RedHill Biopharma (NASDAQ: RDHL) reported Q3 EPS of $0.05, $0.21 better than the analyst estimate of ($0.16). Revenue for the quarter came in at $20.9 million versus the consensus estimate of $25.37 million.

Financial highlights for the third quarter ended September 30, 20201

• Net Revenues of $20.9 million, continuing at a similar level to that in the second quarter of 2020. The increase in gross revenues, as well as in the number of scripts for Talicia and Movantik, were partially offset by the voluntary discontinuation of our legacy products.
• Cost of Revenues of $10.3 million, compared to $14.2 million in the second quarter of 2020. The decrease was attributable to the reduced royalty rate payable to Daiichi Sankyo, Inc. for Movantik following the new agreement between the companies.
• Gross Profit of $10.6 million, compared to $6.7 million in the second quarter of 2020. Gross profit of 51%, up from 32% in the second quarter, is attributable to the lower royalties payable.
• Research and Development Expenses were $4.3 million, compared to $3.2 million in the second quarter of 2020. The increase was primarily attributable to the progression of the opaganib COVID-19 studies and to initiation activities for the Phase 3 study with RHB-204 for NTM infections.
• Selling, Marketing and Business Development Expenses were $13.4 million, compared to $10 million in the second quarter of 2020. The increase was primarily attributable to the expansion of commercialization activities related to Talicia and Movantik, as well as to the payment received in the second quarter under the U.S. Small Business Administration Payroll Protection Program (PPP) which was recorded as a reduction in expenses.
• General and Administrative Expenses were $7.3 million, compared to $6 million in the second quarter of 2020. The increase was primarily attributable to the payment received in the second quarter under the PPP which was recorded as a reduction from expenses.
• Operating Loss was $14.5 million, compared to $12.5 million in the second quarter of 2020. The increase was primarily attributable to the expansion of commercialization activities related to Talicia and Movantik and investment in the studies with opaganib and RHB-204, partially offset by the increase in gross profit, as described above.
• Net Loss was $18.6 million, compared to $16 million in the second quarter of 2020. The increase was primarily attributable to the increase in operating loss, as detailed above, and the increase in financing expenses due to the financial liability related to the new agreement with Daiichi Sankyo.
• Net Cash Used in Operating Activities was $9.2 million, compared to $15 million in the second quarter of 2020. The decrease was primarily attributable to positive changes in working capital.
• Net Cash Provided by Financing Activities was $12 million, compared to $5.5 million in the second quarter of 2020. The increase was primarily attributable to the increase in proceeds from the Company’s “at-the-market” (ATM) facility and a reduction in restricted cash.

Dror Ben-Asher, RedHill’s Chief Executive Officer, said: “Despite the challenging pandemic environment, we have shown the strength of our commercial organization. Our extensive promotional efforts for Talicia delivered 300% quarter-over-quarter prescription growth, as well as rapid expansion of the prescriber base alongside national payor coverage for 167 million Americans. Movantik prescriptions grew for a second consecutive quarter - reversing the trend of prescription decline prior to its acquisition by RedHill.”

Mr. Ben-Asher continued: “Our global Phase 2/3 and U.S. Phase 2 studies with opaganib for COVID-19 are quickly approaching completion and are supplemented by data demonstrating opaganib’s complete inhibition of SARS-CoV-2 viral replication. We have also initiated manufacturing ramp-up in preparation for potential emergency use applications for opaganib in the first quarter of 2021. We are initiating the Phase 3 study of RHB-204 as an oral first-line therapy for pulmonary NTM infections, a disease with a significant unmet need and no FDA-approved first-line treatment.”

Micha Ben Chorin, Chief Financial Officer at RedHill, added: “This has been another positive quarter for the Company. We have significantly increased gross profit from 32% in the second quarter to 51% thanks to our new agreement with Daiichi Sankyo Inc. We expect the trend of increasing Movantik prescriptions to continue. We are pleased with the successful transition of Movantik from AstraZeneca and expect savings in operating expenses, as well as higher distribution service agreement fees to apply. We continue to effectively manage our cash position and continue to work toward operational break-even next year.”

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