RedHill Biopharma to raise $25m in Nasdaq ADS offering

RedHill Biopharma, photo: Einat Levron
RedHill Biopharma, photo: Einat Levron

RedHill's share price has fallen 45% since it reported the results of the Phase III trial of its drug for Crohn's Disease.

RedHill Biopharma today announced that it would raise $25 million at $6 per American Depositary Share (ADS) (a security traded on Nasdaq that follows the company's share on the TASE (Tel Aviv Stock Exchange)). The package to be offered by the company includes options. Investment bank Ladenburg Thalmann is leading the offering.

The share price in the offering is 8% lower than the share price on Nasdaq yesterday before the offering and its price were announced. As of now, however, the share price is up 10%, probably because the market expected the offering and may have been concerned that if delayed, it would be held on worse conditions - this concern may have been already priced by the market. The current price reflects a $151 million market cap for RedHill.

RedHill is planning to use the money it raises and the rest of its cash to go ahead with a second Phase III trial of its product for Crohn's Disease, which the company hopes will culminate in approval of its product; to finish a confirmatory clinical trial of it product for treatment of H. pylori bacteria and to begin commercialization of this product if the trial is successful; to acquire additional products; and for the company's general needs.

Today's offering comes a week after the publication of the results of RedHill's clinical trial of the company's product for treatment of Crohn's Disease - its leading product. The company attained significant results for its main target and secondary targets, except for one - the number of patients with no attacks after 52 weeks. The company said that this measure was not clinically significant, but added that there was a clear effectiveness trend except for this measure and that it was possible that a larger trial would also have shown significance in this measure. The market nevertheless sent RedHill's share price tumbling. As of today, before the announcement of the offering, the share had lost 45% of its value just before the results were announced.

RedHill stated in advance that it would carry out the offering only after publication of its trial results. It is possible that anticipation of the offering is what caused the share price to slide, in addition to the market's perception of the trial results.

The offering is taking place before RedHill publishes its results. The question arises of whether the company believes that the report could further damage its share price and therefore preferred to hold its offering first. Another possible reason for holding the offering before publication of RedHill's results, however, is that the company saw that the market was alarmed by the offering, and therefore preferred to go ahead with it in order to relieve the pressure on the share.

The main questions to be answered by RedHill's report concern development of the company's commercial activity. RedHill acquired the marketing rights for a number of products for treatment of the digestive tract in order to build a marketing platform on them for the newer products for treatment of Crohn's Disease and H. pylori bacteria that it hopes to bring to market. Meanwhile, in previous quarters, revenue from these products were below the expectations created by the company's announcement of their performance under the products' previous owners before being acquired by RedHill.

Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

RedHill Biopharma, photo: Einat Levron
RedHill Biopharma, photo: Einat Levron
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