RedHill Biopharma Announces Closing of $8 Million Registered Direct Offering

Rhea-AI Summary

RedHill Biopharma Ltd. (NASDAQ: RDHL) has closed a registered direct offering for the purchase and sale of 10,000,000 of the Company's American Depositary Shares at a purchase price of $0.80 per ADS, with gross proceeds of $8 million. The Company also issued unregistered warrants to purchase up to 10,000,000 ADSs at an exercise price of $1.00 per ADS. The net proceeds will be used for general working capital, acquisitions, research and development, and general corporate purposes.

Financial Analyst

The recent registered direct offering by RedHill Biopharma Ltd. indicates a strategic move to bolster its financial position by raising capital through the sale of 10 million American Depositary Shares (ADSs) and concurrent private placement of warrants. The offering price of $0.80 per ADS, with warrants exercisable at $1.00, suggests a potential for upside for investors if the company's stock price appreciates. However, the discount on the ADSs could also reflect current market sentiments about the company's valuation or a need for quick capital infusion.

From a financial perspective, the gross proceeds of $8 million, before costs, are crucial for the company's stated goals of general working capital, acquisitions, research and development and corporate purposes. This influx of capital may provide the necessary resources for RedHill to advance its pipeline products or expand its market presence through acquisitions. Investors should monitor how effectively this capital is deployed to generate returns.

It's important to note that the use of a 'shelf' registration statement expedites the process of capital raising, allowing the company to act quickly when market conditions are favorable. This strategic flexibility is often viewed positively by the market. However, the impact on current shareholders should also be considered, as the issuance of additional shares typically leads to dilution of existing ownership.

Legal Expert

RedHill's adherence to regulatory requirements in the offering process is evident. The use of a 'shelf' registration statement, which was filed and declared effective by the SEC, allows the company to issue securities in a more timely and efficient manner. This method of capital raising is common among public companies seeking to maintain regulatory compliance while accessing capital markets swiftly.

The concurrent private placement of warrants, which were not registered under the Securities Act, leverages Regulation D to sell securities without a public offering. This exemption is often used to raise capital from accredited investors, typically involving less disclosure than public offerings. However, it limits the resale of the securities, which may not be immediately liquid.

The legal structure of this transaction ensures that the company meets SEC regulations while potentially attracting a different class of investors through the private placement of warrants. Investors should be aware of the restrictions associated with unregistered securities, including the potential lack of liquidity and the reliance on exemptions for their sale or transfer.

Market Research Analyst

The biopharmaceutical sector is highly competitive and capital-intensive. RedHill Biopharma's move to raise capital through a direct offering and warrants issuance is indicative of the ongoing need for liquidity in this industry to fund research and development activities. Biopharma companies often require substantial investment to progress through clinical trials and bring products to market.

An evaluation of the offering's impact on the stock market should consider the industry's response to similar capital-raising activities. It's not uncommon for biopharma stocks to experience volatility following such announcements, as the market digests the implications of dilution versus the potential for future growth fueled by the raised capital.

The specific allocation of proceeds towards acquisitions could signal a strategic expansion or consolidation, which is a trend in the biopharma industry as companies seek to diversify their portfolios and enhance their pipeline. The market's reaction to these developments will depend on how the acquisitions align with RedHill's core competencies and strategic vision.

TEL AVIV, Israel and RALEIGH, N.C., Jan. 26, 2024 /PRNewswire/ -- RedHill Biopharma Ltd. (NASDAQ: RDHL) ("RedHill" or the "Company"), a specialty biopharmaceutical company, today announced that it has closed its previously announced registered direct offering for the purchase and sale of 10,000,000 of the Company's American Depositary Shares ("ADSs"), each ADS representing four hundred (400) ordinary shares, at a purchase price of $0.80 per ADS. In addition, in a concurrent private placement, the Company issued unregistered warrants to purchase up to 10,000,000 ADSs. The warrants have an exercise price of $1.00 per ADS, are immediately exercisable upon issuance and have a term of five years following the issuance date.

 

H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.

The gross proceeds to the Company from the offering were $8 million, before deducting placement agent's fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for general working capital, acquisitions, research and development, and general corporate purposes.

The ADSs described above (but not the warrants issued in the private placement or the ADSs underlying the warrants) were offered by the Company pursuant to a "shelf" registration statement on Form F-3 (File No. 333-258259) previously filed with the Securities and Exchange Commission (the "SEC") on July 29, 2021, and declared effective by the SEC on August 9, 2021. The offering of the ADSs was made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. A prospectus supplement and accompanying prospectus relating to the offering of ADSs have been filed with the SEC. Electronic copies of the prospectus supplement and accompanying prospectus may be obtained on the SEC's website at http://www.sec.gov or by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, NY 10022, by phone at (212) 865-5711 or e-mail at placements@hcwco.com.

The warrants described above were issued in a concurrent private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation D promulgated thereunder and, along with the ADSs underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the warrants and underlying ADSs may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About RedHill Biopharma
RedHill Biopharma Ltd. (NASDAQ: RDHL) is a specialty biopharmaceutical company primarily focused on gastrointestinal and infectious diseases. RedHill promotes the gastrointestinal drugs Talicia^®, for the treatment of Helicobacter pylori (H. pylori) infection in adults¹, and Aemcolo^®, for the treatment of travelers' diarrhea in adults². RedHill's key clinical late-stage development programs include: (i) opaganib (ABC294640), a first-in-class oral broad-acting, host-directed SPHK2 selective inhibitor with potential for pandemic preparedness, targeting multiple indications with a U.S. government collaboration for development for Acute Radiation Syndrome (ARS), a Phase 2/3 program for hospitalized COVID-19, and a Phase 2 program in oncology; (ii) RHB-107 (upamostat), an oral broad-acting, host-directed, serine protease inhibitor with potential for pandemic preparedness is in late-stage development as a treatment for non-hospitalized symptomatic COVID-19, with non-dilutive external funding covering the entirety of the RHB-107 arm of the 300-patient Phase 2 adaptive platform trial, and is also targeting multiple other cancer and inflammatory gastrointestinal diseases; (iii) RHB-102, with potential UK submission for chemotherapy and radiotherapy induced nausea and vomiting, positive results from a Phase 3 study for acute gastroenteritis and gastritis and positive results from a Phase 2 study for IBS-D; (iv) RHB-104, with positive results from a first Phase 3 study for Crohn's disease; and (v) RHB-204, a Phase 3-stage program for pulmonary nontuberculous mycobacteria (NTM) disease. 

More information about the Company is available at www.redhillbio.com / twitter.com/RedHillBio.

 

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including, but not limited to, statements regarding the intended use of net proceeds from the offering, may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or similar words and include statements regarding the risk that the Company will not comply with the listing requirements of the Nasdaq Capital Market ("Nasdaq") to remain listed for trading on Nasdaq, the addition of new revenue generating products, out-licensing of the Company's development pipeline assets, timing of opaganib's development for Acute Radiation Syndrome, non-dilutive development funding from RHB-107 and its inclusion in a key platform study. Forward-looking statements are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control and cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, market and other conditions, the risk that the addition of new revenue generating products or out-licensing transactions will not occur; the risk that acceptance onto the RNCP Product Development Pipeline will not guarantee ongoing development or that any such development will not be completed or successful; the risk that the FDA does not agree with the Company's proposed development plans for opaganib for any indication, the risk that observations from preclinical studies are not indicative or predictive of results in clinical trials; the risk that the FDA pre-study requirements will not be met and/or that the Phase 3 study of RHB-107 in COVID-19 outpatients will not be approved to commence or if approved, will not be completed or, should that be the case, that we will not be successful in obtaining alternative non-dilutive development funding for RHB-107, the risk that HB-107's late-stage development for non-hospitalized COVID-19 will not benefit from the resources redirected from the terminated RHB-204 Phase 3 study, that the Phase 2/3 COVID-19 study for RHB-107 may not be successful and, even if successful, such studies and results may not be sufficient for regulatory applications, including emergency use or marketing applications, and that additional COVID-19 studies for opaganib and RHB-107 are likely to be required, as well as risks and uncertainties associated with the risk that the Company will not successfully commercialize its products; as well as risks and uncertainties associated with (i) the initiation, timing, progress and results of the Company's research, manufacturing, pre-clinical studies, clinical trials, and other therapeutic candidate development efforts, and the timing of the commercial launch of its commercial products and ones it may acquire or develop in the future; (ii) the Company's ability to advance its therapeutic candidates into clinical trials or to successfully complete its pre-clinical studies or clinical trials or the development of a commercial companion diagnostic for the detection of MAP; (iii) the extent and number and type of additional studies that the Company may be required to conduct and the Company's receipt of regulatory approvals for its therapeutic candidates, and the timing of other regulatory filings, approvals and feedback; (iv) the manufacturing, clinical development, commercialization, and market acceptance of the Company's therapeutic candidates and Talicia®; (v) the Company's ability to successfully commercialize and promote Talicia® and Aemcolo®; (vi) the Company's ability to establish and maintain corporate collaborations; (vii) the Company's ability to acquire products approved for marketing in the U.S. that achieve commercial success and build its own marketing and commercialization capabilities; (viii) the interpretation of the properties and characteristics of the Company's therapeutic candidates and the results obtained with its therapeutic candidates in research, pre-clinical studies or clinical trials; (ix) the implementation of the Company's business model, strategic plans for its business and therapeutic candidates; (x) the scope of protection the Company is able to establish and maintain for intellectual property rights covering its therapeutic candidates and its ability to operate its business without infringing the intellectual property rights of others; (xi) parties from whom the Company licenses its intellectual property defaulting in their obligations to the Company; (xii) estimates of the Company's expenses, future revenues, capital requirements and needs for additional financing; (xiii) the effect of patients suffering adverse experiences using investigative drugs under the Company's Expanded Access Program; (xiv) competition from other companies and technologies within the Company's industry; and (xv) the hiring and employment commencement date of executive managers. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on April 28, 2023. All forward-looking statements included in this press release are made only as of the date of this press release. The Company assumes no obligation to update any written or oral forward-looking statement, whether as a result of new information, future events or otherwise unless required by law.

Company contact:

Adi Frish
Chief Corporate & Business Development Officer
RedHill Biopharma
+972-54-6543-112
adi@redhillbio.com

Category: Financials

¹ Talicia^® (omeprazole magnesium, amoxicillin and rifabutin) is indicated for the treatment of H. pylori infection in adults. For full prescribing information see: www.Talicia.com.
² Aemcolo^® (rifamycin) is indicated for the treatment of travelers' diarrhea caused by noninvasive strains of Escherichia coli in adults. For full prescribing information see: www.Aemcolo.com.

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SOURCE RedHill Biopharma Ltd.

What is the ticker symbol for RedHill Biopharma Ltd.?

The ticker symbol for RedHill Biopharma Ltd. is RDHL.

How many American Depositary Shares were offered in the direct offering?

10,000,000 American Depositary Shares were offered in the direct offering.

What is the purchase price of the ADS in the direct offering?

The purchase price of the ADS in the direct offering was $0.80 per ADS.

What is the exercise price of the unregistered warrants issued by the Company?

The exercise price of the unregistered warrants issued by the Company is $1.00 per ADS.

What will the net proceeds from the offering be used for?

The net proceeds from the offering will be used for general working capital, acquisitions, research and development, and general corporate purposes.