Knight Therapeutics Inc T.GUD

Alternate Symbol(s): KHTRF

Healthcare

Knight Therapeutics Inc. is a specialty pharmaceutical company. The Company’s principal business activity is developing, acquiring, in-licensing, out-licensing, manufacturing, marketing and distributing pharmaceutical products in Canada, Latin America and select international markets. It finances other life sciences companies and secures product distribution rights for Canada and select international markets. The Company invests in life sciences venture capital funds whereby the Company may receive preferential access to healthcare products for Canada and select international markets. It develops pharmaceutical products, including those to treat neglected tropical and rare pediatric diseases. The portfolio consists of pharmaceutical products with molecules and includes both in-licensed products such as Lenvima, Cresemba, Halaven, Trelstar, Akynzeo, Ambisome, Minjuvi, Imvexxy as well as products owned by Knight such as Exelon and Impavido.

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Knight Therapeutics Inc > 2.5 Million Shares Cancelled

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Comment by gudisgoodon Aug 09, 2021 4:03am

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Post# 33670598

RE:RE:RE:RE:RE:RE:2.5 Million Shares Cancelled

Goodman has said that he likes to sleep his nights well (therefore taking on large amounts of debt is not to his liking). However, there are a few situational factors to consider here:

1) The current share price prevents Goodman from selling shares in order to raise money (his go-to move). Instead, since he sees the company significantly undervalued, he buys from the market, and has to figure out other (relatively risk-free) ways to make funds available for investments.

2) As longrun86 said, for inflation/FX-hedging purposes, it probably makes sense to add foreign debt to the balance sheet.

3) Finally, it would probably be expensive to turn the fund investments into cash ahead of schedule. The fund investments have been financially successful, but they've failed to produce the amount of product rights that Goodman hoped for. The investments generate money, but they're not productive the way we want them to be, but selling the funds ahead of schedule would be costly. Therefore the company could loan money against the fund investments.

Points 2) and 3) were mentioned during the Q1/2021 conference call:

Samira Sakhia:

"So, right now, the – as far as the financial assets are concerned, we may borrow against them, because what we’ve seen – if we were to sell them, we are likely not to receive the value that there was in the balance sheet.

The other thing that we are looking to do after closing a loan is, add debt into the balance sheet in local currency to hedge against the currency exposure there. So that’s clearly what’s going to give us a little bit more flexibility in capital."

Also from Q3/2020 earnings call:

"So from an operational standpoint, we were looking at hedging our risk. It's really by the debt we have in the local country. So we do have debt in Brazil that is denominated in BRL, and that's a natural hedge against our operating activities. And that's how we're looking at it going forward. And we're in the process of looking at adding additional debt in different countries and different currencies."

Also remember (from Q4/2020 earnings call):

"In addition, late last year, we filed the short form base shelf prospectus which enables Knight to offer for sale an issue up to $360 million in common shares, subscription receipts and debt securities from time to time for a period of 25 months, during which the shelf remains valid."