RedHill Biopharma Ltd. Q4 FY2021 Earnings Call

Good day and welcome to the RedHill Biopharma’s Fourth Quarter and Full Year 2021 Financial Results Conference Call. All participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. At this time, I would like to introduce the conference call, RedHill’s CEO, Dror Ben-Asher; Guy Goldberg, Chief Business Officer; Gilead Raday, Chief Operating Officer; Rob Jackson, Senior VP Sales & Marketing; Rick Scruggs, Chief Commercial Officer; and Micha Ben Chorin, Chief Financial Officer. We have additional senior management team members available to answer questions during the Q&A session, including; Dr. June Almenoff, Chief Medical Officer; and Dr. Mark Levitt, Chief Scientific Officer. Before we begin, we will read from RedHill’s Safe Harbor statement. Please go ahead.

Thank you, Sharon. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of RedHill, including statements with respect to the business financial results, promotion and other efforts related to RedHill’s commercialization activities and the initiation planning, progress and results of RedHill’s research, manufacturing, preclinical studies, clinical trials, marketing applications and approvals, if any, including the clinical trials of opaganib and RHB-107 for the treatment of COVID-19 and RHB-204 for NTM disease. These statements are only predictions and RedHill cannot guarantee that they will, in fact, occur. RedHill does not assume any obligation to update that information. Actual events, performance, timing, results or commercialization activities may differ materially from what RedHill projects today. Additional information concerning factors that could cause actual events, performance, timing, results or commercialization activities to materially differ from those contained in the forward-looking statements can be found in the company’s annual report on Form 20-F filed with the SEC on March 17th, 2022, and in its other filings with the Securities and Exchange Commission. I will now turn the call to Dror Ben-Asher, RedHill’s CEO.

Thank you, Alexandra. Good day, everyone and thank you for joining our fourth quarter and full year 2021 earnings call, during which we’ll be presenting R&D commercial and financial highlights. First and foremost, we’d like to thank the entire RedHill team for their remarkable achievements in the last year. Against the pandemic backdrop, the RedHill team delivered record revenue and first positive commercial operations contribution in the fourth quarter of 2021. A strong fourth quarter for both Talicia and Movantik coupled with disciplined cost efficiency measures and intensive out-licensing and in-licensing activities, set us up for rapid organic and non-organic growth in 2022 and beyond. Rob Jackson, who is heading our Marketing & Sales will further elaborate shortly. Turning to R&D. RedHill remains at the forefront of the global search for much needed novel oral COVID-19 therapies, particularly so given the frequent emergence of new variants such as Omicron and most recently, BA.2. Our highly capable R&D team has delivered exciting efficacy data with both opaganib and RHB-107, our variant-agnostic investigational oral novel candidates for the treatment of hospitalized and non-hospitalized COVID-19 patients. At the same time, our ongoing Phase 3 study with RHB-204 is the most advanced first-line standalone potential treatment for NTM infection is being accelerated. Gilead Raday, our Chief Operating Officer will elaborate about our R&D programs shortly. I will now be turning to our Chief Business Officer, Guy Goldberg and the team for our presentation to be followed by a Q&A session.

Thank you, Dror. We’ve started off the year strongly and are poised for successful 2022 with our seasoned commercial team leading the way. We’re expecting commercial operational profitability in 2022. This would mark a major milestone for the company. We will achieve this important milestone by growing revenues through our strengthened salesforce, being cost efficient and maintaining disciplined cost-control measures. We look back on 2021 with a lot of pride in what we accomplished. Our commercial operations had a net positive contribution in Q4 for the first time, recording annual revenues of $85.8 million and quarterly revenues of $22.1 million. This success was driven by our two main revenue-generating products. First, Talicia for H. pylori infection. Talicia became the most prescribed branded H. pylori therapy in December. And we are already seeing a promising growth trajectory this year. Talicia has enormous potential for patients and is a key value driver for RedHill as a company. As with almost all launches, we continue to advise that it takes time to build awareness and acceptance, both with payers and also with physicians. Second, Movantik for opioid-induced constipation. Movantik prescriptions are up, as we saw quarter-over-quarter growth. We continue to maintain a market leadership position, and the PAMORA class of drugs as a whole has continued to rebound. Movantik is well liked by physicians, has great reimbursement, efficacy and safety, along with strong brand recognition. There’s still a very large and underserved OIC patient population. RedHill continues to improve Movantik’s status as best unrestricted coverage in the PAMORA class. Our cash position as of the end of 2021 was $54.2 million. We also have had successful transactions and expect to see continued success on this front in 2022. There are two recent transactions to note here. First, with Kukbo, a South Korean company we announced a two-part transaction that includes a strategic investment of up to $10 million by Kukbo in RedHill. The second part is the licensing agreement for opaganib for COVID-19 in South Korea, with upfront and milestone payments up to $7.1 million plus royalties. The second transaction we announced was a licensing agreement for Talicia with Gaelan Medical in the United Arab Emirates. The agreement included a $2 million upfront payment to RedHill and milestone payments alongside tiered royalties up to mid-teens on net sales. We are actively discussing potential future licensing deals for our therapeutic products, as we’re seeing an increase in interest in our pipeline. We also see interest in our commercial products and have ongoing discussions to add new commercial products that would synergize with the products we currently promote. This would enable us to leverage the great commercial operation we have built and benefit from economies of scale. One point I want to emphasize is that, despite some of the infection rate declines seen in the US and elsewhere recently, COVID continues to be an important field of drug development for two reasons. First, it is an ongoing public health threat with a huge unmet medical need. Also, it has shown to be a very large, relatively undeveloped market opportunity. On the first point, we should remember this pandemic is not over. It is one of the biggest public health crises the world has faced in the last 100 years, and it is still present, with the threat of numerous mutations that can overcome and overwhelm existing vaccine and natural immunity. There have been over 11 million newly reported COVID-19 cases globally in just the last seven days, predominantly from Asia and Europe, and there have been over half a million deaths globally since Omicron was detected according to the World Health Organization. Public health officials have made it clear that a simple, scalable, effective and safe therapeutic is desperately needed. On the second part, the COVID therapeutic market continues to prove that it is very large. Pfizer stated in its earnings announcement last month that it expects Paxlovid sales to be worth over $22 billion for 2022. Just last month, Eli Lilly announced a supply agreement with the US government for its COVID-19 antibody for $720 million. We are firm believers in our COVID program and we think their unique mechanism of action puts us at the forefront of development in this field. To remind our audiences of our two novel oral COVID-19 programs, for opaganib, our first-in-class orally-administered SK2 inhibitor, addressing moderately severe inpatient hospitalization, with its method of action targeting the host cell rather than directly working on the virus. We believe we can achieve a wider net of efficacy against emerging variants. The second is RHB-107, an orally-administered inhibitor of the S1 family of trypsin-like serine proteases being developed as a treatment for non-hospitalized COVID-19 patients. Importantly, RHB-107 is also a once-daily oral pill and it also functions host-mediated, meaning it should also potentially work against various mutations. Our recent data has shown a 100% reduction in COVID-19 related hospitalization and an 88% reduction in reported new severe COVID-19 symptoms after treatment initiation. As mentioned previously, we’re seeing growing interest from potential partners for our R&D products, especially opaganib, RHB-107 and RHB-204. This slide shows our full commercial and R&D pipeline, providing a brief overview of RedHill for those new to our story who may be on today's call. At the top of the slide, we have the three FDA approved products we promote, Movantik for opioid-induced constipation, Talicia for H. pylori infection, and Aemcolo for travelers’ diarrhea caused by non-invasive strains of E. coli. Our commercial products are a mix of those we have developed in-house such as Talicia and those brought in externally like Movantik, which we obtained from AstraZeneca, and Aemcolo from Cosmo. With the pandemic receding in the US for now, we will put renewed energy into our Aemcolo product which we believe is a strong product. The second part of the slide shows our multiple late-stage programs addressing important unmet medical needs. We have generated substantial data with many different drug candidates across various therapeutic areas, beyond what we’ve discussed today during this call, including RHB-104 for Crohn’s, BEKINDA for gastroenteritis and IBS-D, and RHB-106 for bowel prep. I will now turn it over to Gilead for a discussion of R&D.

Thank you, Guy. In the following slides, I will provide a brief update on some of our leading R&D programs. Opaganib is our oral pill which is a first-in-class proprietary selective sphingosine kinase 2 inhibitor. By inhibiting this host enzyme, opaganib exerts a dual action against COVID-19, inhibiting viral replication on the one hand and reducing the body’s excess immune response to the infection on the other hand. Given its unique mechanism of action, opaganib is currently positioned to target advanced COVID-19 infection in hospitalized patients with moderate to severe COVID-19 pneumonia. Following the promising data from the global Phase 2/3 study in hospitalized patients, we are in ongoing regulatory discussions about the path forward in multiple territories worldwide. Opaganib's development is also continuing in oncology indications with cholangiocarcinoma Phase 2 top line data expected in Q2 2022. RHB-107 is our second advancing COVID-19 oral pill candidate, positioned to treat early-stage mild to moderate COVID-19 infection through targeting serine proteases, which are host enzymes involved in viral replication. We recently announced positive and promising results from Part A of a Phase 2/3 study in non-hospitalized symptomatic COVID-19 patients that show promising potential capacity to prevent deterioration with excellent safety and tolerability. Together, opaganib and RHB-107 cover the broad spectrum of COVID-19 patients, from early-stage mild patients to advanced severely ill hospitalized patients. Both products are oral pills and are not affected by viral mutations of the spike protein. They are both highly promising products for tackling emerging variants of concern. The importance of our products’ capacity to address new variants of concern via our mechanism of action, independent of the spike protein is highlighted by a recent publication in Nature which claims that the lower severity of Omicron is a coincidence, and that ongoing rapid antigenic evolution is likely to produce new variants that may evade immunity and could be more severe. RedHill is holding two promising products that could serve as important tools in responding to potential future pandemic waves. RHB-204 is the most clinically-advanced standalone oral therapy in development for first-line treatment of pulmonary nontuberculous Mycobacteria. The ongoing Phase 3 study is progressing, and we expect enrollment in the study to increase with the current waning of COVID-19 infections in the US. Overall, we see strong industry interest and potential partnerships in these promising R&D programs. I will highlight further details regarding each program in the next few slides. Opaganib’s clinical data package has been submitted to several regulatory agencies. Initial guidance requiring confirmatory data on potential approval has been received from the EU’s EMA, the US FDA and the UK’s MHRA. Communication with these agencies is ongoing. Various types of regulatory submissions and interactions are also underway in several additional countries worldwide. The type of regulatory submission depends on the relevant and often significantly varying regulations in each country. The global Phase 2/3 study met part of its pre-specified endpoints. The study showed a 70% reduction in mortality for opaganib when given alongside remdesivir and corticosteroids. Less than 7% mortality in the opaganib arm versus over 23% mortality in the placebo control arm, with a p-value of 0.034. Opaganib also provided a 34% benefit in time to recovery by Day 14, with a p-value of 0.013. Further post hoc analyses showed a marked benefit in reducing mortality with a 62% reduction in a significant subpopulation of over half of the study participants, which consisted of moderately severe hospitalized COVID-19 patients. This promising data in advanced hospitalized patients underscores our plans to advance the development of opaganib for treating the appropriate patient population. The data gathered from both the US Phase 2 study and the global Phase 2/3 study indicate that moderately severe patients represent an underserved population with high unmet needs that could significantly benefit from opaganib. This chart illustrates qualitatively who these moderately severe patients are. The horizontal axis shows the WHO Ordinal Disease Severity categories for hospitalized patients, and the vertical axis represents a Qualitative Continuous Severity Spectrum. Using the WHO Ordinal Scale categories, we move from category 3 (hospitalized with no supportive oxygen) to category 4 (hospitalized with low flow oxygen support devices), and category 5 patients (hospitalized and receiving high flow oxygen support) up to category 6 (intubated and mechanically ventilated). There is some overlap in actual disease severity across the different categories. Those patients likely to benefit the most from opaganib are moderately severe patients who require oxygen support due to a deteriorating condition, whether they are connected to low flow or high flow oxygen devices, reaching a certain disease severity at which point the benefit is likely diminished. We have determined that the fraction of inspired oxygen administered to patients is closely related to underlying disease severity. This metric allows us to identify the target population that is most likely to benefit, which is highlighted in the light blue area of the chart. These category four or five patients possess a high unmet medical need, as there is currently no highly effective therapeutic treating them, and they comprise the majority of hospitalized COVID-19 patients. Milder hospitalized patients are also likely to benefit from opaganib due to its antiviral activity. Given opaganib’s potential broad antiviral efficacy, it is continuing to be developed pre-clinically in collaboration with NIH for treating additional viral infections such as Chikungunya virus, RSV, and Ebola. Prior data has suggested opaganib's capacity to inhibit Ebola virus and Chikungunya virus replication. We are also advancing opaganib’s development program in oncology and inflammatory indications, with cholangiocarcinoma Phase 2 study top line analysis expected in Q2 2022. As recently announced, RHB-107 (or upamostat) provided positive top-line results from Part A of the Phase 2/3 study in outpatients in the US. Part A met the primary endpoint of safety and tolerability. Moreover, Part A provided highly promising efficacy results despite its small sample size of 61 subjects. We observed a 100% reduction in COVID-19 related hospitalizations, with zero out of 41 patients treated with RHB-107 versus 15% of patients on the placebo control arm requiring hospitalization. An 88% reduction in reported new severe COVID-19 symptoms after treatment initiation was also noted. Only one patient on RHB-107 out of 41 (equating to 2.4%) reported new severe COVID-19 symptoms compared to 20% of patients in the placebo control arms. Importantly, for early-stage COVID-19 infected patients, RHB-107 presents a highly favorable profile. It is taken orally once a day and acts as a standalone treatment with excellent safety and tolerability, with no major drug-drug interactions limiting its potential use. Given the promising outcomes, we are now analyzing the data and preparing to submit to regulatory agencies in order to proceed to Phase 3 study. RHB-204 is currently the only first-line standalone oral treatment in late-stage clinical development for pulmonary NTM disease caused by the Mycobacterium avium complex. The ongoing Phase 3 study is randomized, placebo-controlled, and has a six-month co-primary endpoint of sputum culture conversion, abbreviated SCC, alongside clinical benefit using patient-reported outcomes. After the initial six months, study subjects crossover to active treatment with RHB-204 for an additional 12 months from the conversion in accordance with clinical practice. It is notable that RHB-204 has been granted Orphan Drug designation and QIDP status, providing for expedited development, priority review of the NDA, and 12 years of market exclusivity upon approval. I will now turn it over to Rob Jackson for an update on our commercial program.

Thank you, Gilead and good morning. Over the next few minutes, I’m going to summarize the progress we made during the fourth quarter with our sales, marketing, and market access activities so that you can better understand why we feel increasingly confident about where our business is heading in 2022. Before I begin, I’d like to recognize the efforts of our RedHill colleagues, especially the Field Sales Team, as we all strive to deliver consistent profitable growth. Thank you to everyone at RedHill for all of your contributions. During the fourth quarter, RedHill achieved record quarterly prescription volume for both Talicia and Movantik. RedHill grew Talicia prescription volume by 25.5% over the third quarter, reflecting a 10-point improvement in quarter-on-quarter growth. Additionally, Talicia prescription volume has now surpassed our expectations, establishing Talicia as the most prescribed branded H. pylori therapy in the United States. This is strong evidence that payers and prescribers increasingly recognize Talicia’s ability to overcome the combined challenges of clarithromycin resistance, H. pylori regimen tolerability, and diminishing efficacy, issues that patients and prescribers face daily while consuming valuable healthcare resources. Simultaneously, RedHill grew Movantik prescription volume by 2.4% over the third quarter, with the fourth quarter results representing our best quarterly performance with Movantik since we acquired commercial rights from AstraZeneca in the first quarter of 2020. We continue to maintain overwhelming market share for Movantik and clear market leadership of the PAMORA class. Our two lead brands are well positioned to continue these performance trends into 2022. Additionally, we continue to explore opportunities to expand our portfolio and add synergistic products that complement our current salesforce focus in the Pain and GI segments. During the fourth quarter, Movantik volume increased by 2.4% over the third quarter, marking a 9% improvement over what we achieved in the first quarter of last year. We achieved this growth by focusing on targeted prescribers in the Pain Specialty segment. In tandem, we executed marketing strategies aimed at expanding the PAMORA market. This remains a key objective for Movantik as the established market leader. We invested to raise awareness of opioid-induced constipation (OIC) with patients and prescribers and to educate potential customers on how Movantik can provide relief from OIC symptoms. In the fourth quarter, we achieved significant market access success with key payers, and we anticipate this will yield additional growth for Movantik during 2022. As previously mentioned, RedHill has invested in building the PAMORA market. Observing the 12-month moving annual total of PAMORA prescriptions, a clear trend of market growth has emerged in the past two quarters. This represents a significant change for the PAMORA class and reflects RedHill’s investment in building awareness of OIC and encouraging positive provider-patient conversations. Movantik is the clear market leader and will disproportionately benefit from more patients being treated with PAMORA agents. Moreover, the CDC recently announced draft revisions to their 2016 opioid prescribing guideline. This new guideline is expected to further support opioid use in patients experiencing chronic pain. Notably, one of the reported intents of the revised guideline is to address the misapplication of the 2016 guideline. The draft is currently open for public comment, and the CDC expects to publish their final guidance by the end of this year. Although it remains uncertain, the new guideline may relax certain aspects of the 2016 guideline, resulting in a potential increase in responsible opioid prescribing and a subsequent rise in demand for PAMORA agents. To summarize for Movantik, we continue to achieve new milestones with this brand. We recorded close to 115,000 prescriptions in the fourth quarter of 2021, our best quarterly performance since acquiring rights to the product. Movantik continues to hold its competitive advantage, boasting best-in-class payer coverage, with close to 90% of insurance plans providing access for Movantik today. Since launch, more than 3 million Movantik prescriptions have been dispensed. Concurrently, Talicia continues to hit new milestones, achieving its best-ever performance in terms of prescription volume and market share in the fourth quarter. RedHill has made further improvements in customer access, which in turn has enabled greater trial and usage of Talicia. With strong field execution, we believe these trends will continue and accelerate in 2022. In the fourth quarter, Talicia achieved 25.5% prescription growth, and we are optimistic this growth will continue this year as recent payer wins take effect and new payer wins materialize, coupled with stronger field execution. Antimicrobial stewardship is an increasingly important issue; when the most effective antibiotics are used as first-line agents, they offer the best chance for cure, minimizing the need for second, third, and even fourth lines of treatment. This growing recognition is driving Talicia's record performance for weekly, monthly, and quarterly volume. With regards to payer access, our Market Access team has continued to improve our competitive position with commercial payers. As effective January 1st of this year, Talicia has now become preferred with no restrictions for 14 million Medi-Cal beneficiaries. We believe this will expedite Talicia's uptake in the second largest state for H. pylori infections and treatments. This marks a further indication that healthcare experts recognize both the challenges of clarithromycin resistance and the pitfalls of persisting with clarithromycin-based therapy as a first-line treatment choice. In conclusion, we finished the fourth quarter with a consistent trend of delivering growth for both Talicia and Movantik. As market leader in the PAMORA class, we showcase our capability to continue growing new Movantik prescriptions, increase prescription volume in the PAMORA class, and further enhance Movantik's already strong payer coverage. We achieved 25.5% quarter-on-quarter growth in Talicia prescription volume, becoming the leading branded H. pylori agent in the US market. Talicia has also achieved a preferred unrestricted position on the Medi-Cal Rx formulary, covering 14 million beneficiaries. We look forward to further growing our business throughout 2022. Thank you, and I will turn the call back to our CFO, Micha Ben Chorin.

Thank you, Rob. Good morning, good afternoon everybody. RedHill is executing on a consistent growth and value creation strategy, which facilitates achieving positive contributions from our commercial operations segment for the first time in Q4, and which is expected to continue growing in 2022 and reach profitability. We achieved another quarterly and annual record of net revenues, accompanied by a reduction in cash burn, resulting in a cash balance of $54.2 million as of December 31st, 2021. All of this occurred against pandemic headwinds. Net revenues were $22.1 million for the fourth quarter of 2021, marking the third consecutive quarter of record net revenues, attributable to an increase in revenues from both Talicia (132% growth over the previous year) and Movantik. We generated a record annual revenue of $85.8 million for 2021. The record revenues contributed to an annual record of non-GAAP gross margin at 53%, coupled with disciplined cost control measures across the business, which we remain committed to continuing in 2022. This has resulted in a $6.4 million reduction in operating expenses in Q4, following a previous reduction of $5.9 million from Q2 to Q3, signaling a path toward profitability in our commercial operations this year. We signed a strategic investment agreement of up to $10 million with our South Korean partner, Kukbo, which complements the recently announced $1.5 million upfront opaganib license fee and the $2 million upfront Talicia license fee from our partner in the Emirates, GAG. Importantly, we are engaged in intensive discussions for additional licensing and other business transactions that could total in the tens of millions of dollars, which, along with our anticipated organic and non-organic growth expected in 2022, sets the stage for our financial independence in the near future. I will turn our discussion back to Dror for questions.

Happy to take questions. Thank you.

Thank you. Your first question today comes from the line of Brandon Folkes from Cantor Fitzgerald. Please go ahead. Your line is open.

Hi, thanks for taking my question. Congratulations on all the progress. Firstly, on opaganib, can you help us characterize the size of the South Korea opportunity currently? And whether yourself or your partner is going to be required to run additional trials there? Should we expect potentially more partnerships on opaganib before running any additional trials? Thank you.

Thank you, Brandon. I’ll answer the last question first and then refer to Gilead. We are looking at commercial assets. FDA approved our focus to the US, we have 120 customer-facing salespeople, and we can handle additional products and capitalize on economies of scale. So the short answer is, we are looking at commercial assets that are synergistic to our existing products and are well-positioned to complete such transactions in upcoming months. We have several ongoing discussions and are cautiously optimistic.

Thank you, Dror. Regarding opaganib and future regulatory approaches, we are working in multiple territories worldwide. As you mentioned, in Korea, there is a partner involved, and we are working collaboratively to advance regulatory approaches there. Each territory has different regulations and requirements, and we are adjusting our approach to move forward as effectively as possible.

Regarding the market in South Korea, we have received a market analysis from our partners. Unfortunately, we are not authorized to share specifics, but it’s public information that in March alone, approximately 4 million new infections occurred in South Korea. this indicates a significant market potential. Our partner has analyzed that they will closely work with regulatory consultants. We are supporting this process, although we do not have access to their regulatory analysis, our partner Kukbo remains optimistic. I hope this information helps.

That is very helpful. Thank you very much and congratulations on all the progress.

Thank you. Your next question comes from the line of David Hoang from SMBC. Please go ahead. Your line is open.

Hi, thanks so much for taking the questions. I had mostly a few on the commercial portfolio. For Talicia, I’m curious about the revenue growth. Is there any change to gross to net for the product? Do you expect this relationship to persist into 2022?

Thank you, David. I’ll refer this to Micha, our CFO.

Thank you, David. Talicia's growth is accelerating, which we are pleased with. We are continually penetrating new prescribers, and we believe we will continue to see further growth in the future.

Great. Maybe a follow-up on the cadence of Talicia growth? Do you expect a continued linear trend or a more noticeable inflection as we enter the second year of Talicia sales?

It’s a good question. A lot depends on the pandemic, as its impact on prescriptions in GI has been negative for the past two years. We see rapid improvement in access to clinics for both patients and our field sales team. We anticipate constant and rapid improvements moving forward. Our Chief Commercial Officer, Rick Scruggs, would like to add some insights.

Thanks, Dror. This is a good question. We have seen the pandemic hinder our interactions with healthcare providers, and we’ve addressed these challenges by initiating a new department, the Customer Engagement Specialists. They connect with physicians who prefer video consultations over in-person visits. This team is actively promoting Talicia as the best choice for H. pylori treatment. We’re witnessing growth and are optimistic about a productive year in 2022 and beyond.

Thanks for the insights. One final question regarding the NTM RHB-204 study. Is the six-month sputum culture conversion sufficient for full approval, or will you need to conduct a confirmatory study later on?

We’d like to add a couple of sentences about the previous question. Then I’ll address the query regarding RHB-204 for NTM. Micha, please go ahead.

Hi, David this is Micha again. We observed a growth of 17% in Talicia revenues between Q4 and Q3 of this year, which is substantial.

Thank you. Regarding NTM and the study, yes, you’re correct. We anticipate that the six-month primary endpoint will look at sputum culture conversion alongside patient-reported outcomes to potentially support accelerated approval. We will evaluate longer-term treatment of up to 12 months post-conversion to support the full dossier.

Thanks for addressing my questions.

Thank you. Your next question comes from the line of Boobalan Pachaiyappan from H.C. Wainwright. Please go ahead. Your line is open.

Hi, this is Boobalan. Thanks for taking my questions and congrats on the progress. A few questions for us—firstly, with respect to opaganib for COVID-19, have you conducted any European-based market research regarding potential positioning?

Thank you. We view COVID-19 as a global evolving pandemic. We’re conducting market research across various territories. Our Phase 2/3 study was global, and we are approaching markets and regulators on a worldwide basis. We expect demand for new COVID-19 therapies to remain high, as well as growing revenues from products that have received emergency use or approval.

To add to that, if we observe the data from the last two weeks, we’re seeing very high numbers and an increasing trend in countries like Germany, France, and the UK. Unfortunately, this situation is not going away, and with BA.2 and future variants, this will likely remain a significant medical need.

Thanks for the color. Regarding RHB-107, what are your preliminary thoughts on the Phase 3 study design? Will you include an active comparator drug?

Yes, we are currently analyzing Part A data and planning next steps, as mentioned. We’ll approach the FDA regarding the full data set and agree with them on the next steps. We aim to conduct a larger study for non-hospitalized patients with mild-to-moderate symptoms, aiming to replicate the very promising results. Given the favorable profile of upamostat, we believe it could be a significant tool for treating mild-to-moderate COVID-19 patients.

Are you considering potential partnerships for the Phase 3 trial, or do you plan to proceed independently?

Yes, we are in discussions. The strong results from our study have attracted significant interest, not only from potential pharmaceutical partners but also from government and grant sources. We are confident that funding for a large Phase 3 trial will come from external sources.

Could you frame the expectations for your upcoming cholangiocarcinoma study readout expected in Q2? What efficacy signals would boost investor confidence in this program?

Thank you. We have already disclosed that we observed a signal of activity with patients, who are very advanced, after two lines of failing therapies in cholangiocarcinoma, with no available options. This is a promising signal of activity. We will finalize our analysis in the coming months and present the data. Based on that, we will consider refining the patient population targets using biomarkers.

How do you expect the R&D costs to evolve during 2022?

As noted in our press release, we're targeting a cost reduction program to enhance contributions and profitability to the maximum extent possible. We expect relatively low investment in research and development during 2022.

Thanks so much for the questions.

Thank you. I will now hand the call back to you.

Thank you, Sharon and thanks everybody for joining the call. Please reach out to us if you have any additional questions. Keep safe and have a pleasant day.

Thank you. That does conclude today’s conference call. Thank you for participating. You may all disconnect.