6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of July 2013

Commission File No.:001-35773

REDHILL BIOPHARMA LTD.

(Translation of registrant’s name into English)

21 Ha'arba'a Street, Tel Aviv, 64739, Israel

 (Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F S Form 40-F £

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____ 

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____ 

Attached hereto and incorporated by reference herein are the following:

Exhibit 1: Registrant's press release dated July 22, 2013, entitled: "RedHill Biopharma Reports Results for the Second Quarter of 2013”.

Exhibit 2: Registrant’s interim unaudited financial information as of June 30, 2013 and for the six months then ended.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

      Date: July 22, 2013   REDHILL BIOPHARMA LTD. (the "Registrant")   By: /s/ Ori Shilo —————————————— Ori Shilo Deputy Chief Executive Officer Finance and Operations

EX-1

EXHIBIT 1

RedHill Biopharma Reports Results for the Second Quarter of 2013

RedHill continues advanced preparations for the Phase III study with RHB-104 (Crohn's) and Phase II/III study with RHB-105 (H. pylori)

Key Highlights include:

• FDA acceptance of RHB-103 (migraine) NDA for substantive review, with a PDUFA goal date of February 3, 2014
• Commencement of supplementary PK program with RHB-102 (once daily anti-emetic) to support an NDA submission planned for the first quarter of 2014
• Commencement of patient screening in a phase IIa study with RHB-104 for Multiple Sclerosis in June 2013
• Receipt of warrants exercise notice from directors for a total consideration of approximately $400,000

TEL-AVIV, Israel, July 22, 2013 (GLOBE NEWSWIRE) -- RedHill Biopharma Ltd. (Nasdaq:RDHL) (TASE:RDHL) (the "Company" or "RedHill"), an emerging Israeli biopharmaceutical company focused primarily on the development and acquisition of late clinical-stage, proprietary formulations and combinations of existing drugs, today reported financial results for the second quarter ended June 30, 2013.

The Company achieved significant milestones in the second quarter of 2013, including:

(i) Acceptance of the RHB-103 (a proprietary oral thin film formulation of rizatriptan for the treatment of acute migraine) New Drug Application (NDA) for substantive review by the U.S. Food and Drug Administration (FDA) and assignment of a Prescription Drug User Fee Act (PDUFA) goal date of February 3, 2014.

(ii) Commencement of the first of two pharmacokinetic (PK) studies with RHB-102 (a once daily oncology support anti-emetic), with the results from both trials expected by October 2013 and an NDA submission planned for the first quarter of 2014.

(iii) Commencement of patient screening in a Phase IIa, proof of concept, clinical study with RHB-104 for Multiple Sclerosis (MS).

Financial highlights for the first half of 2013:

Research and Development Expenses, net for the quarter ended June 30, 2013 were approximately $2.0 million, an increase of $0.7 million (approximately 54%) compared to $1.3 million for the quarter ended March 31, 2013. The increase was mainly due to expenses related to preparations for the Phase III clinical trial with RHB-104 (Crohn's). Research and Development Expenses, net for the six months ended June 30, 2013 were approximately $3.3 million, a decrease of $0.5 million (approximately 13%) compared to $3.8 million in the six months ended June 30, 2012. The decrease was mainly attributed to a discount from a Canadian service provider in the amount of $0.6 million.

General and Administrative Expenses for the quarter ended June 30, 2013 were approximately $0.5 million, a decrease of $0.2 million (approximately 28%) compared to $0.7 million for the quarter ended March 31, 2013. The decrease was mainly due to expenses associated with the Company's listing on NASDAQ. General and Administrative Expenses for the six months ended June 30, 2013 were approximately $1.2 million, similar to the six months ended June 30, 2012.

Operating Loss for the quarter ended June 30, 2013 was approximately $2.5 million, an increase of $0.5 million (approximately 25%) compared to $2.0 million for the quarter ended March 31, 2013. The increase was mainly due to increase in Research and Development Expenses, net. Operating Loss for the six months ended June 30, 2013 was approximately $4.5 million, a decrease of $0.5 million (approximately 10%) compared to $5.0 million in the six months ended June 30, 2012. The decrease was mainly due to a decrease in research and development expenses, net.

Net Cash Used in Operating Activities for the six months ended June 30, 2013 was $3.9 million, an increase of $0.1 million compared to $3.8 million in the six months ended June 30, 2012.

Net Cash Resulting from Investment Activities for the six months ended June 30, 2013 was $1.1 million compared to net cash of $5.6 million used for investment activities in the six months ended June 30, 2012. The decrease was mainly due to the conversion of short term deposits into cash and cash equivalents and to proceeds the Company received from the sale of marketable securities during the six months ended June 30, 2013.

Cash Balance¹ as of June 30, 2013 was approximately $14.7 million compared to $18.4 million as of December 31, 2012. The decrease of $3.7 million was mainly due to cash used to fund operating activities during the six months ended June 30, 2013.

Key operational highlights for the second quarter ended June 30, 2013:

1. On June 18, 2013, the Company and its co-development partner for RHB-103, IntelGenx Corp., reported that the NDA submitted for RHB-103, a proprietary oral thin film formulation of rizatriptan, a leading drug for the treatment of acute migraine, had been accepted for substantive review by the FDA. The RHB-103 NDA is subject to a standard 10-month review period and has been assigned a PDUFA goal date of February 3, 2014.
    
2. On July 11, 2013, the Company reported that it had commenced dosing in the first of two supplementary pharmacokinetic studies with RHB-102, a patent protected, oral, extended-release (24 hours) formulation of ondansetron, indicated for the prevention of radiotherapy induced nausea and vomiting (RINV) and chemotherapy induced nausea and vomiting (CINV). Subject to the results from the two studies, expected by October 2013, and the required regulatory process, and in light of the data from prior successful studies with RHB-102, the Company plans to submit an NDA seeking U.S. marketing approval of RHB-102 in the first quarter of 2014, earlier than previously planned.
    
3. On June 5, 2013, the Company reported that it had commenced patient screening in the Phase IIa, proof of concept, clinical study (the "CEASE-MS Study"), to assess the efficacy and safety of fixed dose combination RHB-104, a patent protected combination therapy of three antibiotics in a single capsule, as an add-on therapy to interferon beta-1a in patients treated for Relapsing Remitting Multiple Sclerosis (RRMS). The study follows the successful completion of four pre-clinical studies with RHB-104.
    
4. On May 29, 2013, the Company reported that it had concluded a Type B meeting with the FDA regarding its cardio drug RHB-101, a controlled release, proprietary, once-daily formulation of carvedilol, for the treatment of congestive heart failure and hypertension. Based on the FDA's feedback, prior to NDA submission, the Company plans to conduct additional Chemistry, Manufacturing, and Controls (CMC) work and to conduct a comparative bioavailability study and a dose linearity study.
    
5. On May 28, 2013, the United States Patent and Trademark Office (USPTO) issued a new patent covering RHB-101 (No.: 8,449,914) entitled "Controlled release carvedilol compositions", which will expire no earlier than June, 2024.
    
6. SCOLR Pharma, Inc. a U.S.- publicly traded company from whom the Company licenses its rights to its RHB-102 anti-emetic drug, recently announced that it ceased business operations. It should be noted that under the terms of the license agreement between RedHill and SCOLR, should SCOLR file for bankruptcy, RedHill has the protection afforded to the licensee under the United States Bankruptcy Code. Moreover, RedHill independently filed with the USPTO, on March 14, 2013, a provisional patent application, owned by RedHill, covering the formulation of RHB-102. The Company is currently assessing the possible implications of SCOLR's decision to cease its operations and is taking active steps to further safeguard its rights under the RHB-102 license agreement. The Company continues the development program of RHB-102 as planned, and is not expecting any delays in such program resulting from SCOLR's decision to cease its operations. 
    
7. In July 2013, the Company received a notice of exercise from two of its directors, Dr. Shmuel Cabilly and Mr. Eric Swenden, with respect to non-tradable warrants that had been granted to them as part of their investment in the Company during the 2010 pre-IPO bridge financing. Accordingly, the Company will issue to the directors 471,962 ordinary shares for a total consideration to the Company of $405,000.

¹ Including cash, bank deposits and short term investments.

Ori Shilo, Deputy CEO Finance and Operations said: "We are very pleased with our second quarter results. We continued to advance our late clinical stage development programs and achieved another significant milestone with the acceptance of our first New Drug Application (NDA) of RHB-103 for substantive review by the FDA and the assignment of a Prescription Drug User Fee Act (PDUFA) goal date of February 3, 2014. The Company maintains a strong cash balance, with approximately $14.7 million in cash at the end of the second quarter, and no financial debt. We are also very pleased with the vote of confidence by two of our directors who elected to invest another $400,000 in the Company through the exercise of warrants. Looking ahead, we expect significant milestones in the second half of 2013, including the planned commencement of a Phase III study with RHB-104 for Crohn's disease and a Phase II/III study with RHB-105 for H. pylori bacterial infection, and completion of the PK program with the anti-emetic drug RHB-102 supporting planned NDA submission in the first quarter of 2014."

About RedHill Biopharma Ltd.:

RedHill Biopharma Ltd. (Nasdaq:RDHL) (TASE:RDHL) is an emerging Israeli biopharmaceutical company focused primarily on the development and acquisition of late clinical-stage, proprietary formulations and combinations of existing drugs. The Company's current product pipeline includes: (i) RHB-101 - a once-daily formulation of a leading congestive heart failure and high blood pressure drug, with a planned NDA submission subject to further CMC and PK work, and a planned Marketing Authorization Application (MAA) in Europe subject to further CMC work, (ii) RHB-102 - a once-daily formulation of a leading chemotherapy and radiotherapy-induced nausea and vomiting prevention drug, planned for U.S. NDA submission in the first quarter of 2014, (iii) RHB-103 - an oral thin film formulation of a leading drug for the treatment of acute migraine, with a U.S. NDA accepted for review by the FDA in June 2013 and a PDUFA date of February 3, 2014, (iv) RHB-104 - a combination therapy for the treatment of Crohn's disease, planned to commence a first Phase III trial in the third quarter of 2013, as well as Multiple Sclerosis (MS), with a Phase IIa proof of concept trial currently underway, (v) RHB-105 - a combination therapy for Helicobacter pylori infection, planned to commence a phase II/III trial in the third quarter of 2013, and (vi) RHB-106 - an encapsulated formulation for bowel preparation (laxative) ahead of colonoscopy and other GI procedures. For more information please visit: www.redhillbio.com

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and the Company's current and best understanding of the regulatory status and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the initiation, timing, progress and results of the Company's preclinical studies, clinical trials, and other therapeutic candidate development efforts; (ii) the Company's ability to advance its therapeutic candidates into clinical trials or to successfully complete its preclinical studies or clinical trials; (iii) the extent and number of additional studies that the Company may be required to conduct and the Company's receipt of regulatory approvals for its therapeutic candidates, and the timing of other regulatory filings and approvals; (iv) the clinical development, commercialization, and market acceptance of the Company's therapeutic candidates; (v) the Company's ability to establish and maintain corporate collaborations; (vi) the interpretation of the properties and characteristics of the Company's therapeutic candidates and of the results obtained with its therapeutic candidates in preclinical studies or clinical trials; (vii) the implementation of the Company's business model, strategic plans for its business and therapeutic candidates; (viii) the scope of protection the Company is able to establish and maintain for intellectual property rights covering its therapeutic candidates and its ability to operate its business without infringing the intellectual property rights of others; (ix) parties from whom the Company licenses its intellectual property defaulting in their obligations to the Company under their respective licensing agreements; (x) estimates of the Company's expenses, future revenues capital requirements and the Company's needs for additional financing; (xi) competitive companies, technologies and the Company's industry; and (xii) statements as to the impact of the political and security situation in Israel on the Company's business. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on From 20-F filed with the SEC on February 19, 2013, and its Reports on Form 6-K. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. All forward-looking statements included in this Press Release are made only as of the date of this Press Release. We assume no obligation to update any written or oral forward-looking statement made by us or on our behalf as a result of new information, future events or other factors.

REDHILL BIOPHARMA LTD.
CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
	Three months ended June 30		Six months ended June 30
	2013	2012	2013	2012
	U.S. dollars in thousands
REVENUE	4	5	8	9
RESEARCH AND DEVELOPMENT EXPENSES, NET	1,982	1,493	3,328	3,821
GENERAL AND ADMINISTRATIVE EXPENSES:	548	578	1,223	1,187
OPERATING LOSS	2,526	2,066	4,543	4,999
FINANCIAL INCOME	17	40	60	123
FINANCIAL EXPENSES	3	247	6	131
FINANCIAL INCOME (EXPENSES), NET	14	(207)	54	(8)
LOSS AND COMPREHENSIVE LOSS	2,512	2,273	4,489	5,007
LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars)	0.04	0.04	0.07	0.10
WEIGHTED AVERAGE OF ORDINARY SHARES (in thousands)	61,842	52,398	61,376	52,359

REDHILL BIOPHARMA LTD.
CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
	June 30	December 31
	2013	2012
	U.S. dollars in thousands
CURRENT ASSETS
Cash and cash equivalents	14,176	16,814
Bank deposits	293	486
Financial assets at fair value through profit or loss	233	1,065
Prepaid expenses and receivables	586	198
	15,288	18,563
NON-CURRENT ASSETS
Restricted bank deposit	73	75
Fixed assets	111	113
Intangible assets	1,545	1,345
	1,729	1,533
Total assets	17,017	20,096
CURRENT LIABILITIES
accounts payable and accrued expenses	1,761	1,078
EQUITY
Ordinary shares	167	143
Ordinary shares to be issued	--	8,020
Additional paid-in capital	39,679	31,469
Warrants	3,232	3,273
Accumulated deficit	(27,822)	(23,887)
Total equity	15,256	19,018
Total liabilities and equity	17,017	20,096

REDHILL BIOPHARMA LTD.
CONDENSED INTERIM STATEMENTS OF CASH FLOW
(Unaudited)
	Six months ended June 30
	2013	2012
	U.S. dollars in thousands
CASH FLOW FROM OPERATING ACTIVITIES
Loss	(4,489)	(5,007)
Adjustments in respect of income and expenses not involving cash flow
Share-based compensation to employees and service providers	554	1,019
Depreciation	11	11
Fair value gains on financial assets at fair value through profit or loss	(44)	20
Revaluation of bank deposits	2	(34)
Accretion of royalty obligations to investors	--	62
Exchange differences relating to cash and cash equivalents	(5)	(10)
	518	1,068
Changes in assets and liability items
Increase in prepaid expenses and receivables	(388)	(146)
Increase in accounts payable and accrued expenses	483	299
	95	153
Net cash used in operating activities	(3,876)	(3,786)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets	(9)	(5)
Purchase of intangible assets	--	(100)
Change in investment in bank deposits	193	(5,467)
Purchase of financial assets at fair value through profit or loss	--	(105)
Proceeds from sale of financial assets at fair value through profit or loss	876	105
Net cash resulting (used) in investing activities	1,060	(5,572)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares and warrants	100	--
Exercise of warrants and options into ordinary shares	73	27
Net cash provided by financing activities	173	27
DECREASE IN CASH AND CASH EQUIVALENTS	(2,643)	(9,331)
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS	5	10
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	16,814	14,070
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD	14,176	4,749

CONTACT: PR contact (US):
         Lauren Glaser
         Vice President
         The Trout Group
         +1-646-378-2972
         lglaser@troutgroup.com

         Company contact:
         Adi Frish
         Senior VP Business Development & Licensing
         RedHill Biopharma
         +972-54-6543-112
         adi@redhillbio.com

EX-2

Exhibit 2

REDHILL BIOPHARMA LTD.

INTERIM FINANCIAL INFORMATION

(UNAUDITED)

JUNE 30, 2013

REDHILL BIOPHARMA LTD.

INTERIM FINANCIAL INFORMATION

(UNAUDITED)

JUNE 30, 2013

TABLE OF CONTENTS

	Page
UNAUDITED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 – IN U.S. DOLLARS:
Condensed interim statements of comprehensive loss	2
Condensed interim statements of financial position	3
Condensed interim statements of changes in equity	4
Condensed interim statements of cash flow	5
Notes to the financial statements	6-10

REDHILL BIOPHARMA LTD.

CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three months ended June 30					Six months ended June 30
	2013		2012			2013		2012
	U.S. dollars in thousands
REVENUE		4		5			8		9
RESEARCH AND DEVELOPMENT EXPENSES, NET, see note 6		1,982		1,493			3,328		3,821
GENERAL AND ADMINISTRATIVE EXPENSES:		548		578			1,223		1,187
OPERATING LOSS		2,526		2,066			4,543		4,999
FINANCIAL INCOME		17		40			60		123
FINANCIAL EXPENSES		3		247			6		131
FINANCIAL INCOME (EXPENSES), NET		14		(207	)		54		(8	)
LOSS AND COMPREHENSIVE LOSS		2,512		2,273			4,489		5,007
LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars)		0.04		0.04			0.07		0.10
WEIGHTED AVERAGE OF ORDINARY SHARES (in thousands)		61,842		52,398			61,376		52,359

The accompanying notes are an integral part of these condensed financial statements.

3

REDHILL BIOPHARMA LTD.

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited)

	June 30			December 31
	2013			2012
	U.S. dollars in thousands
CURRENT ASSETS
Cash and cash equivalents		14,176			16,814
Bank deposits		293			486
Financial assets at fair value through profit or loss		233			1,065
Prepaid expenses and receivables		586			198
		15,288			18,563
NON-CURRENT ASSETS
Restricted bank deposit		73			75
Fixed assets		111			113
Intangible assets		1,545			1,345
		1,729			1,533
Total  assets		17,017			20,096
CURRENT LIABILITIES
accounts payable and accrued expenses		1,761			1,078
EQUITY
Ordinary shares		167			143
Ordinary shares to be issued		-			8,020
Additional paid-in capital		39,679			31,469
Warrants		3,232			3,273
Accumulated deficit		(27,822	)		(23,887	)
Total  equity		15,256			19,018
Total  liabilities and equity		17,017			20,096

The accompanying notes are an integral part of these condensed financial statements.

4

REDHILL BIOPHARMA LTD.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

	Ordinary shares		Ordinary shares to be issued			Additional paid-in capital		Warrants			Accumulated deficit			Total equity
	U.S. dollars in thousands
BALANCE AT JANUARY 1, 2013		143		8,020			31,469		3,273			(23,887	)		19,018
CHANGES IN THE SIX-MONTHS PERIOD ENDED JUNE 30, 2013:
Share-based compensation to employees and service providers		-		-			-		-			554			554
Issuance of ordinary shares and warrants		17		(5,661	)		5,735		9			-			100
Settlement of the royalty obligations		7		(2,359	)		2,352		-			-			-
Exercise of warrants and options into ordinary shares		*		-			123		(50	)		-			73
Comprehensive loss		-		-			-		-			(4,489	)		(4,489	)
BALANCE AT JUNE 30, 2013		167		-			39,679		3,232			(27,822	)		15,256
BALANCE AT JANUARY 1, 2012		142		-			31,168		2,686			(15,209	)		18,787
CHANGES IN THE SIX-MONTHS PERIOD ENDED JUNE 30, 2012:
Exercise of warrants into ordinary shares		*		-			27		-			-			27
Share-based compensation to employees and service providers		-		-			-		-			1,019			1,019
Comprehensive loss		-		-			-		-			(5,007	)		(5,007	)
BALANCE AT JUNE 30, 2012		142		-			31,195		2,686			(19,197	)		14,826

* Represents amount less than $1 thousand.

The accompanying notes are an integral part of these condensed financial statements.

5

REDHILL BIOPHARMA LTD.

CONDENSED INTERIM STATEMENTS OF CASH FLOW

(Unaudited)

	Six months ended June 30
	2013			2012
	U.S. dollars in thousands
CASH FLOW FROM OPERATING ACTIVITIES
Loss		(4,489	)		(5,007	)
Adjustments in respect of income and expenses notinvolving cash flow
Share-based compensation to employees and service providers		554			1,019
Depreciation		11			11
Fair value gains on financial assets at fair value through profit or loss		(44	)		20
Revaluation of bank deposits		2			(34	)
Accretion of royalty obligations to investors		-			62
Exchange differences relating to cash and cash equivalents		(5	)		(10	)
		518			1,068
Changes in assets and liability items
Increase in prepaid expenses and  receivables		(388	)		(146	)
Increase in accounts payable and accrued expenses		483			299
		95			153
Net cash used in operating activities		(3,876	)		(3,786	)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets		(9	)		(5	)
Purchase of intangible assets		-			(100	)
Change in investment in bank deposits		193			(5,467	)
Purchase of financial assets at fair value through profit or loss		-			(105	)
Proceeds from sale of financial assets at fair value through profit or loss		876			105
Net cash resulting (used) in investing activities		1,060			(5,572	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares and warrants		100			-
Exercise of warrants and options into ordinary shares		73			27
Net cash provided by financing activities		173			27
DECREASE IN CASH AND CASH EQUIVALENTS		(2,643	)		(9,331	)
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS		5			10
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		16,814			14,070
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD		14,176			4,749
Supplementary information on interest received in cash		15			46
Supplementary Information on investing activities not involving cash flows :
Purchase of intangible assets		200			-

The accompanying notes are an integral part of these condensed financial statements.

6

REDHILL BIOPHARMA LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION

(Unaudited)

NOTE 1 - GENERAL:

a.      General

RedHill Biopharma Ltd. (the "Company") was incorporated in Israel on August 3, 2009 and is active in the pharmaceutical industry. The Company is focused primarily on the development and acquisition of therapeutic candidates (the "Drugs") acquired through asset purchases or in-licensing. In particular, the Company acquires or in-licenses and develops patent-protected new formulations and combinations of existing drugs in advanced stages of development with the objective of obtaining marketing approvals for these Drugs. Additionally, the Company's strategy is to commercialize these Drugs mainly through cooperation with pharmaceutical and biotechnology companies.

In February, 2011, the Company listed its securities on the Tel-Aviv Stock Exchange (TASE) and they have been traded on the TASE since that time. Since December, 2012, the Company's American Depositary Shares (“ADSs”) have also been traded on the NASDAQ Capital Market.

The Company's registered address is 21 Ha'arba'a St, Tel-Aviv 64739, Israel.

The Company is still in the research and development phase. Accordingly, the Company is unable to estimate if and when its business will generate positive cash flow. Through June 30, 2013, the Company has accumulated an operating loss and its activities have been funded mainly through public and private offerings of the Company's securities.

The Company plans to fund its future operations through commercialization of its therapeutic candidates, out-licensing certain programs and raising additional capital. The Company's current cash resources are not sufficient to complete the research and development of all of the Company's therapeutic candidates. Management expects that the Company will incur more losses as it continues to focus its resources on advancing its therapeutic candidates based on a prioritized plan that will result in negative cash flows from operating activities. The Company believes its existing capital resources should be sufficient to fund its current and planned operations through approximately August 2014, although no assurance can be given that it will not need additional funds prior to such time.

If the Company is unable to commercialize or out-license its therapeutic candidates, or obtain future financing, the Company may be forced to delay, reduce the scope of, or eliminate one or more of its research and development programs related to its therapeutic candidates, which may have a material adverse effect on the Company's business, financial condition and results of operations.

b.      Approval of condensed interim financial statements

These financial statements were approved by the Board of Directors on July 22, 2013.

7

REDHILL BIOPHARMA LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (continued)

(Unaudited)

NOTE 2 - BASIS OF PREPARATION OF CONDENSED INTERIM FINANCIAL INFORMATION:

a. The Company's condensed interim financial statements for the three and six months ended June 30, 2013 (the "Interim Financial Statements") have been prepared in accordance with International Accounting Standard IAS 34, “Interim Financial Reporting”. These Interim Financial Statements, which are unaudited, do not include all disclosures necessary for a complete presentation of financial position, results of operations, and cash flow in conformity with generally accepted accounting principles. The condensed interim financial statements should be read in conjunction with the annual financial statements as of December 31, 2012 and for the year then ended and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board (“IASB”). The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period. The accounting policies and calculation methods applied in the preparation of the Interim Financial Statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2012 and for the year then ended.

b. New IFRSs not yet in effect, and which the Company did not elect to adopt early, were listed in the 2012 annual financial statements.

NOTE 3 - AGREEMENTS TO PURCHASE INTELLECTUAL PROPERTY OF DRUGS:

In June, 2012, the Company recorded intangible assets in the amount of U.S. $200,000 after reaching a development milestone under an agreement with a Canadian-based company for the co-development of a drug to treat acute migraines.

NOTE 4 - EQUITY:

a.     On January 10, 2013, the Company issued 2,317,186 ordinary shares as part of the acquisition and termination of royalty rights granted to investors pursuant to the August, 2010 mandatory convertible loan agreement. The acquisition and termination of the royalty rights were approved by a general shareholders meeting of the Company on December 26, 2012.

b.     In December 2012, the Company entered into investment agreements with a group of investors for the issuance of 6,481,280 ordinary shares and 3,240,640 warrants exercisable into ordinary shares in consideration for an aggregate investment amount of approximately U.S. $6.35 million, net of direct issuance costs. The ordinary shares and warrants were issued on January 10, 2013.

c.     During the six-months period ended June 30, 2013, the Company received a notice of exercise with respect to non-tradable warrants that had been granted to investors in August and November, 2010. Accordingly, the Company issued 69,920 ordinary shares for U.S. $60,000.

d.     In June, 2013, the Company received a notice of exercise with respect to options that had been issued to a consultant in August, 2010 and in February, 2011. Accordingly, the Company issued 60,000 ordinary shares for U.S. $13,000.

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REDHILL BIOPHARMA LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (continued)

(Unaudited)

NOTE 5 - SHARE-BASED PAYMENTS:

a.     On May 26, 2013, the Board of Directors of the Company resolved, subject to the approval of the Company’s general shareholder meeting, to allocate an aggregate of 850,000 options under the Company’s stock options plan to the Company's directors, including the Company's Chief Executive Officer, Mr. Dror Ben-Asher, and the Company’s Deputy Chief Executive Officer, Finance and Operations, Mr. Ori Shilo. Each option is exercisable into one ordinary share at an exercise price of U.S. $1.12 per share. The options will vest in 16 equal quarterly installments over a four-year period.

The fair value of the options grant to directors, including those granted to the Company's Chief Executive Officer, Mr. Dror Ben-Asher, and the Company’s Deputy Chief Executive Officer, Finance and Operations, Mr. Ori Shilo, on the date of approval, was U.S. $0.5 million.

The fair value of the options was computed using the binomial model and the underlying data used was mainly the following: price of the Company's ordinary share: U.S. $1.067, expected volatility: 66.55%, risk-free interest rate: 1.4% and expected useful life to exercise: seven years.

The options will be exercisable, either in full or in part, from the vesting date until the end of seven years following the date of grant.

b.     On May 26, 2013, the Board of Directors of the Company granted 1,930,000 options to employees and consultants of the Company under the company’s stock options plan. Each option is exercisable into one ordinary share at an exercise price of U.S. $1.12 per share.

The options will vest as follows: for employees and consultants of the Company who had provided services exceeding one year to the Company as of the date of grant, the options will vest in 16 equal quarterly installments over a four-year period. For employees and consultants of the Company who had not provided services to the Company exceeding one year as of the date of grant, the options will vest as follows: 1/4 of the options will vest one year following the grant date, and the rest over the following three years in 12 equal quarterly installments.

The fair value of all options on the date of grant was U.S. $1.1 million. The fair value of the options was computed using the binomial model and the underlying data used was mainly the following: price of the Company's ordinary share: U.S. $1.067, expected volatility: 66.55%, risk-free interest rate: 1.4% and expected useful life to exercise: seven years.

The options will be exercisable, either in full or in part, from the vesting date until the end of seven years from the date of grant.

9

REDHILL BIOPHARMA LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (continued)

(Unaudited)

NOTE 6 - RESEARCH AND DEVELOPMENT EXPENSES, net:

In February, 2013, the Company received a notice from its Canadian service provider ("Service Provider") that the Canadian authorities' successfully completed review of the Service Provider's request for certain incentive cash benefits related to research and development activities provided by the Service Provider for the Company. In March, 2013 the Service Provider received the requested benefits from the Canadian authorities and, subsequently, the Company received a discount from the Service Provider for research and development services provided during 2011 in the amount of U.S. $292,000. As of June 30, 2013 the Company expects to receive an additional discount of U.S. $341,000 in respect to research and development services provided by the Service Provider until June 30, 2013.

During the six month period ended June 30, 2013, the Company recorded research and development expenses, excluding the incurred credit, in an aggregate amount of U.S. $4 million.

NOTE 7 - EVENTS SUBSEQUENT TO JUNE 30, 2013:

a.     In July, 2013, the Company received a notice of exercise with respect to non-tradable warrants that had been granted to investors. Accordingly the Company issued 85,652 ordinary shares for U.S. $75,000.

b.     In July, 2013, the Company received a notice of exercise, by two of its directors, with respect to non-tradable warrants that had been granted to investors. Accordingly the Company will issue 471,962 ordinary shares for U.S. $405,000.

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