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Research: Healthcare
RedHill Biopharma announced yesterday that the FDA has approved Talicia for the treatment of H. pylori infection in adults. The label is broad and potentially positions Talicia to compete as a front-line treatment. Talicia now is the only rifabutin-based combination antibiotic treatment approved by the FDA. In two Phase III clinical trials conducted by RedHill, no resistance to rifabutin was observed, which will be the key competitive advantage compared to standard-of-care clarithromycin-based H. pylori treatment. We previously assigned a high likelihood (90%) of successful approval given the good efficacy data and clean safety profile. Our last published RedHill valuation was $556m or $15.8 per ADS, which we increase to $571m or $16.2 per ADS following the removal of the remaining probability of success from our model.
Written by
RedHill Biopharma |
FDA approves Talicia for H. pylori |
Regulatory news |
Pharma & biotech |
5 November 2019 |
Share price performance
Business description
Analyst
RedHill Biopharma is a research client of Edison Investment Research Limited |
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RedHill Biopharma announced yesterday that the FDA has approved Talicia for the treatment of H. pylori infection in adults. The label is broad and potentially positions Talicia to compete as a front-line treatment. Talicia now is the only rifabutin-based combination antibiotic treatment approved by the FDA. In two Phase III clinical trials conducted by RedHill, no resistance to rifabutin was observed, which will be the key competitive advantage compared to standard-of-care clarithromycin-based H. pylori treatment. We previously assigned a high likelihood (90%) of successful approval given the good efficacy data and clean safety profile. Our last published RedHill valuation was $556m or $15.8 per ADS, which we increase to $571m or $16.2 per ADS following the removal of the remaining probability of success from our model.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
4.0 |
(45.5) |
(0.26) |
0.0 |
N/A |
N/A |
12/18 |
8.4 |
(38.8) |
(0.17) |
0.0 |
N/A |
N/A |
12/19e |
10.0 |
(39.5) |
(0.10) |
0.0 |
N/A |
N/A |
12/20e |
13.0 |
(36.8) |
(0.09) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
Talicia is a proprietary three-drug combination of omeprazole, amoxicillin and rifabutin (10mg/250mg/12.5mg delayed-release capsules). According to yesterday’s news, RedHill plans to launch the drug in Q120, in line with our expectations. The commercial strategy is unchanged and RedHill will market Talicia with its own salesforce in the US, which will increase to c 140 reps (from the existing c 40 reps). Ex-US commercial strategy has not yet been disclosed, which we believe will depend on Talicia’s performance in the US. QIDP designation provides eight years of market exclusivity in the US, while the existing patent portfolio provides protection until 2034.
RedHill has also announced it will host an investor and analyst day in New York on 22 November. The update and the event will focus on the commercial launch plans for Talicia and Aemcolo (planned to be launched in Q419), which is a new asset in-licensed from Cosmo Pharmaceuticals (described in our 22 October 2019 report). Aemcolo (rifamycin) was approved by the FDA for the treatment of traveller’s diarrhoea in November 2018. The deal terms (stock equivalent of $12m upfront, royalties in the high 20% and milestones of up to $100m) imply that Aemcolo can become a substantial asset in RedHill’s gastrointestinal portfolio. Given that both Talicia and Aemcolo are planned to be launched soon, 2020 could potentially be a transformative year for RedHill as a commercial-stage company. Few details on Aemcolo marketing have been released yet, which makes the analyst day in New York a key event to watch.
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Research: TMT
Boku has signed a material identity data supply contract with a global mobile telecoms group. This is a crucial step in building out the scale of the Identity business, providing access to mobile subscribers in multiple countries. While we view this as a positive development for the Identity business, we have taken a more cautious approach to the timing of new merchant contracts, reducing Identity revenues and group EBITDA in FY20 and FY21.