WBB Securities, LLC Steve Brozak, DMH (908)

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1 WBB Securities, LLC Steve Brozak, DMH (908) RedHill Biopharma, Ltd. (NASDAQ GM: RDHL) INITIATING COVERAGE Initiating Coverage with a Speculative Buy Rating December 31, 2018 and 12-Month Price Target of $9.00 If RedHill is Right It Will Challenge Healthcare RedHill Biopharma, Ltd. (RDHL) is threatening some of the widely accepted, perhaps hallowed notions of treating inflammatory diseases. In the 34 years since Barry Marshall drank a potion laced with H. pylori bacteria, one would have thought that medical research would have identified causative bacteria and developed targeted treatments for other gastrointestinal diseases. The presence of dysbiosis (abnormal microbiome population) is only now being seriously studied to identify specific causes and responses to IBD and Crohn s disease, as well as obesity and diabetes. The fact that this is not a settled matter by now has become an indictment of the healthcare system. Current Price $ Month Target Price $ Month Trading Range $4.40-$11.49 Market Capitalization (Mil) $ Shares Outstanding (Mil) Avg. Daily Volume 126,816 L. T. Debt (Mil) N/A Dividend/Yield N/A Book Value P/S $3.15 NASDAQ Composite 6, S&P 500 2, Historical Performance - Page 12 In our opinion, RDHL is a different kind of asset not a brick and mortar asset but a conceptual asset. The company is developing innovative and more effective therapies for treating dysbiosis-caused diseases. TALICIA (RHB-105) is a Phase 3, single capsule combination of the individual drugs needed to treat H. Pylori. It promises to improve compliance and therefore outcome among patients with these infections. RHB-104, another Phase 3 drug candidate, shows promise of becoming a breakthrough therapy for the almost a million Americans and more than a million worldwide who suffer from Crohn s disease. RHB-104 has already demonstrated that in a Phase 3 trial it is superior to the standard of care for inflammatory bowel disease. In our opinion, these two development-stage products reflect an innovative approach that we hope will become a new norm for treating gastrointestinal diseases. We are therefore initiating coverage of RDHL with a speculative buy rating and a 12-month price target of $9.00. TALICIA is a combination of two antibiotics plus a proton pump inhibitor for treating H. Pylori infections. In a recent confirmatory Phase 3 clinical trial, TALICIA achieved superior outcomes for patients with H. Pylori infections by eradicating 84% of H. pylori infections versus 58% in the intent-to-treat standard-of-care cohort. RHB-104 capsules contain intracellular, anti-mycobacterial and anti-inflammatory properties based on the hypothesis that Crohn s disease is caused by a Mycobacterium avium subspecies paratuberculosis (MAP) infection. In a 331 patient Phase 3 study with RHB-104 administered as an add-on therapy to baseline standard-of-care medications, the primary endpoint of clinical remission at week 26 was

2 achieved at 37% for RHB-102 versus 23% for the standard-of-care therapies with a p-value of At 26 weeks, patients who received RHB-104 had greater significant treatment effects than all three standard-of-care therapies alone. Valuation Rating Legend: Strong Buy Should be aggressively purchased. Sell - Stock should be sold on market strength. Buy - Should be purchased on market weakness. Sell Short - Should be aggressively sold. Hold - Fairly valued. Speculative Buy For aggressive accounts only. Core Holding Essential holding of a long-term account. Based on RDHL s current revenue from their co-promotion and licensing agreements, plus a discounted cash flow analysis including potential sales of TALICIA, we believe RDHL should be reasonably valued at $9.00 per share. It would be presumptuous to give a valuation to RDHL s approach regarding Crohn s disease as this could be categorized as one of the most significant breakthroughs of this generation. Therefore, at this time we will refrain from assessing a value on the RHB-104 asset. Accordingly, we are initiating coverage of RDHL with a Speculative Buy rating and a 12-month target price of $9.00. Risks RDHL expects to continue incurring losses for an indefinite period of time, stemming from continual prioritizing and advancing of therapeutic candidates. RDHL has mostly focused on developing and acquiring late-stage clinical therapeutics and none of its therapeutic candidates are approved for sale as of now. Development and commercialization of potential therapeutic candidates may require additional cash to fund expenses and/or may require partnering or collaborating with other companies. Development and commercialization plans may need to be altered if RDHL is unable to acquire sufficient funding, All therapeutic candidates are subject to FDA regulatory clearance and approval and could be subject to delays or rejections, which could significantly impact the value of the company and the company s ability to generate revenue. All products that RDHL currently commercializes or promotes, as well as any future products, could be withdrawn from the market by request of the FDA at any time. EnteraGam is sold in the U.S. under physician supervision as a medical food. Medical foods are not required to undergo premarket review or approval by the FDA. However, EnteraGam s status as a medical food could be challenged by the FDA. Based on previously issued warning letters to other companies along with FDA guidance, the FDA may be applying a more narrow interpretation of what qualifies as a medical food. A medical food is defined by the FDA as one that is formulated to be consumed or administered entirely under the supervision of a physician and is intended for the specific dietary management of a disease or condition for which WBB Securities, LLC 2

3 distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation. Inability to develop a diagnostic test for MAP may adversely impact RDHL s ability to develop or obtain regulatory approval to market RHB-104. The company is expecting to continue to advance the development program for a companion diagnostic for the detection of MAP bacteria in Crohn s disease patients in collaboration with several U.S. universities and with Q2 Solutions. However, it is not known if and when a diagnostic test for MAP will become available. The RDHL co-promotion agreement with Napo Pharmaceuticals for promotion of Mytesi may be short-term. The agreement with Napo will expire, without renewal or a follow-on agreement, on January 28, 2019 without RDHL realizing benefits from the agreement. Promotional activities under the agreement are also limited to the promotion of the product to gastroenterologists and other gastrointestinal specialty healthcare providers. RDHL does not have the right to promote Mytesi to other healthcare providers, such as infectious disease specialists, who may have a greater numbers of patients with HIV or HIV specialists who are high prescribers of antiretroviral medications. Napo will continue to control the sale of Mytesi and have the right to set policies concerning pricing and other terms of sale that may impact the adoption and use of Mytesi. RDHL will only receive compensation from Napo if sales of Mytesi are attributable to RDHL promotional activities within the territory agreed upon with Napo. For RDHL to further establish and maintain marketing and commercialization capabilities in the U.S., expansion of development, regulatory, marketing and sales capabilities, which could increase the cost of operations may need to be undertaken. RDHL has no prior experience commercializing therapeutic candidates on its own. RDHL also has direct competitors, many of whom may have greater resources for selling, marketing and distributing products that RDHL plans to commercialize. RDHL relies on third parties to manufacture active pharmaceutical ingredients. If any of those manufacturers is unable or unwilling to meet current or future needs, RDHL could experience a delay in obtaining regulatory clearances for therapeutic candidates or products. There also is no guarantee that supply interruptions from manufacturers or APIs will not occur. RDHL faces risks involved with international business such as, but not limited to: exchange rates, capital and exchange controls, expropriation and other restrictive government actions and trade regulations. WBB Securities, LLC 3

4 Product Pipeline Source: RedHill Biopharma, LLC 424B5, December 4, 2018 Commercial Products Donnatal In January 2017, RDHL entered into an exclusive three-year co-promotion agreement with Concordia Pharmaceuticals, Inc. (TSX: CXR) granting RDHL promotion rights for Donnatal in the U.S. CXR will be responsible for manufacture and supply of Donnatal. RDHL began promoting Donnatal in select U.S. territories in June 2017, using its GI-focused sales force. Donnatal is available by prescription. It is an adjunctive therapy for the treatment of irritable bowel syndrome (irritable colon, spastic, mucous colitis) and small bowel inflammation (acute enterocolitis). Donnatal slows the natural movements of the digestive system by relaxing the muscles in the stomach and intestines. Donnatal comes as an immediate-release tablet and an immediate-release, fast-acting liquid. Mytesi In June 2018, RDHL entered into an exclusive co-promotion agreement with Napo Pharmaceuticals, Inc. (Private) to co-promote Mytesi in the U.S to certain gastroenterologists and primary care physicians. Mytesi is an anti-diarrheal, indicated for symptomatic relief of noninfectious diarrhea in adult patients with HIV/AIDS who are on antiretroviral therapy. The recommended adult dosage for Mytesi is once- to twice-daily via delayed-release tablets. WBB Securities, LLC 4

5 EnteraGam In April 2017, Entera Health Inc. (Private) entered a sole licensing agreement with RDHL, granting RDHL exclusive U.S. rights to EnteraGam. RDHL has sole U.S. rights for sale, distribution and use-related trademarks, and other intellectual property. RDHL will pay Entera Health royalties based on net sales of EnteraGam. In June 2017, RDHL began promoting EnteraGam in select U.S. territories. EnteraGam is a commercially-available medical food product for the dietary management of chronic diarrhea and loose stools. It is a self-administered powder that must be used under the supervision of a medical professional. EnteraGam is packaged in a packet that contains 5 grams of serum-derived bovine immunoglobulin/protein isolate (SBI), 5 grams of dextrose (glucose) and a trace amount of sunflower lecithin. EnteraGam has been studied for dietary management in diarrhea-predominant irritable bowel syndrome (IBS-D), inflammatory bowel disease (IBD) and human immunodeficiency virus (HIV)-associated enteropathy. Esomeprazole Strontium Delayed-Release Capsules In August 2017, RDHL entered into an exclusive commercialization agreement with ParaPRO LLC, (Private) granting RDHL the right to promote Esomeprazole Strontium Delayed-Release Capsules to gastroenterologists in certain U.S. territories. Promotion began in September Esomeprazole strontium is a prescription proton pump inhibitor (PPI), for short-term treatment of adults with gastroesophageal reflux disease (GERD) and/or erosive esophagitis (EE), risk reduction of NSAID-associated gastric ulcers, and eradication of H. pylori infection and duodenal ulcer disease and long-term treatment of pathological hypersecretory conditions including Zollinger-Ellison syndrome. Esomeprazole Strontium Delayed-Release Capsules are taken daily, for varying lengths of time depending on the indication and come in and 49.3mg capsules. TALICIA (RHB-105) Product Candidates TALICIA is a fixed-dose, oral, combination therapy of two antibiotics and a proton pump inhibitor (PPI) in a single capsule for treatment of H. pylori infection, the strongest risk factor for the development of gastric cancer and a major risk factor for development of peptic ulcer disease. RDHL announced in December 2018, positive top-line results from the ERADICATE Hp2 study, of Talicia in H. pylori infection. This was a two-arm, randomized, double-blind, active comparator-controlled, confirmatory Phase 3 study. TALICIA successfully met its primary endpoint of 70% superiority over historical standard-of-care, with 84% eradication of H. pylori infection versus 58% in the active comparator arm in the intent-to-treat (ITT) population with a p value < No safety issues were reported in the study and TALICIA was well tolerated. WBB Securities, LLC 5

6 RDHL expects to submit an NDA for TALICIA during 1H RDHL also expects to launch TALICIA in the U.S. during 2H/2019. TALICIA was granted Qualified Infectious Disease Product (QIDP) designation and Fast-Track designation by the FDA. TALICIA also is eligible for priority review status. If approved, TALICIA will receive a total of 8 years exclusivity. RDHL retains patent protection for TALICIA until at least RHB-104 RHB-104 is a proprietary, oral, antibiotic combination therapy (clarithromycin, clofazimine, rifabutin) to treat Crohn s disease. RHB-104 capsules contain intracellular, anti-mycobacterial and anti-inflammatory properties based on the hypothesis that Crohn s disease is caused by a MAP infection. Results from a successful Phase 3 study of RHB-104 (the MAP US Study) in treatment of Crohn s disease were announced in July In this study, primary and secondary endpoints were met. RHB-104 led to early remission of Crohn s disease after 16 weeks and remission at 26 weeks. RHB-104 was found to be generally safe and well tolerated. A Phase 2a proof of concept study was completed in December 2016 for treatment of multiple sclerosis in Israel with encouraging top-line results. Following are specific outcomes of the MAP US study that further demonstrate the benefit of RHB-104 as add-on therapy to SoC in Crohn s disease as shown in this trial. MAP US was a randomized, double-blind, placebo-controlled Phase 3 study that enrolled 331 subjects with moderately to severely active Crohn s disease at over 100 investigative sites in the U.S, Europe, Australia, New Zealand and Israel. Subjects were randomized 1:1 to receive orally-administered RHB-104 or placebo as an add-on therapy to baseline SoC medications, which included 5-ASAs, corticosteroids, immunomodulators and anti-tnf agents (infliximab/adalimumab). The MAP US study successfully met the primary endpoint of clinical remission at week 26 (37% vs. 23%, p=0.007) and other endpoints, including early clinical remission at week 16 (42% vs. 29%, p=0.015), clinical remission at weeks 16 and 52 (25% vs. 12%, p=0.003) and durable clinical remission on all visits, weeks 16 through 52 (18% vs. 9%, p=0.018). RDHL reported that despite not being prospectively powered, meaningful and statistically significant treatment effects (RHB-104 vs. placebo) were observed in patients using concomitant immunomodulators (39% vs. 20%, p<0.01) and corticosteroids (36% vs. 20%, p=0.045) throughout the trial. Furthermore, despite very small sample sizes of the following subgroups of patients and lack of prospective powering, strong trends in favor of RHB-104 were also observed in patients receiving anti-tnf agents achieving remission at week 26 (36% vs.17%, p=0.08) (total patients analyzed=67) and the proportion of patients achieving corticosteroid-free remission at week 52 (24% vs. 6%, p=0.175) (total patients analyzed=37). Additionally, in a small subset of patients in whom endoscopy was performed, the study also showed statistically significant improvement in endoscopic healing at week 26 (36% vs. 10%, p=0.048) (total patients analyzed=35). WBB Securities, LLC 6

7 RHB-204 RHB-204 is an oral antibiotic combination therapy with intracellular, anti-mycobacterial and antiinflammatory properties. It is being developed for Nontuberculous Mycobacteria (NTM) infections. NTM are pervasive in soils and natural and engineered water systems. Treatment of NTM infection is difficult, requiring multiple antibiotics and an extended treatment. Consequently, new antimicrobial agents for NTM are urgently needed. A Phase 3 study of RHB-204 for treatment of pulmonary NTM infections caused by Mycobacterium avium complex (MAC) is planned for mid RHB-204 was granted QIDP designation: including eligibility for Fast Track status. RHB-204 would receive extended market exclusivity for a total of 8 years by the FDA for the treatment of NTM Infections. NTM infections have been increasing worldwide over the past two decades. Approximately 80% of pulmonary NTM infections in the U.S. are associated with MAC. Pulmonary NTM disease can include fever, weight loss, chronic or recurring cough, chest pain, blood in sputum and fatigue. BEKINDA (RHB-102) BEKINDA is a proprietary, oral, once-daily pill of the antiemetic drug ondansetron, targeting multiple gastrointestinal indications. Ondansetron is a 5-HT3 (Serotonin) receptor antagonist, a class of drugs considered to be the most effective and significant in the prevention of nausea and vomiting. BEKINDA met primary and secondary endpoints in a Phase 3 study for treatment of Gastroenteritis and Gastritis. Results were announced in June BEKINDA also achieved positive results in a Phase 2 study in IBS-D. RDHL is designing a confirmatory study for acute Gastroenteritis and Gastritis. RHB-106 In February 2014, RDHL and Salix Pharmaceuticals (Private) entered an exclusive agreement for worldwide rights to RHB-106, a capsule for the preparation and cleansing of the gastrointestinal tract prior to abdominal procedures, including diagnostic tests, colonoscopies and surgical procedures such as laparotomy. Since it is a tasteless, solid, orally-administered product, it has the potential for reduced side-effects and improved compliance. A Phase 2a study was completed in Australia in 2005 that demonstrated significantly improved patient responses and equal bowel cleansing to traditional products. RHB-106 was originally acquired from the Australian pharmaceutical company, Gioconda in YELIVA YELIVA is a Phase 2, oral, anti-cancer and anti-inflammatory drug that targets multiple oncology, inflammatory and gastrointestinal indications. It inhibits formation of S1P, which regulates cell proliferation, migration, immune cell trafficking and angiogenesis, and also is WBB Securities, LLC 7

8 involved in immune-modulation and suppression of innate immune responses from T cells. S1P promotes cancer growth, and proliferation and pathological inflammation, including TNFα signaling and other inflammatory cytokine production. Specifically, YELIVA inhibits the SK2 enzyme, which blocks the synthesis of S1P. RDHL acquired YELIVA from U.S.-based Apogee Biotechnology Corp. (Private) in March Apogee completed a successful Phase 1 clinical study in cancer patients with advanced solid tumors. A Phase 2a clinical study in advanced, unresectable, intrahepatic and extrahepatic cholangiocarcinoma was initiated at Mayo Clinic and MD Anderson. YELIVA was granted FDA Orphan Drug designation for the treatment of cholangiocarcinoma. Enrollment for the study is expected to be complete by mid A Phase 2 study of YELIVA for treatment of advanced hepatocellular carcinoma is ongoing at the Medical University of South Carolina Hollings Cancer Center. The study is supported by a $1.8 million grant from the National Cancer Institute (NCI) and will be further supported by additional funding from RDHL. A Phase 1b/2 clinical study of YELIVA for treatment of multiple myeloma is ongoing at Duke University Medical Center. The study is supported by a $2 million grant from the NCI Small Business Innovation Research Program awarded to Apogee Biotechnology in conjunction with Duke University, with additional support from RDHL. RHB-107 RHB-107 is an oral, protease inhibitor, targeting pancreatic cancer and inflammatory gastrointestinal diseases. RHB-107 established a clinical safety profile from over 300 patients including two Phase 2 studies in locally advanced pancreatic cancer and metastatic breast cancer. RHB-107 received FDA Orphan Drug designation for the adjuvant treatment of pancreatic cancer. RDHL acquired the worldwide exclusive rights for development and commercialization (except China, Hong Kong, Taiwan and Macao) for all indications from Heidelberg Pharma AG (WL6.DE) in June Management Dror Ben-Asher, CEO and Co-Founder of RedHill was previously with ProSeed Capital, a European corporate finance boutique. Mr. Ben-Asher is a graduate of the University of Oxford (M.Jur.) and completed LL.M. studies at Harvard University. At Harvard, Mr. Ben-Asher was also a Fulbright Scholar focusing on the pharmaceutical industry and markets, an Olin Fellow for Law, Economics and Business, and an Economics Teaching Fellow at Harvard s Economics Department. Dror Ben-Asher received an LL.B. with distinction (First Class Honours) from the University of Leicester. WBB Securities, LLC 8

9 Reza Fathi Ph.D., Senior VP R&D previously served as Director of Research Operations at XTL Biopharmaceuticals, VivoQuest, PharmaGenics, Metrigen, Enzo Biochem and the Harvard Institute of Chemistry and Cell Biology. Dr. Fathi received a Ph.D. and was a Post-Doctoral Fellow at Rutgers University. He received a BSc from Texas Tech University. Gilead Raday, Chief Operating Officer previously served as interim CEO of Sepal Pharma, and as a director at TK Signal and Morria Biopharmaceuticals. He is a graduate of the University of Cambridge (M.Sc. in Bioscience Enterprise) and the Hebrew University of Jerusalem (M.Sc. Neurobiology, BSc Mathematics and Biology). Adi Frish, Senior VP Business Development and Licensing previously served as VP Business Development at Medigus and was a partner at Y. Ben-Dror & Co. He is a graduate of Bar Ilan University (LL.M.) and Essex University (LL.B. with Honors). Micha Ben Chorin, Chief Financial Officer previously was a member of the team that built GVT (currently Telefonica Brazil), served as CFO of Pyramid Analytics and CFO of Starhome B.V. Mr. Ben Chorin holds an M.A. and a B.A. from Tel-Aviv University and is a Certified Public Accountant. Guy Goldberg, Chief Business Officer previously served as Senior Vice President of Business Operations at Eagle Pharmaceuticals, was a member of the investment team at ProQuest Investments, and a consultant at McKinsey & Company. He holds a B.A. in Economics and Philosophy from Yale University and a J.D. from Harvard Law School. Ira Kalfus M.D., Medical Director previously served as VP of Medical Affairs at Lev Pharmaceuticals, Aetna/US Healthcare, internist at Hillside Medical Associates and President of the Staff Society and Chairman of Performance Improvement at Long Island Jewish Medical Center. Dr. Kalfus completed his residency in Internal Medicine at LIJ, received an M.D. degree from the Albert Einstein College of Medicine and a B.A. in biology from Columbia University. Terry F. Plasse M.D., Medical Director previously served as Director for Oncology for North America at Rhone-Poulenc Rorer and as a consultant to Chiron, Merck and Bristol-Myers Squibb. Dr. Plasse completed his fellowship in medical oncology at Mt Sinai Medical Center and his medical residency at Beth Israel Hospital. He is a graduate of the Washington University School of Medicine and received his B.A. from Brandeis University, in Waltham, MA. Craig Miller, VP US Business Operations, Market Access previously served with Salix Pharmaceuticals for 15 years, where he held positions of increasing responsibility and most recently served as Director of Trade Relation. Mr. Miller also previously served in commercial operations roles at Oclassen Pharmaceuticals Inc. and Watson Pharmaceuticals. Shani Maurice, VP Business Development & Communications previously served as a Project Manager and a Research Analyst at the Israeli Prime Minister s Office, leading technological projects. She holds a B.Sc. in biology and business administration from the Hebrew University of Jerusalem. Patricia Anderson, VP, Regulatory Affairs previously served as VP of Regulatory Services at MAPI SRS and as a member of the Executive Steering Committee for SRS, in various WBB Securities, LLC 9

10 regulatory affairs positions at PharmApprove International Regulatory Consultants, Hyal Pharmaceutical Corporation and Bayer Canada. Ms. Anderson graduated with a B.Sc. in Biology from York University and a M.Sc. in Regulatory Affairs from University of Hertfordshire. Ms. Anderson received a Regulatory Affairs Certification (RAC) from the Regulatory Affairs Professional Society and Ms. Anderson also is a Fellow of the Regulatory Affairs Professional Society. David Wasserman, VP Business Alliance and Compliance Officer previously served as Executive Director Global Business Alliance Management at Salix Pharmaceuticals, Director of Sales Training and Career Development at Watson Pharmaceuticals (now Actavis) and the Dermatology Division at Glaxo PLC. Mr. He also held positions as Regional Sales Manager at Astellas, PharmaDerm, and Oclassen Pharmaceuticals. Clara Fehrmann, Director of Clinical Operations previously served as Clinical Project Manager at Merck Canada, Inc., drug development at Santhera Pharmaceuticals and was a Clinical Research Associate at ICON Clinical Research, Inc. in Canada. She graduated with a B.Sc. in Microbiology and Immunology from McGill University in Montreal and holds an M.Sc. degree in Pharmaceutical Sciences from the University of Montreal, Canada. Raymond M. Panas, Ph.D., Director of Medical Affairs was previously with TAP Pharmaceuticals, Sucampo Pharmaceuticals, Wellstat Therapeutics, and Entera Health. He has supported graduate students as adjunct faculty and dissertation advisor for The George Washington University, University of Liverpool and Walden University. Dr. Panas received his B.S. in Biology and Economics and an MPH degree in Community Health Services from the University of Pittsburgh, and a Ph.D. in Public Health at Walden University. He is also certified as a Technologist in Immunology and a Certified Clinical Research Associate. Board of Directors Dror Ben-Asher, Chairman See management section for full biography. Dan Suesskind, Director served 31 years as CFO of Teva Pharmaceutical Industries until He currently serves as a member of Teva s Board of Directors a board member at Migdal Group, Gefen Biomed Investment, NESS Technologies, Syneron Medical and the Jerusalem Foundation. He holds a B.A. in economics and political science from the Hebrew University and an MBA from the University of Massachusetts. Mr. Suesskind is a member of the Israeli Forum of Chief Financial Officers and was awarded the Life Time Achievement Award from that forum in Eric Swenden, Director had a long and successful career in finance and company management. He held various senior positions in companies including Vandemoortele Food Group and General Bank (Fortis) and Lifeline Scientific (current). Kenneth Reed M.D., Director is currently serving with Kenneth Reed M.D. P.C. (Dermatologist) and Minerva Biotechnologies. Dr. Reed also was a Clinical Investigator for Amgen, Astellas and Centocor (JNJ). He is a graduate of Harvard Medical School with a residency in dermatology). He performed his medical internship at Thomas Jefferson University WBB Securities, LLC 10

11 Hospital, received his M.D. degree from the College of Medicine and Dentistry of New Jersey and a B.A. from Brown University. Rick D. Scruggs, Director most recently served as Executive Vice President of Business Development at Salix Pharmaceuticals, Ltd. until its acquisition by Valeant Pharmaceuticals International. He was appointed Executive Vice President for business development and worldwide distribution in Mr. Scruggs also served as the Head of the Board of Directors of Oceana Therapeutics, Salix s European subsidiary. Mr. Scruggs joined Salix after working at Oclassen Pharmaceuticals Inc. and Watson Pharmaceuticals, Shmuel Cabilly Ph.D., Director previously having served as Co-Founder and Chief Scientist of Ethrog Biotech, which was sold to Invitrogen. He received his Ph.D. from the Hebrew University in Immunology and was a Post-Doctoral fellow at the City of Hope Research Institute heading a joint City of Hope/Genentech project where he developed a new technology for recombinant antibody production. Ofer Tsimchi, Director is the co-founder and manager of Danbar Group and serves as the Chairman of Polysack (TASE: PLSK). Mr. Tsimchi served as a board member of several companies including, among others, Tefron (TASE:TFRN) and presently is a board member of Kapro Industries Ltd.. Mr. Tsimchi holds a B.Sc. in Economics and Agriculture from the Hebrew University of Jerusalem. Nurit Benjamini, Director previously served as CFO of Wix.com Inc., Coppergate Communications Ltd. and Compugen Ltd. Ms. Benjamini currently serves as CFO of Tabtale and as a Director at BioLineRx Ltd. and Allot Communications. Nicolas Weinstein, Director presently serves as Managing Director of Water Bear Investments LLC and leads the healthcare and venture investments of EMC2 Fund Ltd. and its partnership interests in Olive Tree Ventures Limited Partnership of Israel and the U.S. biotechnology fund, Puma Bioventures. Mr. Weinstein previously served as country head in Chile for Abbott Laboratories/CFR Pharmaceuticals and also held VP Business Development and VP Marketing & Sales positions at CFR Pharmaceuticals. Mr. Weinstein holds a M.Sc. in Finance from Universidad Adolfo Ibanez inchile and an MBA from the Kellogg School of Management. WBB Securities, LLC 11

12 Historical and Future Performance EPS Q1 (0.05)A (0.05)A Q2 (0.06)A (0.05)A Q3 (0.09)A (0.04)A Q4 (0.05)A (0.05)E Year (0.26)A (0.19)E (0.20)E P/E NM NM NM EPS Growth NM NM NM FY Rev. (Mil) 4.01A 9.00E 11.42E FY: DEC WBB Securities, LLC 12

13 Distribution of Ratings and Disclosure of Banking Relationships: The following table shows WBB s ratings distribution expressed as a percentage of all securities rated as of the end of the most recent calendar quarter, as well as the percentage of subject companies within each rating category for whom WBB has provided investment banking services within the previous 12 months. WBB has acted as a co-manager for RedHill within the past 12 months. Percentage of Covered Securities Percentage of Banking Clients Buy 77% 6% Hold 9% 0% Sell 14% 0% The research analyst who is primarily responsible for the research contained in this research report and whose name is listed on this report: (1) attests that all of the views expressed in this research report accurately reflect that of the research analyst's personal views about any and all of the securities and issuers that are the subject of this research report; and (2) attests that no part of that research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in this research report. All WBB Securities, LLC ("WBB") employees, including research associates, receive compensation that is based in part upon the overall performance of the firm, including revenues generated by WBB's investment banking department, but not directly related to those revenues. Although information herein has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Opinions and estimates may be changed or withdrawn without notice. This report is not intended as an offer or solicitation, or as the basis for any contract, for the purchase or sale of any security, loan or other instrument. We or our affiliates or persons associated with us or such affiliates ( Associated Persons ) do not maintain a long position in securities, loans or other instruments referred to herein or in other securities, loans or instruments of issuers named herein, or in related derivatives; we may purchase or sell, make a market in, or buy or sell on a principle basis, or engage in other transactions involving such securities, loans or instruments of such issuers; and/or provide investment banking, credit, or other services to any issuers named herein. The author of this report and the officers of WBB do not own options, rights or warrants to purchase any of the securities of the issuer whose securities are recommended, unless the extent of ownership is nominal. The past performance of securities, loans or other instruments does not guarantee or predict future performance. This report may not be reproduced or circulated without our written authority. WBB Securities, LLC 13