Q3 2014 Earnings Call Transcript

Published: 11 Nov 2014

[Operator:]

Greetings and welcome to the Radius Health Third Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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 your host, Barbara Ryan, Managing Director of FTI Consulting. Thank you. You may begin.

[Barbara Ryan:]

Thank you, Christine, and thank you all for joining us this morning for Radius Health’s third quarter 2014 financial results conference call. I am Barbara Ryan of FTI Consulting, Radius Health’s Investor Relations firm. And with me this morning are Robert Ward, President and Chief Executive Officer; Alan Harris, Chief Medical Officer; and Nick Harvey, Chief Financial Officer. Before we begin, I would 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 quarterly report on Form 10-Q filed with the Securities and Exchange Commission and our other reports filed with the SEC. Any forward-looking statements represent our views as of today only. A replay of this call will be available on the company’s website, www.radiuspharm.com following this call. 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:]

Thank you, Barbara and thank you to everyone who is joining us on our conference call and webcast this morning. Today, we will provide you with an update our investigational drugs, abaloparatide subcutaneous and RAD1901, to discuss the highlights from the quarter, and briefly recap our upcoming milestones. On October 7, 2014, we achieved an important milestone with the completion of an additional public offering following our successful IPO in June 2014. In the secondary offering, we sold 2.75 million shares of common stock at a price of $18.25 per share. Our underwriters purchased an additional 378,524 shares by exercising a portion of the over-allotment option granted to them in connection with the offering. As a result, we received aggregate proceeds, net of underwriting discounts, commissions, and estimated offering costs of approximately $53.3 million. These will primarily be used for the continued development of RAD1901, the development of our other product candidates and for other general corporate purposes. I’d like now to turn the call over to Alan Harris to provide an update on the progress of our lead development candidate, abaloparatide. Alan?

[Alan Harris:]

Thank you, Bob. The last patient, last visit for the 18-month anabolic portion of the Phase 3 active study with abaloparatide subcutaneous occurred in October 2014 and all continuing patients are now enrolled in the 6-month standard-of-care extension study. We currently plan on announcing the top line fracture data, including efficacy and safety data for each treatment group included in the 18-month anabolic phase in late December 2014. We will remain blinded at the patient and site level until such times as the 6-month standard-of-care extension study is completed. If the results demonstrate that abaloparatide subcutaneous met the study endpoints, we plan to use the results from this Phase 3 study to support the submission of an NDA and MAA in mid-2015. We plan on providing more detail regarding the expected timing of completion of the 6-month standard-of-care extension study and subsequent submission of both an NDA and MAA in our December 2014 announcements. Data from two completed Phase 2 studies of abaloparatide have demonstrated that abaloparatide’s unique mechanism of action results in less resumption versus PTH, which we believe accounts for the greater and faster increases in bone mineral density at more sites versus other therapies. The abaloparatide subcutaneous Phase 2 clinical study manuscript entitled Effects of Abaloparatide, a Human Parathyroid Hormone-related Peptide Analog, on Bone Mineral Density in Postmenopausal Women with Osteoporosis, has been accepted for publication in the Journal of Clinical Endocrinology and Metabolism. And we expect the version will be available online in November 2014.

[Robert Ward:]

Thank you, Alan. The osteoporosis market has evolved from treatment with bisphosphonates primarily prescribed by primary care physicians to a market now dominated by injectable peptides and biologic therapies prescribed by specialists. We believe that abaloparatide may represent a new standard of care and we will be targeting high prescribers in our future sales efforts as part of our commercialization strategy. In the quarter, we also made significant progress around RAD1901. In June 2014, we initiated a Phase 1 dose escalation study for RAD1901, a selective estrogen receptor degrader, or SERD, which is being developed at high doses for the potential treatment of estrogen receptor positive breast cancer. The initiation of this study represented an important step in the development of exciting program. The study is designed to evaluate the tolerability, safety and pharmacokinetics of RAD1901 and also to use 18-estradiol positron emission tomography, or FES-PET, imaging to provide a pharmacodynamic assessment of estrogen receptor turnover following administration of RAD1901. As of September 30, 2014, 40 subjects had completed dose escalation in the ongoing MTD study and the FES-PET imaging had been completed in a total of 6 subjects across two different dose cohorts. Each of these 6 patients demonstrated suppression of a FES-PET signal to background levels after 6 days of dosing. The study will continue to test additional doses to determine the maximum tolerated dose and to extend the FES-PET imaging correlation with the pharmacokinetic and pharmacodynamic response to RAD1901. We presented a portion of this data on September 19 at the 4th Annual Brain Metastases Research and Emerging Therapies Conference in Marseille, France and we will be presenting additional RAD1901 data in our late-breaking abstract of OC2-1-10, which is entitled RAD1901, a novel tissue-selective estrogen receptor degrader demonstrates estrogen receptor engagement in a Phase 1 clinical study, which has been accepted for Poster Presentation at the San Antonio Breast Cancer Symposium in December 2014. We are on track to commence a Phase 1b study of 1901 for metastatic breast cancer later this year. At low doses, RAD1901 acts as a selective estrogen-receptor modulator or SERM. In our previously completed Phase 2 proof-of-concept study, low-dose RAD1901 has shown potential to be effective for the treatment of vasomotor symptoms such as hot flashes. We intend to continue the development of RAD1901 as a low-dose SERM by commencing a Phase 2b clinical study in vasomotor symptoms in the second half of 2015. On November 3, we were pleased to announce that Dr. William Dere joined our Board of Directors following his retirement from Amgen where he led the development of Prolia. Before joining Amgen in 2003, Dr. Dere held various leadership roles at Eli Lilly, where he led the development of Forteo and Evista. Dr. Dere’s deep therapeutic expertise in the area of endocrinology and metabolic diseases and a wide range of scientific, research and regulatory experiences is expected to provide Radius Health with immense insights as we continue to advance the development of our lead investigational drug candidate, abaloparatide. Now, I would like to turn to focus on the financials for the quarter. Nick, can you walk us through our discussion for the quarter?

[Nick Harvey:]

Sure, Bob. Our cash, cash equivalents and marketable securities balance as of September 30, 2014 was $68.5 million, which includes the $50.4 million of net proceeds we have raised in our IPO, which we completed in June, but does not reflect the $53.3 million the company raised in a subsequent public offering on October 7, 2014. We have updated our guidance on cash burn and expect that our existing cash, cash equivalents and marketable securities along with the proceeds raised on October 7, 2014 to carry us into the fourth quarter of 2015 and through key milestones on the abaloparatide and RAD1901 programs that Bob will now highlight.

[Robert Ward:]

Thank you, Nick. Before we open the line for questions, I would like to summarize our upcoming milestones. So, we are on track to announce the top line 18-month fracture data from the anabolic portion of our Phase 3 active trials for abaloparatide in late December 2014. As I mentioned a moment ago, our RAD1901 abstract has been accepted at the San Antonia Breast Cancer Symposium in December and we are on track to commence a Phase 1b trial in metastatic breast cancer in late 2014. We will be initiating a Phase 2b clinical trial in vasomotor symptoms in the second half of 2015 and we are also scheduled to make presentations at several upcoming conferences. The Therapeutic Area Partnerships Conference, RAD1901 has been selected by the meeting organizers, which is an industry speaker board and the publishers of In Vivo, Startup and The Pink Sheets as one of the Top Oncology Projects to Watch. We will also be at the Jefferies 2014 Global Healthcare Conference in London and both of these are in November. Joining us for the question portion of the call today are Lauren Gallagher, our Vice President of Finance and Geoff Swire, our Vice President of Business Development and Strategy as well. Now, we would like to open the line up for questions from our audience.

[Operator:]

Thank you. [Operator Instructions] Thank you. Our first question comes from the line of John Newman with Canaccord. Please proceed with your question.

[John Newman-Canaccord:]

Hi, guys. Thanks for taking my question. Just had one question on the monkey data that was recently presented at ASBMR, just wondering if you could remind us what the takeaways were from that data and the reason that I am asking is because in the past you have seen a lot of interesting osteoporosis drugs show good increase in bone marrow density, which sometimes hasn’t been asked predictive of fracture. I think the results for abaloparatide are very strong, but the monkey data seems interesting. I just wonder if you could summarize the takeaways there for us?

[Robert Ward:]

Yes, that’s a very good question, John. Yes, I believe you are referring to our ASBMR presentation from earlier this year, where we had an abstract describing the 16-month monkey study. So, in this study, the control animals are ovariectomized, which causes a reduction in bone mineral density. And then three doses of abaloparatide were used over a 16-month period of time to study how the abaloparatide resulted in increases of BMD. Now, in the human equivalent dose which was the third highest dose in the trial, you see that there was a continuous bone build over the entire 16-month period of time and there were no observations of an increase in cortical porosity. Now, in an animal study, one of the things that can be done that’s not done in typical clinical trials is an assessment of bone strength. These are mechanical tests that are performed on the bones to determine if the changes in BMD resulted, improvements not just in micro-architecture, but in terms of bone strength. And at the two higher doses, both femoral neck shear and vertebral cord compression were restored back to baseline levels by the 16 months of abaloparatide treatment. So, these data are the longest exposure data that we have released publicly at this time in an animal mode. Did I address the areas that you were most interested in, John?

[John Newman-Canaccord:]

Yes, thank you.

[Operator:]

Our next question comes from the line of Mara Goldstein with Cantor Fitzgerald. Please proceed with your question.

[Mara Goldstein-Cantor Fitzgerald:]

Thank you. I had two questions. And the first on abaloparatide, so as we are sort of ticking the days down to the first set of pivotal data that come out and then obviously there is 6-month extension study. Can you talk about the activities that would occur in a corporate level between those signs of what you will be doing to ready abaloparatide for NDA submission? And then I had a question on the vasomotor trial when we are done?

[Robert Ward:]

Okay. Sure, Mara. So, if you think of what happens when a trial completes, there is a series of routine steps for each trial to make sure that all the data have been captured in a complete format transferred to the database and then there is a database lock that occurs before an analysis is run. Then as the 6-month extension trial completes, again it will be assembling all of the dossier required for submitting both the NDA and MAA and that work has actually already begun today. As you know, there is a fair amount of writing that goes into having the packets completed. So, as we complete different sections of the development program, we begin crafting of the submission and that work is already underway today. So, our top line report in December would be the results from the 18-month abaloparatide, Forteo and placebo anabolic portion of the trial and will report out on both efficacy and safety across the treatment groups. But the company remains blinded to both the individual patients on the sites as the abaloparatide and placebo groups going to the 6 months standard-of-care arm, which we report out next year.

[Mara Goldstein-Cantor Fitzgerald:]

Okay. And just on the vasomotor of the Phase 2b, are you advancing that with the 10 milligram dose and is that a daily dosing or is there some change from the earlier 2a study that you did, because I think that was the most effective dose?

[Robert Ward:]

You are correct, Mara. In the previously completed study where it was once a day, 10 milligrams was the dose that was the most effective. In this 2b study, we will be defining the minimal affected dose. And so we will be studying lower doses to determine, what is the lowest dose at which we see a clinically significant response. So, 10 milligrams will be included in the study, but we would anticipate that lower doses would be encountered as well.

[Mara Goldstein-Cantor Fitzgerald:]

And you are still anticipating daily dosing?

[Robert Ward:]

Correct.

[Mara Goldstein-Cantor Fitzgerald:]

Okay, thanks. I will hop back in the queue. Thank you.

[Operator:]

Our next question comes from the line of Eric Schmidt with Cowen & Company. Please proceed with your question.

[Unidentified Analyst:]

Hi, good morning. Thanks for taking questions. This is Jeff on for Eric. Just one question on the abaloparatide data announcement, did you decide on how you will release the data?

[Robert Ward:]

Yes. We will be putting out a press announcement with the top line results. Is that what you had in mind, Jeff?

[Unidentified Analyst:]

Yes. And will you host a conference call to discuss the data?

[Robert Ward:]

I think that really comes down to timing. I think right now, our preliminary thinking would be that we would put out the top line data, make a submission to a scientific meeting to the following year. So, I am not sure this moment we hadn’t yet planned to do a conference call, but certainly something we can consider.

[Unidentified Analyst:]

Thanks. That’s helpful. And one question on 1901, so can you describe a little bit of the design for these Phase 1b trial that will be initiated in later this year?

[Robert Ward:]

We have not put out the final 1b trial result. It is undergoing IRB review. And once we have both finished the IND 30-day review period and have IRB approval, the trial will be on clinicaltrials.gov and at that time, we will be happy to share the details of the design.

[Unidentified Analyst:]

Okay, thanks very much.

[Robert Ward:]

And Jeff, we do anticipate that, that would be available on clinicaltrials.gov this year.

[Operator:]

[Operator Instructions] Our next question comes from the line of Eun Yang with Jefferies. Please proceed with your question.

[Eun Yang-Jefferies:]

Thank you. So, Bob, in the past when we spoke, to me that you seem to have been quite confident about abaloparatide issuing a superior efficacy in non-vertebral fracture over Forteo. Are you still confident about the potential first? And second, what’s the kind of assumption underlying the fracture, non-vertebral fracture rate in placebo? Is the 15% reasonable assumption?

[Robert Ward:]

Well, Eun, when we think about the Phase 3 results, we look at what we have observed to-date in Phase 2. So, in Phase 2, we had robust 6-month data point and then a subset of patients that were followed out to 12 months. The Phase 2 manuscript will be available shortly from the Journal of Clinical Endocrinology and Metabolism. And when that is available online, that will highlight the differences that we observed in Phase 2. And I remember our Phase 3 trials much larger. So, the BMD differences observed in Phase 2 if we replicate in Phase 3, the same margin of difference that we saw on Phase 2, many of those endpoints will now be statistically significant that in the smaller Phase 2 trial they were not statistically significant. When you think about fracture data, we do not yet have fracture data in humans. So, when we look historically at where Forteo has performed is performed as an effective reduction of vertebral fractures and then has in different trials from different rates of reduction of non-vertebral fractures. In the trial data that comes out in December, we will be able to have head-to-head comparisons at both vertebral and non-vertebral fracture sites for Forteo and abaloparatide. And please recall this will be one of the largest trials ever of Forteo. So the comparisons will be quite robust. We think it will be not just efficacy, but also in Phase 2 we saw reduced rate of hypercalcemia. So, we will be looking as well to determine whether we see clinically meaningful differences in safety as well as in efficacy. Now, when we think about how the Phase 3 trial was designed, the size of the trial on the power calculations are done around the primary endpoint, which is vertebral fracture reduction. So, at the time the trial was designed, non-vertebral rates are not used as part of the powering calculation. And so there are no guidances per se that you were asking around non-vertebral fracture rate.

[Eun Yang-Jefferies:]

Okay. And then a question on 1901, how is the U.S. protocol Phase 1b U.S. protocol would be different from the EU protocol?

[Robert Ward:]

Right now, Eun, we are talking with different investigator groups on multitude of different trial sites. So, you are correct, right now, the European Oncology Research and Treatment Group, they are evaluating a Phase 1b trial. That’s a different design than the Phase 1b trial I was mentioning a moment ago that we would expect to have on clinicaltrials.gov this year. As we move into next year, we would anticipate having more than one Phase 1b trial running at the same time. And yes, the designs of the trials are slightly different and the different subsets of metastatic breast cancer patients that will be involved are expected to be different across the trials as well. Our goal in the trial design is to be able to provide evidence that enables us to assess whether tumor growth has been haltered or potentially whether tumors have gone smaller to measure the amount of drug in the tumor to be able to show the extent of suppression of the estrogen receptor. So, each of those endpoints is addressed differently across the different trial designs. That’s the reason to do more than one Phase 1b trial.

[Eun Yang-Jefferies:]

Sure. And then on vasomotor symptoms, I thought that you guys were setting a partnership for this indication and the fact that you are planning to start Phase 2b in second half of next year? Is that to strengthen your position for potential partnership?

[Robert Ward:]

Well, Eun, right now if you ask what is our partnership focus? It’s really around abaloparatide. As we look at our Phase 3 data readout this year, we believe this to be the largest value un-partnered late stage asset in the biopharmaceutical industry. And so as a result, we see a high degree of interest from partners around the world. Geoff Swire, Geoff you just returned recently from the BIO-Europe meeting, can you describe what was the atmosphere? And when people think about partnering do they tend to ask mostly about abaloparatide or what is the interest as we think of third-parties?

[Geoff Swire:]

Sure. Thanks Bob. We just returned from Frankfurt from the BIO-Europe meeting and had quite a successful round of discussions with a number of companies, large pharma companies with a global presence, regional pharma companies as well. And we saw interest primarily in abaloparatide at this point, but also in our other assets. And so those discussions will continue in the near future.

[Robert Ward:]

And as you might imagine, Eun, most global partners are really interested this year on Phase 3 data that will be this December. And as we think about globalizing abaloparatide, Asia, Eastern Europe, Latin America are areas where at this moment are focused on commercial presence as U.S., European focused and so we are certainly interested in a partner that would allow us to launch abaloparatide around the world.

[Eun Yang-Jefferies:]

Thank you.

[Operator:]

Our next question is a follow-up question from John Newman with Canaccord. Please proceed with your question.

[John Newman-Canaccord:]

Hi, thanks for taking my follow-up. Bob just had a question just wanted to review quickly the Phase 3 design. My understanding was that the primary endpoint you will be looking at the reduction in vertebral fractures for abaloparatide versus placebo? Secondary, you will be looking at the reduction in non-vertebral fractures for abaloparatide versus placebo and you will also be looking at bone mineral density for abaloparatide head-to-head with Forteo. So, I guess my question is will we able to see the fracture reduction for abaloparatide versus Forteo at non-vertebral sites just not from a statistical comparison perspective, because that’s not how the study is designed or will you be able to maybe make that comparison at a later time? Thanks.

[Robert Ward:]

John, that’s a very good question. And when we think about the Phase 3 design, I think it’s important to keep in mind that from a regulatory perspective, from an FDA perspective, from an EMEA perspective, the primary focus is comparisons of abaloparatide to placebo. And we anticipate that the regulators will have a keen eye on vertebral fracture reduction, non-vertebral fracture reduction and also the overall safety profile. Now, from a competitive perspective, we have the active comparator, Forteo. Now, comparisons to Forteo, is very important for payers, as payers think about healthcare investment that they make. We shared at ASBMR in the responder analysis, which is also included in the forthcoming Phase 2 manuscript that a larger number of patients responded to abaloparatide as compared to Forteo. So, the comparisons between abaloparatide and Forteo in the top line data will include both BMD and fracture comparisons and there will be statistical analysis performed across each of the endpoints that are reported in the top line data.

[John Newman-Canaccord:]

Great, thanks Bob.

[Operator:]

Mr. Ward, it appears we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

[Robert Ward:]

Well, thank you everyone for participating today. The third quarter was for us an area of high activity and we are looking forward to the fourth quarter reporting out on our Phase 3 trial, initiating the Phase 1b with RAD1901, a series of important presentations and other secondary milestones across the portfolio. So, thank you for joining us on our call today and we will look forward to talking with you again on our next quarterly update.

[Operator:]

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.