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Research: Healthcare
RedHill’s COVID-19 programme is progressing well with two clinical trials ongoing, a Phase II study (n=40) in the US and an international Phase II/III study (n=270). If results are promising, RedHill plans to apply for emergency use authorisation as soon as possible. The commercial highlight this year was the acquisition of Movantik (for opioid-induced constipation) from AstraZeneca on 1 April 2020. Q220 was the first full quarter of RedHill promoting Movantik with booked sales of $20.9m (AstraZeneca’s reported sales of $96m in FY19). RedHill is also ramping up the promotion of its other GI drugs, Talicia for H. pylori eradication and Aemcolo for travellers’ diarrhoea. Our valuation of RedHill is $601m or $16.2 per ADS.
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RedHill Biopharma |
Rapid COVID-19 Ph II/III programme progress
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Pharma & biotech |
Deutsches Eigenkapitalforum 2020
12 October 2020 |
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RedHill Biopharma is a research client of Edison Investment Research Limited |
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RedHill’s COVID-19 programme is progressing well with two clinical trials ongoing, a Phase II study (n=40) in the US and an international Phase II/III study (n=270). If results are promising, RedHill plans to apply for emergency use authorisation as soon as possible. The commercial highlight this year was the acquisition of Movantik (for opioid-induced constipation) from AstraZeneca on 1 April 2020. Q220 was the first full quarter of RedHill promoting Movantik with booked sales of $20.9m (AstraZeneca’s reported sales of $96m in FY19). RedHill is also ramping up the promotion of its other GI drugs, Talicia for H. pylori eradication and Aemcolo for travellers’ diarrhoea. Our valuation of RedHill is $601m or $16.2 per ADS.
Opaganib’s unique mechanism of action
The trials are testing opaganib, a sphingosine kinase-2 inhibitor (reviewed in our last report in July 2020). Extensive preclinical studies describe opaganib’s rather unique mechanism of action. It not only has an anti-viral effect, but can also reduce inflammation in the lungs. This makes it an attractive option in severe COVID-19 cases, where an overactive immune response can worsen the outcomes. Clinical data from the compassionate use programme were particularly intriguing, as one-third of patients in the control arm received corticosteroids vs none in the opaganib arm (data were collected before the landmark study in the UK showed that corticosteroids significantly improve outcomes). Patients in the opaganib arm showed numerically better outcomes, but these could have been even better considering corticosteroid use in the control arm.
Closer collaboration with Cosmo
In August 2020, RedHill announced that it had signed a significant licensing and manufacturing agreement with Cosmo. This is an expansion of the partnership with Cosmo announced in October 2019, when RedHill in-licensed Aemcolo, one of the three main assets in its commercial portfolio. The new expanded deal involved co-development of a novel H. pylori therapy, co-development of RedHill’s RHB-204 for NTM infections and Cosmo becoming the exclusive manufacturer of these drugs.
Valuation: $601m or $16.2 per ADS
Our RedHill valuation is $601m or $16.2 per ADS. The successful resumption of full-scale promotion activities, new products (Talicia and Aemcolo) gaining traction and updates from the COVID-19 programme are the key catalysts in the near term.
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Edison estimates
Source: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. |
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Research: Metals & Mining
Ahead of Wheaton’s (WPM’s) Q320 results, which are scheduled to be released on 9 November, we have refined our quarterly forecasts for the remainder of the year to take into account both updated precious metals prices and also the apparent delays in hitherto furloughed mines returning to pre-coronavirus levels of production. As a result, we have reduced our silver and gold production forecasts for Q320 by 11.0% and 5.1%, respectively, and our EPS forecast by 2.6c per share (or 7.5%), although this follows a 40% uplift in our forecasts after the Q220 results were announced in August. As a result, our FY20 forecast still remains close to the middle of the range of analysts’ expectations (see Exhibit 2). Our FY21 and longer-term forecasts remain, to all intents and purposes, intact however, as does our valuation.