On March 17, 2022 RedHill Biopharma Ltd. (NASDAQ: RDHL) ("RedHill" or the "Company"), a specialty biopharmaceutical company, reported its operational highlights and financial results for the fourth quarter and full year ended December 31, 2021 (Press release, RedHill Biopharma, MAR 17, 2022, View Source;full-year-2021-financial-results-301505002.html [SID1234610292]).
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Dror Ben-Asher, RedHill’s Chief Executive Officer, said: "In 2021, RedHill’s team delivered record revenues against a pandemic backdrop, overall contribution of commercial operations to the company was positive for the first time in Q4/21 and positive late-stage clinical data for two novel oral COVID-19 drugs. A very strong fourth quarter for both Talicia and Movantik, coupled with disciplined cost-control measures across the business and intensive out-licensing and in-licensing activities, sets us up for continued organic and non-organic growth in 2022 and beyond."
Mr. Ben-Asher added: "Our R&D team’s drive in remaining at the forefront of the global search for much needed novel oral COVID-19 therapies has been outstanding. The challenge of developing any drug is not to be underestimated and RedHill’s R&D team has delivered exciting efficacy data with both opaganib and RHB-107, our variant-agnostic investigational drug candidates for the treatment of hospitalized and non-hospitalized COVID-19 respectively – a striking achievement."
Micha Ben Chorin, Chief Financial Officer at RedHill, added: "We have realigned focus within our 120-person strong customer-facing sales team in the U.S., providing even greater sales emphasis. In addition, a substantial decrease in our quarterly operational expenses achieved through a tight but agile cost-containment plan that allows for rapid re-adjustments based on compelling business need, are now starting to be realized following implementation in Q4/21 and we believe will continue to bear fruit throughout 2022. These activities are key in our ongoing ability to deliver record revenues, which amounted to $85.8 million for 2021, while keeping gross margins highly competitive, with commercial operations profitability expected in 2022. We are committed to continued substantial cost reduction in 2022."
Financial results for the quarter ended December 31, 2021 (Unaudited)[4]
Net Revenues for the fourth quarter of 2021 were $22.1 million, as compared to $21.6 million in the third quarter of 2021.
Cost of Revenues for the fourth quarter of 2021 were $19.3 million, as compared to $9.2 million in the third quarter of 2021. The increase was attributed to recognition of approximately $9 million impairment related to the intangible asset of Aemcolo for travelers’ diarrhea.
Gross Profit for the fourth quarter of 2021 was $2.7 million, as compared to $12.4 million in the third quarter of 2021. The decrease was attributed to the impairment recognized, as detailed above.
Research and Development Expenses for the fourth quarter of 2021 were $5.9 million, similar to the $5.8 million in the third quarter of 2021.
Selling, Marketing and General and Administrative Expenses for the fourth quarter of 2021 were $17.6 million, as compared to $24.0 million in the third quarter of 2021. The decrease was a result of the cost-containment plan implemented.
Operating Loss for the fourth quarter of 2021 were $20.7 million, as compared to $17.4 million in the third quarter of 2021. The increase is attributed to the impairment recognized, as detailed above, partly offset by the decrease in operating expenses, as detailed above.
Net Cash Used in Operating Activities for the fourth quarter of 2021 was $14.9 million, as compared to $19.0 million in the third quarter of 2021. The decrease was a direct result of the decrease in operating expenses, as detailed above.
Net Cash Provided by Financing Activities for the fourth quarter of 2021 was $17.6 million, mainly due to proceeds from equity offerings, as compared to Net Cash Used in Financing Activities of $1.0 million in the third quarter of 2021.
Financial results for the year ended December 31, 2021[4]
Net Revenues were $85.8 million for the year ended December 31, 2021, as compared to $64.4 million for the year ended December 31, 2020, a 33.2% increase in net revenues. The increase was attributable to the launch of Talicia and Movantik in March 2020 and April 2020, respectively, as well as growth in sales in comparable periods of both products.
Cost of Revenues were $49.4 million for the year ended December 31, 2021, as compared to $36.9 million for the year ended December 31, 2020. The increase was mostly attributable to recognition of approximately $9 million impairment related to the intangible asset of Aemcolo for travelers’ diarrhea and in-line with the increase in net revenues from our commercial products.
Gross Profit was $36.4 million for the year ended December 31, 2021, as compared to $27.5 million for the year ended December 31, 2020. The increase was primarily due to the increase in net revenues, and partially offset by the recognized impairment of Aemcolo intangible asset.
Research and Development Expenses were $29.5 million for the year ended December 31, 2021, as compared to $16.5 million for the year ended December 31, 2020. The increase was mainly attributable to the advancement of our COVID-19 programs with opaganib and RHB-107.
Selling, Marketing and General and Administrative Expenses were $88.0 million for the year ended December 31, 2021, as compared to $74.7 million for the year ended December 31, 2020. The increase was mainly attributable to the expansion of commercialization activities related to Talicia and Movantik and to expenses related to share-based compensation.
Operating Loss was $81.1 million for the year ended December 31, 2021, as compared to $63.7 million for the year ended December 31, 2020. The increase was mainly attributable to the intensified activities in both commercial operations and R&D.
Net Cash Used in Operating Activities was $65.0 million for the year ended December 31, 2021, as compared to $48.6 million for the year ended December 31, 2020. The increase was mainly attributable to the increase in operating loss, as described above.
Net Cash Provided by Financing Activities was $73.5 million for the year ended December 31, 2021, comprised primarily of proceeds from equity offerings. Net Cash Provided by Financing Activities for the year ended December 31, 2020, was $84.4 million, comprised primarily of debt and equity-based financing, partially offset by $16 million classified as restricted cash.
Liquidity and Capital Resources
Cash Balance[2] as of December 31, 2021, was $54.2 million, as compared to $51.5 million as of September 30, 2021, and approximately $46 million as of December 31, 2020[5].
Strategic investment in RedHill by South Korea’s Kukbo Co. ("Kukbo") – $5 million received and an additional $5 million investment expected per the agreement.
Opaganib[6] for COVID-19 licensed by Kukbo for South Korea for $1.5 million in upfront payment and additional payment up to $5.6 million in milestone payments and royalties on net sales.
Talicia for H. pylori licensed by Gaelan Medical for the United Arab Emirates, with $2 million upfront to be received plus milestones and royalties on net sales.
Discussions are ongoing with additional potential partners for Talicia in other territories.
Commercial Highlights
Movantik (naloxegol)[7]
Movantik is the market leader in the PAMORA class holding 73% market share. The Company’s drive and commitment to further growing Movantik and the PAMORA class, which has increased over the past 12 months, is delivering. In Q4/2021 Movantik had its best performance since RedHill’s launch, growing new prescriptions by 2.4% compared to the previous quarter.
Nearly 92% of insurance plans provide access for Movantik – best-in-class coverage – and in December 2021, the Company announced that Movantik had been approved for inclusion as preferred and unrestricted brand on a major National Medicare Part D formulary serving more than 10 million Americans as of January 1, 2022. Movantik’s total commercial coverage now extends to 151 million American patients’ lives and has grown to 46 million Medicare lives, with over 93% coverage of Medicare Part D lives.
In 2021 the Company also successfully brought to a close all presently pending Movantik patent litigation brought pursuant to the ‘Drug Price Competition and Patent Term Restoration Act’ (the Hatch-Waxman Act). The earliest licensed entry date of any generic naloxegol in the U.S. is October 1, 2030.
Talicia (omeprazole magnesium, amoxicillin and rifabutin)[8]
Talicia is now the most prescribed branded H. pylori therapy in the U.S. and achieved another record quarter, delivering a 25.5% increase in prescriptions compared to the previous quarter, reflecting 78.4% growth of Talicia as compared to Q4/2020.
In January 2022, the Company announced that it had entered into an exclusive license agreement with Gaelan Medical Trade LLC, a wholly owned subsidiary of the Ghassan Aboud Group (GAG), for Talicia in the United Arab Emirates (UAE). Under the terms of the agreement, RedHill will receive an upfront payment of $2 million and is eligible for additional milestone payments as well as tiered royalties up to mid-teens on net sales of Talicia in the UAE. Gaelan Medical received the exclusive rights to commercialize Talicia in the UAE, as well as a right of first refusal to commercialize Talicia in the Gulf Cooperation Council region (Saudi Arabia, Kuwait, Qatar, Bahrain and Oman) for a pre-determined period.
In October, Medi-Cal, California’s Medicaid Health Care program covering two million beneficiaries, added Talicia to its Contract Drug List (CDL) for H. pylori treatment, with no prior authorization required. This coverage expanded to 14 million beneficiaries on January 1, 2022. As of December 2021, total Talicia coverage stood at greater than 197 million American lives, equating to 8 out of ten lives.
Also in October 2021, the Company announced the grant of a new U.S. Patent covering Talicia. This patent reinforces the protection for Talicia through 2034, and the Company has listed this patent in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book.
Aemcolo (rifamycin)[9]
The Company has maintained promotion of Aemcolo in the fourth quarter of 2021 in anticipation of renewed post-COVID-19 travel opportunities for Americans. In December 2021, the exclusive license agreement between the Company and Cosmo was amended to allow for provision for either party to terminate the agreement upon 90 days’ notice at any time.
R&D Highlights
COVID-19 Program: Opaganib (ABC294640)
The Company previously announced top-line results from the oral opaganib global 463-patient Phase 2/3 study in hospitalized patients with severe COVID-19 pneumonia (NCT04467840).
Since the initial results were announced, extensive review of all the data has shown compelling and consistent efficacy in large and important sub-group analyses and, earlier this year, the Company announced results from several recently completed prespecified analyses from the study showing that opaganib significantly reduced mortality when given to patients who received remdesivir and corticosteroids, delivered a significant benefit in time to recovery and improved the median time to viral RNA clearance:
A prespecified mortality analysis, undertaken for all patients from the Phase 2/3 study who were receiving remdesivir and corticosteroids at baseline, demonstrated a significant 70.2% mortality benefit for opaganib-treated patients, with a mortality rate of 6.98% (n=3/43) for the opaganib arm + SoC versus 23.4% (n=11/47) for placebo + SoC by Day 42 (p-value=0.034).
A second prespecified analysis showed that opaganib delivered a significant 34% benefit in time to recovery, defined as achieving a score of 1 or less on the WHO Ordinal Scale by Day 14, with 37.4% of opaganib-treated patients (n=86/230) reaching this event versus 27.9% of patients (n=65/233) treated with placebo + SoC (p-value=0.013, Hazard Ratio 1.49).
A third prespecified analysis, of all oral opaganib’s Phase 2/3 study patients with positive PCR at screening, demonstrated that opaganib improved the median time to viral RNA clearance by at least 4 days. Treatment with opaganib resulted in viral RNA clearance in a median of 10 days while the median for clearance in the placebo arm was not reached by the end of 14-days treatment for placebo (Hazard Ratio 1.34; nominal p-value=0.043, N=437/463)
In December 2021, the Company also announced that because opaganib’s proposed mechanism of action is not impacted by spike protein mutations, opaganib is expected to be unaffected by mutations associated with Omicron and other known variants of concern.
Regulatory discussions are in progress, with opaganib data submissions in the U.S., Europe, UK and additional countries. Discussions remain ongoing with initial guidance requiring confirmatory data on potential path to approval received from the EU’s EMA, the U.S. FDA, UK’s MHRA and others. Data and other regulatory submissions are in process in multiple other countries. The Company continues its discussions with U.S. and other government agencies, non-governmental organizations and potential partners around potential funding to support the ongoing development of opaganib.
In March 2022, the Company announced that it has entered into an exclusive license agreement with Kukbo Co. Ltd., a South Korean corporation, which will receive the exclusive rights to commercialize opaganib for the treatment of COVID-19 in South Korea. Under the terms of the agreement, which adds to the previously announced strategic investment by Kukbo of up to $10 million, RedHill will in addition receive an upfront payment of $1.5 million and is eligible for $5.6 million in additional milestone payments, as well as low double-digit royalties on net sales of opaganib.
COVID-19 Program: RHB-107 (upamostat)[10]
RedHill continues to advance the Phase 2/3 study of novel, once-daily, orally-administered, antiviral drug candidate, RHB-107, for the treatment of non-hospitalized patients with symptomatic COVID-19 in the early course of the disease (NCT04723537), who do not require supplemental oxygen – the vast majority of COVID-19 patients. In March 2022, the Company announced positive top-line results from the Phase 2 part of the Phase 2/3 study, predominantly conducted in the U.S. (60/61 patients) as well as South Africa.
Although not powered for efficacy assessment, the study showed highly promising efficacy results delivering a 100% reduction in hospitalization due to COVID-19, with zero patients on the RHB-107 arm hospitalized with COVID-19 (0/41) compared to 15% on the placebo-controlled arm requiring hospitalization (3/20) (nominal p-value=0.0317). Furthermore, the study showed an 87.8% reduction in reported new severe COVID-19 symptoms, with only one patient on RHB-107 (2.4%, 1/41) compared to 20% (4/20) of patients on the placebo-controlled arm experiencing new COVID-19 related severe symptoms (nominal p-value=0.036).
The study met its primary outcome measure, demonstrating a favorable safety and tolerability profile of RHB-107. Study arms were well-balanced with respect to baseline disease severity, risk factors and vaccination status. Patients were also tested for the specific viral strain (last patient randomized November 12, 2021), with the most common variant being Delta, found in 62.5% of the patients that had next generation sequencing (NGS).
The Phase 2 part of the study was designed to evaluate safety for dose selection and to provide preliminary assessment of parameters to be used for efficacy evaluation in Part B. A total of 61 patients were enrolled in Part A and randomized on a 1:1:1 basis to receive one of two dose levels of RHB-107 or a placebo control.
Discussions with regulators to discuss next steps are expected during Q2/22.
RHB-204 – Pulmonary Nontuberculous Mycobacteria (NTM) Disease[11]
A U.S. Phase 3 study is ongoing in the U.S. to evaluate the efficacy and safety of RHB-204 in adults with pulmonary NTM disease caused by Mycobacterium avium Complex (MAC) infection (NCT04616924). Expansion of sites and the waning of COVID-19 is expected to increase the pace of enrolment.
The study protocol provides for 6 months co-primary endpoint of sputum culture conversion (SCC) and clinical outcome (patient-reported outcomes – PRO) in a randomized placebo-controlled design, followed by open label active treatment with RHB-204 for 12 months from conversion.
Conference Call and Webcast Information:
The Company will host a webcast today, Thursday, March 17, 2022, at 8:30 a.m. EDT, during which it will present key highlights for the fourth quarter and full year of 2021.
The webcast including slides will be broadcast live on the Company’s website, View Source, and will be available for replay for 30 days.