Q1 2016 Earnings Call Transcript

Published: 8 May 2016

[Operator:]

Greetings, and welcome to the Radius Health First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce one of your first hosts for today, Ms. Barbara Ryan. You may begin.

[Barbara Ryan:]

Thank you. Welcome, and thank you to those of you joining us on the line and on the webcast this morning for a review of Radius Health's first quarter 2016 financial and operating results. I'm Barbara Ryan, Radius Health's Investor Relations officer. And with me this morning to discuss the results and provide you with an update on our progress are Robert Ward, President and Chief Executive Officer; David Snow, our Chief Commercial Officer; and Nick Harvey, Chief Financial Officer. Before we begin, I'd like to remind you that any statements made during this call that are not historical are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our most recent annual report on Form 10-K and other reports filed with the SEC. Any forward-looking statements represent our views as of today, May 5, 2016 only. A replay of this call will be available on the Company's website, www.radiuspharm.com. You can find the dial-in information for the replay in today's press release as well as the Company's website. I will now turn the call over to Robert Ward, President and Chief Executive Officer of Radius Health.

[Robert Ward:]

Thanks, Barbara, and thank you to everyone who has joined us on our conference call and audio webcast this morning. Radius Health has never been in a stronger position, and we've accomplished a major milestone with the submission of the Company's first NDA for abaloparatide subcu for the treatment of postmenopausal women with osteoporosis. We have an exciting year ahead of us as we continue the regulatory review process in Europe, await the FDA determination on acceptance of filing and continue our negotiations regarding partnerships. We believe the progress made during the quarter and our activities plan for the remainder of the year will position Radius for the launch of abaloparatide pending favorable regulatory review. We ended the first quarter 2016 with approximately $440 million in cash and equivalents and are well funded to continue to develop our portfolio and launch abaloparatide with a partner. During the quarter, our New Drug Application or NDA for the investigational drug abaloparatide subcu was submitted to the Food and Drug Administration or FDA here in the US. Within 60 days after submission, the FDA will review our application and the agency will determine whether the application may be filed. The filing of the application means that the FDA has made a threshold determination that the application is sufficiently complete to permit a substantiative review. We anticipate that we will be notified of this determination in the second quarter of this year. Please recall that our Marketing Application Authorization or MAA for abaloparatide subcu was submitted in Europe in November of last year. In December, the European Medicines Agency validated the MAA and initiated the substantiative review process. Based on the EMA, 210-day active clock subject, of course, to clock stoppages, we anticipate being notified in 2016 of the CHMP scientific opinion on whether abaloparatide subcu should be authorized. We're highly confident that abaloparatide has the potential to become an important medicine for the treatment of osteoporosis. Now, I'd like to introduce David Snow, our Chief Commercial Officer, to tell us more about our preparations for moving to commercial.

[David Snow:]

Thank you, Bob. During the quarter, we continued our preparations for the U.S. launch, hiring key experienced leaders for our sales, marketing and managed care groups. Amanda Mott joined us from Amgen to lead our market access and reimbursement group; Kristin Landon joined us from Sprout Pharmaceuticals to lead the marketing team; and Tim Coyle joined us from AstraZeneca to lead sales. We've also expanded our capabilities in medical affairs by initiating the hiring of the medical science liaison team and each of these individuals brings to Radius a distinguished track record in the osteoporosis field and superb experience working with either pipeline or currently approved osteoporosis therapeutics. We anticipate further expansion through the year with the field sales force coming on board in the fourth quarter of 2016 through early 2017. This past month, we attended the Academy of Managed Care Pharmacy Meeting in San Francisco, where we met with key players in the U.S. health care system. These interactions are key to developing our reimbursement and market access strategy in the U.S. We've initiated a wide range of pre-commercialization activities, including market research, advisory panel sessions and branding development. Also during the quarter, scientific presentations about abaloparatide subcu were made at the Endocrine Society Annual Meeting in Boston and the 2016 World Congress on Osteoporosis, Osteoarthritis and Musculoskeletal Diseases meeting in Malaga, Spain. The presentations included analyses based on the fracture risk reduction results from the Phase III ACTIVE and/or ACTIVExtend trials. This is the first time that we have had the opportunity to share these results with the European scientific community. We believe that abaloparatide represents a significant global opportunity and have continued our partnership dialog during the quarter. We are pleased with our progress to-date. Back to you, Bob.

[Robert Ward:]

Thank you, David. In December, we initiated the crossover PK study in postmenopausal women that will serve as the human replicative study for the optimized abaloparatide-transdermal patch. This pilot study will be important for the design of the formal bioequivalent study. The study is currently ongoing and the results to-date have been very encouraging. We look forward to providing an update at mid-year on the progress of these transdermal optimization studies. Our second investigational drug in development is RAD1901, which we believe is uniquely suited to potentially become the backbone oral agent of combination therapy for hormone-driven or hormone-resistant advanced breast cancer. We've previously communicated that an oral presentation on the RAD1901 dose escalation Phase I study and the overall RAD1901 program would occur at the IMPAKT breast cancer meeting in Belgium in May. The IMPAKT meeting has now been canceled due to events in Belgium. As a result, we anticipate that the update on the RAD1901 Phase I dose escalation study will occur at a future scientific meeting. We continue to enroll patients at the European Phase I FES-PET trial for RAD1901. Our abstract on this FES-PET study has been accepted for a poster presentation at the American Society of Clinical Oncology in June in Chicago. We have also reported progress on potential combination studies. For example, in January, we announced our clinical collaboration agreement with Novartis to explore combinations of RAD1901 with their promising CDK4/6 and PI-3 kinase inhibitors. As you may recall, Radius initiated a Phase IIb study in December 2015 to evaluate low doses of RAD1901, namely 5, 10 and 20 milligrams as the potential non-estrogen treatment approach for postmenopausal women suffering from Vasomotor symptom. This randomized double-blind placebo-controlled trial will enroll 300 patients, and we anticipate reporting on results next year. What is different about drug development of potential treatments for vasomotor symptoms is the emphasis on establishing efficacy in Phase II followed by extended treatment periods in Phase III to primarily focus on long-term safety. As a result, we view this ongoing Phase IIb vasomotor trial as a key de-risking step for the program. As we look ahead, the vasomotor commercial call pattern would have a very complementary footprint to the primary care focus for an osteoporosis transdermal patch. This could allow synergies on both the medical and commercial fronts. I'd now like to ask Nick Harvey, our Chief Financial Officer, to discuss our first quarter and provide an update on the balance sheet.

[Nick Harvey:]

Thank you, Bob. For the three months ended March 31, 2016, we reported a net loss of $40.5 million or $0.94 per share as compared to a net loss of $17.1 million or $0.47 per share for the three months ended March 31, 2015. The increase in net loss from the 2015 period to the 2016 period included an increase in non-cash stock-based compensation expense and was primarily attributable to the growth of the organization to continue our pipeline development and to prepare for the potential promotional launch of abaloparatide subcu. We've experienced substantial growth in our headcount, which currently exceeds 125. As Radius continues to advance towards the first commercial sales of abaloparatide subcu, we expect to continue to expand our headcount and make further investments in launch preparations. Our cash, cash equivalents and marketable securities balance as of March 31, 2016, was $439.8 million. We believe that our cash, cash equivalents and marketable securities balance prior to the consideration of revenue from the potential future sales of any of our investigational products or proceeds from partnership activity is sufficient to fund our development plans, U.S. commercial scale-up and other operational activities into 2018. I'd like to turn the call back to Bob.

[Robert Ward:]

Thank you, Nick. Now, before we open up our line to your questions, I would like to summarize our upcoming milestones for the remainder of 2016. Now indeed, this will be a very exciting year for Radius as we look forward to executing on a number of substantial milestones and are preparing to become a commercial Company. We expect to hear from the FDA on the acceptance of our NDA for filing in the U.S. in the second quarter of 2016, and our MAA is already under active review in Europe. We expect to receive CHMP scientific opinion in 2016. We're actively engaged in partnering negotiations and expect to enter into collaboration by the time of our first commercial launch. At the same time, we're busy building our internal marketing organization and the launch costs for the U.S. launch are already funded in our balance sheet. We look forward to reporting mid-year on the ongoing transdermal patch crossover PK study in postmenopausal women. The very encouraging results of this pilot study will be important for designing of formal bioequivalent study. Our Phase I dose escalation study for RAD1901 in metastatic breast cancer is ongoing, and we plan to report results for the scientific meeting later this year. At the ASCO Annual Meeting, June 3 through June 7 in Chicago, we will be presenting a poster on the ongoing European FES-PET study that is currently enrolling patients. We'll also be making presentations at two upcoming investor conferences over the next several weeks; the Bank of America Merrill Lynch Conference in Las Vegas, May 9 through May 11 and the Goldman Sachs Conference on June 7 through June 9 in California. Thank you. We'd now like to open up the call for your questions.

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question today is from Ying Huang of Bank America Merrill Lynch. You may proceed with your question.

[Ying Huang:]

Hi, good morning. Thanks for taking my question. First one, Bob, I think you mentioned the Japanese market yesterday at another investor conference. So, as we understand, you did not license Japanese right to abaloparatide from Ipsen. Can you elaborate on your strategy in Japan? And then secondly, on the partnership discussions, do you think the data from the Phase I of transdermal patch formulation of abaloparatide would be kind of a negating factor for the potential partners on that one? Lastly, when do you guys tend to start hire field force for abaloparatide? Thank you.

[Robert Ward:]

Thank you, Ying. So, I think David had mentioned really we're putting place now the medical science liaisons. We're quite pleased that the individuals are coming on board have extensive experience in osteoporosis with long track records of working, whether it's directly on the research side of investigator-initiated trials or with many other key opinion leaders across the country. So, those field sales force I believe we mentioned really in the fourth quarter of this year through first quarter of next year will be the time we bring the sales force on board. With regards to transdermal patch, when we think about the Company maturing, we have global transdermal rights for abaloparatide-transdermal patch, so that we would include Japan. And when we think about the commercial footprint, which we believe expands substantially from really the specialty biologic focus of abaloparatide subcu to more of a primary care promotion where transdermal patch is attractive to physicians who currently do not use injectable products to manage osteoporosis. We think that the commercial requirements are different, and we look for Radius to play a different role in transdermal call pattern than we might within a partnership around abaloparatide subcu.

[Ying Huang:]

Very helpful, thank you.

[Operator:]

Our next question is from John Goodman of Canaccord. Please go ahead.

[John Goodman:]

Hey, thanks for taking the question. So Bob, you mentioned in the press release that you still plan to enter collaboration for abaloparatide subcu prior to launch. That will be prior to the European launch or prior to the U.S. launch? And I'm assuming this would be collaboration for the EU and not the U.S. still, is that correct? Thanks.

[Robert Ward:]

Yes, John. You're correct. We're really focusing our commercialization activities here in U.S. and as you know, there's a number of international markets that are quite attractive for bone-building agents that would have a profile similar to abaloparatide. So, for the ex-U.S., we have guided that by time of launch, we'd have a partnership in place. The European submission was made earlier than the U.S. submission, so we do anticipate that CHMP opinion this year would be likely to occur earlier than we would have at FDA decision. And I did want to mention one other item, John, as we think about transdermal patch as well, yesterday was a news report from Corium who is a transdermal patch company on the West Coast, where they had mentioned they were working on a patch for Aricept which currently is on the market as an oral agent, of changing that to a transdermal patch. And they mentioned that they had shared with the FDA their preliminary PK data and have written response back where the FDA said yes, formal demonstration of bioequivalence would be a sole clinical requirement for approval. I know we've had the chance to talk to you at length about what would be the likely equivalent path for transdermal patch, and we anticipate that the PK crossover study we're doing now would be used as the preliminary PK data that would enable us to go and have a similar conversation, and we would anticipate that the FDA would similarly respond towards that demonstration of bioequivalence would be the clinical requirement for patch as well.

[John Goodman:]

Great and thanks for that update on patch part.

[Operator:]

And the next question comes from Jessica Fye of JPMorgan. Please proceed with your question.

[Jessica Fye:]

Hey, good morning. Thanks for taking my questions. First on 1901, can you confirm that you still expect to complete dose escalation by the end of 2Q? And can you elaborate on what types of information we should expect to learn from the FES-PET update at ASCO, is that expectations there? And then on the patch, you mentioned the results so far have been very encouraging, and then also characterized the mid-year update as sort of a progress update. Will that be the completed PK data that we get at mid-year? Do you believe you could have a matched PK curve by then or will this be more of an interim status update?

[Robert Ward:]

So Jessica, with regards to the patch itself, if you think of the concept that announcing that the patch is bioequivalent that would really be an FDA determination. So, the data that we'll have from the PK crossover study we're doing now, in a crossover study, individual postmenopausal women are administered the subcutaneous abaloparatide and then PK comparisons are also made in the same patient with exposure to patch. So, the studies are ongoing. We're very pleased with the response data we have to-date, and we've committed that we'd come back and share with folks information in this calendar year to enable them to have a close look at the progress we've made. So, our goal is to have the preliminary data to enable us to then design a formal bioequivalent study, which would be then initiated, which we anticipate to be the basis for approval. With 1901, at ASCO in June, it's a poster presentation on the FES-PET study; now remember FES-PET study began at 400 milligrams. It's currently posted on clinicaltrials.gov, and what FES-PET imaging enables us to do is that PET imaging allows one to see where the ER, the estrogen receptor, is being expressed and then after administration of the drug, we look to see if the signal has been attenuated. Now this can be caused by the drug integrating the receptor is simply blocking the binding of ligand, but the reason why this is an interesting work to undertake is it allows one to visualize, has sufficient drug being administered to attenuate the signal. So, in the ASCO ongoing trial section, it's usually an update similar to what we gave at San Antonio Breast Cancer last year on the Phase I dose escalation, looks at study design, and we'll share the information that's available at ASCO.

[Jessica Fye:]

Okay. And just to follow-up on those patch comments, what's the time frame in which you think that you might be able to say, okay, FDA, here's what we've got. Can you confirm our path forward here? Is that a second half event that we could get clarity on that?

[Robert Ward:]

I would defer really to our regulatory team to make the call since we currently have abaloparatide subcu submitted to the agency. I think we'll look to coordinate it so that it's most effective in the context of the overall review on the lead program, because submission of patch would be a line extension of abaloparatide subcu would be the intended development of that.

[Jessica Fye:]

Okay, so are you saying that you might not want to request a meeting with the FDA on patch until after you get subcu approved?

[Robert Ward:]

I'll defer to our internal regulatory team to make that call. I think right now, Jess, we're focused on completing the, what we've been calling the replicative study, which is this PK crossover study and then when we have the data in hand, I think we'll make a call of what's the right thing to do next.

[Jessica Fye:]

Okay, got it, thanks.

[Operator:]

Our next question is from Salveen Richter of Goldman Sachs. Please proceed with your question.

[Salveen Richter:]

Thanks for taking my questions. Regarding the ex-U.S. partnership discussions for abaloparatide, how are these discussions progressing? And can you give us any guidance on structure and term that you're looking for? And then apart from the sales force build, what pre-commercial payer preparations are currently underway? And I have a follow-up.

[Robert Ward:]

Sure, Salveen, we initiated really some of the health economic evaluation and valuation determination some time ago. In fact, NICE probably two years ago first requested that we submit some preliminary evaluation information. So, the work's been ongoing for some time. And here in the U.S., I think David had mentioned just returned back from the Academy of Managed Care Pharmacy. So David, do you want to comment further on some of the areas around payer preparation as we think about current conditions in the market and what are the types of things you like to foreclose [ph]?

[David Snow:]

Sure Bob. I think the main point here is that ASBMR has a pretty robust dossier process that we will follow-up, and we'll be putting that together, and that will be the basis upon which we engage a lot of the payers. They will more or less go to that, build their own information, but that's a good starting point for us to do that. We're also, as Bob has mentioned, we've already engaged some discussions with select payers to better understand their needs, what they're looking for. We'll continue to do that through the second half of the year. Also there's quite a bit of segmentation and analytical work that's going on behind the scenes just to make sure we have a good idea about the market dynamics, the fracture market, things are going on where we would want to really be focused.

[Robert Ward:]

Is that helpful, Salveen?

[Salveen Richter:]

Yes, that's helpful. And then just on the ex-U.S. partnership discussions, how are those progressing and guidance here and kind of structure and terms you're looking for?

[Robert Ward:]

Yes, I think we guided before that we looked at the Prolia deal that Amgen entered into with GSK as kind of the floor for what we're looking for and then outside that, we really don't comment on specific ongoing conversations. But I will tell you that as we think about the opportunity around subcu, we think it's substantial. But also, as I mentioned earlier, with the transdermal patch, it is a larger market and we do seek to allow the Company to grow over time. From a vision perspective, when we think about what's currently an early-stage vasomotor program where the Phase IIb study is ongoing, and that is a key study for that program. The commercial footprint for a vasomotor product would fit neatly into the footprint of what would really be a primary care osteoporosis call pattern around a transdermal patch. And then again, we think abaloparatide subcu is much more of a specialty biologic sort of marketing opportunity.

[Salveen Richter:]

Great. And then Bob, just on 1901, will we get the dose escalation data by year-end and any updates on plans for combination studies here?

[Robert Ward:]

Yeah, we've previously announced that we entered into the collaboration with Novartis. And the way the collaboration is structured is that, as we move forward, we and Novartis would make a joint decision about when is the best time to communicate. So, right now since the two teams are working together, but at this moment of time, not a clear update there. With regards to future scientific conferences, I think we're waiting to submit and wait to see what we're accepting and what type of presentations we have, but we always commit to keep people posted on the progress we're making across our portfolio.

[Salveen Richter:]

Okay, thank you.

[Operator:]

Our next question is from Mara Goldstein of Cantor Fitzgerald. Please proceed with your question.

[Mara Goldstein:]

Thanks for taking my question. On 1901, on the vasomotor trial, the primary endpoint is the reduction in frequency and severity of hot flash, is that a composite endpoint or is that a co-primary?

[Robert Ward:]

That is a very good question, Mara, and I would realistically want to ask our clinical team to give you a specific answer. Now the trial design is posted on clinicaltrials.gov, and so the specific description should be there. I just don't recall personally, I thought it may have the precise answer to that.

[Mara Goldstein:]

Okay. I can circle back on that. But on the combination studies that you're looking to do with 1901, you obviously had some preclinical data top of cycle. I'm just wondering sort of as you look out into the coming on data for your dose escalation, when we should think about looking at additional combination studies?

[Robert Ward:]

Yeah, we're under active discussions right now about other mechanism of actions or other combination studies that we do. When we think about our ideal clinical collaboration, we've asked that the partner co-invest in the trial. So, this is not a case where we're asking that people get access to the drug. The two parties need to come together, have a shared appreciation of the trial design and co-fund as well as contribute drugs. So, we continue to have dialogues about that sort of clinical collaboration, and we do anticipate that we will have opportunity to share more updates with you. Remember when you think about drugs that are currently available commercially, it's really up to us to decide whether we'd rather just purchase the drug that commercially inside the trial or whether it's of greater value to work with the innovator that developed the drug. So I think first, as we go through the year, of course, more information becomes available.

[Mara Goldstein:]

Okay. And if I could just ask a question on abaloparatide, I know it's early in this process, but when you think about potential labeling for it, do you think that the label will specify population by stratification like severe osteoporotic or bone marrow density parameters or something of that nature and how - what would be ideal for you, do you think?

[Robert Ward:]

We believe, Mara, that’s the trial offered a broad range of patients. Remember, a third of the patients did not have a baseline fracture and then the other two-thirds did have a baseline fracture. And so as a result, we think there's a broad range of patients that were included in our pivotal trial, and we would anticipate that since labeling is intended to provide instructions physicians on how to best safely and effectively use agents, we anticipate the labeling will be reflective of populations that we studied but we're early in the process. So realistically, here in the U.S., we haven't really had an in-depth discussion with the agency and that really occurs as the review process moves forward. The next step will be they're making the determination on the acceptance of filing, which is 60 days typically after submission date. And I just have an update, yes, they are the co-primary endpoint. So, one of the great fortunes of working with the team is that people can slip the amounts, so I can give you.

[Mara Goldstein:]

Alright, thank you very much.

[Operator:]

Our next question is from Jeff Chen of Cowen and Company. Please go ahead.

[Jeff Chen:]

Hi, good morning. Thanks for taking my questions. Bob, can you remind us of you requested priority review with the FDA with your NDA submission? And then, a follow-up would be on the - when you talked to the EU scientific community about your findings for abaloparatide, were there any sort of specific points that they were enthusiastic about or that were unexpected that you heard? Thanks.

[Robert Ward:]

Yes, Jeff, so when we came back from World Congress of Osteoporosis last year, which is the biggest meeting of the European community, I was very impressed by the depth of scientific dialogue, great engagement. There were a number of elements around abaloparatide that are called out by different scientists have either important clinical or scientific implications. Overall, conversations were pretty supportive. And I think we're very encouraged by the reception. One of the things that came up is a kind of a scientific area that I don't think that there is clear consensus around that. There might be differing views would be when bone turnover markers stay elevated for different periods of time, so if we think, whether it's with teriparatide, abaloparatide, romosozumab, quite frequently, the bone scientists look at P1NP as a marker of anabolic, in fact that CTX has a marker of resorptive effect, and have noticed that the three agents have a very different profile in terms of bone turnover market. And I think there is a lot of scientific engagement around such questions as does this mean there's a difference in anabolic window, does this mean there's a difference in the extent of maybe resorptive rebound or other almost like that but right now that falls squarely in the area of scientists finding some areas of high interest and I don't think that there was a consensus, but it certainly was an area that people showed a great deal of discussion around.

[Jeff Chen:]

Thanks. And then did you mention that you've requested a priority review with the FDA?

[Robert Ward:]

Yeah. We're anticipating standard review here in the U.S.

[Jeff Chen:]

Okay, excellent. Thanks very much.

[Operator:]

[Operator Instructions] Okay, there are no further questions from the phone line. I would like to turn the floor back over to the management for any closing statements.

[Robert Ward:]

Yeah, thanks, everyone again for joining with us today for this update and the earnings call. We're very much looking forward to continuing to provide you a progress updates on the program and also with the Company as we move through the year. So, thank you again for your attendance today.

[Operator:]

This concludes today's telephone conference. You may disconnect your lines at this time. Thank you for your participation.