On March 4, 2020 RedHill Biopharma Ltd. (Nasdaq: RDHL) ("RedHill" or the "Company"), a specialty biopharmaceutical company primarily focused on the commercialization and development of proprietary drugs for the treatment of gastrointestinal diseases, reported its full-year 2019 financial results and operational highlights (Press release, RedHill Biopharma, MAR 4, 2020, View Source [SID1234555181]).
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"With the planned U.S. launch of Talicia, the ongoing promotion of Aemcolo, the recent acquisition of Movantik and the expansion of our sales force, we expect 2020 to be a year of transformational growth as we work to become a leader in the gastrointestinal field," said Micha Ben Chorin, RedHill’s Chief Financial Officer. "The $36.3 million strategic investment by Cosmo Pharmaceuticals and the non-dilutive royalty-backed term loan facility of up to $115 million from HealthCare Royalty Partners allow us to continue to execute our plans."
Full Year 2019 Results1
Net Revenues for the year ended December 31, 2019 were $6.3 million, compared to $8.4 million for the year ended December 31, 2018. The decrease was attributed mainly to the competitive landscape surrounding Donnatal and EnteraGam.
Cost of Revenues for the year ended December 31, 2019 was $2.3 million, compared to $2.8 million for the year ended December 31, 2018. The decrease was in line with the decrease in revenues from our commercial products.
Gross Profit for the year ended December 31, 2019 was $4.0 million, with gross margin of 64.1%, compared to $5.5 million and 66.1%, respectively, for the year ended December 31, 2018.
Research and Development Expenses for the year ended December 31, 2019, were $17.4 million, compared to $24.9 million for the year ended December 31, 2018. The decrease was mainly due to the completion of the Phase 3 study with Talicia and the finalization of the Phase 3 studies with
RHB-104.
Selling, Marketing and Business Development Expenses for the year ended December 31, 2019, were $18.3 million, compared to $12.5 million for the year ended December 31, 2018. The increase was mainly due to the expansion of our commercial operations to support the preparations for the launch of Talicia and Aemcolo.
General and Administrative Expenses for the year ended December 31, 2019 were $11.5 million, compared to $7.5 million for the year ended December 31, 2018. The increase was mainly due to the expansion of our U.S. commercial operations as well as an increase in professional services expenses to support the preparations for the launch of Talicia and Aemcolo.
Operating Loss for the year ended December 31, 2019 was $43.2 million, compared to $39.3 million for the year ended December 31, 2018. The increase was mainly due to the increase in commercial operating expenses, as described above.
Net Cash Used in Operating Activities for the year ended December 31, 2019 was $40.7 million, compared to $34.5 million for the year ended December 31, 2018. The increase in Net Cash Used in Operating Activities was a direct result of the increase in Operating Loss as described above.
Net Cash Provided by Financing Activities for the year ended December 31, 2019 was $35.5 million, compared to $41.8 million for the year ended December 31, 2018, resulting from a private placement transaction in 2019 compared to two underwritten public offerings in 2018.
Cash Balance2 as of December 31, 2019 was $47.9 million, compared to $53.2 million as of December 31, 2018.
Commercial Highlights:
Talicia (omeprazole magnesium, amoxicillin and rifabutin)3
In November 2019, the U.S. Food and Drug Administration (FDA) approved Talicia for the treatment of H. pylori infection in adults. RedHill expects to launch Talicia in the U.S. by mid-March 2020.
Aemcolo (rifamycin)4 and Strategic Investment by Cosmo Pharmaceuticals
In October 2019, RedHill entered into a strategic collaboration with Cosmo Pharmaceuticals N.V. (SIX: COPN), which included an exclusive license agreement for the U.S. rights to Aemcolo and a simultaneous private investment by Cosmo Pharmaceuticals of $36.3 million in RedHill. In December 2019, RedHill initiated the U.S. promotion of Aemcolo for the treatment of travelers’ diarrhea caused by non-invasive strains of Escherichia coli (E. coli) in adults.
Acquisition of Movantik (naloxegol)5
In February 2020, RedHill announced that it is acquiring the global rights to Movantik, excluding Europe, Canada and Israel, from AstraZeneca (LSE/STO/NYSE: AZN). The acquisition is expected to close in the first quarter of 2020, subject to certain closing conditions and regulatory clearances. Movantik is a peripherally acting mu-opioid receptor antagonist (PAMORA) indicated for the treatment of opioid-induced constipation (OIC) in adults with chronic non-cancer pain, including patients with chronic pain related to prior cancer or its treatment who do not require frequent opioid dosage escalation. Movantik generated U.S. net sales of $96 million in 2019. Under the terms of the license agreement, RedHill will make an upfront payment of $52.5 million to AstraZeneca upon closing and a further non-contingent payment of $15 million 18 months post-closing. RedHill will also assume financial responsibility for sales-based royalty and potential milestone payments that AstraZeneca is required to pay to Nektar Therapeutics, the originator of Movantik. AstraZeneca will continue to manufacture and supply Movantik to RedHill during a transition period. In 2015, AstraZeneca entered into a co-commercialization agreement with Daiichi Sankyo, Inc. ("Daiichi Sankyo") for Movantik in the U.S., which will be transferred to RedHill upon closing of the transaction. Following such transfer, RedHill expects to lead all U.S. commercialization activities for Movantik and will continue to share costs and pay sales-related commissions to Daiichi Sankyo under that agreement.
Financial Highlights:
In February 2020 RedHill entered into a non-dilutive royalty-backed term loan agreement with HealthCare Royalty Partners (HCR) pursuant to which HCR committed up to $115 million to support RedHill’s U.S. commercial operations. Under the terms of the agreement, RedHill will receive $30 million following closing to support RedHill’s commercial operations. Subject to satisfaction of certain conditions, RedHill will receive an additional $50 million to fund the acquisition of rights to Movantik. Two additional tranches, the second of which is at the mutual agreement of RedHill and HCR, totaling $35 million will be available upon satisfaction of certain conditions to further support RedHill’s growing commercial operations. HCR will receive royalties in the low-single digits based on RedHill’s worldwide net revenues, subject to a cap, as well as interest on the outstanding term loan to be computed as the 3-month LIBOR rate plus a single-digit interest rate, depending on revenues generated. The term loan matures in six years with no principal payments required in the first three years. The loan can be prepaid at RedHill’s discretion, subject to customary prepayment fees, certain of which decrease over time.
R&D Highlights:
RHB-204 – Pulmonary Nontuberculous Mycobacteria (NTM) Infections
In light of positive data from an ongoing supportive non-clinical program, RedHill plans to initiate in mid-2020 a single, pivotal Phase 3 study evaluating RHB-204 as a first-line, stand-alone treatment for pulmonary NTM infections caused by Mycobacterium avium complex (MAC), subject to further input from the FDA.
RHB-104 – Crohn’s Disease
RedHill announced in October 2019 the full Week 52 results for all subjects in the previously announced positive Phase 3 randomized, controlled study of RHB-104 in Crohn’s disease (MAP US study) and supportive top-line results from the open-label extension Phase 3 study (MAP US2 study). The full Week 52 results of blinded treatment in the MAP US Phase 3 study with RHB-104 were consistent with the previously reported positive outcomes of the study.
The results from the MAP US study were presented at the American College of Gastroenterology (ACG) 2019 Annual Scientific Meeting in October. RedHill continues to evaluate the path toward potential approval of RHB-104 in the U.S.
ABC294640 (opaganib, Yeliva) – Cholangiocarcinoma and Additional Indications
RedHill has completed the enrollment of the full cohort of 39 patients evaluable for efficacy in the Phase 2a study evaluating the activity of orally-administered ABC294640 in advanced cholangiocarcinoma. Preliminary data from the open-label Phase 2a study has indicated a signal of activity in a number of subjects with advanced cholangiocarcinoma. RedHill plans to submit this data for presentation at an upcoming scientific meeting. In light of this, and in light of positive data from a pre-clinical program evaluating ABC294640 in combination with additional actives, RedHill has added a second arm to the study, evaluating ABC294640 in combination with hydroxychloroquine, an anti-autophagy agent. Enrollment of patients to the second arm of the Phase 1/2a study is planned to be initiated in the first quarter of 2020. RedHill also plans to add a third arm to the study, evaluating ABC294640 in combination with RHB-107 (upamostat).
An investigator-sponsored study with ABC294640 in prostate cancer is planned to be initiated at the Medical University of South Carolina (MUSC) in the coming weeks. The study is supported by a National Cancer Institute (NCI) grant awarded to MUSC.
RHB-106 – Encapsulated Bowel Preparation
RedHill has regained the exclusive worldwide rights to RHB-106, a proprietary encapsulated formulation intended for the preparation and cleansing of the gastrointestinal tract prior to abdominal procedures and diagnostic tests. RedHill terminated its 2014 license agreement with Salix Pharmaceuticals Ltd. in January 2020 and is now planning the development path toward potential approval of RHB-106 in the U.S.
RHB-102 (Bekinda) – Gastroenteritis and Gastritis
RedHill concluded a positive FDA meeting on the pediatric study plans required to potentially obtain pediatric labeling for RHB-102, in addition to the intended adult labeling. RedHill is currently working toward a confirmatory Phase 3 study to support a potential New Drug Application (NDA) for RHB-102 for acute gastroenteritis and gastritis, subject to FDA guidance. The confirmatory Phase 3 study will follow the successful completion of a first Phase 3 study for acute gastroenteritis and gastritis with RHB-102, the findings of which were published in JAMA Open Networks in November 2019.
Conference Call and Webcast Information:
The Company will host a conference call today, Wednesday, March 4, 2020 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: 4753535.
The conference call will be broadcast live and will be available for replay for 30 days on the Company’s website, View Source