Good day, and welcome to the RedHill Biopharma's First Quarter 2020 Financial Results Conference Call. At this time, I would like to introduce the conference call RedHill's CEO, Mr. Dror Ben-Asher; Mr. Micha Ben-Chorin, RedHill's Chief Financial Officer; Mr. Rick Scruggs, RedHill's Chief Commercial Officer; and Mr.

Gilead Raday, RedHill's Chief Operating 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 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 applications and approvals, if any, including RedHill's activities regarding its therapeutic candidates opaganib and RHB-107 as a potential treatment for COVID-19.

These statements are only predictions, and RedHill cannot guarantee that they will in fact occur. RedHill does not assume any obligation to update our 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 4, 2020, and in its other filings with the Securities and Exchange Commission.

Dror?.

Thank you. [Technical Difficulty] joining us during such challenging times for you and your families. This is a transformational period for RedHill. Our clear focus is on achieving rapid sustainable and profitable revenue growth.

Accordingly, by early this year, we discontinued all legacy co-promotion and commercialization arrangements to enable a greater focus on our lead commercial products, Talicia, Aemcolo and most recently, Movantik, which we acquired from AstraZeneca.

We're excited about the prospects for Movantik, which generated $7.3 million in April alone, its first month at RedHill. In parallel, we continue to make progress on the R&D front, including rapid parallel development of our clinical-stage, novel, orally administered molecules, opaganib and RHB-107 for COVID-19.

RedHill is strong in the science-based race for the development of much-needed, potential COVID-19 treatments, including ongoing initiation of a clinical study in the United States with opaganib and our parallel plans and preparations for Phase II and III COVID-19 studies.

With proven core organic growth competencies, shown with the successful development and FDA approval of Movantik as well as proven nonorganic rollout capabilities demonstrated with acquisition of rights to Aemcolo and Movantik, RedHill is well positioned for rapid revenue growth on its way to become a leading U.S. specialty pharma player.

But first, let me turn the call over to our CFO, Micha, for the 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 the first quarter of 2020. First quarter of 2020 and recent months have been transformative for RedHill. Our key financial milestones include the following.

We have successfully implemented our strategic decision to focus on the commercialization of our current 3 core products, Talicia, Movantik and Aemcolo. We have completed the acquisition of Movantik from AstraZeneca as of April 1, 2020, and initiated U.S. promotion on the same day. We launched Talicia in the U.S.

in March 2020 and successfully added it to 2 key national formularies, Express Scripts and Prime Therapeutics as a preferred brand. Our net revenues of approximately $8.4 million in the first 4 months of 2020, excluding Talicia sales into the channel, represents an increase of 3.6x compared with $2.3 million in the comparable period of 2019.

The increase is primarily attributable to the additional -- to the addition of Movantik. We have secured up to $115 million nondilutive, royalty-backed term loan facility with HealthCare Royalty Partners.

Our cash position was approximately $115 million at the end of the first quarter and approximately $62.5 million immediately following the Movantik acquisition from AstraZeneca as of April 1. While net cash used in operating activities were $10.6 million in the first quarter.

We generated revenues in the first quarter of 2020 of $1.1 million compared to $1.6 million in the fourth quarter of 2019.

The decrease was primarily attributable to the company's strategic decision to discontinue its partnership agreements for the legacy products, Donnatal, EnteraGam and Mytesi to enable greater focus on our prime commercial products, Movantik, Talicia and Aemcolo.

Cost of revenues for the first quarter of 2020 were $1.7 million compared to $800,000 in the fourth quarter of 2019. The increase was primarily attributable to the impairment of intangible assets related to Aemcolo for travelers' diarrhea as the company expects a significant decrease in travel over the coming quarters due to COVID-19 pandemic.

Research and development expenses for the first quarter of 2020 were $2.8 million compared to $2.3 million in the fourth quarter of 2019. The increase was primarily attributable to completion of the first stage of the ongoing trial with opaganib in cholangiocarcinoma.

Selling, marketing and business development expenses for the first quarter of 2020 were $9 million compared to $6.2 million in the fourth quarter of 2019. The increase was primarily attributable to the expansion of commercial activities to support the commercialization of Movantik, Talicia and Aemcolo.

General and administrative expenses for the first quarter of 2020 were $4.6 million compared to $4.1 million in the fourth quarter of 2019. The increase was primarily attributable to the expansion of commercial activities. Operating loss for the first quarter of 2020 was $17 million compared to $11.8 million in the fourth quarter of 2019.

The increase was primarily attributable to expanded activities as previously described. Net cash used in operating activities for the first quarter of 2020 was $10.6 million compared to $13.9 million in fourth quarter of 2019. The decrease was primarily attributable to the positive impact of changes in working capital in the first quarter of 2020.

We reported net cash provided by financing activities for the first quarter of 2020 of $59.1 million, primarily attributable to the proceeds from long-term borrowing made in the first quarter of 2020 of $79.1 million, as will be further detailed, offset by the movement in restricted cash of $20 million. Liquidity and capital resources.

Our cash balance as of March 31, 2020, was approximately $115 million compared to $48 million as of December 31, 2019.

The increase was attributable, primarily to the funding of the first and second tranches of the nondilutive, royalty-backed term loan facility with HealthCare Royalty Partners in the amount of $30 million and $50 million, respectively, received during the first quarter of 2020 and offset by cash used in operating activities.

On April 1, 2020, a payment of $52.5 million was made to AstraZeneca upon the closing of Movantik acquisition. The cash balance immediately following closing of the acquisition was approximately $62.5 million.

As of May 25, 2020, about 600,000 American Depositary Shares, (ADSs), of the company were issued under the company's ATM, generating net proceeds of approximately $4.7 million. We have continued to maintain cost discipline with cash burn of approximately $12.8 million during the first quarter of 2020.

Importantly, we are committed to maintain cost discipline as we continue to expand the commercialization activities for our core commercial products.

While the current pandemic situation is dynamic and many unknowns remain, we still are in line to achieve operational breakeven in 2021, and we'll continue to monitor our progress and economic and public health conditions as economic and public health conditions evolve.

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, I will highlight only a few of several key events. And I apologize in advance for having to speak longer than usual. There's a lot going on. Protecting our employees, patients, colleagues and communities has been our primary focus throughout the COVID-19 pandemic period.

RedHill maintained full employment of its dedicated sales representatives and employees in order to provide support to health care providers through various remote technologies. In-person work practices are gradually being resumed where possible, subject to authorization and guidance from the relevant health authorities and clinics.

To date, there have been no significant disruptions to the company's supply chain, and it has sufficient supply on hand to meet U.S. commercial demand. A number of activities have been impacted by COVID-19 pandemic, including some launch activities for Talicia for H.

pylori infection, primarily due to a sharp decrease in in-person diagnosis visits by patients; and also for Aemcolo for travelers' diarrhea due to a sharp increase in travel restrictions and resulting decline in travel traffic.

Our aspiration is for RedHill to become the GI company of choice for both health care providers and patients by solving their unmet needs.

Accordingly, by early this year, we have completely refocused our resources on the commercialization of our principal products, Talicia; Aemcolo; and most recently, Movantik for opioid-induced constipation in adults, which we have been promoting since April 1.

These 3 commercial products form a solid foundation to support our evolution into a leading specialty pharma in the United States. In this respect, the first quarter of 2020 has been a transformational period in RedHill's history.

We launched Talicia in the United States with our 100 strong and highly trained sales force, supported by additional 30 RedHill experts, including our thought leader liaisons, medical affairs and others.

We strengthened our commercial portfolio with acquisition of Movantik from AstraZeneca and secured up to $115 million in nondilutive financing to support our commercial operations.

Subsequent to the end of the first quarter, we initiated promotion of Movantik immediately following the closing of the acquisition and recorded Movantik net revenues of approximately $7.3 million in April alone, the first month of the promotion by RedHill.

We continue to provide remote support to prescribers and are gradually resuming in-person visits to the clinics in strict adherence with all applicable laws and regulations. For a bit more color about Talicia. Talicia was developed by RedHill, and RedHill got it approved by FDA in November last year.

It is estimated that there are approximately 100 million Americans and more than half of the world's population carrying H. pylori, an infection that is classified as a Class I carcinogen, to which approximately 90% of gastric cancer cases are estimated to be linked to. We launched Talicia in March 2020.

We are doing it with an experienced and strong momentum on the managed care front for Talicia, where we recently were added to Express Scripts and Prime Therapeutics formularies as an unrestricted, preferred brand for H. pylori. This is a positive signal that payers are on board with Talicia.

We expect additional meaningful wins by the end of the summer. Intensive discussions continue with payers and additional timely endorsements are expected in the near and midterm as well. Our strategy is for Talicia to replace existing standard-of-care therapy as the new standard-of-care, first-line treatment for H. pylori infection.

Talicia offers high rates of eradication with 0 to minimal H. pylori resistance in all-in-one capsule that is well tolerated. We are primarily targeting gastroenterologists, primary care physicians and mid-level providers. The performance of Talicia is dependent on access to providers for H. pylori diagnosis and treatment.

And unsurprisingly, there are indications that a large backlog consisting of patients in need was built over the last 3 months, including for colonoscopy procedures.

We have been conducting extensive marketing and other activities for Talicia, including mass communications, mailer, multipage ads, speaker programs and webinars, regional advisory boards. And feedback from health care providers has been immensely positive across the board.

Last year, we in-licensed Aemcolo for travelers' diarrhea from our strategic partner, Cosmo Pharmaceuticals, with whom we continue to work closely on additional collaboration opportunities.

While the COVID-19 pandemic and resulting travel restrictions significantly hit the hospitality [Technical Difficulty] airlines, hotels, Airbnb and over 90% of American travel plans were affected due to the coronavirus. There are initial signs of improvement.

Our focus is on positioning Aemcolo as the go-to treatment as travel restrictions are lifted and consumers rebook travel plans, with primary care physicians as our primary targets.

Extensive marketing, market access and other activities for Aemcolo continued throughout the period, including speaker programs, introduction of co-pay and market access programs and various digital tools. Turning to Movantik. In February, we announced acquisition from AstraZeneca of the global rights to Movantik, excluding Europe, Canada and Israel.

Movantik is the leading PAMORA-class drug indicated for the treatment of opioid-induced constipation, OIC, in adults. We completed the transaction and immediately initiated promotion of Movantik on April 1, with the first months' revenues in line with our plans.

Thanks to AstraZeneca's excellent work since launch, Movantik is a leader in the OIC space and the number one PAMORA-class drug in the OIC market. Hundreds of millions of dollars have been invested since launch, and Movantik benefits from market-leading patient access and patient support programs.

Movantik also benefits from larger field sales force now promoting Movantik at RedHill and from targeting significantly larger HCP population as well as new perspectives and energy from the RedHill team. We intend to strengthen the Movantik brand and are taking action in order to achieve sustainable, profitable growth with Movantik.

Also in February 2020, we entered into a nondilutive, royalty-backed term loan with a leading investment firm, Healthcare Royalty Partners, pursuant to which HCR committed to 150 -- up to $150 million to support our U.S. commercial operations, including the acquisition of Movantik from AstraZeneca.

We continue to operate with strict financial discipline by running a cost-effective organization. Moving on to our R&D pipeline. Our R&D pipeline remains both robust and advanced with several promising Phase III programs ongoing and excellent track record of success.

For lack of time, I will only briefly mention our ongoing COVID-19 development programs and RHB-204 for first-line pulmonary NTM infections caused by mycobacterium avium complex, MAC.

We are rapidly advancing the parallel development of 2 independent programs for the treatment of COVID-19 with our clinical-stage, orally administered, novel molecules, opaganib and RHB-107.

In light of encouraging initial results from the compassionate use program with opaganib in severe-to-critical COVID-19 patients in Israel, we are currently initiating a randomized, double-blind, placebo-controlled clinical study recently approved by FDA in several leading hospitals in the United States.

The study aims to enroll up to 40 patients with severe-to-critical COVID-19 infection and pneumonia, requiring hospitalization and high-flow supplemental oxygenation. We are also advancing a COVID-19 development program with RHB-107, which was selected for in vitro testing by the U.S. National Institute of Allergy and Infectious Diseases, the (NIAID).

The NIAID based on its possible mechanism of action, the evaluation of upamostat RHB-107.

We also continue to work closely with regulatory authorities and medical communities to expand the access to opaganib to patients in additional countries through our compassionate use programs and plan clinical studies, including Phase II/III studies currently under preparation for COVID-19.

Specifically in relation to the COVID-19 compassionate use program with opaganib in Israel, all 6 severe-to-critical patients analyzed and treated demonstrated pronounced clinical improvement following treatment initiation with opaganib and substantial improvement in biomarkers, including decreased required supplemental oxygenation, higher lymphocyte counts and decreased C-reactive protein, CRP, levels.

Importantly, all 6 patients were weaned from oxygen and discharged from the hospital on room air without having required to receive mechanical ventilation. Opaganib was well tolerated as well.

At the time of treatment initiation, all 6 patients analyzed were hospitalized, suffered from severe-to-critical acute respiratory symptom relating to SARS-CoV-2 infection, were hypoxic and required high-flow supplemental oxygenation while being treated with standard of care. Moving on to our NTM program.

We continue to make advance on that front as well. And following additional positive new data from ongoing supportive nonclinical programs, we are now on track, subject to further input from FDA, to initiate in the third quarter of this year a single, pivotal Phase III study evaluating RHB-204 as a first-line stand-alone NTM treatment.

There are currently no FDA-approved drugs for first-line NTM. The medical need is strong, and the commercial prospects for RHB-204, if approved, are very significant.

RHB-204 has QIDP's Fast Track status under the GAIN Act from FDA and is potentially eligible for up to 12 years of market exclusivity, since pulmonary NTM likely qualifies as an orphan indication. A few final remarks. RedHill entered the challenging COVID-19 period in a resilient position and is emerging even stronger. This is no coincidence.

We are now reaping the benefits of a robust and agile business model, having diligently and gradually built a robust and durable U.S. commercial force during the last three years, well in advance of the launch of Talicia, Aemcolo, Movantik and potentially additional revenue-generating products currently under discussion.

Our commercial leadership team is headed by our Chief Commercial Officer, Rick Scruggs, former Executive VP at Salix Pharmaceuticals. Rick is working closely with many of his former colleagues at Salix who joined RedHill over the last 3 years.

Our commercial leadership team is highly experienced and has a solid track record of success in launching GI products into the U.S. market and rapidly growing revenues to create a market leader.

With over 100 sales representatives in the field and three well-protected and much-needed FDA-approved GI drugs in our commercial bag as well as advanced and robust pipeline of drug candidates addressing significant medical needs and large potential markets, we are confident and are uniquely positioned for rapid revenue growth.

We aim to become a specialty GI pharma leader in the United States, utilizing both our organic growth capabilities, driven by RedHill's own late-stage clinical pipeline, as was the case with Talicia; and our nonorganic growth competencies, as we have shown with Aemcolo and Movantik, driven by continued rollout of synergistic commercial product acquisition.

We will now take any questions you may have..

[Operator Instructions]. Your first question comes from the line of Christopher Marai from Nomura..

Congratulations on the progress. First, I wanted to touch upon some of the data you provided for Talicia, specifically net revenues of $8.4 million for the first four months of 2020, excluding sales into the channel. And I guess what I wanted to understand is just how many days you expect of product into the channel.

And then secondarily, if we could maybe talk about the COVID programs, but I'll let you touch upon that first, the financials on the Talicia sales..

Sure. We have not booked any sales into the channel. In Q1, we have decided to exclude those out of our general conservative approach to this..

Right. Okay. Great. And then just thinking about the COVID program and also COVID's overall impact to your pipeline.

So number one, on your COVID program, I was just kind of curious the type of resources that it's requiring of your noncommercial staff, is this really a distraction to the company? Or are you able to leverage partners really to launch and run these studies? And then secondarily, just with respect to impact.

Obviously, the NTM study looks to be starting in the third quarter here. There are a handful of NTM centers in the United States. Obviously, some patients might be concerned about traveling.

How have your conversations gone with respect to kind of the cadence of enrollment and expectation for the trial to get up and running rapidly in the third quarter?.

Thanks. Great questions. With relation to COVID-19 and our program, this is certainly not a distraction. Those are products that we know inside out, that we have been developing for years. Those are products that have been administered to hundreds of subjects, so we have the data to analyze and work with. Our team has the capacity.

We are very experienced, and we are moving very fast with what we have got. And what we are seeing so far makes us cautiously optimistic about the prospects. Specifically with relation to opaganib, we have conducted several studies with opaganib, therefore, moving into the U.S.

placebo-controlled study, as we speak, is something that we are very comfortable with and our team is very experienced with. We are moving very fast and very confident that we can execute. This is certainly not a distraction.

I will also add that the costs associated with these COVID-19 programs are relatively modest, and there are also external funding support, as you might imagine. As far as NTM is concerned, the number of sites is indeed not going to be big. The reason is that we don't need a large number of study -- of sites.

We have about -- we're going to do 125 patients. That does not require a large number of sites. From what we hear, we should be able to move into this study with the first patient in, sometimes, in Q3 during the summer, and we are very advanced in preparing for this study..

Okay. Great. Congratulations on the progress..

Your next question comes from the line of Matt Kaplan from Ladenburg Thalmann..

Congrats on the quarter. I just wanted to dig in a little bit to the initial physician reactions to the Talicia launch.

And specifically, what are you hearing in the feedback back from specialists and GPs? What's the initial feedback on the launch here?.

Thank you, Matt. I'll refer this to Rick..

Thanks for the question. I mean, the initial reaction, and we've just launched, as you know, and then we had to go to the sidelines because of COVID-19 experience, but all of our key opinion leaders are very positive on the product. We envision this becoming the first-line therapy for physicians.

We've done virtual webinars and other things during this time period. But as you know that these patients haven't been presenting to offices right now because of the COVID crisis. And so we anticipate as the patients come back and offices step back up in the coming months that we'll see a really big uptick in Talicia prescriptions.

But it's been very well received and very well utilized right now in this sort of a condition that we have. Thank you..

And I guess, just a quick follow-up on that in terms of the feedback, I guess.

What's your sense in terms of enthusiasm to start to use the product once they start seeing the patients in their offices again?.

I think it's going to be -- it's enthusiastic. I mean, just simply, everybody is very enthusiastic about having a new therapy. We haven't had a new therapy in over 10 years. We're the only people out there actually promoting in this class right now or this disease state right now.

So there's enthusiastic response from all our providers, gastroenterologists, health care, primary care physicians, practitioners. Everyone is very excited about Talicia..

Great. And then just a follow-up on that in terms of the coverage you're getting. You've made some great progress with getting Express Scripts and, I guess, Prime Therapeutics online. What do you expect to see, Dror? I guess, by the end of the summer, you said additional meaningful additions by end of summer.

What should we expect to see?.

Before referring this to Rick, I just want to add about the previous point, anecdotally, that what we see, obviously, in the whole H. pylori space, there's very few scripts in April and so on when patients were not at the clinic and couldn't be tested and therefore, couldn't be treated for H. pylori. These patients are not going anywhere, and H.

pylori is not going anywhere. We expect to see them back, and we're starting to see them back. But I wanted to say that when you look at the overall landscape for H.

pylori prescriptions, anecdotally, but very encouraging for us, even with, essentially, days of active promotion by relatively few RedHill reps, we are seeing Talicia already gaining meaningful market share, which is a very good sign for us. Rick, please about managed care..

So we have very good coverage right now with managed care. So if you look at MIT -- the MMIT data, we are over 55% of commercial coverage right now. We anticipate that to get better as we progress in the months. We have active discussions right now with several large payers. We don't see this as a problem. The payers have embraced the product.

It's a good price point. It is a good clinical story, and so that -- we hit the right points with payers. And so we anticipate the product will be available across a broad -- the coverage will get better than it is right now. Right now, it's very good, it's 55%, and it's growing every day..

Right. And just two more questions, if I may. Movantik.

Can you comment on its initial performance, I guess, in April, seeing strong out of the gate after the transition? What changes have you made in terms of your detailing strategy as the time is, so to speak, handed off from AstraZeneca to you?.

So as you know, we've been -- Dror, you may -- to take this one? Or you want to add to this one?.

Yes, please go ahead, Rick..

So I was going to say, as we've been home, our representatives have been home since the middle of March, we're back into the field this week, next week and strong into the -- and going forward. What we have is we have a product that has great coverage. It is the number one brand in the PAMORA class, and our sales force will be out there.

We're going to actually have a bigger footprint than Astrazeneca and DSI had in previous days of promoting. We also added some of the DSI sales reps to our sales force. So we're going to have a clear focus on Movantik going forward..

And then last question. The RHB-204 pivotal Phase III trial.

Can you talk a little bit about the design of that study and the potential time lines to enrollment and completion and readout of data?.

Thank you. I'll refer this to Gilead..

Thank you, Dror. So the NTM study should be initiated at Q3. And we're talking about a pivotal Phase III study, which per discussions with FDA should support submission of an accelerated NDA under Subpart H. We are looking at the primary endpoint for that accelerated NDA submission of the conversion of the sputum at 6 months from treatment initiation.

So we anticipate that the readout of that primary endpoint should be approximately 18 to 24 months from initiation of the study once we complete enrollment of the entire cohort and analyze that data set -- data point..

Congrats on the quarter..

And your next question comes from the line of Ed Woo from Ascendiant Capital..

Congratulations on the quarter. My question is, I think you mentioned that your sales force has just started going back into the field.

What is the initial response? Is it -- it seems that physicians that you guys are calling on are back to normal and the patients are coming back in? Or is it going to be a slow trickle?.

Thanks. It's a great question. Anecdotally, I can tell you, before referring to Rick, that in quite some places, our reps, and we are very proud of that, are the very first ones allowed into certain clinics. And that speaks volumes to the credibility and the relationship that our sales force has with the health care providers and the clinic.

As far as trickling or not, for the last 3 weeks or so, 2, 3 weeks, we are back in some clinics in some states, in some territory, subject to the local regulations, guidance and the feedback and input from the clinics themselves. We expect that to grow. I will refer to Rick to provide additional color on our plans..

Sure. So thanks, Dror. The -- early on, we asked our people not to go to offices. We wanted them to abide by the local guidances. We also wanted to take account of our physicians, our customers, our patients and what we had to do to adhere to the COVID concerns. Physicians were being asked to come to hospitals to help the patients early on.

They were asking to be conservative of their supplies early on. So we did not pressure physicians. We did do some virtual things with them, those that we wanted to. Now we're back into where physicians have wanted us to come back. They're actually saying, "Come back and see us. We want to hear from you.

We want to know about the new drugs, and we want to hear the things you have to share with us." So we are back in offices. Some are more open to see our reps, depending upon the state because we are still dependent upon state regulations, city regulations.

And also our customers because some of these offices are just now coming back with their -- they furloughed their staffs. Now the staffs are coming back. Patients are coming back. So we are cognizant of that. We are having the lunches with folks, coming to the right appointments, wearing our mask, being -- social distancing where appropriate.

And so we're trying to adhere to everything so that we can make our customers, the physicians, patients comfortable with our presence in the offices. And we are coming back into the offices. We have been going back in the last week, and we're going back full force this week and particularly in June..

Great. And then my next question is, you guys talked about adding additional products into your bag.

Have you guys changed your view in terms of now that you guys have some more time to market your own products and obviously the -- with the change in COVID, has that changed your view at all in terms of getting new products?.

Thank you, Ed. It's a great question. We pride ourselves of having the core competence of being able to detect a great opportunity, such as Movantik or Aemcolo, and negotiate in a fair way, in a way that the product is attractive to us. And this is a big advantage for us. We intend to continue to do so.

And we will carefully continue to roll out with additional products both from within, such as Talicia; and from the outside, such as Movantik and Aemcolo, when such products are sufficiently attractive for us. There are not many players in the GI specialty.

We are one of the only shops, and we are certainly one of the very few companies that are growing and growing fast in this space. So COVID-19 has changed nothing in this regard. In fact, we are emerging out of this period with ever more energy and enthusiasm to grow the business in the best possible way..

Your next question comes from the line of Jonas Peciulis from Edison Research..

Congratulations with finalizing the transaction with AstraZeneca, and that was quite an achievement during the circumstances. Now I have one question about the COVID-19 program.

So obviously, the clinical trial, this clinical trial is most interesting one because it will be prospective there, but the retrospective data will still -- might have interesting value if there will be a second peak late this year or next year.

So you presented some data from several patients, but can you give us a sense how big the compassionate program is currently? I mean, in how many hospitals it's running? And how many patients potentially could receive? And if the physicians will be analyzing the data? And will there be any more presentations from these trials from the compassionate program itself?.

Certainly, Jonas, and thanks for excellent questions. We have a lot going on, far too much to provide details in this time frame. But yes, compassionate use programs, clinical studies, including Phase II/III studies for COVID-19, are all in the works, and we will announce as we gain sufficient certainty about each and every one of them.

So exciting times ahead. As far as our U.S. study that is initiating right now, I will refer to Gilead to provide additional color..

Thank you, Dror. The U.S. study, which has been approved by FDA under the IND, which we are currently initiating and hope to have the first patient in imminently, will be a randomized, placebo-controlled study, a prospective, as you say. And up to 40 patients will be enrolled.

So it will give us a good readout of the potential impact that opaganib has in this patient population of severe-to-critical patients who have high-flow oxygen supplementation requirement. So this is potentially reading out within this first wave of patients.

In the U.S., we hope we can enroll the full cohort in the next weeks once we start the study and be able to have readout of this study still within this wave by the summer -- by the end of the summer..

All right. That's useful. On the cholangiocarcinoma trial, there was one press release earlier this year that you actually have a -- some preliminary data from the clinical trial. And as I understand, it was reported at a conference, and this could potentially also be an interesting piece of information.

Do you have any, like, time lines when you expect to report it?.

I will refer this to Gilead. I will just refresh the memory of the listeners that we have expanded the study, given the signals that we are seeing, and this includes a second arm that Gilead will speak to in a moment. And then a third arm, which combines two of our products.

The second arm is combined interestingly with HCQ, which is currently in the news for COVID-19, but that's an entire coincidence. We have been working on that with FDA for about a year now. I refer to Gilead to provide additional details..

Thank you, Dror. So as Dror mentioned, we are -- based on the signal and readout that has been -- from the open-label arm of opaganib in cholangiocarcinoma patients put in place and have initiated an expanded arm opaganib plus hydroxychloroquine, which is an anti-autophagy agent in oncology.

So as Dror mentioned, this is aside from all the research that has been going on with hydroxychloroquine in the COVID-19 setting. So we are in the process of initiating that additional second arm of the combination.

And we are planning, as Dror mentioned, a third arm of a combination of opaganib with RHB-107 based on preclinical models in cholangiocarcinoma that show potential additive or synergistic effects. The additional aspect of the publication of the data in scientific conferences, this is still being analyzed and put together.

We expect to have, before the end of this year, a publication of this in certain scientific conferences in the oncology area..

Okay. That's clear. The last one, just a quick one on financials. You still have some amount left to -- accessible from HCR Partners, as I understand.

Are there any conditions attached to it?.

Yes. Thank you, Jonas. Yes, there are conditions. They are pretty standard related to revenue threshold achievements and so on. And I will also say that we may or may not need those additional tranches. I'll refer to Micha, and see if he wants to add anything..

Yes. So following a withdrawal of tranche a and b, for tranche c, we have Talicia revenues as a precondition as well as receiving a -- the formal final QIDP status for Talicia..

The last question comes from the line of Jeb Terry from Aberdeen Investment..

Very encouraging to hear your sales in April. If you -- if I might, I'd like to have ask some comments from Rick about Movantik sell-through as well as Talicia. Extremely encouraging to hear that you were able to get the endorsement from Scripts and Prime.

And I was just curious, just if you could tell me how that channel development works and how that impacts your sales cycle as we go -- head into the coming months. And then also on the Movantik, if you could give us some sense about how that April sales number of $7 million would relate to your expectations in coming months as further momentum..

All yours, Rick..

So the first question was around the Blues, I believe with Prime. We know that Prime covers a lot of Blues in this country, right? And so all those plans are doing their own reviews and adding the product, but we anticipate the product to be added over the coming months to all of the Blues across the country.

And so as our sales force reenters the workplace, as those patients show back at offices, we anticipate that these prescriptions will go through a pharmacy with little or no fanfare, and patients will be able to pick up their Talicia prescription with no blocks from any of the Prime plans.

So we anticipate this will be a good thing for us going forward. With regards to Movantik, the sales numbers are what we expected, and we expect that it will be trending the same way for the rest of the year. We're quite pleased with where we are right now with Movantik.

And we do anticipate once we get out there in the field with an active voice, these numbers will get better..

And with respect to Movantik, how long does the patient actually take it? Is it -- do they have to take it for months and months? Or do they have it in a particular regimen and then end? Or is that like an ongoing source of demand?.

I think it's probably -- I mean, it is patient dependent, right? So there is the labeled indication for patients that aren't responding to the OTC products. And so if patients are on medications for long periods of time, for pain medications, they have this constipation problem that you may take Movantik for several months. So..

Jeb, I can add a little bit of color, if you're interested, about this. So a lot of the times, it is sort of chronic treatment. Now it depends, as Rick said, on the patients.

If the patient, as was expanded label from 2017, is an oncology survivor that is no longer receiving treatment for her or his prior cancer, but suffering from chronic pain associated with those treatments that they received in the past, and all the cancer they had in the past, then it could last long because they remain on the pain treatment on the underlying opioid for longer.

If it's post-surgery with orthopedics, it's a different story. So it really depends, but refills tend to be for longer. And typically, you see patients on the medication for several months..

Actually, I'll just add, Dror, that many Rxs are actually 90 days or more, especially through mail order, so a patient could be on the product for a good while..

Okay. Great. So obviously, there weren't a lot of new cases being done under COVID. And so what you're now saying is this kind of recurring revenue from chronic users that have been already on it, I guess. It's one way to look at that.

Can you discuss the backlog and then how fast the backlog of patients will work itself out and how that might impact your expectations on revenues for Movantik and Talicia?.

Jeb, it's Dror here. To be clear, we are seeing nice NRx, new prescriptions during this COVID-19 period. In April when the product was already ours, it was the same. So new prescriptions, new patients continue to emerge throughout this period.

One of the reasons is that Movantik, unlike Talicia, for example, is not dependent on the kind of diagnosis that requires necessarily a visit to the office, and telehealth can be more effective here. It's also unlike Aemcolo that is dependent on actual traveling. The rest I'll refer to Rick..

No. I think that catches that very nicely, Dror. As patients return to offices, we're going to see -- and we're able to do testing for H. pylori, we're going to see an uptick in the coming months on Talicia. And as Dror stated that Movantik is the easier one to do refills for.

And as we return to the field, we will actually be out there covering all these areas where the prescriptions are written for Movantik, and we'll anticipate to see those prescriptions uptick..

That's great.

And can you all comment just perhaps, lastly, on your -- on margins? Are you getting the kind of margins you anticipated?.

The short answer is yes. Unfortunately, because of various contractual restrictions, obligations, we are not yet able to disclose our exact margins on the product after payments to Nektar, the original licensor; and to Daiichi, which is our co-commercialization partner.

However, we can tell you that we are doing everything within our ability and are cautiously optimistic that not only will we be able to optimize the margins from the product, but we will also be able to disclose in a much more transparent way so that investors like yourself, Jeb, and analysts and investors in general are able to do the analytics.

And I dare say that they're not going to be unhappy..

There are no further questions at this time. Please continue..

Thank you, Maria, and thanks all of you for joining the call. Please reach out to us if you have any additional questions. Keep safe. We wish you all a pleasant day..

Thank you. That does conclude your conference for today. Thank you all for participating. You may all disconnect..