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RedHill Biopharma Provides Full-Year 2018 Financial Results and Operational Highlights

TEL-AVIV, Israel and RALEIGH, N.C., Feb. 26, 2019 (GLOBE NEWSWIRE) -- RedHill Biopharma Ltd. (RDHL) (Tel-Aviv Stock Exchange: RDHL) (“RedHill” or the “Company”), a specialty biopharmaceutical company primarily focused on gastrointestinal (GI) diseases, today reported its full-year 2018 financial results and operational highlights.

Key Highlights:

  • Positive top-line results from the confirmatory Phase 3 study with TALICIA® for eradication of H. pylori infection; NDA filing expected in H1/19 with potential U.S. commercial launch in Q4/19

  • Positive top-line results from a first Phase 3 study with RHB-104 for Crohn’s disease; FDA meeting planned mid-2019

  • Initiation of pivotal Phase 3 study with RHB-204 for first-line treatment of pulmonary nontuberculous mycobacteria (NTM) infections expected in H2/19

  • Strengthening of commercial management team with appointment of Rick D. Scruggs, former executive VP at Salix Pharmaceuticals, as RedHill’s chief operating officer, U.S. operations

  • Debt-free balance sheet with approximately $53 million in cash as of December 31, 2018

  • Net revenues of $8.4 million and gross margin of 66% in 2018, compared to net revenues of $4.0 million and gross margin of 47% in 20171

Micha Ben Chorin, RedHill’s chief financial officer, said: “We had a successful 2018 with positive data reported from our two key Phase 3 studies: the confirmatory Phase 3 study with TALICIA® for eradication of H. pylori infection and the first Phase 3 study with RHB-104 for Crohn’s disease.”

Mr. Ben Chorin added: “We enter 2019 with a solid cash position of $53.2 million and a debt-free balance sheet. One of our potential key upcoming milestones this year is the planned filing of a U.S. NDA for TALICIA® in the first half of 2019, which is expected to support a potential commercial launch in the fourth quarter of 2019, subject to FDA approval. Additionally, we expect to meet with the FDA to discuss the development path to potential approval of RHB-104 for Crohn’s disease following the positive Phase 3 study results. We also plan to initiate a pivotal Phase 3 study with RHB-204 for potential first-line treatment of pulmonary nontuberculous mycobacteria (NTM) infections, an orphan disease with a strong unmet medical need, in the second half of 2019.”

“We continue to strengthen our commercial management team with senior industry executives and are pleased to have Rick D. Scruggs, a former senior executive at Salix Pharmaceuticals, expand his role as chief operating officer, U.S. operations to lead our growing U.S. commercial operations. For 2019, our established sales team is positioned to drive revenue growth with a lineup of four commercial products. In an effort to drive additional revenue growth and further leverage our existing U.S. commercial operations, we continue to evaluate opportunities to in-license and acquire additional U.S commercial products,” concluded Mr. Ben Chorin.

Select 2018 operational highlights:

TALICIA® (RHB-105)2 - Eradication of H. pylori Infection
Following the positive results from the confirmatory Phase 3 study with TALICIA® for eradication of H. pylori infection (ERADICATE Hp2 study), RedHill plans to submit a New Drug Application (NDA) to the Food and Drug Administration (FDA) in the first half of 2019, with eligibility for six-month priority review and potential U.S. commercial launch in the fourth quarter of 2019, subject to FDA approval.

RHB-104 - Crohn’s Disease
The first Phase 3 study with orally-administered RHB-104 for the treatment of Crohn’s disease (MAP US study) successfully met both its primary endpoint and key secondary endpoints and confirmed the broad benefit of RHB-104 as an add-on therapy to standard-of-care treatments for Crohn’s disease. RedHill continues to assess additional data from the positive study as it becomes available and plans to meet with the FDA mid-2019 to discuss the development path towards potential approval.

RHB-204 - Pulmonary Nontuberculous Mycobacteria (NTM) Infections
A pivotal Phase 3 study with RHB-204 for the treatment of pulmonary nontuberculous mycobacteria infections is expected to be initiated in the second half of 2019, subject to completion of the ongoing supportive non-clinical program and additional input from the FDA. The study is intended to assess the efficacy and safety of RHB-204 and potentially support its approval as a first-line treatment for pulmonary NTM infections caused by Mycobacterium avium complex (MAC).

BEKINDA® (RHB-102) - Gastroenteritis and Gastritis and Diarrhea-Predominant Irritable Bowel Syndrome (IBS-D)
Following the successful completion of a first Phase 3 study with BEKINDA® for gastroenteritis and gastritis and guidance provided by the FDA, RedHill is currently working to design a confirmatory Phase 3 study to support a potential NDA for BEKINDA® for acute gastroenteritis and gastritis.

RedHill held a positive end-of-Phase 2/pre-Phase 3 (Type B) meeting with the FDA discussing the clinical and regulatory pathway towards potential U.S. approval of BEKINDA® for the treatment of IBS-D.  RedHill is currently finalizing the design of two pivotal Phase 3 studies with BEKINDA® for IBS-D.

YELIVA® (opaganib, ABC294640) - Cholangiocarcinoma
The ongoing Phase 2a study evaluating the activity of orally-administered YELIVA® in advanced cholangiocarcinoma (bile duct cancer) achieved its pre-specified efficacy goal for the first stage of the two-stage study design and advanced to its second stage. Enrollment of the full cohort of 39 evaluable patients is expected to be completed in the second half of 2019.

U.S. Commercial Highlights:

RedHill currently commercializes and promotes four GI-specialty products in select U.S. territories, Donnatal® (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide)3, EnteraGam® (serum-derived bovine immunoglobulin/protein isolate SBI)4, Mytesi® (crofelemer 125 mg delayed-release tablets)5 and Esomeprazole Strontium DR Capsules 49.3 mg6.

RedHill expanded its leadership team with the appointment of Rick D. Scruggs as chief operating officer, U.S. operations. With more than 25 years of experience in the pharmaceutical industry, Rick has extensive experience in commercial operations and business development, having served as executive vice president of business development at Salix Pharmaceuticals, Inc., up to its acquisition by Valeant Pharmaceuticals International, Inc. (now Bausch Health Companies Inc.).

Full-Year 2018 Results7

  • Net Revenues of $8.4 million for 2018, compared to $4.0 million for 2017 8.
     
  • Cost of Revenues of $2.8 million for 2018, compared to $2.1 million for 2017. 
     
  • Gross Profit of $5.5 million for 2018, compared to $1.9 million for 2017; with gross margin increased from 47% to 66%.
     
  • Research and Development Expenses of $24.9 million for 2018, compared to $33.0 million for 2017. The decrease was mainly due to the finalization of the Phase 3 study with RHB-104 and completion of the clinical studies with BEKINDA®.
     
  • Selling, Marketing and Business Development Expenses were $12.5 million for 2018, compared to $12.0 million for 2017.
     
  • General and Administrative Expenses were approximately $7.5 million for 2018, compared to $8.0 million for 2017.
     
  • Operating Loss of $39.3 million for 2018, compared to $52.0 million for 2017.
     
  • Net Cash Used in Operating Activities was $34.5 million for 2018, compared to $44.8 million for 2017.
     
  • Net Cash Provided by Financing Activities was $41.8 million for 2018, compared to $25.7 million for 2017. The increase was mainly due to higher gross proceeds raised in underwritten public offerings.
     
  • Cash Balance9 as of December 31, 2018, was $53.2 million, compared to $46.2 million as of December 31, 2017.

Conference Call and Webcast Information:

The Company will host a conference call today, February 26, 2019, at 8:30 a.m. EST to review the financial results and operational highlights.

To participate in the conference call, please dial one of the following numbers 15 minutes prior to the start of the call: United States: +1-866-966-1396; International: +1-631-510-7495; and Israel: +972-3-721-7998. The access code for the call is: 3459887.

The conference call will be broadcast live and will be available for replay for 30 days on the Company's website, http://ir.redhillbio.com/events. Please access the Company's website at least 15 minutes ahead of the conference call to register.

Availability of RedHill’s Annual Report on Form 20-F Through its Website

RedHill’s Annual Report on Form 20-F, containing audited financial statements for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on February 26, 2019, is available on its website (http://www.redhillbio.com). Shareholders may receive a hard copy of the annual report free of charge upon request.

About RedHill Biopharma Ltd.
RedHill Biopharma Ltd. (RDHL) (Tel-Aviv Stock Exchange: RDHL) is a specialty biopharmaceutical company, primarily focused on the development and commercialization of late-stage clinical, proprietary drugs for the treatment of gastrointestinal diseases. RedHill commercializes and promotes four gastrointestinal products in the U.S.; Donnatal® - a prescription oral adjunctive drug used in the treatment of IBS and acute enterocolitis; EnteraGam® - a medical food intended for the dietary management, under medical supervision, of chronic diarrhea and loose stools; Mytesi® - an anti-diarrheal drug indicated for the symptomatic relief of non-infectious diarrhea in adult patients with HIV/AIDS on anti-retroviral therapy, and Esomeprazole Strontium Delayed-Release Capsules 49.3 mg - a prescription proton pump inhibitor indicated for adults for the treatment of gastroesophageal reflux disease (GERD) and other gastrointestinal conditions. RedHill’s key clinical-stage development programs include: (i) TALICIA® (RHB-105) for the treatment of Helicobacter pylori infection with two positive Phase 3 studies; (ii) RHB-104, with positive top-line results from a first Phase 3 study for Crohn's disease; (iii) RHB-204, with a planned pivotal Phase 3 study for pulmonary nontuberculous mycobacteria (NTM) infections; (iv) BEKINDA® (RHB-102), with positive results from a Phase 3 study for acute gastroenteritis and gastritis and positive results from a Phase 2 study for IBS-D; (v) YELIVA® (ABC294640), a first-in-class SK2 selective inhibitor, targeting multiple oncology, inflammatory and gastrointestinal indications, with an ongoing Phase 2a study for cholangiocarcinoma; (vi) RHB-106, an encapsulated bowel preparation licensed to Salix Pharmaceuticals, Ltd. and (vii) RHB-107 (formerly MESUPRON), a Phase 2-stage first-in-class, serine protease inhibitor, targeting cancer and inflammatory gastrointestinal diseases.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the initiation, timing, progress and results of the Company’s research, manufacturing, preclinical studies, clinical trials, and other therapeutic candidate development efforts, and the timing of the commercial launch of its therapeutic candidates; (ii) the Company’s ability to advance its therapeutic candidates into clinical trials or to successfully complete its preclinical studies or clinical trials; (iii) the extent and number of additional studies that the Company may be required to conduct and the Company’s receipt of regulatory approvals for its therapeutic candidates, and the timing of other regulatory filings, approvals and feedback; (iv) the manufacturing, clinical development, commercialization, and market acceptance of the Company’s therapeutic candidates; (v) the Company’s ability to successfully commercialize and promote Donnatal®, EnteraGam®, Mytesi® and Esomeprazole Strontium Delayed-Release Capsules 49.3 mg; (vi) the Company’s ability to establish and maintain corporate collaborations; (vii) the Company's ability to acquire products approved for marketing in the U.S. that achieve commercial success and build its own marketing and commercialization capabilities; (viii) the interpretation of the properties and characteristics of the Company’s therapeutic candidates and the results obtained with its therapeutic candidates in research, preclinical studies or clinical trials; (ix) the implementation of the Company’s business model, strategic plans for its business and therapeutic candidates; (x) the scope of protection the Company is able to establish and maintain for intellectual property rights covering its therapeutic candidates and its ability to operate its business without infringing the intellectual property rights of others; (xi) parties from whom the Company licenses its intellectual property defaulting in their obligations to the Company; (xii) estimates of the Company’s expenses, future revenues, capital requirements and needs for additional financing; (xiii) the effect of patients suffering adverse experiences using investigative drugs under the Company's Expanded Access Program; and (xiv) competition from other companies and technologies within the Company’s industry. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on February 26, 2019. All forward-looking statements included in this press release are made only as of the date of this press release. The Company assumes no obligation to update any written or oral forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law.

           
REDHILL BIOPHARMA LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
           
  Year Ended December 31,
  2018   2017
       
  U.S. dollars in thousands
NET REVENUES 8,360     4,007  
COST OF REVENUES 2,837     2,126  
GROSS PROFIT 5,523     1,881  
RESEARCH AND DEVELOPMENT EXPENSES, net 24,862     32,969  
SELLING, MARKETING AND BUSINESS DEVELOPMENT EXPENSES 12,486     12,014  
GENERAL AND ADMINISTRATIVE EXPENSES 7,506     8,025  
OTHER EXPENSES     845  
OPERATING LOSS 39,331     51,972  
FINANCIAL INCOME 678     6,505  
FINANCIAL EXPENSES 167     77  
FINANCIAL INCOME, net (511 )   (6,428 )
LOSS AND COMPREHENSIVE LOSS FOR THE YEAR 38,820     45,544  
           
LOSS PER ORDINARY SHARE (U.S. dollars)          
Basic 0.17     0.26  
Diluted  0.17     0.26  
           


           
REDHILL BIOPHARMA LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
           
   December 31, 
  2018   2017
       
   U.S. dollars in thousands
CURRENT ASSETS:          
Cash and cash equivalents 29,005     16,455  
Bank deposits 8,271     13,163  
Financial assets at fair value through profit or loss 15,909     16,587  
Trade receivables 958     1,528  
Prepaid expenses and other receivables 1,876     3,290  
Inventory 769     653  
  56,788     51,676  
NON-CURRENT ASSETS:          
Bank deposits 140     152  
Fixed assets 163     230  
Intangible assets 5,320     5,285  
  5,623     5,667  
TOTAL ASSETS 62,411     57,343  
           
           
CURRENT LIABILITIES:           
Accounts payable 3,324     4,805  
Accrued expenses and other current liabilities 7,057     6,025  
Payable in respect of intangible asset purchase     1,000  
  10,381     11,830  
           
NON-CURRENT LIABILITIES:          
Derivative financial instruments 344     448  
Royalty obligation 500      
  844     448  
TOTAL LIABILITIES 11,225     12,278  
           
           
EQUITY:          
Ordinary shares 767     575  
Additional paid-in capital 219,505     177,434  
Accumulated deficit (169,086 )   (132,944 )
TOTAL EQUITY 51,186     45,065  
           
TOTAL LIABILITIES AND EQUITY 62,411     57,343  
           


                 
REDHILL BIOPHARMA LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
  Year Ended December 31,
  2018   2017   2016
  U.S. dollars in thousands
OPERATING ACTIVITIES:                
Comprehensive loss (38,820 )   (45,544 )   (29,370 )
Adjustments in respect of income and expenses not involving cash flow:                
Share-based compensation to employees and service providers 2,678     2,235     1,679  
Depreciation 90     81     44  
Write-off of intangible assets     845      
Fair value adjustments on derivative financial instruments (104 )   (5,687 )   (1,152 )
Fair value losses (gains) on financial assets at fair value through profit or loss 137     127     (67 )
Revaluation of bank deposits 35     (123 )   (274 )
Issuance costs in respect of warrants         368  
Exchange differences in respect of cash and cash equivalents 103     (367 )   (39 )
  2,939     (2,889 )   559  
Changes in assets and liability items:                
Decrease (increase) in trade receivables 570     (1,429 )   99  
Decrease (increase) in prepaid expenses and other receivables 1,414     (1,728 )   612  
Decrease (increase) in inventory (116 )   (653 )    
Increase (decrease) in accounts payable (1,481 )   4,745     (60 )
Increase (decrease) in accrued expenses and other current liabilities 1,032     2,729     (98 )
  1,419     3,664     553  
Net cash used in operating activities  (34,462 )    (44,769 )    (28,258 )
INVESTING ACTIVITIES:                
Purchase of fixed assets (23 )   (146 )   (85 )
Purchase of intangible assets (35 )   (1,035 )   (35 )
Change in investment in current bank deposits 4,869     (13,000 )   36,838  
Purchase of financial assets at fair value through profit or loss (6,976 )   (21,923 )   (12,246 )
Proceeds from sale of financial assets at fair value through profit or loss 7,517     17,522      
Net cash provided by (used in) investing activities  5,352      (18,582 )    24,472  
FINANCING ACTIVITIES:                
Proceeds from issuance of ordinary shares, net of expenses 41,902     22,216     35,754  
Exercise of warrants and options into ordinary shares, net of expenses 361     3,437     263  
Repayment of payable in respect of intangible asset purchase (500 )        
Net cash provided by financing activities  41,763      25,653      36,017  
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,653     (37,698 )   32,231  
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS (103 )   367     39  
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,455     53,786     21,516  
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 29,005     16,455     53,786  
SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH 728     469     408  
                 

______________________________
1 Promotional activities initiated mid-2017.
2 TALICIA® (RHB-105), BEKINDA® (RHB-102) and YELIVA® (opaganib, ABC294640) are investigational new drugs, not available for commercial distribution.
3 Donnatal® (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide) is a prescription drug, classified as possibly effective as an adjunctive therapy in the treatment of irritable bowel syndrome (irritable colon, spastic colon, mucous colitis) and acute enterocolitis. For more information, please see the prescribing information: http://www.donnatal.com/wp-content/uploads/2015/02/2015-02-18-Risk-Benefit-information-DTC-REV.-SE.pdf.
4 EnteraGam® (serum-derived bovine immunoglobulin/protein isolate, SBI) is a commercially-available medical food, intended for the dietary management of chronic diarrhea and loose stools due to specific intestinal disorders, which must be administered under medical supervision.
5 Mytesi® (crofelemer 125 mg delayed-release tablets) is a first-in-class anti-secretory prescription drug approved by the U.S. FDA for the symptomatic relief of non-infectious diarrhea in adults with HIV/AIDS on anti-retroviral therapy. For more information, see the prescribing information: http://mytesi.com/assets/mytesi_package_insert_june_2016.pdf.
6 Esomeprazole Strontium Delayed-Release (DR) Capsules 49.3 mg is an FDA-approved, proprietary, prescription proton pump inhibitor, indicated for adults for the treatment of gastroesophageal reflux disease (GERD) and other gastrointestinal conditions. For more information, please see the prescribing information: https://dailymed.nlm.nih.gov/dailymed/fda/fdaDrugXsl.cfm?setid=53240ab5-98e7-4050-b640-e09c1271899a&type=display
7 All financial highlights are approximate and are rounded to the nearest hundreds of thousands.
8 Promotional activities initiated mid-2017.
9 Including cash and short-term investments (bank deposits and financial assets at fair value).

Company contact:
Adi Frish
Senior VP Business Development & Licensing
RedHill Biopharma
+972-54-6543-112
adi@redhillbio.com

IR contact (U.S.):
Timothy McCarthy, CFA, MBA
Managing Director, Relationship Manager
LifeSci Advisors, LLC
+1-212-915-2564
tim@lifesciadvisors.com