RedHill Biopharma Ltd. Reports 2014 Fourth Quarter And Year-End Financial Results

Key Highlights Include:

• Strong cash position of over $34 million, following completion of a $14.4 million U.S. public offering in February 2015
• With three ongoing Phase III clinical studies for gastrointestinal diseases, R&D expenses increased to $12.7 million in 2014 compared to $8.1 million in 2013
• Anticipated 2015 milestones include top-line data from the ongoing Phase III study of RHB-105 for the treatment of H. pylori bacterial infection, expected in Q2/2015, and from the ongoing Phase III study of BEKINDA^™ (RHB-102) for acute gastroenteritis and gastritis, expected in Q4/2015

TEL-AVIV, Israel, Feb. 26, 2015 (GLOBE NEWSWIRE) -- RedHill Biopharma Ltd. (Nasdaq:RDHL) (TASE:RDHL) ("RedHill" or the "Company"), an Israeli biopharmaceutical company primarily focused on late clinical-stage, proprietary, orally-administered drugs for inflammatory and gastrointestinal diseases, including gastrointestinal cancers, today reported its financial results for the year ended December 31, 2014.

Financial highlights for the year ended December 31, 2014 and for the fourth quarter of 2014:

Revenues for the year ended December 31, 2014 were $7.0 million, compared to immaterial revenues for the year ended December 31, 2013. The revenues in 2014 were mainly from an upfront payment of $7.0 million received from Salix Pharmaceuticals, Inc. ("Salix") for the out-licensing of RedHill's RHB-106 encapsulated bowel preparation and related rights.

Cost of Revenues for the year ended December 31, 2014 was $1.0 million compared to immaterial Cost of Revenues in the year ended December 31, 2013. The Cost of Revenues resulted primarily from a payment made to Giaconda Limited under a 2010 Asset Purchase Agreement, triggered by the payment received from Salix as part of the out-licensing transaction described above.

Research and Development Expenses for the year ended December 31, 2014 were approximately $12.7 million, an increase of $4.6 million, or approximately 57%, compared to $8.1 million for the year ended December 31, 2013. The increase resulted primarily from clinical trial costs of approximately $3.5 million, net, related mainly to the ongoing Phase III clinical studies of RHB-104 (Crohn's disease), RHB-105 (H. pylori) and BEKINDA^™ (gastroenteritis and gastritis). Research and Development Expenses for the quarter ended December 31, 2014 were approximately $3.7 million, compared to $2.6 million in the comparable quarter of 2013. The increase was mainly due to the RHB-104, RHB-105 and BEKINDA^™ Phase III programs.

General and Administrative Expenses for the year ended December 31, 2014 were approximately $4.0 million, an increase of $1.3 million, or approximately 48%, compared to $2.7 million for the year ended December 31, 2013. The increase resulted primarily from an increase in payroll and related expenses as a result of the recruitment of new employees and an increase in share-based payments and professional services. General and Administrative Expenses for the quarter ended December 31, 2014 were approximately $1.1 million compared to $0.9 million in the comparable quarter of 2013. The increase was mainly due to an increase in professional services.

Operating Loss for the year ended December 31, 2014 was approximately $10.6 million compared to $10.8 million for the year ended December 31, 2013. The decrease was mainly due to revenues from the Salix licensing transaction, partially offset by an increase in Research and Development Expenses. Operating Loss for the quarter ended December 31, 2014 was $4.8 million, compared to $3.5 million in the comparable quarter of 2013. The increase in the fourth quarter of 2014 was mainly due to an increase in Research and Development Expenses.

Net Cash Used in Operating Activities for the year ended December 31, 2014 was approximately $12.2 million, an increase of $3.8 million, or approximately 45%, compared to $8.4 million for the year ended December 31, 2013. The increase was a direct result of an increase in operations, mainly an increase in advanced payments to suppliers and a decrease in accounts payable, both mainly related to research and development activities. The increase was partially offset by revenues from the Salix transaction. Net Cash Used in Operating Activities for the quarter ended December 31, 2014 was $5.9 million, compared to $2.5 million in the comparable quarter of 2013. The increase was mainly due to an increase in advance payments to suppliers and a decrease in accounts payable, both related to research and development activities.

Net Cash Used in Investment Activities for the year ended December 31, 2014 was approximately $17.9 million, compared to Net Cash Resulting from Investment Activities of $1.1 million for the year ended December 31, 2013. The increase was mainly due to investments in bank deposits and an upfront payment of $1.0 million to WILEX AG for the acquisition of rights to the oncology drug MESUPRON^®.

Cash Resulting from Financing Activities for the year ended December 31, 2014 was approximately $24.4 million, compared to $2.3 million for the year ended December 31, 2013. The Cash Resulting from Financing Activities in 2014 resulted primarily from the two financing rounds in January 2014, in the U.S. and Israel, whereas in 2013 it resulted primarily from the exercise of warrants.

Cash Balance¹ as of December 31, 2014 was approximately $22.9 million, an increase of $10.8 million, or approximately 89%, compared to $12.1 million as of December 31, 2013 and a decrease of $6.1 million, approximately 21%, compared to $29 million as of September 30, 2014. As of February 25, 2015, following the closing of the underwritten public offering, RedHill had cash and short term investments of approximately $34.6 million.

Ori Shilo, Deputy CEO, Finance and Operations said: "We reached a number of significant milestones in 2014, including the out-licensing to Salix Pharmaceuticals of the rights to the bowel preparation drug RHB-106 which generated $7.0 million from an upfront payment. RedHill has also made substantial clinical development progress throughout 2014 and is currently conducting three Phase III clinical studies for gastrointestinal diseases with top-line Phase III data expected from two of these studies during 2015. We recently secured gross proceeds of approximately $14.4 million through our first public offering in the U.S., in which prominent investors participated, bringing our cash balance to over $34 million as of February 25, 2015. Our strong cash position, together with the continuing support from our shareholders, allows us to continue to pursue our clinical and business development plans in 2015."

Selected operational highlights for the year ended December 31, 2014 and anticipated key milestones for 2015:

RHB-105 for H. pylori bacterial infection

• Q2/2015 - Top-line data expected from the Phase III study with RHB-105, currently ongoing in the U.S. (the ERADICATE Hp study).

In November 2014, the U.S Food and Drug Administration (FDA) designated RHB-105 as a Qualified Infectious Disease Product (QIDP) under the FDA's Generating Antibiotic Incentives Now (GAIN) Act. This designation allows for an additional five years of market exclusivity, Fast-Track status (an expedited development pathway) and Priority Review status (shortened review time for marketing applications). In addition, RedHill is pursuing a significantly broader indication with RHB-105 than existing treatments by targeting H. pylori infection as a first line treatment regardless of ulcer status.

BEKINDA^™ (RHB-102) - for gastroenteritis and gastritis, and for chemotherapy and radiotherapy-induced nausea and vomiting

• Q4/2015 - Top-line data expected from the Phase III study for acute gastroenteritis and gastritis (the GUARD study), currently ongoing in the U.S.

In December 2014, the Company announced that the first patients had been enrolled in the GUARD study. The randomized, double-blind, placebo-controlled, parallel group Phase III study is being conducted in the U.S. with a planned enrollment of 320 adults and children over the age of 12 who suffer from acute gastroenteritis and gastritis.

RedHill submitted, in December 2014, a European Marketing Authorization Application (MAA) to the UK Medicines and Healthcare Products Regulatory Agency (MHRA), seeking European marketing approval of BEKINDA^™ for the prevention of chemotherapy and radiotherapy-induced nausea and vomiting (CINV and RINV, respectively). The MAA was validated by the MHRA and RedHill expects to receive feedback regarding the MAA during the second half of 2015. RedHill is also pursuing marketing approval of BEKINDA™ in the U.S. for CINV prevention. Following a pre-NDA with the FDA, and in light of the FDA's feedback, RedHill intends to use post-marketing data, along with data generated from prior studies, to further support a potential New Drug Application (NDA) in the U.S.