Radius Recycling Inc (RDUS) 2015 Q1 法說會逐字稿

Greetings and welcome to the Radius Health first-quarter 2015 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Barbara Ryan, Investor Relations. Thank you. You may begin.

Thank you, Christine, and welcome and thank you to all of you joining us on the line this morning for our webcast and conference call and review of Radius Health's first-quarter 2015 financial and operating earnings results. I am Barbara Ryan, Radius Health's Investor Relations officer and with me this morning to discuss the results and update on you on our progress are Robert Ward, President and Chief Executive Officer, and Nick Ward, 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 6, 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.

Thank you, Barbara. Thank you to everyone who has joined 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 substantial progress we've made in advancing our pipeline.

We're 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 age 50 and older are at a risk of breaking a bone. Osteoporosis-related bone breaks are estimated to cost the US healthcare system approximately $19 billion annually.

At Radius, we are focusing our 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-SC 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 data set.

This will form the basis of our planned submission of a new drug application to the US 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 EMA. Pending a positive regulatory outcome, first commercial sales of abaloparatide are expected next year in 2016.

In the Phase 3 ACTIVE clinical trial, we reported an 86% reduction in new vertebral fractures and a 43% reduction in nonvertebral 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 Meeting, or ECTS, this past week, where we discussed data from a post-hoc analysis. Now, a post-hoc analysis is not pre-specified in the study protocol or the original or amended statistical analysis plan for the ACTIVE trial.

[On] our investigational agent ability, we wanted to evaluate the impact on wrist fractures. Each year in America, it's estimated that 2 million osteoporotic fractures occur, most commonly at the spine, but wrist fracture is also one of the most common osteoporotic fracture sites. A substantial challenge in the field of osteoporosis is improving the efficacy of treatments 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 the end of the second quarter. And this is very important as the secondary endpoints will compare the response to bisphosphonate treatment of the active abaloparatide and placebo treated groups.

With this portion of the ACTIVExtend complete, we will turn our full attention toward 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 1 study in the second half of 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 1, multicenter, open-label, two-part dose escalation study of RAD1901. This is a US study in postmenopausal women with advanced estrogen receptor positive and HER2-negative breast cancer.

The main objective of this Phase 1 trial is to determine the recommended dose for a Phase 2 study and include the preliminary evaluation of the potential antitumor effect of RAD1901. We expect to provide an update in the trials in progress session at ASCO in May and we plan to have additional data to present later this year.

Additionally, we expect to initiate a Phase 1 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 are 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 it 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 obtaining regulatory approval, plan 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'm also pleased to report that we announced the appointment of Tony Rosenberg to our Board of Directors. Tony is a 35-year veteran of the 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 are seen as a landmark deals in the industry.

Now I'd like to turn the 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.

Thanks, Bob. Our cash, cash equivalents, and marketable securities balance as of March 31, 2015, was $243.1 million, which includes $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 on 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 RAD19 programs that Bob will now highlight.

Thanks, Nick. Before we open up the line for questions, I'd like to summarize our upcoming milestone. The next several months of 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 6-month fracture data from the ACTIVExtend and the full 24-month fracture data set. We anticipate submitting an NDA in the US and an MAA in Europe for the investigational drug of abaloparatide-SC 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 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 1 dose escalation study during the ASCO annual meeting at the end of May, beginning of June, of this year. And we'll provide further updates as the trial progresses later this year. We expect to initiate a Phase 1 clinical trial in the EU in metastatic breast cancer and to initiate a Phase 2b trial for RAD1901 in vasomotor symptoms.

We'll also be presenting at several upcoming investor conferences. Today, we'll be at the Deutsche Bank healthcare conference in Boston. We'll be at the Bank of America conference in Las Vegas on May 12 [through] 14th, the Jefferies conference in New York on June 1 through the 4th, and the Goldman Sachs conference in California on June 9.

We'll also be presenting an abstract on the abaloparatide transdermal program at the Transdermal Drug Delivery Conference in Philadelphia on May 11. And we'll be presenting the responder analysis from the Phase 3 ACTIVE trial at EULAR on June 10 through the 14th in Rome, Italy.

I think now, Barbara, we are prepared to open the line up for questions from our audience.

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

(Operator Instructions)

Ying Wang, BofA Merrill Lynch.

Thanks for taking my question. Good morning, guys. So couple 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 endpoint. Even though you do have 18-month trial plus a 6-month [diagstation].

And then secondly, are you still looking at patients who have advanced metastatic breast cancer with brain mets, or brain metastasis? 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.

Okay. Thank you very much for your question, Ying. Let me just repeat back the three items. So it 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 US trial? Is that accurate?

Yes, very much. Thank you, Robert.

Terrific. I'll ask Greg Williams, who leads our development group, to comment in just a moment on the FDA issue. But I do want to remind folks that any time we provide a regulatory submission, the FDA and EMA have deep expertise, having reviewed numbers of others' products.

So during the process of review, as both an evaluation of our data, but also the experience of the regulators that comes together in evaluating what the label for the program or what's the process of review. So we always anticipates that's it's 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 months of data that we are anticipating to submit likely to fulfill the FDA interest in 24-month data?

Thank you, Bob. Yes, 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 6 months of open-label alendronate for patients that had been treated in a blinded 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's there's no risk. Of course, we don't have the data in hand as of yet, but we feel very good about the program and about our relationship with each of the agencies thus far.

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 the 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'll note in the Phase 1 trial that's ongoing today, it's not a requirement that patients have metastatic disease that has spread behind the blood-brain barrier. It's also not an exclusion criteria.

So if you said we were 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 would be accurate.

Dinesh, could you walk through for us as we think about the US 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.

Sure. So the design that we have in the US today, it is a two-part design. The first part is to look at the dose escalation, which would give us the maximum tolerated dose. And the second -- the part B of that trial would allow us to get the drug in further expansion cohorts.

And this would -- and we're working -- we have several ideas in mind. And that 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 that RAD1901 would 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, you would be in very good position to move forward. That's our current thinking.

Thank you, Dinesh.

So Bob and Dinesh, I guess that means the European trial -- the main effort there is for the pharmacodynamic study, sounds like. Is that the right assumption?

Dinesh?

Yes. So I think you're right. So the main focus over there is to look at the pharmacodynamic effects of the drug.

And it also allows us to build upon our previously completed MTD study that used FES-PET in healthy volunteers. This of course would be the first FES-PET in patients who have metastatic disease. So it would be very important for us to be able to look at how the study helps us bridge now into the patient population.

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

Eric Schmidt, Cowen.

Hi. This is Jeff on for Eric. Good morning and thanks for taking my question. First one is on abaloparatide. 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 the success?

Yes. As you know, the 24-month data really is the group of patients who will go from placebo to bisphosphonate 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 bisphosphonate.

As we look at previous publications and the literature of other studies, where patients have gone from either a naive treatment state to 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 groups, generally the literature has suggested the previously anabolic treated group has a 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 tonight.

Thank you. That was very helpful. And are there any other preclinical studies remaining to be completed for abaloparatide?

Doctor Williams, 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 1 studies?

Sure. So for the Phase 1 studies, we are in very good shape. We are wrapping up our QTc and renal trials now. And from a nonclinical perspective, we believe we have a complete package that will satisfy both the FDA and EMA. There's no additional trials required that we are aware of at this time.

So we are on track for submission this year. (multiple speakers)

Thank you. That sounds great. And just the last one on RAD1901. So in the upcoming ASCO presentation, do we expect to see any early efficacy data there?

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 filling of cohorts for the progress and dose escalation, it's not a session that ASCO has established specifically to look at interim efficacy.

Understood. Thank you and congrats on all the progress.

Mara Goldstein, Cantor Fitzgerald.

Thanks a lot. I appreciate the taking the question. Maybe we can talk a little bit about -- continue on this discussion on RAD1901. 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 for this.

Do you think that the nature of testing drug in earlier-stage women would lend itself out to an accelerated approval? Or do you think you will go through a more traditional Phase 2/Phase 3 trial program?

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's efficacy in the metastatic breast cancer population. We've recently completed some preclinical studies that have been very encouraging as we think about the profile.

So previously, we shared some data in an animal model that showed tumor regression with RAD1901 in a study that compared tumor-static doses of already approved SERMs or SERDs. If we find in humans that RAD1901 results in a significant partial or complete response, then we think that that 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 RAD1901 during the course of this year?

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

Okay.

So as we think about it, Mara, we have really a three-branch point question. For a neoadjuvant study -- neoadjuvant is based on reducing tumor size before surgery, so the drug would have to demonstrate the ability to reduce tumor size.

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 drugs is extremely important. And we also think that the overall ability to contribute to the efficacy will be a key criteria of which combinations are selected for use.

In the adjuvant setting, some of the unique characteristics of RAD1901 pre-clinically were being bone protective. If we demonstrate that capability in the adjuvant setting, that would be a very important improvement in the overall profile. So we are very encouraged by what we know about the molecule today and we'll learn more as we go through this year.

And do you anticipate as you are incorporating patients in the trial who have CNS metastases, do you anticipate that that becomes a secondary endpoint in a Phase 2 setting or just an observable endpoint?

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 with or without metastases to the CNS is more likely to be the focus than it would be a trial that required metastases to the CNS as we go forward.

Okay. Thank you. I'll jump back in the queue.

Eun Yang, Jefferies.

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 on abaloparatide-SC, when will you start building out the sales force for that?

On the first question, I'd like to offer Gary Hattersley an opportunity 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.

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 patch in such way that it's able to achieve a pharmacokinetic profile, where the patch matches the profile of the subcutaneous injection.

We'll be reporting on progress of that optimization initiative, where through some modifications, we are able to achieve a profile that's comparable to subcutaneous injection. And so our expectations for this year will be that we will continue to provide further updates through during the course of 2015 on the progress towards this optimized pharmacokinetic profile.

And with regards to commercial build, we today have already begun recruiting really for MSLs that were fortunate that four individuals that have deep backgrounds in osteoporosis and have the ability to consider joining our Company [who have] great success. So Tim Weckwerth has joined us now to lead our MSL development program. And so that's a currently ongoing activity.

In terms of a standard field sales force, in 2016, we will look to initiate the build so that at the time of approval, we are prepared to launch the product.

Okay. Great. Thank you. And then one more, if I could. On RAD1901, based on the Roche data presented recently at AACR, where do you think you could differentiate RAD1901?

As you know, at AACR, Roche, our understanding, has presented data, not just on ARN-810, which was the lead compound which previously underwent some Phase 1 study, but also talked about a second compound that they were introducing in some markets. 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 a oral development program that's a SERD that would be the competitor as well.

So Dinesh, as you think about the landscape of Radius Health oral SERD once-a-day, the AstraZeneca SERD program, and then the Roche program, how would you highlight for us some areas where we expect to see differentiation amongst the compounds?

As you all know, we are in very early stages of development for all these assets. But what we know about our molecule is that we have a very good tissue selectivity profile, which potentially has some positive and protective effects on bones. Potentially lack of uterine stimulation, which you see with some of the agents.

We also have seen, based on what we have today, very good data in terms of efficacy. We have seen tumor regression in 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 ESR-1 mutations.

We also believe that given the profile that we have of this [molecule] in our hand, this drug can be very well combined with therapy. As you are probably aware, lot of breast cancer therapy, particularly in the postmenopausal setting, the landscape over there is changing with the entry of palbociclib and its potential combination with various agents, including [BAIs] and SERDs.

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 a daily oral dose and an encouraging safety profile in over 150 human exposures, we believe that we have a very good agent in our hands, a good molecule that compares very well with some of the other molecules that are out there.

Jason McCarthy, Maxim.

Hi, guys. Sounds like everything is going really well. And in terms of post-hoc data analysis, just being a researcher, 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 safety and improved bone mineral density in all kinds of bones, where Forteo just doesn't seem to be efficacious, does it potentially open up the market to the anti-resorptive side of the market? When you are talking about injectables like Prolia, could you get patients to switch to a safer, more efficacious anabolic?

Thank you for your question, Jason. As we think about upcoming regulatory review, one of the elements of both the FDA and EMA will be taken into consideration. As they look at the totality of the data, part of the dialogue will be the labeled indication and what will 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. But 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 underdiagnosed and undertreated. 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 becomes better established in the community and physicians learn more about the drug -- yes, we are also quite helpful that abaloparatide may enable a change in treatment patterns, which, as you suggested, could change how physicians think about what drugs they choose when they are thinking about how best to treat osteoporosis.

Great. Thank you so much.

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

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 speaking with you all again on our next quarterly update. Thank you.

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.