RedHill Biopharma Ltd. (Nasdaq: RDHL); TASE: RDHL) fell nearly 11% after the Israeli company priced 2.462 million American Depositary Shares at $16.25 per share to raise $40 million. Despite the fall in price, after sustained rises in recent weeks, the public offering was considered extremely successful by RedHill and will enable it to conduct Phase III trials on its lead product.
The offering follows the good results obtained a month ago in a trial of its product for the treatment of Helicobacter pylori bacteria (the main cause of ulcers). The latest financing comes on top of the $32 million in cash held by the company, $12 million of which was raised only last February. The underwriters for the flotation were Nomura, Roth Capital Partners, MLV & Co., and HC Wainwright & Co. The leading shareholders in RedHill are OrbiMed Advisors LLC (9.9%) and Broadfin Capital (4.3%).
In its recent trial, RedHill's product eradicated the H. pylori bacteria in 90% of the patients, compared with 70% healing in the currently accepted treatments. The planned financing round will be used mainly to pay for the company's clinical trials. The most important and expensive of these trials next year will be a repeat Phase III trial of the H. pylori product (there is little chance that the US Food and Drug Administration (FDA) will decide that the company's previous trial is enough for registration. Meetings on the matter are expected in the near future); a Phase III US trial of the company's leading product - RHB-104, an antibiotic for treating Crohn's Disease; and an RHB-104 trial in Europe.
Each of these trials costs $10-20 million, less than a Phase III trial for a completely new drug, because the trials involve drugs already recognized for other uses in different combinations. The company is also exempt from some of the requirements for proving the safety of the drug and its behavior in the patient's body.
Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2015
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