Market Newsdesk

SAN DIEGO, Nov. 13, 2020 (GLOBE NEWSWIRE) — Crinetics Pharmaceuticals, Inc. (Nasdaq: CRNX), a clinical stage pharmaceutical company focused on the discovery, development and commercialization of novel therapeutics for rare endocrine diseases and endocrine-related tumors, today announced that it will host a virtual Key Opinion Leader (KOL) meeting on oral paltusotine for the treatment of acromegaly on Friday, November 20, 2020 at 11:00 am Eastern Time.

The call will feature a presentation by KOLs Peter Trainer, MD (The Christie NHS Foundation Trust) and Monica Roberto Gadelha, MD, PhD (Medical School of the Universidade Federal do Rio de Janeiro), who will discuss the current treatment landscape, which is comprised primarily of injected somatostatin receptor ligand (SRL) products. In addition, they will share their insights into the unmet medical need in treating patients with acromegaly and the implications of the topline results from the Phase 2 ACROBAT studies with oral paltusotine that were released on October 26, 2020. Drs. Trainer and Gadelha will be available to answer questions following their formal presentations.

Crinetics’ management team will provide a brief update on oral paltusotine and two other pipeline assets that Crinetics expects will begin Phase 1 in the coming months. Paltusotine establishes a new class of oral selective nonpeptide somatostatin receptor type 2 (SST2) agonists designed for the treatment of acromegaly. Based on the positive topline Phase 2 results, Crinetics expects to begin its Phase 3 program in the first half of 2021, to further characterize the differentiating features relative to the current standard of care.

To register for the webinar, please click here.

Dr. Trainer is an active leader in the international endocrine community and has served on the senior executive committees of the Society for Endocrinology, the Endocrine Society and the European Society of Endocrinology (ESE). He chaired the ESE’s Programme Organising Committee in 2011 for the European Congress of Endocrinology and received the Society’s ‘Special Recognition Award’ in 2014 for his contributions as chairman of the Society’s Education Committee. He chaired the board of directors of Bioscientifica Ltd from 2014 to 2016 and served on the editorial board of Endocrine Connections, a Bioscientifica publication. His prime areas of interest are diseases of the pituitary and adrenal glands, particularly Cushing’s syndrome and acromegaly. His research has resulted in over 200 peer-reviewed publications. Dr. Trainer received his medical degree at the University of Edinburgh, undertook his general medical rotation at St. Bartholomew’s Hospital in London. In addition, he completed a European Economic Community exchange program as a resident at the Academisch Ziekenhuis Utrecht in the Netherlands and studied at Oregon Health & Sciences University in Portland, Oregon under a Fulbright scholarship.

Dr. Gadelha, a member of the Brazilian National Academy of Medicine, is a professor of endocrinology at the Medical School of the Universidade Federal do Rio de Janeiro (UFRJ) and directs the Neuroendocrine Research Center at UFRJ’s Hospital Universitário Clementino Fraga Filho (HUCFF), a premier research and teaching hospital in Brazil. Dr. Gadelha also heads the Neuroendocrine Section and the Molecular Genetics Laboratory of the Instituto Estadual do Cérebro Paulo Niemeyer. She is a board member in the Department of Neuroendocrinology at the Brazilian Society of Endocrinology and Metabolism, as well as a researcher at Brazil’s Conselho Nacional de Desenvolvimento Cientifico e Tecnológico and is president-elect of the Pituitary Society. Her main areas of interest are diseases of the pituitary gland, particularly acromegaly and Cushing’s disease. Dr. Gadelha’s clinical and translational research has resulted in over 150 peer-reviewed publications. She earned her medical degree from HUCFF-UFRJ and completed her doctoral research at the University of Illinois at Chicago, after which she returned to Brazil and received her PhD from UFRJ.

About Paltusotine

Paltusotine (formerly CRN00808) is an orally available nonpeptide biased agonist that is designed to be highly selective for the somatostatin receptor type 2. It was designed by the Crinetics discovery team to provide a once-daily oral option for patients with acromegaly and neuroendocrine tumors who are currently treated by injected therapies that sell approximately $3.1 billion annually. Topline results from Crinetics’ ACROBAT Edge and Evolve Phase 2 trials showed maintenance of insulin-like growth factor-1 (IGF-1) levels in acromegaly patients who were switched from first-line injected somatostatin receptor ligand (SRL) depots of either octreotide or lanreotide monotherapy. Paltusotine was observed to be well-tolerated among the 60 participants in the ACROBAT Edge and Evolve studies. Crinetics’ previously completed Phase 1 studies showed that paltusotine was 70% orally bioavailable and possesses a plasma half-life of ~2 days, supporting the potential for once-daily oral administration.

About Acromegaly

Acromegaly is a serious disease generally caused by a benign growth hormone (GH) secreting tumor in the pituitary. Excess GH secretion causes excess secretion of IGF-1 from the liver, which causes bone and cartilage overgrowth, organ enlargement, and changes in glucose and lipid metabolism. The symptoms of acromegaly include abnormal growth of hands and feet and changes in shape of the bone and cartilage that result in alteration of facial features. Overgrowth of bone and cartilage and thickening of tissue leads to arthritis, carpal tunnel syndrome, joint aches, enlarged lips, nose and tongue, deepening of voice due to enlarged vocal cords, sleep apnea due to obstruction of airways and enlargement of heart, liver and other organs.

Surgical removal of pituitary adenomas, if possible, is the preferred initial treatment for most acromegaly patients. Pharmacological treatments are used for patients who are not candidates for surgery, or when surgery is unsuccessful in achieving treatment goals. Approximately 50% of patients with acromegaly prove to be candidates for pharmacological treatment. Long-acting SRLs are usually the initial pharmacologic treatment, however these drugs require monthly injections and are commonly associated with pain, injection site reactions, and increased burden in the lives of patients. Although over 90% of patients have demonstrable responses to SRLs (Annals of Internal Medicine. 1992; 117:711-718) only 20-40% of patients achieve normalization of IGF-1 (J Clin Endocrinol Metab 99: 791–799, 2014). Additional pharmacological treatment options include dopamine agonists or GH receptor antagonists which may be used in combination with SRLs.

About Crinetics Pharmaceuticals

Crinetics Pharmaceuticals is a clinical stage pharmaceutical company focused on the discovery, development, and commercialization of novel therapeutics for rare endocrine diseases and endocrine-related tumors. The company’s lead product candidate, paltusotine (formerly CRN00808), is an oral selective nonpeptide somatostatin receptor type 2 biased agonist for the treatment of acromegaly, an orphan disease affecting more than 25,000 people in the United States. Crinetics plans to advance paltusotine into a Phase 3 program in acromegaly and a Phase 2 trial for the treatment of carcinoid syndrome associated with NETs in 2021. The company is also developing CRN04777, an oral nonpeptide somatostatin receptor type 5 (SST5) agonist for hyperinsulinism, as well as an oral nonpeptide ACTH antagonist for the treatment of Cushing’s disease, congenital adrenal hyperplasia and other diseases of excess ACTH. All of the company’s drug candidates are new chemical entities resulting from in-house drug discovery efforts and are wholly owned by the company. For more information, please visit www.crinetics.com.

Forward-Looking Statements

Crinetics cautions you that statements contained in this press release regarding matters that are not historical facts are forward-looking statements. These statements are based on the company’s current beliefs and expectations. Such forward-looking statements include, but are not limited to, statements regarding: the potential benefits of paltusotine for acromegaly patients; the potential to initiate a Phase 3 program of paltusotine in acromegaly based on the Edge and Evolve topline results and the timing thereof; and the planned expansion of the paltusotine development program to include the treatment of carcinoid syndrome in patients with NETs and the expected timing thereof, including initiation of a Phase 2 trial in these patients. The inclusion of forward-looking statements should not be regarded as a representation by Crinetics that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in Crinetics’ business, including, without limitation: topline data that Crinetics reports is based on a preliminary analysis of key efficacy and safety data, and such data may change following a more comprehensive review of the data related to the clinical trials and such topline data may not accurately reflect the complete results of a clinical trial, and the FDA and other regulatory authorities may not agree with Crinetics’ interpretation of such results; advancement of paltusotine into a Phase 3 program is dependent on and subject to the receipt of further feedback from the FDA; the COVID-19 pandemic may disrupt Crinetics’ business and that of the third parties on which it depends, including delaying or otherwise disrupting its clinical trials and preclinical studies, manufacturing and supply chain, or impairing employee productivity; the company’s dependence on third parties in connection with product manufacturing, research and preclinical and clinical testing; the success of Crinetics’ clinical trials and nonclinical studies for paltusotine and its other product candidates; regulatory developments in the United States and foreign countries; unexpected adverse side effects or inadequate efficacy of the company’s product candidates that may limit their development, regulatory approval and/or commercialization; Crinetics may use its capital resources sooner than it expects; and other risks described under the heading “Risk Factors” in documents the company files from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and Crinetics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Contacts:

Marc Wilson
Chief Financial Officer
[email protected]
(858) 450-6464

Investors / Media:
Corey Davis
LifeSci Advisors
[email protected]
(212) 915-2577

Aline Sherwood
Scienta Communications
[email protected]
(312) 238-8957

MONTREAL, Nov. 13, 2020 (GLOBE NEWSWIRE) — Knight Therapeutics Inc. (TSX: GUD) (“Knight” or “the Company”), a leading pan-American (ex-US) specialty pharmaceutical company, today reported financial results for its third quarter ended September 30, 2020. All currency amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

Q3 2020 Highlights

Financials

• Revenues were $45,239, an increase of $41,209 or 1,023% over prior year.
• Gross margin was $19,533 or 43% compared to $3,301 or 82% in prior year.
• Interest income generated of $3,188 a decrease of $2,870 or 47% over prior year.
• Adjusted earnings¹ of $6,582, an increase of $1,020 or 18% over prior year.
• Net income for the period was $17,492 compared to a net loss of $2,959 in prior year.

Corporate Developments

• Launched a normal course issuer bid (“NCIB”) in July 2020 and purchased 797,952 common shares for an aggregate cost of $4,745.
• Completed the tender offer process and acquired all of the outstanding Brazilian Depositary Receipts (“BDR”) of Biotoscana Investments S.A. (“GBT”).

Products

• Obtained regulatory approval for Lenvima^® and Halaven^® in Ecuador.
• Received regulatory approval from Health Canada for Imvexxy™ and Bijuva^®.
• Submitted a supplement to a New Drug Submission (“NDS”) of Nerlynx for HER2-positive metastatic breast cancer.

Strategic Investments

• Received distributions of $14,887 from strategic fund investments and realized a gain of $9,348.

Key Subsequent Event

• Signed a new exclusive distribution agreement with Gilead for the continued commercialization of AmBisome® in Brazil, effective January 1, 2021.

“We are pleased to have completed the GBT acquisition and are knee deep in needed integration work which is complicated by COVID-19. In addition, we remain focused on execution of business development initiatives to in-license and acquire innovative pharmaceuticals for the Canadian and Latin American markets”, said Jonathan Ross Goodman, CEO of Knight Therapeutics Inc.

_____________________
¹Adjusted earnings is not a defined term under IFRS, refer to the definition below for additional details.

SELECT FINANCIAL RESULTS & BALANCE SHEET ITEMS

[In thousands of Canadian dollars]

	Change												Change
	Q3-20		Q3-19		$ 1		%2		YTD-20		YTD-19		$1		%2
Revenues	45,239		4,030		41,209		1,023	%	144,328		10,190		134,138		1,316	%
Gross margin	19,533		3,301		16,232		492	%	61,630		8,519		53,111		623	%
Selling and marketing	7,763		1,146		(6,617	)	577	%	26,928		3,341		(23,587	)	706	%
General and administrative	10,835		4,761		(6,074	)	128	%	27,424		12,339		(15,085	)	122	%
Research and development	2,967		892		(2,075	)	233	%	8,035		2,502		(5,533	)	221	%
Amortization of intangible assets	5,703		424		(5,279	)	1,245	%	17,546		1,273		(16,273	)	1,278	%
Operating loss	(7,735	)	(3,922	)	(3,813	)	97	%	(18,303	)	(10,936	)	(7,367	)	67	%
Interest income	(3,188	)	(6,058	)	(2,870	)	47	%	(11,515	)	(18,108	)	(6,593	)	36	%
Interest expense	822		—		(822	)	N/A		3,070		—		(3,070	)	N/A
Foreign exchange loss	703		638		(65	)	10	%	9,666		3,315		(6,351	)	192	%
Net income (loss)	17,492		(2,959	)	20,451		N/A		23,527		21,186		2,341		11	%
Basic net earnings (loss) per share	0.138		(0.021	)	0.159		N/A		0.256		0.150		0.106		71	%
Adjusted earnings3	6,582		5,562		1,020		18	%	23,510		14,755		8,755		59	%
1 Includes fair value adjustments recorded on the business combination
2 A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income
3 Percentage change is presented in absolute values

					Change
	09-30-20		12-31-19		$		%1
Cash, cash equivalents, restricted cash and marketable securities	392,352		536,182		(143,830	)	27	%
Trade and other receivables	65,611		108,182		(42,571	)	39	%
Inventory	61,783		70,870		(9,087	)	13	%
Financial assets	173,116		159,151		13,965		9	%
Accounts payable, accrued and other liabilities	44,128		96,156		(52,028	)	54	%
Bank loans	43,407		55,579		(12,172	)	22	%
1 Percentage change is presented in absolute values

Revenue:
For the quarter ended September 30, 2020, GBT’s financial results accounted for $40,574 of incremental revenues ($16,020 in Brazil, $8,497 in Argentina, $7,659 in Colombia and $8,398 in the rest of the Latin American region). The remainder of the growth in revenues of $635 attributable to timing of sales of Impavido^® and the in-licensing of Trelstar^®. The increase in year-to-date revenues is primarily attributed to consolidation of GBT’s financial results as well as the growth in sales of Movantik^®, timing of sales of Impavido^®, and in-licensing of Trelstar^®.

Gross margin:
For the quarter ended September 30, 2020, the gross margin decreased to 43% compared to the same period in the prior year due to consolidation of GBT’s results and an inventory provision of $1,871 due to impact of COVID-19 on certain new product launches. The gross margin would have been 46%, an increase of 3%, from 43% after excluding the adjustment of hyperinflation accounting in accordance with IAS 29.

Selling and marketing:
The increase of $6,617 for the quarter is primarily driven by the consolidation of GBT.

General and administrative:
The increase in general and administrative expenses of $6,074 for the quarter ended September 30, 2020 is due to consolidation of GBT’s financial results which accounted for $4,710 of incremental general and administrative expenses for the three-month ended September 30, 2020. In addition, in Q3-2020 Knight incurred $3,490 in legal and advisory fees in relation to the unified tender offer compared to $2,476 in Q3-2019 for the acquisition of 51.2% of GBT.

Research and development:
GBT’s financial results accounted for $2,006 of incremental research and development expenses for the three-month period ended September 30, 2020.

Amortization of intangible assets:  Increase due to the amortization of the definite-life intangible assets acquired in the GBT acquisition.

Interest income:
Interest income is the sum of interest income on financial instruments measured at amortized costs and other interest income.  For the quarter, interest income was $3,188 a decrease of 47% or $2,870 compared to the same period prior year. The decrease is due to lower interest rates, average cash and marketable securities balances and average loan balance.

Interest expense:  The consolidation of GBT’s financial results accounted for $822 of incremental interest expense for the three-month period ended September 30, 2020 mainly related to interest on its bank loans.

Net income or loss:  For the quarter net income was $17,492 an increase of $20,451 compared to the same period last year. The variance mainly resulted from the above-mentioned items as well as (i) net gain on the revaluation of financial assets measured at fair value through profit or loss of $12,873 (Q3-19 loss of $4,883), (ii) net gain on mandatory tender offer (“MTO”) liability of $10,502 mainly driven by the public shareholders of GBT tendering their shares using the Alternative Offer Price at BRL 10.40 per share, (iii) loss on hyperinflation of $401 due to net monetary positions under hyperinflation accounting.

Adjusted Earnings: For the three-month period ended September 30, 2020, adjusted earnings were $6,582 an increase of $1,020 or 18% compared to the same period last year. The variance is mainly explained by the incremental adjusted earnings of the GBT acquisition offset by a decline in interest income.

Cash, cash equivalents, restricted cash and marketable securities:  As at September 30, 2020, Knight had $392,352 in cash, cash equivalents and marketable securities, a decrease of $143,830 or 27% as compared to December 31, 2019. The variance is primarily due to cash outflows related to the acquisition of the outstanding BDRs of GBT, shares repurchased through NCIB and changes in working capital.

Trade and other receivables:  As at September 30, 2020, Knight had $65,611 in trade and other receivables, a decrease of $42,571 compared to December 31, 2019 which primarily relates to the net collection of receivables of $24,494 as well as depreciation of Latin American (“LATAM”) currencies of $9,445, and an increase in estimated credit loss provision recorded in 2020 of $2,819. The remaining difference is mainly due to collection of a distribution receivable from a fund investment, a decrease in interest receivable due to timing of the maturities of the marketable securities as well as a decline in interest rates.

Inventory: Overall decrease in inventories of $9,087 as compared to December 31, 2019 is due to increase of $1,516 related net inventory purchases (purchases offset by cost of goods sold) driven by the timing of inventory purchases and new product launches, offset by $3,806 of decrease related to depreciation of LATAM currencies and $6,797 of additional inventory provision recorded in the period ending September 30, 2020.  

Financial assets:  The increase of $13,965 as compared to December 31, 2019 in financial assets is due to the following: (i) increase of $3,859 attributable to loans and receivables as a result of additional loans issued and $883 of gain on foreign exchange (ii) decrease in equity investments, warrants and derivatives of $5,673 due to disposal and revaluation, and (iii) increase of $15,779 attributable to fund investments due to capital calls, foreign exchange gains and mark to market adjustments partially offset by distribution received.

Accounts payable, accrued, and other liabilities: Decrease in accounts payable and accrued liabilities balance of $52,028, or 54% is mainly due payments of inventory purchases, GBT transaction fees, the depreciation of LATAM currencies and lower accrual balance as compared to December 31, 2019 due to timing.

Bank Loans: As at September 30, 2020, bank loans were at $43,407, a decrease of $12,172 mainly due to loan repayment of $8,219 and the foreign exchange revaluation, partially offset by additional loan issued to a subsidiary of GBT.

Product Updates

In September 2020, Knight announced that it has submitted a supplemental NDS to Health Canada for neratinib in combination with capecitabine for the treatment of patients with HER2-positive metastatic breast cancer who have failed two or more prior lines of HER2-directed treatments.

On July 31, 2018, Knight entered into an exclusive licensing agreement for the commercial rights of Imvexxy™ and Bijuva™ in Canada and Israel. Both Imvexxy™ and Bijuva™ were approved by Health Canada during Q3-20.  Imvexxy™, an estradiol vaginal inserts, has been approved for the treatment of postmenopausal moderate-to-severe dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar and vaginal atrophy (VVA), due to menopause. Bijuva™, a once-daily combination of estradiol and progesterone in a single oral capsule, was approved for the treatment of moderate-to-severe vasomotor symptoms due to menopause. The Company expects to launch both products in 2022

In July 2020, Knight obtained regulatory approval for Lenvima^® (lenvatinib) in Ecuador for the treatment of (i) unresectable hepatocellular carcinoma (HCC); (ii) advanced renal cell carcinoma (RCC), in combination with everolimus; and (iii) differentiated thyroid cancer (DTC).  In addition, in August 2020, the Company obtained regulatory approval for Halaven® in Ecuador for the treatment of patients with metastatic breast cancer.  Through its acquisition of GBT, Knight has the license to Halaven® and Lenvima^® from Eisai for all Latin America excluding Mexico.

On October 26, 2020, the Company announced a new exclusive agreement with Gilead for the commercialization of AmBisome^®. The new agreement is effective starting January 1, 2021. AmBisome^® is a liposomal amphotericin B that is used to treat antifungal infections. This product has been part of Knight’s Brazilian affiliate’s portfolio for over twenty years.

NCIB

On July 10, 2020, the Company announced that the Toronto Stock Exchange approved its notice of intention to make a NCIB. Under the terms of the NCIB, Knight may purchase for cancellation up to 10,856,710 common shares of the Company which represented 10% of its public float as at July 6, 2020. The NCIB commenced on July 14, 2020 and will end on the earlier of July 13, 2021 or when the Company completes its maximum purchases under the NCIB. Furthermore, Knight entered into an agreement with a broker to facilitate purchases of its common shares under the NCIB. Under Knight’s automatic share purchase plan, the broker may purchase common shares which would ordinarily not be permitted due to regulatory restrictions or self-imposed blackout periods.  During the three-month period ended September 30, 2020, the Company purchased 797,952 common shares, for an aggregate cash consideration of $4,745, of which $1,009 remains to be settled and 172,642 shares remain to be cancelled as at September 30, 2020. 

Acquisition of GBT

On July 15, 2020, Knight announced the launch of the tender offer for the acquisition and delisting of the remaining 48.8% Brazilian Depository Receipts (“BDRs”) of GBT. The public shareholders had the choice between the following two tender options:

• BRL11.23 per BDR with an amount equivalent to 20% deposited in an escrow account to secure the sellers’ indemnification obligations under the purchase agreement for the GBT Transaction, provided that BRL 0.91 of the escrow amount shall be mandatorily paid on or at any time prior to November 29, 2022. The escrow amount will be released equally over a period of three years from closing, net of claims in accordance with the terms and conditions of the Share Purchase Agreement.
• BRL10.40 per BDR in cash on the settlement date (“Alternative Offer Price”).

Upon close of the tender offer process, 99.6% of the public shareholders tendered their BDRs through the Alternative Offer Price. The Company paid an aggregate purchase price of $170,855 [BRL 537,523] and acquired all the BDRs outstanding.  On October 23, 2020, the BDR program of GBT was cancelled by the Brazilian Securities and Exchange Commission. 

COVID-19 Update

The recent outbreak of the coronavirus, or COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. Certain countries where the Company has significant operations, have required entities to limit or suspend business operations and have implemented travel restrictions and quarantine measures. Knight is continuing to work to alleviate some of the pressure that the global COVID-19 pandemic has placed on our healthcare systems and ensure that we maintain supply of our medicines to patients. The Company and its employees have transitioned to working remotely, including our field sales and medical teams. The Company has taken steps to establish digital and virtual channels to ensure that physicians and patients continue to receive continued support.  Knight is developing return to field or office protocols on a country by country basis. Furthermore, the Company has not faced any inventory shortages and has sufficient liquidity to meet all operating requirements for the foreseeable future. As the date hereof, the outbreak has not had a material impact on the Company’s results.

Conference Call Notice 

Knight will host a conference call and audio webcast to discuss its third quarter results today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

Date: November 13, 2020
Time: 8:30 a.m. ET
Telephone: Telephone: Dial-in information will be provided to participants following pre-registration
Webcast:www.gud-knight.com or Webcast 
This is a listen-only audio webcast. Media Player is required to listen to the broadcast.
Replay: An archived replay will be available for 30 days at https://www.gud-knight.com

Please pre-register in advance of the call.

This method will allow you to join the call seconds before it goes live without having to hold for a live agent to pick up your line, which has proven to be an issue with the influx of callers during
the COVID-19 pandemic.

Online pre-registration: http://www.directeventreg.com/registration/event/4687537

Phone pre-registration: 1-(888)-869-1189 and provide the Conference ID: 4687537 to the Live Agent who will take your details.

Once you register, you will receive a confirmation which will have the dial in number and both the Direct Event Passcode and your unique Registrant ID to join this call. For security reasons, please do NOT share this information with anyone else.

About Knight Therapeutics Inc. 

Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing innovative pharmaceutical products for Canada and Latin America. Knight owns a controlling stake in Grupo Biotoscana, a pan-Latin American specialty pharmaceutical company. Knight Therapeutics Inc.’s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the company’s web site at www.gud-knight.com or www.sedar.com.

Forward-Looking Statement

This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations are discussed in Knight Therapeutics Inc.’s Annual Report and in Knight Therapeutics Inc.’s Annual Information Form for the year ended December 31, 2019 as filed on www.sedar.com. Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events, except as required by law.

CONTACT INFORMATION:

Investor Contact:
Knight Therapeutics Inc.
Samira Sakhia	Arvind Utchanah
President & Chief Operating Officer	Chief Financial Officer
T: 514.484.4483 ext.122	T. 514.484.4483 ext. 115
F: 514.481.4116	F. 514.481.4116
Email: info@knighttx.com	Email: info@knighttx.com
Website: www.gud-knight.com	Website: www.gud-knight.com

IMPACT OF HYPERINFLATION

[In thousands of Canadian dollars]

The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company’s Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation. If the Company did not apply IAS 29, the effect on the Company’s operating income would be as follows:

Q3-20

	Reported under IFRS		Excluding impact of IAS 29		Variance
					$ 1		%2
Revenues	45,239		45,847		(608	)	1	%
Cost of goods sold	25,706		24,765		(941	)	4	%
Gross margin	19,533		21,082		(1,549	)	7	%
Gross margin (%)	43	%	46	%
Expenses
Selling and marketing	7,763		7,604		(159	)	2	%
General and administrative	10,835		10,883		48		0	%
Research and development	2,967		3,026		59		2	%
Amortization of intangible assets	5,703		5,756		53		1	%
Operating Loss	(7,735	)	(6,187	)	(1,548	)	25	%
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29
2 Percentage change is presented in absolute values

YTD-20

	Reported under IFRS		Excluding impact of IAS 29		Variance
					$ 1		%2
Revenues	144,328		145,860		(1,532	)	1	%
Cost of goods sold	82,698		78,792		(3,906	)	5	%
Gross margin	61,630		67,068		(5,438	)	8	%
Gross margin (%)	43	%	46	%
Expenses
Selling and marketing	26,928		27,021		93		0	%
General and administrative	27,424		26,656		(768	)	3	%
Research and development	8,035		8,175		140		2	%
Amortization of intangible assets	17,546		17,407		(139	)	1	%
Operating Loss	(18,303	)	(12,191	)	(6,112	)	50	%
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29
2  Percentage change is presented in absolute values

RECONCILIATION TO ADJUSTED EARNINGS

[In thousands of Canadian dollars]

Non-IFRS measure: EBITDA and Adjusted earnings

The Company discloses non-IFRS measures that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance and in interpreting the effect of the GBT Transaction on the Company. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.

The Company uses the following non-IFRS measures:

EBITDA: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.

Adjusted earnings: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, acquisition costs, non-recurring expenses incurred but to include interest income earned net of interest expenses and costs related to leases.

Adjustments to operating (loss) income include the following:

• With the adoption of IFRS 16, the lease payments of Knight are not reflected in operating expenses.  The IFRS 16 adjustment approximates the cash outflow related to leases of Knight.
• Acquisition costs relate to expenses of $3,490 for the quarter, for the acquisition of GBT.
• Other non-recurring expenses relate to expenses incurred by Knight that are not due to, and are not expected to occur in, the ordinary course of business. For the quarter ended September 30, 2020, Knight recorded one-time costs of $595 related to restructuring activities including severance to certain employees as part of restructuring and integration of GBT
• Interest income Includes “Interest income on financial instruments measured at amortized cost” and “Other interest income”. Primarily from interest earned on loans, cash and cash equivalents, marketable securities and accretion on loans receivable.
• Interest expense on bank loans includes GBT’s interest expense mainly related to interest on its bank loans and excludes Knight’s interest accretion

For the three-month and nine-month periods ended September 30, 2020, the Company calculated adjusted earnings as follows:

	Q3-20		Q3-19		YTD-20		YTD-19
Operating (loss) income	(7,735	)	(3,922	)	(18,303	)	(10,936	)
Adjustments to operating (loss) income:
Amortization of intangible assets	5,703		424		17,546		1,273
Depreciation of property, plant and equipment	1,382		112		4,916		305
Lease costs (IFRS 16 adjustment)	(820	)	(122	)	(2,405	)	(274	)
Impact of PPA accounting	—		—		865		—
Impact of IAS 29	1,601		—		5,973		—
EBITDA	131		(3,508	)	8,592		(9,632	)
Acquisition costs	3,490		2,476		3,810		2,476
Other non-recurring expenses	595		536		2,663		3,803
Interest income	3,188		6,058		11,515		18,108
Interest expense on bank loans	(822	)	—		(3,070	)	—
Adjusted earnings	6,582		5,562		23,510		14,755

INTERIM CONSOLIDATED BALANCE SHEETS

[In thousands of Canadian dollars]
[Unaudited]

	09-30-20		12-31-19
ASSETS
Current
Cash, cash equivalents and restricted cash	218,091		174,268
Marketable securities	158,944		235,045
Trade receivables	51,894		85,845
Other receivables	11,809		17,622
Inventories	61,783		70,870
Prepaids and deposits	2,927		3,306
Other current financial assets	26,248		26,303
Income taxes receivable	6,439		8,265
Total current assets	538,135		621,524
Marketable securities	15,317		126,869
Trade receivables	1,908		4,715
Prepaids and deposits	4,066		4,652
Right-of-use Asset	4,651		6,409
Property, plant and equipment	21,979		22,639
Investment properties	1,439		1,740
Intangible assets	156,641		173,372
Goodwill	77,770		88,262
Other financial assets	146,868		132,848
Deferred income tax assets	1,123		3,991
Other long-term receivables	41,582		41,582
	473,344		607,079
Assets held for sale	2,484		76,700
Total assets	1,013,963		1,305,303

INTERIM CONSOLIDATED BALANCE SHEETS (continued)

[In thousands of Canadian dollars]
[Unaudited]

	09-30-20		12-31-19
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities	42,475		94,406
Lease liabilities	1,089		1,788
Other liabilities	1,270		1,750
Other financial liabilities	—		184,023
Bank loans	41,567		50,557
Income taxes payable	11,828		15,447
Other balances payable	802		2,833
Total current liabilities	99,031		350,804
Accounts payable and accrued liabilities	383		—
Lease liabilities	3,351		4,812
Bank loan	1,840		5,022
Other balances payable	8,495		1,699
Deferred income tax liabilities	18,641		27,860
Total liabilities	131,741		390,197
Equity
Share capital	695,066		723,832
Warrants	117		785
Contributed surplus	18,203		16,463
Accumulated other comprehensive income	2,530		17,405
Retained earnings	166,306		52,246
Attributable to shareholders of the Company	882,222		810,731
Non-controlling interests	—		104,375
Total equity	882,222		915,106
Total liabilities and  Equity	1,013,963		1,305,303

INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)

[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]

	Three months ended September 30				Nine months ended September 30
	2020		2019		2020		2019
Revenues	45,239		4,030		144,328		10,190
Cost of goods sold	25,706		729		82,698		1,671
Gross margin	19,533		3,301		61,630		8,519
Expenses
Selling and marketing	7,763		1,146		26,928		3,341
General and administrative	10,835		4,761		27,424		12,339
Research and development	2,967		892		8,035		2,502
Amortization of intangibles	5,703		424		17,546		1,273
Operating loss	(7,735	)	(3,922	)	(18,303	)	(10,936	)
Interest income on financial instruments measured at amortized cost	(1,754	)	(4,825	)	(7,477	)	(14,651	)
Other interest income	(1,434	)	(1,233	)	(4,038	)	(3,457	)
Interest expense	822		—		3,070		—
Other income	(243	)	(1,579	)	(133	)	(1,949	)
Net (gain) loss on financial instruments measured at fair value through profit or loss	(12,873	)	4,883		(22,642	)	(19,649	)
Net gain on mandatory tender offer liability	(10,502	)	—		(12,072	)	—
Realized gain on sale of asset held for sale	—		—		(2,948	)	—
Realized gain on automatic share purchase plan	—		—		(4,168	)	—
Share of net income of associate	—		(128	)	—		(448	)
Foreign exchange loss	703		638		9,666		3,315
Loss on hyperinflation	401		—		1,205		—
Income before income taxes	17,145		(1,678	)	21,234		25,903
Income tax
Current	(3,079	)	999		1,386		3,168
Deferred	2,732		282		(3,679	)	1,549
Income tax (recovery) expense	(347	)	1,281		(2,293	)	4,717
Net income for the period	17,492		(2,959	)	23,527		21,186
Attributable to:
Shareholders of the Company	18,094		(2,959	)	33,834		21,186
Non-controlling interests	(602	)	—		(10,307	)	—
Attributable to shareholders of the Company
Basic (loss) earnings per share	0.138		(0.021	)	0.256		0.150
Diluted (loss) earnings per share	0.138		(0.021	)	0.256		0.150
Weighted average number of common shares outstanding
Basic	130,867,769		137,783,892		132,346,922		141,147,239
Diluted	131,051,220		138,154,629		132,614,809		141,519,892

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]

	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
OPERATING ACTIVITIES
Net income for the period	17,492		(2,959	)	23,527		21,186
Adjustments reconciling net income to operating cash flows:
Deferred income tax expense (recovery)	2,732		282		(3,679	)	1,549
Share-based compensation expense	725		484		1,422		1,639
Depreciation and amortization	7,085		536		22,462		1,578
Net (gain) loss on financial instruments	(12,873	)	4,883		(22,642	)	(19,649		)
Net gain on mandatory tender offer liability	(10,502	)	—		(12,072	)	—
Realized gain on sale of asset held for sale	—		—		(2,948	)	—
Realized gain on automatic share purchase plan	—		—		(4,168	)	—
Interest expense	822		—		3,070		—
Foreign exchange loss	703		638		9,666		3,315
Loss on hyperinflation	401		—		1,205		—
Share of net income of associate	—		(128	)	—		(448		)
Other adjustments	424		(180	)	(50	)	(363		)
	7,009		3,556		15,793		8,807
Changes in non-cash working capital and other items	(15,413	)	472		(30,974	)	2,368
Other long-term receivable	—		—		—		(18,242		)
Dividends from associate	—		—		—		4,159
Interest payments on bank loans	(8	)	—		(1,321	)	—
Cash (outflow) inflow from operating activities	(8,412	)	4,028		(16,502	)	(2,908		)
INVESTING ACTIVITIES
Acquisition of shares through mandatory tender offer	(170,855	)	—		(170,855	)	—
Purchase of marketable securities	(662	)	(20,300	)	(37,778	)	(203,445		)
Purchase of intangible assets	(1,191	)	(328	)	(14,024	)	(2,317		)
Purchase of property and equipment	(861	)	—		(3,119	)	(4		)
Exercise of warrant investments	—		—		(397	)	—
Issuance of loans receivables	—		(1,987	)	(7,364	)	(20,038		)
Purchase of equity investments	—		—		—		(6		)
Investment in funds	(2,010	)	(5,864	)	(15,010	)	(18,434		)
Proceeds on sale of asset held for sale	—		—		77,000		—
Proceeds on maturity of marketable securities	32,440		90,543		226,999		362,091
Proceeds from repayments of loans receivable	17		873		7,786		3,574
Proceeds from disposal of equity investments	—		1,676		2,919		1,676
Proceeds from distribution of funds	14,887		8,500		26,996		9,177
Cash (outflow) inflow from investing activities	(128,235	)	73,113		93,153		132,274
FINANCING ACTIVITIES
Proceeds from exercise of stock options	115		—		595		—
Proceeds from contributions to share purchase plan	62		62		175		178
Proceeds from repayment of share purchase loans	—		425		—		425
Proceeds from bank loans	—		—		10,998		—
Repurchase of common shares through Normal Course Issuer Bid	(3,736	)	(54,181	)	(35,001	)	(54,181		)
Principal repayment of lease liabilities	(888	)	(68	)	(2,406	)	(205		)
Principal repayments on bank loans	(701	)	—		(8,219	)	—
Cash outflow from financing activities	(5,148	)	(53,762	)	(33,858	)	(53,783		)
(Decrease) increase in cash and cash equivalents during the period	(141,795	)	23,379		42,793		75,583
Cash, cash equivalents and restricted cash, beginning of the period	359,593		294,911		174,268		244,785
Net foreign exchange difference	293		835		1,030		(1,243		)
Cash, cash equivalents and restricted cash, end of the period	218,091		319,125		218,091		319,125
Cash and cash equivalents					218,091		319,125
Short-term marketable securities					158,944		243,790
Long-term marketable securities					15,317		137,177
Total cash, cash equivalents and marketable securities					392,352		700,092

CAMBRIDGE, Mass., Nov. 13, 2020 (GLOBE NEWSWIRE) — Fulcrum Therapeutics, Inc. (Nasdaq: FULC), a clinical-stage biopharmaceutical company focused on improving the lives of patients with genetically defined rare diseases, today announced that management will participate in the following virtual investor conferences:

• Stifel Virtual 2020 Healthcare Conference
  Presentation on Wednesday, November 18, 2020 at 11:20 a.m. ET.

• Piper Sandler 32nd Annual Virtual Healthcare Conference
  Prerecorded Fireside Chat Available on Monday, November 23, 2020 at 10:00 a.m. ET

Audio webcasts of the presentations will be available through the Investor Relations section of the Fulcrum website at https://ir.fulcrumtx.com/events-and-presentations. Archived replays will be available on the Company’s website for 90 days after each conference.

About Fulcrum Therapeutics

Fulcrum Therapeutics is a clinical-stage biopharmaceutical company focused on improving the lives of patients with genetically defined rare diseases in areas of high unmet medical need. Fulcrum’s proprietary product engine identifies drug targets which can modulate gene expression to treat the known root cause of gene mis-expression. The company has advanced losmapimod to Phase 2 clinical development for the treatment of facioscapulohumeral muscular dystrophy (FSHD) and Phase 3 for the treatment of COVID-19. Fulcrum has also advanced FTX-6058, a small molecule designed to increase expression of fetal hemoglobin for the treatment of sickle cell disease and beta thalassemia into Phase 1 clinical development.

Please visit www.fulcrumtx.com.

C
ontact:

Christi Waarich
Director, Investor Relations
and Corporate Communications
617-651-8664
[email protected]