Earnings call transcript: Knight Therapeutics Q2 2025 misses EPS, raises revenue

Knight Therapeutics reported its Q2 2025 earnings, revealing a significant miss on earnings per share (EPS) but surpassing revenue expectations. The company posted an actual EPS of -$0.13 against a forecast of $0.0223, marking a surprise of -682.96%. Knight’s revenue of $108.5 million exceeded the forecasted $95.08 million, reflecting a 14.16% surprise. Following the earnings release, the company’s stock price increased by 1.91% to $6.29. According to InvestingPro data, the stock is currently trading near its 52-week high of $4.70, with a robust financial health score of 3.18 (rated as "GREAT"). Analysis suggests the stock is currently undervalued based on InvestingPro’s Fair Value model.

Key Takeaways

• Knight Therapeutics posted a significant EPS miss but exceeded revenue forecasts.
• The company reported a 15% year-over-year increase in revenues.
• Stock price rose by 1.91% following the earnings announcement.
• Revenue guidance for 2025 was raised, reflecting confidence in future growth.

Company Performance

Knight Therapeutics demonstrated robust revenue growth in Q2 2025, with a 15% increase compared to the same period last year. This performance aligns with the company’s impressive 51% revenue CAGR over the past five years. The company’s strategic initiatives, including product launches and partnerships, have bolstered its market presence, particularly in the oncology and infectious disease sectors. InvestingPro analysis reveals 10+ additional insights about Knight’s growth potential and financial strength, available to subscribers.

Financial Highlights

• Revenue: $108.5 million, up 15% year-over-year
• Earnings per share: -$0.13, missing forecast by a wide margin
• Gross margin: 46%, equating to $49 million
• Adjusted EBITDA: $15.5 million, or $0.16 per share

Earnings vs. Forecast

Knight Therapeutics’ actual EPS of -$0.13 was significantly below the forecast of $0.0223, resulting in a negative surprise of 682.96%. In contrast, the company’s revenue of $108.5 million exceeded expectations by 14.16%, highlighting strong sales performance despite the EPS shortfall.

Market Reaction

Following the earnings announcement, Knight Therapeutics’ stock price rose by 1.91% to $6.29. This movement contrasts with the broader market trend, indicating investor confidence in the company’s revenue growth and future prospects despite the EPS miss.

Outlook & Guidance

Knight Therapeutics revised its 2025 revenue guidance upward to a range of $410-$420 million, reflecting optimism about upcoming product launches and strategic initiatives. The company anticipates an EBITDA margin of approximately 13% of revenues, with potential improvements expected in the coming years. InvestingPro data supports this positive outlook, indicating that net income is expected to grow this year, while the company maintains more cash than debt on its balance sheet.

Executive Commentary

CEO Samira Sakia emphasized the company’s execution on transactions since 2020, stating, "We have been executing since 2020, 2021 on transactions." Chief Business Officer Amal Khoury highlighted future acquisition plans, saying, "We will continue to look for both acquisitions of specific products or portfolios of products or companies."

Risks and Challenges

• Potential supply chain disruptions could impact product availability.
• Market saturation in key therapeutic areas may limit growth.
• Macroeconomic pressures, such as currency fluctuations, could affect financial performance.
• Regulatory challenges in new markets may delay product launches.
• Competitive pressures from other pharmaceutical companies could impact market share.

Q&A

During the earnings call, analysts inquired about the larger-than-expected order from the Brazilian Ministry of Health and the progress of the Paladin integration. Executives confirmed that the integration is proceeding efficiently and expressed optimism about potential additional orders.

Full transcript - Knight Therapeutics Inc (GUD) Q2 2025:

Sergio, Conference Call Operator: Good morning, ladies and gentlemen. My name is Sergio, and I will be your operator. Welcome to Knight Therapeutics Second Quarter twenty twenty five Results Conference Call. Before turning the call over to Samira Sakia, President and CEO of Knight, listeners are reminded that portions of today’s discussion may, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward looking statements. The company considers the assumptions on which these forward looking statements are based to be reasonable as the fact they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the company and its subsidiaries, may ultimately prove to be incorrect.

The company disclaims any intention or obligation to update or revise any forward looking statements, whether as result of new information, future events, except as required by law. We will also like to remind you questions during today’s call will be taken from analysts only. Should there be any further questions, please contact Knight’s Investor Relations department via email to ir@knighttx.com or via phone at (514) 484-4483. I would like to remind everyone that this call is being recorded today, 08/07/2025. And we’ll now like to return the meeting over to your host for today’s call, Samira Sakia.

Please go ahead, Ms. Sakia.

Samira Sakia, President and CEO, Knight Therapeutics: Thank you, Sergio. Good morning, everyone, and welcome to Knight Therapeutics second quarter twenty twenty five conference call. I’m joined on today’s call with Amal Khoury, our Chief Business Officer, and Arvind Ujana, our Chief Financial Officer. I’m excited to announce that for the 2025, we achieved a record high adjusted revenues of $197,000,000 driven by our innovative promoted product portfolio, which delivered organic growth of 15% on a constant currency basis. Our adjusted EBITDA for the six months of 2025 was $27,600,000 In addition to driving strong results, we continue to execute on the business development front.

With the Paladin and Sumitomo transactions, we added over 50 products to our portfolio, including five pipeline and early launch assets, which will further accelerate the growth trajectory of our Canadian business. We also continue to strengthen our relationships and partnerships. Earlier this year, we expanded our agreement with HealthSean and relaunched Onasit in Brazil and Mexico. In addition, earlier this week, we announced that we added two innovative pipeline products in oncology, retifanlimab and axatilamab for LATAM from Incyte. Moving to the pipeline.

We continue to advance our portfolio with the regulatory submissions of MINJUVI for follicular lymphoma in Brazil, as well as CREXANT in Canada and Mexico. In addition, we obtained the approval of Pemazyre in Argentina and Rembre or Dasatinib in Chile. Now talking about our NCIB. Knight completed the NCIB launched in July 2024, and during that twelve month period, we purchased 2,000,000 shares at an average price of $5.48 for an aggregate consideration of $11,000,000 Finally, we have secured a US50 million dollars revolving credit facility with National Bank. We have launched a syndication process to increase the size of the facility to up to US100 million dollars with an additional accordion of US50 million dollars This facility will ensure that we remain well positioned to continue to transact and execute on our mission to acquire, in license, develop and commercialize pharmaceutical products in Canada and Latin America.

I’ll now turn the call over to Arvind to cover our results.

Arvind Ujana, Chief Financial Officer, Knight Therapeutics: Thank you, Samira. When speaking of our financial results, I will refer to adjusted EBITDA and financial results at constant currency, which are non IFRS measures, as well as adjusted EBITDA per share, which is a non IFRS ratio. Knight defines adjusted EBITDA as operating or loss, excluding amortization an impairment of non current assets, depreciation, the impact of accounting under hyperinflation, acquisition and transaction costs, inventory step up expense, and other non recurring expenses, but to include costs related to leases. We define adjusted EBITDA per share as adjusted EBITDA over the number of common shares outstanding at the end of the respective period. In addition, revenues and financial results at constant currency are also non GAAP measures.

Financial results at constant currency are obtained by translating the prior period results at the average foreign exchange rates in effect during the period, except for Argentina, where we only exclude hyperinflation. Furthermore, my discussion on the operating results will refer to figures that exclude hyperinflation unless otherwise indicated. For the 2025, we delivered revenues of $108,500,000 representing an increase of $14,000,000 or 15% compared to the same quarter last year. A constant currency basis, revenues increased by approximately $19,000,000 or 21%. This increase was driven by the growth of our key promoted products, which grew by $13,500,000 or 20%, as well as incremental revenues of over $2,000,000 from the Paladin and Sumitomo transaction, as well as buying patterns of certain products.

Moving on to revenues by therapeutic area. The oncology hematology portfolio delivered $35,500,000 in Q2 twenty five. Excluding the termination of a non strategic distribution agreement in Colombia, the portfolio increased by approximately $2,100,000 on a constant currency basis compared to the same period last year. This growth was primarily driven by AKINZEO, the launch of Minjury, and the addition of Orgovyx and Onesit, which was offset by a decline in our mature and branded generic products due to the lifecycle. Our infectious disease portfolio delivered $45,000,000 an increase of $7,500,000 or 20%.

On a constant currency basis, the portfolio grew by $9,500,000 or 26% compared to the same period last year. The increase was due to the growth of Cresemba, additional Ambisome deliveries to the Ministry of Health in Brazil, offset by purchasing patterns of certain products. Turning to our other specialty therapeutics areas. The portfolio generated approximately $28,000,000 in revenues, an increase of $7,000,000 or 34%. On a constant currency basis, the portfolio grew by $8,000,000 or 42% compared to the same period last year.

The increase was mainly driven by the launch of IMVEXXY and BIJUVA, the additions of Paladin endosumit tumor products, as well as purchasing patterns of certain customers. Now moving on to gross margin. We reported $49,000,000 or a gross margin of 46% of adjusted revenue in Q2 ’twenty five compared to $45,000,000 or 48% of adjusted revenue in the same period last year. The decrease in the gross margin percent was mainly explained by the product mix as well as severance costs related to the closures of Knights HIV and respiratory facility in Argentina. All the key products produced in that manufacturing facility were transferred to certain contract manufacturers.

I will now turn to our operating expenses excluding amortization. For the second quarter, our operating expenses were $38,400,000 an increase of $8,000,000 or 27% compared to the same period last year. Excluding the acquisition costs related to the Paladin transaction, our operating expenses increased by approximately $5,000,000 or 15%. The increase in operating expenses was driven by prelaunch and launch investments behind the launch of Minjuvy in Mexico, join APM in Canada, an increase in activities behind our key promoted products, incremental costs related to the Paladin infrastructure, as well as an increase in share based compensation following period degree assessment of vesting targets. Moving on to adjusted EBITDA.

For the 2025, we reported $15,500,000 of adjusted EBITDA or $0.16 per share, which is relatively unchanged compared to the same period last year. I will now cover our financial assets, which are valued at $103,000,000 as at 06/30/2025. In the second quarter, we settled the Synergy loan receivable in exchange for $13,800,000 in cash and $1,100,000 in warrants. In addition, subsequent to the quarter, we collected $3,800,000 to settle Knight Last strategic strategic loan receivable with a life science company. As of today, Knight has collected all of its strategic loan receivable.

Now moving on to our funds and equities. In the second quarter, we recorded a net loss of $5,700,000 mainly driven by the mark to market revaluations of our strategic fund investments, partly offset by the change in value of certain equities. As a reminder, our funds continue to be a source of cash. We received net proceeds of $5,000,000 in 2025 and $44,000,000 since 2020. Moving on to our cash position and cash flows.

At the end of Q2, our net debt position was $6,500,000 We held $97,700,000 in debt and $91,200,000 in cash and marketable securities. During the quarter, we generated cash inflows from operations of $20,000,000 driven by our operating results as well as a decrease of $13,000,000 in working capital as a result of collections in our accounts receivable. In terms of our investing activities, we deployed $131,000,000 in the Paladin and Sumitomo transaction and received $15,800,000 from our strategic loans and funds. A portion of the Paladin acquisition was financed by the withdrawal of $60,000,000 from the revolving credit facility with National Bank. In addition, as announced previously, we had withdrawn $35,000,000 from our Citi working capital line of credit.

That amount was repaid in full during the quarter. I will now turn the call over to Amal.

Amal Khoury, Chief Business Officer, Knight Therapeutics: Thank you, Arvind. 2025 continues to be a very productive year for our business development team. This week, we announced that we expanded our existing relationship with Incyte and added exclusive LatAm rights to retifanlimab, which is sold as ZYNYS in The US and Europe, and axatilamab, which is sold as Nictimso in The US. Retifanlimab is approved in The US and Europe for the treatment of adult patients with metastatic or recurrent locally advanced Merkel cell carcinoma or MCC, which is a rare and aggressive type of skin cancer. Based on epidemiological data from two Brazilian registries, there are an estimated five fifty to twelve fifty fifty new cases of MCC each year across Brazil, Mexico, Colombia and Argentina.

Retifanlimab is also approved by the FDA in combination with carboplatin and paclitaxel for the first line treatment of adult patients with inoperable locally recurrent or metastatic squamous cell carcinoma of the anal canal, or SCAC. In addition, the FDA approved retifanlimab as a single agent for the treatment of adult patients with locally recurrent or metastatic SCAC with disease progression on or intolerance to platinum based chemotherapy. While epidemiological data for SCAC in LatAm is limited, there are an estimated two thousand seven hundred to four thousand new cases of SEAC each year in Brazil, Mexico, Colombia, and Argentina. The second product, axatilamab, is approved in The US for the treatment of chronic graft versus host disease, or CGVHD, after failure of at least two prior lines of systemic therapy in adult and pediatric patients weighing at least forty kilograms. EGVHD is a serious complication of allogeneic stem cell transplantation in which the donor’s immune cells attack the recipient’s tissues, potentially affecting multiple organs such as the skin, liver, lungs, and gastrointestinal tract.

There are approximately fourteen hundred to eighteen hundred reported allogeneic transplants in Brazil every year. The expansion of this existing relationship with Incyte, and earlier this year with HealthIn reflect our ability to deliver end market success from regulatory submissions to approvals to commercial execution. In addition, the Paladin and Sumitomo transactions illustrate our ability to build a balanced portfolio that includes both innovative, growing, promoted products, as well as profitable, mature, cash flow generating products. I will now turn over the call back to Samira.

Samira Sakia, President and CEO, Knight Therapeutics: Thank you, Amal. Now onto our financial outlook for fiscal twenty twenty five. I would like to remind everyone that the guidance provided earlier this year included the close of the Paladin acquisition in mid-twenty twenty five and also assumed that there is no material adjustment due to hyperinflation accounting in Argentina. In addition, our guidance is based on a number of assumptions which are described in our press release. Should any of these assumptions differ, the financial outlook and the actual results may vary materially.

We are increasing our outlook for fiscal twenty twenty five and expect to generate revenues between $410,000,000 to $420,000,000 up from $390,000,000 to $4.00 $5,000,000 We expect our EBITDA to remain at approximately 13% of revenues. The change in our revenue outlook is driven by better performance in the first half of the year and the incremental revenues from the Sumitomo transaction. Looking ahead, we are very excited with what we can deliver to our stakeholders with our recent and upcoming launches, as well as our pipeline products. In addition, the Paladin and Sumitomo transactions mark a pivotal step in accelerating our growth and strengthening our position in the Canadian market. With our expanded portfolio, increased operational scale, and capital flexibility, we remain well positioned to drive long term value and deliver on our mission to acquire, in license, develop, and commercialize pharmaceutical products for Canada and Latin America.

Thank you for your support and confidence in the NIT team. This concludes our formal remarks. I would now like to open the call for questions. Back to you, Sergio.

Sergio, Conference Call Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised.

Arvind Ujana, Chief Financial Officer, Knight Therapeutics: Should you wish to

Sergio, Conference Call Operator: decline from the polling process, please press the star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Michael Freeman from Raymond James. Please go ahead.

Michael Freeman, Analyst, Raymond James: Hey. Good morning, Samir, Arv, and Amal. Congratulations on this quarter and all and all the business development and launch activity you’ve been doing recently. It did looks like it’s been a busy year. My first question, it looked like there was a significant order from the Brazilian MOH this quarter.

I wonder if you could describe whether you expect more orders from the MOH during the rest of the year if this was completed, the contract that was contemplated for 2025. And then in addition, I wonder if you could tell us about when a potential 2026 contract would be negotiated.

Samira Sakia, President and CEO, Knight Therapeutics: That’s a great question. We did see a bigger purchase than we originally expected. As for can they buy more in the rest of the year, as of today, we don’t really have a commitment from them to purchase. Yes, they are allowed to purchase more, but we haven’t seen it yet. They may purchase more, but it will be a small amount, probably maximum in the four to six range.

As for next year’s contract, we expect to have more information later in the fall.

Michael Freeman, Analyst, Raymond James: Okay. All right. Thank you, Samiria. And now I wonder if you could give us an update on your integration of Paladin. We saw a few transaction costs here.

Also saw that R and D increased as a result of some Paladin related activity. I wonder, yeah, if you could provide us that update and then if you could give us your expectation of what R and D levels might be for the rest of the year.

Samira Sakia, President and CEO, Knight Therapeutics: So what you see in the G and A is really the transaction costs, not really integration costs. And that’s really legal, bank fees and other advisory fees that we had in the process. And for the year, for the six months, that was in the $4 ish million range. As it comes to R and D or G and A or sales and marketing, it’s kind of spread throughout the various OpEx lines. When it comes to transition, our teams have run really fast through it and are continuing to race through it because, as we’ve talked about before, part of the return thesis is bringing OpEx under control.

As it’s in our MD and A, to date, we have restructured the organization by about 25% of the headcount. We do expect a little bit more, and as we said in the Sumitomo call, it will not be as high as we originally expected because there will be, in connection with Journee, in connections with the brands that we just brought on with Sumitomo, a few more positions, and those gaps will be filled by the Palatin team.

Michael Freeman, Analyst, Raymond James: Okay. All right. Yeah, thank you very much. I’ll pass the line here.

Sergio, Conference Call Operator: Thank you. Your next question comes from David Martin from Bloom Burton. Please go ahead.

David Martin, Analyst, Bloom Burton: Good morning and congratulations on the quarter. The business development activity seems to have really stepped up recently. I’m wondering, have opportunities become more attractive and what has changed to make them more attractive? Or is this because the company completed the integration and streamlining of BioToscana and that positioned them better to increase a BD?

Samira Sakia, President and CEO, Knight Therapeutics: David, what I’m going to say is we have been extremely productive over the last five years. If I was to probably go back and pull the transcript this time last year, everybody said we’ve been more productive than we had been in the previous year. And as Amal has always said, there is ebbs and flows, but we have been executing since 2020, 2021 on transactions. We will continue. And as you see, are yes, we’ve used up our cash, but we have begun a process to continue to have financial flexibility.

We ended the quarter with $90,000,000 of cash. We are expanding our debt facility that could give us anywhere between an additional $70,000,000 and 150,000,000 so that we can continue to execute.

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

Samira Sakia, President and CEO, Knight Therapeutics: We’ll guide to 2026 later in early twenty six. But yes, Paladin will have a better margin, but it is relatively small when you compare to the entire business. What I do expect is as we move through the next couple of years, and I’m talking about ’twenty six, ’twenty seven, ’twenty eight, we will see step ups, small increases over the next couple of years, and then really a relatively bigger increase as the products that are launching start to become real large contributors.

David Martin, Analyst, Bloom Burton: Okay, and just one last quick question. Are there plans for any further share buybacks?

Samira Sakia, President and CEO, Knight Therapeutics: So as you know, over the last few years, we’ve invested over $250,000,000 in our stock. We continue to believe that Knight is of good value. We’re going to continue to evaluate, and if we think that there is an opportunity, we will be relaunching the, the NCIB.

David Martin, Analyst, Bloom Burton: Thank you. That’s it for me.

Sergio, Conference Call Operator: Thank you. Your next question comes from Sahil Singhra from RBC. Please go ahead.

Sahil Singhra, Analyst, RBC: Hi. Good morning. This is Sahil for Doug. I have two questions. One is on the Sumitomo portfolio.

Can you remind us what’s the current run rate, for top line for that portfolio? And what growth are you anticipating in 2026? And second question I have is is business development related. So, the Paladin acquisition that you’ve closed now, do you we expect more acquisitions in Canada, given that you have a larger commercial footprint? Thank you.

Samira Sakia, President and CEO, Knight Therapeutics: Sure. So, I’ll take the first one, and I’ll turn the second one over to Amol. So, when we had this call, when announced Sumitomo, we had said that the portfolio had approximately $11,000,000 in sales for the last year. We expected that number to be the same for this year. Didn’t, and so really we have a half year impact of that $11,000,000 in 2025.

We didn’t really guide to the growth of those specific products. What I can tell you is in the case of Orgovyx, Orgovyx is an antagonist in large market. There is one other antagonist in the market today, which is furosemone. That’s an injection. There is an advantage of Orgovyx, which is an oral, and the injection is not listed, does not have public reimbursement in Alberta and BC, and it does approximately sales of about $8,000,000 in Canada.

So you can kind of project out this was a product that was just launched, Orgovyx does have reimbursement. Has passed through PCPA. It has reimbursement. We have today signed up Ontario, Quebec, BC, a couple of the smaller provinces, and we expect to get rest of Canada over the next year. Actually, should talk about MyFembre, sorry.

MyFembre is also an early launch product. It has a couple of different competitors. Orlyssa, which is really kind of another oral, does about $9,000,000 of sales, mostly private, and it was launched in 2018. There is more to this market through LHR agonists for women, but if you kind of look at Orlysa, it does about 9,000,000 of sales. Mifembrane was just launched about a year ago.

We expect that product to continue to grow. And what’s great about these two products is they are a great fit in the case of Orgovyx with Trelstar and in the case of Mifengre with IMVEXXY and BIJUVA. So we already have reps in the field for physicians. We will be expanding the teams slightly, and that’s why I’m saying that there will be team additions to have better reach in places that we don’t have today. Sahil, this is Amal.

Amal Khoury, Chief Business Officer, Knight Therapeutics: I’ll take your second question from perspective. I think your question was with the Paladin transaction, does that change or what does that mean for further acquisitions? Well, the answer is really simple. As we’ve been saying, this is really what you guys have been seeing over the last year and the last five years is a continuing execution of our strategy. And nothing will change there.

We will continue to look for both acquisitions, it’s of specific products or portfolios of products or companies, as well as in licensing additional products for our pipeline. So none of that will change. We have the capacity to execute and we’ll continue to execute as we have been.

Sahil Singhra, Analyst, RBC: Okay, great. Thank you so much for taking questions.

Sergio, Conference Call Operator: Thank you. There are no further questions at this time. I will now turn the call over to Samira Sakia for closing remarks. Please go ahead, Ms. Sakia.

Samira Sakia, President and CEO, Knight Therapeutics: Thank you, Sergio. Once again, thank you for the confidence in the Knight team for joining our Q2 ’twenty five conference call. Have a great morning.

Sergio, Conference Call Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you all for your participation. You may now disconnect.

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