In the more than 30 months since its startup, Knight Therapeutics (TSX:GUD) has shown an uncanny knack for raising equity at increasing valuations, building a portfolio of some 20 innovative products for its pipeline, expanding internationally and investing in life science funds to gain access to new pharmaceuticals.
“Over the next 30 months, we want to get real and demonstrate that we are good at commercializing and selling innovative pharmaceuticals that touch people's lives,” CEO, Jonathan Ross Goodman, says in an interview with BioTuesdays.com.
“In the highly competitive Canadian licensing landscape, we have been more creative and are adding more horsepower to our licensing capabilities,” he adds, noting that all of Knight’s products are sourced through partnerships and acquisitions.
Mr. Goodman explains that the company has invested $127-million in eight different life science funds in exchange for not only generating a return, just like as any other limited partner in the fund, but also to preferentially gain access to innovative pharmaceuticals developed from biotech/pharma companies funded by the eight funds.
“We call this our long-term licensing strategy and I will tell you in a decade if it worked,” he contends.
In addition, Knight also has entered into $125-million of strategic loans in 14 different transactions where it has earned healthy returns but also has security over product rights.
In the second quarter, Knight raised $230-million in a bought deal, its fourth equity raise, and Mr. Goodman says the company has no plans to raise additional equity. “Our objective is simple - to deploy capital in low-risk, nice return opportunities and expand sales of pharmaceuticals that make people’s lives better.”
Mr. Goodman points out that Knight has a growing portfolio of products in ophthalmology, urology, and pain - sectors will likely be the jumping off point to build a sales force.
He expects the company will likely engage a team of five-to-ten sales reps when it launches either Akorn’s AzaSite antibiotic eye drop for pink eye or Profound Medical’s (TSX-V:PRN) TULSA-PRO ablation device in Canada.
When launched, AzaSite is expected to be the first ophthalmic azithromycin product available in Canada.
Profound’s TULSA-PRO has CE Mark approval in Europe and is being reviewed by Health Canada. It combines real-time MRI with transurethral robotically driven ultrasound and closed-loop thermal feedback control for accurate and precise ablation of prostate tissue, both malignant and benign, with a low side effect profile.
Mr. Goodman suggests that ophthalmology and urology are characterized by a small number of physicians in Canada driving a high volume of sales. “So we don’t need a large sales force to call on them.”
Knight also has distribution rights in Canada to Titan Pharmaceuticals’ (NASDAQ:TTNP) Probuphine implant for the treatment of opioid addiction. Probuphine received FDA approval in the summer and is distributed in the U.S. by Braeburn Pharmaceuticals. Probuphine received a massive amount of publicity in the summer as the White House expanded treatment options to tackle an opioid epidemic sweeping the country.
Currently, Knight’s only commercialized pharmaceutical products are Impavido for the treatment of leishmaniasis, a tropical and subtropical disease transmitted by the bite of sandflies, and Neuragen, the first all-natural, non-prescription topical treatment for relief of pain associated with diabetic and peripheral neuropathy, approved for sale in Canada and the U.S.. Impavido is approved in Germany, Israel and the U.S., where it is distributed by Profounda.
According to Mr. Goodman, Knight’s growth strategy includes licensing innovative, late-stage pharmaceuticals for sale in Canada and Israel; acquiring mature or under-promoted products from Big Pharma; developing near-term, low risk/low expense products for the Canadian and global markets; and lending money, on a fully secured basis, to promising life science companies for interest income and/or Canadian product rights.
Knight has deployed more than $300-million since its founding in February 2014 in low risk, fair return opportunities.
“We expect to have a pipeline of innovative products in five-to-10 years from now larger than Merck and Pfizer combined, albeit just for Canada and select international markets, leveraging tens of billions of dollars of R&D,” Mr. Goodman contends.
In September 2015, Knight entered into a strategic collaboration with Medison, which represents more than 40 companies in Israel and is the fourth-largest specialty pharma there by sales. Knight acquired a 28.3% stake in Medison valued at $80-million in exchange for approximately a 10% equity interest in Knight.
“My long-term vision is to build a rest-of-the-world pharma company where biotech and pharma licensors can partner in countries that are too small for them to care about, such as Canada, Israel, South Africa and Russia,” Mr. Goodman says. “Israel is my first expansion for building a rest-of-the-world pharma.”