- RedHill maintains a debt-free balance sheet with $39.6 million in cash 1 at the end of the third quarter of 2017
- In addition, an underwritten public offering of the Company's American Depositary Shares (ADSs) is scheduled to be closed today, November 13, 2017, subject to customary terms and conditions, for aggregate net proceeds of approximately $20.6 million, after deducting underwriting discounts and commissions and other offering expenses
- Net revenues of approximately $1.5 million in Q3/2017 from the promotion of three GI-specialty products in the U.S., Donnatal ®, EnteraGam® (launched in June) and Esomeprazole Strontium Delayed-Release Capsules 49.3 mg (launched mid-September)
- Decrease quarterly cash burn rate and continued revenue growth are expected in 2018
- Increased focus on partnerships and U.S. co-promotion of select RedHill development programs
- Top-line results from the first Phase III study with RHB-104 for Crohn's disease (MAP US study) expected in mid-2018; patient enrollment completed
- Top-line results from the confirmatory Phase III study with TALICIA ™ (RHB-105) (ERADICATE HP2 study) for the treatment of H. pylori infection, expected in H2/2018
- Initiation of pivotal Phase III study with RHB-104 for first line treatment of Nontuberculous Mycobacteria (NTM) infections expected in H1/2018
- Successful top-line results from the Phase II study with BEKINDA ® (RHB-102) 12 mg for the treatment of diarrhea-predominant irritable bowel syndrome (IBS-D)
The Company will host a conference call today, November 13, 2017 at 9:00 am EST to review the financial results and business highlights. Dial-in details are included below.Financial highlights for the quarter ended September 30, 2017 2 Net Revenues for the third quarter of 2017 were approximately $1.5 million, compared to $0.5 million in the second quarter of 2017. The increase was due to the promotional activities of Donnatal ®3 and the sale of EnteraGam ®4 and the initial promotion of Esomeprazole Strontium Delayed-Release Capsules 49.3 mg 5 in mid-September 2017. Cost of Revenues for the third quarter of 2017 was $0.9 million, due to the sale of EnteraGam ®, compared to $0.3 million in the second quarter of 2017, also due to the sale of EnteraGam ® and reflecting the cost of goods sold and royalties. Gross Profit for the third quarter of 2017 was $0.6 million, compared to $0.2 million in the second quarter of 2017. The increase was due to higher revenues from the sale of EnteraGam ® and from the promotion of Donnatal ® and due to the initial promotion of Esomeprazole Strontium Delayed-Release Capsules 49.3 mg in mid-September 2017. Research and Development Expenses for the third quarter of 2017 were $8.1 million, an increase of $1.1 million or 15% compared to the third quarter of 2016. The increase was mainly due to the ongoing confirmatory Phase III study with TALICIA ™ (RHB-105) for H. pylori infection, the Phase III and Phase II studies with BEKINDA ® (RHB-102) for gastroenteritis and IBS-D, respectively, and the ongoing and planned studies with YELIVA ® (ABC294640) 7 for multiple indications. Research and Development Expenses for the third quarter of 2017 decreased by $0.3 million or 4% compared to the second quarter of 2017. General and Administrative Expenses for the third quarter of 2017 were $2.3 million, an increase of $1.2 million compared to the third quarter of 2016. General and Administrative Expenses for the third quarter of 2017 increased by $0.3 million compared to the second quarter of 2017. The increase from the comparable periods was mainly due to the establishment and advancement of the Company's U.S. commercial operations in the first quarter of 2017. Selling, Marketing and Business Development Expenses for the third quarter of 2017 were $4.2 million, an increase of $3.8 million compared to $0.4 million in the third quarter of 2016, comprised only of Business Development Expenses. Selling, Marketing and Business Development Expenses for the third quarter of 2017 increased by $0.8 million or 24% compared to the second quarter of 2017. The increase from the comparable periods was mainly due to the establishment and advancement of the Company's U.S. commercial operations. The Company recognized Selling and Marketing Expenses in 2017 for the first time. Operating Loss for the third quarter of 2017 was $14 million, an increase of $5.5 million or 65% compared to the third quarter of 2016. Operating Loss for the third quarter of 2017 increased by $0.4 million or 3% compared to the second quarter of 2017. The increase from the comparable periods was mainly due to an increase in Selling, Marketing and Business Development Expenses, Research and Development Expenses, and General and Administrative Expenses, as detailed above. Financial Expenses, net for the third quarter of 2017 was $1.5 million, an increase of $1.1 million compared to the third quarter of 2016. Financial Income, net for the second quarter of 2017 was $2.5 million. The changes from the comparable periods were mainly due to variations in the fair value of the derivative financial instruments, which is affected by share price variations. Net Cash Used in Operating Activities for the third quarter of 2017 was $10.6 million, an increase of $3.2 million or 43% compared to the third quarter of 2016. The increase was mainly due to the increase in Operating Loss, as detailed above. Net Cash Used in Operating Activities for the third quarter of 2017 increased by $0.8 million or 8% compared to the second quarter of 2017. Net Cash Provided by Investing Activities for the third quarter of 2017 was $13.9 million, an increase of $3.2 million or 30% compared to the third quarter of 2016. Net Cash Used in Investing Activities for the second quarter of 2017 was $4.9 million. The changes from the comparable periods were mainly due to changes in bank deposits and financial assets at fair value through profit or loss. Cash Balance 7 as of September 30, 2017, was $39.6 million, a decrease of $26.7 million, compared to $66.3 million as of December 31, 2016, and a decrease of $11.6 million compared to June 30, 2017. The decrease was a result of the ongoing operations, mainly related to research and development activities and the establishment and advancement of the U.S. commercial operations. "The third quarter of 2017 was the first full quarter of revenues generation from the promotion of Donnatal® and EnteraGam®, with $1.5 million in net revenues. We anticipate net revenues to continue to grow following initiation of the promotion of Esomeprazole Strontium DR capsules 49.3 mg in mid-September," said Micha Ben Chorin, RedHill's CFO. "We expect a decrease in quarterly cash burn rate along with continued revenue growth in 2018. Our cash balance at the end of the third quarter of approximately $39.6 million, along with expected net proceeds of approximately $20.6 million from the November 2017 underwritten public offering of ADSs, should allow us to achieve significant milestones in 2018, including Phase III top-line results with RHB-104 for Crohn's disease, expected in mid-2018, and confirmatory Phase III top-line results with TALICIA ™ (RHB-105) for H. pylori infection, expected in the second half of 2018." Conference Call and Webcast Information: The Company will host a conference call today, Monday, November 13, 2017 at 9:00 am EST to review the financial results and business 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: +1-877-280-2296; International: +1-212-444-0896; and Israel: +972-3-763-0147. The access code for the call is: 2543708. The conference call will be broadcasted live and will be available for replay on the Company's website, http://ir.redhillbio.com/events.cfm , for 30 days. Please access the Company's website at least 15 minutes ahead of the conference call to register, download and install any necessary audio software. Recent operational highlights:
- On July 31, 2017, RedHill reported, following a second pre-planned meeting by an independent Data and Safety Monitoring Board (DSMB) to assess the safety and efficacy data from its ongoing first Phase III study with RHB-104 for Crohn's disease (the MAP US study), that it had received a unanimous recommendation from the DSMB to continue the study as planned. The DSMB reviewed safety and efficacy data, of which RedHill remains blinded, from the first 222 subjects who had completed week 26 assessments in the Phase III MAP US study.
- On September 13, 2017, RedHill announced that it had initiated promotion of Esomeprazole Strontium DR Capsules 49.3 mg in the U.S. Esomeprazole Strontium DR Capsules 49.3 mg is a U.S. Food and Drug Administration (FDA)-approved, proprietary, prescription proton pump inhibitor (PPI) indicated for adults for the treatment of gastroesophageal reflux disease (GERD) and other gastrointestinal (GI) conditions 9. On August 17, 2017, RedHill announced that it had entered into a commercialization agreement with ParaPRO LLC, an Indiana-based specialty pharmaceutical company, granting RedHill the exclusive rights to promote Esomeprazole Strontium DR Capsules 49.3 mg to gastroenterologists in certain U.S. territories.
- On September 18, 2017, RedHill announced that it had received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for a new patent covering the use of two of RedHill's Phase II-stage proprietary investigational compounds, YELIVA ® and MESUPRON (upamostat) 10 in combination with a known antibiotic. Upon issuance, on top of existing intellectual property (IP) protection covering the individual compounds, the new patent will provide RedHill with IP protection covering its combination for the potential treatment of cancer, prevention of cancer recurrence or progression and inhibition of growth and proliferation of cancer cells.
- On October 3, 2017, RedHill announced positive top-line results from the Phase II study with BEKINDA ® 12 mg for the treatment of diarrhea-predominant irritable bowel syndrome (IBS-D). The study successfully met its primary endpoint, improving primary efficacy outcome of stool consistency. RedHill plans one or more pivotal Phase III studies with BEKINDA ® 12 mg in IBS-D. RedHill further announced that, following the positive results from its Phase III GUARD study with BEKINDA ® 24 mg in acute gastroenteritis and gastritis, the Company met with the FDA to discuss the results and the clinical and regulatory path towards potential marketing approval of BEKINDA ® 24 mg in the U.S. Following the positive FDA guidance meeting, the Company is currently working with the FDA to design the confirmatory Phase III study to support a New Drug Application (NDA) with BEKINDA ® 24 mg for acute gastroenteritis and gastritis.
- On October 20, 2017, RedHill announced that the FDA granted MESUPRON (upamostat) Orphan Drug designation for the adjuvant treatment of pancreatic cancer. The Orphan Drug designation allows RedHill to benefit from various incentives to develop MESUPRON for this indication, including a seven-year marketing exclusivity period for the indication, if approved. Following the recent identification of a new mechanism of action for MESUPRON, inhibition of trypsin, RedHill is currently evaluating potential utilization of MESUPRON in several GI indications.
- On October 23, 2017, RedHill announced that it had received a Notice of Allowance from the USPTO for a new patent covering RHB-104 for relapsing-remitting multiple sclerosis (MS), which is expected to be valid until 2032, once granted.
- On November 1, 2017, RedHill announced, together with IntelGenx Corp. ("IntelGenx"), that they had resubmitted the 505(b)(2) New Drug Application (NDA) for RIZAPORT ® 10 mg to the FDA. If the RIZAPORT ® NDA resubmission is deemed complete and permits a full review by the FDA, a Prescription Drug User Fee Act (PDUFA) date is expected to be set by the FDA for the first half of 2018.
- On November 9, 2017, RedHill announced that the last patient had been enrolled in the Phase III study with RHB-104 for Crohn's disease (MAP US study). The study enrolled 331 subjects across approximately 150 clinical sites in the U.S., Canada, Europe, Israel, Australia and New Zealand. Top-line results are expected to be announced in mid-2018. On October 2, 2017, RedHill announced that it had curtailed the target sample size in the Phase III study with RHB-104 for Crohn's disease (MAP US study) from 410 to approximately 325 subjects, while maintaining statistical power of over 80% with a treatment effect of 15%.
About Esomeprazole Strontium Delayed-Release Capsules 49.3 mg 12 :Esomeprazole Strontium Delayed-Release Capsules 49.3 mg is indicated for adults:
- for the short-term treatment (4-8 weeks) of heartburn and other symptoms associated with gastroesophageal reflux disease (GERD) and/or in healing and symptomatic resolution of erosive esophagitis (EE).
- to reduce the risk of stomach ulcers in some people taking non-steroidal anti-inflammatory drugs (NSAIDs) (controlled studies did not extend beyond 6 months).
- in combination with amoxicillin 1000 mg and clarithromycin 500 mg is indicated for the treatment of patients with a stomach infection ( Helicobacter pylori) and duodenal ulcer disease.
- is indicated for the long-term treatment of pathological hypersecretory conditions, including Zollinger-Ellison Syndrome.
- Esomeprazole strontium is contraindicated in patients with known hypersensitivity to proton pump inhibitors. For information about contraindications of antibacterial agents (clarithromycin and amoxicillin) indicated in combination with esomeprazole strontium, refer to the contraindications section of their package inserts.
- Symptomatic response to therapy does not rule out the presence of gastric malignancy. Consider additional follow-up and diagnostic testing in adult patients who have a suboptimal response or an early symptomatic relapse after completing treatment with a proton pump inhibitor (PPI). In older patients, also consider an endoscopy.
- Acute interstitial nephritis has been observed in patients taking PPIs. Discontinue esomeprazole strontium if acute interstitial nephritis develop.
- PPI therapy may be associated with increased risk of Clostridium difficile-associated diarrhea. This diagnosis should be considered for diarrhea that does not improve.
- PPI therapy may be associated with an increased risk of osteoporosis-related fractures of the hip, wrist, or spine. The risk of fracture was increased in patients who received high-dose (multiple daily doses) and long-term (a year or longer) therapy.
- Cutaneous lupus erythematosus (CLE) and systemic lupus erythematosus (SLE) have been reported in patients taking PPIs, including esomeprazole. These events included both new onset and exacerbations. If signs or symptoms consistent with CLE or SLE are noted with esomeprazole strontium, discontinue and refer the patient to a specialist. Most patients improve with discontinuation of the PPI alone in 4 to 12 weeks.
- Avoid concomitant use of esomeprazole strontium with clopidogrel, due to a reduction in plasma concentrations of the active metabolite of clopidogrel. When using esomeprazole strontium consider alternative anti-platelet therapy.
- Daily treatment with any acid-suppressing medications over a long period of time (e.g., longer than 3 years) may lead to malabsorption of cyanocobalamin (vitamin B12). Rare reports of cyanocobalamin deficiency occurring with acid-suppressing therapy have been reported in the literature.
- Hypomagnesemia has been reported rarely with prolonged treatment with PPI therapy and may require discontinuing PPI therapy.
- Concomitant use of esomeprazole strontium and St. John's wort or rifampin can substantially decrease esomeprazole strontium concentrations. Avoid concomitant use.
- Literature suggests that concomitant use of PPIs with methotrexate (primarily at high dose; see methotrexate prescribing information) may elevate and prolong serum levels of methotrexate and/or its metabolite, possibly leading to methotrexate toxicities. In high-dose methotrexate administration, a temporary withdrawal of the PPI may be considered in some patients.
- Concomitant use of esomeprazole strontium and atazanavir or nelfinavir is not recommended. esomeprazole strontium is expected to increase the plasma levels of saquinavir. Consider dose reduction of saquinavir.
- Patients treated with PPIs and warfarin concomitantly may need to be monitored for increases in INR and prothrombin time. Esomeprazole may interfere with the absorption of drugs for which gastric pH affects bioavailability (e.g., ketoconazole, iron salts, erlotinib, digoxin and mycophenolate mofetil).
- Esomeprazole strontium may increase systemic exposure of cilastozol and one of its active metabolites. Consider dose reduction of cilastozol.
- In adults, adverse reactions (ARs) reported at a frequency of 1% or greater with esomeprazole strontium include headache, diarrhea, nausea, flatulence, abdominal pain, constipation, and dry mouth.
- Safety and effectiveness of esomeprazole strontium have not been established in pediatric patients. Not recommended for use in pediatric patients.
- Safety of esomeprazole strontium has not been studied in patients with severe renal impairment. Not recommended for use in patients with severe renal impairment.
|Company contact:Adi FrishSenior VP Business Development & Licensing RedHill Biopharma+972-54-6543-112 firstname.lastname@example.org||IR contact (U.S.):Marcy NanusSenior Vice President The Trout Group+1-646-378-2927 Mnanus@troutgroup.com|
|Three months ended||Nine months ended|
|September 30,||September 30,|
|U.S. dollars in thousands|
|COST OF REVENUES||935||—||1,207||—|
|RESEARCH AND DEVELOPMENT EXPENSES, net||8,106||7,038||24,677||17,745|
|SELLING, MARKETING AND BUSINESS DEVELOPMENT EXPENSES||4,189||*402||8,170||1,138|
|GENERAL AND ADMINISTRATIVE EXPENSES||2,258||*1,014||5,513||2,669|
|FINANCIAL EXPENSES (INCOME), net||1,547||490||(2,475||)||(531||)|
|LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD||15,512||8,944||35,131||21,020|
|LOSS PER ORDINARY SHARE, BASIC AND DILUTED (U.S. dollars)||0.09||0.07||0.21||0.17|
REDHILL BIOPHARMA LTD.CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION(Unaudited)
|September 30,||December 31,|
|U.S. dollars in thousands|
|Cash and cash equivalents||18,663||53,786|
|Financial assets at fair value through profit or loss||12,645||12,313|
|Trade receivables and contract assets||1,399||*99|
|Prepaid expenses and other receivables||2,760||*1,562|
|Accrued expenses and other current liabilities||9,149||*3,296|
|Payable in respect of intangible asset purchase||1,000||2,000|
|Derivative financial instruments||4,307||6,155|
|Additional paid-in capital||156,616||150,838|
|TOTAL LIABILITIES AND EQUITY||50,299||74,212|
REDHILL BIOPHARMA LTD.CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS(Unaudited)
|Three months ended||Nine months ended|
|September 30,||September 30,|
|U.S. dollars in thousands|
|Adjustments in respect of income and expenses not involving cash flow:|
|Share-based compensation to employees and service providers||640||449||1,652||1,318|
|Write-off of intangible asset||—||—||45||—|
|Unrealized losses (gains) on derivative financial instruments||1,685||585||(1,828||)||(130||)|
|Fair value losses (gains) on financial assets at fair value through profit or loss||(12||)||(10||)||67||(72||)|
|Revaluation of bank deposits||(3||)||(108||)||(108||)||(255||)|
|Exchange differences in respect of cash and cash equivalents||46||(36||)||(315||)||(77||)|
|Changes in assets and liability items:|
|Increase in trade receivables and contract assets||(621||)||—||(1,300||)||—|
|Decrease (increase) in prepaid expenses and other receivables||336||150||(1,198||)||342|
|Decrease (increase) in inventory||389||—||(221||)||—|
|Increase (decrease) in accounts payable||737||*(417)||1,822||*(94)|
|Increase in accrued expenses||1,734||*950||5,853||*1,868|
|Net cash used in operating activities||(10,555||)||(7,370||)||(30,604||)||(18,088||)|
|Purchase of fixed assets||(41||)||(10||)||(143||)||(55||)|
|Purchase of intangible assets||(1,035||)||—||(1,035||)||—|
|Change in investment in current bank deposits||7,284||14,668||(7,976||)||14,668|
|Purchase of financial assets at fair value through profit or loss||(978||)||(3,976||)||(14,931||)||(11,456||)|
|Proceeds from sale of financial assets at fair value through profit or loss||8,685||—||14,532||—|
|Net cash provided by (used in) investing activities||13,915||10,682||(9,553||)||3,157|
|Proceeds from issuance of ordinary shares, net of expenses||—||—||1,282||—|
|Exercise of warrants and options into ordinary shares, net of expenses||30||—||3,437||110|
|Net cash provided by financing activities||30||—||4,719||110|
|DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS||3,390||3,312||(35,438||)||(14,821||)|
|EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS||(46||)||36||315||77|
|BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD||15,319||3,424||53,786||21,516|
|BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD||18,663||6,772||18,663||6,772|
|SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH||153||133||354||185|
1 Including cash, short-term investments and non-current bank deposits.2 All financial highlights are approximate and are rounded to the nearest hundreds of thousands. 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 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 (GI) 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. 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 (GI) 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 TALICIA ™, BEKINDA ® and YELIVA ® are investigational new drugs, not available for commercial distribution. 8 Including cash and short-term investments and non-current bank deposits. 9 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. 10 MESUPRON is an investigational new drug, not available for commercial distribution. 11 Xifaxan ® (rifaximin) prescribing information: www.accessdata.fda.gov/drugsatfda_docs/label/2010/022554lbl.pdf; Viberzi ® (eluxadoline) prescribing information: www.accessdata.fda.gov/drugsatfda_docs/label/2015/206940s000lbl.pdf; Average absolute difference from reported Phase III studies; The theoretical comparison between the BEKINDA ® Phase II study results and reported data from studies of IBS-D-approved therapies serves as a general benchmark for the effect size observed with BEKINDA ® and should not be construed as a direct and/or equal comparison given that the studies were not identical in design, patient population and treatment period. For example, in the Xifaxan ® Phase III studies, the referenced efficacy endpoints were evaluated over a period of 4 weeks after 2 weeks of drug administration, and in the Viberzi ® Phase III studies, the referenced efficacy endpoints were evaluated after the drug was administered and evaluated for 12 weeks. The studies were not conducted head-to head in the same patient population. 12 Esomeprazole Strontium Delayed-Release Capsules is also available in a 24.65 mg dose. RedHill promotes the Esomeprazole Strontium Delayed-Release Capsules 49.3 mg formulation only. 13 Horgan A, Maas K, Henderson A, Detzel C, Weaver E. Serum-derived bovine immunoglobulin/protein isolate binds to pathogen-associated molecular patterns. Poster presented at: Federation of American Societies for Experimental Biology; April 26-30, 2014; San Diego, CA. 14 Petschow BW, Burnett B, Shaw AL, Weaver EM, Klein GL. Serum-derived bovine immunoglobulin/protein isolate: postulated mechanism of action for management of enteropathy. Clin Exp Gastroenterol. 2014;7:181-190. Gasbarrini A, Lauritano EC, Garcovich M, Sparano L, Gasbarrini G. New insights into the pathophysiology of IBS: intestinal microflora, gas production and gut motility. Eur Rev Med Pharmacol Sci. 2008;12 Suppl 1:111-117.