Knight Therapeutics Inc

TSX:GUD

Earnings Call Transcript 2020-Q1

[Operator]

Good morning, ladies and gentlemen. My name is Marcella, and I will be your conference operator today. Welcome to Knight Therapeutics Inc. 2020 First Quarter Results Conference Call. Before turning the call over to Jonathan Ross Goodman, CEO of Knight, listeners are reminded that portions of today's discussion may, by their nature, necessarily involve risks and uncertainty that could cause actual results to differ materially from those contemplated by the forward-looking statements. The company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions that these assumptions regarding the future events, many of which are beyond the control of the company and its subsidiaries, may ultimately prove to be incorrect. The company 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. We would also like to remind you questions during today's call will be taken from analysts only. Should there be any further questions, please contact Knight's Investor Relations department via e-mail at [e-mail] (sic) [ [e-mail] ], mail to [e-mail] (sic) [ [e-mail] ] or via phone at [phone]. I would like to remind everyone that this call is being recorded today, June 26, 2020. I would now like to turn the meeting over to your host today, Jonathan Ross Goodman. Please go ahead, Mr. Goodman.

[Jonathan Ross Goodman, Founder, CEO & Director]

Thank you, Marcella. Good morning, everyone, and welcome to Knight Therapeutics First Quarter 2020 Conference Call. I'm joined today on today's call with Samira Sakhia, our -- and this is new, this is late-breaking news, our Chief Operating Officer. It's very exciting and only about 20 years overdue; and Amal Khouri, our VP of Business Development; and Arvind Utchanah, our CFO. We are pleased to report our Knight's continued progress on its mission to become a rest of the world specialty pharmaceutical company. We continue to remain focused on completing the acquisition of Biotoscana and advancing our product portfolio in Latin America and Canada while, at the same time, continuing our business development efforts for a pan-American, ex U.S.A. footprint. Yesterday, we had our Annual Shareholders Meeting, and I would like to welcome Janice Murray and Nicolás Sujoy, our 2 new independent Board members, who bring with them valuable Latin American experience. I would also like to thank our exiting Board members, Sylvie Tendler, Nancy Harrison and Kevin Cameron for their multiple contributions. I'll now turn over the call to Samira, who will walk through the development of our portfolio and corporate updates.

[Samira Sakhia, President & Director]

Thank you, Jonathan, and good morning, everyone. We're pleased to report that Knight continues to advance its pan-American, ex U.S. product portfolio. On Jan 8, 2020, Knight announced that it has entered into an exclusive agreement to commercialize triptorelin or Trelstar in Canada. Trelstar, an LHRH agonist, is currently approved and sold in Canada. Subsequent to the quarter, Knight took over commercial activities for Trelstar. According to IQVIA, Trelstar sales were $2.7 million in 2019. We're excited to be relaunching this product as several members of the Knight team were involved in bringing Trelstar and growing it in Canada when we were at Paladin. In April 2020, Knight obtained Health Canada approval for Ibsrela or tenapanor for the treatment of irritable bowel syndrome with constipation. According to IQVIA, the total market for laxatives in Canada, including OTC and prescription, was $161 million in 2019. In addition, according to IQVIA, sales of prescription -- prescription product sales reached $22.9 million in 2019 and grew at a 3-year CAGR of 13%. Constella continues to be the lead product with sales of $17.1 million in 2019. We expect to be launching Ibsrela in early 2021. We're also pleased on our market access progress with the public reimbursement of Probuphine in Ontario. This important product for the fight against opioid addiction is now covered in Ontario, Quebec, New Brunswick, Newfoundland, Nova Scotia, Manitoba, Alberta, Saskatchewan and the NHIB and Veterans Affairs Canada. Finally, this quarter, we launched through GBT Cresemba in Brazil. Cresemba is an azole antifungal agent indicated for use in adults for the treatment of invasive aspergillosis and invasive mucormycosis and has been licensed from Basilea Pharmaceutica Ltd. GBT holds the rights to commercialize the product in Latin America and is an early launch in Argentina, Colombia, Mexico, Chile and Peru. Now I'll turn it over to corporate updates. As a reminder, Knight commenced a Normal Course Issuer Bid on July 11, 2019, under which Knight was authorized to purchase for cancellation just over 12 million of its common shares. As of today, Knight has completed its NCIB and purchased a cumulative total of 12,053,692 common shares at an average price of $7.14 per share. Lastly, in November 2019, Knight and Medison has entered into a definitive agreement pursuant to which Knight agreed to sell to Medison the group -- to the Medison group all of Knight's shares in Medison in consideration for $77 million payable in cash. We agreed to release each other from all claims and withdraw all legal proceedings initiated by both parties. In addition, Medison, which, together with its affiliates, owns approximately -- or owned approximately 10.4 million shares of Knight, agreed to a 4-year standstill commitment and will divest their position in Knight during this period. During the quarter, Medison paid the full amount of the settlement, and Knight received 75% or $57.8 million of the consideration. And the remaining 25% or $19.3 million is being held by a trustee and is expected to be released to Knight upon the issuance of a tax certificate by the Israel Tax Authority, which is expected later this year. I'm now going to turn the call over to Amal for an update on BD activities.

[Amal Khouri, Vice President of Business Development]

Thank you, Samira. As a reminder, the acquisition of GBT was part of our rest-of-world strategy of becoming a one-stop shop for second-tier markets. Today, Knight is the company best positioned to provide this one-stop shop for the entire Lat Am region. Grupo Biotoscana has provided Knight with an immediate presence in our high-priority markets, including a solid footprint across 10 countries and a diversified portfolio, including a number of in-licensed specialties pharmaceutical products. Both of our companies focus on in-licensing late-stage innovative products as well as established products. We both promote branded pharmaceutical products to physicians, and we both pursue growth while maintaining a rigid focus on financial discipline. As we previously announced, the acquisition of 100% of GBT is by way of a 2-step transaction. The first step was the acquisition of 51.2% majority stake through a private transaction which closed on November 29, so it was last year, giving Knight controlling interest. In December of last year, we started the process for the second step, which is the mandatory tender offer for the minority shareholders or the BDR holders. This process has already concluded Brazilian Exchange approval and is under Brazilian Securities Commission review. We expect to complete the second step in Q3 of this year. Over the last several months, our teams have been working together to not only integrate the businesses, but also, we've been busy on business development efforts to acquire in-licensed innovative product for the pan-American, ex U.S. market. Our objective remains to acquire underpromoted or legacy assets from big pharma, in-license innovative products and to pursue bolt-on corporate acquisitions in the region. I will now turn the call over to Arvind to go over the financial results for the quarter.

[Arvind Utchanah, Chief Financial Officer]

Thank you, Amal. In the course of this conference call, I will refer to Knight's adjusted earnings, which is a non-IFRS measure. Knight defines adjusted earnings as operating loss or income adjusted to exclude amortization and impairment of intangible assets, depreciation, acquisition costs, nonrecurring expense incurred but includes net interest income earned and costs related to leases. In addition, the adjusted earnings do not reflect the portion of GBT's adjusted earnings attributable to this noncontrolling interest. I am pleased to report that for the quarter ended March 31, 2020, we reported revenues of $45.8 million, an increase of $42.8 million or 1,451% compared to the same period last year. The growth in revenues is explained by the consolidations of GBT's financial results, which accounted for $42.7 million of incremental revenues. GBT generated $14 million in Brazil, $10.5 million in Argentina, $9.1 million in Colombia and $9.1 million in the rest of Latin America. Historically, GBT's first quarter revenues are negatively impacted by seasonality due to reduced economic activity resulting from the New Year and summer holidays as well as carnival events in Latin America. With the exclusion of hyperinflation impact under IAS 29, the revenues reported by GBT in the first quarter of 2019 represented 20% of its annual 2019 revenues and a 27% decline compared to the fourth quarter of 2018. Comparatively, GBT revenues in the first quarter of 2020 represented a 28% decline compared to the fourth quarter of 2019. We also reported a gross margin of $19.9 million and a gross margin as a percentage of sales of 43% compared to $2.3 million or 77% in the same period last year. The change in the gross margin in dollars and as a percentage of sales was mainly attributable to the consolidation of GBT's financial results. Furthermore, GBT recorded an inventory provision of $3.3 million, of which $874,000 relates to certain inventory destroyed because of a temperature excursion during transportation. And the balance is due to delays in certain new product launches and COVID-19. Furthermore, after excluding the impact of hyperinflation accounting in accordance with IAS 29 and a purchase price allocation adjustment of $632,000, the gross margin as a percentage of sales would have been 46%. I would also like to point out that earlier today, we have posted a presentation explaining the basic accounting under hyperinflation on the Knight's website under the Investor Relations Presentation section. Our selling and marketing, G&A and R&D for the quarter increased by $16.1 million over the first quarter of 2019. The variance is explained by the consolidation of GBT's financial results, which accounted for $16.8 million of incremental expenses. This was offset by a decline in Q1 2020 versus Q1 2019. And Knight's own selling, marketing and G&A and R&D decreased mainly due to nonrecurring expenses in the first quarter of 2019 related to Meir Jakobsohn shareholders activist campaign. I would like to note that Knight expect to incur significant additional expenses in the second half of 2020 related to closing the GBT mandatory tender offer. Now moving on to amortization and impairment of intangible assets. For the quarter, our amortization of intangible assets is at $6 million, an increase of $5.6 million versus the prior period. The increase related to the amortization of the definite-life intangible asset acquired in the GBT transaction. Moving to interest earned on our cash, marketable securities and strategic loans. We reported interest income of $4.6 million, a decrease of $1.2 million or 21% compared to the same period in the prior year due to a decrease in the average cash and marketable securities balances partially offset by a higher average loan balance. In addition, we recorded interest expense for the quarter of $3.2 million due to the interest expense on GBT's loan of $1.1 million as well as interest accretion of $2 million on the liability related to the mandatory tender offer. For the quarter, adjusted earnings were $6.4 million, up 39% or $1.8 million compared to the same period last year. The consolidation of GBT's financial results accounted for $3.4 million of the increase partially offset by an increase in Knight's selling and marketing activities due to product launches, an increase in certain general administrative expenses and a decrease in Knight's interest income. The nonrecurring adjustment made to the operating loss for Q1 2020 represent a total of $1.7 million. It includes $252,000 on restructuring activities, $850,000 related to the inventory destroyed due to a temperature excursion, as well as $632,000 related to an old trade receivable balance existing prior to the Knight acquisition of the controlling stake in GBT. Now moving on to gains and losses that are not reflected in adjusted earnings. For the quarter, we recorded a net loss on financial assets measured at fair value through profit or loss of $6.7 million mainly due to unrealized losses and revaluation of the strategic fund and equity investment. Knight recorded a total loss of $5.2 million on the strategic fund investment in the statement of income. However, the loss of $5.2 million is offset by the foreign exchange gains upon conversion to Canadian dollars of $7.7 million. And the majority of this gain was recorded in the statement of other comprehensive income. In addition, we recorded a net gain on the mandatory retender offer or MTO liability of $1.5 million due to unrealized gain on the foreign exchange revaluation of the Brazilian reais-denominated liability offset by an unrealized loss on forward and non-deliverable forward contracts. Furthermore, we recorded a realized gain of $2.9 million on the assets held for sale due to the disposal of the shares of Medison and a realized gain of $2.9 million on our NCIB's automatic share purchase plan. We also recorded a foreign exchange loss of $4.9 million due to the depreciation of the Lat Am currency at the end of the quarter partially offset by Knight's relative gain on certain U.S.-denominated net assets. I will now turn the call back to Samira.

[Samira Sakhia, President & Director]

Thank you, Arvind. 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. Public health pandemic, including COVID-19, poses the risk of the company, its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time including due to shutdowns that may be requested or mandated by governmental authorities. Certain countries where Knight has significant operations have required entities to limit or suspend business operations and have implemented travel restrictions and quarantine measures. As a pharmaceutical company, Knight is working to alleviate some of the pressures of the global COVID-19 pandemic has placed on our health care systems and to ensure that we maintain supply of our medicines to our patients. All of our employees have transitioned to working remotely, including our field, sales and medical teams. In Argentina, where we manufacture our branded generic products, we have implemented precautionary measures to ensure safety and continuity of supplies. These steps are being taken to minimize personal interaction as much as possible and to stem the disease and flatten the curve. In the field of pharmaceutical marketing, increased social contact, such as interaction between sales representatives and medical science liaisons with health care providers, has the potential to counteract these important public health initiatives and to put our employees, patients and health care professionals at risk. The Knight and GBT teams have established digital and virtual channels to ensure that physicians and patients continue to receive continued support. In addition, in several of our markets, we are making contributions of supplies or products that can help patients and health care professionals deal with the crisis. For example, in Canada, we have launched a Probuphine access program to allow patients who do not have public coverage to receive Probuphine at no cost. We remain committed to ensuring the safety of our employees and the uninterrupted supply of our medicines. We are actively working with our partners to minimize business interruption and to ensure uninterrupted product supply. As of the date hereof, the outbreak has not had a material impact on the company's results. I'll now turn the call back to Jonathan for his concluding remarks.

[Jonathan Ross Goodman, Founder, CEO & Director]

Thank you, Samira. The team remains focused on developing in-licensing and acquiring innovative pharmaceuticals for the pan-American, ex U.S.A. market. Thank you for your continued support and confidence in the Knight team. This concludes my formal remarks. So I now like to open up the call to questions. Operator?

[Operator]

Before beginning, may I please remind you, questions during today's call will be taken from analysts only. Should there be any further questions, please contact Knight's Investor Relations department via e-mail to [e-mail], mail to [e-mail] or via phone at [phone]. [Operator Instructions] Your first question comes from the line of David Novak from Raymond James.

[David Novak, MD & Healthcare Research Analyst]

Really a nice quarter here, which was actually spot on with our estimates. So just a few questions from me this morning. To kick it off, notwithstanding the impact of COVID-19, you guys are alluding to some seasonality in Lat Am as a result of holidays and events. If possible, I just wanted to channel check my rest of year assumptions with you guys. Currently, I see about 21% of revenues hitting in Q1, 27% in Q2, 25% in Q3 and about 28% in Q4. Without getting into specific revenue numbers, proportionately speaking, am I in the right ballpark here? And I suppose on the same chain of thought, COVID is obviously continuing to disproportionately hit various Lat Am countries like Brazil and Argentina. So how should I be thinking about that impact as it relates to GBT in Q2?

[Samira Sakhia, President & Director]

David, its Samira. The -- honestly, the issue that I have in commenting on your numbers is the impacts of COVID. We are obviously -- one of the things is GBT is in launch phase on a lot of products. As I said earlier in the call, we're launching Cresemba in Brazil. This is a launch that's going a little bit slower than we expected, and so we do expect the balance of the year to improve, but we don't know how it's going to phase up. And we are working very closely, and the team is working very hard to continue to commercialize through digital means, having advisory -- virtual advisory board's communications to other channels. When it comes to how is COVID impacting these markets, a lot of it is really around shutdown. So for example, Argentina is extremely shut down. Even movement of people is very complex. Where we -- where you're seeing the numbers, it should be noted. Sadly, in a lot of these countries, the issue isn't the -- there's 2 types of economy. And there is a significant proportion of the population that is, let's say, the -- not the underground economy but let's say, the informal economy where social distancing and work from home is not feasible. And that is where we're seeing the majority of these terrible numbers.GBT and Knight, we really are operating more in the private market and less so with public market. There will be an impact, but we don't expect that, a significant impact this year in the private market. But as the economies adjust, we will -- we expect to see it.

[David Novak, MD & Healthcare Research Analyst]

Got it. Great. And just sort of building upon your comments on Cresemba, it's something both you guys as well as GBT seem to be highlighting in your financials this quarter. Could you provide us a little bit of insight around this asset? Is it -- I guess, from a top level perspective, is this expected to become a major revenue contributor going forward?

[Samira Sakhia, President & Director]

We're -- Cresemba is a really great product. It has a better safety and efficacy profile to existing products. And we do expect it to grow dramatically. We're excited about the launch. I'm actually going to turn it over to Amal to provide more information.

[Amal Khouri, Vice President of Business Development]

Thank you, Samira. Yes, I mean we're highlighting Cresemba because it's a key launch for GBT and for us. And it's a product for -- that's indicated for invasive aspergillosis and invasive mucormycosis. Both are serious infections that affect patients who already have other serious health conditions. So it's -- from an unmet need perspective, it's a really important product and that really kind of adds to why we're so -- we're excited about it. It fits very well within our portfolio. Whether it's the anti-infective portfolio or even the heme/onc portfolio because some of the heme/onc patients are more susceptible to these types of infections. So it is a very important product and one of our key launches.

[David Novak, MD & Healthcare Research Analyst]

Got it. Excellent. And okay, I guess, moving on to the inventory loss experienced in the quarter due to temperature excursion during transportation. Is this a type of provision we should be expecting in the normal course of business in Lat Am? Or are there any improvements we might see Knight make at GBT that could tackle this? And again, on the same line, are there any other areas of focus that you could speak to now having spent some time with GBT that team Knight would like to amend within the company?

[Samira Sakhia, President & Director]

So temperature excursions are, I'm going to say quasi-normal in the industry. It's not just a GBT factor. We obviously all try to avoid it. The reason we are identifying this is because there is potential for insurance claims and I don't want to have a -- take the benefit in the margin when it shows when -- if there is a claim, so kind of to highlight an unusual item. When it comes to is there any other issues that we've seen that we want to see improvements on, it's one of the things that we were saying when we acquired the company. A lot of it is really around the fact that GBT was a company that came together as 4 separate companies: so GBT itself, which was a Colombian company; United Medical, which was the Brazilian arm; and LKM and DOSA, which are the 2 branded generic arms. These companies never really came together. So a lot of it is about systems, processes and coordination of activities amongst each other. And that's what the entire -- like myself, Amal and Jon and Arvind have been working on with the team there over the last 7 months. And it's a long slug that we have for maybe the next year in a bit as well because it's not just putting the Knight culture, it's really building a culture for our entire organization together.

[David Novak, MD & Healthcare Research Analyst]

Got it. Great. And I guess just lastly, turning our sights back to Canada, last week, the PMPRB published a second set of draft guidelines and announced that the regs have been delayed to Jan 2021. I was wondering if you could comment on whether Knight might be submitting feedback on the current draft guidelines. And further, any comment on how you're seeing the current draft impacting Knight or the industry as a whole going forward?

[Samira Sakhia, President & Director]

So I'm working with the Canadian team. So it's become that -- the team that you're talking to right now, we've now got 2 levels within our organization. So that Canadian team has been really focused on the guidelines, and I have a call with them later this afternoon about that. The -- what I can tell you is first blush, slightly better. What we're excited about is that there -- we have an extra 6 months of delay. And hopefully, we're able to see going through this process that there are excursion, other changes, potentially, a further delay. And we're going to -- we will see, but it's the -- it may not affect existing products as much. There is still a sense early on that this will affect new product launches. So we're -- my team -- I know our team is still in the assessment period. I know that the industry association is still in the assessment period, and I know that there will be a lot of comments submitted.

[Operator]

Your next question comes from the line of Justin Keywood from Stifel GMP.

[Justin Keywood, Director of Equity Research]

Just on the working capital in the quarter, on the receivable balance, are you comfortable with those levels? Is there any risk of collection there or bad debt expense?

[Samira Sakhia, President & Director]

Justin, thanks. I'm going to turn it over to Arvind to answer that question.

[Arvind Utchanah, Chief Financial Officer]

Thank you for your question. So in terms of the first question in terms of levels of the receivable and working capital, what you see is the normal course of working capital and normal course of receivable. Typically, in that time, it takes a bit longer to collect receivable as compared to Canada. So typical collection is between 90 to 110 days, and that's why you kind of see those level based on the sales. In terms of bad debt, we did have disclosed that we did have about $1 million of additional bad debt we recorded in the quarter. We've done in-depth analysis, and this is what we see so far as potential collection issues. Going into the quarter and into the next future quarters, at this point, there's no -- we're still collecting in most of the countries and within the collection period, and we don't see any significant delays or collection issues at this point.

[Justin Keywood, Director of Equity Research]

Just to clarify, that's $1 million in bad debt expense?

[Arvind Utchanah, Chief Financial Officer]

Yes, around $1.1 million.

[Justin Keywood, Director of Equity Research]

Okay. All right. Not much. All right. And then I just have a broader question on GBT's portfolio. I believe there's 40% related to infectious disease. Could you just expand on that a bit more and how that breaks down on a more granular basis as far as therapeutic areas?

[Samira Sakhia, President & Director]

Sure. So in -- GBT's focus is really infectious diseases, oncology, onco-hematology and a little bit in rare CNS. I'm not sure if we've provided TA data. But in the infectious diseases, we have Cresemba, and we have AmBisome as well as some HIV and HCV products. In oncology, we have the Gambit. And the HIV and HCV -- HIV products especially, we have both the Gilead portfolio as well as some of our own branded generic products in Argentina. In oncology, we have the AzaSite portfolio. We have the Celgene BMS portfolio as well as several of our own BGx products. And in the rare CNS, it's really around Fycompa and Inovalon. And that's really -- and I am going to ask Amal to add some more -- is really where our focus of in-licensing as well because this is where we can build on the infrastructure that we have.

[Amal Khouri, Vice President of Business Development]

Thanks, Samira. So -- sure. Sorry, I was on mute. So the -- in terms of BD focus, the areas that we're looking at is really to add to those key focus areas we're in. So oncology, heme/onc as well, infectious disease, I think you're asking -- I don't know if you're asking the breakdown within that therapeutic area. But if you look at the portfolio within infectious diseases, we're not really -- we're not talking about your run of the mill antibiotics, right? So these are high-specialty infectious disease products. So they're really split between the hospital-based antifungal, so AmBisome and Cresemba. And we also have a partnership with Gilead for their HIV and Hep C portfolio. So that's really where infectious disease is. So whatever we look for in this area would be really complementary there, plus the other 2 therapeutic areas that Samira mentioned for -- in terms of breakdown, I think -- sales breakdown, GBT disclosed last year about 40% of their revenue was for the infectious disease portfolio and a bit less than half for onc -- heme/onc and with the other specialty areas accounting for the rest.

[Justin Keywood, Director of Equity Research]

Okay. That's helpful color. They certainly seems diversified. And then I just have a question on GBT's R&D and research programs. I believe there's around 50 in progress. Are you able to provide some additional color there? Like are any of these assets in late stages as far as trials? Or how would you characterize the maturity of those assets?

[Samira Sakhia, President & Director]

Yes. Amal, do you want to take that?

[Amal Khouri, Vice President of Business Development]

Sure. So I think what you need to, I guess, think about when we are talking about GBT development, we are talking about a branded generics portfolio. So it's not your typical clinical development pathway that you'd be used to for an innovative product. So we're really talking about primarily formulation development, so time lines are really much shorter. So kind of -- if you look in the same length as we would look at an NTE development, I guess all of them would kind of count as late stage, right, because these are known molecules. It's just a question of development formulation. And so the life cycle is quite short compared to an NTE kind of full clinical development pathway.

[Operator]

Your next question comes from the line of Endri Leno from NBC.

[Endri Leno, Associate]

A few for me. I'll start with Canada first. So I was wondering if you have any updates on the Health Canada's reviews on IMVEXXY and BIJUVA and could there be any delays there. Are you seeing anything on that regulatory end?

[Samira Sakhia, President & Director]

IMVEXXY and BIJUVA continue through the review process. We have had a lot of questions. The team is responding as fast as they can. And unfortunately, until you get to the finish line, you don't really know what happens. So we're -- the assessment is continuing when we're answering their questions.

[Endri Leno, Associate]

Okay. Great. And one more on the Canadian product side. For NERLYNX, just kind of more -- I mean, not specifically but in terms of sales, but like when do you -- would you expect it to contribute to revenues, basically?

[Samira Sakhia, President & Director]

So NERLYNX is a product that we're eking out our launch actually. And what we're doing is -- unfortunately, this is a launch similar to some of the activities that we're talking about in Lat Am is a launch during COVID. So we're being more measured as to the launch. Our medical team has been conducting a lot of activity, virtual ad boards, education. We are starting to see pickup. But -- and our market access team is working very hard for public -- for private reimbursement. And again, that's advancing but slowly given what's happening in COVID. We do expect it to start becoming more meaningful. But in a slower launch, it will still be a couple more years to contribute meaningful to the Canadian numbers.

[Endri Leno, Associate]

Okay. Great. And just turning on to Lat Am, you mentioned, Samira, that as -- I mean, perhaps the virus starts impacting more the private -- or the pandemic rather, private economy in Latin America, and it could be impacted a little bit as well. I was wondering if you can kind of provide a bit more granularity there in terms of would you impact -- more impact on sales, on growth or launching new products, which one of those areas you think would be more impacted in Lat Am?

[Samira Sakhia, President & Director]

So what we've seen historically is when the pandemic -- as OECD has essentially said that this is going to have a global economic impact. And as that economic impact could start, and we see some job losses happening. And those job losses, people will lose insurance. What we know is historically, when we've seen that in large markets like Brazil, there is a decline in sales a little bit or the growth slows down. And then it starts to pick back up as people -- as the economy [ recovers ]. What we know is that it has happened. And then the private market is what recovers faster than the public markets. And our operations are more so in that public -- in that private market and maybe in a couple of years out as there is a little bit of a dip, and then we expect to come back.

[Endri Leno, Associate]

And 2 more questions actually on Lat Am. But I think on the last call, on Q4, you mentioned that there was some potential for negotiations for renewal of some expiring agreements. Has that been impacted? Like I mean, first, like how it is going? And then has it been impacted with the pandemic at all?

[Samira Sakhia, President & Director]

Sure. I'm going to actually ask Amal to answer that question.

[Amal Khouri, Vice President of Business Development]

Sure. So yes, I mean, we had -- I think we had mentioned and there are some agreements that -- existing agreements. I think that was your question, correct? That are -- that would be up for renewal over the next few months to a year. So we are working on that. And we are expecting to be able to renew potentially at different terms from what we have today, but we are expecting to be able to renew. I think your -- the other part of your question was on the impact of the pandemic, if that's slowing things down. I think that's more of a kind of if I look at overall BD discussions, some discussions are continuing as normal and others, some discussions are being delayed because of the pandemic. So it's really some impact and some are not impacted at all.

[Endri Leno, Associate]

Okay. And since we are actually on the BD discussion, I mean, have you seen any changes in terms of multiples or prices that are being asked, I mean, especially if we contemplate a bit of a dip because of a slowdown in the economies?

[Amal Khouri, Vice President of Business Development]

Yes. So we're not seeing any dip in valuations. In fact, if you look at all the financing and all the cash inflow into the sector, if anything, it may be we're kind of doing the opposite. So we're not really seeing any improved valuations or any fire sales. There is pretty healthy cash inflow into the factor, so no change, no improvement on valuation.

[Endri Leno, Associate]

Okay. And then last one for me, it's in Lat Am. I was wondering if you can talk a little bit about the management team in there, how do you see developing, I mean, especially when you finish the tender in Q3. Like any comment in terms of the structure that you expect there.

[Samira Sakhia, President & Director]

Endri, the -- so one of the things I mentioned earlier on the call, what we're really trying to build is one organization. So to have people who are working at -- whether they're in Canada or whether they're in Lat Am, they're really focused on us as a global company. We do -- there are certain gaps in the organization that we had identified when we were doing the acquisition. As we've been working through, there's talent within the company that we will continue to elevate. And there's other places where we do need to continue to fill the gaps. And during this time, it's a little unusual to be recruiting over Zoom, but we are putting those -- we are really in the process of putting people in those positions and working through that.

[Operator]

[Operator Instructions] Your next question comes from the line of Andre Uddin from Mackie Research.

[Andre Uddin, Managing Director of Healthcare Research]

Just wondering when do you think you'll be able to monetize your venture fund investments.

[Samira Sakhia, President & Director]

Sure. So we've decided, I guess, over the last couple of years that the venture funds have been very successful for us financially. But from a BD efforts, they've been lukewarm at best and that we're not investing in new funds. When it comes to monetizing, the decisions for now is to continue to hold them until their maturity. At this point in time, we don't -- we still have a nice amount of cash. So unless there is a need, we won't really be monetizing.

[Andre Uddin, Managing Director of Healthcare Research]

Okay. I'm wondering on your top 3 public equity positions right now.

[Samira Sakhia, President & Director]

I'm going to ask Arvind. I don't think that -- I'll ask Arvind to answer that question. You might be on mute, Arvind.

[Arvind Utchanah, Chief Financial Officer]

Sorry, I was on mute. So in terms of our equity position, like we don't have anything that's material. In fact, if you go to the disclosures on our financial statement, it's less than a couple of million -- like a couple of million dollars at best.

[Andre Uddin, Managing Director of Healthcare Research]

Okay. Okay. That's all right. I just was curious. And also, just wondering if you're going to be providing any guidance on GBT going forward.

[Samira Sakhia, President & Director]

That's one of the things we have been trying to work on. Unfortunately, due to COVID, it's a little hard internally to do that. But we -- as we come out of this, we will be.

[Operator]

There are no further questions at this time. I'll turn the call back over to the presenters.

[Jonathan Ross Goodman, Founder, CEO & Director]

Thank you for your confidence in the Knight team and for joining our first quarter 2020 conference call. Please stay healthy and stay safe.

[Operator]

This concludes today's conference call. You may now disconnect.