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REDHILL BIOPHARMA LTD.
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(the "Registrant")
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Date: May 27, 2021
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By:
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/s/ Dror Ben-Asher
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Dror Ben-Asher
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Chief Executive Officer
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Press Release
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Company contact:
Adi Frish
Chief Corporate and Business Development Officer
RedHill Biopharma
+972-54-6543-112
adi@redhillbio.com
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Media contacts:
U.S.: Bryan Gibbs, Finn Partners
+1 212 529 2236
bryan.gibbs@finnpartners.com
UK: Amber Fennell, Consilium
+44 (0) 7739 658 783
fennell@consilium-comms.com
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Three Months Ended
|
||||||||
March 31,
|
||||||||
2021
|
2020
|
|||||||
U.S. dollars in thousands
|
||||||||
NET REVENUES
|
20,575
|
1,056
|
||||||
COST OF REVENUES
|
10,253
|
1,715
|
||||||
GROSS PROFIT
|
10,322
|
(659
|
)
|
|||||
RESEARCH AND DEVELOPMENT EXPENSES
|
7,484
|
2,765
|
||||||
SELLING AND MARKETING EXPENSES
|
13,895
|
9,006
|
||||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
7,095
|
4,586
|
||||||
OPERATING LOSS
|
18,152
|
17,016
|
||||||
FINANCIAL INCOME
|
(42
|
)
|
(214
|
)
|
||||
FINANCIAL EXPENSES
|
4,753
|
355
|
||||||
FINANCIAL EXPENSES, net
|
4,711
|
141
|
||||||
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD
|
22,863
|
17,157
|
||||||
LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars):
|
0.05
|
0.05
|
||||||
WEIGHTED AVERAGE OF ORDINARY SHARE (in thousands)
|
429,603
|
352,696
|
March 31,
|
December 31,
|
|||||||
2021
|
2020
|
|||||||
Unaudited | Audited | |||||||
U.S. dollars in thousands
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
75,972
|
29,295
|
||||||
Bank deposits
|
16
|
17
|
||||||
Financial assets at fair value through profit or loss
|
—
|
481
|
||||||
Trade receivables
|
23,306
|
28,655
|
||||||
Prepaid expenses and other receivables
|
4,094
|
5,521
|
||||||
Inventory
|
9,270
|
6,526
|
||||||
112,658
|
70,495
|
|||||||
NON-CURRENT ASSETS:
|
||||||||
Restricted cash
|
16,158
|
16,164
|
||||||
Fixed assets
|
553
|
511
|
||||||
Right-of-use assets
|
4,702
|
5,192
|
||||||
Intangible assets
|
86,052
|
87,879
|
||||||
107,465
|
109,746
|
|||||||
TOTAL ASSETS
|
220,123
|
180,241
|
||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
6,536
|
11,553
|
||||||
Lease liabilities
|
1,636
|
1,710
|
||||||
Allowance for deductions from revenue
|
22,677
|
18,343
|
||||||
Accrued expenses and other current liabilities
|
25,446
|
24,082
|
||||||
Payable in respect of intangible assets purchase
|
10,334
|
17,547
|
||||||
66,629
|
73,235
|
|||||||
NON-CURRENT LIABILITIES:
|
||||||||
Borrowing
|
82,524
|
81,386
|
||||||
Payable in respect of intangible assets purchase
|
13,788
|
7,199
|
||||||
Lease liabilities
|
3,391
|
3,807
|
||||||
Royalty obligation
|
750
|
750
|
||||||
100,453
|
93,142
|
|||||||
TOTAL LIABILITIES
|
167,082
|
166,377
|
||||||
EQUITY:
|
||||||||
Ordinary shares
|
1,309
|
1,054
|
||||||
Additional paid-in capital
|
354,057
|
293,144
|
||||||
Accumulated deficit
|
(302,325
|
)
|
(280,334
|
)
|
||||
TOTAL EQUITY
|
53,041
|
13,864
|
||||||
TOTAL LIABILITIES AND EQUITY
|
220,123
|
180,241
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2021
|
2020
|
|||||||
U.S. dollars in thousands
|
||||||||
OPERATING ACTIVITIES:
|
||||||||
Comprehensive loss
|
(22,863
|
)
|
(17,157
|
)
|
||||
Adjustments in respect of income and expenses not involving cash flow:
|
||||||||
Share-based compensation to employees and service providers
|
872
|
802
|
||||||
Depreciation
|
492
|
350
|
||||||
Amortization and impairment of intangible assets
|
1,827
|
1,076
|
||||||
Non-cash interest expenses related to borrowing and payable in respect of intangible assets purchase
|
2,639
|
104
|
||||||
Fair value losses (gains) on financial assets at fair value through profit or loss
|
6
|
75
|
||||||
Exchange differences and revaluation of bank deposits
|
46
|
(159
|
)
|
|||||
5,882
|
2,248
|
|||||||
Changes in assets and liability items:
|
||||||||
Decrease (increase) in trade receivables
|
5,349
|
(501
|
)
|
|||||
Decrease in prepaid expenses and other receivables
|
1,428
|
971
|
||||||
Increase in inventories
|
(2,744
|
)
|
(885
|
)
|
||||
Decrease in accounts payable
|
(5,017
|
)
|
(999
|
)
|
||||
Increase in accrued expenses and other liabilities
|
1,364
|
6,030
|
||||||
Increase (decrease) in allowance for deductions from revenue
|
4,334
|
(331
|
)
|
|||||
4,714
|
4,285
|
|||||||
Net cash used in operating activities
|
(12,267
|
)
|
(10,624
|
)
|
||||
INVESTING ACTIVITIES:
|
||||||||
Purchase of fixed assets
|
(88
|
)
|
(242
|
)
|
||||
Change in investment in current bank deposits
|
—
|
3,200
|
||||||
Transactions costs related to purchase of intangible assets
|
—
|
(1,183
|
)
|
|||||
Proceeds from sale of financial assets at fair value through profit or loss
|
475
|
2,225
|
||||||
Net cash provided by (used in) investing activities
|
387
|
4,000
|
||||||
FINANCING ACTIVITIES:
|
||||||||
Proceeds from long-term borrowings, net of transaction costs
|
—
|
79,345
|
||||||
Proceeds from issuance of ordinary shares, net of issuance costs
|
57,941
|
—
|
||||||
Exercise of options into ordinary shares
|
3,227
|
—
|
||||||
Repayment of payable in respect of intangible asset purchase
|
(2,125
|
)
|
—
|
|||||
Increase in restricted cash
|
—
|
(20,000
|
)
|
|||||
Payment of principal with respect to lease liabilities
|
(383
|
)
|
(261
|
)
|
||||
Net cash provided by financing activities
|
58,660
|
59,084
|
||||||
INCREASE IN CASH AND CASH EQUIVALENTS
|
46,780
|
52,460
|
||||||
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
|
(103
|
)
|
131
|
|||||
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
29,295
|
29,023
|
||||||
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
75,972
|
81,614
|
||||||
SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH
|
19
|
178
|
||||||
SUPPLEMENTARY INFORMATION ON INTEREST PAID IN CASH
|
1,990
|
231
|
||||||
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Acquisition of right-of-use assets by means of lease liabilities
|
—
|
1,575
|
||||||
Long-term borrowings transaction costs
|
—
|
1,284
|
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF MARCH 31, 2021 IN U.S. DOLLARS:
|
Page
|
3 | |
4 | |
5 | |
6 | |
7-11
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2021
|
2020
|
|||||||
U.S. dollars in thousands
|
||||||||
NET REVENUES
|
20,575
|
1,056
|
||||||
COST OF REVENUES
|
10,253
|
1,715
|
||||||
GROSS PROFIT
|
10,322
|
(659
|
)
|
|||||
RESEARCH AND DEVELOPMENT EXPENSES
|
7,484
|
2,765
|
||||||
SELLING AND MARKETING EXPENSES
|
13,895
|
9,006
|
||||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
7,095
|
4,586
|
||||||
OPERATING LOSS
|
18,152
|
17,016
|
||||||
FINANCIAL INCOME
|
(42
|
)
|
(214
|
)
|
||||
FINANCIAL EXPENSES
|
4,753
|
355
|
||||||
FINANCIAL EXPENSES, net
|
4,711
|
141
|
||||||
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD
|
22,863
|
17,157
|
||||||
LOSS PER ORDINARY SHARE, basic and diluted (U.S. dollars):
|
0.05
|
0.05
|
||||||
WEIGHTED AVERAGE OF ORDINARY SHARE (in thousands)
|
429,603
|
352,696
|
March 31,
|
December 31,
|
|||||||
2021
|
2020
|
|||||||
U.S. dollars in thousands
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
75,972
|
29,295
|
||||||
Bank deposits
|
16
|
17
|
||||||
Financial assets at fair value through profit or loss
|
—
|
481
|
||||||
Trade receivables
|
23,306
|
28,655
|
||||||
Prepaid expenses and other receivables
|
4,094
|
5,521
|
||||||
Inventory
|
9,270
|
6,526
|
||||||
112,658
|
70,495
|
|||||||
NON-CURRENT ASSETS:
|
||||||||
Restricted cash
|
16,158
|
16,164
|
||||||
Fixed assets
|
553
|
511
|
||||||
Right-of-use assets
|
4,702
|
5,192
|
||||||
Intangible assets
|
86,052
|
87,879
|
||||||
107,465
|
109,746
|
|||||||
TOTAL ASSETS
|
220,123
|
180,241
|
||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
6,536
|
11,553
|
||||||
Lease liabilities
|
1,636
|
1,710
|
||||||
Allowance for deductions from revenue
|
22,677
|
18,343
|
||||||
Accrued expenses and other current liabilities
|
25,446
|
24,082
|
||||||
Payable in respect of intangible assets purchase
|
10,334
|
17,547
|
||||||
66,629
|
73,235
|
|||||||
NON-CURRENT LIABILITIES:
|
||||||||
Borrowing
|
82,524
|
81,386
|
||||||
Payable in respect of intangible assets purchase
|
13,788
|
7,199
|
||||||
Lease liabilities
|
3,391
|
3,807
|
||||||
Royalty obligation
|
750
|
750
|
||||||
100,453
|
93,142
|
|||||||
TOTAL LIABILITIES
|
167,082
|
166,377
|
||||||
EQUITY:
|
||||||||
Ordinary shares
|
1,309
|
1,054
|
||||||
Additional paid-in capital
|
354,057
|
293,144
|
||||||
Accumulated deficit
|
(302,325
|
)
|
(280,334
|
)
|
||||
TOTAL EQUITY
|
53,041
|
13,864
|
||||||
TOTAL LIABILITIES AND EQUITY
|
220,123
|
180,241
|
Ordinary
|
Additional
|
Accumulated
|
Total
|
|||||||||||||
shares
|
paid-in capital
|
deficit
|
equity
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
BALANCE AT JANUARY 1, 2021
|
1,054
|
293,144
|
(280,334
|
)
|
13,864
|
|||||||||||
CHANGES IN THE THREE-MONTHS PERIOD ENDED MARCH 31, 2021:
|
||||||||||||||||
Share-based compensation to employees and service providers
|
—
|
—
|
872
|
872
|
||||||||||||
Issuance of ordinary shares, net of expenses
|
242
|
57,699
|
—
|
57,941
|
||||||||||||
Exercise of options into ordinary shares
|
13
|
3,214
|
—
|
3,227
|
||||||||||||
Comprehensive loss
|
—
|
—
|
(22,863
|
)
|
(22,863
|
)
|
||||||||||
BALANCE AT MARCH 31, 2021
|
1,309
|
354,057
|
(302,325
|
)
|
53,041
|
|||||||||||
BALANCE AT JANUARY 1, 2020
|
962
|
267,403
|
(208,363
|
)
|
60,002
|
|||||||||||
CHANGES IN THE THREE-MONTHS PERIOD ENDED MARCH 31, 2020:
|
||||||||||||||||
Share-based compensation to employees and service providers
|
—
|
—
|
802
|
802
|
||||||||||||
Comprehensive loss
|
—
|
—
|
(17,157
|
)
|
(17,157
|
)
|
||||||||||
BALANCE AT MARCH 31, 2020
|
962
|
267,403
|
(224,718
|
)
|
43,647
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2021
|
2020
|
|||||||
U.S. dollars in thousands
|
||||||||
OPERATING ACTIVITIES:
|
||||||||
Comprehensive loss
|
(22,863
|
)
|
(17,157
|
)
|
||||
Adjustments in respect of income and expenses not involving cash flow:
|
||||||||
Share-based compensation to employees and service providers
|
872
|
802
|
||||||
Depreciation
|
492
|
350
|
||||||
Amortization and impairment of intangible assets
|
1,827
|
1,076
|
||||||
Non-cash interest expenses related to borrowing and payable in respect of intangible assets purchase
|
2,639
|
104
|
||||||
Fair value losses (gains) on financial assets at fair value through profit or loss
|
6
|
75
|
||||||
Exchange differences and revaluation of bank deposits
|
46
|
(159
|
)
|
|||||
5,882
|
2,248
|
|||||||
Changes in assets and liability items:
|
||||||||
Decrease (increase) in trade receivables
|
5,349
|
(501
|
)
|
|||||
Decrease in prepaid expenses and other receivables
|
1,428
|
971
|
||||||
Increase in inventories
|
(2,744
|
)
|
(885
|
)
|
||||
Decrease in accounts payable
|
(5,017
|
)
|
(999
|
)
|
||||
Increase in accrued expenses and other liabilities
|
1,364
|
6,030
|
||||||
Increase (decrease) in allowance for deductions from revenue
|
4,334
|
(331
|
)
|
|||||
4,714
|
4,285
|
|||||||
Net cash used in operating activities
|
(12,267
|
)
|
(10,624
|
)
|
||||
INVESTING ACTIVITIES:
|
||||||||
Purchase of fixed assets
|
(88
|
)
|
(242
|
)
|
||||
Change in investment in current bank deposits
|
—
|
3,200
|
||||||
Transactions costs related to purchase of intangible assets
|
—
|
(1,183
|
)
|
|||||
Proceeds from sale of financial assets at fair value through profit or loss
|
475
|
2,225
|
||||||
Net cash provided by (used in) investing activities
|
387
|
4,000
|
||||||
FINANCING ACTIVITIES:
|
||||||||
Proceeds from long-term borrowings, net of transaction costs
|
—
|
79,345
|
||||||
Proceeds from issuance of ordinary shares, net of issuance costs
|
57,941
|
—
|
||||||
Exercise of options into ordinary shares
|
3,227
|
—
|
||||||
Repayment of payable in respect of intangible asset purchase
|
(2,125
|
)
|
—
|
|||||
Increase in restricted cash
|
—
|
(20,000
|
)
|
|||||
Payment of principal with respect to lease liabilities
|
(383
|
)
|
(261
|
)
|
||||
Net cash provided by financing activities
|
58,660
|
59,084
|
||||||
INCREASE IN CASH AND CASH EQUIVALENTS
|
46,780
|
52,460
|
||||||
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
|
(103
|
)
|
131
|
|||||
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
29,295
|
29,023
|
||||||
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
75,972
|
81,614
|
||||||
SUPPLEMENTARY INFORMATION ON INTEREST RECEIVED IN CASH
|
19
|
178
|
||||||
SUPPLEMENTARY INFORMATION ON INTEREST PAID IN CASH
|
1,990
|
231
|
||||||
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Acquisition of right-of-use assets by means of lease liabilities
|
—
|
1,575
|
||||||
Long-term borrowings transaction costs
|
—
|
1,284
|
a. |
General
|
1) |
RedHill Biopharma Ltd. (the “Company”), incorporated on August 3, 2009, together with its wholly-owned subsidiary, RedHill Biopharma Inc. (“RedHill Inc.”), incorporated in Delaware, U.S. on January 19, 2017, is a specialty
biopharmaceutical company primarily focused on gastrointestinal (“GI”) diseases and infectious diseases.
|
2) |
Since the Company established its commercial presence in the U.S. in 2017, it has promoted or commercialized various GI-related products that were either developed internally or acquired through in-licensing agreements. As of the date of
approval of these condensed consolidated interim financial statements, the Company commercializes in the U.S., Talicia®, for the treatment of Helicobacter pylori
infection in adults, the first product approved by the U.S. Food and Drug Administration (“FDA”) being developed primarily internally by the Company, Movantik®, for
the treatment of opioid-induced constipation, and Aemcolo® (rifamycin), for traveler’s diarrhea.
|
3) |
Through March 31, 2021, the Company has an accumulated deficit and its activities have been funded primarily through public and private offerings of the Company’s securities and borrowing. There is no assurance that the Company’s
business will generate sustainable positive cash flows.
|
b.
|
Approval of the condensed consolidated interim financial statements:
|
a. |
Movantik® License Agreement amendment
|
b. |
During the three months ended March 31, 2021, the Company issued 7,836,209 and 428,421 ADSs for net proceeds of approximately $58 million from underwritten offerings and $3 million from options exercises, respectively.
|
c. |
On February 22, 2021, Aether Therapeutics Inc., filed a complaint against the Company in the United States District Court for the District of Delaware ("Aether Litigation"). The complaint asserts that the Company's marketing of the
Movantik® product infringes U.S. Patent No’s. 6,713,488, 8,748,448, 8,883,817 and 9,061,024 held by Aether Therapeutics Inc., or the Aether Patents. Aether has asserted the Aether Patents against other entities previously involved in the
marketing of the Movantik® product. The complaint requests customary remedies for patent infringement, including (i) a judgment that the Company has infringed, contributed to and induced infringement of the Aether patents, (ii) damages,
(iii) attorneys’ fees and (iv) costs and expenses. the Company intends to vigorously defend itself against these claims. Given the early stage of the Aether Litigation, the Company is unable to predict the likelihood of success of the
claims of Aether Therapeutics Inc. or to quantify any risk of loss.
|
Rebates and patient discount programs
|
Product returns
|
Total
|
||||||||||
U.S. dollars in thousands
|
||||||||||||
As of January 1, 2021
|
16,380
|
1,963
|
18,343
|
|||||||||
Increases
|
17,804
|
460
|
18,264
|
|||||||||
Decreases (utilized)
|
(13,028
|
)
|
(243
|
)
|
(13,271
|
)
|
||||||
Adjustments
|
(659
|
)
|
-
|
(659
|
)
|
|||||||
As of March 31, 2021
|
20,497
|
2,180
|
22,677
|
|||||||||
Rebates and patient discount programs
|
Product returns
|
Total
|
||||||||||
U.S. dollars in thousands
|
||||||||||||
As of January 1, 2020
|
1,001
|
266
|
1,267
|
|||||||||
Increases
|
252
|
392
|
644
|
|||||||||
Decreases (utilized)
|
(223
|
)
|
(8
|
)
|
(231
|
)
|
||||||
Adjustments
|
(82
|
)
|
-
|
(82
|
)
|
|||||||
As of March 31, 2020
|
948
|
650
|
1,598
|
Number of options granted
|
||||||||||||||||||||
According to the Award Plan
|
|
Fair value of
|
||||||||||||||||||
of the Company
|
|
options on date of
|
||||||||||||||||||
Other
than to
|
Exercise
price for 1 |
grant in
U.S. dollars
in thousands
|
||||||||||||||||||
Date of grant
|
directors (1)
|
To directors (1)(2)
|
Total
|
ADS ($)
|
(1)(2)
|
|||||||||||||||
March 2021
|
40,500
|
—
|
40,500
|
9.44
|
151
|
1) |
The options will vest as follows: for directors, employees and consultants of the Company and the Company's subsidiary who had provided services exceeding one year as of the grant date, options will vest in 16 equal quarterly
installments over a four-year period. For directors, employees and consultants of the Company and the Company's subsidiary who had not provided services exceeding one year as of the grant date, the options will vest as follows: 1/4 of the
options will vest one year following the grant date and the rest over 12 equal quarterly installments. During the contractual term, the options will be exercisable, either in full or in part, from the vesting date until the end of 10 years
from the date of grant.
|
2) |
The fair value of the options was computed using the binomial model and the underlying data used was mainly the following: exercise price of the Company's ADS: $9.44, expected volatility: 64.05%, risk-free interest rate: 1.73% and the
expected term was derived based on the contractual term of the options, the expected exercise behavior and expected post-vesting forfeiture rates.
|
Three Months Ended March 31,
|
||||||||
2021
|
2020
|
|||||||
U.S dollars in thousands
|
||||||||
Movantik® revenues
|
18,898
|
—
|
||||||
Other products
|
1,677
|
1,056
|
||||||
20,575
|
1,056
|
a. |
Fair value hierarchy
|
b.
|
The carrying amount of cash equivalents, bank deposits, restricted cash, receivables, account payables and accrued expenses approximate their
fair value due to their short-term characteristics.
|
Three Months Ended March 31,
|
||||||||||||
2021
|
||||||||||||
|
Commercial
Operations
|
Research and Development
|
Consolidated
|
|||||||||
U.S. dollars in thousands
|
||||||||||||
Net revenues
|
20,575
|
—
|
20,575
|
|||||||||
Operating loss
|
8,515
|
9,637
|
18,152
|
|||||||||
Three Months Ended March 31,
|
||||||||||||
2020
|
||||||||||||
Commercial
Operations
|
Research and Development
|
Consolidated
|
||||||||||
U.S. dollars in thousands
|
||||||||||||
Net revenues
|
1,056
|
—
|
1,056
|
|||||||||
Operating loss
|
12,076
|
4,940
|
17,016
|
a. |
On April 26, 2021, the Company has filed with the SEC a schedule tender offer to exchange 2,805,281 of its options for the Company’s ADSs with new 2,805,281 options for the Company’s ADSs (the “New Options”). The New Options will have
lower exercise prices than in the original options, as stipulated in the terms and conditions filed in the exchange offer.
|
b. |
On April 28, 2021, the BoD approved a grant of options to purchase 2,121,296 ADSs to employees, consultants and advisory board members of the Company and RedHill Inc. The estimated fair value of the options on the grant date was
approximately $8.5 million.
|
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