, 2023, View Source [SID1234629253]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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"2022 represented a transformational year for the Company. We expanded our oncology pipeline and bolstered our potential for key inflection points. We have continued to execute on our development plans for the DNase platform and are encouraged by our progress towards creating a near-term clinical development opportunity. We believe that our DNase platform, comprising multiple treatment modalities, has the potential to generate much needed therapies for pancreatic carcinoma and other locally advanced or metastatic solid tumors, and we are excited to unlock the full potential of our assets," commented Jeffrey Eisenberg, Chief Executive Officer of Xenetic.

DNase Oncology Platform: Targeting Neutrophil Extracellular Traps ("NETs") to improve cancer therapies with a focus on advancing systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and other locally advanced or metastatic solid tumors.

Program Highlights:

· Systemic DNase program initially targeting multi-billion-dollar indications.
· Advancing toward planned first-in-human study to evaluate DNase combined with immune checkpoint inhibitors or chemotherapy.
· Notice of allowance received in January 2023 for Canadian patent covering use of DNase enzyme for preventing or ameliorating toxicity associated with chemotherapy.
· Appointed globally recognized oncology and NETs experts Allan Tsung, MD and Jonathan Spicer, MD, PhD to the Scientific Advisory Board for advancement of the DNase oncology platform.
· In August 2022, entered into a research and development collaboration agreement with VolitionRX Limited to develop NETs-targeted adoptive cell therapies potentially targeting multiple types of solid cancers.
· In June 2022, entered into a development and manufacturing agreement with Catalent Pharma Solutions LLC, which will include cGMP manufacturing of Phase 1 clinical supply.

PolyXen Platform Technology: Patent-protected platform technology designed for protein or peptide therapeutics, enabling next-generation biological drugs by prolonging a drug’s circulating half-life and potentially improving other pharmacological properties.

Program Highlight:

· Royalty payments of approximately $1.7 million were received from our sublicense with Takeda in the year ended December 31, 2022, representing an approximate 47.1% increase over the year ended December 31, 2021.

Summary of Financial Results for Fiscal Year 2022

Net loss for the year ended December 31, 2022 was approximately $6.6 million. Research and development expenses for the year ended December 31, 2022 increased by $1.6 million, or 50.8% to $4.8 million from $3.2 million in the comparable period in 2021 primarily due to in-process research and development expense of $1.8 million. General and administrative expenses for the year ended December 31, 2022 was $3.7 million, a 2.4% decrease compared to the same period in the prior year. The decrease was primarily due to a decrease in consulting and legal costs associated with our intellectual property portfolio substantially offset by an increase in legal costs related to the licensing of the DNase oncology platform from CLS during the year ended December 31, 2022 compared to the same period in 2021.

The Company ended the year with approximately $13.1 million of cash.

On March 23, 2023 TCR2 Therapeutics Inc. (Nasdaq: TCRR) (TCR2 or the Company), a clinical-stage cell therapy company with a pipeline of novel next-generation T cell therapies for patients suffering from solid tumors, reported fourth quarter and full-year 2022 financial results and provided a corporate update (Press release, TCR2 Therapeutics, MAR 23, 2023, View Source [SID1234629250]).

Schedule your 30 min Free 1stOncology Demo!
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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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"Focus and specialization are critical in the cell therapy space. The strategic combination with Adaptimmune and the operating benefits are highly compelling for both Adaptimmune and TCR² shareholders. Our complementary technology platforms are designed to treat solid tumors which represents a substantial market opportunity largely unaddressed by cell therapies. The combination of our two companies provides a strong foundation to commercialize curative therapies for people with cancer," said Garry Menzel, Ph.D., President and Chief Executive Officer of TCR2 Therapeutics.

Recent Developments

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TCR2 announced a strategic combination with Adaptimmune Therapeutics plc (Adaptimmune) to create a preeminent cell therapy company for solid tumors. The two companies entered into a definitive agreement under which Adaptimmune will combine with TCR² in an all-stock transaction. The transaction is expected to close in the second quarter of 2023, subject to shareholder approval and satisfaction or waiver of other closing conditions. Following the closing of the transaction, Adaptimmune shareholders will own approximately 75% and TCR² stockholders will own approximately 25% of the combined company. As a result, and following the closing of the transaction, it is anticipated that the combined company’s cash runway will extend into 2026.
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TCR2 published preclinical gavo-cel data in OncoImmunology. Research showed that gavo-cel more rapidly infiltrated and eliminated mesothelin-positive tumors of various histologies while producing less pro-inflammatory cytokines than second-generation mesothelin-targeted CAR T cells.
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TCR2 reprioritized its pipeline to focus on gavo-cel in ovarian cancer and second-generation programs TC-510 and TC-520. In connection with the reprioritization, TCR2 reduced its workforce by approximately 40 percent.

Anticipated Milestones

gavo-cel:

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First readout from the ongoing Phase 2 portion of the gavo‑cel Phase 1/2 clinical trial in ovarian cancer in combination with checkpoint inhibitors and redosing strategies anticipated in the second half of 2023.
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Interim update, including key translational data, in patients with mesothelioma treated with gavo‑cel in combination with checkpoint inhibitors in the Phase 2 portion of the gavo-cel Phase 1/2 clinical trial before the focus was narrowed to ovarian cancer anticipated midyear 2023.

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Tumor regression has been observed in 93% of patients in the Phase 1 trial. The response rate was 29% in patients with ovarian cancer with a median progression free survival (PFS) of 5.8 months and a median overall survival (OS) of 8.1 months. The response rate in mesothelioma was 21% with a median PFS of 5.9 months and a median OS of 11.2 months.
TC-510:

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First data readout from the Phase 1 trial with TC-510 for patients with ovarian, malignant pleural mesothelioma, pancreatic, colorectal, or triple-negative breast cancer anticipated in the second half of 2023.

Financial Highlights

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Cash Position: TCR2 ended the fourth quarter of 2022 with $149.2 million in cash, cash equivalents, and investments compared to $265.6 million as of December 31, 2021. Net cash used in operations was $25.0 million for the fourth quarter of 2022 compared to $23.3 million for the fourth quarter of 2021.

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R&D Expenses: Research and development (R&D) expenses were $25.7 million for the fourth quarter of 2022 compared to $18.8 million for the fourth quarter of 2021. The increase in R&D expenses was primarily due to increased spending on clinical programs.

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Impairment and Restructuring Expenses: Impairment expenses were $29.9 million for the fourth quarter of 2022 compared to $3.7 million for the fourth quarter of 2021. The impairment charges during 2022 are primarily related to the Rockville manufacturing facility which have been reclassified as held for sale as of December 31, 2022.

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G&A Expenses: General and administrative (G&A) expenses were $5.8 million for the fourth quarter of 2022 compared to $5.2 million for the fourth quarter of 2021. The increase in G&A expenses was primarily due to an increase in personnel costs.

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Net Loss: Net loss was $60.5 million for the fourth quarter of 2022 compared to $27.7 million for the fourth quarter of 2021.

About gavo-cel, TC-510, and TC-520

Our most advanced program, gavo-cel, targets tumors that express the protein mesothelin.

TC-510 is an enhanced version of gavo-cel that co-expresses a PD-1:CD28 chimeric switch receptor that the Company believes may lead to deeper responses and more durable benefit.

TC-520 is the Company’s first TRuC-T cell targeting CD-70-expressing solid and liquid tumors which incorporates IL-15 pathway enhancements designed to improve T-cell persistence. TCR2 is currently advancing TC-520 to Investigational New Drug (IND) status.

On March 23, 2023 PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) ("PureTech" or the "Company"), a clinical-stage biotherapeutics company dedicated to changing the treatment paradigm for devastating diseases, and Royalty Pharma (Nasdaq: RPRX), the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the life sciences industry, reported that Royalty Pharma has acquired an interest in PureTech’s royalty in Karuna Therapeutics’ KarXT for up to $500 million, with $100 million in cash up front and up to $400 million in additional payments contingent on the achievement of certain regulatory and commercial milestones (Press release, PureTech Health, MAR 23, 2023, View Source [SID1234629248]).

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"We are delighted to partner with PureTech, which began a remarkable innovation story with KarXT that has demonstrated an impressive clinical profile in Phase 3," said Pablo Legorreta, Royalty Pharma’s Founder and Chief Executive Officer. "We believe this important therapy will have a significant impact on patients with schizophrenia if approved by the FDA. This medicine is a notable addition to our royalty portfolio and is well aligned with our strategy of investing in breakthrough therapies that address areas of high unmet medical need."

"We’ve seen extraordinary clinical success demonstrated by KarXT, which, if approved, will be the first new mechanism for treating schizophrenia in more than fifty years. KarXT has now demonstrated efficacy in registration enabling studies and is heralded as a potential treatment paradigm shift that could impact millions of patients," said Daphne Zohar, Founder and Chief Executive Officer of PureTech. "This agreement will provide PureTech with additional non-dilutive capital to advance our Wholly Owned Pipeline, including our rapidly maturing clinical programs, towards potential commercialization. Such non-dilutive sources of capital have allowed us to fund our pipeline and operations without having to raise capital from the public markets in over five years, and we are pleased to be able to benefit from the success of our invented programs."

As part of this transaction, PureTech has sold its right to receive a 3% royalty from Karuna to Royalty Pharma on sales up to $2 billion annually, after which threshold Royalty Pharma will receive 33% and PureTech will retain 67% of the royalty payments. PureTech retains its 3.1% equity ownership in Karuna.[1] Additionally, under its license agreement with Karuna, PureTech retains the right to receive milestone payments upon the achievement of certain regulatory approvals and 20% of sublicense income.

KarXT was invented by a team at PureTech, including its Chief Innovation Officer, Eric Elenko, Ph.D., who served as the founding CEO of Karuna Therapeutics. KarXT is an oral, investigational M1/M4-preferring muscarinic agonist in development for the treatment of psychiatric and neurological conditions, including schizophrenia as a monotherapy and adjunctive therapy and psychosis in Alzheimer’s disease. Karuna has announced that it plans to submit a New Drug Application for KarXT in schizophrenia to the U.S. Food and Drug Administration (FDA) in mid-2023.

Sills Cummis & Gross P.C., acted as legal advisors to PureTech and Gibson, Dunn & Crutcher, LLP, Jones Day and Maiwald GmbH acted as legal advisors to Royalty Pharma.

About PureTech’s Wholly Owned Pipeline

In addition to the excellent progress across its Founded Entities, PureTech’s Wholly Owned Pipeline is rapidly advancing, and the Company’s operational runway, including its $341.4 million Cash and Cash Equivalents as of June 30, 2022, not including this transaction, is expected to support this growth into the first quarter of 2026. PureTech’s pipeline is comprised of six therapeutic candidates, four of which are currently clinical stage, including one partnered program. These candidates are centered on a strategy of leveraging validated biology to rapidly advance therapeutics with proven efficacy. Several upcoming milestones are anticipated for these candidates, including the following:

LYT-100 (deupirfenidone) is in development for the potential treatment of conditions involving inflammation and fibrosis, including idiopathic fibrosis (IPF), for which current standards of care are associated with significant tolerability issues, resulting in approximately three out of four patients in the U.S. foregoing treatment with these otherwise efficacious medicines.[2] LYT-100 is a deuterated form of one of the two standard of care treatments, pirfenidone, which has proven efficacy and has been shown to improve survival in these patients by approximately three years, but its side effects cause patients to discontinue or dose reduce, thereby limiting its effectiveness.[3] LYT-100 has shown a 50% reduction in gastrointestinal tolerability issues in a head-to-head study versus pirfenidone, and it can be dosed at a higher exposure level, but with a lower Cmax, than the FDA-approved dosage of pirfenidone, potentially enabling improved efficacy. PureTech is currently evaluating two doses of LYT-100, one with comparable exposure to the approved dose of pirfenidone and one with a higher level of exposure, in a global, randomized double blind, placebo-controlled trial in patients with IPF, which is expected to serve as the first of two registration enabling trials. As previously noted, the Company has taken measures to accelerate enrollment. Topline results are now expected in 2024.
LYT-300 (oral allopregnanolone) is in development for the potential treatment of anxiety disorders and postpartum depression (PPD) where there is a need for more effective treatments that work quickly, have more favorable tolerability and can be administered orally. A placebo-controlled, Phase 2a, proof-of-concept trial using a validated clinical model of anxiety in healthy volunteers is expected to begin in the first half of 2023, with topline results anticipated by the end of 2023. An open-label, Phase 2a, proof-of-concept clinical trial in women with PPD is expected to initiate in the second half of 2023.
LYT-200 (anti-galectin-9 mAb) is in development for the potential treatment of metastatic solid tumors that have poor survival rates as well as hematological malignancies, such as acute myeloid leukemia (AML), where more than 50% of patients either don’t respond to initial treatment or experience relapse after responding to initial treatment.[4] PureTech recently initiated a Phase 1b trial in acute myeloid leukemia, and initial results are expected by the end of 2023. PureTech also recently initiated a Phase 1b trial of LYT-200 in combination with an anti PD-1 antibody, tislelizumab, in patients with urothelial or head and neck cancer. Topline results are expected in 2024.
LYT-310 (oral cannabidiol [CBD]) is in development to expand the therapeutic application of CBD across a range of epilepsies and neurological disorders. LYT-310 is designed to enable oral administration of CBD in a capsule; expand the use of CBD into a broad range of therapeutic areas and patient populations (such as adolescents and adults) where higher doses are required to achieve a therapeutic effect; potentially improve safety and reduce gastrointestinal (GI) tract side effects that are associated with the currently approved CBD-based treatment by reducing GI and liver exposure; and allow for a readily scalable, consistent product in a cost-effective manner. LYT-310 is expected to enter the clinic in the fourth quarter of 2023.

On March 23, 2023 Monopar Therapeutics Inc. (Monopar or the Company) (Nasdaq: MNPR), a clinical-stage biopharmaceutical company focused on developing proprietary therapeutics designed to extend life or improve the quality of life for cancer patients, reported fourth quarter and full-year 2022 financial results and summarized recent developments (Press release, Monopar Therapeutics, MAR 23, 2023, View Source [SID1234629247]).

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Recent Developments

Validive – International Phase 2b/3 Trial, Interim Go/No-go Analysis on Track for End of Next Week

The VOICE trial, in planning for a potential positive go/no-go outcome from the interim analysis, continues to enroll patients in the Phase 3 portion of the VOICE trial and add additional clinical sites (now at 81 active sites across the U.S. and Europe

The blinded interim analysis of clinical data from the Phase 2b patient cohort of the trial, to be performed by an independent data monitoring committee, will be used to recommend the Company either continue enrolling the Phase 3 portion of the trial or to stop the trial. This analysis should be completed and reported out by the end of next week.

Camsirubicin – Phase 1b Dose-Escalation Trial, Now Enrolling Fifth Dose-Level Cohort

Monopar is currently enrolling patients into the fifth dose-level cohort (650 mg/m2), which is nearly 2.5x the highest dose evaluated in any prior camsirubicin clinical trial (265mg/m2

Phase 1b data to date show an improvement in median progression free survival from what was observed in the prior camsirubicin Phase 2 trial (265 mg/m2). This is supportive of our dose-response hypothesis with camsirubicin

To date, no drug-related cardiotoxicity has been observed with camsirubicin treatment as evaluated by the industry standard left-ventricular ejection fraction (LVEF). This compares favorably to the well-documented dose-restricting cardiotoxicity experienced with doxorubicin, the current first-line treatment for advanced soft tissue sarcoma (ASTS

75% of camsirubicin patients in this trial have experienced no hair loss. Of the 25% with any hair loss, only 8% experienced >50% hair loss and only 17% experienced low grade hair loss. This compares favorably to the approximately 50% of doxorubicin treated patients in recent ASTS clinical trials reporting some amount of hair loss, with the majority of these patients experiencing >50% hair loss.

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Only 8% of camsirubicin patients in the trial have experienced low grade, mild oral mucositis. This compares favorably to the roughly 35-40% of doxorubicin treated patients in recent ASTS clinical trials that experienced mild-to-severe oral mucositis.

MNPR-101 for Radiopharmaceutical Use – Promising Preclinical Studies Support FIH Study

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MNPR-101-Zr is a zirconium-89 labeled version of MNPR-101, a highly selective antibody against the urokinase plasminogen activator receptor (uPAR). Positron emission tomography (PET) imaging of preclinical mouse models for triple-negative breast, colorectal, and pancreatic tumors displayed high and selective uptake of MNPR-101-Zr in these uPAR-expressing tumors.

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Based on the promising recently generated preclinical imaging results with MNPR-101-Zr, Monopar and its collaborator, NorthStar Medical Radioisotopes, LLC committed to additional funding with the aim of initiating a first-in-human (FIH) imaging study with MNPR-101-Zr as early as the end of this year.

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These proof-of-concept studies provide support for a FIH PET imaging study with MNPR-101-Zr and a future therapeutic study using the previously announced actinium-225 labeled radioimmunotherapeutic version of MNPR-101. Overall, the imaging results demonstrate the potential utility of MNPR-101 as a precision targeting agent for both imaging and therapy in multiple cancer indications.

MNPR-202 – Promising Preclinical Data Ignites Further Research

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MNPR-202 is designed to retain the same potentially non-cardiotoxic backbone as camsirubicin but is modified at other positions which may enable it to work in certain cancers that are resistant to camsirubicin and doxorubicin.

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Monopar’s collaborator at the National University of Singapore, Cancer Science Institute, has reported data from blood cancer preclinical studies showing that MNPR-202:

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has a similar cytotoxic potency to doxorubicin

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generates increased DNA damage in the cancer cells compared to doxorubicin

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has a unique immune activation profile versus doxorubicin

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demonstrates increased apoptosis (programmed cell death) compared to doxorubicin

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causes a distinct set of genes to be upregulated and downregulated versus doxorubicin and

may also be superior to doxorubicin in certain combination treatment regimens.

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A combination drug screen with 183 compounds was performed, revealing distinct differences in the synergy profile between doxorubicin and MNPR-202 when used along with other compounds. For example, MNPR-202 demonstrated a more favorable synergy profile with the experimental anti-cancer agent volasertib compared to doxorubicin.

Kim R. Tsuchimoto Appointed as New Board Member

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On March 20, 2023, the Company increased its Board size from five to six members.

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Simultaneously, Monopar appointed Kim R. Tsuchimoto, the Company’s Chief Financial Officer, to the Board to serve until the next annual stockholders’ meeting.

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Ms. Tsuchimoto brings over 25 years of experience in the biopharma industry, which includes previously serving as Vice President at BioMarin Pharmaceutical and Chief Financial Officer at Raptor Pharmaceutical. She was involved in BioMarin’s initial public offering onto Nasdaq in 1999, Raptor’s reverse merger onto Nasdaq in 2009, and Monopar’s initial public offering onto Nasdaq in 2019. She brings strong financial management, corporate governance and financial strategy experience to Monopar’s Board.

Results for the Fourth Quarter and Year Ended December 31, 2022, Compared to the Fourth Quarter and Year Ended December 31, 2021

Cash and Net Loss

Cash, cash equivalents and short-term investments as of December 31, 2022, were $13.1 million. Monopar expects that its current funds will be sufficient for Monopar to obtain topline results from its ongoing open-label Phase 1b camsirubicin clinical trial as planned by the end of 2023 (but this may not be the case if camsirubicin reaches even higher dose levels than anticipated and topline results are deferred as dosing continues beyond 2023) and the continued enrollment in the Phase 3 portion of the ongoing Validive Phase 2b/3 (VOICE) clinical program should the interim analysis yield a "go" decision. Monopar will require additional funding and/or a corporate partner to advance its clinical and preclinical programs and anticipates that it will seek to raise additional capital and/or engage a partner within the next 12 months to fund its future operations.

Net loss for the fourth quarter of 2022 was $2.9 million or $0.22 per share compared to net loss of $2.7 million or $0.21 per share for the fourth quarter of 2021. Net loss for the year ended December 31, 2022 was $10.5 million or $0.83 per share compared to net loss of $9.1 million or $0.73 per share for the year ended December 31, 2021.

Research and Development (R&D) Expenses

R&D expenses for the fourth quarter of 2022 were $2.1 million compared to $2.0 million for the fourth quarter of 2021. This increase of $0.1 million was primarily due to 1) an increase of $0.3 million for VOICE clinical trial expenses, and 2) an increase in $0.1 million in R&D consulting partially offset by a decrease of $0.3 million in R&D personnel expenses.

R&D expenses for the year ended December 31, 2022 were $7.6 million compared to $6.5 million for the year ended December 31, 2021. This increase of $1.1 million was primarily due to 1) an increase of $1.0 million for VOICE clinical trial expenses, 2) an increase of $0.5 million for camsirubicin Phase 1b clinical trial expenses, and 3) increase of $0.2 million in R&D consulting partially offset by 1) a decrease of $0.5 million in R&D personnel expenses and 2) a decrease of $0.1 million in preclinical program expenses

General and Administrative (G&A) Expenses

G&A expenses for the fourth quarter of 2022 were $0.8 million, compared to $0.7 million for the fourth quarter of 2021. This increase of $0.1 million was primarily due to an increase in G&A personnel expenses.

G&A expenses for the year ended December 31, 2022 were $2.9 million, compared to $2.6 million for the year ended December 31, 2021. This increase of $0.3 million was primarily due to an increase in G&A personnel expenses.