Vote For Change

Medison believes Knight shareholders should expect more from Knight and should vote for the Independent Nominees because:

  • Knight has failed to build a specialty pharmaceutical business. Five years after its founding, Knight only markets three drugs, has generated life-time revenue of just $25 million from pharmaceutical products and has incurred operating losses every quarter. Instead of building an operating pharmaceutical business, Knight has stockpiled cash and functions more like an investment firm, investing in venture capital funds and fund-of-funds and making loans to various and sundry healthcare companies, without any identifiable strategic purpose.
  • Knight’s stock has underperformed its peers and the market. Knight’s stock has underperformed its relevant peers and the broader market in the one-, two- and three-year periods ended March 31, 2019 and in the first quarter of 2019.
  • Knight is valued only for its cash and holdings, not its business or potential. The Company’s stock price indicates the market does not believe Knight will build a successful operating business. Fully 97% of the value of Knight’s market value reflects the cash and passive holdings on its balance sheet. Just 3% of the stock price ($0.25 per share) can be attributed to the value of Knight’s business and vision.
  • Knight’s CEO is conflicted, and his interests are not aligned with all other Knight shareholders. Mr. Goodman owns more of Pharmascience, which has recently become a significant competitor to Knight, than he owns of the company he serves as CEO. Knight first disclosed the competition in 2017 and despite this critical change in circumstance, Mr. Goodman asserts that shareholders should trust him to disregard his own economic interest while he runs Knight. Mr. Goodman’s recent disingenuous act of placing his Pharmascience interest in a “blind trust” is wholly ineffective – Mr. Goodman knows he still owns more of Pharmascience than Knight. We believe shareholders should expect their CEO to be fully committed and aligned with the success of the organization he or she runs.
  • The incumbent directors are entangled with the CEO and each other. There are longstanding relationships between every one of the incumbent directors and the CEO, including financial and business partnerships and relationships that compromise the role of the incumbent directors as fiduciaries for shareholders. Shareholders deserve and are entitled to independent oversight. The fact that Mr. Goodman recently told a reporter that he would not work under an independent Board should cause all shareholders to doubt whether his hand-picked directors have fulfilled their duties to provide rigorous oversight of Knight and Mr. Goodman.
  • There is a better plan that can create growth and profit, and increase Knight’s stock price. Medison has developed a comprehensive plan for building Knight into a leading, Canadian-based pharmaceutical company that commercializes innovative therapeutics for life-altering and life-threatening diseases. There is enormous potential to create a growing and profitable business delivering these medicines to patients in Canada and other “rest of world” markets.
  • The Independent Nominees are experienced, objective and talented. Medison has identified and recruited five extraordinary pharmaceutical executives who are willing to serve Knight’s shareholders by overseeing the strategy and execution at Knight. Unlike the incumbent directors, the Independent Nominees have decades of operating experience inside respected pharmaceutical companies and have no ties to Mr. Goodman (or to Medison, Mr. Jakobsohn or Knight).
Reasons For This Solicitation

Medison Biotech (1995) Ltd. and its affiliates (“Medison”) is the second largest shareholder of Knight Therapeutics Inc. (“Knight” or the “Company”).

We are seeking your support to elect a new, more effective Board of Directors at Knight because we believe Knight can:

  • Build a strong Canadian-based company with sustainable, long-term growth that generates substantial returns for shareholders in the near-, medium- and long-term; and
  • Save or improve the lives of patients in Canada and around the world by creating access to innovative medicines.
The Knight-Medison Relationship

In 2015, Knight and Medison, Israel’s fastest growing pharmaceutical company, entered into a strategic relationship.

Medison became Knight’s second largest shareholder and Knight became a shareholder in Medison.

The two companies shared a common vision: to create a specialty pharmaceutical company focused on in-licensing innovative pharmaceutical products that treat life-threatening or life-altering diseases for commercialization in the Canadian, Israeli and other select “rest of world” markets.

Mr. Jakobsohn, the CEO of Medison, joined the Board of Knight to help execute this vision. Jonathan Goodman, Knight’s CEO, joined the Board of Medison.

Unfortunately, Knight is not executing on either mission: it has simply failed to become a specialty pharmaceutical company.

We believe Knight shareholders are suffering needlessly – with significant negative impact on patients in Canada too – because Knight has failed to build a focused operating business that commercializes important and innovative medicines to treat lifealtering and life-threatening illnesses. Shareholders should wait no longer. Knight shareholders deserve to be rewarded for their investment in Knight.

Medison has been a shareholder of Knight for more than three-and-a-half years and can no longer allow Knight to continue to falter in its mission. Medison’s CEO, Meir Jakobsohn, who has served on the Board of Knight since 2015, has concluded that Knight has abandoned its original strategic plan; is not capitalizing on its available opportunities; and has failed to create value for its shareholders.

We have decided to act now to ensure our and all shareholders’ investment in Knight succeeds and appreciates in value.

Medison has developed a comprehensive plan for Knight to fulfill its promise. That strategic plan and information on this campaign is available at www. To successfully execute this plan, we believe Knight first needs a new Board comprised of truly independent directors with relevant operating experience and a renewed commitment to Knight’s dual purpose of saving lives and earning returns for shareholders.

At Knight’s annual and special meeting this year – to be held on May 7, 2019 – we intend to nominate six exceptional professionals for election to the Knight Board. We believe this change is required to get Knight back on track.

To be clear: Medison is seeking to help Knight succeed, not to control Knight or remove Jonathan Goodman from the Board. We are nominating six seasoned professionals with decades of operating experience in the pharmaceutical business, records of extensive public board service and a commitment to serving Knight’s shareholders as truly independent directors. Besides Mr. Jakobsohn the other five nominees have no ties whatsoever to Medison, Knight or Mr. Goodman. Our aim is to have these experienced pharmaceutical executives serve on the Board alongside Mr. Goodman and Mr. Jakobsohn to oversee and guide Knight as it fulfills its mission.

Please vote with us to support necessary change at Knight by returning the GOLD proxy card or by voting online.

Patients and shareholders deserve a New Day for Knight.

Knight’s Opportunity is Attractive and Large

The market opportunity to introduce innovative, life-saving and life-altering drugs to Canadian patients and to patients in other important international markets is tremendous. The Canadian pharmaceutical market alone is estimated to be worth at least $25 billion annually. New medicines are launched around the world regularly and many of these compounds are extremely attractive economically – what we consider to be true “Diamonds”: innovative therapeutics with strong intellectual property protection and the potential to earn lasting, attractive returns.

Biotechnology companies and other innovators are naturally focused on the largest patient populations in the United States, Western Europe and Japan when they launch these products. Canada and other markets are smaller, complicated and are often best served through local partnerships. The patients in Canada and other markets often have to wait to receive innovative medicines. Knight can be the bridge that brings these critical medicines into Canada and other select rest-of-world markets.

We believe, in fact, that Knight can be the partner of choice to successful medical innovators, while helping patients access new medicines. To do so, however, requires Knight to have a more focused approach to building domain expertise in key therapeutic areas and energetically pursuing licenses for the best medicines.

Knight’s Business and Growth Have Been a Disappointment

Knight’s Operating Business is Small and Unfocused

Five years into its existence, Knight has sold cumulatively less than $25 million of pharmaceutical products. The Company’s pharmaceutical business continues to lose money every quarter. And, despite its enormous cash reserve, Knight has offered no tangible plans or clear path to significant, profitable growth, let alone shareholder returns.

Knight would like shareholders to believe that this is a common practice for pharma companies. The idea that the path to success requires slow business development is simply wrong. In our own business, which has grown substantially every year since our founding and which is very profitable, we have proven the opposite: growth is the key to success and positive impact.

The problem, we believe, is not that success takes time. Knight has simply not exercised the focus and discipline necessary to capitalize on the “Diamond” opportunities in Canada and other markets. Instead, Knight has taken the easy path, licensing low-value, low-tech compounds in a wide variety of therapeutic areas, in addition to marketing medical devices and over-the-counter medicines.1 These medicines do not aid the patients most in need of life saving therapeutics and therefore do not have the potential to generate significant sales and profits.

Revenue From Pharmaceutical Products is Modest

Knight, for example, recently licensed Mytesi® in Canada from the struggling pharmaceutical company Jaguar Health, Inc. (NASDAQ: JAGX). Mytesi generated a paltry USD $1.5 million in fourth quarter sales in the United States – a market twenty times larger than the Canadian market – and is showing no promising signs of substantial growth. In our view, the effort involved in licensing this product and commercializing it in Canada will never be rewarded.2

Knight also licensed Probuphine® for the Canadian market from Braeburn Pharmaceuticals. Knight seems quite excited by the product – it regularly releases updates on its regulatory and commercialization status – but we believe Probuphine has a peak sales opportunity in Canada of less than $2 million annually. Probuphine suffers both from low quality and insufficient clinical data when compared to sublingual buprenorphine. It also has fierce competition from other buprenorphine-based medications, most of which are already generic.

Products like Mytesi and Probuphine will not lead Knight to greatness, nor will they generate returns for shareholders. So it is with the approximately twenty drugs Knight has licensed (some of which are unlikely to ever even make it to market): nearly all are economically unattractive – with small markets, short intellectual property lives, substantial competition, or all four – and do not significantly enhance value for Knight’s shareholders.

Few Products* are Commercialized

“We don’t invest in [Knight] because it just does not meet our criteria from an operating company point of view. It is more like a mutual fund sitting on a lot of cash looking for opportunities.”Canadian Fund Manager on BNN, March 27, 2019

The problems at Knight are fixable; bad choices have been made that can be corrected with the right Board overseeing the Company.

A decade ago (or more), successful pharmaceutical companies sold mass-market, branded or generic pharmaceutical products. But the healthcare and pharma industries have since shifted. Today, the high value products are now the innovative, specialized biotech products – the “Diamonds.” While they may treat fewer patients, those medicines command higher prices and significantly higher lifetime value per patient because of their unique efficacy and safety profiles in patients with life-altering or life-threatening (and often chronic) diseases.

With the change in marketplace dynamics and patient care, once successful generic and general pharmaceutical companies – like Valeant, Teva and Endo, which purchased Knight’s predecessor, Paladin Labs – have seen their fortunes erode. To be successful today, Knight needs a different formula and needs to make different choices: it needs to focus on the innovative products that can alter and save the lives of patients.

Knight’s lack of discipline has also led it to license products in many different therapeutic areas, diluting its focus and increasing its diligence costs, commercialization risks and marketing expense. The effects are clear: a scattered portfolio with low return-on-investment. Across the twenty or so products that Knight has licensed or inherited from its predecessor, Knight is attempting to commercialize products in at least eight separate therapeutic areas, in addition to attempting to market medical devices and over-the-counter drugs.

This creates a lot of activity and hard work, but it does little to generate profits. To properly manage the risk and profit potential associated with such a wide range of therapeutics, Knight must first develop a commanding knowledge of the therapeutic alternatives (including those in the pipeline of respected biotechnology companies) that are used in each of these areas; the unique commercialization, distribution and operational aspects of the markets; and their legal and regulatory environments. In our experience, it is inefficient and risky for a company the size of Knight to be involved in so many diverse therapeutic areas at one time.3

Knight has also failed to make any noticeable progress in markets other than Canada. Other than its relationship with Medison, Knight has failed to develop global partners or commercialization capabilities.


Knight is Valued for its Tangible Assets, not Prospects or Operating Business

Knight’s Value is Almost All in Undeployed or Passive Assets

Being so thinly spread is also a distinct commercial disadvantage when Knight seeks to in-license attractive therapeutics. Biotech companies with innovative medicines want a local partner that is skilled and knowledgeable in their therapeutic area and has a good reputation for commercializing complicated and expensive products. In our discussions with biotech companies around the world, there is a clear preference for local partners that do not sell both aspirin-like commodity medicines and biotech compounds that cost $5,000 per monthly treatment. Knight’s willingness to sell over-the-counter and mundane medicines dampens its chances of successfully in-licensing innovative products from biotech companies that want a specialized partner.

Everyone loses from Knight’s current strategy. Patients in Canada do not get early access to innovative therapies. And shareholders take on the expense and risk of a scattered portfolio, while losing out on the opportunity to commercialize the truly profitable medicines.

The consequences of these various missteps manifest themselves in Knight’s disappointing financial results: Knight has reported anemic growth and continuous operating losses since its formation. Knight’s ongoing lack of focus and discipline nearly guarantee that this trend will not abate anytime soon, absent shareholder intervention.

Knight’s Business is Akin to a Financial Intermediary

Knight’s real business today is making passive investments and lending money. Knight and its executive team oversee a large, idle stockpile of $787 million in cash, which cannot generate meaningful return for shareholders. Since the beginning of 2015, Knight’s cash has been equal to at least 70% of the Company’s total assets.

Why isn’t Knight using this cash to build value for shareholders? When will it?

On the few occasions over the past five years when the Company has deployed its cash, it has most often been put to work as a purely financial, non-strategic transactions, including being invested into venture capital funds (and fund-of-funds) or limited partnership units or lent to distressed companies in need of capital. Knight’s investments and commitments to venture capital funds are now nearly $130 million and it has provided loans of more than $170 million.

Knight originally claimed that these financial transactions would lead to the licensing of new products and an increase in commercial business. But that has not proven to be true. The passive limited partnership interests in venture capital funds have not led to a single license of a promising product.4 The same is true for the loans.

For example, last October, Knight extended a $10 million loan (and may issue up to an additional $100 million in funding5) to a Mexican pharmaceutical company, Moksha8, which distributes mostly generic drugs. The agreement offers no strategic value to Knight, secures no product rights in Canada or other markets around the world, aids no patients and can only result in a financial return similar to what one would expect from a bank.6

Knight also loaned money to a company in which Knight’s CEO, Jonathan Goodman, and its Chairman, James Gale, had an ownership interest. We frankly do not understand why this was a proper use of Knight shareholder capital (it predated Medison’s investment in Knight and we are not aware of how or whether these obvious conflicts of interest were disclosed to the Knight Board or why the Board ignored them. Not surprisingly, this was the first loan that Knight granted without receiving product rights).

In other financial transactions, Knight invested in a venture capital fund which was started by a former business partner of Knight Board member Nancy Harrison and bought stock in a company where a former Paladin employee serves as a director.

These uses of capital – like most of Knight’s deployed capital – were entirely non-strategic and have not led, and will not lead, to Knight becoming a world-class pharmaceutical company. Knight, in reality, is a financial firm today – nearly all of its assets are cash and passive investments – not a pharmaceutical company.

When Knight touts its historical profitability, the Company would have us believe this reflects operational progress. In fact, Knight inherited from Paladin an asset that neither Jonathan Goodman nor the stock market could properly value: it was an uncommon “license” called a “Priority Review Voucher” for a drug company to effectively jump-the-line in the US Food and Drug Administration’s notoriously long approval process. When Knight sold this “license” soon after its founding, it generated a financial “profit” (not an operating profit) because it was carried on Knight’s balance sheet at such a low valuation. That also led to a one-time stock price appreciation early in Knight’s days as a public company. Notably, this single non-recurring transaction, represents 65% of Knight’s accumulated profits since inception.

Financial transactions such as these are not sustainable or even repeatable. And, they are not consistent with creating a great pharmaceutical company.

Knight should be deploying shareholder capital to build a sustainable business, not to invest in venture capital funds or for issuing loans. In fact, we are not aware of a well-run pharmaceutical company anywhere in the world that has adopted a similar approach to using shareholders’ capital. Even more rare is the pharmaceutical company that lends to the Chairman’s projects and invests money with a director’s former partner.

These financial transactions are a diversion from building a sustainable operating business and value for Knight shareholders.

1This cannot be explained by a lack of opportunities. There are plenty of “Diamonds” in the market. Medison, for example, has licensed 15 lucrative “Diamond” products from twelve different companies in the last three years alone.

2Knight was compelled – or worse, chose – as part of the deal to invest in Jaguar’s stock, which currently trades at a market cap of approximately US $15M, a decline of almost 90% over the past 12 months. Perhaps the licensing deal, the investment or both were motivated by things other than profit motive: one of Jaguar’s Board members previously worked for Knight’s CEO, Mr. Goodman, and sat on a Board with both Mr. Goodman and another Knight director, Nancy Harrison.

3At Medison, we intentionally limit our focus to key therapeutic areas to ensure we have the knowledge and diligence capabilities to lower our regulatory and commercialization risks.

4Knight has disingenuously said that “the investments in venture capital funds have led to the Canadian in-license of Iluvien® from Alimera and a
portfolio of products from Advaxis.” However, neither Alimera Sciences nor Advaxis are portfolio companies of any of the venture funds in which
Knight invested.


6Knight has misleadingly called Moksha8 a “specialty pharmaceutical company” and the deal a “strategic funding deal”. Neither claim is accurate. Moksha8 sells generic drugs almost exclusively and there is no commercial deal with Moksha8 whatsoever.

Knight’s Stock Has Underperformed Its Peers
Not surprisingly, with limited commercial operations, Knight’s stock has faltered. Shareholders who bought stock three years ago (or those who paid $8 or $10 per share in the recent primary offerings) have earned no returns, while the market and peer companies have risen substantially in value. In fact, the total return on Knight’s stock has underperformed its peers and relevant indices over the last one-, two- and three-years, as well as in the first quarter of 2019.

Knight Has Failed to Create Value for Three Years

As Knight Makes Little Progress, Stock Stagnates and Underperforms

Source: FactSet, measured through March 26th 2019

Knight’s CEO Has an Untenable Conflict of Interest

We support Jonathan Goodman’s re-election to the Board of Knight as its founder and someone with deep experience in the pharmaceutical industry. But shareholders should know that Mr. Goodman has demonstrable and untenable conflicts of interest that we believe he must resolve prompt before continuing to serve as Knight’s Chief Executive.

Mr. Goodman has a long history in the Canadian pharmaceutical sector. He is the son of Morris Goodman, the founder of Pharmascience, one of Canada’s largest pharmaceutical companies, and was once the Chief Executive of Paladin Labs.

Pharmascience is the Goodman family business. It is run by Jonathan Goodman’s brother, Dr. David Goodman, and Jonathan Goodman has a significant ownership stake in the business. In fact, it is our understanding that Jonathan Goodman owns a larger share of Pharmascience than he owns of Knight.

We are not aware of any other public company Chief Executive who owns a greater share of a direct competitor’s stock than he owns of the business he is running. We think this economic misalignment may explain why Knight’s development has been stunted.

This means that a dollar of profit at Pharmascience creates more wealth for Jonathan Goodman than a dollar of profit at Knight.

Knight is in Direct Competition with the Goodman Family Business

Until two years ago, Pharmascience was, by all accounts (including according to Jonathan Goodman himself), focused entirely on the generic drug business and not in competition with Knight. Jonathan Goodman regularly told investors and reporters that Knight had a very different business plan from Pharmascience and that the businesses would never be competitive rivals.

However, approximately two years ago, Pharmascience changed its business plan and veered directly into Knight’s lane. One of Pharmascience’s wholly-owned subsidiaries, Pendopharm, has publicly revealed that it is “actively engaged in licensing, partnering, developing and marketing specialty prescription medicines.7

It is very telling that today, Jonathan Goodman does not deny the fact that Knight competes directly with his family business, nor does he refute the fact that his ownership stake in Pharmascience is worth more to him than his ownership in Knight. Knight even lists Pharmascience as a key competitor in its Annual Information Form.

Holding Annual General Meetings at the Competitor’s Office

Knight has traditionally held its Annual Meeting at the offices of Pharmascience, the Goodman’s family business. That was the initial plan this year too. Knight must have recognized that holding this year’s meeting at the offices of Knight’s competitor might draw too much attention to Mr. Goodman’s conflicts of interest. So, Knight just recently (and quietly) changed the meeting location.

Instead, Mr. Goodman says he has no influence over Pharmascience. In the last week – for the first time – he begrudgingly put his Pharmascience stake into a voting trust and agreed to be blinded to Pharmascience’s plans and results. While we are pleased that our efforts are getting results, this is not nearly good enough. Mr. Goodman knows a dollar of profit at Knight’s competitor is worth more to him than a dollar of profit at Knight. It would be as if the CEO of General Motors owned more stock in Ford than in General Motors. Yes, sure, the General Motors CEO cannot control Ford, but she can slow down the development of new cars and technology, steer clear of the markets she knows Ford wants to pursue and wait for Ford to have the first crack at the most profitable lines of business. Why would General Motors ever allow that? Why should Knight’s Board permit it?

We think Knight’s shareholders should be seriously concerned that Mr. Goodman has been given wide latitude by Knight’s unquestioning and uncritical Board, while he has a stronger economic incentive to allow Pharmascience to license the high-value products Pharmascience covets, with Knight taking the leftovers.

A Bylaw to Protect Shareholders

For the protection of all shareholders, Medison has proposed an amendment to the Company’s Bylaws prohibiting any Knight CEO from owning a substantial stake in a direct competitor. We urge you to support this proposal at this year’s annual meeting, by voting FOR Resolution 5.

Mr. Goodman says he would not operate in this manner, but shareholders and the Board should not expect a CEO to ever face the dilemma between generating maximum profits for himself or, alternatively, helping his Company’s shareholders. Moreover, it is disturbing that Mr. Goodman has allowed Pharmascience in recent years to succeed in licensing products that should and could have been Knight’s products.

Pharmascience received distribution rights in Canada, for example, from EDESA Biotech,8 Vivo Cannabis,9 RDD Pharma,10 and Cosmo Pharmaceuticals.11 All of these companies could be doing business with Knight, as they are developing the sorts of products Knight claims it wants to license. But, instead, Knight has allowed the Goodman family business to license them, while Knight is left with Mytesi and Probuphine, which Pharmascience would, rightly, never seek to distribute.

Does Mr. Goodman’s direct conflicts of interest explain the lack of development of Knight’s pharmaceutical business and the failure to license products that could dramatically improve Knight’s financial results? We don’t know for sure. But we do know that this is a question that public shareholders should never have to ask.

Knight claims shareholders should simply ignore Mr. Goodman’s strong economic ties to Pharmascience and his misalignment of interests with Knight shareholders because, Mr. Goodman’s family business connections are and have been well known to the market place for decades.12

But, Pharmascience’s business has evolved very recently. Mr. Goodman’s significant ownership position in the family business was not a direct conflict of interest until Pharmascience decided to enter the specialty pharmaceutical business. Note, for example, that Paladin never recognized Pharmascience as a competitor and Knight did not cite Pharmascience as a competitor until 2016. Moreover, even if the “market place” was “aware” of the conflict, shareholders are entitled to loyal services from the Chief Executive Officer. Disclosure of stark economic conflicts should not excuse or give permission for that serious misalignment of interests.

The Entanglements and Conflicts on Knight’s Board

Knight’s Board has a myriad of entanglements and longstanding relationships with one another and with Knight’s CEO, Jonathan Goodman, that may impact the objectivity of the incumbent directors, as well as their ability to act in the interests of Knight’s shareholders.

The simple fact is that Jonathan Goodman should have divested his interest in Pharmascience as soon as it became a competitor of Knight, or else step down as Knight’s CEO. The Board of General Motors would never permit its CEO to own a significant stake in Ford, even if she swore she would not let her own economic best interests influence her decision making.

Moreover, a truly independent Knight Board would have recognized the implications of Mr. Goodman’s conflict of interest and would have taken action. Instead, Knight’s Board has done nothing, leaving shareholders to wonder to what extent their investment in Knight has been harmed by Mr. Goodman’s split loyalties.

“This is what I told my father. I told him: you sell generics, I will sell branded pharmaceuticals. Pharmascience is a private company, I will build a public one. You have in-house R&D and manufacturing operations, I will not have any! I went the opposite track within the same industry. “Jonathan Goodman, September 25, 2017






12 Knight news release, February 28, 20199

Knight’s Board is Conflicted and Too Close to Jonathan Goodman

As shown in the chart above, Knight’s Board has a myriad of entanglements and longstanding relationships with one another and with Knight’s CEO, Jonathan Goodman, that may impact the objectivity of the incumbent directors, as well as their ability to act in the interests of Knight’s shareholders.

Chairman James Gale is Not Independent

James Gale, Knight’s Chairman of the Board, has numerous business dealings with the Goodman family, including as a business partner with them through their joint ownership of an investment management business, Signet Healthcare Management, which Mr. Gale founded, according to filings with the U.S. Securities and Exchange Commission.13

We also understand that the Goodman’s holding company, Joddes, is a large investor in the Signet managed funds, providing income and support to Mr. Gale.

So, while Mr. Gale serves as the supposedly independent Chairman of Knight, overseeing Mr. Goodman, he is also in business with Mr. Goodman and, likely, earning fees from Mr. Goodman’s continued support of his funds. In addition, one of Mr. Goodman’s relatives, Todd Sone, was a partner in Mr. Gale’s investment management business after working for the Goodman family businesses, at both Pharmascience and Joddes.

Additionally, one of the funds Mr. Gale manages was a founding investor alongside Pharmascience in a pharmaceutical business called Bionpharma.14 Mr. Gale serves on the board of this business together with Mr. Goodman’s brother, David Goodman, the CEO of Pharmascience.15

Most egregiously, Knight provided the debt financing for an acquisition by Signet (owned by Mr. Gale and the Goodman family).16 Knight thus provide cheap capital to Mr. Gale and Mr. Goodman so they could sweeten their personal returns in a side investment.

In our opinion, the number, depth and complexity of Mr. Gale’s economic relationships with various members of the Goodman family and Knight itself should cause all shareholders to reasonably doubt whether Mr. Gale can provide independent, vigorous and objective oversight of Knight’s business, its potential competition with Pharmascience and its conflicted CEO, Jonathan Goodman.

The Independent Directors Have Close Ties to Mr. Goodman

Unfortunately, as shown in the accompanying chart, the entanglements and conflicts of interest do not end with only Mr. Gale and Mr. Goodman. The other so-called independent directors all have prior relationships and some business dealings – with Mr. Goodman.

For example, independent director Nancy Harrison has had several financial and business dealings with Mr. Goodman prior to her joining the Knight Board. When Paladin made an investment in Isotechnika Pharma in 2009, Mr. Goodman joined the Board as Chairman and brought Ms. Harrison in as a new director the same day. Ms. Harrison resigned her Board seat on the day Paladin agreed to sell some of its stock the following year.

Ms. Harrison was also the seed investor, in 2004, in a company that Knight eventually purchased.

In both instances, it appears, Ms. Harrison benefitted professionally – and likely financially – from Mr. Goodman’s actions. We do not believe Ms. Harrison can now be expected to oversee Mr. Goodman objectively.

None of the Independent Directors Have Pharma Operating Experience

Also concerning is the incumbent Board members’ lack of experience operating a commercial pharmaceutical business in Canada or anywhere else. If Knight is going to execute on its stated vision and become a pharmaceutical company, surely it should have a Board with experience in the industry.

In fact, the Board is much more experienced in making venture capital investments than in licensing and commercializing medicines to save lives and generate profits. Perhaps this is why Knight has seemed more comfortable acting like an investment firm than a pharmaceutical business.

Director Robert Lande, for example, is an expert in trading currencies. He is a smart and capable professional. But we believe his principal qualification for the Board at Knight is his longstanding friendship with Mr. Goodman. They went to school together at McGill.

Representing the interests of shareholders, public company boards require independence and expertise to make the hard decisions about a company’s strategy or its management, based on an objective review of performance. We do not believe there is a place on Knight’s Board for outside business partners, schoolmates or people with little relevant industry experience.





Medison’s Strategic Plan for Value Creation Is the Best Path Forward

It’s a basic truth of business: idle cash does not generate substantial returns for shareholders, nor does haphazard execution of a chaotic business plan. Absent a significant change in direction and new Board-level leadership – with focus and discipline – shareholders cannot realistically expect any meaningful return on their investment in Knight.

Medison has developed a comprehensive plan for Knight, available at The plan is based on years of extensive research and dozens of discussions with pharma executives from Canada and international markets. We believe it is more comprehensive, thoughtful and actionable than any plan developed by Knight to date.

This plan is not intended – and will not – provide unique benefits to Medison, as Knight has tried to claim. It is a plan for Knight. We believe the plan will help Knight generate over $500 million in annual revenues with 20% EBITDA margins in 2025. Medison believes this can be achieved with substantially less capital than Knight currently has on its balance sheet. Accordingly, if elected, Medison’s director nominees intend to return a substantial amount of capital to shareholders.

Knight Should Focus on Diamonds

To build a successful operating business and have the greatest impact on public health, Knight must focus on licensing innovative, high value-added pharmaceuticals for sale in Canada and in a select number of “rest of world” markets. These “Diamond” products provide attractive lifetime revenue per patient because of their compelling efficacy or safety profiles and strong intellectual property protection.

We also believe Knight must focus on a select number of therapeutic areas so that it can develop sufficient resources and expertise to identify promising compounds and engage in discussions with potential companies early in the commercialization process, as we have done at Medison. Medison believes Knight should focus on oncology, hematology, central nervous system and orphan therapeutics, which are promising areas that can drive significant and profitable growth. This focus on higher margin, growing therapeutic areas will enable Knight to develop a commercial profile that will fuel growth far into the foreseeable future, while saving lives in Canada and throughout the world.

As Knight develops expertise and specialization in these areas, biotechnology companies with innovative products will be eager to partner with Knight for distribution of their products in Canada and other markets. Such specialization reduces competition with other pharmaceutical companies that cannot offer the expertise and market access a focused Knight could offer.

Knight Must Accelerate Entry into Other Rest-of-World Markets

At the same time, Knight needs to accelerate its commercialization capabilities in Canada and other select “rest of world” markets. In some cases, we believe Knight should deploy some of its capital to acquire or partner with local, in-market pharma companies in order to build capabilities in attractive markets, such as in Latin America and Asia. In others, Knight should consider building its own operations, a decision that should be made by the Company based on a methodology that was proposed in our strategic plan.

In our experience, Knight will have a significant advantage in in-licensing products when it is able to successfully commercialize those products in multiple geographies.

Medison believes that Knight can become a solution for the commercialization of “Diamond” products in multiple “rest of world” markets outside of the United States, Western Europe and Japan where biotechnology and pharmaceutical companies typically focus their efforts. Knight can provide the developers of these innovative therapies ready access to multiple markets with one dedicated partner. And while such a vision was part of Knight’s original mission, Knight has done very little to build capabilities outside of Canada.

Use Some Cash to Launch an Investment Fund; Return the Excess Cash to Shareholders

Once Knight has built a strong research capability that tracks compounds in development, the natural extension of its business would be to establish an investment fund together with a well-respected investment partner to strategically deploy capital into these promising compounds and companies.

This active investment strategy is materially different from the passive approach Knight has taken to date: rather than allowing investment managers to earn management fees and profits on Knight’s capital, make investment decisions without input from Knight, and without Knight receiving any commercialization rights, Knight should be controlling the research and investment decisions and insisting upon product licensing agreements every time Knight puts its shareholders’ capital to work.

We believe Knight could “seed” such opportunities with some of its cash while at the same time raising substantial sums from outside partners on which Knight could earn investment fees. Knight (and any fund it sponsors) should only deploy capital into companies that provide, in exchange, a license agreement to Knight for the commercialization of their products.

Even with all the opportunities upon which Knight can profitably execute, Knight is overcapitalized, in our view. We know Mr. Goodman takes great pride in the fact that he has raised substantial amounts of cash. But his obligation is to earn a good return on all the assets that have been entrusted to Knight. We see no evidence, and no plan has been put forth by Knight, for earning attractive risk-adjusted returns on Knight’s large cash hoard. We believe Knight should return at least $100 million to shareholders immediately.

Idle cash does not generate returns for shareholders.

Proposed Plan vs Knight’s Current Plan

The Independent Nominees Can Lead Knight Forward

In addition to Mr. Jakobsohn, who currently serves on the Board, Medison will nominate five new, experienced directors for Knight, each of whom is independent of Medison and of Knight and Knight’s management team – the “Independent Nominees.”

The Independent Nominees bring decades of pharmaceutical industry operating experience in both the Canadian market and in other markets across the globe. Each is a recognized industry leader; each has held senior operating roles at distinguished operating pharmaceutical companies.

The Independent Nominees also have extensive public company oversight and governance expertise, as well as experience entering markets and building revenues for products, managing capital allocation, sourcing and negotiating licensing contracts, managing regulatory interactions and realizing value on investments.

The Independent Nominees are:

  • Kevin Cameron, CEO of Ionetix, developer of cyclotron technology developed at MIT, former President of corporate governance firm Glass, Lewis & Co., and an experienced biotech public board member;
  • Elaine A. Campbell, the former President and CEO of AstraZeneca Canada and former SVP of DuPont Pharmaceuticals, with operating roles in sales, marketing and business development in the United States and Canada;
  • Michael Cloutier, the former General Manager of PTC Therapeutics Canada, former President and General Manager of InterMune Canada (now Roche), former President and CEO of AstraZeneca Canada, and former President of Pharmacia Canada (now Pfizer);
  • Meir Jakobsohn, the CEO of Israel-based Medison Biotech (1995) Ltd., which he founded in 1996, and which has become one of the world’s leading commercial partners for pharmaceutical and biotech companies and one of the three largest pharmaceutical companies in Israel by sales, generating over $250 million annually;
  • Christophe Robert Jean, the former EVP for Corporate Strategy, Business Development and Strategic Alliances of Ipsen Group, former President and CEO of the pharmaceutical operations of Pierre Fabre Group and former Head of Region Europe, Middle-East and Africa for Novartis; and
  • Bob Oliver, the former President and CEO of Otsuka America Pharmaceutical, former Chairman of Otsuka Canada Pharmaceutical and former SVP for Commercial Operations at Pfizer

We encourage you to read the full biographies of the exceptional Independent Nominees in the Information Circular.

Collectively, the Independent Nominees are committed to overseeing Knight with objectivity and a dedication to shareholder interests. We are enthusiastic about these nominees and believe they can bring to the Knight Board much needed industry knowledge and experience.

Vote the GOLD proxy FOR ALL of the Independent Nominees.

Knight has failed its shareholders and has failed to create a specialty pharmaceutical company serving Canada and other rest-of-world markets.

It has not built an operating business of any substantial scale. It has let capital sit idle, earning little or no return for shareholders. Its limited investment portfolio is not strategic and resembles a mutual fund or financial intermediary, not an operating business. The stock has not increased in value in more than three years.

It is time for change.

We urge our fellow shareholders to vote for new, world-class directors that can help Knight execute on our promising strategic plan. We believe there is tremendous upside and potential at Knight, but also believe that Knight will never realize its full potential without a new Board providing constructive, independent oversight.

Please join us in supporting a New Day for Knight.

VOTE FOR THE Independent Nominees

Knight’s Reaction to Our Criticisms

For over a year, Medison has made substantial efforts to convince the Knight Board and management team to change course. Mr. Jakobsohn, Medison’s representative on Knight’s Board, has tried to engage constructively through quiet diplomacy inside and outside of the boardroom and through telephone calls, emails and letters; he has presented his alternative strategic plan to the Board on two different occasions.

Knight and its incumbent directors have not been open to Medison’s thinking or engagement. Instead, Knight has sought to harass and frustrate Medison. For example, Knight:

  • suddenly, and on pretextual grounds, sought thousands of pages of accounting records and corporate information from Medison, after three-and-a-half years of seemingly happy and passive ownership of Medison
  • attempted to prevent Medison from communicating with Knight’s shareholders by stopping Medison from using Knight’s TSX ticker symbol (“GUD”) in press releases;
  • sued Medison to prevent Medison from spending its own money to protect its substantial economic stake in Knight (and in the process improperly revealed highly confidential information about Medison);
  • approached Medison’s third party partners “fishing” for information about Medison; and • demanded, for the first time, that Medison turn over dozens of confidential and sensitive commercial and investment agreements.

“We don’t invest in [Knight] because it just does not meet our criteria from an operating company point of view. It is more like a mutual fund sitting on a lot of cash looking for opportunities.”

– Canadian Fund Manager on BNN, March 27, 2019

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