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

You’re reading a free article with opinions that may differ from The Motley Fool’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.

Let’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 — 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 “other” 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 Canadian National Railway right now?

Before you buy stock in Canadian National Railway, 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 now… and Canadian National Railway wasn’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 “eBay of Latin America” at the time of our recommendation, you’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 – 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 “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — 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.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Investing

chart reflected in eyeglass lenses
Dividend Stocks

TFSA $7K: Where to Invest Right Now

TFSA users can invest their $7K annual limits in two profitable large-cap dividend stocks right now.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Investing

The Best Canadian Stocks to Buy and Hold Forever in a TFSA

For investors looking to add to their TFSA, here are two top Canadian growth stocks that may be worth buying…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Investing

2 Brilliant Canadian Stocks to Buy Now and Hold for the Long Term

A small-cap and a large-cap Canadian tech stock can both be terrific holdings to consider for your self-directed investment portfolio,…

Read more »

calculate and analyze stock
Investing

Top Canadian Stocks to Buy Right Now With $7,000

Given their solid underlying businesses, consistent performances, and healthy growth prospects, the following three Canadian stocks are ideal additions to…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

6% Dividend Yield? Buy This Top-Notch Dividend Stock in Bulk!

This top-notch dividend stock offers a high and sustainable yield of about 6%, enabling you to generate resilient passive income.

Read more »

data analyze research
Dividend Stocks

2 High-Dividend TSX Stocks to Buy for Increasing Payouts

For big dividends with increasing payouts, look more closely at TD and CNQ today!

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

Better Dividend Stock: TD vs. BCE

TSX dividend stocks such as TD and BCE offer shareholders a tasty dividend yield. But which blue-chip stock is a…

Read more »

Make a choice, path to success, sign
Dividend Stocks

Magna International: Buy, Sell, or Hold in 2025?

Magna International stock: A 5.5% dividend yield and a cheap 8.1 forward P/E – Can the automotive sector stock outrun…

Read more »