Can Knight Therapeutics Inc. Repeat the Success of Paladin Labs?

Knight Therapeutics Inc. (TSX:GUD) offers investors exposure to the lucrative specialty pharmaceutical market.

| More on:
The Motley Fool

Youโ€™re reading a free article with opinions that may differ from The Motley Foolโ€™s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What would you do if you knew of a guy who built a company and made his shareholders big money in the process? Would you trust that he could do it again? Well, the company was Paladin Labs and the guy is Mr. Jonathon Goodman.

A unique specialty pharmaceutical company that was focused on the in-licensing and acquisition of products for the Canadian marketplace, Paladin Labs was incorporated in 1993 and went public in 1995 at $1.50. It was sold in 2013 to Endo Pharmaceuticals at $151 per share for a 100-fold increase in value for shareholders.

Letโ€™s fast forward to today. Knight Therapeutics Inc. (TSX:GUD) was formed on February 28, 2014, the day the sale of Paladin to Endo closed, and it was comprised of the assets that were not sold to Endo as part of the deal. It was initially owned by Paladin shareholders as consideration for the Paladin Labs sale.

So, like Paladin Labs, Knight Therapeutics is a specialty pharmaceutical company focused on in-licensing and acquiring innovative pharmaceutical products for the Canadian and select international markets. This includes prescription pharmaceuticals, consumer health products, and medical devices.

Key to the story is the fact that Knight Therapeutics takes on the commercialization risk in the business, and not the drug-development risk, so the focus is on later stage products โ€” phase two or three, or a drug that is already approved in a foreign market. That means lower risk.

In the prescription pharmaceuticals market, Knight has marketed or late-stage products in the pain category, the ophthalmic category, and some in a variety of other categories; it has four in the pain category, three in the ophthalmic category, and four in the โ€œotherโ€ category, which includes cancer and tropical diseases.

In consumer health, the company has six products that are either marketed or late stage. And in medical devices, the company has two products that are late stage.

Furthermore, to ensure that the company has access to products, investments are made and loans are given in exchange for product rights.

In closing, management has the experience and an excellent track record in the specialty pharmaceutical business, from structuring mutually beneficial deals and partnerships to the regulatory process to commercialization of products. And financials are strong with $519 million in cash on the balance sheet, no debt, and $15 million in operating cash flow in 2016.

Going forward, the company is very well positioned to continue to execute its strategy. In fact, there had been talk that Knight Therapeutics would actually consider buying back Paladin from Endo, as Endo has been going through difficulties with too much debt taken on to pay for its acquisition strategy. The point here is that there are many possibilities, but it seems pretty sure that Knight Therapeutics is strongly positioned.

Should you invest $1,000 in Fortis right now?

Before you buy stock in Fortis, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy nowโ€ฆ and Fortis wasnโ€™t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the โ€œeBay of Latin Americaโ€ at the time of our recommendation, youโ€™d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month โ€“ one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the โ€œofficialโ€ recommendation position of a Motley Fool premium service or advisor. Weโ€™re Motley! Questioning an investing thesis โ€” even one of our own โ€” helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas has no position in any stocks mentioned. The Motley Fool owns shares of KNIGHT THERAPEUTICS INC.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? Youโ€™re not alone. At The Motley Fool Canada, we get it โ€” and weโ€™re here to help. Weโ€™ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

dividends can compound over time
Dividend Stocks

Want a 6% Yield? 3 TSX Stocks to Buy Today

These TSX stocks offer yield of over 6% and are well-positioned to sustain their payouts and maintain consistent dividend payments.

Read more ยป

clock time
Dividend Stocks

10 Years From Now, Youโ€™ll Be Glad You Bought These Magnificent TSX Dividend Stocks 

A decade from now, these 2 dividend stocks could give you strong returns through dividends or capital appreciation, or both.

Read more ยป

Asset Management
Tech Stocks

Missing Out Is Costly: Why the Smartest Investors Keep Buying Canadian Stocks

Smart investors know that success in the stock market comes from identifying high-quality businesses and holding them for a longโ€ฆ

Read more ยป

A person looks at data on a screen
Energy Stocks

Enbridge Stock vs. Cameco: Which One Is a Better Buy on the Dip?

Consider Enbridge (TSX:ENB) and another great momentum play to energize your TFSA.

Read more ยป

Silver coins fall into a piggy bank.
Dividend Stocks

TFSA: 3 Top-Tier TSX Stocks for That $7,000 Contribution

The market is full of great long-term stock to fuel your TFSA. Hereโ€™s a look at three top-tier TSX stocksโ€ฆ

Read more ยป

man touches brain to show a good idea
Energy Stocks

Trump Tariffs: Are Canadian Energy Stocks Still a Safe Haven for Investors?

Amid Trumpโ€™s tariffs, can Canadian energy stocks still shelter your portfolio? Let's identify the risks and opportunities.

Read more ยป

A plant grows from coins.
Dividend Stocks

3 Top Growth Stocks to Buy for March

These three growth stocks might be excellent holdings to add to your self-directed portfolio this month.

Read more ยป

grow money, wealth build
Energy Stocks

Down 30% From Highs: Is This TSX Growth Stock a Screaming Buy?

This TSX stock may be down now, but don't count it out. With plenty of growth opportunities already underway, nowโ€ฆ

Read more ยป