On May 5, 2022 Radius Health, Inc. ("Radius" or the "Company") (Nasdaq: RDUS), reported its financial results for the first quarter ended March 31, 2022. The Company also provided a general business update (Press release, Radius, MAY 5, 2022, View Source [SID1234613638]).
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Radius CEO Kelly Martin provided the following commentary covering a variety of topics:
"Failure to meet the prespecified primary endpoint in the long awaited abaloparatide transdermal system pivotal trial resulted in a swift and precipitous 50+% drop in the Radius share price during the month of December. Conversely, our convertible notes, as an indicator for the credit market assessment of the Radius balance sheet, cash flows and business fundamentals, were basically unchanged in price and value during that same period."
Martin added, "against this dislocation and backdrop, our approach is to ‘control what we can control’ and focus on advancing the Radius business on behalf of shareholders, creditors, patients and employees."
"To that end, we are working closely with our partner – the Menarini Group – on all aspects of elacestrant. Recent competitor trial failures in the SERD space may expand the potential commercial opportunity – and subsequent value – for the asset if approved. Our financial participation is realized through achievement of both milestones and royalties and, importantly, incorporates all indications, geographies and any combination therapies following the monotherapy data and potential approval. As announced in February, we will return 100% of the value generated by elacestrant to our capital providers – both creditors as well as shareholders."
"For RAD011, we are progressing this molecule in a deliberate and disciplined manner with a focus on specific genetically based and orphan neurological/behavioral diseases. Interest in the program – post the April R&D webcast – has been, and continues to be, noteworthy. Clear and specific patient need, little to no treatment options, pre-existing data and a concise regulatory path leading to single pivotal trial readouts in 2H 2024 underscore the characteristics of the opportunity."
"Lastly, for TYMLOS we are preparing for a potential US launch for the male indication, assisting our partners Paladin Labs in Canada and Teijin Pharma in Japan for launches in their respective countries. As per our previously stated goal to ‘expand the global footprint of the asset’ we expect to finalize up to three additional geographic/partner agreements over the coming months, and plan for up to four ex-US market launches in 2023. We have also completed all necessary steps for the EU re-submission and await that decision in 2H 2022."
In summary, Martin concluded, "as mentioned in our FY 2021 earnings in February, the recent market dislocation in biotechnology has been significant. We expect these challenges to continue throughout 2022. Within this environment, Radius continues to have the opportunity to differentiate itself by remaining active with the balance sheet and monitoring cash flow, managing the risk/reward dynamics of the three assets and, lastly, incorporating overall corporate timelines and potential business inflection points."
Q1 2022 FINANCIAL HIGHLIGHTS
Revenues
Total net revenues for the quarter were $43 million compared to $56 million in Q1 2021, which included $11 million in one-time payments received for abaloparatide approval in Japan and licensing in Canada
TYMLOS net product revenue was $43 million compared to $45 million in Q1 2021, down 5%. This modest decrease was expected in Q1 and was driven primarily by inventory destocking and seasonal payer dynamics
Patient Growth: average active patients on therapy increased by 4% compared to Q1 2021
Reiterate full year 2022 guidance of $232 million with 42% of net revenue estimated to come in 1H ($97 million) and 58% ($135 million) in 2H 2022. The Q1 net revenue is on track to meet the 1H guidance
Productivity and Headcount
Total headcount for the quarter was 258 compared to 294 in Q1 2021, down 12%; and down 31% compared to 376 in Q1 2020
Dramatic Productivity Improvements: TYMLOS net revenue per commercial employee was $374k in Q1 2022 compared to $283k in Q1 2021, up 32%; compared to Q1 2020, commercial productivity has improved by 66%
The Company continues to employ a ‘hybrid work environment’. Real estate footprint vs. 2020 has been reduced by nearly 85% and those associated infrastructure costs are down by ~65%
P&L
Net Loss of ($18.3) million in Q1 2022 vs ($15.7) million in Q1 2021
Adjusted EBITDA (Non-GAAP) loss of ($9.1) million Q1 2022 vs. ($4.6) million Q1 20211
Diluted EPS (GAAP): ($0.39) in Q1 2022 vs. ($0.34) in Q1 2021
Balance Sheet
$72 million of cash, cash equivalents and marketable securities as of March 31, 2022
Decrease in cash driven by change in net working capital ($19 million), annual bonus payouts, one-time reduction in force (RIF) payouts, and other one-time items
Mark Conley, Chief Financial Officer, commented, "Our first quarter TYMLOS net revenue is in line with our 1H 2022 net revenue guidance of $97 million and today we are reiterating our financial objectives for 2022, including TYMLOS net revenue of $232 million. Our total headcount has reduced further this quarter and our productivity has increased significantly, demonstrating efficient management of our cost structure, and increased operational efficiency."
Conley added, "We ended the quarter with $72 million in cash, driven by several one-time items. We expect cash on the balance sheet to increase as the year progresses."
Key Financial Objectives for 2022
Radius reiterates its financial objectives for 2022, as set out in its press release dated February 24, 2022, which included:
$232 million TYMLOS Net Revenue (42% estimated in 1H and 58% in 2H 2022)
($5) to $5 million Net Loss
$35 to $45 million Company Adjusted EBITDA (Non-GAAP)
ASSETS UPDATE
Elacestrant
Elacestrant is the first and currently only investigational oral SERD to show positive topline results in a pivotal trial as a monotherapy vs. standard of care (SoC) for the treatment of ER+HER2-advanced or metastatic breast cancer (mBC).
Recent competitor trial failures may broaden the opportunity for elacestrant
Differentiator of EMERALD from other SERD trials: two primary endpoints, all-comers and ESR1 mutant subgroup
Current focus: robust clinician engagement, life cycle and ‘go to market’ activity
Regulatory submissions: on track to file in the US in Q2 2022 with EU filing to follow the US filing
Life cycle management: Menarini Group is working to further develop elacestrant in the adjuvant setting, combination therapy, and metastatic breast cancer that has metastasized to the brain
RAD011
RAD011 is the Company’s investigational synthetic cannabidiol oral solution which has potential utilization in multiple neuro-endocrine, neurodevelopmental, or neuropsychiatric disease areas.
Initiating two single pivotal trials in Angelman syndrome (AS) (Q3) and Prader-Willi syndrome (PWS) (Q2)
SCOUT-015 study evaluating hyperphagia in PWS is open for recruitment and has begun patient screening in the US
Plans to follow AS and PWS trials with a Phase 2 infantile spasms (IS) trial evaluating spasm resolution
Dup15q syndrome: first company to receive Orphan Drug Designation; possible life cycle opportunity
Orphan Drug Designations have been granted for all four of the above indications in the US
On April 5, 2022, Radius hosted an R&D webcast dedicated to RAD011; a replay of the webcast and presentation is available on the Company’s website (View Source)
ABALOPARATIDE
TYMLOS in Male Indication
As previously reported on March 1, 2022, the Company filed a Supplemental New Drug Application (sNDA) with the US Food and Drug Administration (FDA) for TYMLOS (abaloparatide) subcutaneous injection in men with osteoporosis at high risk for fracture.
10-month review process and, subject to approval, plan to launch in early Q1 2023
Estimated that 30% of all hip fractures occur in men and approximately 20% of men over the age of 50 will experience an osteoporosis-related fracture in their lifetime
The full data set from the ATOM Phase 3 study will be presented at the upcoming American Association of Clinical Endocrinology (AACE) Annual Meeting on May 12-14, 2022
TYMLOS Intellectual Property
On March 8, 2022, Radius announced the United States Patent and Trademark Office (USPTO) granted patent 11,255,842, which extends TYMLOS exclusivity to January 10, 2040
This adds to the Company’s four issued patents covering TYMLOS, which provide significant depth and breadth in protecting the commercial runway of the asset
Financial Results
Three Months Ended March 31, 2022
Net Loss
For the three months ended March 31, 2022, Radius reported a net loss of $18.3 million, or $0.39 per share, compared to a net loss of $15.7 million, or $0.34 per share, for the three months ended March 31, 2021.
For the three months ended March 31, 2022, Adjusted EBITDA (Non-GAAP), was ($9.1) million, or $0.19 per share, compared to Adjusted EBITDA (Non-GAAP) of ($4.6) million, or $0.10 per share, for the three months ended March 31, 2021.
Revenue
For the three months ended March 31, 2022, TYMLOS net product revenues were $43.0 million compared to $45.3 million for the three months ended March 31, 2021.
For the three months ended March 31, 2022, $0.2M in license revenue was recognized compared to $11.0 million recognized for the three months ended March 31, 2021.
Costs and Expenses
For the three months ended March 31, 2022, research and development expense was $22.7 million compared to $31.4 million for the three months ended March 31, 2021, a decrease of $8.7 million, or 28%. This decrease was primarily driven by a decrease of $7.3 million in abaloparatide-TD program costs, a $5.5 million decrease in abaloparatide-SC program costs, a $0.8 million decrease in professional fees driven by billed reimbursable consultant costs, and a $2.1 million decrease in elacestrant program costs, which is comprised of a $7.3 million decrease in gross program expenses as well as a $5.2 million increase in billed reimbursable expenses. These decreases were offset by a $6.1 million increase in RAD011 program costs, a $0.4 million increase in occupancy and depreciation costs, and a $0.4 million increase in compensation expense, which is comprised of a $1.0 million increase in compensation expense related to headcount offset by $0.5 million of billed reimbursable expenses.
For the three months ended March 31, 2022, selling, general and administrative expenses were $30.0 million compared to $34.1 million for the three months ended March 31, 2021, a decrease of $4.1 million, or 12%. This decrease was primarily the result of a $3.5 million decrease in professional support costs and a $1.2 million decrease in wages and employee benefit costs due to a decrease in headcount. These decreases were offset by a $1.4 million increase in occupancy and depreciation costs and other operating costs.
Webcast and Conference Call
In connection with today’s reporting of First Quarter 2022 Financial Results, Radius will host a conference call and live audio webcast at 8:30 a.m. ET today, May 5, 2022, to review financial results and provide a Company update.
Conference Call Information:
Date: May 5, 2022
Time: 8:30 a.m. ET
Domestic Dial-In Number: 1 (866) 323-7965
International Dial-In Number: 1 (346) 406-0961
Conference ID: 5844208
Webcast Link: View Source
A live audio webcast of the call can be accessed from the Investors section of the Company’s website, www.radiuspharm.com. The full text of the announcement and financial results will also be available on the Company’s website.
A replay of the conference call will be available on May 5th at 11:30 a.m. ET. A live audio webcast of the call will be archived on the Company’s website for 12 months. To access the replay, dial (855) 859-2056 or (404) 537-3406 for International, using conference ID number 5844208. The live audio webcast of the call can be accessed from the Investors section of the Company’s website, View Source. The full text of the announcement and financial results will also be available on the Company’s website.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures in this press release: Adjusted EBITDA and Adjusted EBITDA per share. The Company defines adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that management does not consider in its evaluation of ongoing performance of the Company’s core operations. These items include stock-based compensation expense and other one-time expenses. These non-GAAP financial measures exclude certain amounts or expenses from the corresponding financial measures determined in accordance with GAAP. Management believes this non-GAAP information is useful for investors, taken in conjunction with Radius’ GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to Radius’ operating performance and can enhance investors’ ability to identify operating trends in our business. Management uses these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Radius’ operating results as reported under GAAP, not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. Reconciliations between these non-GAAP financial measures and the most comparable GAAP financial measures for the three months ended March 31, 2022 and 2021 are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.
This release includes forward-looking guidance for adjusted EBITDA. The Company is not able to provide, without unreasonable effort, a reconciliation of the guidance for adjusted EBITDA to the most directly comparable GAAP measure because the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments included in the most directly comparable GAAP measure that would be necessary for such reconciliations, including (a) one-time items or other expenses that we do not believe are indicative of our ongoing operations. These adjustments are inherently variable and uncertain and depend on various factors that are beyond our control and as a result we are also unable to predict their probable significance. Therefore, because management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results in accordance with GAAP, it is unable to provide a reconciliation of the non-GAAP measures included in its 2022 guidance.