RedHill BioPharma — Continued GI product growth, CD PhIII data in 3M

RedHill Biopharma (US: RDHL)

Last close As at 24/12/2024

9.14

0.00 (0.00%)

Market capitalisation

323m

More on this equity

Research: Healthcare

RedHill BioPharma — Continued GI product growth, CD PhIII data in 3M

With its Q118 results, RedHill reported GI product revenues growing by 22% q-o-q to $2.4m in Q118. It also provided updates on its Phase III programmes. The last patient has been assessed against the primary endpoint in the RHB-104 first Phase III trial in Crohn’s disease (CD), and top-line data are expected by August (including) this year. Additionally, more than 70% of patients have been enrolled for the TALICIA confirmatory Phase III trial in H. pylori infection. Management now expects top-line data from this trial in Q418. We value the company at $404.5m (NIS1.5bn) or $19.0/ADS (NIS6.8/share).

Analyst avatar placeholder

Written by

Healthcare

RedHill BioPharma

Continued GI product growth, CD PhIII data in 3M

Q118 update

Pharma & biotech

24 May 2018

Price*

US$6.96

Market cap

US$148m

*Priced at 16 May 2018 NIS3.57/US$

Net cash ($m) at end Q118 (including short term investments)

36.4

Shares in issue

21.3m

Free float

90.8%

Code

RDHL

Primary exchange

TASE

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

43.6

14.7

(30.8)

Rel (local)

41.2

15.1

(39.0)

52-week high/low

US$10.8

US$4.6

Business description

RedHill is a speciality company with an R&D pipeline focusing on gastrointestinal (GI) and inflammatory diseases, while earlier-stage assets also target various cancers. The most advanced products are TALICIA for H. pylori infection, RHB-104 for CD, RHB-204 for NTM infections, and BEKINDA for gastroenteritis and IBS-D. RedHill also promotes three GI products in the US.

Next events

Top-line results from first Phase III trial with RHB-104 for Crohn’s disease

August 2018

Top-line results from confirmatory Phase III trial with TALICIA for H. pylori

Q418

Initiation of pivotal Phase III trial with RHB-204 for NTM infections

H218

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3681 2527

With its Q118 results, RedHill reported GI product revenues growing by 22% q-o-q to $2.4m in Q118. It also provided updates on its Phase III programmes. The last patient has been assessed against the primary endpoint in the RHB-104 first Phase III trial in Crohn’s disease (CD), and top-line data are expected by August (including) this year. Additionally, more than 70% of patients have been enrolled for the TALICIA confirmatory Phase III trial in H. pylori infection. Management now expects top-line data from this trial in Q418. We value the company at $404.5m (NIS1.5bn) or $19.0/ADS (NIS6.8/share).

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/16

0.1

(29.4)

(0.23)

0.0

N/A

N/A

12/17

4.0

(45.5)

(0.26)

0.0

N/A

N/A

12/18e

16.6

(39.3)

(0.18)

0.0

N/A

N/A

12/19e

30.2

(35.8)

(0.17)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Continued GI product growth is encouraging

GI revenues grew 22% to $2.4m in Q118 compared with $2.0m in Q417. This was only the second complete quarter in which all three GI products were marketed by RedHill (Donnatal, EnteraGam and Esomeprazole Strontium DR Capsules 49.3mg). No product breakdown was provided but, according to management, growth came from all three products, where Donnatal contributed the most. The gross profit margin was 62% compared with 54% in Q417, surpassing our expectations. Sales visibility is still limited so we maintain our forecasts. Currently, 100% revenues are from the three GI products, but management is in discussions to in-license additional products (likely to be already approved products).

Cost-reduction programme underway, R&D update

In line with the company’s ongoing cost-reduction programme, operating loss in Q118 was $10.0m compared with $14.4m in Q417. Net cash used in operating activities was $9.5m compared to $14.2m in Q417. This is moving towards management’s target of $8.5m average cash burn per quarter for 2018. The pivotal Phase III study for RHB-204 in non-tuberculous mycobacteria (NTM) infections should start in H218, depending on non-clinical supportive studies and additional input from the FDA. RedHill is in discussions with the FDA regarding the design of the upcoming BEKINDA trials: gastroenteritis (confirmatory Phase III) and IBS-D (likely 2x Phase III trials).

Valuation: Revised to $404.5m or $19.0/ADS

Our valuation has slightly decreased to $404.5m or $19.0/ADS from $410m or $19.2/ADS previously. This is due to a lower net cash position, which was partially offset by rolling the model forward. The cash position at 31 March 2018 was $36.4m, which according to our model will reach to the end of 2018. Key near-term catalysts are top-line results from the Phase III trial with RHB-104 in CD, top-line results from confirmatory Phase III trial with TALICIA for H. pylori and continued sales growth.

Next catalyst: RHB-104 CD Phase III results

According to recent news, the last patient has been assessed against the primary endpoint in the RHB-104 first Phase III trial in Crohn’s disease (CD). The primary efficacy endpoint is remission at week 26. Top-line data are expected by August (including) this year. As RedHill pointed out, a review of the blinded blended efficacy data suggests that the total number of treatment successes is consistent with the predefined expected treatment outcome (effect of at least 15% defined in the protocol). However, the data are currently unblinded. After that, as communicated previously, RedHill will likely need to carry out a second Phase III trial before regulatory submission.

As a reminder, the ongoing Phase III trial was initiated in 331 moderate to severe CD patients. To gather as many insights as possible, the company is also running an open-label extension study to assess the safety and efficacy in those patients who remained with active CD after the treatment in the original trial. RHB-104 is a patented combination of three antibiotics (clarithromycin, rifabutin and clofazimine) in an oral capsule for the treatment of CD. The product is in Phase III development for CD, an area where current therapies have limited efficacy and pronounced side effects, and are often very costly. An increasing amount of data supports the link between MAP infection in CD patients and RedHill believes it could induce and prolong remission time by treating the infection. This idea has an interesting background and has previously been explored in several clinical trials by other parties, such as a large Phase III trial funded by Pharmacia/Pfizer. In our initiation report, we reviewed the MAP hypothesis in CD, existing clinical data and RHB-104’s fit in the current landscape.

Financials: GI products deliver 22% growth q-o-q

RedHill reported revenues of $2.4m in Q118 (all US), which represented 22% growth from Q417 (see Exhibit 1), which is largely in line with our expectations. This was the second full quarter with all three products so this growth rate is now more informative (Donnatal launched Q217, EnteraGam Q317 and Esomeprazole Strontium DR 49.4mg Q417). According to management, all three products have grown in sales. However, it is still too early to judge uptake. Management did not release information about product split, and there was also no guidance released yet. The gross profit margin in Q118 was 62% compared with 54% in Q417 and better than we expected. The increase was mainly related to Donnatal. Although this is improved and management commented that it could be even higher for the GI speciality products, due to the early stage of commercialisation we maintain a 50% gross profit margin in our GI product forecast. We also maintain our previous estimates for 2018 and 2019, which are $16.6m and $30.2m respectively, until we have greater visibility on sales.

Exhibit 1: RedHill’s sales and gross profit

Source: RedHill, Edison Investment Research

RedHill employs a sales force of approximately 40 people based in North Carolina, which according to management is targeting thousands of US gastroenterologists as well as some primary care physicians and internists. The company believes that building relationships with physicians now will make it easier to introduce new products into the US market in the future, including its proprietary GI products, if approved: BEKINDA for gastroenteritis and IBS-D, RHB-105 for H.pylori infection and RHB-104 for CD.

Management is in ongoing discussions to in-license new GI products, which could be introduced in 2019 before the potential launch of TALICIA and may contribute to top-line growth. We assume they are approved or marketed products, and could provide upside to our sales forecasts. In addition, due to economies of scale RedHill’s margins would likely grow, as growing the GI portfolio would bring in more sales, while keeping the infrastructure close to the size it is currently.

Operating loss in Q118 was reported as $9.9m, which is a decrease from Q417 ($14.4m) but more in line with Q317 ($9.0m), which did not include the Q4 costs of establishing the US sales force. We maintain our estimates for R&D, S&M and G&A for 2018 at $26.6m, $14.0 and $7.0m, respectively. Net cash used in operating activities was $9.5m compared to $14.2m in Q417, and $10.2m in Q317. This Q118 cash burn is closer to management’s target of $8.5m average cash burn per quarter for 2018. Management expects a further decrease of expenses as a result of its previously announced cost reduction plan, which is still being implemented. This measure will help to reduce cash burn along with the increased top-line revenue growth.

Although RedHill does not provide guidance on cash reach, our model suggests cash will last until end-2018, past two key R&D catalysts and more sales data points. RedHill’s cash position at 31 March 2018 was $36.4m (including bank deposits and short term financial assets), compared with $46.2m at 31 December 2017. For 2019 we calculate an additional cash need of $33.8m, which we show in our model as illustrative long-term debt.

Valuation

Our valuation has decreased slightly to $404.5m or $19.0/ADS from $410m or $19.2/ADS previously. This is due to a lower net cash position, which was partially offset by rolling the model forward. All our assumptions remain unchanged until we have further visibility on GI product sales and the upcoming clinical data readouts, which are due by August (including) 2018 (RHB-104 first Phase III trial for CD) and Q418 (TALICIA confirmatory Phase III trial in H. pylori).

Exhibit 2: Sum-of-the parts RedHill valuation

Product

Launch

Peak sales ($m)

NPV ($m)

NPV/share ($)

Probability

rNPV ($m)

rNPV/share ($)

TALICIA, - H. pylori infection

2021*

86

103.9

4.9

70%

70.4

3.3

RHB-104, - Crohn’s disease

2023

145

67.7

3.2

40%

20.7

1.0

- NTM infections

2022

50

55.6

2.6

30%

14.0

0.7

BEKINDA, - Gastroenteritis

2022

21

28.2

1.3

85%

23.5

1.1

- IBS-D

2023

201

137.3

6.4

60%

100.4

4.7

YELIVA, - Cholangiocarcinoma

2024

115

159.2

7.5

10%

10.5

0.5

- r/r MM

2025

565

243.5

11.4

10%

60.6

2.8

- Advanced HCC

2025

649

145.8

6.8

10%

44.5

2.1

GI specialty products: Donnatal, EnteraGam & Esomeprazole

Market

48

24.4

1.1

100%

24.4

1.1

Net cash (end-Q118)

35.4

100%

35.4

1.7

Valuation

1,001

45.2

404.5

19.0

Source: Edison Investment Research. Note: WACC = 12.5% for product valuations. IBS-D: irritable bowel syndrome; r/r MM: refractory/relapse multiple myeloma; Advanced HCC: hepatocellular carcinoma; *TALICIA could potentially reach the market before 2021 given its fast-track status and depending on the timelines for the upcoming confirmatory Phase III trial.

Exhibit 3: Financial summary

$'000s

2016

2017

2018e

2019e

December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

101

4,007

16,584

30,157

Cost of Sales

0

(2,126)

(8,292)

(15,079)

Gross Profit

101

1,881

8,292

15,079

Research and development

(25,241)

(32,969)

(26,584)

(29,084)

EBITDA

 

 

(30,499)

(51,891)

(39,210)

(35,670)

Operating Profit (before amort. and except.)

(30,543)

(51,972)

(39,317)

(35,801)

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(30,543)

(51,972)

(39,317)

(35,801)

Net Interest

1,173

6,428

0

0

Profit Before Tax (norm)

 

 

(29,370)

(45,544)

(39,317)

(35,801)

Profit Before Tax (reported)

 

 

(29,370)

(45,544)

(39,317)

(35,801)

Tax

0

0

0

0

Profit After Tax (norm)

(29,370)

(45,544)

(39,317)

(35,801)

Profit After Tax (reported)

(29,370)

(45,544)

(39,317)

(35,801)

Average Number of Shares Outstanding (m)

128.5

175.3

213.6

213.8

EPS - normalised (c)

 

 

(22.85)

(25.99)

(18.41)

(16.74)

EPS - normalised

 

 

(0.24)

(0.26)

(0.18)

(0.17)

EPS - (reported) ($)

 

 

(0.23)

(0.26)

(0.18)

(0.17)

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross Margin (%)

100.0

46.9

50.0

50.0

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

6,397

5,667

6,211

6,995

Intangible Assets

6,095

5,285

5,820

6,605

Tangible Assets

165

230

239

238

Investments

137

152

152

152

Current Assets

 

 

67,815

51,676

6,497

5,471

Stocks

0

653

653

653

Debtors

1,661

4,818

4,818

4,818

Cash

53,786

16,455

1,026

0

Other*

12,368

29,750

0

0

Current Liabilities

 

 

(5,356)

(11,830)

(4,276)

(3,849)

Creditors

(5,356)

(11,830)

(4,276)

(3,849)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

(6,155)

(448)

(448)

(34,200)

Long term borrowings

0

0

0

(33,752)

Other long term liabilities

(6,155)

(448)

(448)

(448)

Net Assets

 

 

62,701

45,065

7,983

(25,583)

CASH FLOW

Operating Cash Flow

 

 

(28,258)

(44,769)

(44,528)

(33,862)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(85)

(146)

(116)

(131)

Acquisitions/disposals

0

0

0

0

Financing

36,017

25,653

0

0

Other**

24,596

(18,069)

29,215

(785)

Dividends

0

0

0

0

Net Cash Flow

32,270

(37,331)

(15,429)

(34,778)

Opening net debt/(cash)

 

 

(21,516)

(53,786)

(16,455)

(1,026)

HP finance leases initiated

0

0

0

0

Other

0

0

0

0

Closing net debt/(cash)

 

 

(53,786)

(16,455)

(1,026)

33,752

Source: Edison Investment Research, RedHill accounts. Note: *Bank deposits and financial assets at fair value. **Includes bank deposits converted to cash and cash equivalents.

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Limited (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Limited (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

More on RedHill Biopharma

View All

Latest from the Healthcare sector

View All Healthcare content

Research: TMT

Datagroup — EBITDA margins lift to 10.6% as acquisitions drive growth

DATAGROUP performed in line with expectations in H1, with revenue growing by 24%, including 1.5% organic growth, or 5–6% when adjusting for discontinued activities from acquisitions. Management conservatively maintained revenue guidance, despite 50% of this already being generated in H1, with ALMATO only contributing for one month in the period. While the rating looks fairly priced at c 10x EBITDA, DATAGROUP offers an excellent track record, high recurring revenues, a clear focus on the large German Mittelstand sector and an increasing number of key differentiators following the acquisitions of ikb Data and ALMATO.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free