Good day and welcome to the RedHill Biopharma 2015 Third Quarter Financial Results and Business Highlights Conference Call. At this time, I would like to introduce to the conference, RedHill's CEO, Mr. Dror Ben-Asher; Mr. Ori Shilo, Deputy CEO, Finance and Operations; and Mr. Guy Goldberg, Chief Business Officer. Before we begin, we will read from RedHill's Safe Harbor statement. Please go ahead.

Thank you. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of the company. 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, results or achievements may differ materially from what RedHill projects today. Additional information concerning factors that could cause actual events, results or achievements to materially differ from those contained in the forward-looking statements can be found in the company's Annual Report on Form 20-F and in its other filings with the Securities and Exchange Commission.

Thank you, Guy, and to those of you who are on call live, thank you for joining us. Earlier today, we announced the marketing approval of RIZAPORT, our migraine oral thin film treatment by the German Regulatory Authority BfArM. The approval comes under the European decentralized procedure. And it's the first marketing approval for RedHill; it is therefore a major and validating milestone for us as a development company. It demonstrates our team's strong commitment and execution abilities in bringing innovative RX products all the way to marketing approval in major territories. I would like to take this opportunity to thank the RedHill team, our excellent partners at IntelGenx and the various consultants and vendors assisting us. I would like in particular to compliment the RedHill team for their persistent and effective efforts that made this inspiring success happen. As far as RIZAPORT is concerned, our combined efforts with our partners at IntelGenx focused on securing commercialization partners in the United States, Europe and other territories, and on obtaining FDA approval in the United States as well as regulatory approval in the rest of Europe as quickly as possible. We will focus today on selected recent operational highlights and the status of our lead program, including the three ongoing Phase III flagship program for GI diseases. RHB-105 for the treatment of H. pylori, bacterial infection; RHB-104 for Crohn's disease; and BEKINDA for gastroenteritis and gastritis. We will also discuss our various ongoing on and planned Phase II programs with YELIVA, our innovative first-in-class oncology and inflammation SK2 inhibitor. The focus our discussion today, there will be RHB-105 following the successful top-line results and additional supportive data recently generated in the Phase III study for the treatment for H. pylori infection. H. pylori is a major cause of gastric cancer and other gastric diseases. But first, I would like to refer to Ori for discussion of our third quarter financial results announced earlier today.

Thank you, Dror. Good morning and good afternoon everybody. I will provide a short overview of our financial results for the third quarter of 2015. In the third quarter of 2015, as well as in the first nine months of 2015, we did not record meaningful revenues compared to $7 million of revenues in the first nine months of 2014 from the licensing of RHB-106 to Salix Pharmaceuticals in Q1 2014. R&D expenses during the third quarter of 2015 were $3.9 million compared to $4.1 million in the third quarter of 2014. R&D expenses for the first nine months of 2015 were $12.8 million compared to $9 million in the first nine months of 2014. The significant increases in R&D expenses were mainly due to the advancement of the Phase III trials with RHB-105 for H. pylori, RHB-104 for Crohn's disease and BEKINDA for gastroenteritis and gastritis. G&A expenses during the third quarter of 2015 was $700,000, compared to $901,000 in the third quarter of 2014. Operating loss for the third quarter of 2015 was $4.6 million, compared to operating loss of $5 million in the third quarter of 2014. Operating loss for the first nine months of 2015 was $5.2 million compared to $5.8 million in the first nine months of 2014. The increase was mainly due to the $7 million revenue from the Salix transaction received in the first quarter of 2014 and an increase in R&D expenses during 2015. Our operational burn during the third quarter of 2015 was $3.7 million compared to $3.8 million in the third quarter of 2014. The operational burn for the nine months ended September 30, 2015 was approximately $11.8 million compared to $6.3 million in the nine months ended September 30, 2014. The overall increase was mainly due to higher operating loss during the first nine months of 2015. Our cash balance as of September 30, 2015, was approximately $64 million following the July 2015 public offering of $44 million. Our strong cash position allows us to execute our development plans including the ongoing Phase III studies with BEKINDA for gastroenteritis and RHB-104 for Crohn's disease. The second Phase III with RHB-105 for H. pylori eradication, Phase II with BEKINDA for IBS-D and several other earlier stage programs mainly in oncology. I will now turn the discussion back to Dror, and I will be happy to take questions later on. Thank you.

Thank you, Ori. You recall that RedHill is focused on development of last stage proprietary orally administered small molecule drugs for GI and inflammatory diseases and cancer. We're pursuing multiple short-term goal strategy, and, therefore, headed into the fourth quarter of 2015 with a balanced pipeline, including three ongoing Phase III GI programs, and a number of Phase II stage development programs. Among the recent operational highlights, we are particularly excited about the first European marketing approval of RIZAPORT announced earlier today. The positive top-line results from the Phase I study with YELIVA in advanced solid tumors that was announced two weeks ago. And the announcement in September of additional supporting data for the first Phase III study with RHB-105 for the eradication of H. pylori. Last month, we announced positive top-line results from the Phase I study with YELIVA, in patients with advanced solid cancer. The study successfully met its primary and secondary end points providing key information about the drug safety, toxicity, PK and PD supporting the ongoing and planned Phase II studies with YELIVA. The results demonstrated that YELIVA can be safely administered to cancer patients and those that provide circulating drug level that are predicated to have therapeutic activity based on levels required in preclinical models. The first in human Phase I study treated 21 patients with advanced solid tumors with a majority of which for GI cancer patients including pancreatic colorectal and cholangiocarcinoma cancers. And also last month we announced a following and recent meeting with -- we announced following recent meeting with the U.S. FDA for the development part of BEKINDA that we filed particular amendments to the Phase III gastroenteritis study and the approved IND to increase the data collection. We reported that we expect to achieve top-line results from the Phase III…

Thank you, sir. [Operator Instructions] We now take our first question from Scott Henry from ROTH Capital. Please go ahead. Your line is open.

Thank you, and good morning. I appreciate the very thorough recap of the pipeline. So, just a couple of questions. First on the expense side, G&A looked a little lower in R&D as well, how should we think about expense items going forward.

So, hi, Scott. So in 2015, we burn more or less $4 million of the quarter. 2016, we anticipated some increase not very material and since we have about $64 million in cash, we anticipate that even if we increase our R&D expenses and execute the entire R&D plan, we have enough resources well into 2017. Would that answer your question, Scott?

I think. So R&D specifically, I would expect it to bounce up a little bit in the fourth quarter or flat in fourth quarter, just trying to -- I think I was expecting an up tick there?

We don't provide guidelines, but it shouldn't be meaningful increase in the fourth quarter.

Okay.

Next year, we will see some increase.

Okay. Fair enough.

G&A should stay more or less like previous quarters.

Okay. And then the final question on the income statement, the $1.4 million in financial income, is that kind of one-time event, I know it's happened in the past third quarter last year as well. How do I think about that number?

Just revaluation of warrant that we gave to investors back in 2014, so every quarter we need to appreciate it based on the share price and the value of the warrants.

Okay, perfect. Thank you for that color. Shifting over to the pipeline on RHB-105, question is, when do you expect to meet with the FDA given that's kind of the next event before starting the confirmatory trial?

Probably January, typically it would have 60 days from filing, so you could see them around January with the study commencing soon as possible thereafter. We're already preparing for the confirmatory Phase III. We are manufacturing that. We have already announced that and so on.

Okay. And then a Phase III trial, so that would lead me to believe that the Phase III trial would start maybe a month or two after you met with FDA, would you have to wait for minutes or can you go pretty much right after the meeting?

We have to go right after the meeting. So I think end of Q1 maybe, it really is -- planned if we get possible thereafter. We are preparing for it already.

Okay, great. And then final question on RIZAPORT approved in Germany, assuming you need to partner prior to launch, so when you would expect to launch that product in Europe?

We are in discussions with various European partners, so as U.S. partners and partners in other parts of the world. We hope and expect for the approval in Germany and consolidation to provide the right boost for those discussions so that we can secure the right path.

Okay. And what is the -- kind of the latest fund to U.S., when should we -- how should we think about when you maybe able to get approval -- final approval there?

We are thinking about approval currently early 2017 and there is a need that we are looking to manufacture, I think our partners at IntelGenx already discussed that. But we are looking to manufacturing three commercial batches for the approval. And we are starting there. So should be able to refile the NDA received a new PDUFA date sometime in the second half and hopefully approval early 2017. The key is not so much speed at this point but making sure that we get it right and all the remaining comments of the -- complete response letter that we received are addressed fully.

Okay, great. That's it for me. Thank you for taking the question.

Thank you, Scott.

Thank you. We will now take our next question from Shibani Malhotra from Nomura Securities. Please go ahead. Your line is open.

Hi, this is Austin Nelson on for Shibani. Just first following up on the RHB-105 and the FDA meeting. So do you still see potential for just to be one additional confirmatory study or is it possible that you will need more than that post the meeting? And then if that's required, how do you expect the design to be, do you expect any [indiscernible] requirement or do you think that you can have a study that is more inline with the [YELIVA] [ph] on the first study?

Thank you, Austin. With regard to one study, there is some company that would tell you that with the QIDP status under the GAIN Act and the fast-track development, you could expect an immediate approval based on a single Phase III. We are not one of those companies. We have fuel that we will need to do a confirmatory Phase III study. We are planning for it. Hence, we wouldn't want anybody to assume that we are counting and we don't want anybody to count on a single Phase III study and an immediate approval. That's one thing. On the design, whether or not, we will need to do factorial design remains to be seen and it is very much up to the discussion we will have with FDA very soon. So I cannot answer your question with certainty until we meet FDA.

Okay. And then, on the GUARD study amendment comes around that you think that should be enough to receive approval both in the U.S. and Europe. If a second study is required by one agency and not the other, would you be willing to file with the one study where that would be acceptable and then conduct a second study for the other agency or would you think more about like holding off than using the full data set for all filings?

We will apply as soon as possible. Both agencies told us that very clearly, that a single Phase III study is doable subject to strong results. Now, how stronger that should be, we don't know. We obviously need to hit our endpoint, but how well we have to hit it remains to be seen. But let's assume we hit it. If we hit it, and one of the agencies either FDA or the European tell us that to get approved in their territory, we need another Phase III study, we will do that. We will get approved sequentially in both -- in the territories.

Okay. And then just following up on RIZAPORT and I know you discussed previously that you're still in that discussions around marketing authorization. But just assuming how the approval in one country so far, how do you thinking about the process and timelines for approval across Europe and how does that timeline affect the potential timing on a partnership?

So I believe, it's the other way around. The partnership affects the approval in other European countries. The approval that we received in Germany as the reference state other the decentralized procedure in Europe, means that we can rollout throughout Europe, negotiate pricing again approved state by state. But, I have to remind you that RedHill is not a CNS company and not a pain company, this is a very important product for us. But, it's a non-core product. We have no intension to commercialize it ourselves either in Europe or the U.S. Therefore, our former partner will need to do that in Europe and our former partner will need to do that in the U.S. Did I answer you question?

Yes. That was helpful. And I think that's all for us. Thanks again.

Thank you.

Thank you. Our next question comes from Swayampakula Ramakanth from H.C. Wainwright. Please go ahead. Your line is open.

Thank you. Good morning, Dror. Congratulations on a nice quarter. The question I have is more of a foot level of a strategy, you just mentioned that RedHill is not a pain company, [indiscernible], but then you have two major dedicated categories that you are focusing on, certainly the GI, and that's why you are getting the oncology part of it. And in the future, how would you like RedHill to be part of because even with three Phase III products gastroenteritis -- and then in the GI category, I'm not -- are you at a point where you could commercialize them or you would gain experience and wait for the oncology products to come through before commercializing on your own dollar?

Thanks RK. Of the three Phase III GI program that we have, all of them we believe are potential blockbuster, BEKINDA is not only for gastroenteritis, it's also for IBS-D. The first to hit the market should be BEKINDA and RHB-105 H. pylori, and also, again, big product. So when you think of RedHill, you should think of us as looking to maximize shareholders value from those assets. In order to do so, as we have said in the past, we are looking actively for quite a while now for the right vertical integration transaction. And that could be one to two approaches, fuel in the United States, either acquire a company or acquire products. Most likely in the GI space, or related inflammatory conditions, but oncology is not out of the question. And in the ideal scenario for RedHill strategically, we would be able to become a specialty pharma as quickly as possible. And then roll our products as they get approved in the coming years into the same sales and marketing infrastructure and distribution infrastructure in the United States. That's the goal. That's the vision. We have been at it for quite a while. We have discussed it openly and we are making big efforts towards achieving just that. What we committed to, is to do it carefully, gradually without jeopardizing anything of what we have achieved so far. I hope answered your question RK.

Yes. Thank you.

Thank you. [Operator Instructions] Our next question comes from Vernon Bernardino from FBR & Co. Please go ahead. Your line is open.

Hi, everyone and thanks for taking my questions and congratulations on the tremendous progress this past quarter. I just wanted to get from you just -- I guess a bit of a run down as to YELIVA program. Now, some of the studies are being funded by the NCI and/or some of them or all of them are -- how is the YELIVA program funded at this point?

The Phase I that we completed in solid tumors was funded by both the FDA itself, the open office and by the National Cancer Institute. Those grants were granted both to Apogee our licensor and the relevant university. The Phase II study that was initiated in lymphoma is also supported by National Cancer Institute. It's $2 million grant that was awarded to our licensor and is providing meaningful support to that study. The additional Phase II study that we are looking to commence by early 2016 in multiple myeloma is Duke University. It's also supported by a $2 million grant from National Cancer Institute that was awarded to our licensor. There is a third Phase II study that we are planning in radio protection in radiotherapy patients, cancer patients and that study will be funded probably both by RedHill and grants that we are thinking. Did I answer your question Vernon?

Yes. So a lot of the funding will be outside and some into -- by RedHill but once you have move forward let's say into later stage Phase II study, do you anticipate moving the program yourself or you will out license or what is the longer term strategy for YELIVA?

It's a very good question because in oncology in particular, you will stage mid-stage, mid-clinical stage deals open. So yes, we do see meaningful interest from pharma companies including big pharma in that compound. We are discussing that nothing to announce and we are open to a transaction mid-stage if that will help us get through large Phase IIb studies and Phase III studies. If we don't do partnership, a partnership -- we will go it alone. We are prepared for that as well.

When do you anticipate perhaps making a decision, you have many indications you are pursuing, which one do you think perhaps will yield the data, the soonest that helps you decide whether you should pursue partnership discussions in earnest or whether you should start thinking your strategy as far as to your latest stage studies?

The Phase I study was in patients with solid tumors and advanced -- with advanced solid tumors and generated meaningful data. And that data is not limited to safety. So to answer your question, we may have enough data to strike a partnership. That said, we are looking to generate in the coming two years or so Phase II data an additional indication and that data should have optimize or maximize the value that we can generate in a partnership. We are open and opportunistic and we talk to potential partners all the time, we share the confidentiality whatever we can with them. And it's one of those cases where the opportunity will drive the strategy and not the other away around.

Terrific. That's fantastic insight. That's not in my models. Thank you very much.

Thanks Vernon.

[Operator Instructions] As there are no further questions at this time, I would like to turn the call back to the presenter for any further remarks.

Thank you, Adelle. I would like to thank everybody for your interest in RedHill. Management is available always. You would find us responsive to any concerns or questions you may have and we are looking forward to speaking with you again next quarter. Thank you.

This will conclude today's conference call. Thank you for your participation, ladies and gentlemen, you may now disconnect.