Knight Therapeutics ((TSE:GUD)) has held its Q4 earnings call. Read on for the main highlights of the call.
Knight Therapeutics’ latest earnings call conveyed a mixed sentiment, reflecting both achievements and challenges. The company celebrated record revenues and a robust pipeline expansion, yet faced hurdles with declining gross margins, reduced adjusted EBITDA, and competitive pressures from generic products. While the acquisition of Paladin and new contracts in Brazil were seen as positive developments, they were somewhat overshadowed by currency and hyperinflation issues.
Record-Breaking Revenue and Growth
Knight Therapeutics marked an impressive milestone with 11 consecutive years of record high revenues, achieving over $365 million in revenue and approximately $58 million in adjusted EBITDA for 2024. The company’s promoted portfolio saw a 16% growth over the previous year, maintaining a three-year compound annual growth rate (CAGR) of more than 30%.
Pipeline Expansion
The company made significant strides in expanding its pipeline, introducing five new products. This expansion has resulted in a pipeline of 18 products, which are anticipated to generate peak sales exceeding $150 million, underscoring Knight’s commitment to innovation and growth.
Regulatory Approvals
Knight Therapeutics achieved several regulatory milestones, securing approvals for Minjuvi and TAVALISSE in Mexico and Jornay PM in Canada. Additionally, the company successfully launched Bijuva and Imvexxy in Canada, further strengthening its market presence.
Acquisition of Paladin
The strategic acquisition of Paladin is set to enhance Knight’s portfolio with stable, cash flow-generating products, projected to contribute $70 million in revenue for 2024. This move is expected to bolster the company’s financial stability and market reach.
New MOH Contract in Brazil
Knight secured a new contract with the Ministry of Health in Brazil for AmBisome, anticipating approximately $22.4 million in revenue by 2025. This contract signifies a strategic expansion in the Latin American market.
Gross Margin Decline
The company reported a slight decline in gross margin to 47% for 2024, down from 48% the previous year. This decrease was attributed to changes in product mix, highlighting the need for strategic adjustments.
Adjusted EBITDA Decrease
Knight Therapeutics experienced a $2 million or 4% decrease in adjusted EBITDA compared to the previous year. Despite this, adjusted EBITDA per share remained relatively stable, reflecting resilience amidst financial challenges.
Challenges from Generic Competition
Generic competition in Brazil posed challenges, particularly affecting the sales of Lenvima. Although legal actions are ongoing, the company expects no significant impact on the market, demonstrating confidence in its competitive strategies.
Impact of Foreign Exchange and Hyperinflation
The depreciation of Latin American currencies and hyperinflation in Argentina adversely affected Knight’s financial results, underscoring the volatility of operating in these regions.
Forward-Looking Guidance
Looking ahead, Knight Therapeutics provided substantial guidance for fiscal 2025, forecasting revenues between $390 million to $405 million and an adjusted EBITDA of approximately 13% of revenues. This outlook is contingent on the successful mid-2025 closure of the Paladin transaction, expected to add $70 million in revenue. The company remains focused on sustaining its growth trajectory through ongoing product launches and strategic investments.
In summary, Knight Therapeutics’ earnings call highlighted a blend of record-breaking achievements and notable challenges. The company’s strategic acquisitions and pipeline expansion are poised to drive future growth, despite facing pressures from declining margins and competitive forces. Investors and market watchers will be keenly observing how Knight navigates these dynamics in the coming fiscal year.