RedHill Biopharma Ltd. (RDHL) Q4 2020 Earnings Report, Transcript and Summary

Good day and welcome to the RedHill Biopharma’s Fourth Quarter and Full Year 2020 Financial Results Conference Call. [Operator Instructions] At this time, I would like to introduce to the conference call RedHill’s CEO, Dror Ben-Asher; Micha Chorin, RedHill’s Chief Financial Officer; Rick Scruggs, RedHill’s Chief Commercial Officer; Gilead Raday, RedHill’s Chief Operating Officer; Guy Goldberg, RedHill’s Chief Business Officer; Adi Frish, Chief Corporate and Business Development Officer; and Rob Jackson, RedHill’s Senior Vice President, Sales and Marketing. Before we begin, we will read from RedHill’s Safe Harbor statement. Please go ahead.

Thank you, Priscilla. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of RedHill, including statements with respect to the business promotion and other efforts relating to RedHill’s commercialization activities; and the initiation, timing, progress, and results of RedHill’s research, manufacturing, preclinical studies, clinical trials, marketing applications, and approvals, if any, and the clinical trials of opaganib and upamostat for the treatment of COVID-19. These statements are only predictions and RedHill cannot guarantee that they will in fact occur. RedHill does not assume any obligation to update that information. Actual events, performance, timing, results, or commercialization activities may differ materially from what RedHill projects today. Additional information concerning factors that could cause actual events, performance, timing, results, or commercialization activities to materially different from those contained in the forward-looking statements can be found in the company's Annual Report on Form 20-F filed with the SEC on March 18, 2021, and in its other filings with the Securities and Exchange Commission. I will now refer to Dror Ben-Asher, RedHill’s CEO, for opening remarks.

Thank you, Alexandra. Good day, everyone, and thank you for joining us. During the bulk of today's call, we will be presenting R&$, commercial, and financial highlights. Please remember to press on the link to follow the slides. 2020 is a year that our team looks back on with a sense of immense achievement. While navigating a challenging pandemic, we have delivered consistent growth culminating in a very strong end to 2020 for both Movantik and Talicia. Starting with Movantik, we have completed three full quarters of Movantik promotion following its acquisition from AstraZeneca, maintaining Movantik’s position as a leader in its category and ending 2020 strongly. Turning to Talicia, our commercial team’s brand work during the pandemic has resulted in strong accumulation of new Talicia prescribers and consistent, strict growth. Talicia ended 2020 strongly with 52% quarter-over-quarter prescription growth in the first – in the fourth quarter and achieved its highest weekly prescription volume in December. This growth is supported by major additions of Talicia as a preferred brand on leading national formularies with further formulary additions expected. Rob, our Head of Sales and Marketing would be providing additional details in a moment. Moving on to research and development. RedHill is currently positioned at the very forefront of the global COVID-19 therapeutics development efforts with two of the most advanced and most comprehensive COVID-19 programs covering both inpatient hospital life and outpatient population with opaganib and RHB-107, respectively. Within less than a year which is equivalent to the speed of light in pharma terms we reported strong clinical and preclinical data and have progress these two novel orally administered COVID-19 therapies into Phase 2/3 studies with approximately two-thirds enrollment already achieved in the opaganib global study. Intensive manufacturing scale up, government discussions and business development discussions all continue in parallel. A third Phase 3 stage US program we are currently running is with orally administered RHB-204 for first-line stand-alone pulmonary NTN disease caused by Mycobacterium avium complex or in short MAC. Our chief operating officer, Gilead, will elaborate shortly. I would like to thank the RedHill team for their dedication and resilience which led to continued and impressive growth during the last year. RedHill is set for a very exciting 2021 with strong momentum across both commercial and R&D operations. And we expect 2021 to be a breakout year. Before turning to our Chief Business Officer, Guy, and the team for the presentation, I remind everybody to press on the link in order to see our detailed slide, to be followed by a Q&A session. All yours, Guy.

Thank you, Dror. Since we started generating significant revenues over the last three quarters, we have been providing full presentations on our earnings calls and striving to give as much detail and transparency as possible regarding our commercial activities and operations. We continue with that tradition today, as well as reviewing key highlights of our R&D progress and financial updates to complete the picture of the RedHill story. RedHill is a fully integrated specialty biopharmaceutical company focused on gastrointestinal and infectious diseases with a robust pipeline of drugs and a world-class commercial operation run out of our US headquarters in Raleigh, North Carolina. We promote three FDA-approved drugs, the ones you see here at the bottom of the slide. And we have multiple late-stage programs in development, addressing important unmet medical needs. As a result of our diverse activity, we have many paths to grow and build value. The message we hope to deliver today is that 2020 was a very important and pivotal year that has transformed RedHill and sets us up for success in 2021 both on the commercial front and on the R&D front. This is our pipeline slide. As Dror mentioned, Rob Jackson, our Senior Vice President of Marketing and Sales will be going into the detail on the commercial products. And Gilead Raday, our Chief Operating Officer, will be doing so for our COVID program and RHB-204. So, I want to take a second to update where we are with our other programs that you see here, particularly RHB-104 for Crohn's disease. As a reminder, RHP 104 RHB-104 for Crohn’s build on the growing evidence from various studies that intracellular microbacteria play a crucial role in Crohn's disease. Testing this theory, we conducted a Phase 3 study in Crohn's disease that successfully met our primary and key secondary endpoints including remission at 26 weeks, response at week 26, early remission at week 16, durability and maintenance and others. Overall, RHB104 demonstrated meaningful, consistent, and statistically significant clinical activity. Right now, we are working on developing a diagnostic for MAP infection as well as exploring other paths to advance this program to the next phase of the study. This has been a very long development path, but given the uniqueness and promise of our approach, we attempt to address the underlying cause, not the symptoms of the disease as current drugs do. We think it is well worth the effort. With regards to RHB-102, Bekinda, we have generated positive results from the US Phase 3 study for gastroenteritis gastritis meeting the primary endpoint and also, positive results from a US Phase 2 study for IBS-D also meeting our primary endpoint. We plan to further develop Bekinda in the future but have not yet started additional clinical studies. Right now, given the intense effort we are making as a small company to fight this pandemic, our R&D efforts are focused on running several COVID studies in parallel with opaganib and RHB-107, and we are also highly focused on RHB-204 for NTM disease as there is nothing approved first line and we could be the first. Those studies are ongoing and we are pleased with the progress we are making. We are working very hard to get results as soon as possible. So, this slide highlights our progress since our last earnings call. We are proud to report annualized revenues now nearing $90 million based on Q4 2020. We have reached this number partly through our fast-growing Talicia revenues which is now at an annualized revenue rate of about $8 million and partly with Movantik which has held strong of about $8 million and partly with Movantik, which was helped strong as the market leader of the class with approximately 75% market share. We have a good cash position of about $100 million to support our R&D and commercial efforts, and this provides a solid foundation to support our growth in 2021. On the R&D side, a lot of attention has been given to our COVID programs and rightly so. There have been very few, if any, breakthroughs on the treatment front and many failures. This is a global pandemic which will be around for a long time, even with the success of the vaccines, and there’s an acute need for effective treatment, especially with the concerns around mutation. We are in the middle of two late-stage trials for Opaganib and RHB-107 and we are working around the clock to get these studies recruited as quickly as possible. There are many important advantages of our COVID drugs. I want to highlight one in particular, because they target the host cell factor, both components work independently of the possible mutations of the viral spike protein and we believe they will remain effective against the continually emerging variants, including variants which may be resistant to direct acting antibodies and vaccines. Another central program for us is our ongoing study for RHB-104 for NTM disease, an important indication with no approved first-line treatment. Nontuberculous mycobacteria lung disease is a general term for a group of disorders, characterized by exposure to specific bacterial germ known as mycobacteria, that can cause serious lung disease and even lung failure. RHB-204 should be the first one to approve to treat this very important orphan disease. Gilead will update you more about that later. And finally, slide 8, investors often ask us, what are our goals for the next several years? What is our vision of what we want to become? Our goal is to become a leading US specialty pharma company. And we are well on our way to achieve that. The way we are doing that is continuing to commercialize our three FDA approved products and also developing our pipeline, which is our future engine of growth. We will do it by continuing to focus on detail orientated execution speed. We have done a good job of growing inorganically and organically. In other words, acquiring products such as Movantik from AstraZeneca at the commercial stage, and also developing products in-house such as Talicia as we have proven successfully to-date and taking these drugs all the way through. We will continue with that strategy into the future. We are here to build a leading specialty pharma company of the future. Now, I’ll now turn the presentation over to Gilead.

Thank you, Guy. I'm pleased to provide the R&D progress highlights. COVID-19 has been a major R&D focus for us in 2020. RedHill is at the forefront of the global efforts to develop therapeutics for COVID-19 with two promising and rapidly advancing Phase 2/3 stage therapeutic candidates with near-term data readouts. Both compound, of opaganib and upamostat are orally administered in novel small molecules with potent antiviral activity. This provides them a distinct advantage in terms of ease and simplicity of distribution and administration which are particularly important in the outpatient and community settings where the vast majority of COVID patients are. Both compounds exert their antiviral activity through targeting of a host cell factor, so they work independently of the viral strain mutations to the viral spike protein and are expected to remain effective against the continually emerging variants including against variants which may be resistant to direct-acting antibodies and vaccines. Looking at the overall COVID-19 therapeutic field, the clinical and operational challenges of developing a therapeutic for COVID-19 has established a narrow pyramid with few remaining advanced clinical candidates. Therapeutics that have to-date received emergency use authorization have at best an incremental benefit. With the possible exception of the old drug dexamethasone, the reported real-world levels of effectiveness of approved COVID-19 medications are mixed equivocal and sometimes contradictory. There clearly remains an urgent unmet need for a highly effective and safe COVID-19 therapy. With our two promising and differentiated shots on goal, Redhill is uniquely positioned to potentially benefit the vast majority of COVID-19 patients from the mild outpatients to the severe hospitalized patients. Opaganib is our first advanced compound for COVID-19. It has already demonstrated clinical efficacy signals in a well-controlled study. And we are anticipating a major milestone of our global Phase 2/3 data readout in the near term. Opaganib targets SK2, a human intracellular enzyme with multiple functions which acts both in data [Technical Difficulty] antiviral and as an anti-inflammatory importantly by targeting a human cell [indiscernible]. Opaganib is expected to uphold this antiviral activity against the continually emerging variant, which raised concern of the existence to direct-acting antibody and to vaccines as recently suggested by the New England Journal of Medicine reports about the AstraZeneca vaccine in the South Africa variant. [Technical Difficulty] COVID-19 patient from the mild outpatient to severe hospitalization. Given the perspective [Technical Difficulty] utilization of opaganib, we have embarked [Technical Difficulty] supply chain for scaled up manufacturing.

I understand there’s a technical problem but I hope you can hear me soon.

Yeah. And that has been updated. So please go ahead.

Thank you. Opaganib has successfully achieved important development milestones already. It successfully completed a randomized, controlled Phase 2 study in the US in 40 patients, demonstrating positive safety and efficacy signals. I will review this in further detail shortly. The ongoing global Phase 2/3 study is approximately two-thirds enrolled and opaganib has already passed an independent Data Safety Monitoring Board review of unblinded data from the first 175 subjects and also an unblinded futility analysis on the first 135 patients enrolled. In addition, as published in a peer reviewed journal, compassionate use with opaganib in severe COVID-19 patients demonstrated a substantial benefit as compared to matched case controls from the same hospital. Opaganib Attacking him completely blocks SARS-CoV-2 viral replication in a human bronchial tissue acid, comparing favorably with remdesivir which was the positive control in the study. In addition, extensive preclinical data indicates broad antiviral properties of opaganib indicates broad antiviral properties of opaganib and potent anti-inflammatory activity highly applicable to the damaging hyperimmune responses that are associated with COVID-19. Clinical safety data has already been obtained in well over 200 patients indicating good safety and tolerability of opaganib. I will share a few more details about the successfully completed randomized double-blind placebo controlled Phase 2 study in hospitalized patients with severe COVID-19. The study was conducted in eight sites in the US from July to December 2020. The study's population was patients who were hospitalized with COVID-19 pneumonia and required supplemental oxygen but not mechanical ventilation. This corresponds to levels 4 and 5 on the WHO ordinal scale of disease severity. Patients were randomized to receive either opaganib 500 milligrams twice a day or a matching placebo on top of standard of care therapy for 14 days. In terms of standard of care used in the study, approximately 80% of subjects received dexamethasone and 60% of subjects received remdesivir and these were balanced across the active and control arms. Opaganib showed highly encouraging efficacy and safety outcomes in the Phase 2 study. With respect to clinical recovery, opaganib showed improved times to 50% reduction in supplemental oxygen requirements and a marked improvement in the proportion of patients no longer requiring supplemental oxygen by day 14 and by day 7. It also showed less total oxygen requirements across 14 days and improvement in time to discharge from hospital. In terms of safety, opaganib was overall safe and well tolerated and treatment emergent adverse events were primarily gastrointestinal with mild to moderate severity. The magnitude of improvement in clinical recovery is well captured by the cap line plot of the time to patients no longer requiring supplemental oxygen. By day 14, 53% of opaganib treated patients recovered to breathing room air with no oxygen support. This, as compared to only 22% of the controlled room, it is a meaningful difference with opaganib more than doubling the proportion of patients effectively recovering in this time period. Importantly, this observed benefit was maintained across the key subgroups receiving standard of care of either corticosteroids such as dexamethasone or remdesivir or both. There was a consistent benefit of treatment with opaganib with a range of 50% to 57% success across active subgroups with a consistent 22% only in the controlled groups regardless of the standard of care administered. For a quick update on the progress of our ongoing global Phase 2/3 COVID-19 with opaganib. The ongoing randomized, double-blind standard of care plus placebo controlled global Phase 2/3 study is targeting enrollment of 464 hospitalized patients with severe COVID-19. The study is enrolling well, and we are at approximately two thirds of the target cohort. The primary endpoint of the study is the proportion of patients reaching room air breathing without oxygen support by day 14. The study will capture additional standard outcome measures in the follow-up period up to six weeks. The study has been approved in eight countries, Italy, UK, Poland, Russia Israel, Mexico, Colombia, and Brazil with further expansion ongoing. Three independent DSMB recommendations to continue the study were already provided following unblinded safety and futility reviews. We anticipate top line data read out towards the end of the second quarter and also have plans to initiate an advanced study of opaganib in mild to moderate outpatients. Upamostat is our second Phase 2/3 COVID-19 program. And this is currently targeting COVID-19 in the outpatient setting, the largest category of COVID patients. It is a novel, orally administered, serine protease inhibitor with potent anti-SARS-CoV-2 activity as demonstrated in an in vitro model of human bronchial tissue. Upamostat targets a human cell factor involved in enabling viral attachment and entry to cells. So it too is expected to uphold effectivity against the continually emerging variants. Upamostat is also a simple to distribute and administer orally available pill. So it is particularly well suited for treating the mild to moderate outpatient. Given its promising profile, we have initiated a Phase 2/3 study of upamostat in COVID-19 outpatients. The study is targeting 310 patients to be enrolled in a two-part randomized, double-blind placebo-controlled Phase 2/3 study. The study incorporates the use of cutting edge, innovative home-based monitoring technologies, coupled with home nursing assistance to allow patients to participate from home, while supporting the rigorous collection of clinical outcomes data. The primary endpoint of this study is time to sustained recovery and patients will also be tested for the viral – specific viral strain. On other non-COVID-19 pipeline fronts, we have initiated a Phase 3 study for treating first-line, nontuberculous micro bacterial infection with RHB-204. Nontuberculous mycobacterial infection, or NTM in short, is a rare disease with chronic debilitating manifestations and with no FDA-approved first line therapy. RHB-204 is a promising potential first line, stand-alone oral therapy. It's all in one combination capsule designed to ensure that the proper combination of antibiotics is administered with each dose intended to safely and effectively treat NTM and to maintain microlight sensitivity. RHB-204 has been granted orphan drug designation, qualified infectious disease product designation and fast track designation. As such, it is eligible for priority review of the NDA and a full 12 years of market exclusivity. The randomized, placebo-controlled Phase 3 study is planned to enroll 125 subjects at up to 40 sites across the US. The key outcomes of microbiological response and patient reported outcomes will be evaluated at month six with longer term follow up ensuing. With the initiation of the Phase 3 study, RHB-204 is well-positioned to address the unmet medical need for an approved safe and effective first line therapy for the growing number of NTM patients, reflecting significant US market potential. I will now turn to Rob, our Senior VP of Sales and Marketing, to update on commercial progress.

Thank you, Gilead, and good morning. Despite the challenges of last year, we've been very successful at developing our fast growing business. RedHill’s commercial team successfully transition Movantik from AstraZeneca, stabilize Movantik from AstraZeneca, stabilized Movantik’s position as the brand leader in the PAMORA class, continued to grow Talicia, and delivered other important commercial achievements during the fourth quarter of 2020. Before I go into the details, I want to express my sincere thanks to all of our global colleagues, who persevered throughout last year, especially our customer-facing sales colleagues, who are among the earliest in the industry to return to the field to serve our customers and our patients last summer. We greatly appreciate their perseverance and their resilience during these very difficult times. For context, it's valuable to begin today's presentation by outlining on what has occurred in the overall US prescription pharmaceutical market. And as a starting point, we know from IQVIA that industry-wide total prescription volume declined year-on-year in the fourth quarter of 2020 with weekly prescription volume declining from October into December by between 1% and 5% each week versus the prior year. In 2020, we also know that industry-wide among GI specialty prescribers, both new to brand and total prescription volume declined by 11% and 5%, respectively. Despite many COVID-related challenges, our sales force delivered growth in the second half of 2020 for both Movantik and Talicia. And this growth really demonstrates the ability of our commercial team to execute our strategy, compete effectively, and grow and defend our market positions. So, let's move the presentation to Talicia. Although Talicia has been available on the market since last March, our effective launch date was really last July. Many pandemic-related factors conspired against Talicia in the early times including access to the breath and endoscopic biopsy diagnostic tests to proceed a prescription for Talicia, and the fact that many individuals who get diagnosed with H. pylori tend to be older members of the population and, hence, there are more at risk in a COVID environment and less likely to travel out to be diagnosed. Despite these facts, during the fourth quarter, we achieved 52% growth in Talicia and TRx volume versus what we achieved in third quarter, while continuing our trend of consecutive monthly sales growth since the launch. We made significant progress in third quarter and fourth quarter and anticipate an acceleration of our Talicia business in 2021 as the pandemic continues to recede, patients returning to clinics, breath and endoscopic testing returned to normal rates, and offices reopened to sales representatives. In the second half of last year, we developed over 2,400 new to Talicia prescribers. And during the second half the year, we reached and educated over 1,400 high-decile prescribers about H. Pylori infections and Talicia through the use of live online webinars. These programs were very well-received during the pandemic period by prescribers and set the stage for return to in-person programming in 2021. With nearly 70% commercial coverage, patients across the country can broadly access Talicia with most patients not having any restrictions. Our payer strategy for Talicia continues to emphasize expanding our coverage. And because of our high level of commercial coverage, we've been able to achieve a high degree of prescription pull-through at retail pharmacies. The biggest barriers to success for Talicia so far have been COVID-related factors, such as the state lockdowns as we experienced in California and, of course, inconsistent sales team access to offices. Looking ahead, we're focused on increasing both the number of prescribers and also the depth or vibe of prescribing that emanates from each writer. We consistently grew both new and repeat prescribers last year and expect this trend to continue and strengthen in 2021. Now, let's turn the topic to Movantik. During the fourth quarter, we continued our market leadership of the promoter class by maintaining approximately 75% market share with Movantik. We did this by growing prescription volume in the second half of the year versus the first half of the year. In December, we exited the year with our second highest monthly prescribing volume from Movantik. This is a very, very strong finish for us. And as the market leader, our goal is to better serve providers and patients by educating stakeholders and expanding the size of the promoter market. We believe we can improve on our 2020 performance in 2021. With Movantik, prescribers and patients continue to benefit from the best commercial and government coverage available in the class including 87% commercial coverage. With this demonstrates the strength of RedHill’s market access team and our ability to maintain continuity with payers following the transition of Movantik from AstraZeneca. Consistent with our position as the overwhelming market leader, we expect to continue building on our payer coverage in 2021. In the second half of last year, we greatly strengthened RedHill digital marketing capability by making key hires in developing partnerships that improved our ability to efficiently reach both providers and consumers online whether they be mobile on their phones, at home, or in the provider's office. And these investments in Movantik are spilling over to Talicia and Aemcolo in 2021. This has proven to be an excellent investment for us and we believe digital investments will play an increasingly important role in the years ahead as the prescription pharmaceutical promotional model continues to evolve. Switching gears to Aemcolo, during fourth quarter we put the finishing touches on our 2021 plans for this brand. Although vaccination rates are increasing and COVID-19 disease burden is decreasing, the travel scenario still remains uncertain, especially international business and leisure travel outside of North America. We view Aemcolo’s offering upside potential as the US travel begins to return to international travel, especially travel to Mexico. Because of COVID-19, we believe patients and prescribers will be much more receptive to proactive prescribing of an agent that can effectively treat an infectious disease during travel. We also believe that travelers will be less than willing to risk disrupting their long awaited vacation with a case of traveler’s diarrhea. As with Movantik and Talicia, Aemcolo was clinically differentiated through both its active ingredient, in this case rifamycin SV, and its Multi Matrix MMX delivery system. And this is the same delivery system that helped differentiate and propel LIALDA and [indiscernible] to success in their respective markets. Additionally, Aemcolo enjoys a high degree of expanding commercial coverage. As of January 2021, Aemcolo commercial coverage improved to 83% and that's a 66% improvement since RedHill took over commercialization activities. So in summary despite the pandemic, RedHill achieved numerous commercial milestones in 2020 including the scale up of US operations, the launch of Talicia and the seamless transition of Movantik from AstraZeneca to RedHill and the stabilization of Movantik as the market leader in the promoter class. Moving forward, we're well positioned for future commercial success as we continue to grow Talicia. We invest in developing both market leading Movantik and the promoter class and we introduce Aemcolo into the US travel market. Our goal is to achieve transformational growth in commercial operational breakeven by the end of 2021. Thank you. And I'm going to turn the presentation over to Micha, our CFO.

Thank you, Rob. I will now provide a short financial overview of the year 2020. And the last quarter of that year. RedHill is delivering on a clear strategy designed to enable us to achieve fast growth and increased profit margins. We have been diligent in maintaining a solid balance sheet and we solid balance sheet. And we aim to achieve commercial operational breakeven point by the end of the year. Net revenues were approximately $64 million for the year ended December 31, 2020. An increase of $58 million compared to prior year attributed to Movantik and Talicia. Gross profit was $27.5 million for the year ended December 31, 2020, an increase of $23.5 million compared to prior year. Research and development expenses were approximately $16.5 million for the year ended December 31, 2020, mainly attributable to the development of our COVID-19 therapeutics and the Phase 3 study of RHB-204 for NTM. Other than R&D, our operating costs were approximately $74 million due to the expansion of our commercial operations related to the launch of Talicia and the acquisition and transition of Movantik. In terms of cash flow, the main items were $51 million was invested in sales force expansion, Talicia launch, Movantik transition, and R&D progress. $52.5 million paid to AstraZeneca for Movantik acquisition. These were financed by inflow of approximately $102 million consisting mainly of debt and equity resulting in a cash balance of $46 million as of December 31, 2020. And as of the first week of March of this year, 2021, our cash balance is $100 million. Let's move now to review our Q4 of 2020. Net revenues for the fourth quarter of 2020 were approximately $21.5 million, an increase of $0.5 million compared to the third quarter of 2020 with a 12% increase in product delivery. Gross margin in Q4 was $10.8 million, approximates previous quarter. Cash burn in Q4 was approximately $13 million compared to $11 million in the previous quarter. We have maintained cash flow discipline notwithstanding expansion efforts of our commercial operations and rapid progress of R&D programs. I will now turn the discussion back to Dror.

Thank you, Micha. We'll take questions now.

Thank you so much. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We will now take our first question. And the first question comes from the line of Scott Henry from ROTH Capital. Please go ahead.

Thank you and good morning. Just a couple questions. First, on the product sale, should we assume that Talicia revenues were roughly $2 million in the quarter based on the kind of that $8 million annualized run rate?

Yes, exactly.

Okay. And when – your guidance for cash flow positivity by the fourth quarter of 2021. Is the main driver there TALICIA or are there expense reductions? Just how should we think about, you know, you’re still a little ways away, what are the main levers to get you there? Thank you.

Thank you, Scott. It’s a great question. It’s both.

Okay. And speaking of that, it looks like I mean I've kind of got to break out what Q4 was so assuming I got the first three quarters right. It looks like R&D in selling expenses ticked up a bit in Q4 of 2020. Is that reflective or were there perhaps some one-time reasons for that increase in the fourth quarter?

Yeah. There is a slight increase due to the COVID-19 programs development.

Okay. So we should expect that to come down going forward a little bit or?

Yeah. This is reasonable to assume so.

Okay. And then I guess on shares outstanding, obviously, a lot has happened with ADM in the first quarter. Can you give us some idea of what the real-time shares outstanding are as of early March?

Yes. It is around 46 million ADS.

Okay. Perfect. And I guess the final question just with regard to Aemcolo, you know, obviously, due to COVID2019, there's not a lot to do with that product right now. Is it utilizing many financial resources or are you able to redeploy them, you know, pending a better general environment for that product?

It does not require significant resources right now.

Okay. Great. That should do it for me. Thank you for taking the questions and congratulations on the progress.

Thank you so much. And the next question comes from the line of Ram Selvaraju from H.C. Wainwright. Please go ahead.

Hi. Thanks very much for taking my questions. Just a couple of quick ones here. Firstly, just wanted to ask if you could clarify the statement in the press release this morning relating to operational breakeven. Does this specifically only focus on the commercial operations that doesn't include the development stage activities? Is that correct?

Hi, Ram. Great to have you with us. Yes, it is correct. It remains to be seen what happens with the COVID-19 programs as we currently have two Phase 3 stage programs running in parallel and we need to see how things develop. You’re statement was correct.

Okay. And then with respect to promotional activities relating to the commercial portfolio, we'd love to get additional granularity around how you expect that to evolve and change over the course of 2021 if you have any visibility into that.

Thank you. We refer this to Rob Jackson who is heading our sales and marketing. Rob, all yours.

Thank you, Dror. Yeah. Our promotional activity, Ram, is very well established for 2021. What we expect is as the conditions improve in the US due to COVID our access is going to improve, and I think that's going to be the biggest change that we see for the remainder of the year. Our promotional plans as I mentioned we have solid brand plans in place for making the investments we expected to make and everything is on track with the brand. So, as access improves, I expect that results will continue to improve along with that.

Quick question on the evolution and your thinking regarding the positioning of Aemcolo and the long-term growth potential for that brand. We're seeing a lot of activity being placed behind the investment in rifaximin and new formulations and combination products around rifaximin being made by Bausch Health. As you look at those activities, do you see any potential read through or relevance for what you might look to do with Aemcolo? As you seek to invest in that brand for long-term optimization of its value going forward?

I will refer that question to Rick Scruggs. Rick?

Hey. Thanks for the question. It’s a good question. So – and we're aware of the rifaximin activities. Bausch Health, I don't believe has much activity in the travelers’ diarrhea space. So, we're not concerned about that. We are going to keep promoting the product. Aemcolo’s travels return to traveling for the travelers’ indication. As you may be aware, Cosmo had a positive readout on the IBS-D program. We are going to be looking at that and looking at the other indications. We do have rights of first refusal on the product. And so, we do look forward to continuing the development of Aemcolo and the future with our partner, Cosmo.

Great. Thank you very much. Just one last one on Opaganib. Wanted to better understand how swiftly you expect to be in a position to file a full NDA, assuming that you were able to obtain EUA based on the results of this ongoing clinical development program. Just give us a sense of, kind of, the general timing and the extent to which you already have essential elements of a putative future NDA already assembled. Thank you.

The Phase 2/3 study that is running globally is about two-thirds enrolled. It's about 300 patients out of 464. We already released the successful positive data from a completed US Phase 2 study. We’re in discussions with regulators. We will see how the data plays out sometimes in Q2 towards the end of Q2. We expect to complete enrollment in the global Phase 2/3 study with opaganib in the second quarter as well as top line results towards the end of the quarter all goes well. And depending on the quality and strength of that data, we will decide where to file initially for emergency use authorization and then all goes well for full NDA or equivalent globally.

So, assuming that you obtain EUA, my question was more geared towards what else you would need to do in order to be in position to obtain full NDA approval? In other words, do you have long-term stability data? Do you have CMC information already on this product candidates so that once you obtain EUA assuming you obtain EUA, the NDA process won't take you more than a few months? Just wanted to ascertain whether that would be an accurate rendition of the situation?

Yeah. Great question. The short answer is yes. I refer this to be Gilead Raday with heading the R&D.

Thank you. So, just to add shortly that yes, indeed we do have long-term stability and the CMC module is advanced and we feel that this will be up to par with what we need to do we feel that it will be up to par with what we need to do in the future.

Thank you so much. And the next question comes from the line of David Hoang, SMBC. Please go ahead.

Hi. Thanks for taking my questions and congrats on the progress. So, I had a couple. The first one, just wanted to get your thoughts on the cadence of scripts for Movantik and Talicia over the course of 2021. Do you expect some of the headwinds we traditionally seen in Q1, things such as plan resets and Medicare donut hole. And then would you expect the scripts to sort of accelerate going into the back half of the year? Along with that, do you feel that the sales force is properly sized to support the ongoing launch?

Thank you, David. Glad to have you with us. We refer this to Rob.

Thank you. Thank you, David, for your question. I think we expect a typical first quarter as you would see in other parts of the industry and we've had some really bright signs showing up early in the first quarter, so confident from where the business is going. And particularly on Talicia, expected we would see significant acceleration as the year goes on. We're effectively, you know, six months – at the end of the year, we're effectively six months into the launch under pandemic conditions. So, as the conditions get better, I expect that results will absolutely continue to improve on that brand and at an accelerated pace.

Okay. Great. Thanks for the color there. And then I had a question on, you know, I think you mentioned a time to discharge from the hospital was improved for the US Phase 2 COVID trial of opaganib. Just curious if you can give any additional color on that. You know, how many days faster the discharge are you seeing for opaganib compared to discharge are you seeing for opaganib compared to the standard of care?

I’ll refer this to Gilead. There's little that we can say obviously about the ongoing study because it's blinded and so on. Gilead?

Thank you. What we can say is that we saw a difference – a meaningful difference in time to discharge. The study was a small 40-patient study. So, it wasn't powered to this end point. And we are capturing time to discharge in the global Phase 2/3 study with 464 patients. That is a much larger sample size which will allow us to quantify the outcomes better going forward. The primary outcome, as I mentioned, is – and we feel it’s the most important one for the evaluation of clinical recovery – is the time to achieving room air breathing, no longer requiring oxygen support by day 14. And there, we saw a robust benefit of opaganib in the Phase 2 study and have powered the global study to meet and be able to identify and check that difference in the global Phase 2/3 study.

Thank you so much. And the next question comes from the line of Bert Hazlett of BTIG. Please go ahead.

Yes. Thank you. Just two for me. First, with regard to commercial access, just a general assessment, trying to get a general assessment of your understanding of where we stand in terms of access. If 0 is the access during the worst of the pandemic, the worst the shutdown, and 10 is normal access before COVID, before the shutdown. Where are we now roughly? Is it a 6, is it a 5? Just in terms of general access for your sales force, just to give us a little sense of maybe the progress of how things are moving.

I think it's a good question. And what we've seen is it is really varied across the country on a state-by-state basis. Some states are much more toward the lockdown end of things like California. Others are more wide open as you see in the news. So, I would say, if I had to put a number on it, I'd say it's probably somewhere in the 6 to 7 range on a scale of 10 in terms of returning to normal. We're certainly not there yet, but we are starting to see some signs of normal starting to return particularly in some of the large group practices that are showing early signs that they may be willing to re-entertain reps going in the next couple of weeks. So, it's all going in the right direction. It's just going to take some time.

Terrific. That's encouraging. And then just one question on gross margin. Would you expect that to expand during 2021? Or just an understanding of gross margin and how that might trend during 2021 would be helpful. Thank you.

So, yes, we expect the gross margin to continue to grow because the mix between Movantik and Talicia will be a little different as we go forward as Talicia will continue to grow. And as Talicia does not have the royalty obligation that Movantik has, we are will supposed to improve gross margins.

Thank you so much. And the next question comes from the line of Matt Kaplan from Ladenburg. Please go ahead.

Oh, hi. This is Rain [ph] in for Matt. Thanks for taking our questions and congrats on the quarter. Perhaps just two quick questions. Some of the questions have already been answered, but if I may, can you just talk more about potential main drivers behind the Movantik prescription growth in the last few quarters? Is it more increase targeting or more conversion switches? Any color would be helpful.

Targeting has certainly gotten better over what we had when we initially acquired the brand from AstraZeneca. We've made some investments in that space and we've tightened up our targeting approach. I think also what we're experiencing is a more consistent and maybe higher quality brand presence than what was there previously. So, we're very focused on this brand. With AZ obviously it wasn't their top priority and that's why we have it now. So, we've certainly put this at the top of our list. We've put a lot of resources behind it. And it's our number one focus right now. And I think that's all bearing fruit.

Thanks. I guess just a pipeline question on RHB-107. Are you able to provide us a potential timeline for a readout in that study?

Yes we are initiated enrolling, ongoing, and we expect to see data in the second half of this year.

Thank you so much. And there are no further questions at the moment, so please go ahead.

Thank you, Priscilla, and thank you all for joining the call. Please reach out to us if you have any additional questions. We're always available. Keep safe and we wish you all a pleasant day.

Thank you so much. That does conclude our conference for today. Thank you for participating. You may all disconnect.