McElvaine Value Fund on Knight Therapeutics Inc.
Thesis
Knight Therapeutics is a specialty pharmaceutical company focused on acquiring, licensing and distributing drugs across Canada and Latin America. Its portfolio focuses on areas such as oncology, infectious disease, neurology and immunology, where prescribing tends to be concentrated among a relatively small number of specialists. Revenue increased during 2026 as the Paladin acquisition became fully reflected in results, while gross margins also improved. Management raised full-year revenue guidance twice to C$540-C$560 million, indicating better operating momentum than previously expected. Knight has a net-cash balance sheet and continued buying back shares while they traded in the low C$6 range. The stock subsequently approached C$10, but McElvaine still classifies the company's underlying position as improved.
“Gross margin improved and full-year revenue guidance raised twice, now $540–560 million.”
Key risks
- The share price has already appreciated materially from the levels where management was aggressively repurchasing shares.
- The business depends on successful commercialization and distribution of acquired and licensed pharmaceutical products.