On November 8, 2021 Radius Health, Inc. ("Radius" or the "Company") (Nasdaq: RDUS), reported its results for the third quarter ended September 30, 2021 (Press release, Radius, NOV 8, 2021, View Source [SID1234594782]).

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Q3, 2021 FINANCIAL HIGHLIGHTS:

TYMLOS Net Revenue: $57 million in Q3, 2021 vs. $50 million in Q3, 2020, +13% year-over-year
Total Company Headcount: 285 in Q3, 2021 vs. 317 in Q3, 2020 a 10% reduction
TYMLOS Net Revenue per commercial employee: 50% increase in productivity in Q3, 2021 vs. Q3, 2020
Total Net Revenue: $57 million in Q3, 2021 vs. $78 million in Q3, 2020, -27% year-over-year due to $27 million in upfront license revenue received from Menarini Group for the elacestrant asset
Total Company Adjusted EBITDA: ($11) million in Q3, 2021 vs. $9 million in Q3, 2020, down year-over-year as 2020 results included the elacestrant upfront license revenue
RAD011 expenses increased by $5.5 million driven by life cycle planning and key talent recruitment
Total Operating Expenses: $69 million in Q3, 2021 vs. $73 million in Q3, 2020
Liquidity position: $110 million of cash, cash equivalents and marketable securities as of 9/30/2021
Our shift from a general osteoporosis sales approach to one that focuses on – primarily – the fracture patient segment continues to evolve. We have made progress and expect to make more in the future. However, due to lower-than-expected year-to-date TYMLOS net revenue, the Company is making the following changes to full year 2021 forecasts:

TYMLOS Net Revenue FY 2021: now $210 to $220 million vs. previous forecast of $240 million
Total Company FY 2021 Adjusted EBITDA: now ($5) to ($15) million vs. previous forecast of $10 million
ELACESTRANT:

On October 20, 2021, Radius announced along with its partner the Menarini Group that EMERALD, a pivotal study evaluating elacestrant in breast cancer, was positive as a monotherapy vs. the standard of care for patients with ER+/HER2- advanced or metastatic breast cancer (mBC), including those with the Estrogen Receptor Mutation (ESR1). The study met both primary endpoints for the overall population as well as the ESR1 mutation subgroup.

Chhaya Shah, Senior Vice President and clinical program lead for Radius commented, "The study results were certainly encouraging for patients and their families, as the first oral selective estrogen receptor degrader to show positive topline data. We are working with our partner on progressing the program towards regulatory submission in the U.S. as well as Europe in 2022."

Kelly Martin, Chief Executive Officer of Radius, elaborated, "We work closely with the Menarini Group on all aspects of the elacestrant asset – they are a terrific partner. We are collectively enthusiastic about the opportunities to bring potential benefit to patients by progressing this molecule."

He added, "Given the significance of the positive topline data to Radius, it is important to outline key aspects of the molecule as well as the financial/business relationship that exists between the Menarini Group and ourselves."

Martin concluded, "Creating tangible value for our capital providers is a fundamental objective of our business and central to our management approach and operating philosophy. To that end, we intend to utilize a minimum of 50% of the up to $300 million in potential future sales milestones from elacestrant to strengthen the capital structure."

As to the detail – mentioned above – the following five (5) items are of particular relevance to Radius shareholders, capital providers, and other stakeholders:

Radius is eligible to receive:
Up to $20 million in development and regulatory milestone payments
Up to $300 million in sales milestones
A tiered net royalty up to 9% that is based on global net sales
Royalties and sales milestones are:
Based on global net sales of elacestrant
Inclusive of monotherapy as well as any/all utilization as a combination therapeutic
Inclusive of all other potential therapeutic applications
Intellectual Property – three (3) U.S. issued patents for elacestrant:
Composition of matter (August 2026, subject to patent term extension up to August 2030)
Method of treatment (October 2034)
Polymorph/Crystalline (January 2038)
Additional patents are pending
Exclusivity – as a new chemical entity, elacestrant has the potential to receive regulatory exclusivity of:
5 years in the U.S.
10 years in Europe
8 years in Japan, assuming no generic competitor entrant to the market
All the above are subject to regulatory approval(s)
Radius intends to utilize a minimum of 50% of the up to $300 million in potential future sales milestones from elacestrant to strengthen its capital structure
ABALOPARATIDE:

Clinical and Regulatory

Resubmitted abaloparatide-SC dossier to the EMA for potential approval in the EU on November 4, 2021
Announced that the ATOM study evaluating abaloparatide-SC for use in males with osteoporosis met its primary endpoint as well as key secondary endpoints with plans to submit a sNDA in Q1, 2022
Previously announced an update to the MOA section of the TYMLOS label following data from the histomorphometry study that showed TYMLOS stimulated new bone formation in humans
Assist partner, Paladin Labs Inc., in the abaloparatide regulatory submission in Canada (Q4, 2021)
Commercial

Added 4,461 new patients on TYMLOS in Q3, 2021, +10% vs. Q3, 2020
Top 500 TYMLOS prescribers represent 50% of total new patients in Q3, 2021
Top 50 TYMLOS prescribers had new patient growth of 15% vs. Q2, 2021
Full year TYMLOS Net Revenue projection has been adjusted to $210 to $220 million vs. $240 million
Our focus on continuing to position TYMLOS for additional growth:
Increase depth vs. breadth in the fracture patient segments
Emphasis on best people and talent aligned to the opportunity
Properly utilize data – with larger institutions – for patient identification, tracking, and interface
Prepare for the possibility of adding male indication to TYMLOS
Plan for abaloparatide-TD following pivotal data readout expected in Q4, 2021
RAD011:

All remains on track as previously communicated for Prader-Willi Syndrome (PWS). The seamless pivotal trial (SCOUT) is expected to commence in Q4, 2021 or early Q1, 2022.

We will provide a further update on the RAD011 molecule in the near term. We plan to add at least two additional neurological orphan disease indications and progress those forward with pivotal trials.

Third Quarter 2021 Financial Results

Three Months Ended September 30, 2021

Net Loss
For the three months ended September 30, 2021, Radius reported a net loss of $22.0 million, or $0.47 per share, compared to a net loss of $6.3 million, or $0.14 per share, for the three months ended September 30, 2020.

For the three months ended September 30, 2021, non-GAAP adjusted net loss, was $15.3 million, or $0.32 per share, compared to non-GAAP adjusted net income of $7.0 million, or $0.15 per share, for the three months ended September 30, 2020.

Revenue
For the three months ended September 30, 2021, TYMLOS net product revenues were $56.8 million compared to $50.4 million for the three months ended September 30, 2020.

For the three months ended September 30, 2021, no license revenue was recognized compared to $27.4 million recognized for the three months ended September 30, 2020.

Costs and Expenses
For the three months ended September 30, 2021, research and development expense was $34.7 million compared to $39.5 million for the three months ended September 30, 2020, a decrease of $4.7 million, or 12%. This decrease was primarily driven by a decrease of $7.6 million in abaloparatide-TD program costs, a decrease of $1.0 million in RAD140 expenses, a $0.7 million decrease in compensation expense, which is comprised of a $2.2 million increase in compensation expense related to headcount and $2.9 million of billed reimbursable expenses, and a $9.9 million decrease in elacestrant program costs, which is comprised of a $6.0 million decrease in gross program expenses as well as a decrease of $3.9 million in billed reimbursable expenses. These decreases were offset by a $6.1 million increase in abaloparatide-SC program costs, a $3.2 million increase in RAD011 program costs, a $4.6 million increase in professional fees and other expenses, and a $0.2 million increase in occupancy and depreciation costs.

For the three months ended September 30, 2021, selling, general and administrative expenses were $34.3 million compared to $33.7 million for the three months ended September 30, 2020, an increase of $0.6 million, or 2%. This increase was primarily the result of a $4.3 million increase in professional support costs. This increase was offset by a $2.1 million decrease in wages and employee benefit costs due to a decrease in headcount and a $1.9 million decrease in occupancy and depreciation costs and other operating costs.

Nine Months Ended September 30, 2021

Net Loss
For the nine months ended September 30, 2021, Radius reported a net loss of $54.6 million, or $1.16 per share, compared to a net loss of $87.8 million, or $1.89 per share, for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, non-GAAP adjusted net loss, was $34.3 million, or $0.73 per share, compared to non-GAAP adjusted net loss of $51.6 million, or $1.11 per share, for the nine months ended September 30, 2020.

Revenue
For the nine months ended September 30, 2021, TYMLOS net product revenues were $153.9 million compared to $148.4 million for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, license revenue was $11.0 million compared to $27.4 million recognized for the nine months ended September 30, 2020.

Costs and Expenses
For the nine months ended September 30, 2021, research and development expense was $93.1 million compared to $123.3 million for the nine months ended September 30, 2020, a decrease of $30.2 million, or 24%. This decrease was primarily driven by a decrease of $21.6 million in abaloparatide-TD program costs, a $1.2 million decrease in RAD140 program costs, a $12.9 million decrease in compensation expense, which is comprised of a $3.5 million decrease in compensation expense related to headcount and $9.4 million of billed reimbursable expenses, and a $24.3 million decrease in elacestrant program costs, which is comprised of a $0.3 million decrease in gross program expenses offset by $23.8 million of billed reimbursable expenses. These decreases were offset by a $12.2 million increase in abaloparatide-SC program costs, a $10.3 million increase in RAD011 program costs, and a $7.1 million increase in professional fees and other expenses.

For the nine months ended September 30, 2021, selling, general and administrative expenses were $100.5 million compared to $108.4 million for the nine months ended September 30, 2020, a decrease of $7.9 million, or 7%. This decrease was primarily the result of a $6.3 million decrease in wages and employee benefit costs due to a decrease in headcount, a $1.8 million decrease in stock-based compensation expense and a $1.9 million decrease in other operating costs. These decreases were offset by an increase of $2.3 million in professional support costs.

Webcast and Conference Call

In connection with today’s reporting of Third Quarter 2021 Financial Results, Radius will host a conference call and live audio webcast at 8:30 a.m. ET today, November 8, 2021, to review the commercial, research and development, and financial highlights and provide a Company update.

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 November 8 at 11:30 a.m. ET and the audio webcast of the call will be archived on the Company’s website for ninety days. To access the replay, dial (855) 859-2056 or (404) 537-3406 for International, using conference ID number 9322858. 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: non-GAAP adjusted net loss and non-GAAP net loss per share. 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 September 30, 2021 and 2020 are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.