RedHill Biopharma Ltd 6-K, filed Nov 29, 2022
RedHill Biopharma Ltd. (RDHL)
6-K
2022-11-29
For: 2022-11-29
View Original
Added on
April 07, 2026
About this 6-K
RedHill Biopharma Ltd filed this 6-K on November 29, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November 2022
Commission File No.:001-35773
REDHILL BIOPHARMA LTD.
(Translation of registrant’s name into English)
21 Ha'arba'a Street, Tel Aviv, 6473921, Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Attached hereto and incorporated by reference herein are the following:
Exhibit 99.1 (solely with respect to “Financial results for the three months ended September 30, 2022 (unaudited)”, Q3/22 Business Updates”, “Q3/22 Commercial Highlights”, “Q3/22 R&D
Highlights”, "Condensed Consolidated Interim Statements of Comprehensive Loss", "Condensed Consolidated Interim Statements of Financial Position" and "Q3/22 Condensed Consolidated Interim Statements of Cash Flows" and not including publications
referred to in such exhibit) and Exhibit 99.2 to this Report on Form 6-K are hereby incorporated by reference into the Registrants Registration Statements on Form S-8 filed with the Securities and Exchange Commission on May 2, 2013 (Registration
No. 333-188286), on October 29, 2015 (Registration No. 333-207654), on July 25, 2017 (Registration No. 333-219441), on May 23, 2018 (Registration No. 333-225122), on July 24, 2019 (File No. 333-232776), on March 25, 2021 (File No. 333-254692), on
May 3, 2021 (File No. 333-255710), on January 11, 2022 (File No. 333-262099) and on June 27, 2022 (File No. 333-265845), and its Registration Statements on Form F-3 filed with the Securities and Exchange Commission on March 30, 2021 (File No.
333-254848) and on July 29, 2021 (File No. 333-258259).
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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REDHILL BIOPHARMA LTD.
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(the "Registrant")
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Date: November 29, 2022
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By:
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/s/ Dror Ben-Asher
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Dror Ben-Asher
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Chief Executive Officer
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2
Exhibit 99.2
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Press Release
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RedHill Biopharma Announces Q3/22 Results and
Operational Highlights
Non-binding agreement in principle reached with HCR on sale of Movantik to extinguish all debt
obligations, to facilitate growth
--
Q3/22 Net revenues of $17.6 million; Operating loss of $7.1 million; Q3/22 positive cash flow
from U.S. commercial operations, before interest payments1; Cash balance2 of $31.4 million as
of September 30, 2022
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Talicia® and Movantik® have delivered year-to-date prescription growth of 65% and 6.7%,
respectively; Q4/22 data to date indicate continued growth for both products
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Discussions underway regarding opaganib for nuclear radiation injury with various government
agencies with expedited Animal Rule pathway expected, and potential eligibility for a medical
countermeasures Priority Review Voucher; Development activities ongoing with opaganib for
COVID-19 and other viral diseases for government pandemic preparedness purposes
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Advanced discussions ongoing regarding inclusion of once-daily oral RHB-107 in a U.S.
platform trial for COVID-19 outpatients
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RHB-204 granted EU orphan drug designation providing 10 years of post-approval EU market exclusivity
TEL AVIV, Israel and RALEIGH, NC, November 29, 2022, RedHill Biopharma Ltd. (Nasdaq: RDHL) (“RedHill” or the “Company”), a specialty
biopharmaceutical company, today reported its third quarter 2022 financial results and operational highlights.
Dror Ben-Asher, RedHill’s Chief Executive Officer, said: “The agreement in principle to sell Movantik to HCR in return for termination of all HCR debt
obligations, subject to closing, is a significant turnaround opportunity for the Company, freeing us up to expedite both organic and inorganic growth. RedHill’s U.S. commercial operations achieved positive cash flow in Q3/22, before interest
payments, thanks to ongoing implementation of our cost-reduction plan. Talicia and Movantik have delivered year-to-date growth of 65% and 6.7%, respectively, and Q4/22 data to date indicate continued growth for both products. Turning to R&D, we
continue to press forward with our two novel, broad-acting, host-directed late clinical-stage antiviral drug candidates, opaganib and RHB-107, in line with our stated goal to advance our late clinical-stage R&D programs primarily through
external non-dilutive financing. We are advancing discussions for RHB-107’s inclusion in a U.S. COVID-19 outpatients platform trial. Opaganib continues to advance as well, with collaborations ongoing and under discussion for COVID-19 and other
viral diseases for government pandemic preparedness purposes. Additionally, multiple discussions and activities are advancing to expedite opaganib’s development as a potential homeland security nuclear medical countermeasure (MCM) via the Animal
Rule, subject to further guidance from FDA, which may provide for an MCM Priority Review Voucher eligibility. We are also holding multiple partnership discussions in relation to our products and potential acquisitions of additional
revenue-generating products.”
1 Net cash used in operating activities for the three months ended September 30, 2022, was $6 million, of which cash flow from operating activities from the U.S. operations in Q3/22 was positive, before
interest payments.
2 Including cash, cash equivalents, short-term bank deposits and restricted cash.
Financial results for the three months ended September 30, 2022 (Unaudited)3
Net Revenues for the third quarter of 2022 were $17.6 million, as compared to $18.3 million in the second quarter of 2022, the difference
being attributable to an increase in units sold, accompanied by increased gross-to-net allowances as the percentage of Medicare part D and Medicaid prescriptions increased.
Cost of Revenues for the third quarter of 2022 was $9.5 million, as compared to $9 million for the second quarter of 2022.
Gross Profit for the third quarter of 2022 was $8.1 million, as compared to $9.4 million for the second quarter of 2022. The decrease was
primarily attributable to a $0.7 million inventory write-off, recognized in the third quarter of 2022.
Research and Development Expenses for the third quarter of 2022 were $1.6 million, as compared to $1.5 million for the second quarter of
2022.
Selling, Marketing and General and Administrative Expenses for the third quarter of 2022 were
$13.6 million, as compared to $17 million for the second quarter of 2022. The decrease was mainly attributed to the successful and ongoing cost-reduction program.
Operating Loss for the third quarter of 2022 was $7.1 million, as compared to $9.2 million for the second quarter of 2022, as described
above.
3 All financial highlights are approximate and are rounded to the nearest hundreds of thousands. The comparisons in this section reflect the restated condensed consolidated interim financial statements as
of and for the three and nine months ended September 30, 2022, described below.
2
Financial Expenses, net, as of September 30, 2022 were $28.6 million, as compared to $4.0 million as of September 30, 2021 due to the previously disclosed
notice of event of default sent by HCR in September as a result of which the Company classified the borrowing under the credit agreement with HCR as a current liability and adjusted its carrying amount to reflect all amounts owing or payable under
the credit agreement as being immediately due. As noted below, the Company has reached a non-binding agreement in principle with HCR with respect to the terms of a transfer of RedHill's rights in Movantik to HCR in exchange for the extinguishment
of all RedHill's obligations under the credit agreement.4
Net Cash Used in Operating Activities for the third quarter of 2022 was $6 million, as compared to $16.6 million for the second quarter
of 2022. The decrease was attributed to ongoing cost-reduction program accompanied by changes in working capital and positive cash flow from U.S. commercial operations.
Net Cash Used in Financing Activities for the third quarter of 2022 was $5.7 million comprised primarily of payables with respect to the
Movantik acquisition.
Cash Balance2 as of September 30, 2022, was $31.4 million, as compared to $43.2 million as of June 30, 2022, and $45 million
as of March 31, 2022.
Q3/22 Business updates
On November 14, 2022, the Company announced that it has reached a non-binding agreement in principle with HCR with respect to the terms of a transfer of RedHill's rights in Movantik to HCR in
exchange for the extinguishment of all RedHill's obligations (including all principal, interest, revenue interest, prepayment premiums and exit fees) under the Credit Agreement between RedHill's U.S. subsidiary RedHill Biopharma Inc. and HCR dated
as of February 23, 2020 (as amended). RedHill would retain substantially all pre-closing assets and liabilities relating to Movantik and HCR would assume substantially all post-closing assets and liabilities. It is expected that RedHill would
provide cash-generating transition services to HCR to ensure a seamless process and uninterrupted patient care. Subject to certain approvals, the definitive agreements are expected to be signed and the transaction is expected to close by year-end,
but there can be no assurance that the parties will enter into definitive agreements or that the transaction will be completed.
On September 2, 2022, the Company filed a lawsuit against Kukbo Co. Ltd. (“Kukbo”) in the Supreme Court of the State of New York, County of New York, Commercial Division, as a result of Kukbo’s
default in delivering to the Company $5.0 million under the Subscription Agreement, dated October 25, 2021, in exchange for ADSs, and a further payment of $1.5 million due under the Exclusive License Agreement, dated March 14, 2022. On November 24,
2022, the Company received a letter from Kukbo asserting that Kukbo intends to defend its case and bring a counterclaim against the Company. The Company believes in the merits of its lawsuit against Kukbo and will continue to pursue a favorable
judgment. The Company notes that Kukbo did not file a response in the U.S. court within the required timeframe.
Discussions regarding out-licensing of RedHill’s products in multiple territories and in-licensing of new revenue-generating products are advancing.
4 Movantik pre-closing liabilities are estimated to exceed Movantik pre-closing accounts receivable and the $16 million in restricted cash by approximately $18 million, which amount is subject to change
based on various factors, including timing of the potential closing of the transaction with HCR.
3
Q3/22 Commercial Highlights
Movantik® (naloxegol)5
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Movantik delivered a 4.9% growth in new prescriptions in Q3/22, compared to Q3/21, representing the second highest quarterly prescribing volume for Movantik since RedHill acquired the product rights. Indications from data to date
suggest further growth in Q4/22.
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Movantik continues to hold a firm grip on its PAMORA class leadership position, with more than 70% market share. As market leader, Movantik is anticipated to benefit further from positive PAMORA class growth trends – up 7.0%
year-over-year and up 7.6% for the three months ending September 30, 2022, as compared to the same period in the previous year.
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Two new Movantik analyses, from pooled data from two Phase 3 studies, were presented at PAINWeek in September, demonstrating that Movantik (naloxegol) provides healthcare-related quality of life (HR-QOL) and clinically meaningful
symptom improvements, compared to placebo, in patients with opioid-induced constipation (OIC).
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Movantik retains best-in-class coverage with Preferred Status in two of the three largest Commercial PBMs and 86% Preferred Status within Medicare Part D6.
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New updated Centers for Disease Control and Prevention (CDC) guidelines, issued in November 2022, provided for increased flexibility in opioid prescribing.
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Talicia® (omeprazole magnesium, amoxicillin and rifabutin)7
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A 56.6% increase in Talicia prescriptions in Q3/22, compared to Q3/21, builds on the record quarterly prescription levels seen in Q1/22 and Q2/22 and represents 64.8% year-to-date growth in Talicia prescriptions. Indications from data to
date suggest further growth in Q4/22.
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Talicia is the most prescribed branded agent by gastroenterologists and is on track to become the most prescribed branded H. pylori therapy in 2023.
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New Talicia data analyses were presented at Obesity Week (November 2022) and the World Gastro 2022 congress (August 2022) supporting the efficacy and safety of Talicia as empiric first-line treatment for H. pylori infection in patients regardless of obesity, body mass index (BMI) or diabetic status and demonstrating that:
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Talicia’s efficacy in the pooled data from two Phase 3 studies was unaffected by presence of diabetes, obesity or elevated BMI.
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Intragastric rifabutin exposure was unaffected by patient BMI, and that Talicia provides clinically relevant and favorable intragastric rifabutin concentrations compared to generically available rifabutin.
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The safety profile of Talicia in these patients was generally similar to the overall population and no cases of hypoglycemia were reported. This is clinically relevant as clarithromycin has a risk of drug interactions with commonly
used diabetes medications such as insulin and metformin, as well as potential for increased risk of hypoglycemia.
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A commercial PBM win improved coverage to “preferred” for up to 58.0 million lives starting July 1, 2022. As of September 2022, total Talicia coverage stood at almost 200 million American lives.
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Aemcolo® (rifamycin)8
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The first post-pandemic prescriptions for Aemcolo are beginning to be seen and the Company is planning additional commercialization initiatives focused on driving growth in the primary care segment.
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5 Movantik® (naloxegol) is indicated for opioid-induced constipation (OIC). Full prescribing information see: www.movantik.com.
6 Managed Markets Insight & Technology, LLC, June 2022.
7 Talicia® (omeprazole magnesium, amoxicillin and rifabutin) is indicated for the treatment of H. pylori infection in adults. For
full prescribing information see: www.Talicia.com.
4
Q3/22 R&D Highlights
Opaganib (ABC294640)9 - A novel broad-acting, host-directed oral antiviral targeting
COVID-19, other viruses as part of a pandemic preparedness approach, inflammatory indications, oncology and radioprotection. Updates include:
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On November 14, 2022, the Company announced acceleration of opaganib’s nuclear radiation protection development program, with newly published data from eight U.S. government-funded in vivo
studies, and additional experiments, indicating that opaganib was associated with:
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Protection of normal tissue, including gastrointestinal, from radiation damage due to ionizing radiation exposure or cancer radiotherapy.
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Improvement of antitumor activity, response to chemoradiation, and enhancement of tolerability and survival.
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Radioprotective capacity in bone marrow, with opaganib showing enhanced survival in mice irradiated with both lethal and half-lethal whole-body radiation.
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Additional positive in vivo results from a new pre-clinical study evaluating the effects of opaganib on radiation-induced hematologic and renal toxicity, announced November 17, 2022, indicate
that opaganib exerts a protective impact on key hematological and kidney function parameters following total body irradiation (TBI).
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Development of opaganib as a homeland security nuclear medical countermeasure is expected to follow the Animal Rule under which human efficacy studies may not be required, and if approved, may be eligible for a medical countermeasure
Priority Review Voucher. Discussions regarding further support and pathway to potential approval have been initiated with U.S. and other governments.
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Other opaganib updates include:
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Demonstrated preliminary evidence of in vitro inhibition of Omicron BA.5 sub-variant (October 2022).
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Opaganib granted a new United States Patent and Trademark Office (USPTO) patent for the treatment of COVID-19 (October 2022).
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New in vivo data demonstrating opaganib’s potential to protect against renal damage in acute kidney injury (AKI) published in the International Journal of Nephrology and Renovascular Disease (November
2022).
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Opaganib’s suggested host-directed mechanism of action published in the journal Drug Design, Development and Therapy (July 2022).
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RHB-107 (upamostat)10 – A novel broad-acting, host-directed oral antiviral
targeting COVID-19, other viruses as part of a pandemic preparedness approach, inflammatory and oncology indications. Updates include:
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Pursuing RHB-107’s inclusion in a COVID-19 outpatients platform trial, pre-IND submitted.
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Demonstrated preliminary in vitro inhibition of Omicron BA.5 sub-variant in testing conducted by the University of Tennessee in October 2022.
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Both opaganib and RHB-107 are being pursued in development programs against multiple viral targets, including influenza and Ebola (amongst others).
RHB-204 - Pulmonary Nontuberculous Mycobacteria (NTM) Disease11
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In August 2022, the European Commission granted Orphan Drug Designation to RHB-204, which is in an ongoing U.S. Phase 3 study, for the treatment of nontuberculous mycobacteria (NTM) disease, providing 10 years of post-approval EU
market exclusivity.
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8 Aemcolo® (rifamycin) is indicated for the treatment of travelers’ diarrhea caused by noninvasive strains of Escherichia coli in
adults. For full prescribing information see: www.aemcolo.com.
9 Opaganib is an investigational new drug, not available for commercial distribution.
10 RHB-107 (upamostat) is an investigational new drug, not available for commercial distribution.
11 RHB-204 is an investigational new drug, not available for commercial distribution.
5
About RedHill Biopharma
RedHill Biopharma Ltd. (Nasdaq: RDHL) is a specialty biopharmaceutical company primarily focused on gastrointestinal and infectious diseases.
RedHill promotes the gastrointestinal drugs, Movantik® for opioid-induced constipation in adults5, Talicia® for the treatment of Helicobacter pylori (H. pylori) infection in adults7, and Aemcolo® for the treatment of travelers’ diarrhea in adults8. RedHill’s key clinical late-stage development programs include: (i) RHB-204, with an ongoing Phase 3 study for pulmonary nontuberculous mycobacteria (NTM) disease; (ii) opaganib (ABC294640), a first-in-class oral broad-acting, host-directed, SK2 selective inhibitor targeting multiple indications, including for pandemic preparedness, with a Phase 2/3 program for hospitalized COVID-19 and a Phase 2 program in oncology and a
radiation protection program ongoing; (iii) RHB-107 (upamostat), an oral broad-acting, host-directed serine protease inhibitor with potential for pandemic
preparedness and is in Phase 3-stage development as treatment for non-hospitalized symptomatic COVID-19, and targeting multiple other cancer and inflammatory gastrointestinal diseases; (iv) RHB-104, with
positive results from a first Phase 3 study for Crohn's disease; and (v) RHB-102, with positive results from a Phase 3 study for acute gastroenteritis and gastritis and positive results from a Phase 2 study
for IBS-D. More information about the Company is available at www.redhillbio.com/ twitter.com/RedHillBio.
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be preceded by the
words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words and include statements regarding anticipated continued growth in prescriptions, the
sale of Movantik, the addition of new revenue generating products, non-dilutive development funding from RHB-107 and its inclusion in a key platform study. Forward-looking statements are based on certain assumptions and are subject to various
known and unknown risks and uncertainties, many of which are beyond the Company’s control and cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied by such forward-looking
statements. Such risks and uncertainties include, without limitation, the risk that the growth in prescriptions will not continue, that the sale of Movantik and the addition of new generating products will not occur; that the FDA pre-study
requirements will not be met and/or that the Phase 3 study of RHB-107 in COVID-19 outpatients will not be approved to commence or if approved, will not be completed or, should that be the case, that we will not be successful in obtaining
alternative non-dilutive development funding for RHB-107, that the obligations of the term loan will not be met and that HCR will take steps to accelerate our payment obligations under our credit agreement with HCR, that we will not be successful
in increasing sales of our commercial products, including due to market conditions, that the Phase 2/3 COVID-19 study for RHB-107 may not be successful and, even if successful, such studies and results may not be sufficient for regulatory
applications, including emergency use or marketing applications, and that additional COVID-19 studies for opaganib and RHB-107 are likely to be required, as well as risks and uncertainties associated with the risk that the Company will not
successfully commercialize its products; as well as risks and uncertainties associated with (i) the initiation, timing, progress and results of the Company’s research, manufacturing, pre-clinical studies, clinical trials, and other therapeutic
candidate development efforts, and the timing of the commercial launch of its commercial products and ones it may acquire or develop in the future; (ii) the Company’s ability to advance its therapeutic candidates into clinical trials or to
successfully complete its pre-clinical studies or clinical trials or the development of a commercial companion diagnostic for the detection of MAP; (iii) the extent and number and type of additional studies that the Company may be required to
conduct and the Company’s receipt of regulatory approvals for its therapeutic candidates, and the timing of other regulatory filings, approvals and feedback; (iv) the manufacturing, clinical development, commercialization, and market acceptance
of the Company’s therapeutic candidates and Talicia®; (v) the Company’s ability to successfully commercialize and promote Talicia®, and Aemcolo® and Movantik®; (vi) the Company’s ability to establish
and maintain corporate collaborations; (vii) the Company's ability to acquire products approved for marketing in the U.S. that achieve commercial success and build its own marketing and commercialization capabilities; (viii) the interpretation of
the properties and characteristics of the Company’s therapeutic candidates and the results obtained with its therapeutic candidates in research, pre-clinical studies or clinical trials; (ix) the implementation of the Company’s business model,
strategic plans for its business and therapeutic candidates; (x) the scope of protection the Company is able to establish and maintain for intellectual property rights covering its therapeutic candidates and its ability to operate its business
without infringing the intellectual property rights of others; (xi) parties from whom the Company licenses its intellectual property defaulting in their obligations to the Company; (xii) estimates of the Company’s expenses, future revenues,
capital requirements and needs for additional financing; (xiii) the effect of patients suffering adverse experiences using investigative drugs under the Company's Expanded Access Program; (xiv) competition from other companies and technologies
within the Company’s industry; and (xv) the hiring and employment commencement date of executive managers. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth
in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on March 17, 2022. All forward-looking statements included in this press release are made only as of
the date of this press release. The Company assumes no obligation to update any written or oral forward-looking statement, whether as a result of new information, future events or otherwise unless required by law.
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Company contact:
Adi Frish
Chief Corporate and Business Development Officer
RedHill Biopharma
+972-54-6543-112
adi@redhillbio.com
Category: Financials
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REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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September 30,
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September 30,
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|||||||||||||||
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2022
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2021
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2022
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2021
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U.S. dollars in thousands
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NET REVENUES
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17,552
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21,609
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49,002
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63,686
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COST OF REVENUES
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9,451
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9,229
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24,739
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30,072
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GROSS PROFIT
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8,101
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12,380
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24,263
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33,614
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RESEARCH AND DEVELOPMENT EXPENSES
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1,612
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5,818
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6,146
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23,630
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SELLING AND MARKETING EXPENSES
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7,094
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15,525
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28,927
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44,655
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GENERAL AND ADMINISTRATIVE EXPENSES
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6,503
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8,435
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22,086
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25,765
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OPERATING LOSS
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7,108
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17,398
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32,896
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60,436
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FINANCIAL INCOME
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3,190
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17
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4,862
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39
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FINANCIAL EXPENSES
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31,783
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4,006
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39,906
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12,974
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FINANCIAL EXPENSES, net
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28,593
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3,989
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35,044
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12,935
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LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD
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35,701
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21,387
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67,940
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73,371
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LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars):
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0.06
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0.05
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0.12
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0.16
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WEIGHTED AVERAGE OF ORDINARY SHARE (in thousands):
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638,368
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467,908
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577,536
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454,995
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REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
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September 30,
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December 31,
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|||||||
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2022
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2021
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|||||||
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U.S. dollars in thousands
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CURRENT ASSETS:
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Cash and cash equivalents
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15,204
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29,474
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Bank deposits
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15
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8,530
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Restricted cash
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16,000
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—
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Trade receivables
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36,007
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31,677
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Prepaid expenses and other receivables
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3,290
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4,661
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Inventory
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12,584
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14,810
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83,100
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89,152
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NON-CURRENT ASSETS:
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Restricted cash
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148
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16,169
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Fixed assets
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568
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572
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Right-of-use assets
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6,233
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3,651
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Intangible assets
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67,143
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71,644
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||||||
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74,092
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92,036
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TOTAL ASSETS
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157,192
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181,188
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CURRENT LIABILITIES:
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||||||||
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Account payable
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4,784
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11,664
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Lease liabilities
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966
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1,618
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||||||
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Allowance for deductions from revenue
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41,785
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30,711
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Accrued expenses and other current liabilities
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21,199
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20,896
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Borrowing
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113,859
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—
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||||||
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Payable in respect of intangible assets purchase
|
10,937
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16,581
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||||||
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193,530
|
81,470
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|||||||
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NON-CURRENT LIABILITIES:
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||||||||
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Borrowing
|
—
|
83,620
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||||||
|
Payable in respect of intangible assets purchase
|
—
|
3,899
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||||||
|
Lease liabilities
|
6,008
|
2,574
|
||||||
|
Derivative financial instruments
|
2,931
|
—
|
||||||
|
Royalty obligation
|
750
|
750
|
||||||
|
9,689
|
90,843
|
|||||||
|
TOTAL LIABILITIES
|
203,219
|
172,313
|
||||||
|
EQUITY:
|
||||||||
|
Ordinary shares
|
1,834
|
1,495
|
||||||
|
Additional paid-in capital
|
383,407
|
375,246
|
||||||
|
Accumulated deficit
|
(431,268
|
)
|
(367,866
|
)
|
||||
|
TOTAL EQUITY
|
(46,027
|
)
|
8,875
|
|||||
|
TOTAL LIABILITIES AND EQUITY
|
157,192
|
181,188
|
||||||
8
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
OPERATING ACTIVITIES:
|
||||||||||||||||
|
Comprehensive loss
|
(35,701
|
)
|
(21,387
|
)
|
(67,940
|
)
|
(73,371
|
)
|
||||||||
|
Adjustments in respect of income and expenses not involving cash flow:
|
||||||||||||||||
|
Share-based compensation to employees and service providers
|
1,614
|
2,191
|
4,538
|
8,337
|
||||||||||||
|
Depreciation
|
491
|
507
|
1,645
|
1,465
|
||||||||||||
|
Amortization and impairment of intangible assets
|
1,601
|
1,834
|
4,501
|
5,491
|
||||||||||||
|
Non-cash interest expenses related to borrowing and payable in respect of intangible assets purchase
|
28,761
|
869
|
31,574
|
4,725
|
||||||||||||
|
Fair value (gains) on derivative financial instruments
|
(3,143
|
)
|
—
|
(5,124
|
)
|
—
|
||||||||||
|
Fair value losses on financial assets at fair value through profit or loss
|
—
|
—
|
—
|
6
|
||||||||||||
|
Issuance costs in respect of warrants
|
—
|
—
|
334
|
—
|
||||||||||||
|
Exchange differences and revaluation of bank deposits
|
7
|
17
|
(56
|
)
|
80
|
|||||||||||
|
29,331
|
5,418
|
37,412
|
20,104
|
|||||||||||||
|
Changes in assets and liability items:
|
||||||||||||||||
|
Decrease (increase) in trade receivables
|
(2,252
|
)
|
62
|
(4,330
|
)
|
(1,381
|
)
|
|||||||||
|
Decrease (increase) in prepaid expenses and other receivables
|
(501
|
)
|
(390
|
)
|
1,371
|
839
|
||||||||||
|
Decrease (increase) in inventories
|
(865
|
)
|
(4,352
|
)
|
2,226
|
(6,589
|
)
|
|||||||||
|
Increase (decrease) in accounts payable
|
411
|
1,939
|
(6,880
|
)
|
3,692
|
|||||||||||
|
Increase (decrease) in accrued expenses and other liabilities
|
987
|
(2,575
|
)
|
303
|
(3,495
|
)
|
||||||||||
|
Increase in allowance for deductions from revenue
|
2,562
|
2,260
|
11,074
|
10,013
|
||||||||||||
|
342
|
(3,056
|
)
|
3,764
|
3,079
|
||||||||||||
|
Net cash used in operating activities
|
(6,028
|
)
|
(19,025
|
)
|
(26,764
|
)
|
(50,188
|
)
|
||||||||
|
INVESTING ACTIVITIES:
|
||||||||||||||||
|
Purchase of fixed assets
|
(22
|
)
|
(21
|
)
|
(198
|
)
|
(112
|
)
|
||||||||
|
Change in investment in current bank deposits
|
—
|
(8,500
|
)
|
8,500
|
(12,000
|
)
|
||||||||||
|
Proceeds from sale of financial assets at fair value through profit or loss
|
—
|
—
|
—
|
475
|
||||||||||||
|
Net cash (used in) provided by investing activities
|
(22
|
)
|
(8,521
|
)
|
8,302
|
(11,637
|
)
|
|||||||||
|
FINANCING ACTIVITIES:
|
||||||||||||||||
|
Proceeds from issuance of ordinary shares and warrants, net of issuance costs
|
—
|
499
|
16,221
|
58,713
|
||||||||||||
|
Exercise of options into ordinary shares
|
—
|
665
|
—
|
4,006
|
||||||||||||
|
Repayment of payable in respect of intangible asset purchase
|
(5,100
|
)
|
(1,721
|
)
|
(10,878
|
)
|
(5,600
|
)
|
||||||||
|
Payment of principal with respect to lease liabilities
|
(621
|
)
|
(442
|
)
|
(1,091
|
)
|
(1,229
|
)
|
||||||||
|
Net cash provided by (used in) provided by financing activities
|
(5,721
|
)
|
(999
|
)
|
4,252
|
55,890
|
||||||||||
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(11,771
|
)
|
(28,545
|
)
|
(14,210
|
)
|
(5,936
|
)
|
||||||||
|
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
|
(13
|
)
|
(17
|
)
|
(60
|
)
|
(105
|
)
|
||||||||
|
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
26,988
|
51,816
|
29,474
|
29,295
|
||||||||||||
|
BALANCE OF CASH AND CASH EQUIVALENTS AT THE END OF PERIOD
|
15,204
|
23,254
|
15,204
|
23,254
|
||||||||||||
|
SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH
|
24
|
11
|
35
|
36
|
||||||||||||
|
SUPPLEMENTARY INFORMATION ON INTEREST PAID IN CASH
|
2,942
|
3,250
|
8,225
|
8,266
|
||||||||||||
|
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||||||
|
Acquisition of right-of-use assets by means of lease liabilities
|
—
|
385
|
4,767
|
385
|
||||||||||||
|
Decrease in lease liability (with corresponding decrease in right of use asset
in an amount of $534) resulting from early termination of lease
|
587
|
—
|
587
|
—
|
||||||||||||
9
Exhibit 99.2
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
(UNAUDITED)
September 30, 2022
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
(UNAUDITED)
September 30, 2022
TABLE OF CONTENTS
|
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2022, IN U.S. DOLLARS:
|
Page
|
| 3 |
|
| 4 |
|
| 5 |
|
| 6 |
|
|
7-16
|
2
REDHILL BIOPHARMA LTD.
(Unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
NET REVENUES
|
17,552
|
21,609
|
49,002
|
63,686
|
||||||||||||
|
COST OF REVENUES
|
9,451
|
9,229
|
24,739
|
30,072
|
||||||||||||
|
GROSS PROFIT
|
8,101
|
12,380
|
24,263
|
33,614
|
||||||||||||
|
RESEARCH AND DEVELOPMENT EXPENSES
|
1,612
|
5,818
|
6,146
|
23,630
|
||||||||||||
|
SELLING AND MARKETING EXPENSES
|
7,094
|
15,525
|
28,927
|
44,655
|
||||||||||||
|
GENERAL AND ADMINISTRATIVE EXPENSES
|
6,503
|
8,435
|
22,086
|
25,765
|
||||||||||||
|
OPERATING LOSS
|
7,108
|
17,398
|
32,896
|
60,436
|
||||||||||||
|
FINANCIAL INCOME
|
3,190
|
17
|
4,862
|
39
|
||||||||||||
|
FINANCIAL EXPENSES
|
31,783
|
4,006
|
39,906
|
12,974
|
||||||||||||
|
FINANCIAL EXPENSES, net
|
28,593
|
3,989
|
35,044
|
12,935
|
||||||||||||
|
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD
|
35,701
|
21,387
|
67,940
|
73,371
|
||||||||||||
|
LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars):
|
0.06
|
0.05
|
0.12
|
0.16
|
||||||||||||
|
WEIGHTED AVERAGE OF ORDINARY SHARE (in thousands):
|
638,368
|
467,908
|
577,536
|
454,995
|
||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
REDHILL BIOPHARMA LTD.
(Unaudited)
|
September 30,
|
December 31,
|
|||||||
|
2022
|
2021
|
|||||||
|
U.S. dollars in thousands
|
||||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash and cash equivalents
|
15,204
|
29,474
|
||||||
|
Bank deposits
|
15
|
8,530
|
||||||
|
Restricted cash
|
16,000
|
—
|
||||||
|
Trade receivables
|
36,007
|
31,677
|
||||||
|
Prepaid expenses and other receivables
|
3,290
|
4,661
|
||||||
|
Inventory
|
12,584
|
14,810
|
||||||
|
83,100
|
89,152
|
|||||||
|
NON-CURRENT ASSETS:
|
||||||||
|
Restricted cash
|
148
|
16,169
|
||||||
|
Fixed assets
|
568
|
572
|
||||||
|
Right-of-use assets
|
6,233
|
3,651
|
||||||
|
Intangible assets
|
67,143
|
71,644
|
||||||
|
74,092
|
92,036
|
|||||||
|
TOTAL ASSETS
|
157,192
|
181,188
|
||||||
|
CURRENT LIABILITIES:
|
||||||||
|
Account payable
|
4,784
|
11,664
|
||||||
|
Lease liabilities
|
966
|
1,618
|
||||||
|
Allowance for deductions from revenue
|
41,785
|
30,711
|
||||||
|
Accrued expenses and other current liabilities
|
21,199
|
20,896
|
||||||
|
Borrowing
|
113,859
|
—
|
||||||
|
Payable in respect of intangible assets purchase
|
10,937
|
16,581
|
||||||
|
193,530
|
81,470
|
|||||||
|
NON-CURRENT LIABILITIES:
|
||||||||
|
Borrowing
|
—
|
83,620
|
||||||
|
Payable in respect of intangible assets purchase
|
—
|
3,899
|
||||||
|
Lease liabilities
|
6,008
|
2,574
|
||||||
|
Derivative financial instruments
|
2,931
|
—
|
||||||
|
Royalty obligation
|
750
|
750
|
||||||
|
9,689
|
90,843
|
|||||||
|
TOTAL LIABILITIES
|
203,219
|
172,313
|
||||||
|
EQUITY:
|
||||||||
|
Ordinary shares
|
1,834
|
1,495
|
||||||
|
Additional paid-in capital
|
383,407
|
375,246
|
||||||
|
Accumulated deficit
|
(431,268
|
)
|
(367,866
|
)
|
||||
|
TOTAL EQUITY
|
(46,027
|
)
|
8,875
|
|||||
|
TOTAL LIABILITIES AND EQUITY
|
157,192
|
181,188
|
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
REDHILL BIOPHARMA LTD.
(Unaudited)
|
Ordinary
|
Additional
|
Accumulated
|
Total
|
|||||||||||||
|
shares
|
paid-in capital
|
deficit
|
equity
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
BALANCE AT JULY 1, 2022
|
1,827
|
383,414
|
(397,181
|
)
|
(11,940
|
)
|
||||||||||
|
CHANGES IN THE THREE-MONTHS PERIOD ENDED SEPTEMBER 30, 2022:
|
||||||||||||||||
|
Share-based compensation to employees and service providers
|
—
|
—
|
1,614
|
1,614
|
||||||||||||
|
Issuance of RSUs
|
7
|
(7
|
)
|
—
|
—
|
|||||||||||
|
Comprehensive loss
|
—
|
—
|
(35,701
|
)
|
(35,701
|
)
|
||||||||||
|
BALANCE AT SEPTEMBER 30, 2022
|
1,834
|
383,407
|
(431,268
|
)
|
(46,027
|
)
|
||||||||||
|
BALANCE AT JULY 1, 2021
|
1,311
|
354,442
|
(326,172
|
)
|
29,581
|
|||||||||||
|
CHANGES IN THE THREE-MONTHS PERIOD ENDED SEPTEMBER 30, 2021:
|
||||||||||||||||
|
Share-based compensation to employees and service providers
|
—
|
—
|
2,191
|
2,191
|
||||||||||||
|
Issuance of ordinary shares, net of expenses
|
2
|
497
|
—
|
499
|
||||||||||||
|
Exercise of options into ordinary shares
|
3
|
662
|
—
|
665
|
||||||||||||
|
Comprehensive loss
|
—
|
—
|
(21,387
|
)
|
(21,387
|
)
|
||||||||||
|
BALANCE AT SEPTEMBER 30, 2021
|
1,316
|
355,601
|
(345,368
|
)
|
11,549
|
|||||||||||
|
BALANCE AT JANUARY 1, 2022
|
1,495
|
375,246
|
(367,866
|
)
|
8,875
|
|||||||||||
|
CHANGES IN THE NINE-MONTHS PERIOD ENDED SEPTEMBER 30, 2022:
|
||||||||||||||||
|
Share-based compensation to employees and service providers
|
—
|
—
|
4,538
|
4,538
|
||||||||||||
|
Issuance of ordinary shares and warrants, net of expenses
|
332
|
8,168
|
—
|
8,500
|
||||||||||||
|
Issuance of RSUs
|
7
|
(7
|
)
|
—
|
—
|
|||||||||||
|
Comprehensive loss
|
—
|
—
|
(67,940
|
)
|
(67,940
|
)
|
||||||||||
|
BALANCE AT SEPTEMBER 30, 2022
|
1,834
|
383,407
|
(431,268
|
)
|
(46,027
|
)
|
||||||||||
|
BALANCE AT JANUARY 1, 2021
|
1,054
|
293,144
|
(280,334
|
)
|
13,864
|
|||||||||||
|
CHANGES IN THE NINE-MONTHS PERIOD ENDED SEPTEMBER 30, 2021:
|
||||||||||||||||
|
Share-based compensation to employees and service providers
|
—
|
—
|
8,337
|
8,337
|
||||||||||||
|
Issuance of ordinary shares, net of expenses
|
245
|
58,468
|
—
|
58,713
|
||||||||||||
|
Exercise of options into ordinary shares
|
17
|
3,989
|
—
|
4,006
|
||||||||||||
|
Comprehensive loss
|
—
|
—
|
(73,371
|
)
|
(73,371
|
)
|
||||||||||
|
BALANCE AT SEPTEMBER 30, 2021
|
1,316
|
355,601
|
(345,368
|
)
|
11,549
|
|||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
REDHILL BIOPHARMA LTD.
(Unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
OPERATING ACTIVITIES:
|
||||||||||||||||
|
Comprehensive loss
|
(35,701
|
)
|
(21,387
|
)
|
(67,940
|
)
|
(73,371
|
)
|
||||||||
|
Adjustments in respect of income and expenses not involving cash flow:
|
||||||||||||||||
|
Share-based compensation to employees and service providers
|
1,614
|
2,191
|
4,538
|
8,337
|
||||||||||||
|
Depreciation
|
491
|
507
|
1,645
|
1,465
|
||||||||||||
|
Amortization and impairment of intangible assets
|
1,601
|
1,834
|
4,501
|
5,491
|
||||||||||||
|
Non-cash interest expenses related to borrowing and payable in respect of intangible assets purchase
|
28,761
|
869
|
31,574
|
4,725
|
||||||||||||
|
Fair value (gains) on derivative financial instruments
|
(3,143
|
)
|
—
|
(5,124
|
)
|
—
|
||||||||||
|
Fair value losses on financial assets at fair value through profit or loss
|
—
|
—
|
—
|
6
|
||||||||||||
|
Issuance costs in respect of warrants
|
—
|
—
|
334
|
—
|
||||||||||||
|
Exchange differences and revaluation of bank deposits
|
7
|
17
|
(56
|
)
|
80
|
|||||||||||
|
29,331
|
5,418
|
37,412
|
20,104
|
|||||||||||||
|
Changes in assets and liability items:
|
||||||||||||||||
|
Decrease (increase) in trade receivables
|
(2,252
|
)
|
62
|
(4,330
|
)
|
(1,381
|
)
|
|||||||||
|
Decrease (increase) in prepaid expenses and other receivables
|
(501
|
)
|
(390
|
)
|
1,371
|
839
|
||||||||||
|
Decrease (increase) in inventories
|
(865
|
)
|
(4,352
|
)
|
2,226
|
(6,589
|
)
|
|||||||||
|
Increase (decrease) in accounts payable
|
411
|
1,939
|
(6,880
|
)
|
3,692
|
|||||||||||
|
Increase (decrease) in accrued expenses and other liabilities
|
987
|
(2,575
|
)
|
303
|
(3,495
|
)
|
||||||||||
|
Increase in allowance for deductions from revenue
|
2,562
|
2,260
|
11,074
|
10,013
|
||||||||||||
|
342
|
(3,056
|
)
|
3,764
|
3,079
|
||||||||||||
|
Net cash used in operating activities
|
(6,028
|
)
|
(19,025
|
)
|
(26,764
|
)
|
(50,188
|
)
|
||||||||
|
INVESTING ACTIVITIES:
|
||||||||||||||||
|
Purchase of fixed assets
|
(22
|
)
|
(21
|
)
|
(198
|
)
|
(112
|
)
|
||||||||
|
Change in investment in current bank deposits
|
—
|
(8,500
|
)
|
8,500
|
(12,000
|
)
|
||||||||||
|
Proceeds from sale of financial assets at fair value through profit or loss
|
—
|
—
|
—
|
475
|
||||||||||||
|
Net cash (used in) provided by investing activities
|
(22
|
)
|
(8,521
|
)
|
8,302
|
(11,637
|
)
|
|||||||||
|
FINANCING ACTIVITIES:
|
||||||||||||||||
|
Proceeds from issuance of ordinary shares and warrants, net of issuance costs
|
—
|
499
|
16,221
|
58,713
|
||||||||||||
|
Exercise of options into ordinary shares
|
—
|
665
|
—
|
4,006
|
||||||||||||
|
Repayment of payable in respect of intangible asset purchase
|
(5,100
|
)
|
(1,721
|
)
|
(10,878
|
)
|
(5,600
|
)
|
||||||||
|
Payment of principal with respect to lease liabilities
|
(621
|
)
|
(442
|
)
|
(1,091
|
)
|
(1,229
|
)
|
||||||||
|
Net cash provided by (used in) provided by financing activities
|
(5,721
|
)
|
(999
|
)
|
4,252
|
55,890
|
||||||||||
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(11,771
|
)
|
(28,545
|
)
|
(14,210
|
)
|
(5,936
|
)
|
||||||||
|
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
|
(13
|
)
|
(17
|
)
|
(60
|
)
|
(105
|
)
|
||||||||
|
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
26,988
|
51,816
|
29,474
|
29,295
|
||||||||||||
|
BALANCE OF CASH AND CASH EQUIVALENTS AT THE END OF PERIOD
|
15,204
|
23,254
|
15,204
|
23,254
|
||||||||||||
|
SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH
|
24
|
11
|
35
|
36
|
||||||||||||
|
SUPPLEMENTARY INFORMATION ON INTEREST PAID IN CASH
|
2,942
|
3,250
|
8,225
|
8,266
|
||||||||||||
|
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||||||
|
Acquisition of right-of-use assets by means of lease liabilities
|
—
|
385
|
4,767
|
385
|
||||||||||||
|
Decrease in lease liability (with corresponding decrease in right of use asset
in an amount of $534) resulting from early termination of lease
|
587
|
—
|
587
|
—
|
||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTE 1 - GENERAL:
| a. |
General
|
| 1) |
RedHill Biopharma Ltd. (the “Company”), incorporated on August 3, 2009, together with its wholly-owned subsidiary, RedHill Biopharma Inc. (“RedHill Inc.”), incorporated in Delaware, U.S. on January 19, 2017, is a specialty
biopharmaceutical company primarily focused on gastrointestinal (“GI”) diseases and infectious diseases.
The Company’s ordinary shares were traded on the Tel-Aviv Stock Exchange (“TASE”) from February 2011 to February 2020, after which the Company voluntarily delisted from trading on the TASE, effective February
13, 2020. The Company’s American Depositary Shares (“ADSs”) were traded on the Nasdaq Capital Market from December 27, 2012 and have been listed on the Nasdaq Global Market (“Nasdaq”) since July 20, 2018.
The Company’s registered address is 21 Ha’arba’a St, Tel-Aviv, Israel.
|
| 2) |
Since the Company established its commercial presence in the U.S. in 2017, it has promoted or commercialized various GI-related products that were either developed internally or acquired through in-licensing agreements. As of the date of
approval of these condensed consolidated interim financial statements, the Company commercializes in the U.S., mainly Talicia®, for the treatment of Helicobacter
pylori infection in adults, the first product approved by the U.S. Food and Drug Administration (“FDA”) being developed primarily internally by the Company, and Movantik®, for the treatment of opioid-induced constipation.
|
| 3) |
Through September 30, 2022, the Company has an accumulated deficit and its activities have been funded primarily through public and private offerings of the Company’s securities and senior secured borrowing. There is no assurance that
the Company’s business will generate sustainable positive cash flows to fund its business and support its indebtedness.
The Company plans to further fund its future operations through commercialization and out-licensing of its therapeutic candidates, commercialization of in-licensed or acquired products and raising additional
capital through equity or debt financing or through other non-dilutive financing. The Company’s current cash resources are not sufficient to complete the research and development of all of its therapeutic candidates and to fully support
its commercial operations until generation of sustainable positive cash flows. Management expects that the Company will incur additional losses as it continues to focus its resources on advancing the development of its therapeutic
candidates, as well as advancing its commercial operations, that will result in negative cash flows from operating activities.
According to the Credit Agreement with HCR Collateral Management, LLC (“HCRM”), the Company needs to deliver to HCRM its condensed consolidated interim financial statements within 60 days after the end of the
Company’s fiscal quarter. The Company did not deliver its condensed consolidated interim financial statements for June 30, 2022, within 60 days after the end of the second fiscal quarter (see also note 3(h) and 9(a) below). In addition,
the Company, did not maintain minimum net sales of $75 million for the trailing four fiscal quarters periods ending September 30, 2022 (See also note 3(f) below).
In addition, there is an uncertainty regarding RedHill Inc’s ability to comply with other covenants required under the Credit Agreement, including Minimum Cash covenants for the next 12 months. For more information regarding the covenants, see note 15 to the annual financial statements and note 3(f) and 3(h) below. |
7
|
Per the Credit Agreement, failure to perform or meet any covenant, which continues for 30 days after the earlier of the date on which (i) such failure occurred and (ii) written notice thereof shall have
been given to RedHill Inc, shall constitute an Event of Default. If any Event of Default occurs and is continuing, HCRM may declare all amounts owing or payable under the Credit Agreement to be immediately due and payable (“proclaim
acceleration” of the Borrowing). Thus, at the end of the reporting period, Redhill Inc. does not have an unconditional right to defer its settlement for at least 12 months after September 30, 2022. Moreover, as of September 30, 2022,
the Company did not expect to obtain a waiver from HCRM. Therefore, the Company classified the Borrowing as a current liability and adjusted its carrying amount to reflect all amounts owing or payable under the Credit Agreement as being
immediately due. The Company and its legal counsel are of the opinion that if HCRM will proclaim acceleration, only part of the amounts payable under the Credit Agreement would be due thereupon. However, there is no assurance that the
Company’s opinion will be accepted, (See also note 9(a)). Consequently, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The current COVID-19 pandemic has presented substantial public health and economic challenges around the world and specifically in the Company’s target markets in the U.S., affecting employees, patients,
medical clinics, medical diagnosis, communities, and business operations. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, the terms of the Credit Agreement and
financial condition will depend on future developments that are bit certain and still cannot be predicted at this stage. The Company took actions designed to mitigate the potential impact of the COVID-19 pandemic on its business operations
and to date, the COVID-19 pandemic has not caused significant disruptions to the supply chain and the Company has sufficient supply on hand to meet U.S. commercial demand and clinical study’s needs.
A number of the Company’s commercial activities have been materially impacted by the COVID-19 pandemic, including some launch sales and marketing activities for Talicia® for H. pylori infection and significant impact on sales of Aemcolo® for travelers’ diarrhea as well as on the Company’s sales force turnover.
|
| б. |
Approval of the condensed consolidated interim financial statements:
These condensed consolidated interim financial statements were approved by the Board of Directors (the "BoD") on November 28, 2022. |
8
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
The Company’s condensed consolidated interim financial statements for the three and nine months ended September 30, 2022 (the "Condensed Consolidated
Interim Financial Statements"), have been prepared in accordance with International Accounting Standard IAS 34, “Interim Financial Reporting”. These Condensed Consolidated Interim Financial Statements, that are unaudited, do not include all the
information and disclosures that would otherwise be required in a complete set of annual financial statements and should be read in conjunction with the annual financial statements as of December 31, 2021, and their accompanying notes, which have
been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board (“IASB”). The results of operations for the three and nine months ended September 30, 2022, are not
necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.
| a. |
The accounting policies applied in the preparation of the Condensed Consolidated Interim Financial Statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2021, except for the
following additions:
Revenues from licensing
The Company accounts for licenses of intellectual property (“IP”) rights and manufacturing and supply services as distinct performance obligations if the customer can benefit from the good or services either
on its own or together with other resources that are readily available to the customer (i.e. – the good or service is capable of being distinct) and if the Company’s promise to transfer the good or service to the customer is separately
identifiable from other promises in the contract (i.e. – the promise is distinct within the context of the contract).
If the promise to grant the license is distinct, the Company determines whether the nature of the promise in granting the license to the customer is to provide the customer with either a right to access the
entity’s IP as it exists throughout the license period or a right to use the entity’s IP as it exists at the point in time at which the license is granted. Accordingly, revenue from a license providing a right of use to the Company’s is
recognized at the point in time when control of the distinct license is transferred to the customer. Revenue from a license providing a right of access to the Company’s IP is recognized over the access period.
Variable consideration, such as sales-based royalties and milestones that are allocated to license of IP are recognized only when (or as) the later of the following occurs: (a) the subsequent sale occurs; and
(b) the performance obligation to which some or all the sales-based royalty has been allocated has been satisfied (or partially satisfied).
Revenue from achieving additional milestones is recognized only when it is highly probable that a significant reversal of cumulative revenues will not occur, usually upon achievement of the specific
milestone, in accordance with the relevant agreement.
|
| b. |
The following clarification to standards issued by the IASB has been adopted by the Company in the nine months ended in September 30,2022:
IFRIC Agenda Decision on Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 - Statement of Cash Flows)
In April 2022, the International Financial Reporting Interpretations Committee (IFRIC) issued an agenda decision clarifying that an entity should present a demand deposit with restrictions on use arising from
a contract with a third party as cash and cash equivalents in the statements of financial position and cash flows, unless those restrictions change the nature of the deposit such that it no longer meets the definition of cash in IAS 7.
The adoption of the agenda did not have an impact on the Company’s condensed consolidated interim financial statements as of September 30,2022.
|
9
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| a. |
During the nine months ended September 30, 2022, the Company sold 836,476 ADSs under the “at-the-market” equity offering program (“ATM program”) at an average price of $2.18 per ADS, for aggregate net proceeds of approximately $1.8
million, net of an immaterial amount of issuance expenses.
|
| b. |
In March 2022, the Company entered into an exclusive license agreement with Kukbo Co. Ltd ("Kukbo") for oral opaganib for the treatment of COVID-19, in South Korea. Under the terms of the license agreement, which follows the strategic
investment by Kukbo noted in note 18(c) to the annual financial statements as of December 31, 2021, RedHill is to receive an upfront payment of $1.5 million and is eligible for up to $5.6 million in milestone payments as well as low
double-digit royalties on net sales of oral opaganib in South Korea. Kukbo will receive the exclusive rights to commercialize opaganib in South Korea for COVID-19. As of September 30, 2022, the Company did not recognize revenues from this
license agreement as the criteria to recognize revenues was not fully met.
On September 2, 2022, the Company filed a lawsuit against Kukbo and in the process of seeking a default judgment against Kukbo in a United States court, as a result of Kukbo’s default in delivering to the
Company $5 million under the Subscription Agreement, dated October 25, 2021, in exchange for ADSs, and a further payment of $1.5 million due under the Exclusive License Agreement, dated March 14, 2022. In parallel, the lawsuit is being
translated into Korean and planned to be sent to the Korean Central Authority for filing in South Korea. (See also note 9 (b)).
|
| c. |
In October 2021, the Company entered into an exclusive license agreement (the “License Agreement”) with Gaelan Medical Trade LLC ("Gaelan") for Talicia in the United Arab Emirates (UAE). Under the terms of the License Agreement, the
Company received in April 2022 an upfront payment of $2 million. In addition, the Company is eligible for additional milestone payments as well as tiered royalties up to mid-teens on net sales of Talicia in the UAE. Gaelan will receive the
exclusive rights to commercialize Talicia in the UAE, as well as a right of first refusal to commercialize Talicia in the Gulf Cooperation Council region (Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman) for a pre-determined period. Gaelan
shall be responsible for obtaining and maintaining regulatory approvals, as well as to conduct any and all required clinical and other studies. In March 2022, the Company and Gaelan signed an amendment to the License Agreement, according to
which Gaelan may sublicense or assign any of its rights or obligations under the License Agreement.
In connection with the License Agreement, the Company and Gaelan entered into a supply agreement, according to which, the Company will exclusively manufacture (by a third party CMO) and supply Talicia to
Gaelan during the term of the agreement.
The Company accounted for the license of the Talicia IP rights and manufacturing and supply services as distinct performance obligations, mainly due to the manufacturing not being specialized or unique and
can be manufactured by others (i.e. – the good or service is capable of being distinct), as well as due to that the License Agreement and the manufacturing and supply services do not significantly affect each other (i.e. – the promise is
distinct within the context of the contract). During the nine months ended September 30, 2022, the Company provided Gaelan substantially all the documentation which represents the right to use the Licensed IP, as well the paperwork
relating to the IP itself and its regulatory documents. Accordingly, and since the manufacturing services are priced at their Standalone Selling Price, the Company recognized the $2 million upfront consideration as revenues in the
Statement of Comprehensive Loss for the nine months ended September 30, 2022.
|
| d. |
In March 2022, the Company entered into a lease agreement for the U.S. offices it uses. The agreement will expire on July 31, 2034. The projected yearly rental for the first four years is approximately $400,000 per year and for the next
8 years are approximately $900,000 per year. The Company recognized right-of-use asset and lease liability of approximately $4.8 million. The weighted average lessee’s incremental annual borrowing rate applied to the lease liabilities was
9.9%.
|
10
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| e. |
In May 2022, the Company entered into a definitive agreement with a single investor. In accordance with the agreement, the Company issued to the investor 10,563,380 ADSs (or ADS equivalents), as well as granted unregistered private
warrants to purchase up to 13,204,225 ADSs, for a total net consideration of $14.4 million.
The warrants have an exercise price of $1.48 per ADS, are exercisable six months after the issuance date, and have a term of five and one-half years. The warrants may be exercised either for cash or on a
cashless basis.
The warrants were classified as a financial liability due to a net settlement provision. These derivatives were recognized and subsequently measured at fair value through profit or loss. The consideration,
net of issue expenses, was allocated to the various issued instruments. Out of the gross consideration, amount of $8.1 million was allocated to the warrants. The remainder of approximately $6.9 million was allocated to equity. Issuance
expenses of approximately $0.6 million were allocated as following: $0.3 million allocated to the liability instruments and were recorded directly to the statement of comprehensive loss and $0.3 million allocated to the equity component
and were recorded against additional paid in capital.
|
| f. |
On June 17, 2022, RedHill Inc. signed an amendment to the Credit Agreement. Pursuant to the Amendment, Redhill Inc. shall be required, in addition to other covenants set out in the Credit Agreement, to maintain minimum net sales of $75
million for the trailing four fiscal quarters periods ending June 30, 2022, and September 30, 2022, and $90 million each fiscal quarter thereafter. Redhill Inc. shall also be required to maintain minimum net sales of $14 million for
Movantik® each fiscal quarter starting the fiscal quarter ending June 30, 2022. The Amendment further sets an increase of 0.5% to the interest on the outstanding term loan for the quarters ending June 30, 2022, and September 30, 2022, at
3-month LIBOR rate (“LIBOR”), subject to a 1.75% floor rate, plus 7.2% fixed rate, which will be decreased to 6.7% thereafter. As a result of the event of default described in 3(h) below and that as of September 30, 2022, the Company did
not expect to obtain a waiver from HCRM, HCRM may proclaim acceleration of the Borrowing. The Company and its legal counsel are of the opinion that if HCRM will proclaim acceleration, only part of the amounts payable under the Credit
Agreement would be due thereupon. However, there is no assurance that the Company’s opinion will be accepted. Therefore, the Company classified the Borrowing as a current liability and adjusted its carrying amount to reflect all amounts
owing or payable under the Credit Agreement as being immediately due. Accordingly, the Company recorded an adjustment of approximately $27.9 million in the carrying amount of the Borrowing and a corresponding charge in the statements of
comprehensive loss under financial expenses. See also note 9(a) below.
|
| g. |
Following the decrease in Movantik® net revenues, the Company has tested for impairment of the intangible asset related to Movantik® as of June 30, 2022 and calculated the recoverable amount of the asset. The weighted average cost of
capital (WACC) used to discount the asset’s cash flows was 17.8%. No impairment was required as the recoverable amount of the asset is higher than the asset’s value as of June 30, 2022. As of September 30, 2022, the Company concluded that
no indication that the asset may be impaired exists and therefore did not re-estimate the recoverable amount of the asset.
|
| h. |
On September 13, 2022 the Company and RedHill Inc. received a notice of events of default and reservation of rights letter (the “Notice”) from HCRM. The Notice asserts that certain events of default occurred as a result of alleged
breaches by RedHill Inc. of its representations and warranties and financial covenants under the Credit Agreement. As a result of the alleged events of default, the Notice provides that the outstanding obligations under the Credit Agreement
now bear interest at the default rate prescribed therein and that the lenders may accelerate the obligations under the Credit Agreement. While not asserted in the Notice, the Company acknowledges that it has not satisfied its obligation to
deliver to HCRM its condensed consolidated interim financial statements as of June 30, 2022 within 60 days after the end of the Company’s fiscal quarter. The Company disagrees with the assertions made by HCRM as the basis for the Notice
and, accordingly, the validity of the Notice. Moreover, the Company disputes the alleged events of default asserted by HCRM and, on September 15, 2022, the Company sent a response letter to HCRM to this effect. In addition, the Company, did
not maintain minimum net sales of $75 million for the trailing four fiscal quarters periods ending September 30, 2022. For more information see note 9(a) below.
|
| i. |
On September 29, 2022, HCRM exercised its rights under a Deposit Account Control Agreement to take control of RedHill Inc.’s account at PNC Bank, National Association (“PNC”). HCRM then instructed PNC to wire $16 million (the “Funds”),
which is equivalent to the minimum cash required under the Credit Agreement, from the PNC account to an account held by HCRM. RedHill Inc.’s control over the PNC account has since been restored. HCRM has acknowledged that, despite receipt
of the Funds in an account held in HCRM’s name, the Funds remain the property of RedHill Inc. and are held merely as security for RedHill Inc.’s obligations under the Credit Agreement. The Funds are classified as Restricted Cash in the
condensed consolidated interim statements of financial position as of September 30,2022.
|
| j. |
Write-downs of inventories to net realizable value amounted to $0.7 million in the nine months ended September 30, 2022.These were recognized as an expense, included in cost of revenues in the statement of comprehensive loss.
|
11
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 4: - ALLOWANCE FOR DEDUCTIONS FROM REVENUES:
The following table shows the movement of the allowance for deductions from revenues:
|
Rebates and patient discount programs
|
Product returns
|
Total
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
As of January 1, 2022
|
29,742
|
969
|
30,711
|
|||||||||
|
Increases
|
87,525
|
1,874
|
89,399
|
|||||||||
|
Decreases (utilized)
|
(77,013
|
)
|
(1,499
|
)
|
(78,512
|
)
|
||||||
|
Adjustments
|
277
|
(90
|
)
|
187
|
||||||||
|
As of September 30, 2022
|
40,531
|
1,254
|
41,785
|
|||||||||
|
Rebates and patient discount programs
|
Product returns
|
Total
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
As of January 1, 2021
|
16,380
|
1,963
|
18,343
|
|||||||||
|
Increases
|
63,495
|
1,588
|
65,083
|
|||||||||
|
Decreases (utilized)
|
(53,550
|
)
|
(1,208
|
)
|
(54,758
|
)
|
||||||
|
Adjustments
|
(645
|
)
|
333
|
(312
|
)
|
|||||||
|
As of September 30, 2021
|
25,680
|
2,676
|
28,356
|
|||||||||
|
Rebates and patient discount programs
|
Product returns
|
Total
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
As of July 1, 2022
|
37,978
|
1,245
|
39,223
|
|||||||||
|
Increases
|
34,183
|
160
|
34,343
|
|||||||||
|
Decreases (utilized)
|
(31,696
|
)
|
(136
|
)
|
(31,832
|
)
|
||||||
|
Adjustments
|
66
|
(15
|
)
|
51
|
||||||||
|
As of September 30, 2022
|
40,531
|
1,254
|
41,785
|
|||||||||
|
Rebates and patient discount programs
|
Product returns
|
Total
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
As of July 1, 2021
|
23,724
|
2,372
|
26,096
|
|||||||||
|
Increases
|
21,817
|
632
|
22,449
|
|||||||||
|
Decreases (utilized)
|
(19,908
|
)
|
(632
|
)
|
(20,540
|
)
|
||||||
|
Adjustments
|
47
|
304
|
351
|
|||||||||
|
As of September 30, 2021
|
25,680
|
2,676
|
28,356
|
|||||||||
12
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - SHARE-BASED PAYMENTS:
| a. |
The following is information on options granted during the nine months ended September 30, 2022:
|
|
Number of options granted
|
||||||||||||
|
According to the
Award Planof the Company (1)
|
Exercise
price for 1
ADS ($)
|
Fair value of
options on date ofgrant in
U.S. dollars
in thousands (2)
|
||||||||||
|
January 2022
|
5,000
|
2.45
|
7
|
|||||||||
|
March 2022
|
6,000
|
1.67
|
6
|
|||||||||
|
11,000
|
13
|
|||||||||||
| 1) |
The options will vest as follows: for directors, employees and consultants of the Company and the Company's subsidiary who had provided services exceeding one year as of the grant date, options will vest in 16 equal quarterly
installments over a four-year period. For directors, employees and consultants of the Company and the Company's subsidiary who had not provided services exceeding one year as of the grant date, the options will vest as follows: 1/4 of the
options will vest one year following the grant date and the rest over 12 equal quarterly installments. During the contractual term, the options will be exercisable, either in full or in part, from the vesting date until the end of 10 years
from the date of grant.
|
| 2) |
The fair value of the options was computed using the binomial model and the underlying data used was mainly the following: price of the Company's ADS: $1.67 - $2.45, expected volatility: 66.94% - 67.21%, risk-free interest rate: 1.73% -
1.78% and the expected term was derived based on the contractual term of the options, the expected exercise behavior and expected post-vesting forfeiture rates.
|
| b. |
The following is information on RSUs granted during the nine months ended September 30, 2022:
|
|
Fair value of
|
||||||||||||||||
|
Number of RSUs granted
|
RSUs on date of
|
|||||||||||||||
|
According to the Award Plan of the Company
|
grant in
|
|||||||||||||||
|
Date of BoD
|
Other than to Directors
|
To directors (4)
|
Total
|
U.S. dollarsin thousands
|
||||||||||||
|
January 2022 (1)
|
1,920,500
|
140,000
|
2,060,500
|
5,712
|
||||||||||||
|
March 2022 (1)
|
96,000
|
—
|
96,000
|
160
|
||||||||||||
|
April 2022(1)
|
35,000
|
—
|
35,000
|
87
|
||||||||||||
|
June 2022 (2)
|
2,018,500
|
165,000
|
2,183,500
|
1,878
|
||||||||||||
|
July 2022 (2)
|
65,000
|
—
|
65,000
|
56
|
||||||||||||
|
September 2022 (3)
|
370,279
|
51,030
|
421,309
|
352
|
||||||||||||
|
Total
|
4,505,279
|
356,030
|
4,861,309
|
8,245
|
||||||||||||
| 1) |
The RSUs vest as follows: 50% of RSUs will vest one year following the grant and 50% will vest two years following the grant.
|
| 2) |
The RSUs vest in 12 equal quarterly installments over three year-period.
|
| 3) |
The RSUs vest in 8 equal quarterly installments over two year-period.
|
| 4) |
The general meeting of the Company’s shareholders held on May 13, 2022 (the “May 2022 AGM”), subsequent to approval of the Company’s BoD in January 2022, approved the grant of 140,000 RSUs under the Company’s Award plan to directors and
to the Company's Chief Executive Officer in the same terms. The fair value of these RSUs on the date of grant was $0.1 million.
|
In addition, In June 2022 the Company’s BoD, approved the grant of 165,000 RSUs under the Company’s Award plan to directors and to the Company's Chief Executive Officer in the
same terms subject to the Annual general meeting approval. The fair value of these RSUs on the date of approval was $0.1 million.
| c. |
During the three and nine months ended September 30, 2022, approximately 0.4 million and 1.5 million options and RSUs were forfeited, respectively, resulting in approximately $0.8 million and $2.7 million in reversed expenses,
respectively
|
13
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 - NET REVENUES:
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
U.S dollars in thousands
|
U.S dollars in thousands
|
|||||||||||||||
|
Licensing revenues
|
—
|
—
|
2,000
|
—
|
||||||||||||
|
Movantik® revenues
|
16,006
|
19,395
|
41,462
|
57,510
|
||||||||||||
|
Sales of Other products
|
1,546
|
2,214
|
5,540
|
6,176
|
||||||||||||
|
17,552
|
21,609
|
49,002
|
63,686
|
|||||||||||||
NOTE 7 - FINANCIAL INSTRUMENTS:
| a. |
As of September 30, 2022, the financial instrument of the Company presented at fair value is derivative financial instrument in the amount of $2.9 million. The derivative financial instrument of the Company represents warrants, see note
3(e) above. This instrument is classified as level 3. The fair value adjustments are recognized in profit or loss under financial income or financial expenses. The following table presents the change in the derivative liability measured at
level 3 for the three and nine months ended September 30, 2022:
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Balance at beginning of the period
|
6,074
|
—
|
—
|
—
|
||||||||||||
|
Proceeds received during the period
|
—
|
—
|
8,055
|
—
|
||||||||||||
|
Fair value adjustments recognized in profit or loss
|
(3,143
|
)
|
—
|
(5,124
|
)
|
—
|
||||||||||
|
Balance at end of the period
|
2,931
|
—
|
2,931
|
—
|
||||||||||||
The fair value of the warrants is computed using the Black and Scholes option pricing model. The fair value of the warrants as of September 30,2022, is based on the price of an ADS as of September
30,2022 and based on the following key parameters: risk-free interest rate of 4.05% and volatility of 77.2%. The fair value of the warrants as of May 9, 2022, was computed based on the price of an ADS on May 9, 2022, and based on the following key
parameters: risk-free interest rate of 2.97% and volatility of 71%.
| b. |
The carrying amount of cash equivalents, bank deposits, restricted cash, receivables, account payables and accrued expenses approximate their fair value due to their short-term characteristics.
|
| c. |
The fair value of the borrowing and Payable in respect of intangible assets purchase is approximately $88.8 million and $10.9 million as of September 30, 2022, respectively.
|
14
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 8 - SEGMENT INFORMATION:
The Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”). The CODM allocates resources and assesses the Company’s performance based on the following segmentation:
Commercial Operations and Research & Development.
Effective December 31, 2021, the Company changed its operating segments to reflect the manner in which the Company's CODM reviews and assesses performance. Accordingly, the Company reports on
revenue and segment Adjusted EBITDA. Disclosures regarding the Company’s reportable segments for prior periods have been adjusted to conform to the current period presentation. Adjusted EBITDA represents net loss before depreciation, amortization,
and financial expenses (income), adjusted to exclude share-based compensation.
The following table presents segment profitability and a reconciliation to the consolidated net loss and comprehensive loss for the periods indicated:
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
|
U.S. dollars in thousands
|
U.S. dollars in thousands
|
|||||||||||||||
|
Commercial Operations Segment Adjusted EBITDA
|
(317
|
)
|
(4,738
|
)
|
(12,507
|
)
|
(15,220
|
)
|
||||||||
|
Research And Development Adjusted EBITDA
|
(3,085
|
)
|
(8,128
|
)
|
(9,705
|
)
|
(29,923
|
)
|
||||||||
|
Financial expenses (income), net
|
28,593
|
3,989
|
35,044
|
12,935
|
||||||||||||
|
Share-based compensation to employees and service providers
|
1,614
|
2,191
|
4,538
|
8,337
|
||||||||||||
|
Depreciation
|
491
|
507
|
1,645
|
1,465
|
||||||||||||
|
Amortization and impairment of intangible assets
|
1,601
|
1,834
|
4,501
|
5,491
|
||||||||||||
|
Consolidated Comprehensive loss
|
35,701
|
21,387
|
67,940
|
73,371
|
||||||||||||
Except for $2 million licensing revenues reported in the nine months ended September 30, 2022, which are allocated to the Research and Development segment, all of the Company’s revenues are
allocated to the Commercial Operations segment.
15
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 9 - EVENT SUBSEQUENT TO SEPTEMBER 30, 2022:
| a. |
On November 14, 2022, The Company has reached a non-binding agreement in principle with HCRM with respect to the terms of a transfer of The Company’s rights in Movantik® to HCRM in exchange for the extinguishment of all The Company’s
obligations (including all principal, interest, revenue interest, prepayment premiums and exit fees) under the Credit Agreement between RedHill Inc. and HCRM. The Company would retain substantially all pre-closing liabilities relating to
Movantik and HCRM would assume substantially all post-closing liabilities. It is expected that The Company would provide transition services to HCRM to ensure a seamless process so that patient care will not be interrupted.
|
| b. |
On November 24, 2022, the Company received a letter from Kukbo regarding the pending lawsuit (see also note 3(b)). According to the letter received, Kukbo asserts that it intends to defend its case and bring a counterclaim against the
Company. The Company strongly believes in the merits of its lawsuit against Kukbo and will continue to decisively pursue a favorable judgment. The Company notes that Kukbo did not file a response in the U.S. court within the required
timeframe.
|
16