Knight Therapeutics Inc T.GUD

Updated Outlook

[gudisgood]

Updated Outlook:

Revenue: $300-$320M to $310-$330M

Adjusted EBITDA: 14-15% to 16-17%

[Chianchin]

..and they keep losing money and lower cash as they keep overpaying for share buy back. paradoxically MNGT is very proud of their ten years record

[EbbFlow88]

Seems like a mixed bag. Higher sales which is great to see along with continued flow through of product pipeline. A lot of submissions of recent products.  I think BD is having a tough time finding good product fit or deals at the right price. Also, the timing of inventory and Gilead termination affecting cash flow this Q, but that's very short term fluctuations. Competition/regulatory

[longrun86]

Thanks for your post. I agree with you that BD is underperforming. The operations also are underperforming from a profitability standpoint. The operating income margins should be much higher. I am sure there is some growth spending embedded in the numbers but it is quite far behind where I thought the business would be nearly 5 years after the acquisition. I will tune into the conference call

[gudisgood]

I would also agree that it was a mixed bag of results. Revenue growth but lacking in profitability. Fortunately a nice amount of submissions took place. Even an approval. The pipeline is moving forward although it would be nice to see more products added to it. I'm sure they would like to onload more products to the platform as well. It's just that they will remain patient while looking

[EbbFlow88]

Very well said.  Lol I also checked for Jeff on linkedin. It was odd he wasn't on the call and Henrique Dias wasn't introduced or even mentioned. I might have missed it but I don't think he was.  Seeing him removed from the main page and not on the call isnt great but maybe just added Henrique to take some responsibilities off his plate? Who knows...

[MrMugsy]

Same - maybe there was an introduction and we missed it - I've been away from the computer a bit lately.

[EbbFlow88]

RE: Gilead They transfered inventory worth $6M which raised A/R, which led to increase in working capital outflows. Cash from operations would have been positive ~$4.5M for the Q excluding that transfer. They will get the money paid to them in Q3.

[gudisgood]

There were three people on the call: Samira, Amal and Arvind, as per Samira's introduction. It's anyone's guess why. Perhaps there's been a demotion of some sort... or perhaps they've just determined that four's a crowd on the call and they can do just fine with the three of them. Some further thoughts on the business: Lots of activity with submissions during and

[Chianchin]

Is time for all MNGT and BOD to resign? Yes precisely because of no new deal and using millions of dollars "not earned money but PP Money raised at $10.50"  for an overpriced buy back at $4.80 so that the share price does not collapse lower and they can keep their job. Certainly, they could invest that money in bettter products but for the past years after getting badly burned with

[EbbFlow88]

Thanks for your input Gudisgood! I think it helps to zoom out and look at the last 5-7 years in terms of the BD team. Prior to the GBT deal, everyone was complaining that Goodman was doing nothing with the cash and that there was nothing to find. Then in short order between 2019-21, they put close to 800M to work through GBT, Exelon and share buybacks.  The lack of information or follow up

[gudisgood]

They have indeed put a lot of capital to use. $370M = GBT $180M = Exelon $210M = buybacks That's roughly $760M as you mentioned. In 2022, in-licensing payments (upfront and milestones) totaled $26M. So let's say we're at $800M spent on the platform, products and buybacks. Have we seen a desirable return on these investments so far? I would love to hear your opinions on this. I

[EbbFlow88]

I agree it's not yet apparent. I think if you use the recent yearly cash flows of ~40M on combined purchase price of GBT and Exelon of 550, which is a over simplified calculation but it's probably not too far off, then you are getting a cash return of a little over 7%. I don't think that's what management had in mind when they made those purchases and the market has since reflected

[longrun86]

Your post is spot on so kudos to you. Management probably lost 2-3 years with Covid and that's sometimes just how life works.  My hope is that 3-5 years from now I won't feel like a donkey.  I think Management knows better than anyone else that they need to ramp up in order to generate value for shareholders (which includes themselves). LR