History and Development of the Company

RedHill Biopharma Ltd. (RDHL) was incorporated on August 3, 2009, and was registered as a private company limited by shares under the laws of the State of Israel. The company's principal executive offices are located at 21 Ha’arba’a Street, Tel Aviv, Israel.

In February 2011, the company completed its initial public offering in Israel, pursuant to which the company issued 14,302,300 Ordinary Shares, and 7,151,150 tradable Series 1 Warrants to purchase 7,151,150 Ordinary Shares for aggregate gross proceeds of approximately $14 million. On December 27, 2012, the company completed the listing of its ADSs on the NASDAQ Capital Market. The company's Ordinary Shares are traded on the Tel-Aviv Stock Exchange under the symbol “RDHL,” and its ADSs are traded on the NASDAQ Capital Market under the same symbol "RDHL".¹

The company's capital expenditures for the years ended December 31, 2017, 2016 and 2015 were approximately $146,000, $85,000 and $14,000, respectively. The company's current capital expenditures involve equipment and leasehold improvements.

Business Overview

Redhill Biopharma is a specialty biopharmaceutical company primarily focused on late-clinical development stage and commercialization of proprietary drugs for gastrointestinal ("GI") diseases and cancer. From inception to the end of the period covered by this Annual Report, the company invested a total of $6.2 million on in-licensing and acquisitions of therapeutic candidates and related technologies.

Depending on the specific development program, its therapeutic candidates are designed to exhibit greater efficacy and provide improvements over existing drugs by one or more of the following: by improving their safety profile, reducing side effects, lowering the number of administrations, using a more convenient administration form or providing a cost advantage. Where applicable, the company intend to seek FDA approval for the commercialization of certain of its therapeutic candidates through the alternative Section 505(b)(2) regulatory path under the Federal Food, Drug, and Cosmetic Act of 1938, as amended (“FDCA”), and in corresponding regulatory paths in other foreign jurisdictions. The company's current pipeline consists of six late-clinical development stage therapeutic candidates.

The company generate its pipeline of therapeutic candidates by identifying, rigorously validating and in-licensing or acquiring products that are consistent with its product strategy and that the company believe exhibit a relatively high probability of therapeutic and commercial success. The company's therapeutic candidates have not yet been approved for marketing and, to date, its therapeutic candidates have not generated meaningful sales. The company intend to commercialize its therapeutic candidates through licensing and other commercialization arrangements with pharmaceutical companies on a global and territorial basis. The company also evaluate, on a case by case basis, co-development and similar arrangements and the independent commercialization of its therapeutic candidates in the U.S.

In addition to its primary focus on the development of clinical-stage GI products, Redhill Biopharma has established commercial presence and capabilities in the U.S., intended primarily to support potential future launch of its GI-related therapeutic candidates currently under development in the U.S. The company pursue its commercial activities in the U.S. through RedHill Biopharma Inc., a wholly-owned subsidiary the company formed in Delaware in January 2017. Through this subsidiary, the company currently commercialize in the U.S., EnteraGam® and promote Donnatal® and Esomeprazole Strontium Delayed-Release Capsules 49.3 mg.

Strategy

The company's goal is to become a significant player in the development and commercialization of pharmaceuticals for the treatment of GI diseases and cancer.

Key elements of its strategy are to:

• dentify and acquire rights to products from pharmaceutical companies that have encountered cash flow or operational problems or that decide to divest one or more of their products for various reasons. Specifically, the company seek to acquire rights to and develop products that are intended to treat pronounced clinical needs, have patent or other protections, and have potential target markets totaling tens of millions to billions of dollars. Additionally, the company seek to acquire rights to and develop products based on different technologies designed to reduce its dependency on any specific product or technology. The company identify such opportunities through its broad network of contacts and other sources in the pharmaceutical field;
• advance its initiative to become a revenue-generating, GI-focused, specialty biopharmaceutical company with a commercial presence in the U.S. to support potential future commercialization of its therapeutic candidates and products approved for marketing by identifying and acquiring rights to products that have been approved for marketing in the U.S. from pharmaceutical companies that are interested in divesting one or more of their products. Specifically, the company seek to acquire rights to products that are already commercialized in the U.S., preferably with a therapeutic focus on GI or cancer, which would enable it to commercialize such products independently through its own marketing and commercialization capabilities. The company identify such opportunities through its broad network of contacts and other sources in the pharmaceutical field;
• enhance existing pharmaceutical products, including broadening their range of indications, or launching innovative and advantageous pharmaceutical products, based on existing active ingredients. Because there is a large knowledge base regarding existing products, the preclinical, clinical and regulatory requirements needed to obtain marketing approval for enhanced formulations are relatively well-defined. In particular, clinical trial designs, inclusion criteria and endpoints previously accepted by regulators may sometimes be re-used. In addition to reducing costs and time to market, the company believe that targeting therapeutics with proven safety and efficacy profiles provides it a better prospect of clinical success;
• where applicable, utilize the FDA’s 505(b)(2) regulatory pathway to potentially obtain more timely and efficient approval of its formulations of previously approved products. Under the 505(b)(2) process, Redhill Biopharma is able to seek FDA approval of a new dosage form, strength, route of administration, formulation, dosage regimen, or indication of a pharmaceutical product that has previously been approved by the FDA. This process enables it to partially rely on the FDA findings of safety or efficacy for previously approved drugs, thus avoiding the duplication of costly and time-consuming preclinical and various human studies. See “Item 4. Information on the Company – B. Business Overview – Government Regulations and Funding – Section 505(b)(2) New Drug Applications”; and
• cooperate with third parties to develop or commercialize therapeutic candidates in order to share costs and leverage the expertise of others.

Therapeutic Candidates

Summary

The company's six late-clinical development stage therapeutic candidates include “TALICIA®”, “RHB-104”, “BEKINDA®”, “RHB-106”, “YELIVA®” and “RHB-107” and related research and development programs, the most advanced of which are described below.

TALICIA®

ALICIA® is intended for the eradication of H. pylori bacterial infection in the GI tract. TALICIA® is a combination of three approved drug products – omeprazole, which is a proton pump inhibitor (prevents the secretion of hydrogen ions necessary for digestion of food in the stomach), amoxicillin and rifabutin, which are antibiotics. TALICIA® is administered to patients orally.

Chronic infection with H. pylori irritates the mucosal lining of the stomach and small intestine. The original discovery of the H. pylori bacteria and its association with peptic ulcer disease warranted the Nobel Prize in 2005. H. pylori infection has since been associated with a variety of outcomes which include: dyspepsia (non-ulcer or functional), peptic ulcer disease (duodenal ulcer and gastric ulcer), primary gastric B-cell lymphoma, vitamin B12 deficiency, iron deficiency, anemia and gastric cancer.

Gastric cancer is one of the most commonly diagnosed cancers worldwide and one of the most common causes of cancer-related deaths, accounting for approximately 700,000 deaths annually. According to a 2010 report by Polk DB et al. published in Nature Reviews Cancer, H. pylori-induced gastritis is the strongest singular risk factor for cancers of the stomach, and eradication of H. pylori significantly decreases the risk of developing cancer in infected individuals without pre-malignant lesions.

TALICIA® was granted Qualified Infectious Disease Product (“QIDP”) designation by the FDA in November 2014. The QIDP designation was granted under the FDA's Generating Antibiotic Incentives Now Act, which is intended to encourage the development of new antibiotic drugs for the treatment of serious or life-threatening infections that have the potential to pose a serious threat to public health. The granted QIDP designation allows it to benefit from Fast-Track development status with an expedited development pathway for TALICIA® and Priority Review status which potentially provides shorter review time by the FDA of a future potential marketing application. If approved, TALICIA® will also receive an additional five years of U.S. market exclusivity on top of the standard exclusivity period, for a total of eight years of market exclusivity.

TALICIA® is targeting a significantly broader indication than that of existing H. pylori therapies, as a first-line treatment of H. pylori infection, regardless of ulcer status.

The company acquired the rights to TALICIA® pursuant to an agreement with Giaconda Limited.

Competition and Market

The first-line therapies for H. pylori infection recommended by the American College of Gastroenterology in 2017 commonly include clarithromycin or metronidazole antibiotics with amoxicillin and a proton pump inhibitor. Such current standard-of-care treatments fail in approximately 30% of the patients due to the development of antibiotic resistance, based on reports by Prof. David Y. Graham, M.D., et al. published in Nature Clinical Practice Gastroenterology & Hepatology in 2008 and in Gut in 2010 and by Malfertheiner P. et al. published in Gut in 2012.

As published in the 2006 study report by Dr. T.J. Borody, et al. in Alimentary Pharmacology & Therapeutics, the potential advantage of TALICIA® over the current first-line therapies was shown in a Phase II study comprised of 130 subjects. In the study, a different formulation of TALICIA®, using the same antibiotic ingredients and a similar proton pump inhibitor, was shown to eradicate H. pylori in over 90% of treated patients who failed previous eradication attempts using standard-of-care treatments. Furthermore, final results from the first Phase III study in the U.S. (the “ERADICATE Hp Study”) conducted by it demonstrated 89.4% efficacy in eradicating H. pylori infection with TALICIA® in 118 dyspepsia patients with confirmed H. pylori infection.

In the U.S., the company estimate that approximately three million patients per annum present with first time dyspeptic symptoms caused by an H. pylori infection, based on a 2007 report by Colin W. Howden, M.D., et. al. published in The American Journal of Managed Care and a 2005 report by Nicholas J. Talley, M.D., et al. published in The American Journal of Gastroenterology. Based on this figure, combined with the price of branded treatments, the company estimate the potential global and U.S. market for TALICIA® was approximately $4.83 billion and $1.45 billion in 2015, respectively.

Clinical Development

A Phase II clinical trial in Australia was completed with a different formulation of TALICIA®, using the same antibiotic ingredients and a similar proton pump inhibitor. A first Phase III trial in the U.S., the ERADICATE Hp Study, which was completed in 2015, showed 89.4% eradication of H. pylori with TALICIA® therapy while open-label standard-of-care yielded an H. pylori eradication rate of 63% in placebo subjects.

Professor David Y. Graham, MD, from Baylor College of Medicine, Houston, Texas, served as the lead investigator of the ERADICATE Hp Study.

The company met with the FDA in April 2016 to discuss the successful results of the ERADICATE Hp Study and the proposed design of the confirmatory Phase III study for the treatment of H. pylori infection. In light of the feedback received from the FDA, in January 2017 the company entered into an agreement with ICON Clinical Research Limited to perform clinical trial services for the confirmatory Phase III study. Pursuant to a recommendation from the FDA, the company completed a successful supportive pharmacokinetic (PK) program in May 2017 prior to initiating the confirmatory Phase III study. In June 2017, the company initiated a confirmatory Phase III study with TALICIA® for the treatment of H. pylori infection (the “ERADICATE Hp2 study”), which is currently ongoing. The ERADICATE Hp2 study is a two-arm, randomized, double-blind, active comparator clinical study comparing TALICIA® against a dual therapy amoxicillin and omeprazole regimen at equivalent doses. The study is planned to enroll 444 non-investigated dyspepsia patients with confirmed H. pylori infection in up to 65 clinical sites in the U.S., with a primary endpoint of eradication of H. pylori infection at 43 through 71 days after initiation of treatment. The company expect to receive top-line results from the ERADICATE Hp2 study in the second half of 2018. Subject to a successful outcome and any additional regulatory feedback, the ERADICATE Hp2 study is expected to complete the package required for a potential submission of an NDA for TALICIA®.

The following chart summarizes the clinical trial history and status of TALICIA®:

RHB-104

Crohn’s Disease

RHB-104 is intended to treat Crohn’s disease, which is a serious inflammatory disease of the GI system that may cause severe abdominal pain and bloody diarrhea, malnutrition and potentially life-threatening complications.

RHB-104 is a patented combination of clarithromycin, clofazimine, and rifabutin, three generic antibiotic ingredients, in a single capsule. The compound was developed to treat Mycobacterium avium paratuberculosis (“MAP”) infections in Crohn’s disease.

To date, Crohn’s disease has been considered an autoimmune disease, but the exact pathological mechanism is unclear. Dr. Robert J. Greenstein suggested in The Lancet Infectious Diseases, 2003 that Crohn’s disease is caused by MAP, the same organism responsible for a major cause of disease in animal agriculture production, domestic and wild animals. This hypothesis is supported by an expanding number of scientific and clinical studies published in peer-reviewed journals since a National Institute of Allergy and Infectious Diseases conference that focused on MAP in Crohn’s disease took place in 1998. Specific genetic loci like NOD2 have been implicated in the pathogenesis of Crohn’s disease with mutations in NOD2 suspected of leading to defective recognition of MAP and increased compensatory immune activation in patients with Crohn’s disease. Recent advances in diagnostic technology have led to increasingly higher identification of MAP, with studies, such as Bull TJ et al. J Clin Microbiol, 2003 and Shafran I et al. Dig Dis Sci, 2002, demonstrating a high prevalence of MAP in Crohn’s disease patients. However, there is currently no FDA-approved commercial diagnostic test for MAP.

On February 12, 2012, the company entered into an agreement with Q Squared Solutions LLC (f/k/a Quest Diagnostics Ltd.) (“Q Squared”) to develop a commercial diagnostic test for detecting the presence of MAP bacterial DNA in the blood based upon the rights the company acquired from UCF. Additional intellectual property covering other aspects of MAP detection was licensed from the University of Minnesota in December 2014 in order to potentially enhance its ability to detect MAP. On January 29, 2015, the company announced that, together with Q Squared, the company concluded a pre-submission meeting with the device division of the FDA regarding the development path of a commercial companion diagnostic test for the detection of MAP in Crohn’s disease patients.

In October 2016 the company reported the results from the MAP diagnostic development program, including an initial validation of its platform PCR (polymerase chain reaction) detection methodology licensed from UCF and developed by Professor Saleh A. Naser. Further optimization of the processes for rapid detection of MAP is currently in progress. The company believe that ensuring that any future commercial test is accurate and reproducible is an essential part of the RHB-104 Crohn’s disease program. Currently the development is ongoing, and the company cannot assure when a commercially available diagnostic test will be validated as accurate or reproducible, if at all.

Competition and Market

According to GlobalData, a provider of market intelligence for the pharmaceutical sector, there were approximately 1.5 million diagnosed prevalent cases of Crohn's disease in the seven major markets in 2017. This number of prevalent cases is expected to increase to 1.75 million by 2022.

According to GlobalData, the sales of drug treatments for Crohn’s disease were estimated to exceed $7.7 billion in the seven major markets in 2020. The report also estimated that the sales of therapies for Crohn’s disease in these territories would exceed $12 billion in 2022.

Therapeutic interventions in Crohn’s disease patients are based on the disease location, severity and associated complications. Therapeutic approaches for the treatment of Crohn’s disease are individualized according to the patient’s symptomatic response and tolerance to the prescribed treatment. Since the existing treatments are not curative, the current therapeutic approaches are sequential and involve treatment of an acute disease or inducing clinical remission followed by maintenance of the response or remission to improve the patient’s quality of life.

Currently, available drugs on the market for the treatment of Crohn’s disease offer only symptomatic relief, the effects of which are largely temporary or partial and are accompanied by numerous adverse effects. The most commonly prescribed drugs for treatment of Crohn’s disease include 5 Aminosalicylates (5-ASA, such as mesalamine), corticosteroids (such as prednisone), immunosuppressant drugs (such as azathioprine and methotrexate) and biologic agents, including TNF-α inhibitors (such as Remicade®, Humira® and Cimzia®), integrin inhibitors (Tysabri®, Entyvio®) and an IL 12 and IL23 antagonist (Stelara®).

Unlike drugs currently on the market for the treatment of Crohn’s disease which are immunosuppressive agents, RHB-104 is intended to address the suspected cause of the disease - MAP bacterial infection. To the best of its knowledge, there are no drugs approved for marketing that target infections caused by MAP bacteria in Crohn’s disease patients.

The company may also be exposed to potentially competitive products which may be under development to treat Crohn’s disease, including new biological therapies and other new therapies. Additionally, a number of clinical trials are being conducted by Valeant with the antibiotic rifaximin (Xifaxan®) for the treatment of Crohn’s disease.

Clinical Development

A Phase III clinical trial for RHB-104 was conducted in Australia, sponsored by Pharmacia, a Swedish company (which merged with Pfizer), with the primary endpoint of evaluating the ratio of patients with recurrent symptoms of Crohn’s disease following the initial induction of remission with 16 weeks of treatment. Subjects were subsequently assessed at 52, 104 and 156 weeks. The main secondary objective was the percentage of patients who achieved clinical remission at 16 weeks. The results of the trial were published by Professor Warwick Selby et al. in 2007 in the medical journal Gastroenterology. Although the study did not meet the main objective of showing a difference in relapse rate with long-term treatment, there was a statistically significant difference between the treatment groups in the percentage of subjects in remission at week 16. Professor Marcel Behr and Professor James Hanley from McGill University published a re-analysis of the study in The Lancet Infectious Diseases in June 2008, based on the intent-to-treat (ITT) principle and found that there was a significant statistical advantage for the active therapy over the placebo throughout the period of administration that disappeared once the active therapy was discontinued.

In June 2011, the company entered into an agreement with its Canadian service provider which entered into a back-to-back agreement with PharmaNet Canada Inc. for the provision of clinical trial services for the RHB-104 adult studies in North America and Europe. PharmaNet was subsequently acquired by inVentiv Health, and its agreements were transferred to inVentiv. See “– Master Service Agreement with 7810962 Canada Inc. and see also "Clinical Services Agreement – Clinical Services Agreement related to RHB-104."

In October 2012, the company entered into an agreement with its Canadian service provider which, in turn, entered into a back-to-back agreement with a Canadian manufacturer to complete the manufacturing and supply of RHB-104 for its clinical trials. In addition, the company entered into additional manufacturing agreements directly with the Canadian manufacturer.

Subsequent to its discussions with the FDA for approval to conduct the North American trial based upon an Investigative New Drug (IND) approved by the FDA on July 18, 2007, the company made a number of changes to the original protocol. On August 29, 2012, the company revised the IND filed by Giaconda with the submission of a new Phase III protocol to the FDA, and after 30 days, the IND became effective. Based upon the response from the FDA on issues relating to the clinical study, additional changes have been made to the clinical study in North America, Israel, and other countries. Further amendments to the protocol were submitted to the FDA in 2014, 2016 and 2017 responding to recommendations from the investigators and in order to expedite recruitment and conclusion of the study.

Redhill Biopharma is currently conducting a randomized, double-blind, placebo-controlled first Phase III study with RHB-104 for Crohn’s disease (the “MAP US study”) in approximately 150 clinical sites in the U.S., Canada, Israel, Australia, New Zealand and Europe. In the fourth quarter of 2017, the company accelerated the timelines for the ongoing MAP US study by curtailing the number of subjects enrolled in the study from 410 to 331 subjects, while maintaining statistical power of over 80% with a treatment effect of 15%. A review of the blended efficacy rate of the current blinded data, as well as additional input from experts, including statisticians and key opinion leaders, suggests that the total number of treatment successes is consistent with the predefined expected treatment outcomes and that the study has sufficient enrollment to potentially demonstrate efficacy. The company estimate that as a result of the curtailment, the development program will be shortened by approximately one year. The curtailed enrollment has been completed in November 2017 with a total of 331 subjects, and top-line results are expected in mid-2018. The estimated cost saving from the curtailment was approximately $14 million. The company remain blinded to the data from the ongoing MAP US study and cannot ascertain the potential impact of the curtailed number of subjects on the study’s final outcome. Additional clinical studies are likely to be required to support an NDA for RHB-104. If the MAP US study results are positive, the company intend to meet with the FDA and key opinion leaders to present the data package and discuss the preferred development path.

Two pre-planned independent Data and Safety Monitoring Board (“DSMB") meetings have been held to review data from the MAP US study, in which unanimous recommendations to continue the study without any changes to the protocol, investigator’s brochure, study conduct or informed consent form were given. At the first DSMB meeting, held in December 2016, safety data from the study was reviewed. At the second DSMB meeting, held in July 2017, safety and efficacy data from the first 222 subjects who had completed week 26 assessments of the study was reviewed.

In addition, in an ongoing open-label extension Phase III study (the “MAP US2 study”), the company continue to evaluate the safety and efficacy of RHB-104 in subjects who remain with active Crohn’s disease (CDAI ≥ 150) after 26 weeks of blinded study therapy in the ongoing Phase III MAP US study. These subjects may have the opportunity to receive treatment with RHB-104 for a 52-week period in the open-label MAP US2 study. The company expect that the data collected in the MAP US2 study will be supplemental to the MAP US study data. The MAP US2 study’s primary endpoint is disease remission at week 16, defined as CDAI of less than 150. The MAP US2 study is planned to enroll approximately 50 subjects in the U.S., Canada, Israel, New Zealand and Europe.

Redhill Biopharma has conducted several supportive studies with the current formulation of RHB-104, and a long-term population pharmacokinetic study is ongoing as part of the Phase III MAP US study. The company also continue to advance the development program for a commercial companion diagnostic for the detection of MAP bacteria in Crohn’s disease patients in collaboration with several U.S. universities and with Q Squared.

The following chart summarizes the clinical trial history and status of RHB-104 and its earlier individual active agents:

Nontuberculous Mycobacteria Infections

In light of recent discussions with the FDA on its design of a single pivotal Phase III study in support of a potential NDA filing for a first-line treatment of NTM infections, the company plan, subject to further input from the FDA, to initiate a pivotal Phase III study with RHB-104 for the treatment of NTM infections in mid-2018. The study is intended to assess the safety and efficacy of RHB-104 as a first-line treatment for NTM infections caused by mycobacterium avium complex (MAC).

According to Ryu YJ et al. (Tuberc Respir Dis, 2016) the incidence and prevalence of NTM lung disease are increasing worldwide, while treatment options remain limited, lengthy and challenging. NTM has high levels of drug resistance and requires long term dosing with three or more antibiotics. According to Prevots DR et al. (Am J Respir Crit Care Med, 2010), approximately 80% of pulmonary NTM cases in the U.S. are associated with MAC. RHB-104 is targeting an annual potential U.S. market for pulmonary NTM, estimated to have exceeded $500 million in 2017, based on an analysis by Foster Rosenblatt, a provider of analytic consulting and management development services for the life sciences industry.

In January 2017, the company announced that RHB-104 had been granted QIDP designation by the FDA for the treatment of NTM infections. Multiple Sclerosis (“MS”)

MS is an inflammatory, demyelinating, and neurodegenerative disease of the central nervous system of uncertain etiology that exhibits characteristics of both infectious and autoimmune pathology. There is a growing consensus in the medical community that a dysregulated immune system plays a critical role in the pathogenesis of MS. In a study published in PLOS One (April 2011 | Volume 6 | Issue 4 | e18482) by Cusso et al., among 50 MS patients and 56 healthy patients, MAP was detected in 42% and 12% respectively.

Clinical Development

Redhill Biopharma has performed several preclinical studies, including studies in an experimental autoimmune encephalomyelitis (EAE) mouse model of MS, to investigate the potential impact of RHB-104 in treating MS. The first preclinical study measured cytokine production (biomarkers of inflammation) and demonstrated that the RHB-104 treatment led to a significant reduction of pro-inflammatory cytokine concentrations of IL-6 and TNF, which are associated with inflammation and MS, compared to the control group. The second preclinical study measured the efficacy of RHB-104 as prophylactic therapy, and the treatment with RHB-104 demonstrated a significant reduction in the inflammatory area and level of demyelination, compared with the control group. The third preclinical study measured relapses, demonstrating RHB-104’s efficacy in significantly reducing the incidence of relapse compared with the control group.

Following these preclinical studies, in June 2013, the company initiated a Phase IIa proof-of-concept study with RHB-104 for relapsing-remitting multiple sclerosis (“RRMS”) (the “CEASE MS” study) at two clinical sites in Israel. The study was completed, and the final results (48 weeks) were announced in December 2016. The final results (48 weeks) were consistent with the interim results (24 weeks), suggesting meaningful positive safety and clinical signals upon 24 weeks of treatment with RHB-104 as an add-on therapy, including an encouraging relapse-free rate, Expanded Disability Status Scale scores and MRI results, which support further clinical development.

The following chart summarizes the development history and status of RHB-104-MS:

Additional trials will be required as part of the RHB-104 MS global development program and regulatory strategy.

BEKINDA® (RHB-102)

BEKINDA® is a once-daily bi-modal extended-release oral formulation of ondansetron, a leading member of the family of 5-HT3 serotonin receptor inhibitors. Redhill Biopharma is developing BEKINDA® with two dosages: 24 mg and 12 mg. BEKINDA® is under development for the intended use in the following indications, which are novel and not yet FDA-approved indications for ondansetron targeting large potential markets:

1. Acute gastroenteritis and gastritis - 24 mg strength
2. Irritable Bowel Syndrome with Diarrhea (IBS-D) - 12 mg strength

BEKINDA® utilizes a technology called CDT® that uses salts to provide an extended release of ondansetron. The CDT® platform enables extended drug release (i.e., the measured rate of introduction of active drug) at a relatively low manufacturing cost.

In March 2014, the company entered into a License Agreement with Temple University to secure direct rights to patents related to the CDT® platform. Previously, these rights were licensed to it from SCOLR in 2010, which announced that they had ceased business operations in 2013.

Acute Gastroenteritis and Gastritis

Acute gastroenteritis and gastritis both involve inflammation of the mucous membranes of the GI tract. Symptoms of gastroenteritis and gastritis include nausea, vomiting, diarrhea and abdominal pain. Acute gastroenteritis and gastritis are a major cause of emergency room visits, particularly for pediatrics. If approved, BEKINDA® could potentially decrease the number of emergency room visits for patients suffering from acute gastroenteritis and gastritis by offering them an effective and long-lasting treatment which can be taken in the comfort of their home.

Competition and Market

A single dose of BEKINDA® is intended to treat nausea and vomiting over a time window of approximately 24 hours. This is potentially advantageous for acute gastroenteritis and gastritis patients as it is intended to provide them with relief from nausea and vomiting symptoms for a full 24-hour period with a single oral tablet, thus avoiding the need to take additional drugs (tablets) during the day or receiving intravenously administered drugs.

If BEKINDA® is approved for the treatment of acute gastroenteritis and gastritis, it could potentially hold substantial advantages over existing treatments. If approved, BEKINDA® could be prescribed by primary care physicians to patients early on, potentially preventing emergency room visits, dehydration and the need to provide IV fluids.

BEKINDA® is targeting an annual potential worldwide market for acute gastroenteritis and gastritis treatment estimated to exceed $650 million, based on Graves S. Nancy, Acute Gastroenteritis, Prim Care Clin Office Pract 40 (2013) 727–741 and its analysis.

To the best of its knowledge, there are no other 5-HT3 serotonin receptor inhibitors indicated or in the clinical stage of development in the U.S. for this indication. Patients presenting at hospitals with gastroenteritis and gastritis are often treated primarily in IV administration with antiemetic drugs not indicated or approved for this condition, off-label, including 5-HT3 serotonin receptor inhibitors.

To the best of its knowledge, a product that potentially directly competes with BEKINDA® is EUR-1025 for controlled release of ondansetron, based on a different technology of controlled release originally developed by Eurand N.V. (now owned by Adare Pharmaceuticals, Inc.). According to Eurand N.V.’s press release from March 4, 2010, Eurand N.V. completed two pivotal pharmacokinetic studies of EUR-1025 intended to establish the bioequivalence of EUR-1025 versus Zofran® (ondansetron hydrochloride). To the best of its knowledge, EUR-1025 was being developed for the indication of postoperative-induced nausea and vomiting, for which Zofran® and generic ondansetron were already approved, and according to Eurand N.V.’s press release, a Phase III study was planned to be conducted in this indication. To the best of its knowledge, the Phase III study was not initiated and there has not been further clinical development of EUR-1025 since the completion of the above-mentioned pharmacokinetic studies.

Clinical Development

The company completed a randomized, double-blind, placebo-controlled, parallel group Phase III study (the “GUARD study”) with BEKINDA® (RHB-102) 24 mg for acute gastroenteritis and gastritis, and positive top-line results from the GUARD study were announced in June 2017. The study successfully met its primary endpoint of efficacy in acute gastroenteritis and gastritis. BEKINDA® 24 mg was also found to be safe and well tolerated in this indication. The GUARD study evaluated the safety and efficacy of BEKINDA® 24 mg in treating acute gastroenteritis and gastritis in 321 adults and children over the age of 12 at 21 clinical sites in the U.S. The primary endpoint of the study was the proportion of patients without further vomiting, without rescue medication, and who were not given intravenous hydration from 30 minutes post first dose of the study drug until 24 hours post dose, compared to placebo. In September 2017, the company met with the FDA to discuss the study results and the clinical and regulatory path towards potential marketing approval of BEKINDA® 24 mg in the U.S. Following the guidance provided at the meeting, Redhill Biopharma is currently working with the FDA to design a confirmatory Phase III study to support a potential NDA with BEKINDA® 24 mg for acute gastroenteritis and gastritis and plan to meet with the FDA in the first half of 2018 to discuss the design of this study.

Final results from the GUARD study showed improvement to the primary efficacy outcome by 21% in the Intent to Treat (ITT) population; 65.6% of BEKINDA® treated patients as compared to 54.3% of placebo patients (p=0.04; n=192 in the BEKINDA® group and n=129 in the placebo group). In the Per Protocol (PP) population, which included patients who met all protocol entry criteria and for which the diagnosis of gastroenteritis was confirmed (n=177 in the BEKINDA® group and n=122 in the placebo group), BEKINDA® improved the efficacy outcome by 27%; 69.5% of patients in the BEKINDA® group vs. 54.9% in the placebo group, (p=0.01). An imbalance in baseline nausea was noted, with worse nausea in the BEKINDA® treated group. In a post-hoc analysis, when results were adjusted for baseline nausea, the p-value for the ITT population was 0.0152, and for the PP population was 0.0037. BEKINDA® 24 mg was also shown to be safe and well tolerated; electrocardiogram results showed no adverse changes with treatment. The benefit observed with BEKINDA® is evident across the spectrum of severity of nausea at baseline, including in patients with very severe nausea, suggesting that the drug works regardless of the initial severity of gastroenteritis.

The lead investigator for the Phase III study was Dr. Robert A. Silverman, MD, MS, Associate Professor at the Hofstra North Shore-LIJ School of Medicine and an emergency medicine specialist.

The following chart summarizes the clinical trial history and status of BEKINDA® for Gastroenteritis and Gastritis:

Irritable Bowel Syndrome with Diarrhea (IBS-D)

Irritable bowel syndrome (IBS) is a multifactorial disorder marked by recurrent abdominal pain or discomfort and altered bowel function. Certain factors that alter GI function can contribute to IBS symptoms, including stress, prior gastroenteritis, and changes in the gut microbiome, bile acids and short-chain fatty acids, which may stimulate 5-HT3 serotonin release and increase colonic permeability and motility. (Source: http://www.mayoclinic.org/medical-professionals/clinical-updates/digestive-diseases/better-agents-needed-irritable-bowel-syndrome-diarrhea).

In preliminary studies, ondansetron has demonstrated activity in IBS-D (Garsed K, Chernova J, Hastings M, et al. Gut Published Online First December 12, 2013). Unlike alosetron (a currently approved 5-HT3 antagonist in IBS-D), ondansetron has not been noted to cause ischemic colitis (FDA labeling for Lotronex® (alosetron), 2010; FDA labeling for Zofran® (ondansetron), 2014).

In light of the activity of ondansetron demonstrated in the preliminary studies described above, and because of its extended-release properties and once-daily dosing, the company believe BEKINDA® is a promising candidate for the treatment of IBS-D.

Competition and Market

IBS is one of the most common GI disorders, and IBS-D is the most prevalent diagnosed subtype of IBS in the seven major markets according to a report by GlobalData.

According to publications by Saito YA. et al. (The American Journal of Gastroenterology, 2002) and by Lovell RM et al. (Clinical Gastroenterology and Hepatology, 2012), it is estimated that up to 30 million Americans may suffer from IBS. According to Lovell RM et al, approximately 40% of IBS cases worldwide are of the IBS-D subtype.

According to a report from EvaluatePharma, the U.S. potential market for IBS-D treatments is estimated to reach approximately $870 million in 2018 and exceed $1 billion in 2021.

To the best of its knowledge, there is one other 5-HT3 serotonin receptor inhibitor indicated for this indication in the U.S. – alosetron (currently marketed under the brand name Lotronex® by Sebela Pharmaceuticals and generic versions marketed by Actavis plc, West-Ward and Amneal Pharmaceuticals). However, alosetron is approved only for the treatment of IBS in women with severe chronic IBS-D and is under a restricted prescribing program due to potential severe side effects. The active ingredient in BEKINDA®, ondansetron, is approved by the U.S. FDA as an oncology support antiemetic and has a good safety profile. Therefore, the company believe that BEKINDA®, if approved for the treatment of IBS-D in the U.S., may provide improved safety while maintaining efficacy and has the potential to be a preferred 5-HT3 serotonin receptor inhibitor treatment for patients suffering from IBS-D. According to EvaluatePharma, the U.S. sales of Lotronex® were estimated at $105 million in 2017. Ramosetron, another 5-HT3 serotonin receptor inhibitor, is marketed by Astellas Pharma Inc. under the brand name Irribow® for the treatment of IBS-D in Japan and South Korea, for chemotherapy-induced nausea and vomiting in Japan, South Korea and China, and for and postoperative nausea and vomiting in South Korea. Additionally, Cadila Healthcare Ltd. markets ramosetron under the brand name Nozia® in India for both IBS-D and chemotherapy induced nausea and vomiting. To the best of its knowledge, there is currently no clinical development of ramosetron for marketing approval in the U.S. for any indication.

To the best of its knowledge, one of the main competitors of BEKINDA® for the treatment of IBS-D is Xifaxan® (rifaximin), marketed in the U.S. by Valeant. Xifaxan® is an antibiotic treatment that was approved for the treatment of IBS-D in 2015. Xifaxan® is also approved in the U.S. for the treatment of hepatic encephalopathy and traveler's diarrhea and for the reduction in risk of overt hepatic encephalopathy recurrence in adults. According to a report by GlobalData, it is believed that Xifaxan® is a gut-selective, broad-spectrum antibiotic with in vitro activity against both gram-positive and gram-negative bacteria. In the treatment of IBS-D patients, Xifaxan® is administered orally at a dose of 550 mg three times daily for two weeks. According to a GlobalData analysis, Xifaxan® is not widely prescribed due to safety concerns associated with the long-term use of antibiotics, such as the induction of antibiotic resistance and imbalance in the intestinal flora. According to a report by EvaluatePharma, the worldwide annual sales of Xifaxan® for the treatment of IBS are estimated to exceed $480 million in 2020.

Viberzi® (eluxadoline) is another drug for the treatment of IBS-D approved by the FDA in 2015. Viberzi® is a locally-acting mu-opioid receptor agonist and a delta-opioid receptor antagonist marketed in the U.S. by Ironwood Pharmaceuticals and Allergan plc. According to EvaluatePharma, the worldwide sales of Viberzi® are estimated to reach $320 million in 2020.

Donnatal® (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide) is also used as a treatment for IBS and included in the FDA DESI review program, although it is not approved by the FDA. In December 2016, the company were granted certain rights to promote Donnatal® (tablets and elixir) in the U.S. pursuant to an exclusive Co-Promotion Agreement with Concordia.

Clinical Development

In January 2018, the company announced final results of a randomized, double-blind, placebo-controlled, parallel group Phase II clinical study of BEKINDA® (RHB-102) 12 mg for the treatment of diarrhea-predominant irritable bowel syndrome (IBS-D). The study successfully met its primary endpoint of improving primary efficacy outcome of stool consistency. BEKINDA® 12 mg was also found to be safe and well tolerated in this indication. The randomized, double-blind, placebo-controlled Phase II study evaluated the safety and efficacy of BEKINDA® 12 mg in treating diarrhea-predominant irritable bowel syndrome (IBS-D) in 126 subjects over 18 years old at 16 clinical sites in the U.S.

The primary endpoint of the trial was the proportion of patients in each treatment group with response in stool consistency on study drug as compared to baseline. Response was defined as per FDA guidelines for the indication. Additional endpoints were analyzed including:

• Proportion of patients in each treatment group who are pain responders, per FDA guidance definition
• Proportion of patients in each treatment group who are overall responders, per FDA guidance definition
• Differences between treatment groups in:
• Abdominal pain
• Abdominal discomfort
• Frequency of defecation
• Incidence and severity of adverse events

The BEKINDA® 12 mg Phase II study successfully met its primary endpoint, improving the primary efficacy outcome of stool consistency response (in accordance with the FDA guidance definition) by an absolute difference of 20.7%, with 56.0% responders of subjects treated with BEKINDA® (n=75) vs. 35.3% responders of the placebo subjects (n=51) (p=0.036). While not powered for statistical significance of the secondary efficacy endpoints, the study suggested clinically meaningful improvement in both secondary efficacy endpoints of abdominal pain response and overall response (combined stool consistency and abdominal pain response). Final results from the Phase II study demonstrated that BEKINDA® 12 mg improved the overall worst abdominal pain response rate by 11.5% vs. placebo (50.7% with BEKINDA® 12 mg (n=75) vs. 39.2% with placebo (n=51); (p=0.278)) and the overall response improved by an absolute difference of 14.5% in favor of the BEKINDA® 12 mg arm (40.0% with BEKINDA® 12 mg (n=75) vs. 25.5% with placebo (n=51); (p=0.135)).

BEKINDA® 12 mg was also shown to be safe and well tolerated. No serious adverse events or new or unexpected safety issues were noted in the study. The company continue to analyze the data from the Phase II study with BEKINDA® 12 mg, including all secondary endpoints. Redhill Biopharma is designing one or two pivotal Phase III studies with BEKINDA® 12 mg for the treatment of IBS-D and plan to meet with the FDA in the first half of 2018 to discuss the design for these studies.

The following chart summarizes the clinical trial history and status of BEKINDA® for IBS-D:

RHB-106

RHB-106 is a tablet intended for the preparation and cleansing of the GI tract prior to the performance of abdominal procedures, including diagnostic tests such as colonoscopy, barium enema or virtual colonoscopy, as well as surgical interventions, such as a laparotomy.

On February 27, 2014, the company entered into a licensing agreement with Salix Pharmaceuticals, Ltd. (“Salix”), which was later acquired by Valeant, pursuant to which Salix licensed the exclusive worldwide rights to its RHB-106 encapsulated formulation for bowel preparation and rights to other purgative developments. Pursuant to this agreement, the company received an upfront payment of $7 million and are entitled to an additional potential $5 million in subsequent milestone payments. In addition, as part of the terms of the agreement, Salix agreed to pay it tiered royalties on net sales of RHB-106 and other rights, ranging from the low single-digits up to low double-digits.

Competition and Market

According to a report by EvaluatePharma, the worldwide market of laxative products was estimated at approximately $880 million in 2017 and is expected to exceed $1 billion in 2021.

To the best of its knowledge, the main competitors of RHB-106 are GI cleansing products based on polyethylene glycol (PEG 3350). These products are delivered in the form of a water-soluble powder and require users to drink between 2-4 liters of solution before the performance of the gastroenterological procedure. In addition to the need to drink considerable amounts of solution, a common side effect that raises difficulties with users is the accompanying harsh and unpleasant taste, leading to potential difficulties with patient compliance. RHB-106 offers the potential for improved patient compliance because it is tasteless and eliminates the need for drinking several liters of the ill-flavored electrolyte solution. RHB-106 also potentially has an advantage compared to currently available tablet products in the field in that it does not contain sodium phosphate, an active ingredient linked with a risk of nephrotoxicity.

An additional product, called PrepoPik® in the U.S., is marketed by Ferring Pharmaceuticals and received FDA approval on July 17, 2012. The product, marketed under the name PicoPrep® in other countries, is based on an active chemical ingredient called sodium picosulfate, the same active ingredient used in RHB-106. This product is intended to be used for clearing the GI system and it is given in the form of a water-soluble powder and requires drinking quantities of fluids. Clenpiq™ is another product by Ferring Pharmaceuticals which includes the active ingredient sodium picosulfate. Clenpiq™ (sodium picosulfate, magnesium oxide, and anhydrous citric acid) is a ready-to-drink cranberry-flavored oral solution for cleansing of the colon in adults undergoing a colonoscopy, was approved by the FDA in November 2017 and is planned to be launched in the first quarter of 2018. Another product, called Suprep® in the U.S., is marketed by BrainTree Laboratories Inc. and received FDA approval in 2010 as an osmotic laxative indicated for cleansing of the colon in preparation for colonoscopy in adults. Suprep®’s active ingredients include sodium sulfate, potassium sulfate and magnesium sulfate in oral solution, and it is administered as a split-dose regimen (taken in the evening before and on the day of the colonoscopy). In August 2016 Perrigo Company Plc announced tentative FDA approval of its generic version of Suprep®; however, it has not begun marketing the generic version of Suprep®, and, to the best of its knowledge, no other generic version of Suprep® is currently marketed in the U.S.

Products administered in the form of tablets or capsules that were released on the market in the U.S., such as OsmoPrep® (marketed by Valeant), are based on a chemical substance called sodium phosphate. In December 2008, the FDA published a severe warning against the use of these products due to rare but severe side effects linked to kidney damage. As a consequence of this development, the FDA required in 2008 that oral sodium phosphate products carry a severe warning (black box label). As announced by Salix (now Valeant), following the black box warning received from the FDA, sales in 2009 of these products declined by 39% compared to 2008.

A leading product among the PEG 3350 family of products is MoviPrep®, marketed by Valeant in the U.S. and by Norgine B.V. in Europe. It requires drinking about two liters of solution, and some users report it has an unpleasant taste. The potential advantage of RHB-106 over the current competitor products of the PEG 3350 type (such as MoviPrep®), as well as over PicoPrep®, is that it is administered in an oral tablet, permits the patient to drink any clear liquid with the product and spares the patient the exposure to the unpleasant taste that may accompany these products. RHB-106 also does not fall under the black box warning against nephrotoxicity issued by the FDA in December 2008 with respect to currently marketed sodium phosphate capsule preparations.

Norgine B.V. is also developing a new PEG-based bowel preparation oral solution named Plenvu®, administered as a two-day split dose regimen. According to Norgine B.V., Plenvu® is intended to provide whole bowel cleansing, with an additional focus on the ascending colon. Norgine B.V. licensed the U.S. and Canada rights to Plenvu® to Salix Pharmaceuticals (now Valeant Pharmaceuticals International, Inc.), who announced in June 2017 that the FDA accepted the NDA submitted for Plenvu®. The PDUFA action date for the Plenvu® NDA is scheduled for May 2018. Plenvu® also received marketing approval in several European countries.

Salix (now Valeant), which acquired a worldwide exclusive license to RHB-106 and other purgative developments from it, estimated in its 2014 Investor Day that the peak year revenue from their encapsulated bowel prep would reach approximately $280 million.

Clinical Development

Following the acquisition of Salix by Valeant, the company received confirmation, in July 2015, that Valeant is continuing the development of RHB-106.

The following chart summarizes the clinical trial history and status of RHB-106:

YELIVA® (ABC294640)

YELIVA® is a proprietary, first-in-class, orally-administered SK2 selective inhibitor, with anti-inflammatory and anti-cancer activities, targeting multiple oncology, inflammatory and GI indications.

YELIVA® inhibits SK2, a lipid kinase that catalyzes the formation of the lipid signaling molecule sphingosine 1-phosphate (“S1P”). S1P promotes cancer growth and proliferation and pathological inflammation, including TNFα signaling and other inflammatory cytokine production. Specifically, by inhibiting the SK2 enzyme, YELIVA® blocks the synthesis of S1P which regulates fundamental biological processes such as cell proliferation, migration, immune cell trafficking and angiogenesis, and is also involved in immune-modulation and suppression of innate immune responses from T cells.

On March 30, 2015, the company entered into an exclusive worldwide license agreement with Apogee Biotechnology Corporation (Apogee), pursuant to which Apogee granted it the exclusive worldwide development and commercialization rights to ABC294640 (which the company then renamed to YELIVA®) and additional intellectual property for all indications. Under the terms of the agreement, as amended, the company agreed to pay Apogee initial milestone payments of $3.5 million, of which $3 million has already been paid, as well as up to $2 million in potential development milestone payments, and tiered royalties starting in the low double-digits.

Competition and Market

YELIVA® is being developed for several indications, including for the treatment of cholangiocarcinoma (bile duct cancer), refractory or relapsed multiple myeloma and advanced hepatocellular carcinoma (“HCC”), ulcerative colitis and for radioprotection in head and neck cancer patients undergoing therapeutic radiotherapy.

Cholangiocarcinoma (bile duct cancer) is a highly lethal malignancy. According to the American Cancer Society report from January 2016, approximately 8,000 people are diagnosed with intrahepatic and extrahepatic bile duct cancers annually in the U.S., with recent studies showing an increased incidence of cholangiocarcinoma, mainly attributed to recent advancements in the diagnosis of this disease (Gores GJ, Hepatology, 2003). Surgery with complete resection is currently known to be the only curative therapy for cholangiocarcinoma; however, only a minority of patients is classified as having a resectable tumor at the time of diagnosis. Additional treatment options include radiation therapy and chemotherapy, but the efficacy of these treatments in cholangiocarcinoma patients is also limited and the prognosis for relapse patients who have failed initial chemotherapy is very poor, with an overall median survival of approximately one year (Valle J, et al. New Eng J, Med 2010). The 5-year relative survival rates of intrahepatic and extrahepatic cholangiocarcinoma patients range between 2% to 30%, depending on the tumor type and stage at diagnosis, according to the American Cancer Society.

The American Cancer Society estimated that approximately 30,770 new cases of multiple myeloma would be diagnosed in the U.S. in 2018 and approximately 12,770 deaths are expected to occur. The risk of multiple myeloma increases as people age. The total worldwide sales of multiple myeloma therapies were estimated to exceed $18 billion in 2018 according to GlobalData. There are several drugs in late-stage clinical development for multiple myeloma.

Hepatocellular carcinoma is the most dominant form of liver cancer, accounting for approximately 85% of liver cancer cases, according to GlobalData. According to the World Health Organization (WHO) International Agency for Research on Cancer GLOBOCAN 2012 report, liver cancer is the second and most common cause of cancer-related deaths worldwide. The annual worldwide incidence of liver cancer was estimated in such report to have reached 782,000 cases in 2012, with a mortality rate of 95%; the corresponding U.S. numbers are 30,000 and 80%, respectively. Most patients with HCC suffer from liver cirrhosis, which develops following long periods of chronic liver disease. According to this report, the majority of HCC cases are associated with hepatitis B and hepatitis C virus infections. Few treatment options exist for patients diagnosed at an advanced stage, representing the majority of HCC patients. Sorafenib (Nexavar®) is a targeted drug approved for the treatment of HCC in patients who are not candidates for surgery and do not have severe cirrhosis. According to GlobalData, the market for the treatment of HCC in the seven major markets is estimated to exceed $615 million in 2018 and reach approximately $780 million in 2020. There are several drugs in late-stage clinical development for HCC.

Radiation therapy can cause both acute and chronic side effects. The side effects that develop depend on, among other things, the area of the body being treated, the dose given per day, the total dose given, the patient’s general medical condition, and other treatments given at the same time. Acute side effects may include skin irritation or damage at regions exposed to the radiation beams. The oral cavity is highly susceptible to direct and indirect toxic effects of cancer chemotherapy and ionizing radiation. The American Cancer Society estimated that more than 65,000 people in the U.S.

References

1. ^ https://fintel.io/doc/sec/1553846/000155837019001037/rdhl-20181231x20f.htm