Targeting positive cash from operations to start during H2/22
Focus on earlier achievement of operational profitability thanks to a recently implemented comprehensive cost reduction plan, with expected operational cost savings of approximately $50 million over the next 18 months
Continuous implementation of disciplined cost controls reduced Q1/22 cash used in operating activities by more than 70% to approximately $4 million, compared to approximately $15 million in Q4/21
Net revenues of $18.2 million in Q1/22; Cash balance of $45 million as of March 31, 2022
Talicia® TRx up 12.8% over Q4/21 and Movantik® continues strong Q4/21 prescription performance
Amendment improves key covenants in the HCR Credit Agreement
Given encouraging data to date, opaganib and RHB-107 COVID-19 Phase 3-stage programs expected to be funded via external sources; Global and U.S. regulatory interactions ongoing
Management to host webcast today, at 08:30 a.m. EDT
Dror Ben-Asher, RedHill’s Chief Executive Officer, said: “To address the current market realities and operating landscape, RedHill is being decisive about controlling its own destiny and is highly focused on achieving earlier profitability, targeting positive cash from operations to start during H2/22. Our comprehensive cost reduction plan is expected to generate operational cost savings of approximately $50 million over the next 18 months. The majority of these savings result from an approximately one-third reduction of the U.S. commercial team workforce, returning to pre-pandemic levels, streamlined operational expenditure including selling, general and administrative (SG&A) expenses and refining the Company’s R&D strategy to rely mostly on external funding sources based on the promising clinical data generated to date. On behalf of RedHill and its Board of Directors, I would like to express my profound and respectful gratitude to the colleagues who are departing RedHill. We value and are extremely grateful for your immense contributions and dedication which enabled RedHill to build a first-class U.S. commercial organization and launch three innovative products that help patients in need. While difficult, the changes we have made as part of our cost reduction plan were necessary given the current realities.”
Mr. Ben-Asher continued: “Improved financial stability resulting from cost savings, a commercial basket including three FDA-approved proprietary drugs, continued prescription growth and healthy sales, improved managed care coverage and the amended credit agreement with HCR, positions RedHill for further growth. To that end, RedHill is in non-binding discussions to acquire a synergetic U.S. FDA-approved, patented GI drug currently generating dozens of millions of dollars, which, if materialized, will help expedite and increase cash generation.”
Micha Ben Chorin, Chief Financial Officer at RedHill, added: “RedHill’s commercial team has further strengthened Movantik®’s share of the growing PAMORA class to approximately 74%, and Talicia®’s approximately 13% quarterly growth further consolidates its position as the leading U.S. brand for H. pylori eradication. The Company’s disciplined cost control measures reduced Q1/22 cash used in operating activities by more than 70% to approximately $4 million, compared to approximately $15 million in Q4/21. Despite the challenging market conditions, RedHill is on its way to achieving company-wide positive cash from operations1 this year, and this, along with the envisaged growth drivers from the pipeline and potential acquisitions, could boost cash generation and further improve cash flow. We are confident that RedHill is well positioned for continuing growth.”
Mr. Ben-Asher further remarked: “Turning to R&D, in reliance of promising clinical and other data we generated to date, we expect external funding for much of our promising R&D programs, through grants, industry partnerships and participation in platform studies. COVID-19, included in a broader category of ‘pandemic preparedness’, remains an area of high interest and need for novel oral therapeutics such as RedHill’s candidates. Regulatory feedback on opaganib, supportive of a confirmatory study has provided a pathway to potential opaganib submissions for approval in COVID-19. Most recently, opaganib further exhibited its variant-agnostic credentials by demonstrating potent in vitro efficacy against Omicron, while also showing, in a separate study, potent in vitro inhibition of influenza A H1N1, adding to evidence of opaganib’s broader antiviral potential and its promising applicability to ‘pandemic preparedness’. Meanwhile, RedHill’s 2nd COVID-19 therapeutic candidate, RHB-107, successfully met the Part A study primary outcome measure for its Phase 2/3-stage study in non-hospitalized COVID-19, showing, among other promising data, a 100% reduction in hospitalization due to COVID-19. Discussions are ongoing regarding potential external funding through grants, platform studies and other public, private and industry partnerships to support the opaganib and RHB-107 programs, as well as our ongoing Phase 3 study with RHB-204 for NTM disease.”
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