Filed Pursuant to Rule 424(b)(5)
Registration No. 333-226278
PROSPECTUS SUPPLEMENT
(To prospectus dated July 31, 2018)
3,188,776
American Depositary Shares representing 31,887,760 Ordinary
Shares
RedHill Biopharma Ltd.
We are offering 3,188,776 American Depositary Shares
(“ADSs”) pursuant to this prospectus supplement and accompanying
prospectus. Each ADS represents 10 of our ordinary shares, par
value NIS 0.01 per share (“Ordinary Shares”).
The ADSs are listed on The Nasdaq
Global Market (“Nasdaq”) under the symbol
“RDHL.” On January 11, 2021, the last reported sale price
of the ADSs on The Nasdaq was $8.71 per ADS.
H.C.
Wainwright & Co., LLC (“Wainwright”) may offer the ADSs from
time to time to purchasers directly or through agents, or through
brokers in brokerage transactions on Nasdaq or to dealers in
negotiated transactions or in a combination of such methods of
sale, or otherwise, at fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices. See “Underwriting.”
Investing in the ADSs representing our Ordinary Shares involves a
high degree of risk. Please read “Risk Factors” beginning on page
S-13 of this prospectus supplement, on page 3 of the accompanying
prospectus and in the documents incorporated by reference into this
prospectus supplement.
None
of the United States Securities and Exchange Commission, any state
securities commission or any other regulatory body, has approved or
disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal
offense.
|
|
PER ADS
|
|
|
TOTAL
|
|
Public Offering Price
|
|
$
|
7.8400
|
|
|
$
|
25,000,003
|
|
Underwriting Discounts and
Commissions (1)
|
|
$
|
0.4704
|
|
|
$
|
1,500,000
|
|
Proceeds to Us, Before
Expenses
|
|
$
|
7.3696
|
|
|
$
|
23,500,003
|
|
(1)
|
We have agreed to
reimburse Wainwright for certain offering-related expenses. We also
agreed to pay Wainwright reduced underwriting discounts and
commissions in the amount of $0.2744 in respect of ADSs sold to a
certain existing shareholder, which will result in decreased
underwriting discounts and increased proceeds to us before expenses
of $37,500. See “Underwriting.”
|
We have granted Wainwright a 30-day
option to purchase up to an additional 478,316 ADSs from us at
the public offering price per ADS, less underwriting discounts and
commissions. If Wainwright exercises its option in full, the total
underwriting discounts and commissions payable by us will be
$1,725,000, and the total proceeds to us, before expenses, will be
$27,025,001.
Delivery of the ADSs is expected to
be made on or about January 14, 2021.
H.C. Wainwright & Co.
Prospectus Supplement dated
January 11, 2021.
Table Of Contents
|
Page
|
Prospectus
Supplement
|
|
S-1
|
|
S-2
|
|
S-4
|
|
S-13
|
|
S-20
|
|
S-21
|
|
S-22
|
|
S-22
|
|
S-23
|
|
S-31
|
|
S-33 |
|
S-35
|
|
S-36
|
|
S-36
|
|
S-36
|
|
Page
|
Prospectus
|
|
2
|
|
2
|
|
3
|
|
3
|
|
4
|
|
5
|
|
5
|
|
6
|
|
6
|
|
7
|
|
7
|
|
8
|
|
9
|
|
10
|
|
12
|
|
12
|
|
12
|
|
13
|
|
14
|
|
15
|
ABOUT
THIS PROSPECTUS SUPPLEMENT
You should
rely only on the information provided in this prospectus supplement
and the accompanying prospectus, all information incorporated by
reference herein and therein, as well as the additional information
described under “Incorporation of Information by Reference” on page
S-36 of this prospectus supplement. Neither we nor Wainwright has
authorized anyone to provide you with different information. If
anyone provides you with different or inconsistent information, you
should not rely on it. This prospectus supplement and the
accompanying prospectus do not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by
this prospectus supplement and the accompanying prospectus in any
jurisdiction where it is unlawful to make such offer or
solicitation. You should not assume that the information contained
in this prospectus supplement or the accompanying prospectus, or
any document incorporated by reference in this prospectus
supplement or the accompanying prospectus, is accurate as of any
date other than the date on the front cover of the applicable
document. Neither the delivery of this prospectus supplement and
the accompanying prospectus, nor any distribution of securities
pursuant to this prospectus supplement and the accompanying
prospectus shall, under any circumstances, create any implication
that there has been no change in the information set forth or
incorporated by reference into this prospectus supplement and the
accompanying prospectus or in our affairs since the date of this
prospectus supplement. Our business, financial condition, results
of operations and prospects may have changed since that date.
This
prospectus supplement and the accompanying prospectus form part of
the registration statement (No. 333-226278) that we filed with the
Securities and Exchange Commission (“SEC”), using a “shelf”
registration process. This document comprises two parts. The first
part is this prospectus supplement, which describes the specific
terms of this offering and also adds to and updates information
contained in the accompanying prospectus and the documents
incorporated by reference herein. The second part, the accompanying
prospectus, gives more general information, some of which may not
apply to this offering. Generally, when we refer to this
prospectus, we are referring to both parts of this document
combined. If the description of the offering varies between this
prospectus supplement and the accompanying prospectus or the
documents incorporated herein by reference filed prior to the date
of this prospectus supplement, you should rely on the information
contained in this prospectus supplement. However, if any statement
in one of these documents is inconsistent with a statement in
another document having a later date — for example, a document
incorporated by reference in the accompanying prospectus — the
statement in the document having the later date modifies or
supersedes the earlier statement.
Before
purchasing any securities, you should carefully read both this
prospectus supplement and the accompanying prospectus, together
with the additional information described under the headings,
“Where You Can Find More Information” and “Incorporation of
Information by Reference,” on page S-36 of this prospectus
supplement.
Unless the
context otherwise requires, all references to “RedHill,” “we,”
“us,” “our,” the “Company” and similar designations refer to
RedHill Biopharma Ltd. and its wholly-owned subsidiary, RedHill
Biopharma Inc. The term “NIS” refers to New Israeli Shekels, the
lawful currency of the State of Israel, the terms “dollar,” “US$”
or “$” refer to U.S. dollars, the lawful currency of the United
States (“U.S.”). Our functional and presentation currency is the
U.S. dollar. Foreign currency transactions in currencies other than
the U.S. dollar are translated in this prospectus supplement into
U.S. dollars using exchange rates in effect at the date of the
transactions.
We further
note that the representations, warranties and covenants made by us
in any agreement that is filed as an exhibit to any document that
is incorporated by reference herein were made solely for the
benefit of the parties to such agreement, including, in some cases,
for the purpose of allocating risk among the parties to such
agreements, and should not be deemed to be a representation,
warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date when
made. Accordingly, such representations, warranties, and covenants
should not be relied on as accurately representing the current
state of our affairs.
We are
offering to sell, and seeking offers to buy, ADSs representing our
Ordinary Shares only in jurisdictions where offers and sales are
permitted. The distribution of this prospectus supplement and the
accompanying prospectus and the offering of the ADSs in certain
jurisdictions may be restricted by law. Persons outside the U.S.
who come into possession of this prospectus supplement and the
accompanying prospectus must inform themselves about, and observe
any restrictions relating to, the offering of the ADSs and the
distribution of this prospectus supplement and the accompanying
prospectus outside the U.S. This prospectus supplement and the
accompanying prospectus do not constitute, and may not be used in
connection with, an offer to sell, or a solicitation of an offer to
buy, any securities offered by this prospectus supplement and the
accompanying prospectus by any person in any jurisdiction in which
it is unlawful for such person to make such an offer or
solicitation.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This
prospectus supplement, the accompanying prospectus, and the
information incorporated by reference herein and therein may
include forward-looking statements. These statements involve known
and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. In some
cases, you can identify forward-looking statements by terms,
including “anticipates,” “believes,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans,” “potential,” “predicts,”
“projects,” “should,” “will,” “would,” and similar expressions
intended to identify forward-looking statements. Forward-looking
statements reflect our current views with respect to future events
and are based on assumptions and are subject to risks and
uncertainties. In addition, certain sections of this prospectus
supplement, the accompanying prospectus, and the information
incorporated by reference herein contain information obtained from
independent industry and other sources that we have not
independently verified. You should not put undue reliance on any
forward-looking statements. Unless we are required to do so under
U.S. federal securities laws or other applicable laws, we do not
intend to update or revise any forward-looking statements.
Our ability to
predict our operating results or the effects of various events on
our operating results is inherently uncertain. Therefore, we
caution you to consider carefully the matters described under the
caption “Risk Factors” on page S-13 of this prospectus supplement,
and certain other matters discussed in this prospectus supplement,
the accompanying prospectus, and the information incorporated by
reference herein and therein, and other publicly available sources.
Such factors and many other factors beyond our control could cause
our actual results, performance or achievements to be materially
different from any future results, performance or achievements that
may be expressed or implied by the forward-looking
statements.
Factors that
could cause our actual results to differ materially from those
expressed or implied in such forward-looking statements include,
but are not limited to:
•
|
estimates of
our expenses, future revenues, capital requirements and our needs
for additional financing;
|
•
|
our ability to
obtain additional financing;
|
•
|
the
commercialization and market acceptance of our commercial
products;
|
•
|
our ability to
generate sufficient revenues from our commercial products,
including obtaining commercial insurance and government
reimbursement;
|
•
|
our ability to
advance our therapeutic candidates into clinical trials or to
successfully complete our preclinical studies or clinical trials,
and to complete the development of such therapeutic candidates and
obtain approval for marketing by the Food and Drug Administration
(“FDA”) or other regulatory authorities;
|
•
|
our reliance
on third parties to satisfactorily conduct key portions of our
commercial operations, including manufacturing and other supply
chain functions, market analysis services, safety monitoring,
regulatory reporting and sales data analysis and the risk that
those third parties may not perform such functions
satisfactorily;
|
•
|
our ability to
maintain an appropriate sales and marketing infrastructure;
|
•
|
our ability to
establish and maintain corporate collaborations;
|
•
|
that our
current commercial products or commercial products that we may
commercialize or promote in the future may be withdrawn from the
market by regulatory authorities and our need to comply with
continuing laws, regulations and guidelines to maintain clearances
and approvals for those products;
|
•
|
our exposure
to significant drug product liability claims;
|
•
|
the completion
of any postmarketing studies or trials;
|
•
|
our ability to
acquire products approved for marketing in the U.S. that achieve
commercial success and to maintain our own marketing and
commercialization capabilities;
|
•
|
our estimates
of the markets, their size, characteristics and their potential for
our commercial products and therapeutic candidates and our ability
to serve those markets;
|
•
|
the successful
commercialization of products we in-license or acquire;
|
•
|
our inability
to enforce claims relating to a breach of a representation and
warranty by a counterparty;
|
•
|
the hiring and
continued employment of executives, sales personnel, and
contractors;
|
•
|
our receipt
and timing of regulatory clarity and approvals for our commercial
products and therapeutic candidates, and the timing of other
regulatory filings and approvals;
|
•
|
the
initiation, timing, progress, and results of our research,
development, manufacturing, preclinical studies, clinical trials,
and other commercial efforts and therapeutic candidate development,
as well as the extent and number of additional studies that we may
be required to conduct;
|
•
|
our reliance
on third parties to conduct key portions of our clinical trials,
including data management services and the risk that those third
parties may not perform such functions satisfactorily;
|
•
|
our reliance
on third parties to manufacture and supply our therapeutic
candidates and their respective APIs with the requisite quality and
manufacturing standards in sufficient quantities and within the
required timeframes and at an acceptable cost;
|
•
|
the research,
manufacturing, clinical development, commercialization, and market
acceptance of our therapeutic candidates;
|
•
|
the
interpretation of the properties and characteristics of our
commercial products or therapeutic candidates and of the results
obtained in research, preclinical studies or clinical trials;
|
•
|
the
implementation of our business model, strategic plans for our
business, commercial products, and therapeutic candidates;
|
•
|
heightened
attention on the problems associated with opioids;
|
•
|
the impact of
other companies and technologies that compete with us within our
industry;
|
•
|
the scope of
protection we are able to establish and maintain for intellectual
property rights covering our commercial products and therapeutic
candidates, including from existing or future claims of
infringement, and our ability to operate our business without
infringing or violating the intellectual property rights of
others;
|
•
|
parties from
whom we license or acquire our intellectual property defaulting in
their obligations toward us;
|
•
|
the failure by
a licensor or a partner of ours to meet their respective
obligations under our acquisition, in-license or other development
or commercialization agreements or renegotiate the obligations
under such agreements, or if other events occur that are not within
our control, such as bankruptcy of a licensor or a partner;
|
•
|
our reliance
on the actions of third parties, including sublicensors and their
other sublicensees, to maintain our rights under our in-licenses
which are sublicenses;
|
•
|
the effect of
a potential occurrence of patients suffering serious adverse events
using investigative drugs under our Expanded Access Program;
|
•
|
our ability to
implement network systems and controls that are effective at
preventing cyber-attacks, malware intrusions, malicious viruses and
ransomware threats;
|
• |
the effects of
the economic and business environment, including unforeseeable
events; and
|
•
|
the impact on
our business of the political and security situation in Israel, the
U.S. and other places in which we operate.
|
In July 2020, we initiated a global
Phase 2/3 clinical study (NCT04467840) evaluating opaganib in
hospitalized patients with severe COVID-19 pneumonia. This ongoing
global multi-center, randomized, double-blind, parallel-arm,
placebo-controlled study continues to enroll patients with a target
of up to 270 patients requiring hospitalization and treatment with
supplemental oxygen. The study has been approved in Brazil, Israel,
the United Kingdom, Italy, Russia, Mexico and Colombia, with
further expansion ongoing. Enrollment was initiated in August
2020 and is more than 60% complete. In-line with evolving
clinical practice and guidelines for treatment of hospitalized
COVID-19 patients which aim to minimize patient intubation and
mechanical ventilation, we are planning to change the primary
endpoint of the global Phase 2/3 study to the proportion of
patients reaching room air (no longer requiring oxygen
supplementation) by Day 14, which is an existing key secondary
endpoint in the protocol. Correspondingly, we are evaluating the
adequacy of study sample size and may implement a resizing of the
study, potentially increasing the number of patients planned to be
enrolled to up to approximately 400-450 patients in total.
In December
2020, we announced that our randomized, double-blind,
placebo-controlled U.S. Phase 2 study (NCT04414618) with opaganib
in patients hospitalized with COVID-19 pneumonia demonstrated
preliminary top-line positive safety and efficacy data. The study,
which was not powered for statistical significance, enrolled 40
patients requiring hospitalization and supplemental oxygen.
Top-line
results from the study found opaganib to be safe, with no material
safety differences between the opaganib and placebo treatment arms.
Overall, fewer patients suffered from serious adverse events (SAEs)
in the opaganib treatment arm than in the placebo arm. In this
small sample size, there were few events of intubation or fatality
and these were balanced between the two arms.
The
opaganib-treated arm demonstrated a consistent trend of greater
improvement in reducing oxygen requirement by end of treatment on
Day 14 across key primary and secondary efficacy outcomes,
correlating with clinical improvement as defined by the World
Health Organization (WHO) ordinal scale:
•
|
A greater improvement in the
proportion of patients reaching room air and no longer requiring
oxygen support by Day 14 vs. the control arm (52.6% vs.
22.2%).
|
•
|
A greater improvement in the
proportion of patients with 50% reduction in supplemental oxygen by
Dday 14 vs. the control arm (89.5% vs. 66.7%).
|
•
|
A higher proportion of patients
discharged by Day 14 vs. the control arm (73.7% vs. 55.6%).
|
•
|
A greater reduction from baseline
of the median total oxygen requirement (AUC) over 14 days vs. the
control arm (68.0% vs. 46.7%).
|
Full
analysis of the data, including viral and inflammatory biomarker
analyses, baseline risk factors and SoC background therapy
stratifications, is expected in the coming weeks. We will provide
the data for peer review when available.
Subject to
positive data from the Phase 2/3 study and subject to FDA feedback,
we aim to apply for potential global emergency use authorization
applications as early as possible in 2021.
We are in
discussions with U.S. government agencies around potential funding
or other support for the rapid advancement of opaganib toward
potential emergency use approval.
Opaganib was
originally developed by U.S.-based Apogee Biotechnology Corp.
(“Apogee”) and completed multiple successful preclinical studies in
oncology, inflammation, GI, and radioprotection models, as well as
a Phase 1 clinical study in cancer patients with advanced solid
tumors and an additional Phase 1 study in multiple myeloma.
Opaganib
received orphan drug designation from the FDA for the treatment of
cholangiocarcinoma and is also being evaluated in a Phase 2a study
in advanced cholangiocarcinoma and in a Phase 2 study in prostate
cancer.
Preclinical
data have demonstrated both anti-inflammatory and antiviral
activities of opaganib, with the potential to reduce inflammatory
lung disorders, such as pneumonia, and mitigate pulmonary fibrotic
damage. Opaganib demonstrated potent antiviral activity against
SARS-CoV-2, the virus that causes COVID-19, completely inhibiting
viral replication in an in vitro model of human lung bronchial
tissue. Additionally, preclinical in vivo studies have demonstrated that
opaganib decreased fatality rates from influenza virus infection
and ameliorated Pseudomonas aeruginosa-induced lung injury by
reducing the levels of IL-6 and TNF-alpha in bronchoalveolar lavage
fluids.
In December
2020, we announced that preliminary results from a preclinical
study with opaganib, administered at 250 mg/kg, demonstrated a
reduction of thrombosis (blood clotting) in an acute respiratory
distress syndrome (ARDS) animal model. The preclinical study was
designed to assess the efficacy of opaganib in reducing the
incidence of adverse thromboembolic events in situ in the
lipopolysaccharide (LPS)-induced model of pulmonary inflammation, a
reliable model of ARDS that can mimic COVID-19 inflammation. The
preliminary results from our study showed opaganib 250 mg/kg
reduced blood clot length, weight and total thrombus score in the
preclinical model of ARDS. We believe such preliminary results add
to the known antiviral and anti-inflammatory activities of opaganib
and provide a possibility of a unique triple-action effect on the
pathophysiological processes associated with COVID-19.
We filed a
family of provisional patent applications seeking to protect the
use of opaganib in treating SARS-CoV-2 infection.
Under a
compassionate use program, seven COVID-19 patients (as classified
by the WHO ordinal scale) were treated with opaganib in a leading
hospital in Israel. Analysis of treatment outcomes from the five
patients included in the final published analysis suggested
substantial benefit to patients treated with opaganib under
compassionate use in both clinical outcomes and inflammatory
markers as compared to a retrospective matched case-control group
from the same hospital. All patients in the opaganib-treated group
were discharged from hospital on room air without requiring
intubation and mechanical ventilation, whereas 33% of the matched
case-control group required intubation and mechanical ventilation.
Median time to weaning from high-flow nasal cannula was reduced to
10 days in the opaganib-treated group, as compared to 15 days in
the matched case-control group.
The
development of opaganib has been supported by grants and contracts
from U.S. federal and state government agencies awarded to Apogee,
including from the NCI, BARDA, the U.S. Department of Defense and
the FDA Office of Orphan Products Development. In September 2020,
Apogee was awarded a grant from Pennsylvania’s COVID-19 Vaccines,
Treatments and Therapies Program, which supports the rapid
advancement of promising novel COVID-19 therapies.
Our
Approved and Commercial Products in the U.S.
We have
established the headquarters of our U.S. commercial operations in
Raleigh, North Carolina. Our U.S. operations promotes
Movantik®
for opioid-induced constipation in adults, Talicia®
for the treatment of H.
pylori infection in adults and Aemcolo®
for the treatment of travelers’ diarrhea in adults. We also expect
our U.S. operations to serve as the platform for potential launch
of our proprietary, late-clinical stage therapeutic candidates in
the U.S., if approved by the FDA, and potential in-licensed
commercial-stage products in the U.S.
During 2020,
we expanded our sales force from approximately 40 sales
representatives to approximately 100 sales representatives. We
commercially launched Talicia®
in March 2020 and initiated our commercialization activities
for Movantik®
in April 2020. The net revenues for the fiscal quarter ended
September 30, 2020 were $20.9 million, compared to $1.4
million for the fiscal quarter ended September 30, 2019, which
increase was primarily attributable to revenues from
Movantik®.
Movantik®
In
April 2020, we acquired from AstraZeneca AB (“AstraZeneca”)
worldwide rights (excluding Europe and Canada) to commercialize and
develop Movantik®
(naloxegol), pursuant to a license agreement, dated February 23,
2020 (the “AstraZeneca License Agreement”), and in October 2020 we
obtained the rights to commercialize and develop
Movantik®
in Israel. Movantik® is
a proprietary once-daily oral peripherally-acting mu-opioid
receptor antagonist (PAMORA) approved by the FDA for the treatment
of opioid-induced constipation (OIC) in adult patients with chronic
non-cancer pain, including patients with chronic pain related to
prior cancer or its treatment who do not require frequent (e.g.
weekly) opioid dosage escalation. We initiated our U.S.
commercialization activities for Movantik® in
April 2020.
Movantik® received
FDA approval on September 16, 2014, for the treatment of OIC
in adult patients with chronic non-cancer pain. Its label was later
updated to include patients with chronic pain related to prior
cancer or its treatment who do not require frequent (e.g. weekly)
opioid dosage escalation. In the AstraZeneca License Agreement,
we agreed to assume responsibility for completing any
postmarketing requirements or commitments that may be required to
retain approval. Accordingly, we will be required to continue the
postmarketing observational epidemiologic study to evaluate
the major adverse cardiovascular events
(MACE) of Movantik®.
In August 2020, we announced that
we had replaced the 2015 Movantik®
co-commercialization agreement with Daiichi Sankyo, Inc. (assigned
under the agreement with AstraZeneca), with a new royalty-bearing
agreement. Under the terms of the new agreement, we bear all
responsibilities and costs for commercializing Movantik®
in the U.S. During the term of the new agreement, we pay Daiichi
Sankyo a mid-teen royalty rate on net sales of Movantik®
in the U.S., in addition to three annual lump sum payments,
starting in the fourth quarter of 2021 and ending in 2023.
In July 2020, we amended the
AstraZeneca License Agreement, whereby the parties agreed to
postpone the non-contingent payment of $15.0 million by us to
December 2021 and to increase the amount due by $0.5 million.
In November 2020, we announced the
completion of the transition of Movantik® from AstraZeneca.
Talicia® (omeprazole,
amoxicillin, and rifabutin) delayed-release capsules 10 mg/250
mg/12.5 mg
Talicia® is
our proprietary drug approved for marketing in the U.S. for the
treatment of H.
pylori infection in adults. Talicia® is
a combination of three approved drug products – omeprazole,
which is a proton pump inhibitor (prevents the secretion of
hydrogen ions necessary for the digestion of food in the stomach),
amoxicillin and rifabutin, which are antibiotics.
Talicia® is
administered to patients orally.
Talicia® is
designed to address the high resistance of H. pylori bacteria to the
antibiotics commonly used in current standard-of-care therapies.
Talicia®’s
approval was supported, in part, by the results of two positive
Phase 3 studies in the U.S. for the treatment of H. pylori-positive adult patients
complaining of epigastric pain and/or discomfort. The confirmatory
Phase 3 study of Talicia® demonstrated
84% eradication of H.
pylori infection with Talicia® vs.
58% in the active comparator arm (p<0.0001). Further, in an
analysis of data from this study, it was observed that subjects
with measurable blood levels of drug at Day 13 had response rates
of 90.3% in the Talicia® arm
vs. 64.7% in the active comparator arm.
We believe that Talicia® may
offer a significant benefit over other currently approved drugs in
part because of the resistance profile demonstrated in our Phase 3
program, which showed no bacterial resistance to rifabutin and high
resistance to clarithromycin and metronidazole.
Talicia® is
the first product we developed that was approved for marketing in
the U.S. Talicia® was
approved by the FDA on November 1, 2019, and we launched
Talicia® in
the U.S. in March 2020.
In November 2014,
Talicia® was
granted QIDP designation by the FDA. The granted QIDP designation
allows Talicia® to
benefit from an additional five years of U.S. market
exclusivity, on top of the standard exclusivity period, for a total
of eight years of market exclusivity.
In December 2020, we announced that
we had further increased unrestricted national and regional
commercial coverage of Talicia® in
the U.S. to extend to over 70% of commercial lives and more than
167 million Americans.
Aemcolo®
Aemcolo®,
containing 194 mg of rifamycin, is an orally administered,
minimally absorbed antibiotic that is delivered to the colon,
approved by the FDA in 2018 for the treatment of travelers’
diarrhea caused by non-invasive strains of E. coli in adults (“Travelers’
Diarrhea”). In October 2019, we entered into a license
agreement with a wholly-owned subsidiary of Cosmo Pharmaceuticals
N.V. (“Cosmo”) pursuant to which we were granted exclusive rights
to commercialize Aemcolo® in
the U.S. In December 2019, we launched the commercialization
of Aemcolo® in
the U.S.
Aemcolo® received
FDA approval on November 16, 2018, for the treatment of
travelers’ diarrhea caused by noninvasive strains
of Escherichia
coli in adults. Cosmo transferred the
Aemcolo® New
Drug Application (NDA) and the IND to RedHill Biopharma Inc.,
which were accepted on November 27, 2019. This acceptance also
includes a commitment to complete any postmarketing requirements or
commitments related to the NDA. There are two pediatric studies
that are required to be completed to satisfy the PREA requirements
and also with required milestone dates:
|
•
|
|
Conduct a
randomized, placebo-controlled study to evaluate the safety,
tolerability, and efficacy of Aemcolo® (rifamycin)
for the treatment of travelers’ diarrhea in children from 6 to
11 years of age.
|
|
•
|
|
Conduct a
randomized, placebo-controlled study to evaluate the safety,
tolerability, and efficacy of Aemcolo® (rifamycin)
for the treatment of travelers’ diarrhea in children from 12 to
17 years of age.
|
In October 2017, the FDA
granted QIDP and Fast Track designations for Aemcolo®.
With the QIDP designation, intended for antibacterial or antifungal
drugs that treat serious or life-threatening infections, together
with new chemical entity (NCE) designation, Aemcolo® enjoys
marketing exclusivity until 2028. Due to the significant decrease
in travel as a result of the pandemic, the travelers’ diarrhea
market has been significantly impacted, and we have not generated
meaningful revenues from the sale of Aemcolo®.
We do not expect Aemcolo®
to generate meaningful revenues until international travel returns
to pre-COVID-19 pandemic levels, if at all, and there can be no
assurance that we will generate meaningful revenues upon return of
international travel to pre-pandemic levels.
We continue to pursue the
acquisition of additional commercial products, including, without
limitation, through licensing or promotion transaction, asset
purchase, joint venture with, acquisition of, or merger with or
other business combination with, companies with rights to
commercial GI and other relevant assets and are continuously
working to expand U.S.-managed care access and coverage to our
commercial products, where appropriate. We plan to pursue such
opportunities in the U.S. and, if available, in other
jurisdictions; however, we intend to focus our commercial
activities in the U.S.
Recent
Developments on our Therapeutic Product Candidates
RHB‑204
RHB‑204 is a patented fixed-dose
oral capsule containing a combination of three antibiotics
developed for the treatment of pulmonary nontuberculous
mycobacteria (NTM) disease caused by Mycobacterium avium Complex
(MAC). Each capsule contains clarithromycin, clofazimine, and
rifabutin, at doses distinct from RHB‑104.
In November 2020, we initiated our
Phase 3 study to evaluate the efficacy and safety of RHB-204 in
adults with NTM disease caused by MAC infection. This multi-center,
randomized, double-blind, two-part, placebo-controlled,
parallel-group Phase 3 study aims to enroll approximately 125
patients, randomized at a 3:2 ratio to receive either RHB-204 or
placebo at up to 40 sites across the U.S. Study endpoints include
sputum culture conversion at month six of treatment with RHB-204,
compared to placebo and patient-reported outcomes, including
improvements in physical functioning, respiratory symptoms and
fatigue. In January 2017, we announced that RHB‑204 had been
granted QIDP designation by the FDA for the treatment of pulmonary
NTM disease, including eligibility for Priority Review, Accelerated
Approval and an extended market exclusivity period, if approved for
marketing in the U.S. In October 2020, we announced that the FDA
granted RHB-204 Orphan Drug Designation which together with the
QIDP designation will extend U.S. market exclusivity to a total of
12 years, if RHB-204 is approved by the FDA. In January 2021 we
announced that the FDA granted RHB-204 Fast Track designation,
allowing RedHill access to early and frequent communications with
the FDA, to expedite the RHB-204 development program, and to a
rolling review of an NDA.
RHB-107
RHB-107 (formerly Mesupron) (INN: upamostat) is a proprietary,
first-in-class, orally- administered potent inhibitor of several
serine proteases. We are developing this investigational new drug
as a potential treatment for symptomatic COVID-19 patients that do
not require hospitalization. In addition, RHB-107 has potential in
targeting cancer, inflammatory lung diseases and gastrointestinal
diseases. In November 2020 we announced that the FDA had cleared
our IND application for a Phase 2/3 study evaluating
RHB-107 in patients with symptomatic COVID-19 who do not
require hospitalization. In December 2020, we submitted an
amendment to the protocol for that trial, addressing FDA comments.
The randomized, parallel-group double-blind Phase 2/3 study is
expected to start enrolling patients early next year. The study
will enroll patients with symptomatic diagnostically confirmed
COVID-19 who do not require inpatient care. The primary endpoints
will be time to recovery from symptomatic illness compared to
placebo, as well as safety and tolerability of RHB-107. Several
secondary and exploratory endpoints will also be assessed. In
September 2020 we announced that RHB-107 was studied in a 3D tissue
model of human bronchial epithelial cells (EpiAirway™) which
morphologically and functionally resembles the human airway and is
similar to the model used to discover SARS-CoV-2. The study was
designed to evaluate the in
vitro efficacy of RHB-107 in inhibiting SARS-CoV-2 infection
and included a positive control of camostat. Results from the study
demonstrated potent inhibition of SARS-CoV-2 viral
replication.
Ongoing Negotiation of Licensing and Manufacturing Terms with Cosmo
Pharmaceuticals
On August 12,
2020, we entered into a binding term sheet with Cosmo for an
exclusive licensing and manufacturing agreement for multiple
products; however we and Cosmo are still negotiating the scope and
terms of the collaboration, and there is no assurance that a
definitive agreement will be executed with respect to one or more
of the relevant products in the term sheet. Additionally, we
now expect that the previously planned collaboration regarding the
next generation of H. pylori treatment will most likely not
materialize while an additional product (opaganib) is likely to be
included in the collaboration, and that a definitive agreement with
respect to other products, if executed, is likely to be on
materially different terms than the term sheet.
On January 11, 2021 Cosmo announced that it had successfully
completed a Phase 2 Proof of Concept (“POC”) clinical trial of
Rifamycin-MMX 600mg in patients with diarrhea-predominant irritable
bowel syndrome (“IBS-D”). As part of our Exclusive License
Agreement of October 2019 with Cosmo for the U.S. rights to
Aemcolo® (rifamycin), we maintain certain rights, including a right
of first refusal, in relation to Rifamycin-MMX 600mg in the U.S.
Cosmo reported that results of the Phase 2 POC study show the
achievement of statistical significance in all the study
populations (intent-to-treat, full analysis study, modified full
analysis study and per protocol) for the composite primary endpoint
(substantial pain and diarrhea decrease) [OR 3.26 (1.39 – 7.67);
p-value 0.0066] and for most secondary endpoints such as adequate
relief of IBS-related symptoms [OR 2.18 (1.12 – 4.26); p-value
0.0227] and IBS-related bloating at the end of treatment period [OR
2.13 (1.11 – 4.07); p-value 0.0223].
COVID-19 Impact on our Business
In an effort
to contain and mitigate the spread of COVID-19, many countries
around the world, including the U.S. and Israel, have imposed
quarantines and restrictions on travel and mass gatherings to slow
the spread of the virus and closed non-essential businesses and
offices, and as of the date of this prospectus supplement, many
local jurisdictions continue to have such restrictions in
place. As many local jurisdictions continue to have such
restrictions in place, our ability to continue to operate our
business may also be limited. Such events may result in a period of
office closures, business, supply and drug product manufacturing
disruption, and in reduced operations, any of which could
materially affect our business, financial condition and results of
operations. Moreover, the COVID-19 pandemic may further divert the
attention and efforts of the medical community to coping with
COVID-19 and disrupt the marketplace in which we operate and may
have a material adverse effect on our operations. In addition,
SARS-CoV-2 infections of our employees may cause disruption to
our operations.
To date, the
financial impact on our business has been moderate, and we have put
in place a comprehensive alternative commercial strategy to support
our growth initiatives while adhering to government and health
regulatory guidelines. Additionally, to date, there have been no
significant disruptions to our supply chain, and we currently have
sufficient supply of commercial products on hand to meet U.S.
commercial demand. However, we have experienced decreased
commercial activities which have affected the sales of some of our
commercial products due to slower initiation of certain promotional
activities associated with a significant decrease in in-clinic
patient visits, tests and treatments and the impact on our sales
force’s ability to engage with healthcare providers in an in-person
setting, cancellation of events such as industry conferences and
limited local and international travel. The ability to successfully
commercialize Talicia®
depends on in-clinic patient visits and the availability of
diagnostics, both of which has have been negatively affected by the
pandemic. In addition, the COVID-19 pandemic has adversely affected
and may continue to adversely affect our clinical and pre-clinical
trials, including our ability to initiate and complete our clinical
and pre-clinical trials within the anticipated timelines, and
delays or difficulties in enrolling patients in our clinical trials
and recruiting clinical site investigators and clinical site staff.
For example, initiation of our Phase 3 study with RHB-204 in
pulmonary NTM infections was deferred by two quarters to the fourth
quarter of 2020. In addition, we may be unable to meet the
timelines and milestones established for the contemplated
postmarketing studies we are required to conduct for
Aemcolo®,
in which case we could be subject to FDA enforcement actions and
civil monetary penalties, among others, unless the FDA agrees to an
extension of the timelines and milestones. Moreover, the
significant decrease in travel has significantly reduced the demand
and sales of Aemcolo®
for travelers’ diarrhea.
Assessment of
the complete extent of the impact of COVID-19 on our results will
depend on future developments, which are highly uncertain and
cannot be predicted, including new information that may emerge
concerning the severity of COVID-19 and the actions to contain
COVID-19 or treat its impact, among others. The continuation of the
COVID-19 pandemic could materially disrupt our business and
operations and have an adverse effect on the global markets and
global economy generally, including on the availability and cost of
employees, resources, materials, manufacturing and delivery
efforts, and other aspects of the economy.
Expanded Access Program (EAP)
We have
adopted an Expanded Access Program (“EAP”), allowing patients with
life-threatening diseases potential access to our investigational
new drugs that have not yet received regulatory marketing approval.
Expanded access (sometimes referred to as “compassionate use”) is
possible outside of our clinical trials, under certain eligibility
criteria, when a certain investigational new drug is needed to
treat a life-threatening condition and when there is some clinical
evidence suggesting that the drug might be effective for that
condition. Patients who qualify for our EAP do not meet the
eligibility criteria or are incapable of participating in our
clinical trials for such therapeutic candidate or there is no
clinical trial accessible to such patients. Following the adoption
of the program, we continue to receive patient requests to obtain
access to our investigational drugs. Subject to the evaluation of
eligibility and all other necessary regulatory, reporting and other
conditions and approvals required in all relevant jurisdictions, we
provide certain patients with an investigational new drug under the
EAP.
Preliminary Estimated Financial Results for the Quarter Ended
December 31, 2020, and as of December 31, 2020
Our preliminary estimated net revenues for the quarter ended
December 31, 2020, are expected to be in the range of
approximately $21 million to $23 million, including net
revenues attributable to sales of Movantik®
and Talicia®
of approximately $20 million and $2 million,
respectively. Based on such estimates, the gross revenues of
Movantik are expected to have increased for the second consecutive
quarter, increasing approximately 11% over the quarter ended
September 30, 2020, offset by an increase in distribution service
agreement fees following the expiration of our transition service
agreement with AstraZeneca. These fees are expected to decrease
over time, as sales volume increase. As of December 31, 2020, our
cash, cash equivalents, short-term investments and restricted cash
are estimated to be approximately $46 million. Our restricted cash
as of December 31, 2020 was $16 million as required by our credit
agreement with HCR Collateral Management, LLC.
The preliminary estimates above represent the most current
information available to our management and do not present all
necessary information for an understanding of our financial
condition as of and the results of operations for the period ended
December 31, 2020, or as of December 31, 2020. We are currently
preparing our financial results for the period ended December 31,
2020. There is no assurance that our net revenues for the
period ended December 31, 2020, the estimated increase in gross
revenue from Movantik, or our cash, cash equivalents, short-term
investments and restricted cash as of December 31, 2020, to be
reported in our financial statements, when finalized and audited,
will not differ from the preliminary estimates provided. Any such
differences could be material, and accordingly, prospective
investors should not place undue reliance on these estimates.
The
preliminary financial data included in this document has been
prepared by, and is the responsibility of our management. Our
independent registered public accounting firm, Kesselman &
Kesselman, Certified Public Accountants (Isr.), a member firm of
PricewaterhouseCoopers International Limited, has not audited,
reviewed, compiled or applied agreed upon procedures with respect
to the preliminary financial data. Accordingly, Kesselman &
Kesselman does not express an opinion or any other form of
assurance with respect thereto. These are preliminary estimates
which should not be regarded as a representation by us, our
management, or Wainwright as to our actual results for the quarter
and year ended December 31, 2020.
Corporate Information
We were
incorporated as a limited liability company under the laws of the
State of Israel on August 3, 2009. Our principal executive offices
are located at 21 Ha’arba’a Street, Tel-Aviv, Israel and our
telephone number is +972 (3) 541-3131. Our web site address is
http://www.redhillbio.com. The information on, or that can be
accessed through, our website does not constitute part of this
prospectus. Our registered agent in the U.S. is RedHill Biopharma
Inc. The address of RedHill Biopharma Inc. is 8045 Arco Corporate
Drive, Raleigh, NC 27617, U.S.A.
THE
OFFERING
ADSs Offered by us in the
offering
|
|
3,188,776 ADSs
representing 31,887,760 Ordinary Shares.
|
|
|
|
Total Ordinary Shares outstanding
immediately after this offering
|
|
415,869,220 Ordinary
Shares (or 420,652,380 Ordinary Shares if Wainwright
exercises its option to purchase additional ADSs in full).
|
Option to purchase additional
ADSs
|
|
We have granted Wainwright an
option, exercisable for 30 days from the date of this prospectus
supplement, to purchase up to an additional 478,316 ADSs from
us.
|
|
|
|
The ADSs
|
|
Each ADS
represents 10 Ordinary Shares. The ADSs will be delivered by
The Bank of New York Mellon, as depositary (the
“Depositary”).
The
Depositary, as depositary, or its nominee, will be the holder of
the Ordinary Shares underlying your ADSs and you will have rights
as provided in the Deposit Agreement, dated as of December 26,
2012, among us, the Depositary and all owners and holders from time
to time of ADSs issued thereunder (the “Deposit Agreement”), a form
of which has been filed as Exhibit 1 to the Registration Statement
on Form F-6 filed by the Depositary with the SEC on December 6,
2012.
Subject to the
terms of the Deposit Agreement and in compliance with the relevant
requirements set out in the prospectus, you may turn in your ADSs
to the Depositary for cancellation and withdrawal of the Ordinary
Shares underlying your ADSs. The Depositary will charge you fees
for such cancellations pursuant to the Deposit Agreement.
You should
carefully read the “Description of American Depositary Shares”
section of the accompanying prospectus and the Deposit Agreement to
better understand the terms of the ADSs.
|
Use of Proceeds
|
|
We intend to
use the net proceeds from the offering, together with our existing
cash and cash equivalents, to fund our clinical development
programs, commercialization activities and for acquisitions and
general corporate purposes. See “Use of Proceeds.”
|
|
|
|
|
|
Before
deciding to invest in the ADSs, you should carefully consider the
risks related to our business, the offering, the ADSs and our
Ordinary Shares, and our location in Israel. See “Risk Factors” on
page S-13 of this prospectus supplement and under similar headings
in other documents incorporated by reference into this prospectus
supplement and the accompanying prospectus.
|
|
|
|
|
|
We have never declared or paid any
cash dividends to our shareholders, and we currently do not expect
to declare or pay any cash dividends in the foreseeable future. See
“Dividend Policy.”
|
|
|
|
Depositary
|
|
The Bank of New York Mellon
|
The number of
Ordinary Shares to be outstanding immediately after the offering,
as shown above, is based on 374,736,828 Ordinary Shares outstanding
as of September 30, 2020, and excludes, as of such date, 54,503,640
Ordinary Shares issuable upon the exercise of outstanding options
to purchase 54,503,640 Ordinary Shares at a weighted average
exercise price of $0.91 per share (equivalent to 5,450,364 ADSs at
a weighted average exercise price of $9.07 per ADS). In addition,
such number of Ordinary Shares to be outstanding immediately after
the offering includes an aggregate of 924,463 ADSs we sold
subsequent to September 30, 2020, under our “at-the-market” equity
offering program.
Unless
otherwise stated, outstanding share information throughout this
prospectus supplement excludes such outstanding securities and
assumes no exercise of the outstanding options described above.
Except as otherwise indicated, the information in this prospectus
supplement assumes no exercise of Wainwright’s option to purchase
additional ADSs.
You
should carefully consider the risks described below and in our
annual report on Form 20-F for the year ended
December 31, 2019, as well as the other information included
or incorporated by reference in this prospectus supplement and the
accompanying prospectus, including our financial statements and the
related notes, before you decide to buy our securities. The risks
and uncertainties described below and incorporated by reference in
this prospectus supplement are not the only risks facing us. We may
face additional risks and uncertainties not currently known to us
or that we currently deem to be immaterial. Any of the risks
described below or incorporated by reference in this prospectus
supplement, and any such additional risks, could materially
adversely affect our business, financial condition or results of
operations. In such case, you may lose all or part of your original
investment.
Risks Related to
Our Development of COVID-19 Therapy
Our pursuit of treatments
for SARS-CoV-2 infection in patients entails a high level of
uncertainty. We have not previously tested opaganib or RHB-107 in
this capacity and cannot assure you that either of them will prove
to be an effective treatment for COVID-19 or will be approved for
marketing or Emergency Use Authorization by the FDA or other
regulatory authorities.
In response to
the global pandemic of COVID-19, we are pursuing the studies of
opaganib and RHB-107 as potential
treatments for COVID-19. With the exception of recent limited
compassionate use with opaganib, neither opaganib nor RHB-107 has
previously been tested as a treatment in human patients with viral
infections including for SARS-CoV-2 infection (the cause for
COVID-19). Therefore, we cannot predict the efficacy of opaganib or
RHB-107, and we may be unable to provide a treatment that
successfully treats COVID-19 and/or its symptoms in a timely
manner, if at all. Furthermore, even if we successfully develop a
viable therapeutic candidate, we may encounter difficulties
developing and scaling up manufacturing processes suitable for
production of sufficient supply for our clinical trials or for
commercial use. We are also committing financial resources and
personnel to the development of opaganib and RHB-107 as potential
treatments for COVID-19, which may cause delays in or otherwise
negatively impact our other development programs, despite
uncertainties surrounding the longevity and extent of COVID-19 as a
global health concern. Our business could be negatively impacted by
our allocation of significant resources to a global health threat
that is unpredictable and could rapidly dissipate or against which
our potential treatments, if developed, may not be partially or
fully effective.
Further, we may take a decision to
discontinue the studies of opaganib and RHB-107 as potential
treatments for COVID-19 for any reason, including if additional
parties are successful in developing a more effective treatment or
vaccine for COVID-19 or if the pandemic is effectively contained or
the risk of SARS-CoV-2 infection is diminished or eliminated or if
other market or business conditions and considerations support such
discontinuation before we can successfully complete clinical
development and obtain regulatory approval of opaganib or RHB-107
as a treatment for SARS-CoV-2 infection. We may be unable to recoup
any costs we incur in the evaluation of opaganib and RHB-107 for
SARS-CoV-2 infection and we may never recognize any revenue from
the sale of opaganib or RHB-107 to treat COVID-19, even if we do
receive one or more regulatory approvals.
Furthermore, the biotechnology
sector is highly competitive and there are numerous companies that
are currently pursuing a treatment for COVID-19 and vaccine for
SARS-CoV-2. In particular, there are efforts by public and private
entities to develop additional treatments or vaccines as fast as
possible. To date, the FDA and other world health regulators have
authorized emergency use of a number of vaccines for SARS-CoV-2.
Other entities have or we expect will announce positive results
from clinical trials for additional SARS-CoV-2 vaccine candidates.
In addition, to date, there have been several drugs authorized for
emergency use in treating COVID-19 patients. These and other public
and private entities may develop treatments that are more effective
than any we may develop, may develop a COVID-19 treatment that
becomes the standard-of-care or at a lower cost or earlier than we
are able to, or may be more successful at commercializing their
product, which will reduce or eliminate the commercial opportunity
for our therapeutic candidates. Many of these other organizations
are much larger than we are and have access to larger pools of
capital, including government grants and support, and broader
manufacturing infrastructure.
Government involvement may limit the commercial success of
our COVID-19 therapeutic candidate.
The COVID-19 pandemic has been classified as a pandemic by
public health authorities, and it is possible that one or more
government entities may take actions that directly or indirectly
have the effect of abrogating some of our rights or opportunities.
If we were to develop an anti-viral therapeutic to COVID-19, the
economic value of such therapeutic to us could be limited.
Separately,
various government entities, including the U.S. and other
governments, are offering incentives, grants and contracts to
encourage additional investment by commercial organizations into
preventative and therapeutic agents against COVID-19, which may
have the effect of increasing the number of competitors and/or
providing advantages to competitors. Accordingly, there can be no
assurance that we will be able to successfully establish a
competitive market share for our COVID-19 candidates.
If we are successful in producing a COVID-19 therapeutic, we may
need to devote significant resources to its scale-up and
development, including for use by the U.S. or other
government.
In the event
that the clinical studies of opaganib and/or RHB-107 as a COVID-19
therapeutic candidate are perceived to be successful, we may need
to work toward the large scale technical development, manufacturing
scale-up and larger-scale deployment of the potential therapeutic
through a variety of U.S. government mechanisms such as an Expanded
Access Program or an Emergency Use Authorization program. In this
case, we may need to devote significant resources to this program,
which would require diversion of resources from our other programs.
In addition, since the path to licensure of any COVID-19
therapeutic is unclear, if use of the therapeutic is mandated by
the U.S. or any other government, we may have a widely used
therapeutic in circulation in the U.S. or another country prior to
our full validation of the overall long-term safety and efficacy
profile of our therapeutic. Unexpected safety issues in these
circumstances could lead to significant reputational damage for us
and our therapeutic candidates going forward and other issues,
including delays in our other programs, the need for re-design of
our clinical trials and the need for significant additional
financial resources.
In 2020, we
entered into several collaborations with leading manufacturers,
including with U.S.-based partners to expand manufacturing capacity
of opaganib for COVID-19 in preparation for potential emergency use
applications and to gradually meet subsequent large-scale demand
and distribution. Short-term capacity for finished drug product is
estimated at 100,000 patient treatments as we continue to
build up larger initial annual scale manufacturing capacity to
treat an estimated 2.8 million patients. We cannot guarantee that
our ongoing efforts in relation to the drug candidates or their
manufacturing, including the scale-up of manufacturing, will be
successful or that we will be able to supply the potential high
demand for opaganib for COVID-19 that could follow potential
emergency use authorization and/or full marketing approval, if at
all. The exercise of certain “march-in” rights by the U.S.
government may also adversely affect our ability to supply
sufficient quantities of opaganib. See “⸻The development of
opaganib has been supported by government-funded programs and thus
may be subject to federal regulations such as “march-in” rights and
certain reporting requirements, and compliance with such
regulations may limit our exclusive rights and our ability to
contract with manufacturers” below.
The development of opaganib has been supported by government-funded
programs and thus may be subject to federal regulations such as
“march-in” rights and certain reporting requirements, and
compliance with such regulations may limit our exclusive rights and
our ability to contract with manufacturers.
Our
intellectual property rights to opaganib, which we in-licensed from
Apogee, have been generated through the use of U.S. federal and
state government funding and are therefore subject to certain
federal regulations. As a result, the U.S. government may have
certain rights to intellectual property embodied in opaganib
pursuant to the Bayh-Dole Act of 1980, or the Bayh-Dole Act. These
U.S. government rights include a non-exclusive, non-transferable,
irrevocable worldwide license to use inventions for any
governmental purpose. In addition, the U.S. government has the
right, under certain limited circumstances, to require the licensor
to grant exclusive, partially exclusive or non-exclusive licenses
to any of these inventions to a third party if it determines that
(i) adequate steps have not been taken to commercialize the
invention, (ii) government action is necessary to meet public
health or safety needs or (iii) government action is necessary to
meet requirements for public use under federal regulations (also
collectively referred to as “march-in rights”). The U.S. government
also has the right to take title to these inventions if the
licensor fails to disclose the invention to the government or fails
to file an application to register the intellectual property within
specified time limits. These rights of the government may affect us
even though the U.S. government has not previously contacted us
with respect to these intellectual property rights. Any exercise by
the government of such rights could harm our competitive position,
business, financial condition, results of operations and prospects.
Intellectual property generated under a government-funded program
is also subject to certain reporting requirements, compliance with
which may require us to expend substantial resources.
In addition,
the U.S. government requires that any products embodying any of
these inventions or produced through the use of any of these
inventions be manufactured substantially in the U.S. The
manufacturing preference requirement can be waived if the owner of
the intellectual property can show that reasonable but unsuccessful
efforts have been made to grant licenses on similar terms
to potential licensees that would be likely to manufacture
substantially in the U.S. or that under the circumstances domestic
manufacture is not commercially feasible. This preference for
having products covered by such intellectual property be
substantially manufactured in the U.S. may limit our ability to
contract with non-U.S. product manufacturers or even U.S. product
manufacturers whose manufacturing capacity is offshore.
Risks Related to
Our Business
We have a history of operating losses. We may continue to incur
significant losses in the coming years.
Since our
incorporation in 2009, we have focused primarily on the development
and acquisition of late-stage clinical therapeutic candidates, and
since we established our commercial presence in the U.S., we have
focused primarily on the acquisition and commercialization or
promotion of products in the U.S. Following the launch of
Talicia®
in the first quarter of 2020 in the U.S. and the acquisition of
Movantik®
in April 2020, we recorded meaningful revenues from our products;
however, there is no assurance that we will be able to generate
substantial positive cash flow or be profitable in the
future.
We plan to
further fund our future operations through commercialization and
out-licensing of our therapeutic candidates, commercialization of
in-licensed or acquired products and raising additional capital
through equity or debt financing or through non-dilutive financing.
Our current cash resources are not sufficient to complete the
research and development of all of our therapeutic candidates and
to fully support our commercial operations until generation of
sustainable positive cash flows. We expect that we will incur
additional losses as we continue to focus our resources on
advancing the development of our therapeutic candidates, as well as
advancing our commercial operations, based on a prioritized plan
that may result a negative cash flows from operating
activities.
Most of our
therapeutic candidates are in late-stage clinical development. All
of our therapeutic candidates will require additional clinical
trials before we can obtain the regulatory approvals in order to
initiate commercial sales of them, if at all. We have incurred
losses since inception, principally as a result of research and
development, selling, marketing, and business development, and
general and administrative expenses in support of our operations.
We experienced net losses of approximately $42.3 million in 2019,
$38.8 million in 2018, and $45.5 million in 2017. As of September
30, 2020, we had an accumulated deficit of approximately $257.1
million. Our ability to generate sufficient revenues to sustain our
business operations in accordance with our plan and to achieve
profitability depends mainly upon our ability, alone or with
others, to successfully commercialize or promote our current
commercial products and products that we may acquire or for which
we may acquire commercialization rights in the future, develop our
therapeutic candidates, obtain the required regulatory approvals in
various territories. We may be unable to achieve any or all of
these goals with regard to our current commercial products, our
therapeutic candidates or products we may commercialize or promote
in the future. As a result, we may never achieve sufficient
revenues to sustain our business operations in accordance with our
plan or be profitable.
If we are unable to
successfully continue the commercialization of
Movantik®
and
Talicia®,
our business and results of operations will suffer.
In 2020, we
have undertaken efforts to expand our product portfolio, including
the acquisition of certain rights to promote Movantik®,
and the launch of Talicia®,
as a result of which our commercial portfolio is significantly
larger than it was previously. A significant portion of the
revenues generated in the nine-month period ended September 30,
2020, was attributable to revenues from Movantik®,
and we expect our future success will significantly depend upon our
ability to successfully commercialize Movantik®
and Talicia®.
In addition, there can be no guarantee that we will be able to
establish our own manufacturing capabilities, including through
third parties, in order to continue the successful
commercialization of Movantik®
and Talicia®.
Our success depends on obtaining reimbursement to patients for our
products and there is no guarantee we will be able to secure
commercial or government coverage for any of our products. There is
significant pressure within the U.S. healthcare reimbursement
system to reduce costs of prescription drugs which could adversely
affect us. In addition, in the case of Movantik®,
we face competitive pressures from other drugs in the PAMORA class
as well as non-PAMORA alternatives. Our management team could face
further challenges in effectively and collaboratively working with
AstraZeneca (as well as Nektar Therapeutics, the originator of
Movantik®,
in accordance with the terms of the AstraZeneca License Agreement.
In order to support our growing developmental product portfolio, we
will need to achieve revenues from sales of Movantik®
and Talicia®
consistent with our business expectations, which may prove more
difficult than currently expected. Our reputation, business,
financial condition and results of operations may be materially
adversely affected by any failure to meet such expectations.
The ongoing COVID-19
pandemic may adversely affect our business, revenues, results of
operations and financial condition.
Outbreaks of
epidemic, pandemic or contagious diseases, such as COVID-19, may
adversely affect our business, financial condition and results of
operations. In March 2020, the World Health Organization declared
the outbreak of SARS-CoV-2 a global pandemic, and the global spread
of the novel coronavirus resulted in government-imposed
quarantines, travel restrictions and other public health safety
measures in the United States, Israel, and other affected
countries. The various precautionary measures taken by many
governmental authorities around the world in order to limit the
spread of SARS-CoV-2 have and may continue to have an adverse
effect on the global markets and its economy and demand for
pharmaceutical products, including on the availability and pricing
of employees, resources, materials, manufacturing and delivery
efforts and other aspects of the global economy. The spread of this
pandemic has caused significant volatility and uncertainty in U.S.
and international markets and has resulted in increased risks to
our operations.
Specifically,
we are monitoring a number of risks that have or may affect our
business related to this pandemic, including the following:
|
• |
Commercial Operations: An extended pandemic could have
a material adverse effect on sales of our commercial products. We
have experienced decreased commercial activities and sales of our
commercial products due to slower initiation of some promotional
activities due to a significant decrease in in-clinic patient
visits, tests and treatments and the impact on our sales force’s
ability to engage with healthcare providers in an in-person
setting, cancellation of events such as industry conferences and
limited local and international travel. In addition, there may be
negative impact on our business as a result of COVID-19 within our
commercial organization, including our sales force. The success of
Talicia®
depends on in-clinic patient visits and the availability of
diagnostics, all of which have been negatively affected by the
pandemic. In addition, the significant decrease in travel has
significantly reduced the demand and sales of Aemcolo®
for travelers’ diarrhea. We expect the decreased level of demand
and sales of Aemcolo® to continue over the coming quarters due to
the effects of the pandemic.
|
|
• |
Supply Chain: An extended duration of this pandemic
could result in broad supply disruptions and difficulty in finding
alternative sources in the future which may adversely affect our
ability to distribute certain of our commercial products for
commercial supply and our therapeutic candidates for clinical
supply. For example, quarantines, shelter-in-place and similar
government orders, travel restrictions and health impacts of the
COVID-19 pandemic could impact the availability or productivity of
personnel at third-party manufacturers, distributors, freight
carriers and other necessary components of our supply chain. In
addition, there may be unfavorable changes in the availability or
cost of raw materials, intermediates and other materials necessary
for production, which may result in disruptions in our supply
chain;
|
|
• |
Clinical Trials: The pandemic has adversely affected
and may continue to adversely affect our clinical and pre-clinical
trials, including our ability to initiate and complete our clinical
and pre-clinical trials within the anticipated timelines, and
delays or difficulties in enrolling patients in our clinical trials
and recruiting clinical site investigators and clinical site staff.
Interruption of key clinical trial activities, such as clinical
trial site data monitoring, due to limitations on travel imposed or
recommended by government officials or entities, employers and
others or interruption of clinical trial patient visits and study
procedures (particularly any procedures that may be deemed
non-essential), may impact the completeness of clinical trial data
and clinical study endpoints. The current pressure on medical
systems and the prioritization of healthcare resources toward the
COVID-19 pandemic have also resulted in interruptions in data
collection and submissions for certain clinical trials and delayed
starts for certain planned studies. As a result, our anticipated
filing and marketing timelines may be adversely impacted. For
example, the initiation of the Phase 3 study with RHB-204 in
first-line pulmonary NTM infections was deferred by two quarters to
the fourth quarter of 2020.
|
|
- |
In addition, we may be unable to meet the timelines and
milestones established for the contemplated postmarketing studies
we are required to conduct for Aemcolo, in which case we could be
subject to FDA enforcement actions and civil monetary penalties,
among others, unless the FDA agrees to an extension of the
timelines and milestones.
|
Our clinical trials can also be adversely affected by the reduction
or diversion of healthcare resources away from the conduct of
clinical trials, including the diversion of hospitals serving as
our clinical trial sites and hospital staff supporting the conduct
of our clinical trial. Any delays or interruption of our clinical
trials could have an adverse effect on our development efforts of
our therapeutic candidates, and failure to fulfill any
postmarketing commitments could subject us to FDA enforcement
actions or result in our breach of certain license agreements and
cause us to lose our rights thereunder.
|
• |
Regulatory Reviews: The operations of the FDA or other
regulatory agencies may be adversely affected. We may also
experience delays in necessary interactions with regulatory
authorities around the world, including with respect to any
anticipated filings.
|
Additionally,
because our corporate headquarters are in Israel while our
commercial office is in the U.S., there is additional risk in our
ability as a company to control the activities occurring in the
U.S., due to the geographic separation within our company.
The COVID-19
pandemic continues to rapidly evolve, and its ultimate scope,
duration and effects are unknown. The extent of the impact of the
disruptions to our business, including commercial sales and
clinical development, as a result of the pandemic, will depend on
future developments, which are highly uncertain and cannot be
predicted with confidence. The continuation of the COVID-19
pandemic could materially disrupt our business and operations,
hamper our ability to raise additional funds or sell or securities,
continue to slow down the overall economy, curtail consumer
spending, interrupt our sources of supply, and make it hard to
adequately staff our operations.
Risks Related to
the ADSs
The market price of the ADSs is subject to fluctuation, which could
result in substantial losses by our investors. The COVID-19
pandemic has resulted in significant financial market volatility,
and its impact on the global economy remains uncertain. A
continuation or worsening of the pandemic could have a material
adverse impact on the market price of the ADSs. This may affect the
ability of our investors to sell their ADSs, and the value of an
investment in the ADSs may decline.
The stock
market in general and the market price of the ADSs on the Nasdaq,
in particular, are subject to fluctuation, and changes in the price
of our securities may be unrelated to our operating performance.
The market price of the ADSs on the Nasdaq have fluctuated in the
past, and we expect they will continue to do so. The market price
of the ADSs is and will be subject to a number of factors,
including but not limited to:
•
|
our ability to
execute our business plan, including commercialization of our
current and future commercial products;
|
•
|
announcements
of technological innovations or new therapeutic candidates or new
products approved for marketing by us or others;
|
•
|
announcements
by us of significant acquisitions, strategic partnerships,
in-licensing, out-licensing, joint ventures or capital
commitments;
|
•
|
our ability to
comply with the various covenants under our credit agreement with
HCR Collateral Management, LLC;
|
•
|
expiration or
terminations of licenses, research contracts or other
commercialization or development agreements;
|
•
|
public concern
as to the safety of drugs we, our commercialization or development
partners or others market or develop;
|
•
|
the volatility
of market prices for shares of biopharmaceutical companies
generally;
|
•
|
success or
failure of research and development projects;
|
•
|
departure of
or major events adversely affecting key personnel;
|
•
|
developments
concerning intellectual property rights or regulatory
approvals;
|
•
|
variations in
our and our competitors’ results of operations;
|
•
|
changes in
earnings estimates or recommendations by securities analysts, if
the ADSs are covered by analysts;
|
•
|
changes in
government regulations or patent proceedings and decisions;
|
•
|
developments
by our development or commercialization partners; and
|
•
|
general market
conditions, geopolitical conditions and other factors, including
factors unrelated to our operating performance.
|
These factors
and any corresponding price fluctuations may materially and
adversely affect the market price of the ADSs and result in
substantial losses by our investors.
Additionally,
market prices for securities of biotechnology and pharmaceutical
companies historically have been very volatile. The market for
these securities has from time to time, experienced significant
price and volume fluctuations for reasons unrelated to the
operating performance of any one company. The COVID-19 pandemic has
resulted in significant financial market volatility and
uncertainty. A continuation or worsening of the levels of market
disruption and volatility seen in the recent past could have an
adverse effect on our ability to access capital, on our business,
results of operations and financial condition, and on the market
price of the ADSs. In the past, following periods of market
volatility, shareholders have often instituted securities class
action litigation and derivative actions. If we were involved in
securities or other litigation, it could have a substantial cost
and divert resources and attention of management from our business,
even if we are successful.
U.S. holders of ADSs may suffer adverse tax consequences if we were
characterized as a passive foreign investment company.
Based on the
current composition of our gross income and assets and on
reasonable assumptions and projections, we believe we will not be
treated as a passive foreign investment company (a “PFIC”), for
U.S. federal income tax purposes for 2021. However, there can be no
assurance that this will be the case in 2021 or in future taxable
years. If we were characterized as a PFIC, U.S. holders of the ADSs
may suffer adverse tax consequences. Generally, gains realized on
the sale of the ADSs would be treated as ordinary income, rather
than capital gain, the preferential rate otherwise applicable to
dividends received in respect of the ADSs by individuals who are
U.S. holders would not be available, and interest charges would
apply to certain distributions by us and the proceeds from sales of
the ADSs.
Risks Related to
the Offering
We will have broad discretion in how to use the net proceeds of
this offering, and we may not use these proceeds in a manner
desired by our investors.
We will have
broad discretion as to the use of the net proceeds from this
offering and could use them for purposes other than those
contemplated at the time of this offering. Accordingly, you
will be relying on the judgment of our management with regard to
the use of these net proceeds, and you will not have the
opportunity as part of your investment decision to assess whether
the proceeds are being used appropriately. Our needs may change as
the business and the industry that we address evolves. As a
result, the proceeds to be received in this offering may be used in
a manner significantly different from our current expectations. It
is possible that the proceeds will be invested in a way that does
not yield a favorable, or any, return. The failure of our
management to use such funds effectively could have a material
adverse effect on our business, financial condition, operating
results and cash flow.
You may
experience immediate and substantial dilution in book value of any
ADSs you purchase.
Based on the public offering price
and the net tangible book value per ADS as of September 30, 2020,
because the price per ADS being offered in this offering is
substantially higher than the net tangible book value per ADS, you
will suffer immediate and substantial dilution in the net tangible
book value per ADS you may purchase in this offering. See
“Dilution” on page S-21 for a more detailed discussion of the
dilution you will incur in connection with this offering.
Future
sales of the ADSs, or the perception that future sales may occur,
may cause the market price of the ADSs to decline, even if our
business is doing well.
Sales by the
ADS holders of a substantial number of ADSs in the public market
could occur in the future. These sales, or the perception in the
market that the holders of a large number of ADSs intend to sell
shares, may cause the market price of the ADSs and Ordinary Shares
to decline.
You may experience future dilution as a result of future equity
offerings.
To raise
additional capital, we may in the future offer additional ADSs,
Ordinary Shares or other securities convertible into or
exchangeable for the ADSs or Ordinary Shares at prices that may not
be the same as the price per share in this offering. We may sell
ADSs, Ordinary Shares or other securities in any other offering at
a price per share that is less than the price per share paid by
investors in this offering, and investors purchasing shares or
other securities in the future could have rights superior to the
rights of ADSs holders. The price per share at which we sell
additional ADSs, Ordinary Shares or securities convertible or
exchangeable into ADSs or Ordinary Shares, in future transactions
may be higher or lower than the price per ADS paid by investors in
this offering.
We estimate that
the net proceeds from the sale of 3,188,776 of the ADSs
representing 31,887,760 Ordinary Shares in this offering will
be approximately $23.1 million, or approximately $26.6 million if
Wainwright exercises in full its option to purchase 478,316
additional ADSs, after deducting underwriting discounts and
commissions and estimated offering expenses payable by us in
connection with this offering.
We
intend to use the net proceeds from this offering, together with
our existing cash and cash equivalents, to fund our clinical
development programs, commercialization activities and for
acquisitions and general corporate purposes.
The
amounts and timing of our actual expenditures will depend upon
numerous factors, including the progress of our development and
commercialization efforts, the status of and results from our
clinical trials, whether or not we enter into strategic
collaborations or partnerships, and our operating costs and
expenditures. Accordingly, our management will have significant
flexibility in applying the net proceeds of this offering. In
addition, while we have not entered into any binding agreements or
commitments relating to any significant transaction as of the date
of this prospectus supplement that we expect to use the net
proceeds from this offering, we may use a portion of the net
proceeds to pursue acquisitions, joint ventures and other strategic
transactions.
If
you invest in the ADSs, your interest will be diluted immediately
to the extent of the difference between the offering price per ADS
and our as-adjusted net tangible book value per ADS after this
offering.
Our
net tangible book value as of September 30, 2020, was
approximately $(37.29) million, or approximately $(1.00) per
ADS. Net tangible book value represents the amount of our
total tangible assets minus total liabilities, net of leases
presented as right-of-use assets and lease
liabilities. Dilution in net tangible book value per ADS
represents the difference between the amount per ADS paid by
purchasers of ADSs in this offering and the net tangible book value
per ADS immediately after this offering.
After
giving effect to our sale of an aggregate of 924,463 ADSs
subsequent to September 30, 2020, under our existing
“at-the-market” equity offering program established pursuant to the
sales agreement with SVB Leerink LLC dated July 23, 2019, for total
net proceeds of $8.4 million, after commission and expenses (the
“ATM Sales”), our pro forma net tangible book value as of September
30, 2020 would have been approximately $(28.93) million, or
approximately $(0.76) per ADS.
After giving
effect to the ATM Sales and giving further effect to the sale
of 3,188,776 ADSs in this offering at the offering price of
$7.84 per ADS and after deducting commissions and estimated
offering expenses payable by us, our pro forma as-adjusted net
tangible book value as of September 30, 2020 would have been
approximately $(5.83) million, or $(0.15) per ADS. This represents
an immediate increase in net tangible book value of $0.61 per ADS
to our existing shareholders and an immediate dilution in net
tangible book value of approximately $7.99 per ADS to purchasers of
the ADSs in this offering, as illustrated by the following
table:
Public offering price per ADS
|
|
|
|
|
$
|
7.84
|
|
|
|
|
|
|
|
|
|
Net tangible book value per ADS as
of September 30, 2020
|
|
$
|
(1.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in net tangible book value
per ADS attributable to the ATM Sales
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value
per ADS at September 30, 2020, after giving effect to the ATM
Sales
|
|
$
|
(0.76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in pro forma net tangible
book value per ADS attributable to new investors purchasing ADSs in
this offering
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma as-adjusted net tangible
book value per ADS at September 30, 2020 after giving effect to the
ATM Sales and this offering
|
|
|
|
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
Dilution per ADS to new investors
purchasing our ADSs in this offering
|
|
|
|
|
|
$
|
7.99
|
|
The above
discussion and table are based on 374,736,828 Ordinary Shares
outstanding as of September 30, 2020, and exclude, as of such date
54,503,640 Ordinary Shares issuable upon the exercise of
outstanding options to purchase 54,503,640 Ordinary Shares at a
weighted average exercise price of $0.91 per share (equivalent to
5,450,364 ADSs at a weighted average exercise price of $9.07 per
ADS).
The as-adjusted
information discussed above is illustrative only. Our net tangible
book value following the completion of the offering is subject to
further adjustment based on the actual offering price of our ADSs
and other terms of this offering determined at pricing.
If Wainwright
exercises in full its option to purchase up to an
additional 478,316 ADSs, the pro forma as-adjusted net
tangible book value after this offering would be $(0.06) per ADS,
representing an increase in pro forma net tangible book value of
$0.70 per ADS to our existing stockholders and immediate dilution
in net tangible book value of $7.90 per share to new investors
purchasing ADSs in this offering.
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our
total capitalization as of September 30, 2020:
•
|
on an actual basis;
|
|
|
•
|
on a pro forma basis, giving effect
to the ATM Sales; and
|
|
|
•
|
on a pro forma as-adjusted basis to
reflect the ATM Sales and the sale of 3,188,776 ADSs in this
offering at a public offering price of $7.84 per ADS, and after
deducting underwriting discounts and commissions and estimated
offering expenses payable by us in connection with this
offering.
|
The
information set forth in the following table should be read in
conjunction with and is qualified in its entirety by reference to
the audited and unaudited financial statements and notes thereto
incorporated by reference in this prospectus supplement and the
accompanying prospectus.
|
|
As of
September 30, 2020
|
|
(In thousands,
except share data)
|
|
Actual
|
|
|
Pro
Forma
|
|
|
Pro
Forma
As
Adjusted
|
|
|
|
|
|
|
|
|
Total debt (1)
|
|
$
|
140,235
|
|
|
$
|
140,235
|
|
|
$
|
140,235
|
|
Ordinary shares, par value NIS 0.01
per share
|
|
|
1,025
|
|
|
|
1,055
|
|
|
|
1,156
|
|
Additional paid-in capital
|
|
|
284,806
|
|
|
|
293,143
|
|
|
|
316,141
|
|
Accumulated deficit
|
|
|
(257,085
|
)
|
|
|
(257,085
|
)
|
|
|
(257,085
|
)
|
Total shareholders’ equity
|
|
$
|
28,746
|
|
|
$
|
37,113
|
|
|
$
|
60,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization and
indebtedness
|
|
$
|
168,981
|
|
|
$
|
177,348
|
|
|
$
|
200,447
|
|
(1)
|
Includes $31.6
million reported as current liabilities, which mainly consist of
accounts payable and accrued expenses, and $108.6 million reported
as non-current liabilities, which mainly consist of borrowing and
payable in respect of intangible assets purchase.
|
The above discussion and table are
based on 374,736,828 Ordinary Shares outstanding as of September
30, 2020, and exclude, as of such date 54,503,640 Ordinary Shares
issuable upon the exercise of outstanding options to purchase
54,503,640 Ordinary Shares at a weighted average exercise price of
$0.91 per share (equivalent to 5,450,364 ADSs at a weighted average
exercise price of $9.07 per ADS).
We have never
declared or paid any cash dividends to our shareholders. We
currently anticipate that we will retain future earnings for the
development, operation and expansion of our business and do not
anticipate declaring or paying any cash dividends for the
foreseeable future.
MATERIAL
TAX CONSIDERATIONS
Israeli Tax
Considerations
General
The following
is a summary of the material tax consequences under Israeli law
concerning the purchase, ownership and disposition of our Ordinary
Shares or American Depositary Shares (collectively, the
“Shares”).
This
discussion does not purport to constitute a complete analysis of
all potential tax consequences applicable to investors upon
purchasing, owning or disposing of our Shares. In particular, this
discussion does not take into account the specific circumstances of
any particular investor (such as tax-exempt entities, financial
institutions, certain financial companies, broker-dealers,
investors that own, directly or indirectly, 10% or more of our
outstanding voting rights, all of whom are subject to special tax
regimes not covered under this discussion). To the extent that
issues discussed herein are based on legislation that has yet to be
subject to judicial or administrative interpretation, there can be
no assurance that the views expressed herein will accord with any
such interpretation in the future.
Potential
investors are urged to consult their own tax advisors as to the
Israeli or other tax consequences of the purchase, ownership, and
disposition of the Shares, including, in particular, the effect of
any foreign, state or local taxes.
General Corporate Tax Structure in Israel
Israeli
companies are generally subject to corporate tax on their taxable
income at the rate of 23% for the 2020 tax year.
Taxation of Shareholders
Capital Gains
Capital gains
tax is imposed on the disposition of capital assets by an Israeli
resident and on the disposition of such assets by a non-Israeli
resident if those assets are either (i) located in Israel; (ii) are
shares or a right to a share in an Israeli resident corporation, or
(iii) represent, directly or indirectly, rights to assets located
in Israel, unless an exemption is available or unless an applicable
double tax treaty between Israel and the seller’s country of
residence provides otherwise. The Israeli Income Tax Ordinance
distinguishes between “Real Gain” and the “Inflationary Surplus”.
“Real Gain” is the excess of the total capital gain over
Inflationary Surplus generally computed on the basis of the
increase in the Israeli Consumer Price Index between the date of
purchase and the date of disposition. Inflationary Surplus is not
subject to tax.
Real Gain
accrued by individuals on the sale of the Shares will be taxed at
the rate of 25%. However, if the individual shareholder is a
“Controlling Shareholder” (i.e., a person who holds, directly or
indirectly, alone or together with another, 10% or more of one of
the Israeli resident company’s means of control) at the time of
sale or at any time during the preceding 12-month period, such gain
will be taxed at the rate of 30%.
Corporate and
individual shareholders dealing in securities in Israel are taxed
at the tax rates applicable to business income (23% in 2019 and
thereafter), and a marginal tax rate of up to 50% in 2020 for
individuals, including an excess tax (as discussed below).
Notwithstanding the foregoing, capital gains generated from the
sale of our Shares by a non-Israeli shareholder may be exempt from
Israeli tax under the Israeli Income Tax Ordinance provided that
the following cumulative conditions are met: (i) the Shares were
purchased upon or after the registration of the Shares on the stock
exchange (this condition may not apply to shares purchased on or
after January 1, 2009) and (ii) the seller does not have a
permanent establishment in Israel to which the generated capital
gain is attributed. However, non-Israeli resident corporations will
not be entitled to the foregoing exemption if Israeli residents:
(i) have a 25% or more interest in such non-Israeli
corporation or (ii) are the beneficiaries of, or are entitled
to, 25% or more of the income or profits of such non-Israeli
corporation, whether directly or indirectly. In addition, such
exemption would not be available to a person whose gains from
selling or otherwise disposing of the securities are deemed to be
business income.
In addition,
the sale of the Shares may be exempt from Israeli capital gains tax
under the provisions of an applicable double tax treaty. For
example, the Convention Between the Government of the United States
of America and the Government of the State of Israel with Respect
to Taxes on Income, or the U.S.-Israel Double Tax Treaty, exempts a
U.S. resident (for purposes of the U.S.-Israel Double Tax Treaty)
from Israeli capital gain tax in connection with the sale of the
Shares, provided that: (i) the U.S. resident owned, directly or
indirectly, less than 10% of the voting power of the company at any
time within the 12-month period preceding such sale; (ii) the U.S.
resident, being an individual, is present in Israel for a period or
periods of less than 183 days during the taxable year; and (iii)
the capital gain from the sale was not derived through a permanent
establishment of the U.S. resident in Israel; however, under the
U.S.-Israel Double Tax Treaty, the taxpayer would be permitted to
claim a credit for such taxes against the U.S. federal income tax
imposed with respect to such sale, exchange or disposition, subject
to the limitations under U.S. law applicable to foreign tax
credits. The U.S.-Israel Double Tax Treaty does not relate to U.S.
state or local taxes.
Payers of
consideration for the Shares, including the purchaser, the Israeli
stockbroker or the financial institution through which the Shares
are held, are obligated, subject to certain exemptions, to withhold
tax upon the sale of Shares at a rate of 25% of the consideration
for individuals and corporations.
Upon the sale
of traded securities, a detailed return, including a computation of
the tax due, must be filed and an advance payment must be paid to
the Israeli Tax Authority on January 31 and July 31 of every tax
year in respect of sales of traded securities made within the
previous six months. However, if all tax due was withheld at source
according to applicable provisions of the Israeli Income Tax
Ordinance and regulations promulgated thereunder, such return need
not be filed, and no advance payment must be paid. Capital gains
are also reportable on annual income tax returns.
Dividends
Dividends
distributed by a company to a shareholder who is an Israeli
resident individual will generally be subject to income tax at a
rate of 25%. However, a 30% tax rate will apply if the dividend
recipient is a Controlling Shareholder, as defined above, at the
time of distribution or at any time during the preceding 12-month
period. If the recipient of the dividend is an Israeli resident
corporation, such dividend will generally be exempt from Israeli
income tax provided that the income from which such dividend is
distributed, derived or accrued within Israel.
Dividends
distributed by an Israeli resident company to a non-Israeli
resident (either an individual or a corporation) are generally
subject to Israeli withholding tax on the receipt of such dividends
at the rate of 25% (30% if the dividend recipient is a Controlling
Shareholder at the time of distribution or at any time during the
preceding 12-month period). These rates may be reduced under the
provisions of an applicable double tax treaty. For example, under
the U.S.-Israel Double Tax Treaty, the following tax rates will
apply in respect of dividends distributed by an Israeli resident
company to a U.S. resident: (i) if the U.S. resident is a
corporation which holds during that portion of the taxable year
which precedes the date of payment of the dividend and during the
whole of its prior taxable year (if any), at least 10% of the
outstanding shares of the voting stock of the Israeli resident
paying corporation and not more than 25% of the gross income of the
Israeli resident paying corporation for such prior taxable year (if
any) consists of certain types of interest or dividends the tax
rate is 12.5%; (ii) if both the conditions mentioned in clause (i)
above are met and the dividend is paid from an Israeli resident
company’s income which was entitled to a reduced tax rate under The
Law for the Encouragement of Capital Investments, 1959, the tax
rate is 15%; and (iii) in all other cases, the tax rate is 25%. The
aforementioned rates under the U.S.-Israel Double Tax Treaty will
not apply if the dividend income is attributed to a permanent
establishment of the U.S. resident in Israel.
Excess Tax
Individual
holders who are subject to tax in Israel (whether any such
individual is an Israeli resident or non-Israeli resident) and who
have taxable income that exceeds a certain threshold in a tax year
((NIS 651,600 for 2020, linked to the Israeli Consumer Price Index)
will be subject to an additional tax at the rate of 3% on his or
her taxable income for such tax year that is in excess of such
amount. For this purpose, taxable income includes taxable capital
gains from the sale of securities and taxable income from interest
and dividends, subject to the provisions of an applicable double
tax treaty.
Estate and Gift Tax
Israel does
not currently impose estate or gift taxes if the Israeli Tax
Authority is satisfied that the gift was made in good faith and on
condition that the recipient of the gift is not a non-Israeli
resident.
Foreign Exchange Regulations
Non-residents
of Israel who hold our Shares are able to receive any dividends,
and any amounts payable upon the dissolution, liquidation and
winding up of our affairs, repayable in non-Israeli currency at the
rate of exchange prevailing at the time of conversion. However,
Israeli income tax is generally required to have been paid or
withheld on these amounts. In addition, the statutory framework for
the potential imposition of currency exchange control has not been
eliminated and may be restored at any time by administrative
action.
U.S.
Federal Income Tax Considerations
The following
is a summary of the material U.S. federal income tax consequences
relating to the ownership and disposition of our Ordinary Shares
and ADSs by U.S. Holders, as defined below. This summary addresses
solely U.S. Holders who acquire ADSs pursuant to this offering and
who hold Ordinary Shares or ADSs, as applicable, as capital assets
for tax purposes. This summary is based on current provisions of
the Internal Revenue Code of 1986, as amended (the “Code”), current
and proposed U.S. Treasury regulations promulgated thereunder, and
administrative and judicial decisions as of the date hereof, all of
which are subject to change, possibly on a retroactive basis. In
addition, this section is based in part upon representations of the
depositary and the assumption that each obligation in the deposit
agreement and any related agreement will be performed in accordance
with its terms. This summary does not address all U.S. federal
income tax matters that may be relevant to a particular holder or
all tax considerations that may be relevant with respect to an
investment in our Ordinary Shares or ADSs.
This summary
does not address tax considerations applicable to a holder of our
Ordinary Shares or ADSs that may be subject to special tax rules
including, without limitation, the following:
•
|
dealers or
traders in securities, currencies or notional principal
contracts;
|
•
|
banks,
insurance companies and other financial institutions;
|
•
|
real estate
investment trusts;
|
•
|
persons
subject to the alternative minimum tax;
|
•
|
tax-exempt
organizations;
|
•
|
traders that
have elected mark-to-market accounting;
|
•
|
corporations
that accumulate earnings to avoid U.S. tax;
|
•
|
pension
plans;
|
•
|
investors that
hold the Ordinary Shares or ADSs as part of a “straddle,” “hedge,”
or “conversion transaction” with other investments;
|
•
|
regulated
investment companies;
|
•
|
persons that
actually or constructively own 10 percent or more of our shares by
vote or by value;
|
•
|
persons that
are treated as partnerships or other pass-through entities for U.S.
federal income purposes and persons who hold the Ordinary Shares or
ADSs through partnerships or other pass-through entities; and
|
•
|
persons whose
functional currency is not the U.S. dollars.
|
This summary
does not address the effect of any U.S. federal taxation other than
U.S. federal income taxation. In addition, this summary does not
include any discussion of state, local, or foreign tax consequences
to a holder of our Ordinary Shares or ADSs.
You
are urged to consult your own tax advisor regarding the foreign and
U.S. federal, state, and local and other tax consequences of an
investment in Ordinary Shares or ADSs.
For purposes
of this summary, a “U.S. Holder” means a beneficial owner of an
Ordinary Share or ADS that is for U.S. federal income tax
purposes:
•
|
an individual
who is a citizen or resident of the U.S.;
|
•
|
a corporation
(or other entity taxable as a corporation for U.S. federal income
tax purposes) created or organized in the U.S. or under the laws of
the U.S., any state thereof, or the District of Columbia;
|
•
|
an estate, the
income of which is subject to U.S. federal income tax regardless of
its source; or
|
•
|
a trust (1) if
(a) a court within the U.S. is able to exercise primary supervision
over the administration of the trust and (b) one or more U.S.
persons have the authority to control all substantial decisions of
the trust or (2) that has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S.
person.
|
If an entity
or arrangement that is classified as a partnership for U.S. federal
tax purposes holds Ordinary Shares or ADSs, the U.S. federal tax
treatment of its partners will generally depend upon the status of
the partners and the activities of the partnership. Entities or
arrangements that are classified as partnerships for U.S. federal
tax purposes and persons holding Ordinary Shares or ADSs through
such entities should consult their own tax advisors.
In general, if
you hold ADSs, you will be treated as the holder of the underlying
Ordinary Shares represented by those ADSs for U.S. federal income
tax purposes. Accordingly, gain or loss generally will not be
recognized if you exchange ADSs for the underlying Ordinary Shares
represented by those ADSs.
Distributions
Subject to the
discussion under “—Passive Foreign Investment Companies” below, the
gross amount of any distribution, including the amount of any
Israeli taxes withheld from such distribution, see “Material Tax
Considerations—Israeli Tax Considerations,” actually or
constructively received by a U.S. Holder with respect to an
Ordinary Share (or, in the case of an ADS, received by the
depositary) will be taxable to the U.S. Holder as foreign-source
dividend income to the extent of our current and accumulated
earnings and profits as determined under U.S. federal income tax
principles. A U.S. Holder will not be eligible for any dividends
received deduction in respect of the dividends paid by us.
Distributions in excess of earnings and profits will be non-taxable
to the U.S. Holder to the extent of the U.S. Holder’s adjusted tax
basis in its Ordinary Share or ADS. Distributions in excess of such
adjusted tax basis will generally be taxable to the U.S. Holder as
capital gain from the sale or exchange of property as described
below under “—Sale or Other Disposition of Ordinary Shares or
ADSs.” If we do not report to a U.S. Holder the portion of a
distribution that exceeds earnings and profits, then the
distribution will generally be taxable as a dividend. The amount of
any distribution of property other than cash will be the fair
market value of that property on the date of distribution.
Qualified
dividends received by non-corporate U.S. Holders will be subject to
U.S. federal income tax at the preferential long-term capital gains
rate of, currently, a maximum of 20%. Dividends distributed with
respect to our Ordinary Shares or ADSs are qualified dividend only
if we are treated as a “qualified foreign corporation” and such
U.S. Holder has a holding period with respect to our Ordinary
Shares or ADSs of at least 61 days during the 121-day period
beginning 60 days before the ex-dividend date. We are a “qualified
foreign corporation” if we are not a PFIC for the year in which the
dividend is paid or for the preceding taxable year and either
(a) we are eligible for the benefits under the U.S.-Israel
Double Tax Treaty or (b) the Ordinary Shares or ADSs are
readily tradable on an established securities market in the U.S. As
discussed below in “—Passive Foreign Investment Companies,” we do
not anticipate being treated as a PFIC for this year; however,
there can be no assurance that we will not be treated as a PFIC for
our current taxable or future taxable years. You should consult
your own tax advisor regarding the availability of this
preferential tax rate under your particular circumstances.
The amount of
any distribution paid in a currency other than U.S. dollars (a
“foreign currency”), including the amount of any withholding tax
thereon, will be included in the gross income of a U.S. Holder in
an amount equal to the U.S. dollar value of the foreign currency
calculated by reference to the exchange rate in effect on the date
of the U.S. Holder’s (or, in the case of ADSs, the depositary’s)
receipt of the dividend, regardless of whether the foreign currency
is converted into U.S. dollars. If the foreign currency is
converted into U.S. dollars on the date of receipt, a U.S. Holder
generally should not be required to recognize a foreign currency
gain or loss in respect of the dividend. If the foreign currency
received in the distribution is not converted into U.S. dollars on
the date of receipt, a U.S. Holder will have a basis in the foreign
currency equal to its U.S. dollar value on the date of receipt. Any
gain or loss on a subsequent conversion or other disposition of the
foreign currency will be treated as U.S. source ordinary income or
loss.
Subject to
certain conditions and limitations, any Israeli taxes withheld on
dividends may be creditable against a U.S. Holder’s U.S. federal
income tax liability, subject to generally applicable limitations.
The rules relating to foreign tax credits and the timing thereof
are complex. You should consult your own tax advisors regarding the
availability of a foreign tax credit in your particular
situation.
Sale
or Other Disposition of Ordinary Shares or ADSs
Subject to the
discussion under “—Passive Foreign Investment Companies” below, a
U.S. Holder that sells or otherwise disposes of its Ordinary Shares
or ADSs will recognize gain or loss for U.S. federal income tax
purposes in an amount equal to the difference between the amount
realized on the sale or other disposition and such U.S. Holder’s
adjusted basis in the Ordinary Shares or ADSs. Such gain or loss
generally will be capital gain or loss and will be a long-term
capital gain or loss if the U.S. Holder’s holding period of the
Ordinary Shares or ADSs exceeds one year at the time of the sale or
other disposition. Long-term capital gains realized by
non-corporate U.S. Holders are generally subject to a preferential
U.S. federal income tax rate. In general, gain or loss recognized
by a U.S. Holder on the sale or other disposition or our Ordinary
Shares or ADSs will be U.S. source gain or loss for purposes of the
foreign tax credit limitation.
If a U.S.
Holder receives foreign currency upon a sale or exchange of
Ordinary Shares or ADSs, gain or loss in respect of such foreign
currency will be recognized in the manner described above under
“—Distributions.”
As discussed
above under the heading “Material Tax Considerations—Israeli Tax
Considerations—Taxation of Shareholders,” a U.S. Holder who holds
Ordinary Shares or ADSs through an Israeli broker or other Israeli
intermediary may be subject to Israeli withholding tax on any
capital gain recognized on a sale or other disposition of the
Ordinary Shares or ADSs if the U.S. Holder does not obtain approval
of an exemption from the Israeli Tax Authorities or does not claim
any allowable refunds or reductions. U.S. Holders are advised that
any Israeli tax paid under circumstances in which an exemption from
(or a refund of or a reduction in) such tax was available will not
be creditable for U.S. federal income tax purposes. U.S. Holders
are advised to consult their Israeli broker or intermediary
regarding the procedures for obtaining an exemption or
reduction.
Medicare Tax on Unearned Income
Non-corporate
U.S. Holders whose income exceeds certain thresholds are required
to pay an additional 3.8% tax on their net investment income, which
includes dividends paid on the Ordinary Shares or ADSs and capital
gains from the sale or other disposition of the Ordinary Shares or
ADSs.
Passive Foreign Investment Companies
Although we do
not anticipate being treated as a PFIC for this year, it is
possible that based on the value and composition of our assets, we
may be treated as a PFIC for U.S. federal income tax purposes for
future taxable years. A non-U.S. corporation is considered a PFIC
for any taxable year if either:
•
|
at least 75%
of its gross income for such taxable year is passive income;
or
|
•
|
at least 50%
of the value of its assets (based on an average of the fair market
values of the assets determined at the end of each quarter during a
taxable year) is attributable to assets that produce or are held
for the production of passive income.
|
For purposes
of the above calculations, if a non-U.S. corporation owns, directly
or indirectly, 25% or more of the total value of the outstanding
shares of another corporation, it will be treated as if it
(a) held a proportionate share of the assets of such other
corporation and (b) received a proportionate share of the
income of such other corporation directly. Passive income generally
includes, among other things, dividends, interest, rents, royalties
and certain capital gain, but generally excludes rents and
royalties that are derived in the active conduct of a trade or
business and which are received from a person other than a related
person.
A separate
determination must be made each taxable year as to whether we are a
PFIC (after the close of each such taxable year). Because the value
of our assets for purposes of the asset test will generally be
determined by reference to the market price of the Ordinary Shares
or ADSs, our PFIC status will depend in large part on the market
price of the Ordinary Shares or ADSs, which may fluctuate
significantly.
If we are a
PFIC for any year during which a U.S. Holder holds Ordinary Shares
or ADSs, such Ordinary Shares or ADSs generally will continue to be
treated as Ordinary Shares or ADSs in a PFIC with respect to such
U.S. Holder for all succeeding years during which such U.S. Holder
holds the Ordinary Shares or ADSs, unless we cease to be a PFIC and
such U.S. Holder makes a “deemed sale” election with respect to the
Ordinary Shares or ADSs such U.S. Holder holds. If such election is
made, a U.S. Holder will be deemed to have sold the Ordinary Shares
or ADSs it holds at their fair market value on the last day of the
last taxable year in which we qualified as a PFIC, and any gain
from such deemed sale would be subject to the U.S. federal income
tax treatment described below. After the deemed sale election, the
Ordinary Shares or ADSs with respect to which the deemed sale
election was made will not be treated as Ordinary Shares or ADSs in
a PFIC unless we subsequently become a PFIC.
For each
taxable year for which we are treated as a PFIC with respect to a
U.S. Holder, such U.S. Holder will be subject to special tax rules
with respect to any “excess distribution” it receives and any gain
it realizes from a sale or other disposition (including a pledge)
of the Ordinary Shares or ADSs, unless it makes a “mark-to-market”
election as discussed below. Distributions a U.S. Holder receives
in a taxable year that are greater than 125% of the average annual
distributions it received during the shorter of the three preceding
taxable years or its holding period for the Ordinary Shares or ADSs
will be treated as an excess distribution. Under these special tax
rules, if a U.S. Holder receives any excess distribution or
realizes any gain from a sale or other disposition of the Ordinary
Shares or ADSs:
•
|
the excess
distribution or gain will be allocated ratably over the U.S.
Holder’s holding period for the Ordinary Shares or ADSs;
|
•
|
the amount of
excess distribution or gain allocated to the current taxable year,
and any taxable year before the first taxable year in which we were
a PFIC, must be included in the U.S. Holder’s gross income (as
ordinary income) for the current tax year; and
|
•
|
the amount
allocated to each other year will be subject to the highest
marginal tax rate in effect with respect to such U.S. Holder for
that year and the interest charge generally applicable to
underpayments of tax will be imposed on the resulting tax
attributable to such amounts allocated to each other year.
|
The tax
liability for amounts allocated to years before the year of
disposition or “excess distribution” cannot be offset by any losses
for such years. Additionally, any gains realized on the sale of the
Ordinary Shares or ADSs cannot be treated as capital gains.
If we are
treated as a PFIC with respect to a U.S. Holder for any taxable
year, such U.S. Holder will also be deemed to own its proportionate
share of any of our subsidiaries that are PFICs, and such U.S.
Holder may be subject to the rules described in the preceding two
paragraphs with respect to the shares of such subsidiaries that are
PFICs it would be deemed to own. As a result, a U.S. Holder may
incur liability for any “excess distribution” described above if we
receive a distribution from such subsidiaries that are PFICs or if
any we dispose of, or are deemed to dispose of, any shares in such
subsidiaries that are PFICs. You should consult your own tax
advisor regarding the application of the PFIC rules to any of our
subsidiaries.
Alternatively,
a U.S. Holder of “marketable stock” (as defined below) in a PFIC
may make a mark-to-market election for such stock to elect out of
the general tax treatment for PFICs discussed above. If a U.S.
Holder makes a mark-to-market election for the Ordinary Shares or
ADSs, such U.S. Holder will include in income for each year we are
a PFIC an amount equal to the excess, if any, of the fair market
value of the Ordinary Shares or ADSs as of the close of such U.S.
Holder’s taxable year over such U.S. Holder’s adjusted basis in
such Ordinary Shares or ADSs. a U.S. Holder is allowed a deduction
for the excess, if any, of the adjusted basis of the Ordinary
Shares or ADSs over their fair market value as of the close of the
taxable year. However, deductions are allowable only to the extent
of any net mark-to-market gains on the Ordinary Shares or ADSs
included in a U.S. Holder’s income for prior taxable years. Amounts
included in a U.S. Holder’s income under a mark-to-market election,
as well as gain on the actual sale or other disposition of the
Ordinary Shares or ADSs, are treated as ordinary income. Ordinary
loss treatment also applies to the deductible portion of any
mark-to-market loss on the Ordinary Shares or ADSs, as well as to
any loss realized on the actual sale or disposition of the Ordinary
Shares or ADSs to the extent the amount of such loss does not
exceed the net mark-to-market gains previously included for the
Ordinary Shares or ADSs. A U.S. Holder’s basis in the Ordinary
Shares or ADSs will be adjusted to reflect any such income or loss
amounts. If a U.S. Holder makes a valid mark-to-market election,
the tax rules that apply to distributions by corporations which are
not PFICs would apply to distributions by us, except the lower
applicable tax rate for qualified dividend income would not apply.
If we cease to be a PFIC when a U.S. Holder has a mark-to-market
election in effect, gain or loss realized by such U.S. Holder on
the sale of the Ordinary Shares or ADSs will be a capital gain or
loss and taxed in the manner described above under “—Sale or Other
Disposition of Ordinary Shares or ADSs.”
The
mark-to-market election is available only for “marketable stock,”
which is a stock that is traded in other than de minimis quantities
on at least 15 days during each calendar quarter, or regularly
traded, on a qualified exchange or another market, as defined in
applicable U.S. Treasury regulations. Any trades that have as their
principal purpose meeting this requirement will be disregarded. The
ADSs are listed on the Nasdaq and, accordingly, provided the ADSs
are regularly traded, the mark-to-market election would be
available to a U.S. Holder of ADSs if we are a PFIC. Once made, the
election cannot be revoked without the consent of the IRS unless
the Ordinary Shares or ADSs cease to be marketable stock. If we are
a PFIC for any year in which the U.S. Holder owns the Ordinary
Shares or ADSs but before a mark-to-market election is made, the
interest charge rules described above will apply to any
mark-to-market gain recognized in the year the election is made. If
any of our subsidiaries are or become PFICs, the mark-to-market
election will not be available with respect to the shares of such
subsidiaries that are treated as owned by a U.S. Holder.
Consequently, a U.S. Holder could be subject to the PFIC rules with
respect to income of the lower-tier PFICs the value of which
already had been taken into account indirectly via mark-to-market
adjustments. You should consult your own tax advisors as to the
availability and desirability of a mark-to-market election, as well
as the impact of such election on interests in any lower-tier
PFICs.
In certain
circumstances, a U.S. Holder of stock in a PFIC can make a
“qualified electing fund election” to mitigate some of the adverse
tax consequences of holding stock in a PFIC by including in income
its share of the corporation’s income on a current basis. However,
we do not currently intend to prepare or provide the information
that would enable a U.S. Holder to make a qualified electing fund
election.
Unless
otherwise provided by the U.S. Treasury, each U.S. shareholder of a
PFIC is required to file an annual information return on IRS Form
8621 (Information Return by a Shareholder of a Passive Foreign
Investment Company or Qualifying Electing Fund) containing such
information as the U.S. Treasury may require. A U.S. Holder’s
failure to file such annual information return could result in the
imposition of penalties and the extension of the statute of
limitations with respect to U.S. federal income tax. You should
consult your own tax advisors regarding the requirements of filing
such information returns under these rules, taking into account the
uncertainty as to whether we are currently treated as or may become
a PFIC.
YOU
ARE STRONGLY URGED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE
IMPACT AND APPLICATION OF THE PFIC RULES ON YOUR INVESTMENT IN THE
ORDINARY SHARES OR ADSs.
Backup Withholding and Information Reporting
Payments of
dividends with respect to Ordinary Shares or ADSs and the proceeds
from the sale, retirement, or other disposition of Ordinary Shares
or ADSs made by a U.S. paying agent or other U.S. intermediary will
be reported to the IRS and to the U.S. Holder as may be required
under applicable U.S. Treasury regulations. We, or an agent, a
broker, or any paying agent, as the case may be, may be required to
withhold tax (backup withholding), currently at the rate of 24%, if
a non-corporate U.S. Holder that is not otherwise exempt fails to
provide an accurate taxpayer identification number and comply with
other IRS requirements concerning information reporting. Certain
U.S. Holders (including, among others, corporations and tax-exempt
organizations) are not subject to backup withholding. Backup
withholding is not an additional tax. Any amount of backup
withholding withheld may be used as a credit against your U.S.
federal income tax liability provided that the required information
is furnished to the IRS. U.S. Holders should consult their own tax
advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining an exemption.
Individual
U.S. Holders may be required to file certain U.S. information
reporting returns with the IRS with respect to an investment in our
Ordinary Shares or ADSs, including, among others, IRS Form 8938
(Statement of Specified Foreign Financial Assets). U.S. Holders
paying more than $100,000 for our Ordinary Shares or ADSs may be
required to file IRS Form 926 (Return by a U.S. Transferor of
Property to a Foreign Corporation) reporting this payment. As
described above under “—Passive Foreign Investment Companies,” if
we were determined to be a PFIC, each U.S. Holder would be required
to file an annual report containing certain information.
Substantial penalties may be imposed upon a U.S. Holder that fails
to comply with the required information reporting.
You should
consult your own tax advisors regarding the backup withholding tax
and information reporting rules.
EACH
PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR
REGARDING THE TAX CONSEQUENCES OF AN INVESTMENT IN OUR ORDINARY
SHARES OR ADSs IN LIGHT OF SUCH INVESTOR’S PARTICULAR
CIRCUMSTANCES.
Pursuant to
the underwriting agreement with Wainwright, we have agreed to issue
and sell, and Wainwright has agreed to purchase, the number of ADSs
listed opposite its name below, less the underwriting discounts and
commissions, on the closing date, subject to the terms and
conditions contained in the underwriting agreement. The
underwriting agreement provides that the obligations of Wainwright
are subject to certain customary conditions precedent,
representations and warranties contained therein.
Underwriter
|
|
Number
of
ADSs
|
|
H.C.
Wainwright & Co., LLC
|
|
|
3,188,776
|
|
Total
|
|
|
3,188,776
|
|
Pursuant to
the underwriting agreement, Wainwright has agreed to purchase all
of the ADSs sold under the underwriting agreement if any of these
ADSs are purchased, other than those ADSs covered by Wainwright’s
option to purchase additional ADSs described below. Wainwright has
advised us that it does not intend to confirm sales to any account
over which it exercises discretionary authority.
Discounts, Commissions and Expenses
Wainwright may
offer the ADSs from time to time to purchasers directly or through
agents, or through brokers in brokerage transactions on Nasdaq, or
to dealers in negotiated transactions or in a combination of such
methods of sale, or otherwise, at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated
prices, subject to receipt and acceptance by it and subject to its
right to reject any order in whole or in part. The difference
between the price at which Wainwright purchases ADSs from us and
the price at which Wainwright resells such ADSs may be deemed
underwriting compensation. If Wainwright effects such transactions
by selling ADSs to or through dealers, such dealers may receive
compensation in the form of discounts, concessions or commissions
from Wainwright and/or purchasers of ADSs for whom they may act as
agents or to whom they may sell as principal.
Wainwright is
offering the ADSs, subject to prior sale, when, as and if issued to
and accepted by them, subject to approval of legal matters and
other conditions specified in the underwriting agreement.
Wainwright reserves the right to withdraw, cancel or modify offers
to the public and to reject orders in whole or in part.
We have granted to Wainwright an
option to purchase up to an additional 478,316 ADSs (up to 15%
of the ADSs offered and sold in this offering) at the public
offering price, less the underwriting discounts and commissions.
The option is exercisable for 30 days.
Any ADSs sold by Wainwright to
securities dealers will be sold at the public offering price less a
selling concession not in excess of $0.3528 per ADS.
The following
table shows the public offering price, underwriting discounts and
commissions and proceeds, before estimated offering expenses, to
us. These amounts are shown assuming both no exercise and full
exercise of Wainwright’s option to purchase additional ADSs.
Per
ADS
|
|
Total
Without Option
|
|
|
Total
with Option
|
|
Public offering price
|
|
$
|
7.84
|
|
|
$
|
7.84
|
|
Underwriting discounts and commissions payable by us (1)
|
|
$
|
1,500,000
|
|
|
$
|
1,725,000
|
|
Proceeds, before
estimated offering expenses, to us
|
|
$
|
23,500,003
|
|
|
$
|
27,025,001
|
|
|
(1) |
We have agreed to reimburse Wainwright for certain
offering-related expenses. We also agreed to pay Wainwright reduced
underwriting discounts and commissions in the amount of $0.2744 in
respect of ADSs sold to a certain existing shareholder, which will
result in decreased underwriting discounts and increased proceeds
to us before expenses of $37,500.
|
Subject to
certain exceptions, we have also agreed to pay Wainwright a
management fee equal to 1.0% of the aggregate gross proceeds in
this offering. We have agreed to reimburse the expenses of
Wainwright, including its legal fees, in an amount of up to
$110,000 in connection with this offering and an additional $10,000
for FINRA expenses. In accordance with FINRA Rule 5110, these
reimbursed fees and expenses are deemed underwriting compensation
for this offering.
Indemnification
We have agreed
to indemnify Wainwright against certain liabilities, including
civil liabilities under the Securities Act, or to contribute to
payments that Wainwright may be required to make in respect of
those liabilities.
Lock-Up Agreements
We have agreed not to sell any ADSs
or any securities convertible into or exercisable or exchangeable
into ADSs, subject to certain exceptions, for a period of 60 days
from the date of this prospectus supplement, unless we obtain the
prior written consent of Wainwright. This consent may be given at
any time without public notice, and Wainwright may consent in its
sole discretion. The exceptions to the restriction include, among
other things, issuance of a limited number of ADSs, our ordinary
shares or securities convertible into ADSs or our ordinary shares
that are issued as consideration in a strategic transaction.
In addition, each of our directors
and executive officers has entered into a lock-up agreement with
Wainwright. Under the lock-up agreements, the directors and
executive officers may not, directly or indirectly, sell, offer to
sell, contract to sell, or grant any option for the sale (including
any short sale), grant any security interest in, pledge,
hypothecate, hedge, establish an open “put equivalent position”
(within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of, or enter into any transaction which is
designed to or could be expected to result in the disposition of,
any ADSs or our ordinary shares or securities convertible into or
exchangeable for ADSs or our ordinary shares, or publicly announce
any intention to do any of the foregoing, unless such directors and
executive officers obtain prior written consent of Wainwright for a
period of 60 days from the date of this prospectus supplement. This
consent may be given at any time without public notice, and
Wainwright may consent in its sole discretion. Such lock-up
restriction does not apply to any ADSs acquired in this offering by
our directors and executive officers.
Price
Stabilization, Short Positions and Penalty Bids
In connection
with this offering, Wainwright may engage in stabilizing
transactions, overallotment transactions, syndicate covering
transactions and penalty bids in connection with the ADSs.
Stabilizing
transactions permit bids to purchase ADSs so long as the
stabilizing bids do not exceed a specified maximum.
Overallotment
transactions involve sales by Wainwright of ADSs in excess of the
number of ADSs Wainwright is obligated to purchase. This creates a
syndicate short position which may be either a covered short
position or a naked short position. In a covered short position,
the number of shares over-allotted by Wainwright is not greater
than the number of shares that it may purchase in the overallotment
option. In a naked short position, the number of shares involved is
greater than the number of shares in the overallotment option.
Wainwright may close out any short position by exercising its
overallotment option and/or purchasing shares in the open
market.
These
stabilizing transactions may have the effect of raising or
maintaining the market price of the ADSs or preventing or retarding
a decline in the market price of the ADSs. As a result, the price
of the ADSs in the open market may be higher than it would
otherwise be in the absence of these transactions. Neither we nor
Wainwright makes any representation or prediction as to the effect
that the transactions described above may have on the price of the
ADSs. These transactions may be effected on Nasdaq, in the
over-the-counter market or otherwise and, if commenced, may be
discontinued at any time.
In connection
with this offering, Wainwright also may engage in passive market
making transactions in ADSs in accordance with Regulation M during
a period before the commencement of offers or sales of ADSs in this
offering and extending through the completion of the distribution.
In general, a passive market maker must display its bid at a price
not in excess of the highest independent bid for that security.
However, if all independent bids are lowered below the passive
market maker’s bid that bid must then be lowered when specific
purchase limits are exceeded. Passive market making may stabilize
the market price of the securities at a level above that which
might otherwise prevail in the open market and, if commenced, may
be discontinued at any time.
Electronic Distribution
A prospectus
in electronic format may be made available on the websites
maintained by Wainwright, if any, participating in this offering
and Wainwright may distribute prospectuses electronically. Other
than the prospectus in electronic format, the information on these
websites is not part of this prospectus or the registration
statement of which this prospectus forms a part, has not been
approved or endorsed by us or Wainwright, and should not be relied
upon by investors.
Other
Relationships
From time to
time, Wainwright and its affiliates have provided, and may provide
in the future, various advisory, investment and commercial banking
and other services to us in the ordinary course of business, for
which they have received and may continue to receive customary fees
and commissions.
European
Economic Area and the United Kingdom
This prospectus has
been prepared on the basis that any offer of ADSs in any member
state of the European Economic Area or the United Kingdom (each a
“Relevant State”) will be made pursuant to an exemption under the
Prospectus Regulation from the requirement to publish a prospectus
for offers of ADSs. Accordingly any person making or intending to
make an offer in that Relevant State of ADSs which are the subject
of the offering contemplated in this prospectus may only do so in
circumstances in which no obligation arises for the Company or
Wainwright to publish a prospectus pursuant to Article 3 of the
Prospectus Regulation or supplement a prospectus pursuant to
Article 23 of the Prospectus Regulation, in each case in relation
to such offer. Neither the Company nor Wainwright have authorized,
nor do they authorize, the making of any offer of ADSs in
circumstances in which an obligation arises for the Company or
Wainwright to publish or supplement a prospectus for such offer.
Neither the Company nor Wainwright have authorized, nor do they
authorize, the making of any offer of ADSs through any financial
intermediary, other than offers made by Wainwright, which
constitute the final placement of the ADSs contemplated in this
prospectus.
The expression
“Prospectus Regulation” means Regulation (EU) 2017/1129 (as amended
or superseded).
In relation to each
Relevant State, no ADSs have been offered or will be offered to the
public in that Relevant State, except that offers of ADSs may be
made to the public in that Relevant State:
• to
any legal entity which is a qualified investor as defined under the
Prospectus Regulation;
• to
fewer than 150 natural or legal persons (other than qualified
investors as defined under the Prospectus Regulation), subject to
obtaining the prior consent of the representatives for any such
offer; or
• in
any other circumstances falling within Article 1(4) of the
Prospectus Regulation,
provided that
no such offer of ADSs shall require the Company or Wainwright to
publish a prospectus pursuant to Article 3 of the Prospectus
Regulation or supplement a prospectus pursuant to Article 23 of the
Prospectus Regulation.
Each
person in a Relevant State who receives any communication in
respect of, or who acquires any ADSs under, the offers to the
public contemplated in this prospectus, or to whom the ADSs are
otherwise made available, will be deemed to have represented,
acknowledged and agreed to and with the Company and Wainwright that
it and any person on whose behalf it acquires ADSs is a (a)
qualified investor within the meaning of Article 2(e) of the
Prospectus Regulation; and (b) in the case of any ADSs acquired by
it as a financial intermediary as that term is used in Article 5(1)
of the Prospectus Regulation, (i) the ADSs acquired by it in the
offer have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Relevant State other than qualified investors, as that term is
defined in the Prospectus Regulation, or in circumstances in which
the prior consent of Wainwright has been obtained to each such
proposed offer or resale, or (ii) where ADSs have been acquired by
it on behalf of persons in any Relevant State other than qualified
investors, the offer of those ADSs to it is not treated under the
Prospectus Regulation as having been made to such persons.
We,
Wainwright and affiliates will rely upon the truth and accuracy of
the foregoing representations, acknowledgements and
agreements.
For
the purposes of this provision, the expression an “offer to the
public” in relation to any ADSs in any Relevant State means the
communication in any form and by any means of sufficient
information on the terms of the offer and any ADSs to be offered so
as to enable an investor to decide to purchase or subscribe for any
ADSs, and the expression “Prospectus Regulation” means Regulation
(EU) 2017/1129.
Any
distributor subject to Directive 2014/65/EU (as amended, “MiFID
II”) subsequently offering, selling or recommending the ADSs is
responsible for undertaking its own target market assessment in
respect of the ADSs and determining the appropriate distribution
channels for the purposes of the MiFID II product governance rules
under Commission Delegated Directive (EU) 2017/593 (“Delegated
Directive”). Neither the Company nor Wainwright makes any
representations or warranties as to a Distributor’s compliance with
the Delegated Directive.
References to Regulations or Directives include, in relation to the
United Kingdom, those Regulations or Directives as they form part
of United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018 or have been implemented in United Kingdom
domestic law, as appropriate. The above selling restriction is in
addition to any other selling restrictions set out below.
In
connection with the offering, Wainwright is not acting for anyone
other than the issuer and will not be responsible to anyone other
than the issuer for providing the protections afforded to their
clients nor for providing advice in relation to the offering.
United
Kingdom
This
document is for distribution only to persons who (i) have
professional experience in matters relating to investments and who
qualify as investment professionals within the meaning of Article
19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (as amended, the “Financial Promotion
Order”), (ii) are persons falling within Article 49(2)(a) to (d)
(“high net worth companies, unincorporated associations etc.”) of
the Financial Promotion Order, (iii) are outside the United
Kingdom, or (iv) are persons to whom an invitation or inducement to
engage in investment activity (within the meaning of Section 21 of
the Financial Services and Markets Act 2000, as amended (“FSMA”))
in connection with the issue or sale of any securities may
otherwise lawfully be communicated or caused to be communicated
(all such persons together being referred to as “relevant
persons”). This document is directed only at relevant persons and
must not be acted on or relied on by persons who are not relevant
persons. Any investment or investment activity to which this
document relates is available only to relevant persons and will be
engaged in only with relevant persons.
Switzerland
This
document is not intended to constitute an offer to, or solicitation
of, investors in Switzerland to purchase or invest in ADSs. The
ADSs may not be publicly offered, directly or indirectly, in
Switzerland within the meaning of FinSA (unless in circumstances
falling within article 36 of the FinSA). This document does not
constitute a prospectus pursuant to the FinSA and has been prepared
without regard to the disclosure standards for issuance
prospectuses under the FinSA, art. 652a or art. 1156 of the Swiss
Code of Obligations or the disclosure standards for listing
prospectuses under art. 27 ff. of the SIX Listing Rules or the
listing rules of any other stock exchange or regulated trading
facility in Switzerland. Neither this document nor any other
offering or marketing material relating to the ADSs or the offering
may be publicly distributed or otherwise made publicly available in
Switzerland.
Neither this document nor any other offering or marketing material
relating to the offering, the Company, or the ADSs have been or
will be filed with or approved by any Swiss regulatory authority.
In particular, this document has not been and will not be reviewed
or approved by a Swiss reviewing body (“Prüfstelle”) pursuant to
article 51 of the FinSA and does not comply with the disclosure
requirements applicable to a prospectus within the meaning of
article 35 of the FinSA. Further, this document will not be filed
with, and the offer of ADSs will not be supervised by, the Swiss
Financial Market Supervisory Authority (“FINMA”), and the offer of
ADSs has not been and will not be authorized under the Swiss
Federal Act on Collective Investment Schemes (“CISA”). The investor
protection afforded to acquirers of interests in collective
investment schemes under the CISA does not extend to acquirers of
ADSs.
Canada
The
ADSs may be sold only to purchasers purchasing, or deemed to be
purchasing, as principal that are accredited investors, as defined
in National Instrument 45-106 Prospectus Exemptions or subsection
73.3(1) of the Securities Act (Ontario), and are permitted clients,
as defined in National Instrument 31-103 Registration Requirements,
Exemptions and Ongoing Registrant Obligations. Any resale of the
ADSs must be made in accordance with an exemption from, or in a
transaction not subject to, the prospectus requirements of
applicable securities laws.
Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or
damages if this prospectus (including any amendment thereto)
contains a misrepresentation, provided that the remedies for
rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the
purchaser’s province or territory. The purchaser should refer to
any applicable provisions of the securities legislation of the
purchaser’s province or territory for particulars of these rights
or consult with a legal advisor.
Pursuant to section 3A.3 (or, in the case of securities issued or
guaranteed by the government of a non-Canadian jurisdiction,
section 3A.4) of National Instrument 33-105 Underwriting Conflicts
(NI 33-105), the underwriters are not required to comply with the
disclosure requirements of NI 33-105 regarding underwriter
conflicts of interest in connection with this offering.
Israel
This
document does not constitute a prospectus under the Israeli
Securities Law, 5728-1968, or the Securities Law, and has not been
filed with or approved by the Israel Securities Authority. In the
State of Israel, this document is being distributed only to, and is
directed only at, and any offer of the ADSs is directed only at,
investors listed in the first addendum, or the Addendum, to the
Israeli Securities Law, consisting primarily of joint investment in
trust funds, provident funds, insurance companies, banks, portfolio
managers, investment advisors, members of the Tel Aviv Stock
Exchange, underwriters, venture capital funds, entities with equity
in excess of NIS 50 million and “qualified individuals”, each as
defined in the Addendum (as it may be amended from time to time),
collectively referred to as qualified investors (in each case
purchasing for their own account or, where permitted under the
Addendum, for the accounts of their clients who are investors
listed in the Addendum). Qualified investors will be required to
submit written confirmation that they fall within the scope of the
Addendum, are aware of the meaning of same and agree to it.
Certain
matters concerning this offering will be passed upon for us by
Haynes and Boone, LLP, New York, New York. The validity of the
securities being offered by this prospectus will be passed upon for
us by Gross, Kleinhendler, Hodak, Halevy, Greenberg, Shenhav &
Co., Tel-Aviv, Israel. Covington & Burling LLP, New York, New
York, is acting as counsel to Wainwright in connection with this
offering. Members of Covington & Burling LLP are the beneficial
owners of an aggregate of less than 1.0% of our Ordinary
Shares.
The financial
statements and management’s assessment of the effectiveness of
internal control over financial reporting (which is included in
Management’s Annual Report on Internal Control over Financial
Reporting) incorporated in this prospectus supplement by reference
to the Annual Report on Form 20-F for the year ended December 31,
2019 have been so incorporated in reliance on the report of
Kesselman & Kesselman, Certified Public Accountants (Isr.), a
member firm of PricewaterhouseCoopers International Limited, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject
to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith file annual and
special reports with, and furnish other information to, the SEC.
The SEC maintains a website that contains reports and other
information regarding issuers that file electronically with the
SEC. You may access the SEC’s website at http://www.sec.gov.
These SEC filings are also available to the public on the Israel
Securities Authority’s Magna website at www.magna.isa.gov.il
and from commercial document retrieval services.
This
prospectus supplement is part of the registration statement on Form
F-3 filed with the SEC in connection with this offering and does
not contain all of the information included in the registration
statement. Whenever a reference is made in this prospectus
supplement to any of our contracts or other documents, the
reference may not be complete and, for a copy of the contract or
document, you should refer to the exhibits that are a part of the
registration statement.
INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows
us to “incorporate by reference” information into this prospectus
supplement, which means that we can disclose important information
to you by referring you to other documents that we have filed or
will file with the SEC. We are incorporating by reference in this
prospectus supplement the documents listed below and all amendments
or supplements we may file to such documents, as well as any future
filings we may make with the SEC on Form 20-F under the Securities
Exchange Act of 1934, as amended before the time that all of the
securities offered by this prospectus have been sold or
de-registered:
•
|
the description of our Ordinary
Shares contained in our Registration Statement on Form 20-F filed
with the SEC on December 26, 2012;
|
•
|
our Annual
Report on Form 20-F for the fiscal year ended December 31, 2019,
filed with the SEC on March 4, 2020; and
|
•
|
Reports on
Form 6-K filed on March 9, 2020, March 11, 2020, March 13, 2020,
March 25, 2020, April 1, 2020, April 2, 2020, April 6, 2020 (two
reports), April 13, 2020, April 17, 2020 (two reports), April 20,
2020 (two reports) April 27, 2020, April 28, 2020, May 8, 2020, May
27, 2020, June 10, 2020, June 18, 2020 (relating to expansion of
opaganib COVID-19 Phase 2/3 study), June 24, 2020, June 29, 2020,
July 16, 2020, July 21, 2020, July 22, 2020, July 27, 2020, July
28, 2020, July 30, 2020, July 31, 2020, August 3, 2020,
August 6, 2020, August 13, 2020 (two reports), August 27, 2020,
September 3, 2020, September 8, 2020, September 22, 2020 (two
reports), October 7, 2020, October 8, 2020, October 13, 2020,
October 14, 2020, October 26 ((report regarding Extraordinary
General Meeting of Shareholders of Redhill Biopharma Ltd.),
November 4, 2020, November 12, 2020 (Exhibits 1 (solely with
respect to the Financial highlights for the third quarter, ended
September 30, 2020, Liquidity and Capital Resources, Commercial
Highlights, R&D Highlights, the Condensed Consolidated Interim
Statements of Comprehensive Loss, Condensed Consolidated Interim
Statements of Financial Position and Condensed Consolidated Interim
Statements of Cash Flows) and Exhibit 2), November 16, 2020,
November 17, 2020, November 19, 2020, November 20, 2020, November
25, 2020, December 7, 2020, December 14, 2020, December 15, 2020,
December 22, 2020, December 31, 2020, January 6, 2021 and January
11, 2021.
|
In addition,
any reports on Form 6-K submitted to the SEC prior to the
termination of the offering that we specifically identify in such
forms as being incorporated by reference into the registration
statement of which this prospectus supplement forms a part.
Certain
statements in and portions of this prospectus supplement update and
replace information in the above-listed documents incorporated by
reference. Likewise, statements in or portions of a future document
incorporated by reference in this prospectus supplement may update
and replace statements in and portions of this prospectus
supplement or the above-listed documents.
We will
provide you without charge, upon your written or oral request, a
copy of any of the documents incorporated by reference in this
prospectus supplement, other than exhibits to such documents which
are not specifically incorporated by reference into such documents.
Please direct your written or telephone requests to RedHill
Biopharma Ltd., 21 Ha'arba'a Street, Tel Aviv 6473921, Israel,
Attn: Micha Ben Chorin, telephone number +972 (3) 541-3131. You may
also obtain information about us by visiting our website at
www.redhillbio.com. Information contained on our website is
not part of this prospectus supplement.
PROSPECTUS
$175,000,000 of
American Depositary Shares representing Ordinary Shares,
Ordinary Shares,
Warrants to Purchase American Depositary Shares,
Subscription Rights and/or Units
Offered by the Company
REDHILL BIOPHARMA LTD.
We may offer to the public from time to time in one or more series
or issuances American Depositary Shares ("ADSs"), ordinary shares,
warrants, subscription rights and/or units, including the
securities carried forward from the Prior Shelf Registration
Statement, consisting of two or more of these classes or series of
securities. Each ADS represents 10 ordinary shares.
We refer to the ADSs, ordinary shares, warrants, subscription
rights and units collectively as “securities” in this
prospectus.
This prospectus also may be used in connection with the issuance of
up to 2,025,458 ADSs issuable upon the exercise of outstanding
warrants.
Each time we sell securities pursuant to this prospectus, we will
provide a supplement to this prospectus that contains specific
information about the offeror, the offering and the specific terms
of the securities offered. This prospectus may not be used to
consummate a sale of securities by us unless accompanied by the
applicable prospectus supplement. You should read this prospectus
and the applicable prospectus supplement carefully before you
invest in our securities.
We may, from time to time, offer to sell the securities, through
public or private transactions, directly or through underwriters,
agents or dealers, on or off the Nasdaq Global Market or Tel Aviv
Stock Exchange (the "TASE"), as applicable, at prevailing market
prices or at privately negotiated prices. If any underwriters,
agents or dealers are involved in the sale of any of these
securities, the applicable prospectus supplement will set forth the
names of the underwriter, agent or dealer and any applicable fees,
commissions or discounts.
Our ordinary shares are traded on the TASE, and our ADSs are traded
on the Nasdaq Global Market under the symbol “RDHL.” The last
reported sale price for our ADSs on July 20, 2018 as quoted on the
Nasdaq Global Market was $9.96 per ADS, and the last reported sale
price for our ordinary shares on July 19, 2018 as quoted on the
TASE was NIS3.93 per share, or $1.08 per share (based on the
exchange rate reported by the Bank of Israel for such date).
Investing in these securities involves a high degree of risk.
Please carefully consider the risks discussed in this prospectus
under “Risk Factors” beginning on page 3 and the “Risk Factors” in
“Item 3: Key Information- Risk Factors” of our most recent Annual
Report on Form 20-F incorporated by reference in this prospectus
and in any applicable prospectus supplement for a discussion of the
factors you should consider carefully before deciding to purchase
these securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the securities
being offered by this prospectus, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this
prospectus is July 31, 2018
TABLE OF CONTENTS
|
Page
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
|
5
|
|
|
|
6
|
|
|
|
6
|
|
|
|
7
|
|
|
|
7
|
|
|
|
8
|
|
|
|
9
|
|
|
|
10
|
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
13
|
|
|
|
14
|
|
|
|
15 |
ABOUT THIS
PROSPECTUS
This prospectus is part of a registration statement that we filed
with the Securities and Exchange Commission, or SEC, utilizing a
“shelf” registration process. Under this process, we may offer and
sell our securities under this prospectus.
Under this shelf process, we may sell the securities described in
this prospectus, including the securities carried forward from the
Prior Shelf Registration Statement, in one or more offerings up to
a total price to the public of $175,000,000. The offer and sale of
securities under this prospectus may be made from time to time, in
one or more offerings, in any manner described under the section in
this prospectus entitled “Plan of Distribution.”
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities we will
provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in
this prospectus, and may also contain information about any
material federal income tax considerations relating to the
securities covered by the prospectus supplement. You should read
both this prospectus and any prospectus supplement together with
additional information under the headings “Where You Can Find More
Information” and “Incorporation of Certain Documents by
Reference.”
This summary may not contain all of the information that may be
important to you. You should read this entire prospectus, including
the financial statements and related notes and other financial data
incorporated by reference in this prospectus, before making an
investment decision. This summary contains forward-looking
statements that involve risks and uncertainties. Our actual results
may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause or contribute
to such differences include those discussed in “Risk Factors” and
“Forward-Looking Statements.”
REDHILL
BIOPHARMA LTD.
Overview
Our legal and commercial name is RedHill Biopharma Ltd. We were
incorporated on August 3, 2009 and were registered as a private
company limited by shares under the laws of the State of Israel.
Our ordinary shares are traded on TASE under the symbol “RDHL” and
our ADSs are traded on the Nasdaq Global Market under the symbol
"RDHL". Each ADS represents 10 ordinary shares.
We are a specialty biopharmaceutical company primarily focused on
late-clinical stage development and commercialization of
proprietary drugs for gastrointestinal (“GI”) diseases.
Depending on the specific development program, our therapeutic
candidates are designed to exhibit greater efficacy and provide
improvements over existing drugs by one or more of the following:
by improving their safety profile, reducing side effects, lowering
the number of administrations, using a more convenient
administration form or providing a cost advantage.
In addition to our primary focus on the development of
clinical-stage GI products, we have established commercial presence
and capabilities in the U.S., intended primarily to support
potential future launch of our GI-related therapeutic candidates
currently under development in the U.S. Under agreements with third
parties, our GI-focused sales force in the U.S. currently promotes
Donnatal®
(Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine
Hydrobromide) and Esomeprazole Strontium Delayed-Release Capsules
49.3mg and commercialize EnteraGam®
(serum-derived bovine immunoglobulin/protein isolate (“SBI”), and
we have the exclusive U.S. rights to co-promote
Mytesi®
(crofelemer 125 mg delayed-release tablets) to certain
gastroenterologists and primary care physicians.
Our key clinical-stage development programs include: (i)
TALICIA®
(RHB-105) for the treatment of Helicobacter pylori infection
with an ongoing confirmatory Phase III study and positive results
from a first Phase III study; (ii) RHB-104 with an ongoing first
Phase III study for Crohn's disease; (iii) RHB-204, with a
planned pivotal Phase III study for nontuberculous mycobacteria
(NTM) infections; (iv) BEKINDA®
(RHB-102) with positive results from a Phase III study for acute
gastroenteritis and gastritis and positive results from a Phase II
study for IBS-D; (v) YELIVA®
(ABC294640), a first-in-class SK2 selective inhibitor, targeting
multiple oncology, inflammatory and gastrointestinal indications,
with an ongoing Phase IIa study for cholangiocarcinoma; (vi)
RHB-106, an encapsulated bowel preparation licensed to Salix
Pharmaceuticals, Ltd. and (vi) RHB-107 (formerly MESUPRON), a Phase
II-stage first-in-class, serine protease inhibitor, targeting
cancer and inflammatory gastrointestinal diseases.
We generate our pipeline of therapeutic candidates by identifying,
rigorously validating and in-licensing or acquiring products that
are consistent with our products strategy and that we believe
exhibit a relatively high probability of therapeutic and commercial
success. Our therapeutic candidates have not yet been approved for
marketing and, to date, there have been no meaningful sales. We
intend to commercialize our therapeutic candidates through
licensing and other commercialization arrangements with
pharmaceutical companies on a global and territorial basis. We may
also evaluate, on a case by case basis, co-development and similar
arrangements and the independent commercialization of our
therapeutic candidates in the U.S.
Corporate Information
Our principal executive offices are located at 21 Ha’arba’a Street,
Tel Aviv, Israel and our telephone number is +972 (3) 541-3131. Our
web site address is http://www.redhillbio.com. The information on
our web site does not constitute part of this prospectus. Our
registered agent in the United States is RedHill Biopharma Inc. The
address of RedHill Biopharma Inc. is 8045 Arco Corporate Drive,
Suite 130 Raleigh, NC 27617.
RISK FACTORS
An investment in our securities involves a high degree of risk. Our
business, financial condition or results of operations could be
adversely affected by any of these risks. You should carefully
consider the risk factors discussed under the caption "Item 3: Key
Information - Risk Factors" in our Annual Report on Form
20-F for the year ended December 31, 2017, and in any other filing
we make with the SEC subsequent to the date of this prospectus,
each of which are incorporated herein by reference, and in any
supplement to this prospectus, before making your investment
decision. The risks and uncertainties we have described are not the
only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect
our operations. Past financial performance may not be a reliable
indicator of future performance, and historical trends should not
be used to anticipate results or trends in future periods. If any
of these risks actually occurs, our business, business prospects,
financial condition or results of operations could be seriously
harmed. This could cause the trading price of our ordinary shares
(directly or in the form of ADSs) to decline, resulting in a loss
of all or part of your investment. Please also read carefully the
section below entitled “Forward-Looking Statements.”
FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by
reference into this prospectus, contains, and any prospectus
supplement may include forward-looking statements within the
meaning of Private Securities Litigation Reform Act of 1995. These
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. In some cases, you can identify
forward-looking statements by terms including “anticipates,”
“believes,” “could,” “estimates,” “expects,” “intends,” “may,”
“plans,” “potential,” “predicts,” “projects,” “should,” “will,”
“would,” and similar expressions intended to identify
forward-looking statements. Forward-looking statements reflect our
current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. You should not
put undue reliance on any forward-looking statements. Unless we are
required to do so under U.S. federal securities laws or other
applicable laws, we do not intend to update or revise any
forward-looking statements. Factors that could cause our actual
results to differ materially from those expressed or implied in
such forward-looking statements include, but are not limited
to:
|
• |
estimates of our expenses, future revenues,
capital requirements and our needs for additional
financing; |
|
• |
our
ability to obtain additional financing; |
|
• |
our
receipt of regulatory clarity and approvals for our therapeutic
candidates, and the timing of other regulatory filings and
approvals; |
|
• |
the
initiation, timing, progress and results of our research,
manufacturing, preclinical studies, clinical trials, and other
therapeutic candidate development efforts, as well as the extent
and number of additional studies that we may be required to
conduct; |
|
• |
our
ability to advance our therapeutic candidates into clinical trials
or to successfully complete our preclinical studies or clinical
trials; |
|
• |
our
ability to establish and maintain corporate
collaborations; |
|
• |
that
products we promote or commercialize may be withdrawn from the
market by regulatory authorities and our need to comply with
continuing laws, regulations and guidelines to maintain clearances
and approvals for our products; |
|
• |
our
ability to acquire products approved for marketing in the U.S. that
achieve commercial success and maintain our own marketing and
commercialization capabilities; |
|
• |
the
research, manufacturing, clinical development, commercialization,
and market acceptance of our therapeutic candidates or commercial
products; |
|
• |
the
interpretation of the properties and characteristics of our
therapeutic candidates and of the results obtained with our
therapeutic candidates in research, preclinical studies or clinical
trials; |
|
• |
the
implementation of our business model, strategic plans for our
business, therapeutic candidates and commercial
products; |
|
• |
the
impact of other companies and technologies that compete with us
within our industry; |
|
• |
our
estimates of the markets, their size, characteristics and their
potential for our therapeutic candidates and commercial products
and our ability to serve those markets; |
|
• |
the
scope of protection we are able to establish and maintain for
intellectual property rights covering our therapeutic candidates
and our ability to operate our business without infringing or
violating the intellectual property rights of others; |
|
• |
parties from whom we license or acquire our
intellectual property defaulting in their obligations towards
us; |
|
• |
our
ability to implement network systems and controls that are
effective at preventing cyber-attacks, malware intrusions,
malicious viruses and ransomware threats; and |
|
• |
the
impact of the political and security situation in Israel and in the
U.S. on our business. |
We caution you to carefully consider these risks and not to place
undue reliance on our forward-looking statements. Except as
required by law, we assume no responsibility for updating any
forward-looking statements.
CAPITALIZATION
The table below sets forth our total capitalization as of March 31,
2018. The financial data in the following table should be read in
conjunction with our financial statements and notes thereto
incorporated by reference herein.
|
|
As of March 31, 2018 |
|
|
|
Actual |
|
|
|
(in thousands) |
|
|
|
|
|
Total debt (1) (1) |
|
$ |
10,103 |
|
Ordinary
shares, par value NIS 0.01 per share |
|
|
577 |
|
Additional paid-in capital |
|
|
177,787 |
|
Warrants |
|
|
– |
|
Accumulated deficit |
|
|
(142,073 |
) |
Total shareholders’ equity |
|
|
36,291 |
|
Total capitalization |
|
$ |
46,394 |
|
|
(1) |
Represents $9,705 thousand under
current liabilities, mainly accounts payable and accrued
expenses. |
PRICE
RANGE OF OUR ORDINARY SHARES
Our ordinary shares have been trading on the TASE under the symbol
"RDHL" since February 3, 2011. Prior to that date, there was no
public market for our ordinary shares. U.S. dollar per ordinary
share amounts are calculated using the U.S. dollar representative
rate of exchange on the date to which the high or low market price
is applicable, as reported by the Bank of Israel. The following
table lists the high and low closing prices for our ordinary shares
for the periods indicated as reported by the TASE.
|
|
NIS |
|
|
$U.S. |
|
|
|
Price per Ordinary Share |
|
|
Price per Ordinary Share |
|
Annual
Data |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
2018 (through July 19, 2018) |
|
|
4.08 |
|
|
|
1.72 |
|
|
|
1.12 |
|
|
|
0.47 |
|
2017 |
|
|
4.16 |
|
|
|
1.59 |
|
|
|
1.08 |
|
|
|
0.45 |
|
2016 |
|
|
6.05 |
|
|
|
3.32 |
|
|
|
1.58 |
|
|
|
0.86 |
|
2015 |
|
|
7.80 |
|
|
|
4.34 |
|
|
|
2.03 |
|
|
|
1.12 |
|
2014 |
|
|
6.80 |
|
|
|
3.00 |
|
|
|
1.96 |
|
|
|
0.78 |
|
2013 |
|
|
4.29 |
|
|
|
3.23 |
|
|
|
1.15 |
|
|
|
0.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third
quarter (through July 19, 2018)
|
|
|
4.08 |
|
|
|
3.04 |
|
|
|
1.12 |
|
|
|
0.83 |
|
Second quarter |
|
|
2.97 |
|
|
|
1.72 |
|
|
|
0.82 |
|
|
|
0.47 |
|
First quarter |
|
|
2.27 |
|
|
|
1.76 |
|
|
|
0.66 |
|
|
|
0.50 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter |
|
|
3.80 |
|
|
|
1.59 |
|
|
|
1.07 |
|
|
|
0.45 |
|
Third quarter |
|
|
3.75 |
|
|
|
2.85 |
|
|
|
1.05 |
|
|
|
0.81 |
|
Second quarter |
|
|
3.79 |
|
|
|
3.00 |
|
|
|
1.04 |
|
|
|
0.86 |
|
First quarter |
|
|
4.16 |
|
|
|
3.38 |
|
|
|
1.08 |
|
|
|
0.92 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter |
|
|
5.51 |
|
|
|
3.73 |
|
|
|
1.45 |
|
|
|
0.98 |
|
Third quarter |
|
|
6.05 |
|
|
|
4.21 |
|
|
|
1.58 |
|
|
|
1.09 |
|
Second quarter |
|
|
5.30 |
|
|
|
3.90 |
|
|
|
1.41 |
|
|
|
1.41 |
|
First quarter |
|
|
5.14 |
|
|
|
3.32 |
|
|
|
1.31 |
|
|
|
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Most Recent Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 2018 (through July 19, 2018) |
|
|
4.08 |
|
|
|
3.04 |
|
|
|
1.12 |
|
|
|
0.83 |
|
June 2018 |
|
|
2.97 |
|
|
|
2.53 |
|
|
|
0.82 |
|
|
|
0.71 |
|
May 2018 |
|
|
2.57 |
|
|
|
1.72 |
|
|
|
0.71 |
|
|
|
0.47 |
|
April 2018 |
|
|
1.83 |
|
|
|
1.72 |
|
|
|
0.52 |
|
|
|
0.48 |
|
March 2018 |
|
|
2.11 |
|
|
|
1.77 |
|
|
|
0.60 |
|
|
|
0.50 |
|
February 2018 |
|
|
2.16 |
|
|
|
1.94 |
|
|
|
0.61 |
|
|
|
0.58 |
|
January 2018 |
|
|
2.27 |
|
|
|
1.76 |
|
|
|
0.66 |
|
|
|
0.51 |
|
On July 19, 2018, the last
reported sales price of our ordinary shares on the TASE was
NIS 3.93 per share, or
$1.08 per share (based
on the exchange rate reported by the Bank of Israel for such
date). On July 19, 2018 the exchange rate of the NIS to
the U.S. dollar was $1.00 = NIS 3.65, as reported by the Bank of
Israel.
PRICE RANGE
OF OUR ADSs
Our ADSs were traded under the symbol “RDHL” on the Nasdaq Capital
Market from December 27, 2012 through July 19, 2018, and commenced
trading on the Nasdaq Global Market on July 20, 2018.
The following table sets forth, for the periods indicated, the
reported high and low closing sale prices of our ADSs on the Nasdaq
Capital Market and the Nasdaq Global Market (commencing on July 20,
2018) in U.S. dollars.
|
|
$U.S. |
|
|
|
Price per ADS |
|
|
|
High |
|
|
Low |
|
Annual |
|
|
|
|
|
|
2018 (through July 20, 2018) |
|
|
11.35 |
|
|
|
4.82 |
|
2017 |
|
|
10.88 |
|
|
|
4.58 |
|
2016 |
|
|
16.29 |
|
|
|
8.21 |
|
2015 |
|
|
19.79 |
|
|
|
11.05 |
|
2014 |
|
|
19.20 |
|
|
|
8.03 |
|
2013 |
|
|
13.60 |
|
|
|
8.31 |
|
|
|
|
|
|
|
|
|
|
Quarter |
|
|
|
|
|
|
|
|
2018 |
|
|
|
|
|
|
|
|
Third
quarter (through July 20, 2018)
|
|
|
11.35 |
|
|
|
9.08 |
|
Second quarter |
|
|
8.53 |
|
|
|
4.82 |
|
First quarter |
|
|
6.84 |
|
|
|
4.96 |
|
2017 |
|
|
|
|
|
|
|
|
Fourth quarter |
|
|
10.81 |
|
|
|
4.58 |
|
Third quarter |
|
|
10.81 |
|
|
|
8.18 |
|
Second quarter |
|
|
10.38 |
|
|
|
8.44 |
|
First quarter |
|
|
10.88 |
|
|
|
9.30 |
|
2016 |
|
|
|
|
|
|
|
|
Fourth quarter |
|
|
14.47 |
|
|
|
9.65 |
|
Third quarter |
|
|
16.29 |
|
|
|
10.80 |
|
Second quarter |
|
|
13.79 |
|
|
|
10.00 |
|
First quarter |
|
|
12.61 |
|
|
|
8.21 |
|
Most Recent Six Months |
|
|
|
|
|
|
|
|
July 2018 (through July 20, 2018) |
|
|
11.35 |
|
|
|
9.08 |
|
June 2018 |
|
|
8.53 |
|
|
|
7.00 |
|
May 2018 |
|
|
7.24 |
|
|
|
4.89 |
|
April 2018 |
|
|
5.21 |
|
|
|
4.82 |
|
March 2018 |
|
|
6.42 |
|
|
|
4.96 |
|
February 2018 |
|
|
6.44 |
|
|
|
5.57 |
|
January 2018 |
|
|
6.84 |
|
|
|
5.13 |
|
On July 20, 2018, the
last reported sales price of our ADSs on the Nasdaq Global Market
was $9.96 per ADS.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying prospectus
supplement, the net proceeds from the sale of securities will be
used for general corporate purposes, including research and
development related purposes in connection with our therapeutic
candidates, for potential acquisitions and to support commercial
operations.
DESCRIPTION OF ORDINARY SHARES
A description of our ordinary shares, par value NIS 0.01 per share,
can be found in Item 10B of the Registration Statement on Form 20-F
filed with the SEC on December 26, 2012.
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
A description of our ADSs, each of which represents 10 of our
ordinary shares, can be found in Item 12 of the Registration
Statement on Form 20-F filed with the SEC on December 26, 2012.
DESCRIPTION
OF WARRANTS
We may issue warrants to purchase ADS and/or ordinary shares.
Warrants may be issued independently or together with any other
securities and may be attached to, or separate from, such
securities. We will evidence each series of warrants by warrant
certificates that we may issue under a separate agreement. We may
enter into a warrant agreement with a warrant agent. We may also
choose to act as our own warrant agent. We will indicate the name
and address of any such warrant agent in the applicable prospectus
supplement relating to a particular series of warrants. The terms
of any warrants to be issued and a description of the material
provisions of the applicable warrant agreement will be set forth in
the applicable prospectus supplement.
The applicable prospectus supplement will describe the following
terms of any warrants in respect of which this prospectus is being
delivered:
|
• |
the title of such warrants; |
|
• |
the aggregate number of such
warrants; |
|
• |
the price or prices at which such
warrants will be issued and exercised; |
|
• |
the currency or currencies in which
the price of such warrants will be payable; |
|
• |
the securities purchasable upon
exercise of such warrants; |
|
• |
the date on which the right to
exercise such warrants shall commence and the date on which such
right shall expire; |
|
• |
if applicable, the minimum or
maximum amount of such warrants which may be exercised at any one
time; |
|
• |
if applicable, the designation and
terms of the securities with which such warrants are issued and the
number of such warrants issued with each such security; |
|
• |
if applicable, the date on and
after which such warrants and the related securities will be
separately transferable; |
|
• |
information with respect to
book-entry procedures, if any; |
|
• |
any material Israeli and United
States federal income tax consequences; |
|
• |
the anti-dilution provisions of the
warrants, if any; and |
|
• |
any
other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such
warrants. |
Amendments and Supplements to Warrant Agreement
We and the warrant agent may amend or supplement the warrant
agreement for a series of warrants without the consent of the
holders of the warrants issued thereunder to effect changes that
are not inconsistent with the provisions of the warrants and that
do not materially and adversely affect the interests of the holders
of the warrants.
Outstanding Warrants
On December 27, 2016, in connection with an underwritten public
offering and concurrent registered direct offering of our ADSs and
warrants, we issued three-year warrants to purchase 2,025,458
(representing 20,254,580 ordinary shares) of our ADSs at an
exercise price of $13.33 per ADS.
Exercisability. The warrants were exercisable immediately
upon issuance and at any time during the following 36 months. The
warrants are exercisable, at the option of each holder, in whole or
in part by delivering to us a duly executed exercise notice
accompanied by payment in full for the number of ADSs purchased
upon such exercise, together with applicable charges and taxes.
Unless otherwise specified in the form of warrant, the holder
(together with its affiliates) do not have the right to exercise
any portion of the warrant, to the extent that after giving effect
to the issuance after exercise, the holder would beneficially own
in excess of 4.99% (which may be increased by the holder to up to
9.99%) of the number of our ordinary shares outstanding immediately
after giving effect to the exercise, as such percentage is
determined in accordance with the terms of the warrants. If at
any time after the 6th month
anniversary of the issuance date, a registration statement
registering the issuance of the ADSs underlying the warrants under
the Securities Act of 1933, as amended (the “Securities Act”), is
not then effective or available, the holder may exercise the
warrant through a cashless exercise, in whole or in part, in which
case the holder would receive upon such exercise the net number of
ADSs determined according to the formula set forth in the warrant.
No fractional ADSs are to be issued upon the exercise of the
warrants. If any fractional share of an ADS would be deliverable
upon the exercise of the warrants, we, in lieu of delivering such
fractional ADS, shall pay to the exercising holder an amount in
cash equal to the closing sale price on the principal market of
such fractional ADS on the date of exercise.
Exercise Price. The initial exercise price per ADS
purchasable upon exercise of the warrants is equal to $13.33 per
full ADS (which may be adjusted as set forth below). In addition to
the exercise price per ADS, other applicable charges and taxes are
due and payable upon exercise.
Adjustment Provisions. The exercise price and the
number of ADSs issuable upon exercise are subject to appropriate
adjustment in the event of certain stock dividends and
distributions, stock splits, stock subdivisions and combinations,
reclassifications or similar events affecting our ADSs or ordinary
shares.
Transferability. Subject to applicable laws, the
warrants may be transferred at the option of the holders upon
surrender of the warrants to the warrant agent, together with the
appropriate instruments of transfer.
Exchange Listing. There is no established public
trading market for the warrants, and we do not intend to apply to
list the warrants on any securities exchange or automated quotation
system.
Fundamental Transaction. If, at any time while the warrants
are outstanding, (1) we consolidate or merge with or into another
corporation and we are not the surviving corporation, (2) we sell,
lease, license, assign, transfer, convey or otherwise dispose of
all or substantially all of our assets, (3) any purchase offer,
tender offer or exchange offer (whether by us or another individual
or entity) is completed pursuant to which holders of our shares of
common stock are permitted to sell, tender or exchange their shares
of common stock for other securities, cash or property and has been
accepted by the holders of 50% or more of our outstanding
shares of common stock, (4) we effect any reclassification or
recapitalization of our shares of common stock or any compulsory
share exchange pursuant to which our shares of common stock are
converted into or exchanged for other securities, cash or property,
or (5) we consummate a stock or share purchase agreement or other
business combination with another person or entity whereby such
other person or entity acquires more than 50% of our outstanding
shares of common stock, each, a Fundamental Transaction, then upon
any subsequent exercise of the Warrants, the holders thereof will
have the right to receive the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of
the number of Warrant shares then issuable upon exercise of
the Warrant, and any additional consideration payable as
part of the Fundamental Transaction.
Rights as a Stockholder. Except as otherwise provided in the
Warrants or by virtue of such holder's ownership of shares of our
common stock, the holder of a Warrant does not have the rights or
privileges of a holder of our common stock, including any voting
rights, until the holder exercises the warrants.
DESCRIPTION OF SUBSCRIPTION RIGHTS
We may issue subscription rights to purchase our ordinary shares
and/or our ADSs. These subscription rights may be issued
independently or together with any other security offered hereby
and may or may not be transferable by the shareholder receiving the
subscription rights in such offering. In connection with any
offering of subscription rights, we may enter into a standby
arrangement with one or more underwriters or other purchasers
pursuant to which the underwriters or other purchasers may be
required to purchase any securities remaining unsubscribed for
after such offering.
The prospectus supplement relating to any subscription rights we
offer, if any, will, to the extent applicable, include specific
terms relating to the offering, including some or all of the
following:
|
• |
the price, if any, for the
subscription rights; |
|
• |
the exercise price payable for each
ordinary share and/or ADS upon the exercise of the subscription
rights; |
|
• |
the number of subscription rights
to be issued to each shareholder; |
|
• |
the number and terms of the
ordinary shares and/or ADSs which may be purchased per each
subscription right; |
|
• |
the extent to which the
subscription rights are transferable; |
|
• |
any other terms of the subscription
rights, including the terms, procedures and limitations relating to
the exchange and exercise of the subscription rights; |
|
• |
the date on which the right to
exercise the subscription rights shall commence, and the date on
which the subscription rights shall expire; |
|
• |
the extent to which the
subscription rights may include an over-subscription privilege with
respect to unsubscribed securities; and |
|
• |
if applicable, the material terms
of any standby underwriting or purchase arrangement which may be
entered into by us in connection with the offering of subscription
rights. |
The description in the applicable prospectus supplement of any
subscription rights we offer will not necessarily be complete and
will be qualified in its entirety by reference to the applicable
subscription right agreement, which will be filed with the SEC if
we offer subscription rights. For more information on how you can
obtain copies of the applicable subscription right agreement if we
offer subscription rights, see “Where You Can Find More
Information” beginning on page 12. We urge you to read the
applicable subscription right agreement and any applicable
prospectus supplement in their entirety.
DESCRIPTION OF
UNITS
We may issue units comprised of one or more of the other securities
that may be offered under this prospectus, in any combination. Each
unit will be issued so that the holder of the unit is also the
holder of each security included in the unit. Thus, the holder of a
unit will have the rights and obligations of a holder of each
included security. The unit agreement under which a unit is issued
may provide that the securities included in the unit may not be
held or transferred separately at any time, or at any time before a
specified date.
The prospectus supplement relating to any units we offer, if any,
will, to the extent applicable, include specific terms relating to
the offering, including some or all of the following:
|
• |
the material terms of the units and
of the securities comprising the units, including whether and under
what circumstances those securities may be held or transferred
separately; |
|
• |
any material provisions relating to
the issuance, payment, settlement, transfer or exchange of the
units or of the securities comprising the units; and |
|
• |
any material provisions of the
governing unit agreement that differ from those described
above. |
The description in the applicable prospectus supplement of any
units we offer will not necessarily be complete and will be
qualified in its entirety by reference to the applicable unit
agreement, which will be filed with the SEC if we offer units. For
more information on how you can obtain copies of the applicable
unit agreement if we offer units, see “Where You Can Find More
Information” beginning on page 12. We urge you to read the
applicable unit agreement and any applicable prospectus supplement
in their entirety.
PLAN OF
DISTRIBUTION
The securities being offered by this prospectus may be sold:
|
• |
to or through one or more
underwriters on a firm commitment or agency basis; |
|
• |
through put or call option
transactions relating to the securities; |
|
• |
in at the market offerings into an existing trading market in
accordance with Rule 415(a)(4) of the Securities Act; |
|
• |
through broker-dealers; |
|
• |
directly to purchasers, through a
specific bidding or auction process, on a negotiated basis or
otherwise; |
|
• |
through any other method permitted
pursuant to applicable law; or |
|
• |
through a combination of any such
methods of sale. |
At any time a particular offer of the securities covered by this
prospectus is made, a revised prospectus or prospectus supplement,
if required, will be distributed which will set forth the aggregate
amount of securities covered by this prospectus being offered and
the terms of the offering, including the name or names of any
underwriters, dealers, brokers or agents, any discounts,
commissions, concessions and other items constituting compensation
from us and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Such prospectus supplement, and, if
necessary, a post-effective amendment to the registration statement
of which this prospectus is a part, will be filed with the SEC to
reflect the disclosure of additional information with respect to
the distribution of the securities covered by this prospectus. In
order to comply with the securities laws of certain states, if
applicable, the securities sold under this prospectus may only be
sold through registered or licensed broker-dealers. In addition, in
some states the securities may not be sold unless they have been
registered or qualified for sale in the applicable state or an
exemption from registration or qualification requirements is
available and is complied with.
The distribution of securities may be effected from time to time in
one or more transactions, including block transactions and
transactions on the Nasdaq Global Market or any other organized
market where the securities may be traded. The securities may be
sold at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices relating to the
prevailing market prices or at negotiated prices. The consideration
may be cash or another form negotiated by the parties. Agents,
underwriters or broker-dealers may be paid compensation for
offering and selling the securities. That compensation may be in
the form of discounts, concessions or commissions to be received
from us or from the purchasers of the securities. Any dealers and
agents participating in the distribution of the securities may be
deemed to be underwriters, and compensation received by them on
resale of the securities may be deemed to be underwriting
discounts. If any such dealers or agents were deemed to be
underwriters, they may be subject to statutory liabilities under
the Securities Act.
Agents may from time to time solicit offers to purchase the
securities. If required, we will name in the applicable prospectus
supplement any agent involved in the offer or sale of the
securities and set forth any compensation payable to the agent.
Unless otherwise indicated in the prospectus supplement, any agent
will be acting on a best efforts basis for the period of its
appointment. Any agent selling the securities covered by this
prospectus may be deemed to be an underwriter, as that term is
defined in the Securities Act, of the securities.
If underwriters are used in a sale, securities will be acquired by
the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale, or under delayed delivery contracts
or other contractual commitments. Securities may be offered to the
public either through underwriting syndicates represented by one or
more managing underwriters or directly by one or more firms acting
as underwriters. If an underwriter or underwriters are used in the
sale of securities, an underwriting agreement will be executed with
the underwriter or underwriters, as well as any other underwriter
or underwriters, with respect to a particular underwritten offering
of securities, and will set forth the terms of the transactions,
including compensation of the underwriters and dealers and the
public offering price, if applicable. The prospectus and prospectus
supplement will be used by the underwriters to resell the
securities.
If a dealer is used in the sale of the securities, we or an
underwriter will sell the securities to the dealer, as principal.
The dealer may then resell the securities to the public at varying
prices to be determined by the dealer at the time of resale. To the
extent required, we will set forth in the prospectus supplement the
name of the dealer and the terms of the transactions.
We may directly solicit offers to purchase the securities and may
make sales of securities directly to institutional investors or
others. These persons may be deemed to be underwriters within the
meaning of the Securities Act with respect to any resale of the
securities. To the extent required, the prospectus supplement will
describe the terms of any such sales, including the terms of any
bidding or auction process, if used.
Agents, underwriters and dealers may be entitled under agreements
which may be entered into with us to indemnification by us against
specified liabilities, including liabilities incurred under the
Securities Act, or to contribution by us to payments they may be
required to make in respect of such liabilities. If required, the
prospectus supplement will describe the terms and conditions of the
indemnification or contribution. Some of the agents, underwriters
or dealers, or their affiliates may be customers of, engage in
transactions with or perform services for us or our
subsidiaries.
Any person participating in the distribution of securities
registered under the registration statement that includes this
prospectus will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, or the Exchange Act,
and the applicable SEC rules and regulations, including, among
others, Regulation M, which may limit the timing of purchases and
sales of any of our securities by that person. Furthermore,
Regulation M may restrict the ability of any person engaged in the
distribution of our securities to engage in market-making
activities with respect to our securities. These restrictions may
affect the marketability of our securities and the ability of any
person or entity to engage in market-making activities with respect
to our securities.
Certain persons participating in an offering may engage in
over-allotment, stabilizing transactions, short-covering
transactions, penalty bids and other transactions that stabilize,
maintain or otherwise affect the price of the offered securities.
These activities may maintain the price of the offered securities
at levels above those that might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids, each of which is
described below.
|
• |
A stabilizing bid means the placing
of any bid, or the effecting of any purchase, for the purpose of
pegging, fixing or maintaining the price of a security. |
|
• |
A syndicate covering transaction
means the placing of any bid on behalf of the underwriting
syndicate or the effecting of any purchase to reduce a short
position created in connection with the offering. |
|
• |
A
penalty bid means an arrangement that permits the managing
underwriter to reclaim a selling concession from a syndicate member
in connection with the offering when offered securities originally
sold by the syndicate member are purchased in syndicate covering
transactions. |
These transactions may be effected on an exchange or automated
quotation system, if the securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the
over-the-counter market or otherwise.
If so indicated in the applicable prospectus supplement, we will
authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase offered securities from
us at the public offering price set forth in such prospectus
supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the
prospectus supplement and the prospectus supplement will set forth
the commission payable for solicitation of such contracts.
In addition, ordinary shares or ADSs may be issued upon conversion
of or in exchange for debt securities or other securities.
Any underwriters to whom offered securities are sold for public
offering and sale may make a market in such offered securities, but
such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The
offered securities may or may not be listed on a national
securities exchange. No assurance can be given that there will be a
market for the offered securities.
Any securities that qualify for sale pursuant to Rule 144 or
Regulation S under the Securities Act, may be sold under Rule 144
or Regulation S rather than pursuant to this prospectus.
To the extent that we make sales to or through one or more
underwriters or agents in at-the-market offerings, we will do so
pursuant to the terms of a distribution agreement between us and
the underwriters or agents. If we engage in at-the-market sales
pursuant to a distribution agreement, we will sell our ordinary
shares or ADSs to or through one or more underwriters or agents,
which may act on an agency basis or on a principal basis. During
the term of any such agreement, we may sell ordinary shares or ADSs
on a daily basis in exchange transactions or otherwise as we agree
with the underwriters or agents. The distribution agreement will
provide that any ordinary shares or ADSs sold will be sold at
prices related to the then prevailing market prices for our
ordinary shares or ADSs. Therefore, exact figures regarding
proceeds that will be raised or commissions to be paid cannot be
determined at this time and will be described in a prospectus
supplement. Pursuant to the terms of the distribution agreement, we
also may agree to sell, and the relevant underwriters or agents may
agree to solicit offers to purchase, blocks of our ordinary shares,
ADSs or warrants. The terms of each such distribution agreement
will be set forth in more detail in a prospectus supplement to this
prospectus.
In connection with offerings made through underwriters or agents,
we may enter into agreements with such underwriters or agents
pursuant to which we receive our outstanding securities in
consideration for the securities being offered to the public for
cash. In connection with these arrangements, the underwriters or
agents may also sell securities covered by this prospectus to hedge
their positions in these outstanding securities, including in short
sale transactions. If so, the underwriters or agents may use the
securities received from us under these arrangements to close out
any related open borrowings of securities.
We may enter into derivative transactions with third parties or
sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus
supplement indicates, in connection with those derivatives, such
third parties (or affiliates of such third parties) may sell
securities covered by this prospectus and the applicable prospectus
supplement, including in short sale transactions. If so, such third
parties (or affiliates of such third parties) may use securities
pledged by us or borrowed from us or others to settle those sales
or to close out any related open borrowings of shares, and may use
securities received from us in settlement of those derivatives to
close out any related open borrowings of shares. The third parties
(or affiliates of such third parties) in such sale transactions
will be underwriters and, if not identified in this prospectus,
will be identified in the applicable prospectus supplement (or a
post-effective amendment).
We may loan or pledge securities to a financial institution or
other third party that in turn may sell the securities using this
prospectus. Such financial institution or third party may transfer
its short position to investors in our securities or in connection
with a simultaneous offering of other securities offered by this
prospectus or in connection with a simultaneous offering of other
securities offered by this prospectus.
LEGAL MATTERS
Certain legal matters with respect to Israeli law and with respect
to the validity of the offered securities under Israeli law will be
passed upon for us by Gross, Kleinhendler, Hodak, Halevy,
Greenberg, Shenhav & Co. Certain legal matters with respect to
U.S. federal securities law and New York law will be passed upon
for us by Haynes and Boone, LLP.
EXPERTS
The financial statements incorporated in this prospectus by
reference to the Annual Report on Form 20-F for the year ended
December 31, 2017 have been so incorporated in reliance on the
report of Kesselman & Kesselman, Certified Public Accountant
(Isr.), a member firm of PricewaterhouseCoopers International
Limited, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and
accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-3
under the Securities Act, with respect to the securities offered by
this prospectus. However, as is permitted by the rules and
regulations of the SEC, this prospectus, which is part of our
registration statement on Form F-3, omits certain non-material
information, exhibits, schedules and undertakings set forth in the
registration statement. For further information about us, and the
securities offered by this prospectus, please refer to the
registration statement.
We are subject to the reporting requirements of the Exchange Act
that are applicable to a foreign private issuer. In accordance with
the Exchange Act, we file reports, including annual reports on Form
20-F by April 30 of each year. We also furnish to the SEC under
cover of Form 6-K material information required to be made public
in Israel, filed with and made public by any stock exchange or
distributed by us to our shareholders.
The registration statement on Form F-3 of which this prospectus
forms a part, including the exhibits and schedules thereto, and
reports and other information filed by us with the SEC may be
inspected without charge and copied at prescribed rates at the
SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Copies of this material are also available by mail from the
Public Reference Section of the SEC, at 100 F. Street, N.E.,
Washington D.C. 20549, at prescribed rates. The public may obtain
information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet
site that contains reports, proxy and information statements, and
other information regarding issuers, such as us, that file
electronically with the SEC (http://www.sec.gov).
As a foreign private issuer, we are exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy
statements to shareholders and our officers, directors and
principal shareholders are exempt from the “short-swing profits”
reporting and liability provisions contained in Section 16 of the
Exchange Act and related Exchange Act rules.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
We file annual and special reports and other information with the
SEC. These filings contain important information which does not
appear in this prospectus. The SEC allows us to “incorporate by
reference” information into this prospectus, which means that we
can disclose important information to you by referring you to other
documents which we have filed or will file with the SEC. We are
incorporating by reference in this prospectus the documents listed
below and all amendments or supplements we may file to such
documents, as well as any future filings we may make with the SEC
on Form 20-F under the Exchange Act before the time that all of the
securities offered by this prospectus have been sold or
de-registered:
|
• |
the description of our ordinary
shares contained in our Registration Statement on Form 20-F filed
with the SEC on December 26, 2012; |
|
• |
our Annual Report on Form 20-F for
the fiscal year ended on December 31, 2017, filed with the SEC on
February 22, 2018; and |
|
• |
Reports on Form 6-K filed on March
19, 2018, March 20, 2018, March 26, 2018 (relating to notice and
proxy statement for annual general meeting), March 27, 2018, April
9, 2018, May 1, 2018, May 2, 2018, May 4, 2018, May 7, 2018, May 8,
2018, May 14, 2018, May 29, 2018, May 30, 2018, June 28, 2018, and
July 2, 2018. |
In addition, any reports on Form 6-K submitted to the SEC by the
registrant pursuant to the Exchange Act after the date of the
initial registration statement and prior to effectiveness of the
registration statement that we specifically identify in such forms
as being incorporated by reference into the registration statement
of which this prospectus forms a part and all subsequent annual
reports on Form 20-F filed after the effective date of this
registration statement and prior to the termination of this
offering and any reports on Form 6-K subsequently submitted to the
SEC or portions thereof that we specifically identify in such forms
as being incorporated by reference into the registration statement
of which this prospectus forms a part, shall be considered to be
incorporated into this prospectus by reference and shall be
considered a part of this prospectus from the date of filing or
submission of such documents.
Certain statements in and portions of this prospectus update and
replace information in the above listed documents incorporated by
reference. Likewise, statements in or portions of a future document
incorporated by reference in this prospectus may update and replace
statements in and portions of this prospectus or the above listed
documents.
We will provide you without charge, upon your written or oral
request, a copy of any of the documents incorporated by reference
in this prospectus, other than exhibits to such documents which are
not specifically incorporated by reference into such documents.
Please direct your written or telephone requests to RedHill
Biopharma Ltd., 21 Ha'arba'a Street, Tel Aviv 64739, Israel, Attn:
Dror Ben-Asher, telephone number +972 (3) 541-3131. You may also
obtain information about us by visiting our website at
www.redhillbio.com. Information contained in our website is
not part of this prospectus.
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the laws of the State of Israel. Service
of process upon us and upon our directors and officers and the
Israeli experts named in this prospectus, substantially all of whom
reside outside the United States, may be difficult to obtain within
the United States. Furthermore, because substantially all of our
assets and substantially all of our directors and officers are
located outside the United States, any judgment obtained in the
United States against us or any of our directors and officers may
not be collectible within the United States.
It may be difficult to assert U.S. securities law claims in
original actions instituted in Israel. Israeli courts may refuse to
hear a claim based on a violation of U.S. securities laws
because Israel is not the most appropriate forum to bring such a
claim. In addition, even if an Israeli court agrees to hear a
claim, it may determine that Israeli law and not U.S. law is
applicable to the claim. If U.S. law is found to be
applicable, the content of applicable U.S. law must be proved
as a fact which can be a time-consuming and costly process. Certain
matters of procedure will also be governed by Israeli law.
Subject to specified time limitations and legal procedures, Israeli
courts may enforce a United States judgment in a civil matter
which, subject to certain exceptions, is non-appealable, including
judgments based upon the civil liability provisions of the
Securities Act and the Exchange Act and including a monetary or
compensatory judgment in a non-civil matter, provided that:
|
• |
the judgments are obtained after
due process before a court of competent jurisdiction, according to
the laws of the state in which the judgment is given and the rules
of private international law currently prevailing in Israel; |
|
• |
the prevailing law of the foreign
state in which the judgments were rendered allows the enforcement
of judgments of Israeli courts (however, the Israeli courts may
waive this requirement following a request by the attorney
general); |
|
• |
adequate service of process has
been effected and the defendant has had a reasonable opportunity to
be heard and to present his or her evidence; |
|
• |
the judgments are not contrary to
public policy, and the enforcement of the civil liabilities set
forth in the judgment does not impair the security or sovereignty
of the State of Israel; |
|
• |
the judgments were not obtained by
fraud and do not conflict with any other valid judgment in the same
matter between the same parties; |
|
• |
an action between the same parties
in the same matter is not pending in any Israeli court at the time
the lawsuit is instituted in the foreign court; and |
|
• |
the obligations under the judgment
are enforceable according to the laws of the State of Israel and
according to the law of the foreign state in which the relief was
granted. |
We have irrevocably appointed RedHill Biopharma Inc. as our agent
to receive service of process in any action against us in any
United States federal or state court arising out of this offering
or any purchase or sale of securities in connection with this
offering.
If a foreign judgment is enforced by an Israeli court, it generally
will be payable in Israeli currency, which can then be converted
into non-Israeli currency and transferred out of Israel. The usual
practice in an action before an Israeli court to recover an amount
in a non-Israeli currency is for the Israeli court to issue a
judgment for the equivalent amount in Israeli currency at the rate
of exchange in force on the date of the judgment, but the judgment
debtor may make payment in foreign currency. Pending collection,
the amount of the judgment of an Israeli court stated in Israeli
currency ordinarily will be linked to the Israeli consumer price
index plus interest at the annual statutory rate set by Israeli
regulations prevailing at the time. Judgment creditors must bear
the risk of unfavorable exchange rates.
OFFERING
EXPENSES
The following is a statement of expenses in connection with the
distribution of the securities registered. All amounts shown are
estimates except the SEC registration fee. The estimates do not
include expenses related to offerings of particular securities.
Each prospectus supplement describing an offering of securities
will reflect the estimated expenses related to the offering of
securities under that prospectus supplement.
SEC registration fees |
|
$
|
14,557.50
|
|
FINRA
fees |
|
|
18,039.15
|
|
Legal fees and expenses |
|
|
10,000.00 |
|
Accountants fees and expenses |
|
|
5,000.00 |
|
Miscellaneous |
|
|
5,000.00 |
|
|
|
|
|
|
Total |
|
$
|
52,596.65
|
|
H.C. Wainwright & Co.