On November 9, 2015 RedHill Biopharma Ltd. (NASDAQ:RDHL) (TASE:RDHL) ("RedHill" or the "Company"), an Israeli biopharmaceutical company primarily focused on late clinical-stage, proprietary, orally-administered, small molecule drugs for inflammatory and gastrointestinal diseases, including cancer, reported its financial results for the quarter ended September 30, 2015 (Press release, RedHill Biopharma, NOV 9, 2015, View Source [SID:1234508126]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Financial highlights for the third quarter and for the nine months ended September 30, 2015:
Revenues for the nine months ended September 30, 2015 were immaterial compared to revenues of approximately $7.0 million for the nine months ended September 30, 2014, which resulted mainly from an upfront payment of $7.0 million received from Salix Pharmaceuticals, Inc. ("Salix") for the out-licensing of RedHill’s RHB-106 encapsulated bowel preparation and related rights received in 2014.
Cost of Revenues for the nine months ended September 30, 2015 was immaterial compared to approximately $1.0 million for the nine months ended September 30, 2014, which resulted from a payment of $1.0 million to Giaconda Limited, triggered by the Salix licensing transaction in 2014.
Research and Development Expenses, net for the quarter ended September 30, 2015 were approximately $3.9 million, compared to approximately $4.1 million in the quarter ended September 30, 2014. Research and Development Expenses, net for the nine months ended September 30, 2015 were approximately $12.8 million, compared to approximately $9.0 million for the nine months ended September 30, 2014. The increase in the nine months ended September 30, 2015 was mainly due to an increase in expenses related to the ongoing Phase III studies with RHB-104 (Crohn’s disease), RHB-105 (H. pylori) and BEKINDA (gastroenteritis and gastritis).
General and Administrative Expenses for the quarter ended September 30, 2015 were approximately $0.7 million, compared to approximately $0.9 million in the quarter ended September 30, 2014. The decrease was mainly due to a reduction in share-based compensation. General and Administrative Expenses for the nine months ended September 30, 2015 were approximately $2.4 million, compared to approximately $2.9 million for the nine months ended September 30, 2014. Thehigher expenses during the comparable period in 2014 were mainly due to professional fees associated with the January 2014 private placement.
Operating Loss for the quarter ended September 30, 2015 was approximately $4.6 million, compared to approximately $5.0 million in the quarter ended September 30, 2014. Operating Loss for the nine months ended September 30, 2015 was approximately $15.2 million, compared to approximately $5.8 million in the nine months ended September 30, 2014. The increase was mainly due to higher Research and Development Expenses and to immaterial revenues during the current period compared to the $7.0 million revenues during the comparable period in 2014..
Financing Income, net for the quarter ended September 30, 2015 were approximately $1.3 million, compared to approximately $0.8 million in the quarter ended September 30, 2014. The increase was mainly due to non-cash financing income of $1.3 million that resulted from the revaluation of warrants to investors presented at fair value under the Company’s derivative financial instruments.
Net Cash Used in Operating Activities for the quarter ended September 30, 2015 was approximately $3.7 million, compared to approximately $3.8 million in the quarter ended September 30, 2014. Net Cash Used in Operating Activities for the nine months ended September 30, 2015 was approximately $11.8 million, compared to approximately $6.3 million in the nine months ended September 30, 2014. The increase was mainly due to a higher Operating Loss.
Net Cash Used by Investment Activities for the nine months ended September 30, 2015 was approximately $1.1 million, compared to approximately $17.8 million in the nine months ended September 30, 2014. The decrease was mainly due to investments of cash in bank deposits in the amount of $17 million during the nine months ended September 30, 2014.
Net Cash Provided by Financing Activities for the quarter ended September 30, 2015 was approximately $41.5 million, mainly due to the July 2015 public offerings, compared to immaterial Net Cash Provided by Financing Activities in the quarter ended September 30, 2014. Net Cash Provided by Financing Activities for the nine months ended September 30, 2015 was approximately $54.8 million, mainly due to the February and July 2015 public offerings, compared to approximately $24.4 million for the nine months ended September 30, 2014, mainly from two private placements and the exercise of warrants during the first quarter of 2014.
Cash Balance1 as of September 30, 2015 was approximately $64.2 million,compared to $26.6 million as of June 30, 2015. The increase was due to the July 2015 public offering.
Ori Shilo, Deputy CEO, Finance and Operations, said: "We are very pleased with our financial and operational results for the third quarter of 2015. Following our recent public offering, we strengthened our cash position to approximately $64 million at the end of the quarter. Our solid cash position allows us to continue the development of our advanced development pipeline, including the ongoing Phase III studies with BEKINDA for gastroenteritis and with RHB-104 for Crohn’s disease, and to conduct a confirmatory Phase III study with RHB-105 for H. pylori eradication. During the quarter we generated more data from the successful RHB-105 first Phase III study for H. pylori, further supporting the potential superior efficacy of RHB-105 over standard-of-care therapies and we intend to hold a meeting with the FDA to present the Phase III data and to discuss the path to approval. Earlier today, we announced that we have received the first marketing approval for RIZAPORT for the treatment of acute migraines in Europe. This is a very significant milestone for RedHill and we are continuing our discussions with potential commercialization partners for Europe, the U.S. and additional territories. We are also advancing the development program for our promising novel oncology drug candidate YELIVA, with recently announced positive results from the Phase I study for advanced solid tumors and the recent initiation of a Phase I/II for diffuse large B-cell lymphoma. The YELIVA development program is supported by various grants from the National Cancer Institute, including a $2 million grant supporting a Phase I/II study for multiple myeloma, planned to be initiated by early 2016."
Recent operational highlights:
On November 9, 2015, the Company, together with IntelGenx Corp. ("IntelGenx"), announced that the Federal Institute for Drugs and Medical Devices of Germany (BfArM) granted marketing authorization of RIZAPORT (RHB-103) 5mg and 10mg, an oral thin film formulation of rizatriptan benzoate for the treatment of acute migraines. The national approval of RIZAPORT in Germany was granted under the European Decentralized Procedure (DCP), in which Germany served as the Reference Member State. This authorization is the first national marketing approval of RIZAPORT. Marketing authorization in Luxemburg, the Concerned Member State, is expected to follow. RedHill and IntelGenx intend to continue to work together to obtain national phase approvals in other European DCP territories.
On October 26, 2015, the Company announced positive top-line results from the Phase I study with YELIVA (ABC294640) in patients with advanced solid cancers. The study successfully met its primary and secondary endpoints, providing key information about the drug’s safety, toxicities, pharmacokinetics (PK) and pharmacodynamics (PD), supporting the ongoing and planned Phase II studies with YELIVA (ABC294640), a proprietary, first-in-class, orally-administered sphingosine kinase-2 (SK2) selective inhibitor. The results demonstrated that YELIVA (ABC294640) 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 first-in-human Phase I study treated 21 patients with advanced solid tumors, the majority of which were gastrointestinal cancer patients, including pancreatic, colorectal and cholangiocarcinoma cancers.
On October 22, 2015, the Company announced that the U.S. National Cancer Institute (NCI) has awarded Apogee Biotechnology Corporation ("Apogee") a $225,000 Small Business Innovation Research Program (SBIR) grant to support a pre-clinical study with YELIVA (ABC294640) for the treatment of prostate cancer. RedHill acquired from Apogee the exclusive worldwide rights to YELIVA (ABC294640) in March 2015. The NCI grant is intended to support additional studies with YELIVA (ABC294640) to determine its therapeutic efficacy in in vitro and in vivo models of prostate cancer in combination with radiotherapy.
On October 14, 2015, the Company announced that, following a meeting with the U.S. FDA regarding the development path for BEKINDA, the Company filed a protocol amendment to the BEKINDA Phase III gastroenteritis study’s approved IND to increase data collection and to conduct, among other things, additional safety tests. RedHill also reported that it expects to receive top-line results from the Phase III study in mid-late 2016 and believes that, subject to achieving highly significant positive results, the expanded Phase III study for gastroenteritis and gastritis may be sufficient as a single study to support the filing of a marketing application for BEKINDA for this indication in both the U.S. and Europe. RedHill further announced that it is initiating a new gastrointestinal development program with a new formulation of BEKINDA for the treatment of irritable bowel syndrome with diarrhea (IBS-D), with a Phase II study planned to be initiated by early 2016, subject to fulfillment of all regulatory requirements. The Company also announced that the FDA’s feedback from the recent meeting also indicated that additional clinical data is required to support a U.S. New Drug Application (NDA) with BEKINDA for oncology support indications under the 505(b)(2) regulatory path. Further development for oncology support indications will be decided as data from the ongoing and planned efficacy studies with BEKINDA for gastroenteritis and IBS-D becomes available, and once RedHill receives additional regulatory feedback from the MHRA with regard to the European Marketing Authorization Application (MAA) that was filed in December 2014 for oncology support indications.
On September 9, 2015, the Company announced that the NCI awarded a $2 million SBIR grant to Apogee to support the planned Phase II study with YELIVA (ABC294640) for the treatment of refractory or relapsed multiple myeloma. The grant covers a three year period and was awarded to Apogee in conjunction with Duke University. A Phase I/II study with YELIVA (ABC294640) for the treatment of refractory or relapsed multiple myeloma is planned to be initiated by early 2016. The study will be conducted at Duke University Medical Center and has received Institutional Review Board (IRB) approval from Duke University Health Sciences (DUHS IRB).
On September 8, 2015, the Company announced additional supportive data from the first Phase III study with RHB-105 for the eradication of H. pylori. Results from the subsequent open-label treatment of patients in the placebo arm with standard-of-care (SoC) therapy for persistent H. pylori infection demonstrated a 63% eradication rate with SoC. These results further support the potential superior efficacy of RHB-105 over SoC and validate the use of the historical SoC efficacy threshold of 70% implemented in the Phase III study as the control for the study’s primary endpoint. RedHill announced in June 2015 positive top-line results from the ERADICATE Hp Phase III study demonstrating 89.4% efficacy in eradicating H. pylori infection with RHB-105 meeting its primary endpoint with high statistical significance (p < 0.001).
On July 27, 2015, the Company announced that it had received confirmation from Salix Pharmaceuticals Ltd., recently acquired by Valeant Pharmaceuticals International, Inc., (NYSE/TSX: VRX), that it is continuing the development of RedHill’s RHB-106 tasteless solid oral formulation bowel preparation development program. RedHill and Salix entered into an exclusive license agreement in February 2014, under which Salix acquired the worldwide exclusive rights to RedHill’s RHB-106 encapsulated formulation for bowel preparation and rights to other purgative developments.
On July 22, 2015, the Company closed an underwritten public offering, which included an over-allotment option exercised by the underwriters of 277,143 American Depository Shares ("ADSs"), for a total of 2,739,143 ADSs, each representing 10 of its ordinary shares, at an offering price of $16.25 per ADS. Gross proceeds from the public offering were approximately $44.5 million, before underwriting discounts and commissions and other offering expenses. Investors in the offering included Broadfin Capital LLC, Visium Asset Management, Special Situations Funds, funds managed by Sabby Management LLC, Longwood Capital Partners LLC, Menora Mivtachim and others. Nomura and Roth Capital Partners actedas joint book-running managers. MLV & Co. and H.C. Wainwright & Co. acted as co-managers for the offering.
On July 6, 2015, the Company announced that it had received regulatory authorization to commence patient enrollment in Australia and New Zealand for its ongoing Phase III study with RHB-104 for Crohn’s disease (the MAP US study), and had commenced patient screening in New Zealand. The MAP US first Phase III study is currently ongoing in the U.S. and additional countries, with interim analysis of the study expected in the second half of 2016, after half of the 270 patients expected to be enrolled in the study will have completed 26 weeks of treatment. RedHill also announced in July 2015 that it had received two notices of allowance from the United States Patent and Trademark Office (USPTO) regarding two patent applications covering RHB-104, which are expected to be valid through 2029.