RedHill Biopharma(RDHL) - 2022 Q4 - Annual Report

Financial Performance Net revenues decreased in Q4 and full-year 2022 due to increased allowances, but significant cost reductions substantially lowered operating losses, leading to debt extinguishment and a $36.1 million cash balance - The company became debt-free after extinguishing all obligations with HCR through the sale of Movantik® rights[7][8][29] - A key focus on cost reduction successfully lowered operating losses significantly in 2022 compared to 2021[7][15][24] - The cash balance was $36.1 million as of December 31, 2022[7][17] Q4 2022 Financial Results Q4 2022 saw net revenues decrease to $12.8 million due to higher allowances, while operating loss significantly improved to $9.9 million from $20.7 million due to expense reductions Q4 2022 vs. Q4 2021 Financials (in millions USD) | Metric | Q4 2022 | Q4 2021 | Change Driver | | :--- | :--- | :--- | :--- | | Net Revenues | $12.8 | $22.1 | Increased gross-to-net allowances | | Operating Loss | $9.9 | $20.7 | Cost-reduction measures | | R&D Expenses | $1.1 | $5.9 | Optimization and completion of COVID trials | | SG&A Expenses | $13.0 | $17.6 | Ongoing cost-reduction measures | | Net Cash Used in Operating Activities | $2.4 | $14.9 | Reduction in operating expenses | - The decrease in net revenues occurred despite prescription growth for Talicia and Movantik, primarily due to increased gross-to-net allowances[10] Full-Year 2022 Financial Results Full-year 2022 net revenues decreased to $61.8 million due to Movantik allowances, but operating loss significantly reduced to $42.8 million from $81.1 million due to effective cost controls Full-Year 2022 vs. Full-Year 2021 Financials (in millions USD) | Metric | FY 2022 | FY 2021 | Change Driver | | :--- | :--- | :--- | :--- | | Net Revenues | $61.8 | $85.8 | Increased gross-to-net allowances (Movantik) | | Operating Loss | $42.8 | $81.1 | Reduction in operating expenses | | R&D Expenses | $7.3 | $29.5 | Optimization and completion of COVID trials | | SG&A Expenses | $64.0 | $88.0 | Cost-control measures, reduced salesforce | | Net Cash Used in Operating Activities | $29.2 | $65.0 | Lower operating loss and expenses | - The full-year revenue decline was primarily attributed to increased gross-to-net allowances, mainly related to Movantik[18] Consolidated Financial Statements Consolidated financial statements detail 2022 comprehensive loss, financial position, and cash flows, showing a $71.7 million net loss, $158.9 million in total assets, and a $48.4 million capital deficiency Consolidated Statement of Comprehensive Loss (in thousands USD) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Revenues | 61,800 | 85,757 | | Gross Profit | 28,463 | 36,351 | | Operating Loss | (42,844) | (81,135) | | Loss and Comprehensive Loss | (71,669) | (97,744) | | Loss Per Share (basic and diluted) | $0.12 | $0.21 | Consolidated Statement of Financial Position (in thousands USD) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | 158,870 | 181,188 | | Total Liabilities | 207,270 | 172,313 | | Total Equity (Capital Deficiency) | (48,400) | 8,875 | Consolidated Statement of Cash Flows (in thousands USD) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (29,185) | (65,047) | | Net cash (used in) provided by investing activities | 8,302 | (8,140) | | Net cash provided by financing activities | 11,453 | 73,462 | Operational and Business Highlights Strategic highlights include debt extinguishment via Movantik sale, Nasdaq compliance, and capital raises, alongside strong Talicia® growth and R&D advancements for Opaganib and RHB-102 Business Updates Key business updates include debt extinguishment via Movantik sale, regaining Nasdaq compliance, and successful capital raises through direct and public offerings - All debt obligations with HealthCare Royalty (HCR) were extinguished by transferring Movantik® rights, with RedHill providing up to 12 months of paid transition services[29] - Compliance with Nasdaq's minimum bid price requirement was regained following an American Depositary Shares (ADS) ratio change[27] - A $6 million registered direct offering closed in April 2023, and an approximately $8.0 million underwritten public offering closed in December 2022[28][30] Commercial Highlights Talicia® showed strong commercial growth with a 57% prescription increase and a new warranty, Aemcolo® gained extended exclusivity, and Movantik® rights were transferred to extinguish debt - Talicia® achieved 57% year-over-year prescription growth and is projected to be the most prescribed branded H. pylori therapy in the U.S. in 2023[34] - A first-of-its-kind warranty program for Talicia® commits to reimbursing patient out-of-pocket costs if treatment is ineffective[8][34] - Aemcolo® received an additional five years of FDA exclusivity, extending its regulatory protection through 2028[35] - Movantik® ownership was transferred to an HCR affiliate on February 6, 2023, extinguishing all of RedHill's debt[39] R&D Pipeline Highlights R&D pipeline advanced with Opaganib selected by NIH for ARS and FDA guidance, RHB-102 planned for UK oncology application, and progress for RHB-107 and RHB-204 - Opaganib was selected by the NIH's RNCP for development as a potential treatment for Acute Radiation Syndrome (ARS)[7][39] - The FDA provided guidance for opaganib's ARS development under the Animal Rule, utilizing animal efficacy studies and offering potential for a Priority Review Voucher[7][39] - Following a positive pre-MAA meeting with the UK's MHRA, the company plans to submit a Marketing Authorisation Application for RHB-102 (Bekinda) for oncology support[7][42] - RHB-204 (for NTM disease) received a Notice of Allowance for a U.S. patent, with protection expected through 2041[42] - RHB-107 (upamostat) showed a 100% reduction in hospitalization due to COVID-19 in a Phase 2 study[42]