Good day and welcome to the RedHill Biopharma's Full Year 2019 Financial Results Conference Call. At this time, I would like to introduce to the conference call RedHill's CEO, Mr. Dror Ben-Asher; Micha Ben-Chorin, RedHill's CFO; Mr. Rick Scruggs, RedHill's, Chief Commercial Officer; Mr. Gilead Raday, RedHill's Chief Operating Officer; and Mr.

Guy Goldberg, RedHill's Chief Business Officer. Before we begin, we will read from RedHill's Safe Harbor statement. Please go ahead..

This conference call may contain projections or other forward-looking statements regarding future events or the future performance of RedHill including statements with respect to RedHill's expectations, regarding the timing of the commercial launch of Talicia, the closing of the acquisition of rights to Movantik, and the funding of the non-dilutive financing agreement with Healthcare Royalty Partners.

The business promotion and other efforts related to RedHill's commercialization activities and the initiation timing progress and results of RedHill's research manufacturing, preclinical studies, clinical trials, marketing application, and approvals if any.

These statements are only predictions and RedHill cannot guarantee that they will in fact occur. RedHill does not assume any obligation to update that information. Actual events, performance, timing results, or commercialization activities may differ materially from what RedHill projects today.

Additional information concerning factors that could cause actual events, performance, timing results, or commercialization activities to materially differ from those contained in the forward-looking statements can be found in the company's annual report on Form 20-F filed with the SEC on March 4th, 2020 and in its other filings with Securities and Exchange Commission..

Thank you, Maran [ph]. Good day everyone and thank you for joining us. This is a transformational time for RedHill and our team is both highly energized and thrilled with things to come. During today's call, we plan to primarily focus on our solid commercial readiness for the planned launch of Talicia for H.

pylori infection in the next week or two, the recently announced acquisition of Movantik for opioid-induced constipation in adults from AstraZeneca, which remains subject to closing, as well as the continued launch activities for Aemcolo for travelers' diarrhea in adults. Movantik generated U.S. net sales of $96 million in 2019.

And following three years of diligent commercial operation buildup, preparing for this day with highly experienced and motivated commercial team in place, over 90 sales reps in the field, and going to 150 with three well-protected and much needed FDA-approved GI drugs in the bag, we are uniquely positioned for rapid revenue growth on our way to become a leading GI player in the United States in the coming years.

Let me now turn the call over to Micha, our CFO, for a discussion of our financial results..

Thank you, Dror. Good morning and good afternoon everyone. I will provide a short overview of our financial results for 2019. 2019 in recent months have been transformative for RedHill.

The major financial milestones were $36.3 million strategic investment by Cosmo Pharmaceuticals; a non-dilutive royalty-backed term loan facility of up to $115 million from Healthcare Royalty Partners; acquisition of Movantik from AstraZeneca which generated U.S.

net sales of $96 million in 2019 and which we expect will contribute significantly to our bottom line in the coming years. Our expected cash balance of approximately $60 million following that we will position us well for the launch and continued commercialization our three promising drugs; Talicia, Movantik, and Aemcolo.

We anticipate reaching breakeven of our commercial operations in the next year 2021. We generated net revenues of $6.3 million in 2019 compared with $8.4 million in 2018 from the products that we have been phased out to focus our commercial efforts on Talicia Movantik and Aemcolo. Cost of revenues and gross margins remain stable from 2018.

We recorded research and development expenses of $17.4 million in 2019 compared to $24.9 million in 2018. The decrease was mainly due to the completion of the Phase 3 study with Talicia and the finalization of Phase 3 studies with RHB-104.

Selling and marketing and business development expenses were $18.3 million in 2019 compared to $12.5 million in 2018. The increase was mainly due to the expansion of our commercial operations to support the preparations for the launch of Talicia and Aemcolo.

General and administrative expenses were $11.5 million in 2019 compared to $7.5 million in 2018. The increase is attributable primarily to an increase in professional services related to the launch preparation of Talicia and Aemcolo. Operating loss was $43.2 million in 2019 compared to $39.3 million in 2018.

The increase was mainly due to the increase in commercial operating expenses. Net cash used in operating expenses activities was $40.7 million in 2019 compared to $34.5 million in 2018. The increase in net cash used in operating activities was a direct result of the increase in operating loss as described -- as just described.

We reported net cash provided by financing activities for 2019 of $35.5 million compared to $41.8 million in 2018 resulting from a private placement transaction in 2019 compared to two underwritten public offerings in 2018. Capitalization. Cash balance of December 31st, 2019 was $47.9 million compared to $53.2 million as of December 31st, 2018.

In July 2019, we filed prospect to supplement for the issuance and sale of ADSs in an ATM offering. As of today, no ADSs have been offered, issued, or sold under the ATM. We have maintained cost discipline with a cash burn of approximately $40 million during the year 2019.

Importantly, we expect to continue and maintain cost discipline towards the Talicia launch that will happen this month. Thanks to the carefully planned and gradual buildup of our U.S.

commercial capabilities over the last three years, we believe our launch capabilities will be more effective and that overall we will be able to spend less than our relevant industry peers. We plan to potentially breakeven from commercial operation operational perspective in the next year 2021.

I'll now turn the discussion back to Dror and we'll be happy to take questions later on. Thank you..

Thank you, Micha. In order to leave as much time as possible for Q&A later on, I will highlight only a few of several key events and items. In November 2019, the FDA-approved Talicia for the treatment of H. pylori infection in adults. It is estimated that there are approximately 100 million Americans carrying H.

pylori, an infection to which approximately 90% of gastric cancer cases are estimated to be linked. Our marketing and sales teams have been busy conducting an intensive H. pylori disease awareness campaign since the fourth quarter of last year.

Including approximately 2,500 disease awareness calls each week by our sales force, ahead of the planned launch of Talicia in the next week or two. In October, last year, we entered a strategic partnership with Cosmo Pharmaceuticals, which included an exclusive license for the U.S.

rights to Aemcolo indicators for travelers' diarrhea caused by non-invasive strains of E. coli in adults, and simultaneous private investment by Cosmo in RedHill of $36.3 million.

With 70 million to 90 million Americans estimated to be traveling abroad each year, we believe the potential market for Aemcolo is meaningful and we have been in an active and gradual launch mode of Aemcolo since December of last year.

In February 2020, last month, we announced acquisition from AstraZeneca of the global rights to Movantik, excluding Europe, Canada and Israel. Movantik is a leading PAMORA class drug indicated for the treatment of opioid-induced constipation, OIC in adults.

The acquisition is expected to close later this month subject to certain customary closing conditions and regulatory clearances. Movantik generated U.S. net sales of $96 million last year and AstraZeneca will continue to manufacture and supply Movantik to RedHill during a transition period.

Thanks to AstraZeneca's excellent walk since launch of Movantik. Movantik is a leader in the OIC space. Market access is very good and we intend to grow the product over time. I would like to take the opportunity to thank AstraZeneca for entrusting us with this important product.

Also last month, we entered into a non-dilutive royalty-backed term loan agreement with HealthCare Royalty Partners one of the leading health care funder in the United States. HCR committed up to $115 million to support RedHill U.S. commercial operations.

We continue to operate with strict financial discipline running a thin and cost-effective organization. Together with the $36 million equity investment by Cosmo late last year, the HCR funding positions us well to continue to execute on our growth plans. Turning to research and development.

As most of you know, our pipeline is both robust and advanced with several promising Phase 3 programs ongoing and excellent track record of success. I will briefly mention only one of our late-stage programs RHB-204 for NTM infections.

We continue to see positive data from the ongoing supportive non-clinical program of RHB-204 for pulmonary nontuberculous mycobacteria NTM.

Accordingly, we are on track subject to further input from FDA to initiate in mid-year mid-2020 a single pivotal Phase 3 study evaluating RHB-204 is a first-line, stand-alone treatment for pulmonary NTM infections caused by Mycobacterium avium complex, MAC.

There are no FDA-approved drive for first-line NTM, the medical need is strong and the commercial prospects for RHB-204 if approved are significant. RHB-204 have QIDP fast track status from FDA and is potentially eligible for up to 12 years of market exclusivity. Since pulmonary NTM is likely to qualify as an orphan disease.

To sum up, our commercial readiness is strong. We have been diligently building our commercial operation for three years now well in advance of the launch of Talicia, Aemcolo and Movantik.

We have a highly experienced and motivated commercial team in place led by Rick Scruggs formerly of Salix, our Chief Commercial Officer who is on the call with us today. With over 90 sales reps in the field and going to 150 and with three well-protected and much needed FDA-approved GI drugs in the bag addressing significant markets.

We are confident and uniquely positioned for rapid revenue growth on our way to become a GI leader in the United States in the coming years. We would now take any questions you may have..

Thank you. [Operator Instructions] Your first question comes from the line of Christopher Marai of Nomura Instinet. Please ask your question..

Hi. Good morning. Good afternoon. Thank you for taking my question. And congratulations on the progress. Dror, first, maybe we can talk about Movantik and the type of physicians that you will be detailing that drug to and the potential overlap with that approach with both, I guess, Talicia and your drug for travelers' diarrhea? Thank you..

Thank you. This is Guy Goldberg, Chief Business Officer. The overlap is actually one of the very exciting aspects of this acquisition. We did an overlap analysis on the call points for Movantik in our existing plans. And there's a excellent overlap both in GI and also in primary care.

And also because we're going to be having a larger footprint, we anticipate that we'll really be able to get pretty much all the targets that Movantik is focused on right now both in GI and in primary care and beyond that. So we're very excited about the overlap.

And what that means both for to Talicia, also for Movantik, and also for Aemcolo, we believe there is -- these are roughly the same doctors and can be reached with same call detail. Let me turn it over to Rick, if he has any more color to add to that..

So, yes, thanks Guy. So this is Rick Scruggs. Hey, we did do the overlap as Guy had stated. There are paying specialists that were called on with Movantik we will capture those. We had MAT 2140 for the sales force.

We're increasing that group to 150 to capture more primary care physicians, nurse practitioners, physician assistants, gastroenterologists, which we were a complete match for with AstraZeneca and then the pain specialists. So we've actually increased our reach.

And so we're going to be able to reach all the Movantik prescribers along with our Talicia prescribers, and of course the Aemcolo guys..

Okay. Great. Thank you. And then another follow-up for me just on manufacturing of Movantik. When do you take that over under the agreement? Or have you already? And how do you expect that to hit cost of goods? And then I have a follow-up. Thank you..

Sure. We'll make just a general comment that the product is not ours yet. It still has to go through regulatory review and there's some other closing conditions.

So things talked about manufacturing costs and such we won't talk about that now, but I will turn it over to Rick to talk about how we plan to approach manufacturing on the general level in terms of the transition of responsibilities over to RedHill..

So, yes. So we did enter into a supply agreement with AstraZeneca, they will capture us for a couple of years. And we do have an ability to extend that and we will be doing a complete technical transfer to new manufacturers, which we've done before in our past careers and AstraZeneca has done it successfully in their careers of course.

And so we anticipate having our own suppliers within the next couple of years..

Excellent. Great. And then maybe one last one. Just in terms of sort of breakeven on your GI franchise. Obviously, you've taken on some revenue generating assets, which is great but you are building out a launch. How does RedHill look at sort of the time line and potential cash needs to breakeven on your core commercial GI franchise? Thank you..

Thank you, Chris. We are well positioned to ramp-up our commercial growth plan. As planned, we aim at operational breakeven all goes well sometimes next year. And we will see how the products are doing. We have high expectations of our products, they're very good products. We are putting our sales force a relatively large one too all as we speak.

We'll see how it ramps up..

Great. Thank you..

Thank you. Your next question comes from the line of Scott Henry of Roth Capital. Please ask your question..

Thank you, and good morning. A couple of questions.

First Dror, I don't know if you mentioned it but were there any Aemcolo revenues in Q4 any stocking revenues or demand revenues?.

Yes. Thanks for the question. This is Guy. So we've given general numbers. We haven't broken it down by product. Aemcolo was a small part of that. We launched towards the end of December. So that's about as much as we're seeing it right now..

Okay. Fair enough.

And then Dror, I don't know what you could say kind of subjectively and directionally, but I did want to ask you how we should think about the trajectory of the Talicia launch in 2020? When you would expect reimbursement to come in? And should we expect much in Q2? Obviously, Q1 is only half a month, but when -- how should we think about that ramp throughout the year?.

Let me turn it over to Rick to talk about our general ramp up. Thank you. And just -- again, we haven't given any guidance yet on its forecast or anything like that but we can qualitatively describe how we view the ramp up in the coming months for your question. So let me turn it over to Rick..

So, yes, we -- like Guy said, we didn't give me guidance on the trajectory of the product. We can elaborate on the fact that, we've had over 600 payer interactions beginning before approval and post approval.

We are in active discussions right now that would result in over 200 million lives being covered and we expect those results to come forward here in the coming weeks. We've been out there doing disease state management with physicians post-approval.

So we've got a good footprint or a good basis to go back in there as soon as we launch product into the channel here in the coming weeks to start that getting the physicians to prescribe. They're ready. They have a list of patients that they're looking forward to put the product to use for and so we anticipate a good trajectory as we launch forward..

Okay. And I then guess just the final question. As I look at spending levels for 2020. In Q4, it seems like R&D was a little lower relative to Q3 and G&A was a little higher relative to Q3.

Should I expect those trends to continue? Or was that an aberration in Q4?.

Thanks for the question. I'll turn it over to Micha Ben-Chorin to answer..

Thank you for the question. So R&D was lower, because we concluded the Phase 3 study with Talicia and the Phase 3 studies with RHB-104 for Crohn's disease and G&A is up due to the preparation for the launch of both Aemcolo and Talicia in our commercial operations..

Okay.

So it sounds like those trends should continue based on that comment is that fair?.

Yes, it's fair enough. The big studies and the big spenders for us where the Crohn's and H. pylori the Phase 3 studies and because the results are there and we completed the studies R&D should continue at a lower level indeed..

Okay great. Thank you for taking the question and congratulations on all of the progress in the past months..

Thank you. Your next question comes from the line of Matt Kaplan of Ladenburg. Please ask your question..

Hi. Good morning, guys. Thanks for taking the questions. Just wanted to focus a little bit on Talicia, I guess, a question more for Rick.

Initially, what -- early on in the launch what do you think the coverage and demand will be like I guess maybe from your comment earlier has there been some I guess let's call it warehousing of patients by physicians anticipating the launch of Talicia for the treatment of their patients with H.

pylori infection?.

Yes. Thank you. So we have had physicians and we've had numerous patients call in seeking the product and we hope to make this available here in the coming weeks. We have had physicians tell us that they have a list of patients that they're waiting to prescribe the product for.

So, as soon as, we have the product available at pharmacy, we're going to go right to those physicians and tell them the product is available. And we have a team of people assigned to do that job. The other thing, I said earlier is that, we have been active in the payer side very active over 600 encounters.

We have active ongoing discussions at various stages. We don't anticipate any new-to-market blocks. We do anticipate there'll be some prior authorizations. We do have -- we do anticipate that some of the things we're doing right now will result in over 200 million lives being covered pretty fast pretty quickly.

And we do have co-pay assistance hub services available, cover my meds available, so we do have things to help patients that may have trouble in the initial stages of getting the product, but we don't foresee that.

We anticipate foresee good coverage from a managed care, because there's a need for the product and this is the best therapy for those patients. So we fully anticipate, we'll have good coverage and we fully anticipate physicians will begin running the product as soon as we like them now it's available..

Okay. That's helpful. Thank you. And then just with Movantik.

Can you talk a little bit about the structure of the Movantik marketing and the call effort? And how you're going to break it down with Daiichi and their calling effort and to coordinate the sales effort there?.

Go ahead Rick..

So as you know Movantik is marketed by Daiichi AstraZeneca. We're stepping into those shoes. That agreement with Daiichi as far as the marketing plan was established earlier. So we will step into that shoes execute that plan. As we stated, we remapped our territories to include all of the correct places to target.

For example, we didn't of course we wouldn't target pain specialists. We will capture those now. We've actually increased our call for primary care and for their expectations and physician assistance. So we didn't need to increase the good number of gastroenterologists, but we will call them more gastroenterologists than AstraZeneca did.

And was there another part to your question, I think we've got this -- go ahead sorry..

Yes. I guess in terms of will there be a breakdown for example Daiichi will call on more GPs and you'll call on more GIs.

And how do you break down the call effort?.

So if you remember early on last year, there was Daiichi dissemble their group they called on pain specialists they left this area or they left this area of opioid-induced constipation. So they actually don't have any salespeople calling on these folks will just be RedHill..

Okay. Thank you. That's helpful. And I guess Dror in your prepared remarks you said that you think you can grow Movantik sales over time.

Why do you believe that? And maybe I guess a correlator to that can you talk a little bit about the competitive landscape in PAMORA and how? And maybe that's why you think you can grow Movantik?.

Yes, the competitive landscape is something that we'd rather not get in to at this point the product is not ours yet. But I will say that, yes we do expect to grow the product over the years. Once it's ours for many reasons, but I'll mention a couple. The first is that the OIC market continues to grow despite the reduction in opioid scripts.

Secondly, specific to RedHill, we are going to promote a product with a far higher number of reps than AstraZeneca did. Therefore, we expect to cover more call points and also potentially more diverse call points.

AstraZeneca has done a phenomenal job with this product over the years in all respects on all fronts with managed care and branding and so on. And we are stepping into the shoes all goes well and should be able to grow the product over the coming years..

I would just add one point is that we believe this is a promotionally sensitive product. So the efforts that Dror mentioned really should translate into the growth that he was discussing..

Okay. Thank you. And if I may just a question on your pipeline.

I guess RHB-204, will you need to run two Phase 3 studies to file an NDA for polar NTM?.

Thank you for the question. I'll let Gilead in..

Thank you, Matt. Our anticipation is that based on discussions with FDA, a single pivotal Phase 3 study that we plan to initiate in the middle of this year should suffice to submit new drug application under accelerated approval Subpart H and to continue the study following that in parallel to the review for a full application later on.

So that is our current plan..

Okay, great.

And then last question in terms of Bekinda, what's your current thinking in terms of the Phase 3 study design for gastroenteritis gastritis?.

As we have the Phase 3 design we are in good shape there. I'm glad you asked that Matt, because our plan is to fund those studies externally from outside partners, be it financial and/or pharma partners. And that goes to Bekinda for gastroenteritis and also Crohn's RHB-104, which you did not ask about..

Thank you..

Thank you. And your next question comes from the line of Ed Woo of Ascendiant Capital. Please ask your question..

Yes. Thank you for taking my question.

My question is more on your products that you have right now, do you see yourself expanding to get any more additional products?.

Thanks, Ed. Great question. What we have built over the years that RedHill, capitalizes on our core competence which is our ability to detect, such opportunities approach them, strike attractive deals, treat the partners fairly, share the upside and the success with our partners for new product, we have done this over the years.

We have shown this yet again only a week ago, when we announced the acquisition of Movantik from AstraZeneca. And the big pharma in trusting small cap pharma with a product like Movantik is far from being obvious. So to answer your question, our platform is alive and well and accelerating. We continue to explore and review opportunities.

There's many companies out there that are offering us products in our space. There's very few players that are focused on GI. We are actually one of the largest ones that are dedicated to GI and will be bigger over time.

Therefore, we'll be able to continue to pick and choose the best of the best products, the most promising and commercially attractive products out there. We will be careful not to put too much in the back too fast. But we will continue and we do continue to look at additional opportunities.

I'll actually refer to Rick, because it's important to hear his thoughts..

So yes, so I'll just add some couple of thoughts at my most recent career was at Selex, where we had the same model, developing products and in-licensing products. And so that's what we did in purchasing companies. And so here at RedHill we have that same mindset is that we have a great pipeline of near-term assets.

And we have been very active in acquiring assets. As you can see most recently in October of Aemcolo and then three short months later here we have Movantik.

So I believe that the future is bright for us, for acquisitions and for in-licensing opportunities, because as Dror stated, there's not a lot of premier type companies operating in the gastric space. And I believe that's people -- well people continue to seek us out. So I think the future is bright for in-licensing opportunities..

Great. And then a follow-up question is, you guys are about at 90 salespeople getting to about 150.

How quickly do you think you'll be able to get there? And how quickly do you think they'll become seasoned?.

Go ahead..

Yes. So I can add to that. So right now we're approaching 95 salespeople. And most of our salespeople are tenured, have sales experience, selling similar products or working in the gastroenterologist space. And we are looking within the next 60 to 90 days to finish out the full complement of people because we have to train Movantik in our group.

We'll have to train some folks around Aemcolo and Talicia to bring them in. But we anticipate to have the full complement in the next 60 to 90 days of people out there..

Great. Well thank you for answering my questions and good luck..

Thank you..

[Operator Instructions] Your next question comes from the line of Swayampakula Ramakanth. Please ask your question..

This is RK from H.C. Wainwright. Good afternoon, gentlemen. So Dror, I know you've been waiting for this -- for the launch of Talicia and you've been working towards it for almost two years, setting up a commercial operation in the U.S..

So overall what is the strategy behind our getting initially you had a couple of drugs and then now you've gone into Aemcolo and Movantik and how do you see these drugs really helping you in making a very successful launch out of Talicia?.

Thanks for the question. Let me break that down into two parts. You first mentioned the initial drugs and then you mentioned the new drugs. So the initial drugs this was part of a very clear strategy that we had many years ago that as we saw to this is advancing, we saw the great data that we were generating.

We realized that we didn't want this to be our first launch as a product. We wanted to come into Talicia experience not just with people individually who are experienced with launches, but also as a company experience and launches. There's a certain culture and a certain way of doing things that -- it's not just enough to have experienced people.

You also need to have them working together under your roof and have done it before. So that was the rationale for bringing in those old products. It was a strategic decision to bring in smaller products. We brought them in without any upfront and we were able to launch them and essentially build this well-oiled machine.

So now when we're focused on the launch, our -- focusing on are the products. We're not worried about the million other things that you have to worry about when you're building a commercial infrastructure from scratch. So that was a little bit of the rationale on the initial drugs.

And I would mention also that, it's not just the experience that we have that we're very proud of. We're also very proud of the team Rick and the team that he's brought a lot of people from Salix they've been doing the role that they've been doing for many, many years many successful launches in GI. These are people who have hit the ground running.

And really when you hear Rick and you hear other members of the team have really creates an enormous amount of confidence and what we're doing in our ability to succeed.

So we're very excited that the team we've had has worked together has worked together at RedHill has been working space for many years and it really has built up is ready, ready to go infrastructure as you can. And then as far as the -- you asked the question about the new drugs Aemcolo and Movantik. So the rationale there is very simple.

We've built up a world-class commercial infrastructure and it's not just the sales team, it's the home office functions from medical affairs to manage markets to trade supply etcetera, etcetera. We built in all these core functions in-house. We have this great GI machine ready to go.

So to leverage that and bring in additional products that are complementary makes a lot of sense. We're able to take an existing sales force an increase -- an existing infrastructure and leverage that to be able to increase value for the company. And as we mentioned in the beginning the products are really a great fit for each other.

And I think the best proof of that was when we actually did an overlay of the call points for example that AstraZeneca had with Movantik versus what we were planning with their own products based on our territory mapping for and Aemcolo and Talicia and we saw just a phenomenal overlap.

And what that means -- what that overlap means is that our reps can be going to the same doctor's office and talking about multiple products and it really is economies of scale here that we'll be benefiting from. So that's the answer to your question and I hope I've answered it. Thank you..

Great. On Movantik. Dror, you said that sales of Movantik was $96 million in 2019. It looks like it's been on the decline going down from $122 million in 2017.

So what has AstraZeneca been kind of having commercial concerns issues that you feel you can kind of turn the tide on that? And while -- as Dror stated and we know that the opioid scripts are on the decline what are the things that you could be doing to turn the tide on that revenue line?.

Thank you, RK. I'll remind you that the product is not yet ours. We are very limited in what we can say and elaborate on. AstraZeneca has done a phenomenal job in all respects. All included on all fronts with this product we cannot elaborate more about the numbers than we did previously.

But I'll repeat the two key items that I mentioned earlier which are that we will be promoting the product with many more reps than it's currently being promoted with. And secondly, we are looking at product that is well positioned in terms of market access, branding and so on in a market that is actually growing.

Therefore, we expect to be able to grow it over the years..

Thank you. Thank you for taking the questions..

Thank you. Your next question is a follow-up question from Christopher Marai of Nomura. Please ask your question..

Yes. Hi, thanks for taking the follow-up. Just thinking about your recent plans with respect to becoming a fully integrated GI-focused company. I was wondering how you see the opportunity to further advance 204 in NTM? And if you would look to out-license out or divest that asset wholly at some point in time? Thank you..

Thanks, Chris. Yes, indeed RHB-204 is not a GI drug. There are many similarities with RHB-104. We are aiming at a micro bacteria. We are aiming to add it with three active anti-microbacterial, I mentioned early acting -- active the same as RHB-104 for Crohn's although different formulations different everything. There are two possibilities with RHB-204.

It's a very lucrative product if approved. We could either out-license it divest it provided the right partner and the right terms and the right everything or we could keep it. This is not a big specialty to expand to in a couple of years. Rick team has done it many times before.

Including at Salix, they have been calling on hospitals, they've been calling on others not only GI. And here there is a relatively small community of key opinion leaders relatively few clinics in the United States that specialize in this indication and we could -- we believe without too much effort cover those as well.

We don't know which direction it will go. We'll remain opportunistic and we'll do the best to create value for our shareholders..

Okay. Thank you. And then just with respect to the differences between 104 and 204, could you maybe remind us a little bit? And would you expect there to be any potential for patients to take 104 instead of sort of 204 assuming both are approved but with different labels? Thank you..

Thanks. I'll turn it over to Gilead to answer that question..

Thank you. Certainly as Dror mentioned, the formulation and dosage of the NTM product is different, it's the same actors, but it's a different formulation in doses in such a way that cannot cross-used between the different programs..

Okay. Thank you very much. Congrats on the progress..

Thank you. And your final question comes from the line of Steve Brozak of WBB. Please ask your question..

Well I assume you've saved the best questions for last. So I'll just ask one. Good morning, gentlemen. On Talicia, any kind of forecasting is usually a problematic and never really succeeds. But I do have one question in terms of the clinicians that you've gone out there and spoken with over the years.

What alternatives could they use? And especially, since they're focusing on a lot of their refractory patients, problematic patients, by comparison to Talicia.

And could you give us as much detail as you like on the advantages that Talicia has over what they've been using in the past? And, obviously, that's the reason that you've gone through the steps of getting Talicia approved and now just about to launch it. And that's it. Thank you..

Thanks for the question. So our goal is that, this will be the new gold standard, the new first-line treatment for H. pylori infection. So there is -- the way that physicians typically treat this right now is with clarithromycin-based therapy. However, this therapy is pretty much outdated. The guidelines recommend away from it.

And the reason is the widespread exposure of the vast majority of the population to macrolides previously, which when people already infected with this and being supposed to, macrolides increases the chance of this bacteria become resistant. So the guidelines are guiding away from it.

And there really is nothing there to replace it along the lines of what we've done. We've developed a drug that has 90% efficacy based on drug presence in the blood, the PK population. And that we think is -- makes it really the best drug available out there to treat H. pylori. So it overcomes the resistance issue.

It's the best data that we think is available now for treatment for H. pylori, the side effect profile is clean, it's an elegant solution and that it's an all-in-one pill, so you don't have to deal with any potential compliance issues that patients be getting confused of how to take the pill, how many times a day and at what dose.

So we really think that when you put our drug side-by-side next to every other available treatment on the market, it's no contest. And indeed, we've done an extensive amount of market research. We've done panels. We've done one-on-one research. We've done KOL advisory committees. We've done surveys.

At our investigator meetings we talk to the doctors, we talk to them all the time and really the message we hear is loud and clear, there is a clear demand for a new drug and the profile of what we're offering them really is the solution to what they're looking for.

So we're very excited about how this drug will be received in the physician community. And as we discussed before we're already getting -- the products isn't even on the shelf and we're already getting physicians and others approaching this directly, trying to get access to it. So we're very excited about the potential here.

And we really think this will be the gold standard first-line therapy of the future in H. pylori treatment..

Well great. Thanks for taking the question and, obviously, great luck on the launch..

Thank you..

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