Radius Recycling Inc (RDUS) 2016 Q4 法說會逐字稿

Good afternoon, everyone, and welcome to Radius Health's fourth-quarter and full-year 2016 earnings conference call.

Today's call is being recorded.

At this time, I'd like to turn the conference over to Barbara Ryan. Please begin.

Thank you, and welcome and thank you to those of you joining us on the line and webcast this afternoon for a review of Radius Health's fourth-quarter and full-year 2016 financial and operating results. I'm Barbara Ryan, Radius Health Investor Relations Officer and with me this afternoon to discuss the results and update you on our progress are Robert Ward, President and Chief Executive Officer; David Snow, Chief Commercial Officer; Dr. Lorie Fitzpatrick, Chief Medical Officer; Dr. Greg Williams, Chief Development Officer; and Nick Harvey, Chief Financial Officer of Radius Health.

Before we begin, I would like to remind you that any statements made during the call that are not historical facts are considered to be forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1965. Actual results may differ materially from those indicated by these statements as a result of various important risk 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, February 23, 2017 only.

A replay of this call will be available on the company's website, www.Radiuspharm.com following the 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.

Thanks Barbara, and thank you to everyone who's joined us on our conference call and audio webcast this afternoon. 2016 was an important year in building the base of operation for Radius Health, as we drove substantial progress across the portfolio while expanding our capabilities to ensure sustained high performance.

In December, based on our assessment of the progress on the regulatory reviewed process at the FDA, we greenlighted all of the activities necessary to prepare for the commercial launch, including the hiring of the US sales force. Today we are only 34 days away from our March 30, 2017 PDUFA in the US. In a few moments David Snow, our Chief Commercial Officer, will provide you with an update on our hiring and preparedness for launch.

With a favorable on time regulatory decision, we believe that the US represents an ideal biotech opportunity to directly commercialize. Low competitive intensity coupled with high unmet medical need. In Europe we continue to anticipate a CHMP opinion in 2017. We do not intend to develop commercial capabilities in the EU this time. We've also guided that we intend to enter into a partnership by the time of launch to ensure the commercialization of abaloparatide in market sales outside of the us.

We are well funded to accomplish our goals and ended 2016 with $332.4 million in cash and equivalents. We are highly confident that abaloparatide has the potential to become an important medicine for the treatment of osteoporosis. And I would now like to introduce David Snow, who will review with you the substantial progress that's been made on establishing our commercial capabilities.

Thank you Bob. I am pleased to provide you with a commercial update on the evolution of Radius to a fully integrated biopharmaceutical company as we complete the buildout of our sales, marketing, reimbursement and distribution teams in preparation to support the commercialization of abaloparatide subcu in the US, pending favorable regulatory review.

In the fourth quarter we completed the hiring of our sales leadership team, and as Bob mentioned, in December we greenlighted the hiring of our sales force in the US. We have been delighted by the outstanding response. The applicant pool had represented highly qualified and experienced individuals with excellent track records of success. This response is a testament to both the organization and the data we have generated for abaloparatide subcu.

Successfully launching a speciality brand in the US requires substantial planning, preparation and resources. I'm confident that we have done the necessary work and have the right talent and resources at Radius to succeed. We expect to be fully staffed by the end of the first quarter and will be prepared to launch in the US rapidly following approval.

Our market access organization is being led by Amanda Mott, who brings substantial direct global biotechnology experience to our team. Amanda has hired a highly skilled team of individuals with significant experience, with large third-party payers and trade accounts that represent a substantial majority of the potential target patients. And they're already active in discussions with health plan and PBMs. We fully believe that this will have a positive effect on commercial and Medicare [part D] plan decision-making and acceptance.

Our marketing team is also comprised of seasoned professionals with substantial experience in specialty pharmaceutical marketing, communications, professional education and patient advocacy. We've already launched a disease paid awareness campaign this year with healthcare providers and expanded our presence at key osteoporosis meetings. The brand team as well down the path of finalizing campaigns and launch efforts across the healthcare providers, consumers and payers.

Finally and critically, we forged a comprehensive commercial operations team led by Ronan Gannon to support the wide array of launch requirements. With a capable bench of individuals with extensive experience in establishing hub and specialty pharmacies distribution networks, analytics and forecasting, market research, sales and marketing operations and sales training.

Having spent years in this function, I'm convinced this group can be a major source of competitive advantage. If approved, we intend to distribute abaloparatide subcu in the US through a network of distributers and special pharmacies.

Let me end my comments by discussing our sales team readiness. I started with the 20 plus capable sales leaders with prior osteoporosis, managerial, specialty launch and injectable therapeutic experience brought on last year by our Vice President of Sales, Ken Coyle. In the first quarter, these sales leaders have already hired over 90% of our clinical sales specialists, with a focus on identifying the most experienced team possible.

The result is a sales team that substantial osteoporosis, injectable and women's healthcare experience, and nearly everyone has had prior launch experience. I think this is a great match to the depth of experience across our medical science liaison team and I'm confident that this will translate into strong market performance. I'd now like to turn the call over to Dr. Lorie Fitzpatrick, our Chief Medical Officer to review the breadth of medical literature that's been published on abaloparatide.

Thank you David. We've also been building our medical team at Radius, which is organized with key functions including medical affairs, [pharmical vigilance],medical information, publications life cycle management and health economics research. These teams include physicians, scientists, and medical science liaisons with substantial experience in osteoporosis, bone health, endocrinology and women's health.

We are extremely gratified to have a growing number of important journals publish the results from our abaloparatide phase 3 clinical trial. As many of you know, in August of last year, the Journal of the American Medical Association, or JAMA, published the results of our phase 3 active trial showing that abaloparatide's subcu treatment group demonstrated and 86% reduction in vertebral fracture and a 43% reduction in non-vertebral fractures.

In a prespecified exploratory analysis, abaloparatide also reduced clinical fractures by 43%, and reduced major osteoporotic fractures by 70%. All of these comparisons are to the placebo treatment group.

In September of last year, the Journal of Bone and Mineral Research also published peer-reviewed data from the active trial which coincided with their annual scientific meeting. This study was a prespecified analysis looking at baseline risk, which showed that abaloparatide provided these benefits in all patients regardless of their age, their baseline bone mineral density or prior fracture. And just this month, the Mayo Clinic Proceedings published the results of the first six months of ACTIVExtend, which showed that when transitioning from the anabolic abaloparatide to an antiresorptive agent alendronate, the fracture efficacy was maintained.

We are pleased to the scientific literature continue to grow. For example, the recent review from Doctors Chew and Clarke in the European Menopausal Journal, Maturitas, in which the complete clinical development program for abaloparatide was reviewed, and the authors discussed their view on the context of these data.

We are pleased to see scientific and clinical interest continuing to grow around the program. I would now like to turn the call over to Dr. Greg Williams, our Chief Development Officer, who will provide you an update on ACTIVExtend.

Thank you Lorie. In June of 2015, we recorded on the results of the first six month of ACTIVExtend. And as Laurie mentioned, those results were just reported in the Mayo Clinic Proceedings on February 1. As a reminder, the active [trial was on] was an 18 month three-armed trial were postmenopausal women at risk of an osteoporotic fracture were randomized to abaloparatide subcu, a placebo or open label Forteo.

On completion of ACTIVE, the patients who were treated for the full 18 months with the abaloparatide subcu or with placebo were transitioned into the ACTIVExtend portion of the program. In the ACTIVExtend study, the enrolled patients were treated with four 24 months with the bisphosphonate alendronate.

As I mentioned earlier, we have reported on the first six month period of ACTIVExtend. Now this 24-months study has completed and we expect to report topline results in the second quarter of this year. We believe these results will be important in understanding the durability of the response to abaloparatide subcu treatment.

I would now like to turn the call back over to Bob.

Thank you Greg. In addition to working with regulatory agencies as they review our submissions for abaloparatide, and building our medical and commercial teams, we've continued to advance across our pipeline.

Last September at ASBMR is the we presented the positive result from a human replicative clinical evaluation of an optimized abaloparatide transdermal patch. These results established an important demonstration of how we changed the PK profile in our program to develop a bioequivalent transdermal patch.

Currently we're focused on completing the manufacturing scale up and other required activities needed to initiate a pivotal bioequivalent study. We believe that the transdermal patch program has the potential to allow physicians who treat osteoporosis, but rarely use injectable drugs to have an opportunity to expand their practices to include the use of anabolic therapy.

Also last year at the San Antonio Breast Cancer Symposium, we reported on the encouraging results of our ongoing phase 1 studies of RAD1901 in breast cancer. We were pleased with the clear demonstration of activity in the 400mg treatment groups.

In the first half of this year we planned to engage with regulatory agencies to gain alignment on defining the next step for the program, which would include a phase 2 trial. Also the first half of this year, we plan to report results from our now completed phase 2b study and [basalar] symptoms.

Also in December of 2016, we submitted an investigational new drug application or IND for RAD140, a selective androgen receptor modulator discovered in-house at Radius. We expect to initiate a first in human phase 1 study in women with hormone receptor positive breast cancer this year. The progress with RAD1901 and the recent discoveries around RAD140 provide us with two very promising opportunities to expand our research and development efforts in breast cancer.

Now, I would like to turn the call over to you Nick, our Chief Financial Officer.

Thank you Bob. For the three months ended December 31, 2016, we reported a net loss of $52.7 million, or $1.22 per share. As compared to a net loss of $33.2 million, or $0.77 per share for the three months ended December 31, 2015. For the 12 months ended December 31, 2016, we reported a net loss of $182.8 million, or $4.24 per share. As compared to a net loss of $101.5 million, or $2.56 per share for the 12 months ended December 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 potential sales of abaloparatide subcu. We have experienced substantial growth in our headcount, which currently stands at 352 as a February 22, 2017. As Radius continues to advance towards the potential first commercial sales of abaloparatide subcu, we expect to continue to expand our headcount and make further investment in launch preparations.

Our cash, cash equivalents and marketable securities balance as of December 31, 2016 was $332.4 million. We believe that our cash, cash equivalents and markable securities balance prior to the consideration of revenue from the potential future sales of any of our investigational products or proceeds from business development activities is sufficient to fund our development plans, US commercial scale up and other operational activities into 2018.

I will turn the call back over to Bob.

Thank you Nick. 2017 will represent a major inflection point for Radius. We are just 34 days from our PDUFA in the US on March 30 for abaloparatide subcu and pending favorable regulatory review, we will become a commercial company. Our MAA is on the active review in Europe and we expect to receive the CHMP opinion in 2017 and enter into a partnership by time of launch.

In terms of abaloparatide transdermal patch, we are currently working on the completion of activities which are required for initiation of a pivotal bioequivalent study. We believe that a abaloparatide is the greater value unpartnered late stage asset in the biopharma industry. We plan to complete the ongoing 400 mg phase 1 expansion (technical difficulties) studies in metastatic breast cancer during this year, and in the first half of this year, we plan to engage with regulatory agencies to gain alignment on defining next steps for the program, which would include design and implementation of a phase 2 study.

We submitted an IND for RAD140 in December and are now prepared to initiate first in human studies in 2017. These two programs establish a significant presence for Radius Health in the search for new treatment options for patients with breast cancer.

We will also be making presentations and hosting one-on-one meetings at three upcoming investor conferences over the next few months. The Cowen conference here in Boston and the Deutsche Bank conference also here in Boston. And the Bank of America Merrill Lynch conference in Las Vegas.

I now like to ask Dr. Lorie Fitzpatrick to highlight the upcoming scientific meeting in March.

Thank you Bob. We are delighted that we will have three plenary presentations and one poster with an associated oral talk on abaloparatide at this year's World Congress of Osteoporosis meeting on March 24 and 25th in Florence, Italy.

The first plenary session will evaluate the effect of abaloparatide on a high risk group of patients. And immediately following that lecture will be a second plenary talk on the positive effects of abaloparatide, regardless of baseline risk factors. The second day we will present the number needed to treat with abaloparatide for benefit compared to teriparatide. We are very excited about the science we will be sharing at this meeting.

Back to you, Bob.

Thank you Laurie. With an exciting year ahead of us, I would now like to open up the call for your questions.

(Operator Instructions)

Our first question comes from the line of Jessica Fye with JPMorgan.

Hello guys, thanks for taking my question. First one is on the launch of abaloparatide. Can you talk about the time frame within which we should expect commercial coverage to come into place, and then when we should expect Medicare coverage? And I guess in that interim period as coverage is scaling up, what actions can you take to help support the launch?

And I have a second one on patch. It sounds like you're making progress on CMC scale up. Can you talk about when you expect to have more clarity on what might be an appropriate time to talk to the FDA about the bioequivalence [pass two] approvals for that product? And will you disclose to us when you have made batches of patches at commercial scale? Thank you.

Thank you, Jess. I appreciate the question. I will take them in reverse order and then ask David to address more directly the questions around reimbursement timeline.

When you think about the patch, a bridging study such as bioequivalence bridges to an already approved the drug. So when you think about the ongoing review for abaloparatide subcu, PDUFA is near at hand, but today to it's not an approved agent by any regulatory agency. So really talking about line extensions would occur following approval. And of course we will come back with timelines on the program itself as we move forward so that we have transparency of where patch sits in the development pipeline.

And David, I think Jess was also interested in hearing more about pending positive predatory approval. As abaloparatide moves into the market place, what will be the expected timeline for adoption on both commercial formulary as well as on the Medicare Part D plan? Which you mind sharing with her our thinking around those items?

Sure. Thanks, Bob. Jessica, thanks for the question. I would expect to hear that question early in the Q&A.

Certainly when you look at specialty therapies like this, reimbursement is crucial for our success. We have a very good team in place looking at the core set of plans and PBMs that would be critical for our success. We look at from both the commercial site and the Part D side. You might expect in launches, given the typical cycle of Part D approvals, it should take us longer to get those in place given the long time lines, leads timeline there.

So we fully expect that commercial plans will come online a bit more quickly, but again, the early feedback we've got, we are feeling good about where we are. So we expect that in 2017 we should be doing well in terms of getting our foot in the door in terms of access, and then certainly in the 2018 timeline we would be feeling like we'd be in a good place there.

And also want to emphasize the fact that when you look at the injectable agents within the class, we're talking about specialty positioning and often they're [prior offs here]. So again, as far as the plans themselves looking at it, I don't think they see these as high-risk areas for them in terms of adopting, putting these on the plans and recognizing the fact that there's quite a bit of unmet need in the marketplace. So we are pleased with where we are and expect to see 2017 improvement in terms of access and as a good year to get us started.

Thank you.

Shall I step into that second question real quick on some of the other support? As you might expect as well, on support around the launch, we think that it's critical to have our sales force trained in the right way. It is a specialty audience we're talking about here, so we've taken a lot of care to make sure we get the right people and the right training that they've got.

But we've also got certainly a very strong sense around the patient experience, how we can support patients through the hub, and especially pharmacies that they probably will be using. You can imagine that there will be a lot of support in terms of education for physicians around it, looking at other potential opportunities around perhaps samples or other collateral materials that you certainly would expect any specialty launch to have.

So we would expect to put an array of those programs out. But again, this is a specialty therapy, it's a very tight audience in terms of who the prescribers are, and I think we have a good handle on what it would take --

Thanks, David.

Our next question is from the line of Eun Yang with BofA Merrill Lynch.

Hi, this is [Ken] on for Yang. A couple of questions about abaloparatide. As the PDUFA date is approaching, I'm curious how ready is your CMC facility and has FDA started the inspection of the facility? And [second of all], like we know that we're also expecting EU approval sometime this year and have you got any updates on your European partnership?

As we guided previously, and we have not changed our guidance that we'd anticipate having a partnership in place by time of launch, we continue to engage in productive discussions and are looking forward to continuing that activity. With regards to regulatory process itself, we generally don't comment ongoing regulatory activities. As you know, all of the regulatory agencies do conduct inspections both of our sites and third-party sites and that generally happens early in the review cycle. Our PDUFA is on March 30, 2017, so just 34 days from today.

Okay. Thank you.

Our next question is from the line of Salveen Richter with Goldman Sachs.

Thanks for taking my question. This is actually Carey on the line for Salveen. First of all on RAD1901, when can we expect to see additional data and is your plan for the program to initially develop it as monotherapy and last line [formal positive] advanced breast cancer? And how about combo studies, what is the progress there?

And then secondly, just going back to the plans for the transdermal patch program, are you ready to start the bioequivalence study immediately afterwards, or is there any other work that needs to be done? Thank you.

Thank you for your questions. The thing about transdermal patch, what we guided is that last year at ASBMR, at the late-breaking session where we shared the data around the changes in the PK profile, that the next step was to undergo completion of all the manufacturing CMC-related activities to have patches produced from a batch that would be suitable for conducting a pivotal study. And that we would come back with greater information as we moved down the process of completing those steps. So with patch, we'll be back with more information as we move through the year.

For 1901, last year at San Antonio Breast Cancer, we had the opportunity to share the ongoing phase 1 data from both the 400 milligram expansion cohort, the now completed dose escalation cohort, and separately, the cohort of patients that were enrolled in the European FES-PET study. We were very pleased with the activity we saw in the 400 milligram dosing group, and we've guided that this year, we'll go to seek engagement with the agency around the next step in the program, ideally design of a phase 2 trial that will enable us to identify a patient population where we and the agency view the high unmet medical needs sufficient have the potential for being considered for accelerated approval.

We always post on our trials on clintrials.gov, and when the first patient is enrolled we usually do a press announcement, and so our communications around that next step in terms of new clinicals would be as those trials come online. Of course as programs complete, we do continuously seek to update the scientific and clinical communities through scientific meetings. Generally our policy is as the (inaudible) announce accepted abstracts, then we also share with the public how we'll be participating at those meetings. So as we go through the year to various oncology meetings, we do anticipate being able to provide additional information.

Thank you.

Your next question is from the line of John Newman with Canaccord Genuity.

Hi guys, thanks for taking my question. I wondered if you could talk maybe in general terms at all about the size of the US sales force? And then in terms of the launch focus, will you be targeting mainly prescribers where their primary treatment is Forteo, or will you be targeting an audience that's a little bit broader which may include physicians that are not using Forteo at this time?

Thank you for your question, John. At this moment we're so close to our PDUFA date that we just want to remind everyone that today abaloparatide has not yet been approved by any regulatory agencies, and any claims around abaloparatide's safety [and efficacy] are made of determination by the various regulatory agencies.

So with that in mind when we look at the osteoporosis market, we are aware of the high unmet medical need. Each year in the US alone, 2 million individuals experience an osteoporotic fracture. 8.9 million globally. Today, a very small number of those patients are diagnosed and treated with anabolic agents. So if you said of those patients who are at high risk of a subsequent fracture, the numbers that are not currently being diagnosed are being administered anabolic therapies far exceeds the number that are currently receiving therapy.

We believe because of this high unmet medical need, it'll be important to change how physicians think about managing osteoporosis. We were very pleased last year to see for the first time, treatment guidelines suggested that anabolic should be considered as a first-line option for patients with a recent fracture.

And in the scientific and clinical communities often there's a discussion around treat to goal. Or the question of, is there a way to identify treatment practice parameters that allow physicians to think of how to help patients manage their disease in a way that they can make progress. Dr. Fitzpatrick, would you mind just sharing with us as you think about those trends in medical treatment, both the implications of the treatment guidelines and will treat to goal be more commonplace in the market than it might be today?

Thank you, Bob, it's a very interesting topic because it does appear that guidelines are changing and shifting, and there's quite a bit of new publications that have come out that support this. I think one of the important areas that came out recently were the American College of Clinical Endocrinologists put out their new guidelines, where for the first time, they had an anabolic as a first-line treatment for patients who are at high risk for fractures.

I think anabolic therapy has always been second or third line within the guidelines, even though most of us think that many patients would surely benefit by having it as a first line. So that's one thing that's changed.

The other thing that's changed is there's several commentaries, including the treat to goal saying, how can you get to the goal fastest? And actually what's the more cost-effective way to do it, especially if you already have had a fracture and now you are at really high risk for the second fracture. And in those cases, I think it's pretty clear and cost-effective that by giving an anabolic first and then extending treatment with an antiresorptive agent, you end up with really what's very best for the patient, and increasing their BMD and decreasing the fracture risk rapidly.

And that's kind of the key to this high-risk population who have had a fracture. You really want to intervene rapidly. And that's one of the keynotes that we are going to be looking at I think in our studies as we go further looking at abaloparatide.

So John, we do believe that there is a group of physicians today who are already routinely using anabolic therapies and then a larger number of physicians who, while they use injectable agents, are not necessarily high prescribers of anabolics. And then an even larger number of physicians who treat osteoporosis, but rarely use injectable agents, so we do think that physicians in each of these groups will be looking at the emerging clinical data about not just the abaloparatide program, but other programs in the marketplace to ask the question of how do they help their patients best address the unmet needs of osteoporosis.

Great. Thank you.

Our next question comes from the line of Chris Shibutani with Cowen.

Hi, this is Santhosh on for Chris. Thank you for taking my question. I just wanted to get a little bit more clarity on when we should expect the CHMP opinion? It's already been well over 12 months now since the EMA validated the application. You had mentioned that the CHMP opinion should come in 2017. I'm just wondering since some of the aspect is more about the clock being stopped and you having the opportunity to answer the question, whether you can provide a little bit more narrow of a time frame in terms of when we should be expecting the opinion? Thanks.

Yes, you are correct. We do expect that regulatory decision in the US will come in advance of the European regulatory decision and we don't comment on ongoing regulatory activities. We are engaged with both agencies, and you are correct, we did guide that in 2017 we would be looking to receive a CHMP opinion.

Thanks.

Our next question is from the line of Mara Goldstein with Cantor Fitzgerald.

Thanks very much, appreciate it. I had a question on the distribution model with the specialty distribution network of pharmacies. So what I'm wondering is if you might share with us, to the extent that you can, some of thoughts around fulfillment and delivery of drug and where you see the competitive advantage for you relative to what's already out in the market?

Thank you, Mara. That's such an important consideration. When specialty drugs involve an autoinjector, it really becomes important that the patients be trained, have a patient support hotline to call if they have questions, have access to a nurse educator and quite often need support on reimbursement.

So as we looked in part at the marketplace and asked, what the existing services that have been provided around drugs that have been the most successful, quite often we've gotten feedback that AbbVie has just done a terrific job around HUMIRA. The physicians feel that the way that the program operates has been one that's often referred to as a gold standard. So as we think about the importance of patients being able to appropriately learn to auto-inject to avoid errors, to have the ability to reach out and have their questions answered, we wanted to make sure that our hub services are able to provide that same level of support.

And if I could just ask, one of the key things obviously for individuals who will be able to have access to abaloparatide will be reimbursement around that. And so will you have programs in place essentially to bridge that gap while the insurance aspect is being worked out?

You're right, Mara. Often with speciality pharmaceuticals one of the questions that comes to mind is from the time of the first script until the patient has gone through the reimbursement process, how does one ensure that patients are able to move through what sometimes can be a complex process in a reasonable period of time and be able to comfortably have an expectation that they'll be able to fulfil their prescription.

And that's why having the whole hub service put in place is so important. Remember, in the market today, there are anabolic agents where there are offices that are routinely using these agents and they currently have in place ways that they have managed navigating both the training and reimbursement elements of the anabolic agents. Other offices that may be adopting anabolic agents for the first time, require support to put that in place.

So we're prepared to work not only with offices that already have means of addressing these issues, but also through our offering, enable new prescribers to feel that they have the ability to gain support, whether it's training in office, or ensuring that patients have delivery with the hotline for service provision.

Okay, thank you.

(Operator Instructions)

At this time, I'll turn the call back to Mr. Ward for further remarks.

Well thank you, everyone, for joining us for our quarterly call, and we'll look forward to seeing you again next quarter. Now today, we changed to a call at the end of the day for the convenience of stockholders in different times zones. Our next call will also be held at the end of the day, so thank you very much for your participation.

Thank you, this concludes today's teleconference. You may disconnect your line at this time, and thank you for your participation.