RedHill’s Crohn’s candidate keeps pace with its Phase 3 drug in lab tests (NASDAQ: RDHL)

What happened

RedHill Biopharma Ltd. (NASDAQ: RDHL) said two sets of lab studies confirmed that RHB-204 kills MAP bacteria, comparably to RHB-104. RHB-204 is the company's reformulated Crohn's disease candidate. RHB-104 is the drug behind its positive Phase 3 trial.

MAP stands for Mycobacterium avium subspecies paratuberculosis. The release says published research suggests it may be a root cause of Crohn's disease.

Prof. Tim Bull of City St George's University of London led one set, using long-term intracellular culture. Prof. Irene Grant of Queen's University Belfast and Dr. Hannah Dane led the other, using spot and phage assays. RedHill announced the results Nov. 2.

Results held across MAP strains from human patients and from animal carriers of Johne's disease. RHB-204 did not induce tolerance during exposures of up to 6 days.

The Belfast work reached comparable killing with lower doses of two active ingredients than RHB-104. The release says this points to potential for reduced toxicity and side effects.

Key numbers

Metric	Latest	Change	Source
RHB-104 Phase 3 efficacy, plus standard of care vs standard of care alone	64% more effective		SEC 6-K Exhibit 99.1
RHB-104 Phase 3 statistical significance (p-value)	0.0048		SEC 6-K Exhibit 99.1
RHB-204 pill burden reduction	40%		SEC 6-K Exhibit 99.1
Expected Crohn's disease sales by 2033 (US, Japan, five major European markets)	$19.1 billion		SEC 6-K Exhibit 99.1
Expected market compound annual growth rate	3.87%		SEC 6-K Exhibit 99.1
RHB-204 patent protection through	2041		SEC 6-K Exhibit 99.1

Read more: RedHill Biopharma (RDHL) company research

Why it matters

The result links RHB-204 to the best clinical evidence RedHill has. In RHB-104's Phase 3 Crohn's disease study, the drug plus standard of care was 64% more effective than standard of care alone (p-value of 0.0048). RedHill also cites a 40% pill burden reduction for RHB-204.

The company points to expected Crohn's disease sales of $19.1 billion by 2033, a compound annual growth rate of 3.87% across the United States, Japan and five major European markets. RHB-204 is patent protected through 2041.

OptimistFi has argued that RedHill's equity value depends on rebuilding commercial traction and funding its pipeline without destructive dilution. The studies support one pipeline asset but add neither sales nor funding, so the effect is mixed.

The company warns that in vitro results may not predict results in animals or humans. It also says it may not start or finish a clinical study of RHB-204.

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What's next

The next test is whether RedHill starts a clinical study of RHB-204 in patients with MAP-positive Crohn's disease. The company says it is pursuing partnerships and grant applications for the program. A study backed by a partner or grant would ease the funding question. A delay would leave RHB-204 as laboratory data.

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