RedHill Biopharma Ltd 6-K, filed May 27, 2021
RedHill Biopharma Ltd. (RDHL)
About this 6-K
RedHill Biopharma Ltd filed this 6-K on May 27, 2021.
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 May 2021
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:
Exhibits 99.1 (solely with respect to the Financial highlights for the first quarter, ended March 31, 2021, R&D Highlights, the Condensed Consolidated Interim Statements of Comprehensive Loss, Condensed Consolidated Interim Statements of Financial Position and Condensed Consolidated Interim Statements of Cash Flows) and 99.2 to this Report on Form 6-K are hereby incorporated by reference into the Company's 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) and on May 3, 2021 (File No. 333-255710), and its Registration Statements on Form F-3 filed with the Securities and Exchange Commission on February 25, 2016 (Registration No. 333-209702), on July 23, 2018 (File No. 333-226278), on July 24, 2019 (File No. 333-232777) and on March 30, 2021 (File No. 333-254848).
2
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.
| REDHILL BIOPHARMA LTD. | ||
|---|---|---|
| (the "Registrant") | ||
| Date: May 27, 2021 | By: | /s/ Dror Ben-Asher |
| Dror Ben-Asher | ||
| Chief Executive Officer |
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Exhibit 1
| Press Release |
|---|
RedHill Biopharma Reports First Quarter 2021 Financial
Results and Operational Highlights
Q1/2021 net revenues of approximately $20.6 million compared to $1.1 million for Q1/2020;
Cash balance^1^ of approximately $92 million as of March 31, 2021, compared to
approximately $115 million as of March 31, 2020
--
Talicia® prescription volume grew 11% versus previous quarter;
Movantik^®^ new prescriptions in the first quarter 4% higher than Q1/2020^2^
--
Opaganib global Phase 2/3 study almost 100% enrolled
--
Management to host webcast today, at 8:30 a.m. EST
TEL AVIV, Israel and RALEIGH, NC, May 27, 2021, RedHill Biopharma Ltd. (Nasdaq: RDHL) (“RedHill” or the “Company”), a specialty biopharmaceutical company, today reported its financial results and operational highlights for the first quarter ended March 31, 2021.
Dror Ben-Asher, RedHill’s Chief Executive Officer, said: “The progress of our two novel, oral COVID-19 programs has put RedHill at the forefront of oral COVID-19 therapeutics development. Opaganib, one of the most advanced and promising novel, dual-mode of action, oral drug candidates in development for COVID-19, now has almost 100% enrollment in its global 464-patient Phase 2/3 study in severe COVID-19.” Mr. Ben-Asher continued: “Commercially, a strong end to the first quarter has set up 2021 for growth, reversing a slow start to the year across the industry. Movantik’s new prescriptions in the first quarter outperformed the same quarter last year, while Talicia’s growth in prescription volume, repeat prescribing and new prescribers will be key growth drivers going forward. With the U.S. now emerging from the shadows of COVID-19, patients returning to clinics and travel resuming, positively affecting Aemcolo’s prospects, we are excited for the promise 2021 holds.”
Micha Ben Chorin, Chief Financial Officer at RedHill, added: “A strong March helped rebalance quarterly revenues, as we maintained cash burn rate at previous quarter levels. With a healthy balance sheet, we are well-positioned to drive our late-stage R&D programs forward, as we work diligently to build on the upward trends across our core business.”
Financial highlights for the quarter ended March 31, 2021^3^
Net Revenues were approximately $20.6 million for the first quarter of 2021, a decrease of $0.9 million compared to the fourth quarter of 2020. The decrease was mainly attributable to typical cyclical trends in Movantik sales.
Gross Profit was approximately $10.3 million for the first quarter of 2021, a decrease of $0.5 million compared to the fourth quarter of 2020, maintaining a consistent gross margin of approximately 50%. The decrease was mainly attributable to the decrease in net revenues.
Research and Development Expenses were approximately $7.5 million for the first quarter of 2021, an increase of $1.3 million compared to the fourth quarter of 2020, mainly attributable to the progression of our COVID-19 development programs.
Selling, Marketing and General and Administrative Expenses were approximately $21.0 million for the first quarter of 2021, a decrease of $3.3 million compared to the fourth quarter of 2020. The decrease was mainly attributable to large non-recurring marketing investments made in the fourth quarter of 2020.
Operating Loss and Net Loss were approximately $18.2 million and $22.9 million, respectively, for the first quarter of 2021, compared to $19.7 million and $24.3 million, respectively, in the fourth quarter of 2020. The decrease was mainly attributable to the decrease in marketing expenses, as detailed above.
Net Cash Used in Operating Activities was approximately $12.3 million for the first quarter of 2021, a decrease of $0.4 million compared to the fourth quarter of 2020.
Net Cash Provided by Financing Activities was approximately $58.7 million for the first quarter of 2021, comprised primarily of proceeds from equity offerings.
Cash Balance^1^ as of March 31, 2021, was approximately $92.1 million.
Commercial Highlights
Movantik^®^ (naloxegol)^5^
Movantik ended the quarter strongly with a 4% increase in new prescriptions compared to the first quarter of 2020. Movantik market leadership position is holding strong at 75% U.S. market share, with focus on growth in 2021 and beyond. Movantik also continues to enjoy excellent coverage without restrictions in the PAMORA class for both commercial & government segments, with 88% of American commercial lives covered.
In March 2021, the Company announced that RedHill Biopharma Inc., AstraZeneca AB, AstraZeneca Pharmaceuticals LP and Nektar Therapeutics had entered into a settlement and license agreement with MSN Pharmaceuticals, Inc. and MSN Laboratories PVT. LTD. (MSN) resolving their patent litigation in the U.S. in response to MSN’s Abbreviated New Drug Application (ANDA) seeking approval by the U.S. Food and Drug Administration (FDA) to market a generic version of Movantik. Under the terms of the settlement agreement, MSN may not sell a generic version of Movantik in the U.S. until October 1, 2030 (subject to FDA approval) or earlier under certain circumstances.
2
In February 2021, the Company also announced an agreement with Cosmo Pharmaceuticals N.V. to manufacture Movantik, securing high-quality manufacturing capacity for our current largest commercial product.
Talicia^®^(omeprazole magnesium, amoxicillin and rifabutin)^6^
Talicia continued to achieve new launch year milestones. Talicia achieved 11% growth in prescription volume and a 39% increase in the number of repeat prescribers compared to the previous quarter, positioning the brand and RedHill for continued growth in 2021 as clinician visits resume and diagnostic labs reopen fully. The quarter ended strongly, resulting in the highest levels of monthly and weekly prescription volume and number of prescribers since launch. Overall, Talicia continues to show growth in total prescribers and repeat prescribing, and March’s performance indicates ongoing momentum for accelerated growth for the remainder of 2021.
Talicia’s growth is supported by an increased commercial coverage of 77%, compared to 69% in the fourth quarter of 2020. Further formulary additions are expected, adding to the previously announced listings of Talicia on the national formularies of Prime Therapeutics, EnvisionRx and Express Scripts.
Aemcolo^®^ (rifamycin)^7^
RedHill has implemented plans, including re-launching active field promotion, to support, and build on, the initial momentum that Aemcolo was generating pre-COVID-19 travel restrictions. The Company expects that these plans will drive a resurgence of interest in Aemcolo once travel restrictions are lifted and international travel from the U.S. returns to significant levels.
In January 2021, the Company reported that its partner, Cosmo Pharmaceuticals, announced it had successfully completed its Phase 2 Proof-of-Concept (POC) clinical trial of rifamycin SV-MMX 600 mg in patients with diarrhea-predominant irritable bowel syndrome (IBS-D). As part of an exclusive license agreement between RedHill and Cosmo Pharmaceuticals from October 2019 for the U.S. rights to Aemcolo (rifamycin), RedHill maintains certain rights, including a right of first refusal, in relation to rifamycin SV-MMX 600 mg in the U.S.
R&D Highlights
COVID-19 Program: Opaganib (ABC294640, Yeliva^®^)^8^
The global Phase 2/3 study of orally-administered, opaganib in patients with severe COVID-19 pneumonia requiring hospitalization and treatment with supplemental oxygen (NCT04467840) is now almost 100% enrolled. Last patient out will occur approximately six weeks after the final patient is randomized. This puts opaganib amongst the first novel investigational COVID-19 oral pills to deliver late-stage data.
3
The study has passed four Data Safety Monitoring Board reviews, including a futility review. The fourth DSMB review, conducted in April, was based on an analysis of unblinded safety data from the first 255 patients treated for at least 14 days, extending the total opaganib safety database to approximately 380 patients.
Opaganib has shown dual anti-inflammatory and antiviral activity and is host-targeted, and therefore expected to be effective against emerging viral variants with various mutations in the spike protein.
The Company recently announced receipt of a Notice of Allowance for a U.S. patent application covering the use of opaganib for the treatment of COVID-19 with a term extending until at least 2041. The Company also previously announced that it had signed collaborations with several U.S., European and Canadian suppliers, including with Cosmo Pharmaceuticals for large-scale ramp-up of opaganib manufacturing, further strengthening manufacturing capabilities and capacity of opaganib.
In view of the upcoming completion of enrollment, RedHill is evaluating the regulatory path for opaganib with a focus on those countries currently most affected by COVID-19. The regulatory path, including potential submissions of emergency use applications in those countries, is subject to whether the data generated by the ongoing Phase 2/3 study is sufficiently positive and supportive, as well as the specific requirements in each country. The strength of the safety and efficacy data generated from the opaganib studies will be key to regulatory applications. Additional studies to support the potential of such applications and the use or marketing of opaganib are likely to be required. For example, the FDA has indicated we will need to complete additional studies to support applications in the U.S. Evaluations and discussions continue with the FDA, EMA and regulators in other countries.
The Company continues its discussions with U.S. and other government agencies and non-governmental organizations around potential funding to support the development and manufacturing scale-up of opaganib.
COVID-19 Program: RHB-107 (upamostat)^9^
In February 2021, RedHill announced dosing of the first patient in the U.S. Phase 2/3 COVID-19 study with novel, orally-administered, RHB-107 (upamostat). The study with once-daily RHB-107 is evaluating treatment of non-hospitalized patients with symptomatic COVID-19 who do not require supplemental oxygen - the vast majority of COVID-19 patients.
RHB-107 is a novel, orally-administered, serine protease inhibitor. It is also host-targeting and therefore also expected to be effective against emerging viral variants with mutations in the spike protein. In previously announced in vitro results, RHB-107 strongly inhibited SARS-CoV-2 viral replication.
4
The Company recently announced receipt of a Notice of Allowance for a U.S. patent application covering the use of RHB-107 for the treatment of COVID-19 with a term extending until at least 2041.
RHB-204 - Pulmonary Nontuberculous Mycobacteria (NTM) Disease
A U.S. Phase 3 study is ongoing to evaluate the efficacy and safety of RHB-204 in adults with pulmonary NTM disease caused by Mycobacterium avium Complex (MAC) infection.
The FDA also granted Fast Track designation for RHB-204 in January 2021, providing early and frequent communications and a rolling review of any New Drug Application (NDA). RHB-204 is also eligible for NDA Priority Review and Accelerated Approval.
RHB-204 was granted FDA Orphan Drug designation and Qualified Infectious Disease Product designation, extending its U.S. market exclusivity to a potential total of 12 years upon potential FDA approval.
Opaganib - Cholangiocarcinoma and Prostate Cancer
The Phase 2a study evaluating the activity of opaganib in advanced cholangiocarcinoma (bile duct cancer) is ongoing. Enrollment has been completed for the first cohort of 39 patients, evaluating the activity of orally-administered opaganib as a stand-alone treatment. Preliminary data from this cohort indicated a signal of activity in a number of subjects with advanced cholangiocarcinoma. Enrollment is ongoing for a second cohort, evaluating opaganib in combination with hydroxychloroquine, an anti-autophagy agent.
In light of preclinical findings demonstrating tumor regression following combination treatment with opaganib and RHB-107 (upamostat), RedHill plans to add an additional cohort to the ongoing Phase 2a study, evaluating opaganib in combination with RHB-107, subject to discussions with the FDA. Opaganib was granted FDA Orphan Drug designation for the treatment of cholangiocarcinoma.
An additional Phase 2 study with opaganib in prostate cancer is ongoing at the Medical University of South Carolina (MUSC). The study is supported by a National Cancer Institute grant awarded to MUSC with additional support from RedHill.
Conference Call and Webcast Information:
The Company will host a webcast today, Thursday, May 27, 2021, at 8:30 a.m. EDT, during which it will present key highlights for the first quarter of 2021.
The webcast including slides will be broadcast live on the Company's website, https://ir.redhillbio.com/events, and
will be available for replay for 30 days.
To participate in the conference call, please dial one of the following numbers 15 minutes prior to the start of the call: United States: +1-877-870-9135; International: +1-646-741-3167 and Israel: +972-3-530-8845; the access code for the call is: 8506238.
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 adults, Talicia^®^ for the treatment of Helicobacter pylori (H. pylori) infection in adults, and Aemcolo^®^ for the treatment of travelers’ diarrhea in adults. 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 \(Yeliva^®^, ABC294640\), a first-in-class SK2 selective inhibitor targeting multiple indications with a Phase 2/3 program for COVID-19 and
Phase 2 studies for prostate cancer and cholangiocarcinoma ongoing; \(iii\) RHB-107 \(upamostat\), a serine protease inhibitor in a U.S. Phase 2/3 study as treatment
for 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; \(v\) RHB-102 \(Bekinda^®^\), with positive results from a Phase 3 study for acute gastroenteritis and gastritis and positive results from a
Phase 2 study for IBS-D; and \(vi\) RHB-106, an encapsulated bowel preparation. More information about the Company is available at www.redhillbio.com / https://twitter.com/RedHillBio.
5
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. Forward-looking statements include statements regarding planned commercial operational breakeven by the end of 2021 and regarding achieving fast growth and increased profit margin. 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 of a delay in completion of enrollment for the Phase 2/3 COVID-19 study for opaganib and the Phase 2/3 COVID-19 study for RHB-107, delay in top-line data from the Phase 2/3 COVID-19 study for opaganib, that the Phase 2/3 COVID-19 study for opaganib and 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 are likely to be required, and for RHB-107 may be required, by regulatory authorities to support such potential applications and the use or marketing of opaganib and/or RHB-107, as the case may be, for COVID-19 patients, that opaganib and RHB-107 will not be effective against emerging viral variants, 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 18, 2021. 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.
| Company contact:<br><br> <br>Adi Frish<br><br> <br>Chief Corporate and Business Development Officer<br><br> <br>RedHill Biopharma<br><br> <br>+972-54-6543-112<br><br> <br>adi@redhillbio.com | Media contacts:<br><br> <br>U.S.: Bryan Gibbs, Finn Partners<br><br> <br>+1 212 529 2236<br><br> <br>bryan.gibbs@finnpartners.com<br><br> <br>UK: Amber Fennell, Consilium<br><br> <br>+44 (0) 7739 658 783<br><br> <br>fennell@consilium-comms.com |
|---|
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REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2021 | 2020 | |||||
| U.S. dollars in thousands | ||||||
| NET REVENUES | 20,575 | 1,056 | ||||
| COST OF REVENUES | 10,253 | 1,715 | ||||
| GROSS PROFIT | 10,322 | (659 | ) | |||
| RESEARCH AND DEVELOPMENT EXPENSES | 7,484 | 2,765 | ||||
| SELLING AND MARKETING EXPENSES | 13,895 | 9,006 | ||||
| GENERAL AND ADMINISTRATIVE EXPENSES | 7,095 | 4,586 | ||||
| OPERATING LOSS | 18,152 | 17,016 | ||||
| FINANCIAL INCOME | (42 | ) | (214 | ) | ||
| FINANCIAL EXPENSES | 4,753 | 355 | ||||
| FINANCIAL EXPENSES, net | 4,711 | 141 | ||||
| LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD | 22,863 | 17,157 | ||||
| LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars): | 0.05 | 0.05 | ||||
| WEIGHTED AVERAGE OF ORDINARY SHARE (in thousands) | 429,603 | 352,696 |
7
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
| March 31, | December 31, | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Unaudited | Audited | |||||
| U.S. dollars in thousands | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | 75,972 | 29,295 | ||||
| Bank deposits | 16 | 17 | ||||
| Financial assets at fair value through profit or loss | — | 481 | ||||
| Trade receivables | 23,306 | 28,655 | ||||
| Prepaid expenses and other receivables | 4,094 | 5,521 | ||||
| Inventory | 9,270 | 6,526 | ||||
| 112,658 | 70,495 | |||||
| NON-CURRENT ASSETS: | ||||||
| Restricted cash | 16,158 | 16,164 | ||||
| Fixed assets | 553 | 511 | ||||
| Right-of-use assets | 4,702 | 5,192 | ||||
| Intangible assets | 86,052 | 87,879 | ||||
| 107,465 | 109,746 | |||||
| TOTAL ASSETS | 220,123 | 180,241 | ||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | 6,536 | 11,553 | ||||
| Lease liabilities | 1,636 | 1,710 | ||||
| Allowance for deductions from revenue | 22,677 | 18,343 | ||||
| Accrued expenses and other current liabilities | 25,446 | 24,082 | ||||
| Payable in respect of intangible assets purchase | 10,334 | 17,547 | ||||
| 66,629 | 73,235 | |||||
| NON-CURRENT LIABILITIES: | ||||||
| Borrowing | 82,524 | 81,386 | ||||
| Payable in respect of intangible assets purchase | 13,788 | 7,199 | ||||
| Lease liabilities | 3,391 | 3,807 | ||||
| Royalty obligation | 750 | 750 | ||||
| 100,453 | 93,142 | |||||
| TOTAL LIABILITIES | 167,082 | 166,377 | ||||
| EQUITY: | ||||||
| Ordinary shares | 1,309 | 1,054 | ||||
| Additional paid-in capital | 354,057 | 293,144 | ||||
| Accumulated deficit | (302,325 | ) | (280,334 | ) | ||
| TOTAL EQUITY | 53,041 | 13,864 | ||||
| TOTAL LIABILITIES AND EQUITY | 220,123 | 180,241 |
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REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2021 | 2020 | |||||
| U.S. dollars in thousands | ||||||
| OPERATING ACTIVITIES: | ||||||
| Comprehensive loss | (22,863 | ) | (17,157 | ) | ||
| Adjustments in respect of income and expenses not involving cash flow: | ||||||
| Share-based compensation to employees and service providers | 872 | 802 | ||||
| Depreciation | 492 | 350 | ||||
| Amortization and impairment of intangible assets | 1,827 | 1,076 | ||||
| Non-cash interest expenses related to borrowing and payable in respect of intangible assets purchase | 2,639 | 104 | ||||
| Fair value losses (gains) on financial assets at fair value through profit or loss | 6 | 75 | ||||
| Exchange differences and revaluation of bank deposits | 46 | (159 | ) | |||
| 5,882 | 2,248 | |||||
| Changes in assets and liability items: | ||||||
| Decrease (increase) in trade receivables | 5,349 | (501 | ) | |||
| Decrease in prepaid expenses and other receivables | 1,428 | 971 | ||||
| Increase in inventories | (2,744 | ) | (885 | ) | ||
| Decrease in accounts payable | (5,017 | ) | (999 | ) | ||
| Increase in accrued expenses and other liabilities | 1,364 | 6,030 | ||||
| Increase (decrease) in allowance for deductions from revenue | 4,334 | (331 | ) | |||
| 4,714 | 4,285 | |||||
| Net cash used in operating activities | (12,267 | ) | (10,624 | ) | ||
| INVESTING ACTIVITIES: | ||||||
| Purchase of fixed assets | (88 | ) | (242 | ) | ||
| Change in investment in current bank deposits | — | 3,200 | ||||
| Transactions costs related to purchase of intangible assets | — | (1,183 | ) | |||
| Proceeds from sale of financial assets at fair value through profit or loss | 475 | 2,225 | ||||
| Net cash provided by (used in) investing activities | 387 | 4,000 | ||||
| FINANCING ACTIVITIES: | ||||||
| Proceeds from long-term borrowings, net of transaction costs | — | 79,345 | ||||
| Proceeds from issuance of ordinary shares, net of issuance costs | 57,941 | — | ||||
| Exercise of options into ordinary shares | 3,227 | — | ||||
| Repayment of payable in respect of intangible asset purchase | (2,125 | ) | — | |||
| Increase in restricted cash | — | (20,000 | ) | |||
| Payment of principal with respect to lease liabilities | (383 | ) | (261 | ) | ||
| Net cash provided by financing activities | 58,660 | 59,084 | ||||
| INCREASE IN CASH AND CASH EQUIVALENTS | 46,780 | 52,460 | ||||
| EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | (103 | ) | 131 | |||
| BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 29,295 | 29,023 | ||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD | 75,972 | 81,614 | ||||
| SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH | 19 | 178 | ||||
| SUPPLEMENTARY INFORMATION ON INTEREST PAID IN CASH | 1,990 | 231 | ||||
| SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||
| Acquisition of right-of-use assets by means of lease liabilities | — | 1,575 | ||||
| Long-term borrowings transaction costs | — | 1,284 |
^1^ Including cash, cash equivalents, short-term investments (bank deposits and financial assets at fair value) and restricted cash
^2^ First quarter 2020 was the last quarter for Movantik as an Astra Zeneca product
^3^ All financial highlights are approximate and are rounded to the nearest hundreds of thousands.
^4^ Movantik® (naloxegol) is indicated for opioid-induced constipation (OIC). Full prescribing information see: www.movantik.com.
^5^ 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.
^6^ Aemcolo^®^ (rifamycin) indicated for the treatment of travelers’ diarrhea caused by noninvasive strains of Escherichia coli in adults. For full prescribing information see: www.aemcolo.com
^7^ Opaganib (ABC294640, Yeliva^®^) is an investigational new drug, not available for commercial distribution.
^8^ RHB-107 (upamostat) is an investigational new drug, not available for commercial distribution.
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Exhibit 2
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
(UNAUDITED)
March 31, 2021
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
(UNAUDITED)
March 31, 2021
TABLE OF CONTENTS
| UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF MARCH 31, 2021 IN U.S. DOLLARS: | Page |
|---|---|
| Condensed consolidated interim statements of comprehensive loss | 3 |
| Condensed consolidated interim statements of financial position | 4 |
| Condensed consolidated interim statements of changes in equity | 5 |
| Condensed consolidated interim statements of cash flows | 6 |
| Notes to the condensed consolidated interim financial statements | 7-11 |
2
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2021 | 2020 | |||||
| U.S. dollars in thousands | ||||||
| NET REVENUES | 20,575 | 1,056 | ||||
| COST OF REVENUES | 10,253 | 1,715 | ||||
| GROSS PROFIT | 10,322 | (659 | ) | |||
| RESEARCH AND DEVELOPMENT EXPENSES | 7,484 | 2,765 | ||||
| SELLING AND MARKETING EXPENSES | 13,895 | 9,006 | ||||
| GENERAL AND ADMINISTRATIVE EXPENSES | 7,095 | 4,586 | ||||
| OPERATING LOSS | 18,152 | 17,016 | ||||
| FINANCIAL INCOME | (42 | ) | (214 | ) | ||
| FINANCIAL EXPENSES | 4,753 | 355 | ||||
| FINANCIAL EXPENSES, net | 4,711 | 141 | ||||
| LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD | 22,863 | 17,157 | ||||
| LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars): | 0.05 | 0.05 | ||||
| WEIGHTED AVERAGE OF ORDINARY SHARE (in thousands) | 429,603 | 352,696 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
| March 31, | December 31, | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| U.S. dollars in thousands | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | 75,972 | 29,295 | ||||
| Bank deposits | 16 | 17 | ||||
| Financial assets at fair value through profit or loss | — | 481 | ||||
| Trade receivables | 23,306 | 28,655 | ||||
| Prepaid expenses and other receivables | 4,094 | 5,521 | ||||
| Inventory | 9,270 | 6,526 | ||||
| 112,658 | 70,495 | |||||
| NON-CURRENT ASSETS: | ||||||
| Restricted cash | 16,158 | 16,164 | ||||
| Fixed assets | 553 | 511 | ||||
| Right-of-use assets | 4,702 | 5,192 | ||||
| Intangible assets | 86,052 | 87,879 | ||||
| 107,465 | 109,746 | |||||
| TOTAL ASSETS | 220,123 | 180,241 | ||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | 6,536 | 11,553 | ||||
| Lease liabilities | 1,636 | 1,710 | ||||
| Allowance for deductions from revenue | 22,677 | 18,343 | ||||
| Accrued expenses and other current liabilities | 25,446 | 24,082 | ||||
| Payable in respect of intangible assets purchase | 10,334 | 17,547 | ||||
| 66,629 | 73,235 | |||||
| NON-CURRENT LIABILITIES: | ||||||
| Borrowing | 82,524 | 81,386 | ||||
| Payable in respect of intangible assets purchase | 13,788 | 7,199 | ||||
| Lease liabilities | 3,391 | 3,807 | ||||
| Royalty obligation | 750 | 750 | ||||
| 100,453 | 93,142 | |||||
| TOTAL LIABILITIES | 167,082 | 166,377 | ||||
| EQUITY: | ||||||
| Ordinary shares | 1,309 | 1,054 | ||||
| Additional paid-in capital | 354,057 | 293,144 | ||||
| Accumulated deficit | (302,325 | ) | (280,334 | ) | ||
| TOTAL EQUITY | 53,041 | 13,864 | ||||
| TOTAL LIABILITIES AND EQUITY | 220,123 | 180,241 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
| Ordinary | Additional | Accumulated | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| shares | paid-in capital | deficit | equity | |||||||
| U.S. dollars in thousands | ||||||||||
| BALANCE AT JANUARY 1, 2021 | 1,054 | 293,144 | (280,334 | ) | 13,864 | |||||
| CHANGES IN THE THREE-MONTHS PERIOD ENDED MARCH 31, 2021: | ||||||||||
| Share-based compensation to employees and service providers | — | — | 872 | 872 | ||||||
| Issuance of ordinary shares, net of expenses | 242 | 57,699 | — | 57,941 | ||||||
| Exercise of options into ordinary shares | 13 | 3,214 | — | 3,227 | ||||||
| Comprehensive loss | — | — | (22,863 | ) | (22,863 | ) | ||||
| BALANCE AT MARCH 31, 2021 | 1,309 | 354,057 | (302,325 | ) | 53,041 | |||||
| BALANCE AT JANUARY 1, 2020 | 962 | 267,403 | (208,363 | ) | 60,002 | |||||
| CHANGES IN THE THREE-MONTHS PERIOD ENDED MARCH 31, 2020: | ||||||||||
| Share-based compensation to employees and service providers | — | — | 802 | 802 | ||||||
| Comprehensive loss | — | — | (17,157 | ) | (17,157 | ) | ||||
| BALANCE AT MARCH 31, 2020 | 962 | 267,403 | (224,718 | ) | 43,647 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
REDHILL BIOPHARMA LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2021 | 2020 | |||||
| U.S. dollars in thousands | ||||||
| OPERATING ACTIVITIES: | ||||||
| Comprehensive loss | (22,863 | ) | (17,157 | ) | ||
| Adjustments in respect of income and expenses not involving cash flow: | ||||||
| Share-based compensation to employees and service providers | 872 | 802 | ||||
| Depreciation | 492 | 350 | ||||
| Amortization and impairment of intangible assets | 1,827 | 1,076 | ||||
| Non-cash interest expenses related to borrowing and payable in respect of intangible assets purchase | 2,639 | 104 | ||||
| Fair value losses (gains) on financial assets at fair value through profit or loss | 6 | 75 | ||||
| Exchange differences and revaluation of bank deposits | 46 | (159 | ) | |||
| 5,882 | 2,248 | |||||
| Changes in assets and liability items: | ||||||
| Decrease (increase) in trade receivables | 5,349 | (501 | ) | |||
| Decrease in prepaid expenses and other receivables | 1,428 | 971 | ||||
| Increase in inventories | (2,744 | ) | (885 | ) | ||
| Decrease in accounts payable | (5,017 | ) | (999 | ) | ||
| Increase in accrued expenses and other liabilities | 1,364 | 6,030 | ||||
| Increase (decrease) in allowance for deductions from revenue | 4,334 | (331 | ) | |||
| 4,714 | 4,285 | |||||
| Net cash used in operating activities | (12,267 | ) | (10,624 | ) | ||
| INVESTING ACTIVITIES: | ||||||
| Purchase of fixed assets | (88 | ) | (242 | ) | ||
| Change in investment in current bank deposits | — | 3,200 | ||||
| Transactions costs related to purchase of intangible assets | — | (1,183 | ) | |||
| Proceeds from sale of financial assets at fair value through profit or loss | 475 | 2,225 | ||||
| Net cash provided by (used in) investing activities | 387 | 4,000 | ||||
| FINANCING ACTIVITIES: | ||||||
| Proceeds from long-term borrowings, net of transaction costs | — | 79,345 | ||||
| Proceeds from issuance of ordinary shares, net of issuance costs | 57,941 | — | ||||
| Exercise of options into ordinary shares | 3,227 | — | ||||
| Repayment of payable in respect of intangible asset purchase | (2,125 | ) | — | |||
| Increase in restricted cash | — | (20,000 | ) | |||
| Payment of principal with respect to lease liabilities | (383 | ) | (261 | ) | ||
| Net cash provided by financing activities | 58,660 | 59,084 | ||||
| INCREASE IN CASH AND CASH EQUIVALENTS | 46,780 | 52,460 | ||||
| EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | (103 | ) | 131 | |||
| BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 29,295 | 29,023 | ||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD | 75,972 | 81,614 | ||||
| SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH | 19 | 178 | ||||
| SUPPLEMENTARY INFORMATION ON INTEREST PAID IN CASH | 1,990 | 231 | ||||
| SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||
| Acquisition of right-of-use assets by means of lease liabilities | — | 1,575 | ||||
| Long-term borrowings transaction costs | — | 1,284 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
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<br> 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<br> approval of these condensed consolidated interim financial statements, the Company commercializes in the U.S., Talicia^®^, for the treatment of Helicobacter pylori<br> infection in adults, the first product approved by the U.S. Food and Drug Administration (“FDA”) being developed primarily internally by the Company, Movantik^®^,^^for<br> the treatment of opioid-induced constipation, and Aemcolo^®^(rifamycin), for traveler’s diarrhea. |
|---|
Effective April 1, 2020, RedHill Inc. entered into an exclusive license agreement (the “License Agreement”) with AstraZeneca AB (“AstraZeneca”), granting RedHill Inc. exclusive, worldwide (excluding Europe, Canada) commercialization and development rights to Movantik^®^ (naloxegol). In addition, RedHill Inc. entered into certain related agreements, pursuant to which AstraZeneca provides RedHill Inc. transitional services for an agreed period. See also notes 1a(2) and 16a(5) to the annual financial statements as of December 31, 2020.
| 3) | Through March 31, 2021, the Company has an accumulated deficit and its activities have been funded primarily through public and private offerings of the Company’s securities and borrowing. There is no assurance that the Company’s<br> business will generate sustainable positive cash flows. |
|---|
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 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, based on a prioritized plan that will result in negative cash flows from operating activities. The Company believes its existing capital resources should be sufficient to fund its current and planned operations for at least the next 12 months.
If the Company is unable to out-license, sell or commercialize its therapeutic candidates, generate sufficient and sustainable revenues from its commercial operations, or obtain future financing, the Company may be forced to delay, reduce the scope of, or eliminate one or more of its research and development or commercialization programs, any of which may have a material adverse effect on the Company’s business, financial condition or results of operations.
7
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
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 and financial condition will depend on future developments that are highly uncertain and cannot be accurately 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.
A number of the Company’s commercial activities have been 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.
Although no major disruptions, other than manageable impact on its development and commercial activities, the Company continues to assess the potential impact of the COVID-19 pandemic on its business and operations, including on its sales, expenses, supply chain, financial resources, and clinical trials.
| b. | Approval of the condensed consolidated interim financial statements: |
|---|
These condensed consolidated interim financial statements were approved by the Board of Directors (the "BoD") on May 26, 2021.
NOTE 2 - BASIS OF PREPARATION OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS:
The Company’s condensed consolidated interim financial statements for the three months ended March 31, 2021 (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, 2020, 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 months ended March 31, 2021, are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.
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, 2020.
8
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - SIGNIFICANT EVENTS DURING THE CURRENT REPORTING PERIOD:
| a. | Movantik^®^ License Agreement amendment |
|---|
In connection with the agreements mentioned in note 1a(2) above, in April 2020, RedHill Inc. made an upfront payment of $52.5 million to AstraZeneca. Under the terms of the License Agreement, as amended on July 14, 2020, RedHill Inc. agreed to pay a further noncontingent payment of $15.5 million in December 2021. On March 11, 2021, RedHill Inc and AstraZeneca signed an amendment to the License Agreement. Pursuant to which, the $15.5 million payment due in December 2021 will be adjusted to gradual payments starting in March 2021 and ending in December 2022, totaling $16 million. The amendment is not considered a substantial modification of the terms and resulted in an adjustment of approximately $0.5 million in the carrying amount of the Payable in respect of intangible assets purchase, and a corresponding charge in the statements of comprehensive loss, under financial expenses.
| b. | During the three months ended March 31, 2021, the Company issued 7,836,209 and 428,421 ADSs for net proceeds of approximately $58 million from underwritten offerings and $3 million from options exercises, respectively. |
|---|---|
| c. | On February 22, 2021, Aether Therapeutics Inc., filed a complaint against the Company in the United States District Court for the District of Delaware ("Aether Litigation"). The complaint asserts that the Company's marketing of the<br> Movantik® product infringes U.S. Patent No’s. 6,713,488, 8,748,448, 8,883,817 and 9,061,024 held by Aether Therapeutics Inc., or the Aether Patents. Aether has asserted the Aether Patents against other entities previously involved in the<br> marketing of the Movantik® product. The complaint requests customary remedies for patent infringement, including (i) a judgment that the Company has infringed, contributed to and induced infringement of the Aether patents, (ii) damages,<br> (iii) attorneys’ fees and (iv) costs and expenses. the Company intends to vigorously defend itself against these claims. Given the early stage of the Aether Litigation, the Company is unable to predict the likelihood of success of the<br> claims of Aether Therapeutics Inc. or to quantify any risk of loss. |
| --- | --- |
NOTE 4 – ALLOWANCE FOR DEDUCTIONS FROM REVENUE:
The following table shows the movement of the allowance for deductions from revenue:
| 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 | 17,804 | 460 | 18,264 | ||||||
| Decreases (utilized) | (13,028 | ) | (243 | ) | (13,271 | ) | |||
| Adjustments | (659 | ) | - | (659 | ) | ||||
| As of March 31, 2021 | 20,497 | 2,180 | 22,677 | ||||||
| Rebates and patient discount programs | Product returns | Total | |||||||
| U.S. dollars in thousands | |||||||||
| As of January 1, 2020 | 1,001 | 266 | 1,267 | ||||||
| Increases | 252 | 392 | 644 | ||||||
| Decreases (utilized) | (223 | ) | (8 | ) | (231 | ) | |||
| Adjustments | (82 | ) | - | (82 | ) | ||||
| As of March 31, 2020 | 948 | 650 | 1,598 |
9
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - SHARE-BASED PAYMENTS:
The following is information on options granted during the three months ended March 31, 2021:
| Number of options granted | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| According to the Award Plan | Fair value of | ||||||||
| of the Company | options on date of | ||||||||
| Other<br><br> <br>than to | Exercise<br> price for 1 | grant in<br><br> <br>U.S. dollars<br> <br>in thousands | |||||||
| Date of grant | directors (1) | To directors (1)(2) | Total | ADS () | (1)(2) | ||||
| March 2021 | 40,500 | — | 40,500 | 151 |
All values are in US Dollars.
| 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<br> 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<br> 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<br> 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: exercise price of the Company's ADS: $9.44, expected volatility: 64.05%, risk-free interest rate: 1.73% and the<br> expected term was derived based on the contractual term of the options, the expected exercise behavior and expected post-vesting forfeiture rates. |
| --- | --- |
NOTE 6 - NET REVENUES:
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| U.S dollars in thousands | ||||
| Movantik® revenues | 18,898 | — | ||
| Other products | 1,677 | 1,056 | ||
| 20,575 | 1,056 |
NOTE 7 - FINANCIAL INSTRUMENTS:
| a. | Fair value hierarchy |
|---|
The Company's financial assets as of December 31, 2020, measured at fair value, are at level 1. The Company has no liabilities measured at fair value in the reported periods.
During the reported periods, there were no transfers of financial assets between Levels 1, 2, or 3 fair value measurements.
| b. | The carrying amount of cash equivalents, bank deposits, restricted cash, receivables, account payables and accrued expenses approximate their<br> fair value due to their short-term characteristics. |
|---|
The fair value of the borrowing and Payable in respect of intangible assets purchase is approximately $103 million and $27 million as of March 31, 2021, respectively.
10
REDHILL BIOPHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 8 - SEGMENT INFORMATION:
The Company has two segments, Commercial Operations and Research and Development. The following table presents net revenues and operating loss for the Company's segments for the three months ended March 31, 2021 and 2020:
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | ||||||
| Commercial<br><br> <br>Operations | Research and Development | Consolidated | ||||
| U.S. dollars in thousands | ||||||
| Net revenues | 20,575 | — | 20,575 | |||
| Operating loss | 8,515 | 9,637 | 18,152 | |||
| Three Months Ended March 31, | ||||||
| 2020 | ||||||
| Commercial<br><br> <br>Operations | Research and Development | Consolidated | ||||
| U.S. dollars in thousands | ||||||
| Net revenues | 1,056 | — | 1,056 | |||
| Operating loss | 12,076 | 4,940 | 17,016 |
NOTE 9 - EVENT SUBSEQUENT TO MARCH 31, 2021:
| a. | On April 26, 2021, the Company has filed with the SEC a schedule tender offer to exchange 2,805,281 of its options for the Company’s ADSs with new 2,805,281 options for the Company’s ADSs (the “New Options”). The New Options will have<br> lower exercise prices than in the original options, as stipulated in the terms and conditions filed in the exchange offer. |
|---|
The incremental compensation expense to be recognized by the Company will be measured as the excess of the fair value of each award of New Option granted, measured as of the date the New Options are granted, over the fair value of the options cancelled in exchange for the New Options, measured immediately prior to the cancellation. The Company will recognize any such incremental compensation expense related to the vested options immediately.
| b. | On April 28, 2021, the BoD approved a grant of options to purchase 2,121,296 ADSs to employees, consultants and advisory board members of the Company and RedHill Inc. The estimated fair value of the options on the grant date was<br> approximately $8.5 million. |
|---|
On the same date, the BoD also approved, subject to the approval of a general meeting of the Company’s shareholders, a grant of options to purchase 110,000 and 115,485 ADSs to the Company’s CEO and members of the BoD, respectively.
11