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RedHill reported top-line results from its Phase III trial with RHB-104 in Crohn’s Disease (CD). The primary endpoint was met with 37% of patients in the active arm achieving remission at week 26 compared to 23% in placebo (p=0.013). Several other key secondary endpoints also demonstrated efficacy but, judging from the share price volatility on the day of the announcement and various comments in the public space, a lot of attention was paid to the secondary endpoint dealing with isolated late induction of remission at week 52, which introduced confusion, in our view. The initial share price reaction was positive with a >60% gain, but retracted, closing down 7.2%. We note that RedHill’s share price is up by more than 40% versus the current price since May 2018 and given that the RHB-104 data readout was the single biggest catalyst in mid-2018, we believe the share price appreciation over the last few months reflects the value added by RHB-104. Our new valuation is $423m or $19.8/ADS.

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