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Dr. Reddy’s Q1 FY17 Financial Results

On July 26, 2016 Dr. Reddy’s Laboratories Ltd. (BSE: 500124) (NSE: DRREDDY) (NYSE: RDY) reported its consolidated financial results for the first quarter ended June 30, 2016 under International Financial Reporting Standards (IFRS) (Press release, Dr Reddy’s, JUL 26, 2016, View Source [SID:1234514050]).

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Q1 FY17: Key Highlights

Consolidated revenues at Rs. 32.3 billion, year-on-year decline of 14%
Gross Profit Margin at 56.2%, declined by ~490 bps over that of last year
Research & Development (R&D) spend at Rs. 4.8 billion, year-on-year increase of 9%. Continued focus on building complex generics and differentiated products pipeline
Selling, general & administrative (SG&A) expenses at Rs. 12.3 billion, year-on-year increase of 12%
EBITDA at Rs. 4.0 billion, 12.3% of revenues
Profit after tax at Rs. 1.3 billion, 3.9% of revenues
Co-chairman and CEO GV Prasad said: "We have come through a very difficult first quarter, with our top and bottom lines impacted by a decline in volume growth, particularly in the US market and the loss of business in Venezuela. We also faced a number of challenges in the quarter including price erosion and delayed launches as a result of the warning letter, which significantly impacted our earnings. However, we continue to take actions that focus on remediation, strengthening our quality systems and executing on our strong product pipeline. We remain focused on generating long term, sustainable growth."

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs. 67.51

Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement

Particulars Q1 FY 17 Q1 FY 16
Growth %
($) (Rs.) % ($) (Rs.) %
Revenues 479 32,345 100.0 557 37,578 100.0 (14)
Cost of revenues 210 14,167 43.8 217 14,631 38.9 (3)
Gross profit 269 18,178 56.2 340 22,947 61.1 (21)
Operating Expenses
Selling, general & administrative expenses 182 12,284 38.0 163 10,973 29.2 12
Research and development expenses 71 4,802 14.8 65 4,387 11.7 9
Other operating expense / (income) (1) (96) (0.3) (2) (125) (0.3) (23)
Results from operating activities 18 1,188 3.7 114 7,712 20.5 (85)
Finance expense / (income), net (7) (445) (1.4) (3) (216) (0.6) 106
Share of (profit) of equity accounted investees, net of income tax (1) (74) (0.2) (1) (49) (0.1) 49
Profit before income tax 25 1,707 5.3 118 7,977 21.2 (79)
Income tax expense 7 444 1.4 25 1,720 4.6 (74)
Profit for the period 19 1,263 3.9 93 6,257 16.6 (80)

Diluted EPS 0.11 7.43 0.54 36.58 (80)

EBITDA Computation

Particulars Q1 FY 17 Q1 FY 16
($) (Rs.) ($) (Rs.)
Profit before tax 25 1,707 118 7,977
Interest (income) / expense net* (6) (409) (5) (304)
Depreciation 26 1,760 23 1,519
Amortization 14 921 11 749
EBITDA 59 3,979 147 9,941
EBITDA (% to sales) 12.3 26.5

* Includes income from investments

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs. 67.51

Key Balance Sheet Items

Particulars As on 30th June 16 As on 31st March 16
($) (Rs.) ($) (Rs.)
Cash and cash equivalents and Other current Investments 379 25,578 592 39,955
Trade receivables 526 35,499 612 41,306
Inventories 414 27,922 379 25,578
Property, plant and equipment 814 54,951 799 53,961
Goodwill and Other Intangible assets 419 28,284 365 24,644
Loans and borrowings (current & non-current) 557 37,632 496 33,513
Trade payables 188 12,723 182 12,300
Equity 1,690 1,14,112 1,901 1,28,336

Revenue Mix by Segment

Particulars Q1 FY 17
Q1 FY 16

Growth %
($) (Rs.) % ($) (Rs.) %
Global Generics 395 26,638 82 459 30,961 82 (14)
North America 15,523 18,516 (16)
Europe* 1,615 1,912 (16)
India 5,223 4,756 10
Emerging Markets# 4,277 5,777 (26)
PSAI 70 4,692 15 83 5,614 15 (16)
North America 643 580 11
Europe 1,947 2,350 (17)
India 372 670 (44)
Rest of World 1,730 2,014 (14)
Proprietary Products & Others 15 1,015 3 15 1,003 3 1
Total 479 32,345 100 557 37,578 100 (14)

* Europe primarily includes Germany, UK and out licensing sales business
# Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets including Venezuela.

Segmental Analysis

Global Generics

Revenues from Global Generics segment are at Rs. 26.6 billion, year-on-year decline of 14%; decline primarily on account of lower contribution from North America and loss of sales from Venezuela.

Revenues from North America at Rs. 15.5 billion, year-on-year decline of 16%. Decline primarily on account of increased competition primarily in valgancyclovir and azacitidine, coupled with pricing pressure and moderation in volumes off-take.

As of 30th June, 2016, cumulatively 78 generic filings are pending for approval with the USFDA (76 ANDAs and 2 NDAs under 505(b)(2) route). Of these 76 ANDAs, 50 are Para IVs out of which we believe 18 have ‘First to File’ status.
Revenues from Emerging Markets at Rs. 4.3 billion, year-on-year decline of 26%.
Revenues from Russia at Rs. 2.3 billion, year-on-year growth of 2%. Moderate growth primarily on account of depreciation of Ruble, in constant currency revenues grew by 23% year-on-year. Sequentially, the revenues have been stable.
Revenues from other CIS countries and Romania market at Rs. 0.7 billion, year-on-year decline of 15%.
Revenues from Rest of World (RoW) territories at Rs. 1.3 billion, year-on-year decline of 53% primarily on account of no sales in Venezuela. Ex-Venezuela it grew by 19%.
Revenues from India at Rs. 5.2 billion, year-on-year growth of 10%. NPPA pricing notifications and the WPI based annual price decline impacted growth. Portfolio acquired from UCB well-integrated into our supply chain.
Revenues from Europe at Rs. 1.6 billion, year-on-year decline of 16%.
Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI at Rs. 4.7 billion, year-on-year decline of 16%. Decline primarily on account of lower dispatches in API business on account of the ongoing remediation activities.
During the quarter, 19 DMFs were filed globally of which 2 were in the US. The cumulative number of DMF filings as of 30th June, 2016 was 784.
Proprietary Products (PP)

Subsequent to the approvals received from USFDA for 2 NDAs, the company had launched these two molecules ZembraceSym Touch (Suma 3 mg) injection and Sernivo (betamethasone dipropionate) Spray, 0.05% in the US. The performance of these two molecules is gradually picking up traction.

Income Statement Highlights:

Gross profit margin at 56.2% and declined by ~490 bps over that of previous year primarily led by increased competitive intensity in some of the key products in NAG and relatively lower price realizations. Gross profit margin for Global Generics (GG) and PSAI business segments are at 61.3% and 24.1% respectively.
SG&A expenses at Rs. 12.3 billion, year-on-year growth of 12%. This increase is largely due to the ongoing remediation activities, launch related activities for the approved NDAs by PP and certain routine items related to manpower and other spends.
Research & development expenses at Rs. 4.8 billion, year-on-year growth of 9%. As a % to sales R&D expenses stood at 14.8% in Q1 FY17 as compared to 11.7% in Q1 FY16. Continued focus on building complex generics and differentiated products pipeline.
Net Finance income at Rs. 445 million compared to the net finance income of Rs. 216 million in Q1 FY16. The incremental charge of Rs. 229 million is on account of:
Net foreign exchange gain of Rs. 36 million in the current quarter vs net foreign exchange loss of Rs. 88 million in the previous year.
Increase in profit on sales of investments by Rs. 54 million.
Net increase in interest income of Rs. 51 million.
Profit after Tax at Rs. 1.3 billion
Diluted earnings per share is at Rs. 7.4
Capital expenditure is at Rs. 3.2 billion.
Earnings Call Details (06.30 pm IST, July 26, 2016)

Janssen Announces Clinical Collaboration with Bristol-Myers Squibb to Evaluate Immuno-oncology Combination in Lung Cancer

On July 26, 2016 Janssen Biotech, Inc. reported it has entered into a clinical study collaboration agreement with Bristol-Myers Squibb Company to evaluate the combination of two immuno-oncology compounds in patients with non-small cell lung cancer (NSCLC) (Press release, Johnson & Johnson, JUL 26, 2016, View Source [SID:1234514043]). The Phase 2 clinical trial will evaluate the tolerability and clinical activity of the combination of Janssen’s investigational immunotherapy JNJ-64041757 and Bristol-Myer Squibb’s PD-1 immune checkpoint inhibitor, OPDIVO (nivolumab), in NSCLC patients.

JNJ-64041757 is an antigen-presentation therapeutic, based on Live Attenuated Double-Deleted (LADD) Listeria monocytogenes strains engineered to induce an immune response against NSCLC tumors. Janssen licensed JNJ-64041757 (previously referred to as ADU-214) and another compound, JNJ-64041809 (previously referred to as ADU-741), from Aduro Biotech, Inc., in 2014. Both are currently in Phase 1 clinical development: JNJ-64041757 in lung cancer and JNJ-64041809 in prostate cancer. OPDIVO is indicated for the treatment of patients with NSCLC with progression on or after platinum-based chemotherapy.

"Cancer immunotherapy is a key aspect of our emerging lung cancer portfolio," said Matthew Lorenzi, Ph.D., Vice President, Lung Cancer, Janssen Research & Development, LLC. "This collaboration will help extend the clinical development of JNJ-64041757 while allowing us to gather data on the immune response triggered by the combination of these two innovative approaches."

The study will be conducted by Janssen. Information, including anticipated study start, is expected to be posted on www.clinicaltrials.gov later this year. Additional details of the collaboration were not disclosed.

Baxter Reports Second Quarter 2016 Results and Raises Financial Outlook for Full-Year 2016

On July 26, 2016 Baxter International Inc. (NYSE:BAX) reported results for the second quarter of 2016, and increased its sales and earnings per share outlook for full-year 2016. Baxter’s second quarter worldwide sales totaled $2.6 billion, an increase of 4 percent on a reported basis and 6 percent on a constant currency basis as compared to the prior-year period (Press release, Baxter, JUL 26, 2016, View Source [SID:1234514034]).

"Our second quarter results reflect the steady progress we are making on our strategy to drive industry-leading performance through a disciplined focus on portfolio management and innovation, operational excellence and capital allocation," said José (Joe) E. Almeida, chairman and chief executive officer.

Financial Results

During the quarter, Baxter reported income from continuing operations of $1.2 billion, or $2.19 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis. These results included an after-tax net gain of approximately $1.1 billion from the disposition of the company’s remaining shares of Baxalta Incorporated (Baxalta), which the company spun-off in July 2015. Partially offsetting these results were net after-tax special items totaling $192 million primarily related to business optimization initiatives, intangible asset amortization, asset impairment and Baxalta related spin-off costs.

On an adjusted basis, excluding special items, Baxter’s second quarter income from continuing operations totaled $256 million, or $0.46 per diluted share, exceeding the company’s previously-issued guidance of $0.38 to $0.40 per diluted share.

Baxter’s second quarter worldwide sales totaled $2.6 billion, an increase of 4 percent on a reported basis and 6 percent on a constant currency basis as compared to the prior-year period. Sales within the United States were $1.1 billion, advancing 10 percent, while international sales totaled $1.5 billion, representing a 1 percent increase on a reported basis, and an increase of 3 percent on a constant currency basis. Adjusting for the impact of foreign exchange and a generic market entrant in the United States for the company’s oncology injectable, cyclophosphamide, Baxter’s sales increased 12 percent in the U.S. and globally rose 7 percent in the second quarter.

By business, Hospital Products sales of $1.6 billion increased 6 percent on a reported basis and 7 percent on a constant currency basis. Adjusting for the impact of foreign exchange and U.S. cyclophosphamide, Hospital Products sales advanced 9 percent from the prior year period. Hospital Products performance in the quarter benefited from strong sales across the portfolio, particularly within its U.S. Fluid Systems franchise, driven by solid demand for Baxter’s next-generation SIGMA SPECTRUM infusion pump as well as favorable demand and pricing for IV solutions. Strength internationally in anesthesia products and hospital pharmacy compounding services also contributed to growth in the quarter.

Baxter’s Renal sales totaled $965 million, representing a 2 percent increase on a reported basis, and a 4 percent increase on a constant currency basis. Increased demand globally for continuous renal replacement therapies along with strong sales of peritoneal dialysis products contributed to growth in the quarter. Baxter’s new AMIA Automated Peritoneal Dialysis (APD) System with the SHARESOURCE Connectivity Platform, which was launched in the U.S. in late 2015 and was recently approved by Health Canada, is contributing to growth with more than 500 patients now being treated with AMIA in the U.S. The AMIA APD and SHARESOURCE system is the first APD device cleared in the United States and Canada to include patient-centric features such as voice guidance, a touchscreen control panel and two-way telemedicine capabilities for remote patient management.

During the second quarter, Baxter also completed the disposition of its retained stake in Baxalta, which included an equity contribution of approximately $700 million to the company’s U.S. pension plan. It also included completion of an equity-for-equity share exchange which resulted in a reduction of Baxter’s outstanding share count of approximately 11 million.

"The successful disposition of the retained equity stake in Baxalta allowed us to effectively restructure our balance sheet and provides us with significant flexibility to invest in both organic and inorganic growth initiatives while also returning value to shareholders through dividends and stock repurchases," said Jay Saccaro, Baxter’s chief financial officer.

Financial Outlook

Based on the company’s strong performance in the first six months of the year, Baxter is raising its financial outlook for full-year 2016. For full-year 2016, Baxter now expects reported sales growth of 1 percent to 2 percent and on a constant currency basis, sales growth of 3 percent to 4 percent. In addition, the company now expects earnings from continuing operations, before special items, of $1.69 to $1.74 per diluted share for the full year as compared to previous guidance of $1.59 to $1.67 per diluted share.

For the third quarter, the company expects reported sales growth of 2 percent to 3 percent and on a constant currency basis, sales growth of 3 percent to 4 percent. Baxter expects earnings from continuing operations, before special items, of $0.43 to $0.45 per diluted share for the third quarter of 2016.

The earnings guidance for the third quarter and full-year 2016 excludes $0.05 and $0.22, respectively, per diluted share of intangible asset amortization expense; an estimated $0.02 and $0.08, respectively, per diluted share of Baxalta separation-related expense activities; an estimated $0.09 to $0.11 and $0.38 to $0.40, respectively, per diluted share of business optimization charges; and $7.88 per diluted share of asset impairment, debt extinguishment loss, product related reserve adjustments, and Baxalta retained stake gains for full-year 2016. These estimates are based on information reasonably available at the time of this release and future events or new information may result in different actual results. Reconciling for the inclusion of these items results in GAAP earnings of $0.25 to $0.29 per diluted share for the third quarter of 2016, and $8.87 to $8.94 per diluted share for full-year 2016.

RedHill Biopharma Reports 2016 Second Quarter Financial Results

On July 26, 2016 RedHill Biopharma Ltd. (NASDAQ:RDHL) (TASE:RDHL) ("RedHill" or the "Company"), a biopharmaceutical company primarily focused on development and commercialization of late clinical-stage, proprietary, orally-administered, small molecule drugs for inflammatory and gastrointestinal diseases and cancer, reported its financial results for the quarter ended June 30, 2016 (Press release, RedHill Biopharma, JUL 26, 2016, View Source [SID:1234514032]).

The Company will host a conference call on Tuesday, July 26, 2016, at 9:00 am EDT to review the financial results and business highlights, dial-in details are included below.

Financial highlights for the quarter ended June 30, 20161:

Research and Development Expenses for the second quarter of 2016 were $6.0 million, an increase of $0.9 million, compared to $5.1 million in the second quarter of 2015. Research and Development Expenses for the six months ended June 30, 2016 were $10.7 million, an increase of $1.8 million, compared to $8.9 million in the comparable period of 2015. The increase in 2016 resulted primarily from clinical trial costs related to the ongoing Phase III MAP US study with RHB-104 (Crohn’s disease) and from preparations for several Phase I/II studies with YELIVA for multiple oncology, inflammatory and gastrointestinal indications.

General, Administrative and Business Development Expenses in the second quarter of 2016 were $1.2 million, an increase of $0.4 million, compared to $0.8 million in the second quarter of 2015. General, Administrative and Business Development Expenses for the six months ended June 30, 2016 were $2.4 million, an increase of $0.7 million, compared to $1.7 million in the comparable period of 2015. The increase was mainly due to enhanced business development activities.

Operating Loss in the second quarter of 2016 was $7.2 million, an increase of $1.3 million, compared to $5.9 million in the second quarter of 2015. Operating Loss for the six months ended June 30, 2016 were $13.1 million, an increase of $2.5 million, compared to $10.6 million in the comparable period of 2015. The increase was mainly due to increases in Research and Development Expenses, as detailed above.

Net Cash Used in Operating Activities in the second quarter of 2016 was $5.7 million, an increase of $1.0 million, compared to $4.7 million in the second quarter of 2015. Net Cash Used in Operating Activities for the six months ended June 30, 2016 was $10.7 million, an increase of $2.6 million, compared to $8.1 million in the comparable period of 2015. The increase mainly reflects the increase in Operating Loss, as detailed above.

Net Cash Used in Investment Activities in the second quarter of 2016 was $2.9 million, compared to Net Cashed Provided by Investment Activities of $3.5 million in the second quarter of 2015. Net Cash Used in Investment Activities for the six months ended June 30, 2016 was $7.5 million, an increase of $3.9 million, compared to $3.6 million in the comparable period of 2015. The increase in Net Cash Used in Investment Activities was mainly due to an increase in bank deposits and marketable securities in 2016.

Net Cash Provided by Financing Activities in the second quarter of 2016 was $0.1 million, compared to an immaterial amount in the second quarter of 2015. Net Cash Provided by Financing Activities for the six months ended June 30, 2016 was $0.1 million, compared to $13.2 million in the comparable period of 2015, which resulted mainly from the Company’s public offering in February 2015.

Cash Balance2 as of June 30, 2016 was $47.7 million, a decrease of $10.4 million, compared to $58.4 million as of December 31, 2015. The decrease was a result of the ongoing operations, mainly related to research and development activities.

"We have achieved several significant clinical and operational milestones this quarter, while continuing to maintain our financial discipline," said Mr. Micha Ben Chorin, RedHill’s CFO. "With a strong cash position of $47.7 million at the end of the second quarter we are well-positioned to advance our strategic and operational plans, including the establishment of commercial operations in the U.S. During the second quarter, we continued to actively advance our three Phase III-stage gastrointestinal programs. We are working towards several anticipated milestones, including interim DSMB analysis of the RHB-104 Phase III study for Crohn’s disease, final results from the Phase IIa study with RHB-104 for multiple sclerosis, initiation of a confirmatory Phase III study with RHB-105 for the treatment of H. pylori infection and top-line results from the BEKINDA Phase III study for gastroenteritis. In the coming weeks, we expect to provide a mid-year business update that will highlight the status and timelines for RedHill’s main operations."

Conference Call and Webcast Information:

The Company will host a conference call on Tuesday, July 26, 2016, at 9:00 am EDT to review the financial results and business highlights.

To participate in the conference call, please dial the following numbers 5-10 minutes prior to the start of the call: United States: +1-877-280-1254; International: +1-646-254-3388; and Israel: +972-3-763-0147. The access code for the call is 539724.

The conference call will be broadcasted live and available for replay on the Company’s website, View Source, for 30 days. Please access the Company’s website at least 15 minutes ahead of the conference to register, download, and install any necessary audio software.

Recent operational highlights:

On April 11, 2016, RedHill announced that it had initiated a randomized, double-blind, placebo-controlled, 2-arm parallel group Phase II clinical study in the U.S. evaluating the safety and efficacy of BEKINDA 12 mg in patients with diarrhea-predominant irritable bowel syndrome (IBS-D). The study is expected to be conducted in 12 clinical sites in the U.S. and to enroll 120 patients who will be randomized 60:40 to receive either BEKINDA 12 mg or a placebo, once daily, for a period of eight weeks. The primary endpoint for the study is the proportion of patients in each treatment group with response in stool consistency as compared to baseline, per U.S. Food and Drug Administration (FDA) guidance definition. Secondary endpoints include the proportion of patients in each treatment group who are pain responders and the proportion of patients in each treatment group who are responders to the combined endpoints of stool consistency and pain, per FDA guidance definition. RedHill further announced, on June 20, 2016, that the first patients in the Phase II study had been dosed.

On April 18, 2016, RedHill announced that it had concluded a positive Type B Meeting with the FDA regarding the path to marketing approval of RHB-105 and the planned confirmatory Phase III study for the treatment of H. pylori infection. The FDA confirmed, subject to final minutes of the meeting, the planned two-arm, randomized, double-blind, active comparator design of the confirmatory Phase III study. Based on FDA feedback, and subject to successful completion, the planned confirmatory Phase III study, along with the successfully completed first Phase III study and data from a supportive PK program, are expected to support a U.S. New Drug Application (NDA) for RHB-105.

The FDA Type B meeting announcement followed the successful final results from the first Phase III clinical study with RHB-105 (the ERADICATE Hp study) reported in March 2016, confirming that the ERADICATE Hp study successfully met its primary endpoint of superiority over historical standard-of-care (SoC) eradication rate levels of 70%, with high statistical significance (p < 0.001). The results demonstrated 89.4% efficacy in eradicating H. pylori infection with RHB-105. RHB-105 has been granted Qualifying Infectious Disease Product (QIDP) designation by the FDA, providing a Fast-Track development pathway, as well as Priority Review status, potentially leading to a shorter review time by the FDA of a NDA, if filed. If approved, RHB-105 will have a total of 8 years of market exclusivity.

On May 4, 2016, RedHill announced that the U.S. National Cancer Institute (NCI) has awarded the Medical University of South Carolina (MUSC) a $1.8 million grant to support a broad range of studies on the feasibility of targeting sphingolipid metabolism for the treatment of a variety of solid tumor cancers. One component of the studies includes a planned Phase II study with YELIVA (ABC294640) for the treatment of advanced hepatocellular carcinoma (HCC), the most common primary malignant cancer of the liver3. The Phase II study, planned to be initiated in the third quarter of 2016, will be conducted at MUSC and additional clinical sites and is intended to evaluate the efficacy and safety of YELIVA as a second-line monotherapy in patients with advanced HCC. The NCI grant covers a five-year period. The Phase II HCC study will be further supported by additional funding from RedHill, which acquired the exclusive worldwide rights to YELIVA from Apogee Biotechnology Corp. (Apogee).

On June 21, 2016, RedHill announced positive final results from the Phase I study with YELIVA in advanced solid tumors. The results confirmed that the study successfully met both its primary and secondary endpoints, demonstrating that YELIVA can be safely administered to cancer patients at doses that provide circulating drug levels that are predicted to have therapeutic activity, based on levels required in preclinical models. The study included the first-ever longitudinal analyses of plasma S1P levels as a potential pharmacodynamic biomarker for activity of a sphingolipid-targeted drug. Administration of YELIVA resulted in a rapid and pronounced decrease in S1P levels over the first 12 hours, with return to baseline at 24 hours, which is consistent with clearance of the drug. YELIVA was well tolerated over a prolonged period at doses inducing the expected pharmacodynamic effects.

On June 22, 2016, RedHill announced the publication of an article4 demonstrating that the triple combination of the RHB-104 active components provides excellent synergistic activity in the inhibition of mycobacterial growth, potentially leading to a new and effective treatment for Crohn’s disease associated with Mycobacterium avium subspecies paratuberculosis (MAP) infection. The article, entitled "RHB-104 triple antibiotics combination in culture is bactericidal and should be effective for treatment of Crohn’s disease associated with Mycobacterium paratuberculosis" describes a pre-clinical study intended to determine the efficacy of the RHB-104 active components (the antibiotics clarithromycin, clofazimine and rifabutin) against MAP strains isolated from the blood, tissue and milk of Crohn’s disease patients. The results of the study demonstrated that the RHB-104 active components, in their individual concentrations or in dual combinations, were not as effective against all microorganisms, compared to the triple combination at minimum inhibitory concentrations level.

On July 5, 2016, RedHill and its co-development partner, IntelGenx Corp. (IntelGenx), announced the signing of an exclusive license agreement with Grupo JUSTE S.A.Q.F (Grupo JUSTE), for the commercialization of RIZAPORT oral thin-film for acute migraines. Under the terms of the agreement, RedHill granted Grupo JUSTE the exclusive rights to register and commercialize RIZAPORT in Spain and a right of first refusal for a predefined term for the territories of Belize, Carribean, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, the Middle East and Morocco. RedHill and IntelGenx are entitled to receive an upfront payment and additional milestone payments upon the achievement of certain predefined regulatory and commercial targets, as well as tiered royalties. Financial terms of the agreement were not disclosed. The initial term of the agreement is for ten years from the date of the first commercial sale and shall automatically renew for an additional two-year term. Commercial launch in Spain is expected to take place in the second half of 2017.

On July 13, 2016, RedHill announced the signing of a research collaboration agreement with the U.S. National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), intended to evaluate RedHill’s proprietary experimental therapy for the treatment of Ebola virus disease. The new research collaboration follows encouraging results from preliminary non-clinical studies conducted in conjunction with the NIAID using RedHill’s proprietary experimental therapy. If successful, this study is intended to provide supportive data for discussions with the FDA for potential use of the Animal Rule pathway for approval. Ebola virus disease is a severe and often fatal illness, which can cause severe hemorrhagic fever in humans and has a mortality rate ranging from 25% to 90%5. There is currently no FDA approved treatment for Ebola virus disease.

On July 21, 2016, RedHill announced that it had received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for a new patent covering RHB-105. The patent application, entitled "Pharmaceutical Compositions For The Treatment Of Helicobacter Pylori" expands RedHill’s patent portfolio covering RHB-105 and is expected to be valid until 2034, once granted. The Company is currently prosecuting additional U.S. and international patent applications covering RHB-105.

Progenics Receives $50 Million Milestone Payment Following FDA Approval of RELISTOR® Tablets for the Treatment of Opioid-Induced Constipation in Adults with Chronic Non-cancer Pain

On July 26, 2016 Progenics Pharmaceuticals, Inc. (Nasdaq:PGNX) reported that it has received a $50 million milestone payment from its worldwide collaboration partner, Valeant Pharmaceuticals International, Inc. (NYSE:VRX), resulting from the US Food and Drug Administration’s marketing approval last week of RELISTOR Tablets for the treatment of opioid-induced constipation in adults with chronic non-cancer pain (Press release, Progenics Pharmaceuticals, JUL 26, 2016, View Source [SID:1234514031]).

"We are pleased that our partner Valeant can now offer RELISTOR in a more convenient tablet form to patients in need," said Mark Baker, Chief Executive Officer of Progenics. "This and other sales milestone payments that we may receive from sales of RELISTOR provide an important source of non-dilutive financing for our Company as we approach topline, registrational data on AZEDRA and advance our diverse pipeline of prostate cancer imaging agents and therapeutics."

Under a 2011 collaboration with Salix Pharmaceuticals, Inc. (acquired by Valeant in April 2015), Progenics is also entitled to receive up to $200 million of sales milestone payments based on specified U.S. sales targets. The sales milestone payments range from $10 million when calendar-year U.S. net sales first exceed $100 million, to $75 million when such sales first exceed $1 billion. Each sales milestone payment is payable one time only, and one or more, or all, sales milestones could become payable within the same calendar year if the specified sales levels are met. Progenics also earns tiered royalties on total RELISTOR U.S. net sales, as follows: 15% on U.S. net sales up to $100 million, 17% on the next $400 million in U.S. net sales, and 19% on U.S. net sales over $500 million. Outside of the U.S. Progenics is entitled to receive 60% of any up-front milestone, royalty and other revenue, net of certain costs, as specified in our license agreement with Valeant.

About RELISTOR

Progenics has exclusively licensed development and commercialization rights for its first commercial product, RELISTOR, to Valeant. RELISTOR Tablets (450 mg once daily) is approved in the United States for the treatment of OIC in patients with chronic non-cancer pain. RELISTOR Subcutaneous Injection (12 mg and 8 mg) is a treatment for opioid-induced constipation approved in the United States and worldwide for patients with advanced illness and chronic non-cancer pain.

Important Safety Information about RELISTOR

RELISTOR (methylnaltrexone bromide) Tablets is contraindicated in patients with known or suspected gastrointestinal obstruction and patients at increased risk of recurrent obstruction, due to the potential for gastrointestinal perforation.

Cases of gastrointestinal perforation have been reported in adult patients with OIC and advanced illness with conditions that may be associated with localized or diffuse reduction of structural integrity in the wall of the gastrointestinal tract (e.g., peptic ulcer disease, Ogilvie’s syndrome, diverticular disease, infiltrative gastrointestinal tract malignancies or peritoneal metastases). Take into account the overall risk-benefit profile when using RELISTOR in patients with these conditions or other conditions which might result in impaired integrity of the gastrointestinal tract wall (e.g., Crohn’s disease). Monitor for the development of severe, persistent, or worsening abdominal pain; discontinue RELISTOR in patients who develop this symptom.

If severe or persistent diarrhea occurs during treatment, advise patients to discontinue therapy with RELISTOR and consult their healthcare provider.

Symptoms consistent with opioid withdrawal, including hyperhidrosis, chills, diarrhea, abdominal pain, anxiety, and yawning have occurred in patients treated with RELISTOR.

Patients having disruptions to the blood-brain barrier may be at increased risk for opioid withdrawal and/or reduced analgesia. Take into account the overall risk-benefit profile when using RELISTOR in such patients. Monitor for adequacy of analgesia and symptoms of opioid withdrawal in such patients.

Avoid concomitant use of RELISTOR with other opioid antagonists because of the potential for additive effects of opioid receptor antagonism and increased risk of opioid withdrawal.

The most common adverse reactions (≥ 12%) in adult patients with opioid-induced constipation and chronic non-cancer pain receiving RELISTOR tablets were abdominal pain, diarrhea, headaches, abdominal distention, hyperhidrosis, anxiety, muscle spasms, rhinorrhea, and chills. Adverse reactions of abdominal pain, diarrhea, hyperhidrosis, anxiety, rhinorrhea, and chills may reflect symptoms of opioid withdrawal.

Please see complete Prescribing Information for RELISTOR at valeant.com. For more information about RELISTOR, please visit www.relistor.com.