It’s been quite the journey for shareholders of Knight Therapeutics, a company that emerged this month as a result of the $1.7-billion purchase of Montreal-based Paladin Labs by U.S. based Endo Health Solutions Inc.
Knight Therapeutics, a stub-company that’s been public for less than three weeks, has been very busy in the capital markets, in part, as the result of the confidence investors have in Paladin’s former management team that’s now running Knight Therapeutics. And that confidence is well based: over a 19-year period, the team turned Paladin into a company valued at $1.7-billion when Endo came knocking last November.
The latest example of that capital market activity occurred Friday when Knight, “a specialty pharmaceutical focused on acquiring or in-licencing innovative pharmaceutical products,” upped the size of its previously announced bought deal. The new plan calls for the company to raise about $180-million via the sale of 34.3 million special warrants at $5.25 per special warrant. The cash will be used “to fund Knight’s future growth as well as for general corporate purposes.”
GMP Securities and Cormark Securities are leading the charge to sell the security that comes with a four-month hold period.
“I am honoured by the overwhelming support from investors and will never take this support for granted,” said Jonathan Ross Goodman, founder of Paladin and chief executive at Knight Therapeutics, at the time the deal was upsized.
That increase in the deal size occurred a short time after the company said it was planning to raise a mere $75-million. It’s not that often that a bought deal is doubled in size. It’s even rarer when the two deals are announced within a short time of each other. Clearly investors want to get aboard.
Of the original $75-million financing, one-third was going to be bought by a company controlled by Goodman. Now that the deal has been increased, Goodman’s company will ante up $40-million.
The new, larger financing that is expected to close on April 10, is the second time in its short life as a public company that Knight Therapeutics has raised equity capital.
In early March, and just two days after its shares were listed on the TSX-Venture Exchange, the company announced a $71-million financing via the sale of 20.3 million special warrants at $3.50 per warrant. As things materialized the financing ended up at $75-million after the underwriters exercised the over-allotment option. On that deal, Goodman’s private company invested about $21-million
One reason for the difference in price between the two deals — $3.50 in early March and $5.25 on Friday — is that the company received approval from the U.S. FDA for its Impavido drug. “In short, it has been an incredibly fun and successful first three weeks of [our] existence,” noted Goodman, in a statement on Friday.
Creating the latter was one part of the Endo’s acquisition of Paladin. In that acquisition, that valued Paladin at $77 a share, Paladin’s shareholders received stock and cash plus one share of Knight, a carve out that included Impavido, “an approved Paladin product indicated for the treatment of leishmaniasis.”
At the time of that purchase, Knight, which also received $1-million in cash, was small with sales of about $2.5-million. With FDA approval presumably sales of that product can only increase. Knight Therapeutics closed Friday at $5.30.