Q1 2015 Earnings Call Transcript

Published: 6 May 2015

[Operator:]

Greetings and welcome to the Radius Health First Quarter 2015 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, Investor Relations for Radius Health. Thank you. You may begin.

[Barbara Ryan:]

Thank you, Christine, and welcome and thank you for all of you joining us on the line this morning for our webcast and conference call and review Radius Health’s first quarter 2015 financial and operating results. I am Barbara Ryan, Radius Health’s Investor Relations Officer. And with me this morning to discuss the results and update you on our progress are Robert Ward, President and Chief Executive Officer; and Nick Harvey, Chief Financial Officer of Radius Health. 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 annual report on Form 10-K 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 May 06, 2015 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 on the company’s website. It is now my pleasure to 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 is joining us on our conference call and webcast this morning. Since our IPO last June through today, Radius Capital lists Radius Health as the number one best performing IPO for total shareholder return. We believe this is a positive response to the substantial progress we’ve made in advancing our pipeline. We are particularly pleased to be speaking with you today as May is National Osteoporosis month. According to the National Osteoporosis Foundation, this year nearly 60% of adults aged 15 and older are at a risk of breaking a bone. Osteoporosis related bone breaks are estimated to cost the U.S. Healthcare System approximately $19 billion annually. At Radius, we are focusing on drug development efforts on treating serious diseases. With our investigational drug abaloparatide, we’ve made significant progress during the quarter. As you recall, we reported the positive top line results of the Phase III ACTIVE clinical trial for abaloparatide subcu in December, and we expect to report the result from the first six months of the ACTIVExtend clinical trial at the end of the second quarter this year. These will be combined with the 18 month ACTIVE results to provide the complete 24 month dataset. This will form the basis of our planned submission of a new drug application to the U.S. Food and Drug Administration and of a marketing authorization application to the European Medicines Agency in the second half of this year. We currently anticipate a standard review at the FDA and EMEA. Pending a positive regulatory outcome, first commercial sales of abaloparatide are expected next year in 2016. In these Phase III ACTIVE clinical trial, we reported an 86% reduction in new vertebral fractures and a 43% reduction in non vertebral fractures. These are results that we are very excited about submitting for regulatory review and this is the largest reduction in new vertebral fractures ever reported in a major osteoporosis trial. We just returned from our presentation at the HOT TOPICS Session at the European Calcified Tissue Society or ECTS this past week, where we discussed data from a post-hoc analysis. Now, a post-hoc analysis does not pre-specify in the study protocol or the original amended statistical analysis plan for the ACTIVE trial. On the investigational agent ability, we wanted to evaluate the impact on wrist fractures. Each year in America it is estimated that 2 million osteoporotic fractures occur most commonly of the spine but wrist fracture is also one of the most common osteoporotic fracture site. A substantial challenge in the field of osteoporosis is improving the efficacy of treatment for the reduction of non-spine fractures. In the post-hoc analysis abaloparatide had a positive effect on building or maintaining bone at the radius and fewer wrist fractures were observed than in the placebo group. Most notably, the abaloparatide group had a 72% reduction in wrist fractures as compared to the Forteo group. This was a post-hoc analysis, but we think the difference may be very important in understanding the potential benefits of abaloparatide for reducing non-spine fracture. The potential clinical significance of these data will be evaluated during the upcoming regulatory review. As I mentioned earlier, we expect to be reporting the first six month data for the ACTIVExtend trial at the end of the second quarter. And this is very important as the secondary endpoints will compare the response to bisphosphonate of the active abaloparatide and placebo treated groups. With this portion of the ACTIVExtend complete, we will turn our full attention towards submitting our NDA and MAA this year. We’ve guided that we will have a global partnership by the time of the commercial launch and those discussions are currently ongoing. We are also continuing the clinical evaluation of the optimized transdermal patch and plan to initiate the human phase I study in the second half this year. I’d now like to turn to RAD1901, our investigational endocrine therapy which we are developing at high doses as a selective estrogen receptor degrader or SERD for potential use in the treatment of metastatic breast cancer. We are continuing to enroll and dose patients in our Phase I multicenter, open-label, two-part, dose-escalation study of RAD1901, this is a U.S. study, in postmenopausal women with advanced estrogen receptor positive and HER2-negative breast cancer. The main objective of this Phase I trial is to determine the recommended dose for phase 2 study and include preliminary evaluation of the potential anti-tumor effect of RAD1901. We expect to provide an update in the trials and progress session at ASCO in May and we plan to have additional data present later this year. Additionally, we expect to initiate a Phase I clinical trial for RAD1901 in the EU this year as well. Importantly, during the first quarter, we announced we have secured worldwide rights for RAD1901 by amending our license agreement with Eisai, it’s a very important step for Radius as we look to expand the potential therapeutic profile for RAD1901. We were also pleased to report that on March 18, Dinesh Purandare joined Radius as the Head of Oncology. Previous, Dinesh was the Vice President and Project Head for Oncology at Sanofi, and he brings deep experience to Radius across both the development and commercialization in breast cancer. Dinesh is part of our commitment to accelerate and deepen our capabilities in oncology. Now, as I mentioned earlier in my remarks, our company is now moving to an important new phase as we prepare for our first NDA and MAA submission. At the same time, we seek to enter our first global commercial partnership and subject to obtain regulatory approval, planned for our commercial launch in 2016. We are taking the important and necessary steps to position Radius for success in these initiatives. Also this quarter, Brent Hatzis-Schoch joined Radius as our General Counsel. Brent joined us from Merz Pharma in Germany. I am also pleased to report that we announced the appointment of Tony Rosenberg to our Board of Directors. Tony is a 35 year veteran of pharmaceutical industry, who before recently retiring from Novartis led corporate M&A and licensing and was responsible for the portfolio transformation transactions recently undertaken by Novartis which was seen as landmark deals in the industry. Now, I’d like to turn the turn call over to Nick Harvey, our Chief Financial Officer, who will discuss our first quarter 2015 results and provide an update on our balance sheet.

[Nick Harvey:]

Thanks, Bob. Our cash, cash equivalents and marketable securities balance as of March 31, 2015 was $243.1 million, which includes a $158.4 million net of underwriting discounts and offering expenses that Radius raised in a public offering of its common stock on January 28, 2015. We are maintaining our guidance and our cash burn and expect that our cash and cash equivalents and marketable securities balance as of March 31, 2015 will 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:]

Thanks, Nick. Before we open the line for questions, I would like to summarize our upcoming milestones. The next several months at Radius Health will be very exciting as we advance our company towards our first regulatory submission, continue our commercial partnering discussions and prepare for our first commercial launch in 2016 following regulatory approval. At the end of the second quarter, we expect to report the top line six month fracture data from the ACTIVExtend and the full 24 month fracture data set. We anticipate submitting an NDA in the U.S. and an MAA in Europe for the investigational drug as abaloparatide subcu in the second half of this year. Subject to the receipt of regulatory approval, we anticipate our first commercial sales in 2016 and expect to have entered into an abaloparatide partnership by the time of the launch. We plan to initiate the clinical evaluation of the optimized abaloparatide transdermal patch in the second half of this year. For RAD1901, we will report our progress in the Phase I dose escalation study during the ASCO annual meeting at the end of May, beginning of June of this year, and we will provide further update as the trial progresses later this year. We expect to initiate Phase 1 clinical trial in the EU in metastatic breast cancer and to initiate a Phase 2b trial for RAD1901 in vasomotor symptoms. We will also be presenting at several upcoming investor conferences. Today, we will be at the Deutsche Bank Health Care Conference in Boston; we will be at the Bank of America Conference in Las Vegas on May 12-14; the Jefferies Conference in New York on June 1-4; and the Goldman Sachs Conference in California on June 9. We will also be presenting an abstract on the abaloparatide transdermal program at the transdermal drug delivery conference in Philadelphia on May 11 and we will be presenting the responder analysis from the phase 3 ACTIVE trial at EULAR on June 10-13 in Rome, Italy. I think now, Barbara, we are prepared to open the line up for questions from our audience.

[Barbara Ryan:]

Great. Christine, if you could get the instructions for the callers for questions. Thank you.

[Operator:]

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ying Huang with Bank of America Merrill Lynch. Please proceed with your question.

[Ying Huang:]

Thanks for taking my question. Good morning guys. A couple of questions from me. First one is, can you remind us if there is any regulatory risk at all for the abaloparatide NDA because now FDA requires 24 month end point even though you do have 18 months trial plus a six month extension. And then secondly, are you still looking at patients who have advanced metastatic breast cancer with brain metastases. And then lastly, what’s the difference in the trial design between the phase 1 you are conducting for Radius 1901 and the upcoming European trial phase 1 for Radius 1901? Thanks.

[Robert Ward:]

Okay. Thank you very much for your question, Ying. Let me just repeat back the three items. There was the question around the 24 month, what’s current update on brain metastases as a focus in the context of metastatic breast cancer, and what’s the design of the expected European trial as compared to the currently ongoing U.S. trial. Is that accurate?

[Ying Huang:]

Yes. Very much. Thank you, Robert.

[Robert Ward:]

So terrific. I will ask Greg Williams, who leads our Development Group to comment in just a moment on the FDA issue, but I do want to remind that - anytime we provide a regulatory submission, the FDA and EMA have deep expertise having reviewed numbers of other products. So during the process of review, it’s both in evaluation of our data, but also the experience of the regulator that comes together in evaluating what’s the label for the program, what’s the process of review. So we always anticipate that it is an interactive process and we are very much looking forward to having our NDA in this year and the MAA as well. Greg, could you comment on the FDA’s interest in a 24 month trial design, remind us of what our trial design looks like and is the 24 month of data that we are anticipating to submit likely to fulfill the FDA interest in 24 month data.

[Greg Williams:]

Thank you, Bob. So it was agreed in our prior discussions with the FDA as well as with EMA that the 18 month active study followed by an additional six month of open label alendronate or patients that had been treated in a blended fashion with abaloparatide and placebo, that that together would constitute an adequate 24 month data package to satisfy each of the two regulatory agencies. So from that perspective, I would say that there is no risk. Of course we don’t have the date in hand as of yet but we feel very good about the program and about our relationship with each of the agencies thus far.

[Robert Ward:]

Terrific. Thank you, Greg. With regards to brain metastases, we talked early on about the fact that RAD1901 crosses the blood brain barrier and why that offers a potential for patients who have both peripheral disease and disease that may have metastasized to sites behind the blood-brain barrier and crossing the blood-brain barrier represents the potential for the drug to be effective both behind the blood-brain barrier and for disease in the periphery. In discussions with KOLs however they shared with us that their perspective was that earlier stage patients may represent the best place to conduct a trial around that RAD1901. If you note in the Phase I trial that’s ongoing today, it’s not a requirement that patients have metastatic disease that is spread behind the blood-brain barrier. It’s also not an exclusion criteria. So as you said, we are focusing on metastatic breast cancer, I think that’s an accurate statement and if you said based on sites of metastases are we open to treating patients that may have had the disease spread to different sites within the body that will be accurate. But Dinesh, could you walk through for us as we think about the U.S. trial design today and the trial we are contemplating in Europe. How do those provide a different perspective for us or help us learn more about the potential for RAD1901.

[Dinesh Purandare:]

Sure. So the design that we have in the U.S. today it’s a two-part design. The first part is to look at the dose escalation in which really would give us the maximum tolerated dose, and the second, the part B of that trial would allow us to test the drug into further expansion cohorts and this would – and we’re working, we have several ideas in mind and that the expansion cohort will give us very important clues in terms of how we would want to take this drug forward within metastatic breast cancer. As far as the European trial is concerned, this trial we are going to conduct in some centers which are highly specialized in the technology which is called FES-PET, that would allow us to determine the engagement of this agent with the estrogen receptor and so our focus over there is to use this technology to look at the way would RAD1901 engage with the estrogen receptor and the impact it would have. So combined with the FES-PET data from Europe and the dose escalation cohort from the ongoing Phase 1 trial, we would be in very good position to move forward, that’s our current thinking.

[Robert Ward:]

So thank you, Dinesh.

[Ying Huang:]

Bob or Dinesh, I guess that means the European trial, the main effort there is for the pharmacodynamic study it sounds like, is that the right assumption?

[Robert Ward:]

Dinesh?

[Dinesh Purandare:]

Yes, so I think you are right. So the main focus over there is to look at the pharmacodynamic effect of the drug.

[Robert Ward:]

And also – to build upon our previously completed MTP study that’s used FES-PET in healthy volunteers, this of course will be the first FES-PET in patients who have metastatic disease. So it’d be very important for us to be able to look at how the study helps us bridge now and into the patient population.

[Ying Huang:]

Great. That was very helpful. Thank you, Bob.

[Robert Ward:]

Thank you.

[Barbara Ryan:]

Christine?

[Operator:]

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

[Jeff Chen:]

Hi, this is Jeff on for Eric. Good morning and thanks for taking my questions. First one is on Abaloparatide. I mean the 18 month data looks great and very impressive so far. Can you just help us to understand in the 24 months what you would expect and how you would characterize this success?

[Robert Ward:]

Yes, well as you know, the 24 month data really is a group of patients who will go from placebo to bisphosphonate for the first time and a group of patients who will have just completed anabolic therapy with abaloparatide for 18 months and then will go on to a bisphosphonate. As we look at previous publications in the literature of other studies where patients have either gone from a naïve treatment state to a bisphosphonate or have gone from an anabolic to a bisphosphonate. Generally, that has suggested that the patients in the anabolic group have shown a larger BMD increase than patients who are going on to a bisphosphonate for the first time and in comparison of the two group, generally the literature suggest that the previously anabolic treated group had the greater benefit on fracture reduction. Now we do not yet have the data for the six month extension, but if you ask what would be our expectation, we would expect to see the abaloparatide group continue to show the benefit of the previous treatment with abaloparatide during this additional six month period of time. Now we’ll be prepared to report on that data at the end of the second quarter, which as you know today being May is just a few weeks from today.

[Jeff Chen:]

Thank you. That’s very helpful. And are there any other pre-clinical studies remaining to be completed for abaloparatide

[Robert Ward:]

Dr. William, could you share with us, as we think now of our work for the submission later this year, where we are with regards to completing other Phase I studies?

[GregWilliams:]

So for the Phase I studies, we are in very good shape. We’re wrapping up our Q2 [indiscernible] trials now and from a non-clinical perspective, we believe we have a complete package that will satisfy both the FDA and EMA. There is no additional trials required that we’re aware of at the time.

[Robert Ward:]

And so we’re on track for submission this year.

[Jeff Chen:]

Thank you. That sounds great and just the last one on 1901. So in the upcoming ASCO presentation, do we expect to see any early efficacy data there?

[Robert Ward:]

Well, as you know, our abstract was accepted in the trials in progress session of ASCO and on the ASCO website, they have outlined what the expectation is for presentation in this section. Remember, trials-in-progress is primarily intended to inform investigators that a trial is up and running and available for enrollment. So while we are allowed to comment on enrollment and to share where we are in the billing of cohorts and the progress on dose escalation, it’s not a session that ASCO has established specifically to look at interim efficacy.

[Jeff Chen:]

Understood. Well thank you and congrats on all the progress.

[Robert Ward:]

Thank you very much.

[Operator:]

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

[Mara Goldstein:]

Thanks a lot. I appreciate taking the question. Maybe we could talk a little bit about – continue on the discursion on 1901, I’m just curious as to what your thoughts are on, as you go through the clinical trial process, what you think you’ll be requesting from FDA in terms of development program. Do you think that nature of the testing drug in earlier stage, when they would rend itself to an accelerated approval or do think you’ll go through a more traditional Phase II, Phase III trial program.

[Robert Ward:]

Well, you know Mara, we are, as you might imagine, very interested to see the results from the ongoing phase 1 and to learn more about RAD1901 efficacy in the metastatic breast cancer population. We recently completed the pre clinical study that have been very encouraging as we think about the profile. So previously, we shared some data in an animal model and that showed tumor regression with RAD1901. In a study that compared to more static doses of already approved serums or sers [ph]. If we find in human that RAD1901 results in significant partial or complete response, then we think the data might be the type of data that would open the possibility of early approval or fast track approval. Today, we don’t have the data yet to really have a clear view, but we think that during the course of this year, we’ll learn enough about RAD1901 to be better equipped to really give you a solid answer on that question. Dinesh, do you think that’s an accurate way for us to think about 1901 during the course of this year.

[Dinesh Purandare:]

I agree. I think Bob you described it correctly. I mean there are clearly several options that may open up depending on the kind of data we would have in our hands during the course of the year.

[Mara Goldstein:]

Okay.

[Robert Ward:]

Yeah, so as we think about it Mara, we have really three branch point questions. For a neoadjuvant study, neoadjuvant is based on reducing tumor sites before surgery so the drug would have to demonstrate the ability to reduce tumor sites. In the metastatic cancer population, we know that patients have microheterogeneity of tumors. So we think combination therapy is likely to be the standard of care. So the ability of a drug to be well tolerated when used in combination with other drug is extremely important and we also think that the overall ability to contribute to the efficacy will be a key criteria which combinations are selected for you. In the adjuvant setting, some of the unique characteristics of RAD1901 pre-clinically or being bone protective. If we demonstrate that capability in the adjuvant setting, that will be a very important improvement in the overall profile. So we’re very encouraged by what we know about the molecule today and we’ll learn more as we go through this year.

[Mara Goldstein:]

And do you anticipate, if you are incorporating patients in the trial, who have CNS metastases, do you anticipate that that becomes a secondary end point in a Phase II setting or just a favorable endpoint?

[Robert Ward:]

I think Mara, as we’ve talked to more and more investigators in the field of breast cancer that their advice has been guiding us that is with or without metastases to the CNS but more likely to be focus than it would be a trial that required metastases to the CNS as they go forward.

[Mara Goldstein:]

Okay, thank you. I’ll jump back in the queue.

[Operator:]

Our next question comes from the line of Eun Yang with Jefferies. Please proceed with your questions.

[Carmen Marie Augustine:]

Hi, this is Carmen on the line for Eun. First on Abaloparatide, the patch you mentioned initiation of the trial in the second half of this year, do you have any estimate on when we can expect data and then also o Abaloparatide-SC, when will you start building out the sales force for that?

[Robert Ward:]

On the first question, I’d like to offer Gary Hattersley to share with you that on May 11, he will be speaking at the Transdermal Conference in Philadelphia. Perhaps Gary, you could share with us the data that will be forthcoming on May 11 and then a greater clarity of what the year looks like for Transdermal.

[Gary Hattersley:]

Sure. Thank you, Bob. So next week at the Transdermal Conference, we will be presenting some new data on the results of optimization of the transdermal patch. So the target of this optimization has been to modify the patches such a way that it is able to achieve a pharmacokinetic profile where the path matches the profile of the subcutaneous injection. We will be reporting on progress of that optimization initiative of where through some modifications that we were able to achieve a profile that’s comparable to subcutaneous injection. And so expectations for this year, we will continue to provide a further update during the course of 2015 on the progress towards this optimized pharmacokinetic profile.

[Robert Ward:]

And with regards to commercial bill, we today have already begun recruiting really for MSL [ph] and we are fortunate for individuals that have deep background in osteoporosis and the ability to consider joining our company we had great success. Tim Letchworth has joined us now to lead our normal program and currently ongoing activity. In terms of the standard field sales force, in 2016, we will look to initiate – to build for the time of approval, we will prepare to launch the product.

[Carmen Marie Augustine:]

Okay, great. Thank you. And then one more if I could, on RAD1901 based on the data represented recently at AACR, or do you think you could differentiate 1901?

[Robert Ward:]

As you know, at AACR, our understanding is presented data not just on [indiscernible] which was the lead compound which previously underwent Phase I study, but also talked about a second compound that they were introducing it to the market. So it’s not clear to us now as to which of those two compounds would represent the lead for the program. AstraZeneca also have oral development program that would the competitor as well. So Dinesh, as you think about landscape, Radius Health will serve once a day, the AstraZeneca third program and then the Roche program. How would you highlight for us some areas where we expect to see differentiation amongst the compound?

[Dinesh Purandare:]

So we are in early stages of developing for all these assets and but what we know about our molecule is that, we have a very good tissue selectivity profile with which potentially has some positive and protective effects on bone, potentially lot of uterine simulation which you see some of the agents. We also have seen based on what we have today a very good data in terms of efficacy. We have seen tumor regression is various models. You are aware of the intracranial efficacy that we have seen so far as well as we believe that this molecule will also work in [indiscernible] mutation. We also believe that given the profile that we have of this molecule in our hands, this drug can be very well combined with therapy as you probably are aware, lot of breast cancer therapy particularly in the postmenopausal setting, the landscape over there is changing with the entry of [indiscernible] and its potential combination with various stations including at the AACR and so. So that’s going to alter the landscape dramatically and therefore the combinability of these agents with some of the other agents out there is going to be crucial. And given that we have oral dose and encouraging safety profile in over 150 human exposures, we believe that we have a very good agent in our hand, a good molecule that compares very well with some of the other molecules that are out there.

[Carmen Marie Augustine:]

Okay. Thank you so much.

[Operator:]

Our next question comes from the line of Jason McCarthy with Maxim, please proceed with your questions.

[Jason McCarthy:]

Hi, guys. Sounds like everything is going really well and in terms of post talk data analysis, this being a research I think you can never have enough data, positive or negative and the risk data is definitely exciting. So as you continue to layer in increased phase b [ph] and improved bone mineral density and all kinds of bones, where 40 odd just doesn’t seem to be efficacious. Does it potentially open up the market to the anitresorptive side of the market you know when you’re talking about injectables like Prolia, could you get patients to switch to a safer, more efficacious anabolic?

[Robert Ward:]

Thank you for your question Jason. As we think about upcoming regulatory review. One of the elements that both the FDA and EMA will be taking into consideration, as they look at the totality of the data, part of the dialogue will be the labeled indication and what would be the claims that would be forthcoming for abaloparatide. We have not yet submitted and that kind of dialogue really takes place later in the regulatory review process. So we anticipate that as we move into 2016, we’ll have better understanding of how the regulators are thinking about abaloparatide than we necessarily would today. When you think of the emerging landscape for treatment of osteoporosis, we know the disease is under-diagnosed and under-treated. Both Prolia and the market leader Forteo are used by physicians who commonly use injectable drugs to manage the treatment of osteoporosis, but we know that there is a larger number of physicians perhaps as many as five times as many who rarely use injectable drugs to manage osteoporosis. So as abaloparatide become better established in a community and physicians learn more about the drug, yes we’re also quite helpful that abaloparatide may enable a change in treatment patterns, which as you suggested could change how physicians think about what drug they choose when they’re thinking about this to treat osteoporosis.

[Jason McCarthy:]

Great, thank you so much.

[Operator:]

It appears we have no further questions at this time. I would now like to turn the floor back over to management.

[Robert Ward:]

Well, thank you for joining us at the end of our quarterly call here for 2015. It’s certainly a very exciting year for Radius Health and we’ll look forward to speak with you all again on our next quarterly update. Thank you.

[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.

[Barbara Ryan:]

Thank you.