Radius Health (RDUS) Presents at Morgan Stanley 15th Annual Global Healthcare Conference (Transcript)

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About: Radius Health, Inc. (RDUS)
by: SA Transcripts

Radius Health, Inc. (NASDAQ:RDUS) Morgan Stanley 15th Annual Global Healthcare Conference Call September 13, 2017 10:30 AM ET

Executives

Jesper Høiland - President & CEO

Pepe Carmona - CFO

Analysts

Unidentified Company Representative

We’re going to get started with the next session, which is Radius. Quickly, before we get started, I just need to read a quick disclosure statement. Please note that all important disclosures including personal holdings disclosures and Morgan Stanley disclosures appear on the Morgan Stanley public website at morganstanley.com/researchdisclosures or you can pick up a copy at the registration desk.

So, pleased to have with me both the CEO and CFO from Radius here. Jesper and Pepe, thanks for joining me. So, I guess maybe to get started, you both joined fairly recently. Maybe you could just talk a little bit about your background and why you decided coming to Radius was the right move for you?

Jesper Høiland

Absolutely. Thanks a lot, Matt. Thanks to everyone for coming. Really appreciate it. If I should start out, I started out more than 30 years ago as a management consultant working for McKinsey like company. Then by coincidence, I came across this interesting company called Novo Nordisk. It was a tiny small company at that point of time. We had about 800 employees and not even a $150 million in turnover at that point of time. Joined the company with the mindset of staying here for a few years and then finding a real job. And 30 years later, speaks for itself. I have worked all over the world for Nova Nordisk.

I started working in the U.S. where I trained sales representatives. At that point of time, we had 24 representatives in the field and 16 at the office. Today, just to put it in context, it's plus 5,000 people with Nova Nordisk in the U.S. alone. I then started working in Canada, worked there for a couple of years, then I moved to Belgium where I worked also for couple of years, moved to France where -- in Belgium, I introduced our women’s healthcare products into marketplace, which is relevant vis-à-vis Radius Health. Moved to France where launched together with the management team, NovoSeven, became a huge success for Nova Nordisk. Moved from there down to Australia to take over the role as a General Manager. Moved back to headquarter in year 2000 and looked back the all product launches in the world. I was responsible for marketing at that point of time. From there, I moved to Switzerland in 2004, looking after all countries in the world, except U.S. Europe and Japan, so including China for instance, grew the China business from some $150 million to a $1 billion plus in six years. China was crazy at that point of time of course by being explosive. Then, in 2013, I was sent to the U.S. to look after the U.S. affiliate, which has always been my dream. I've always seen myself as getting close to being an American. I love this country and it's also why I'm still here. Spent little less than four years with Nova Nordisk, launched Tresiba, the long-acting compound, launched Saxenda, the obesity compound, the first of its kind and launched two hemophilia products. And all in all, my launch experience really turned me on in respect to Radius.

And now, I’m coming to of course to why Radius. I was offered when the restructuring of Nova Nordisk happened when Lars stepped down, to come back and look after what I consider the rest of the world. I said no, thank you, I'm going to stay in North America and the U.S., I love this country and this is where the business opportunities are. So, I decided to stay and look around, came across Radius relatively early in the process and was really keen on it for a number of good reasons, basically the products speak for itself. We had TYMLOS just about being launched to the marketplace. That's really where I think my force is, because I'm an operational person. Having three compounds with a very unique probabilities, the patch, the elacestrant and the RAD140, very, very unique for a such a small company that we are, some 500 people, market cap $1.6 billion. I found this was almost like going back 30 years ago with Nova Nordisk. So, this is as good as it gets. A top notch Board of Directors that I really was intrigued by joining. And then, here I'm and I have been with Radius for two months. I love every moment of it.

I have had much more fund in the last two months because I've been out seeing customers. I came home this weekend from the ASBMR meeting where I met the top, top notches in the osteoporosis field. And I'm just very excited about working for Radius and the opportunities that I see. So, I really look forward to work, launching new product. I'm sort of person, what you see is what you get kind of thing. I really like to get hands on, I like to be in the field, like to talk to the investors, like to have that sort of total stakeholder engagement, which I think is so important.

But, Pepe, you're not forgotten. Over to you.

Pepe Carmona

Thank you. Hi, Matthew, hi everybody.

So, I'm a finance person that has grown up in operations. That's how I grew up in large companies. Most of my finance experience in pharmaceutical was with Novartis Pharmaceutical. I was CFO in small countries, large markets like the U.S., large regions like Europe, Middle East, Africa, Asia and others. I think the only place that I haven't managed was Japan. I worked in all divisions of Novartis from pharmaceutical division to the generic business to the eye care business, consumer business, so every aspect of healthcare I think I reasonably know it.

I left Novartis to join a biotech business. I wanted to start growing businesses rather than stabilize the businesses and/or restructuring businesses. So, I joined one biotech company that soon after we sold it, and that's not my intention. When I jumped into biotech, I was looking for a company that had a good footprint and a good pathway for growth. So that's where I found Radius. I knew some of the Board members from former life. And in the last three months that I have been here, I think this is one of the most exciting places I have worked for the last probably 20 years. We have a new product in the market that is disrupting the marketplace. We have several products on the pipeline. We have the right cash on hand to maximize the value of assets with the need to tap the market anytime soon and hopefully anytime. We're progressing with all the pipeline that will have TYMLOS to be market leader and then start strengthening and growing our oncology business. So, very exciting.

Question-and-Answer Session

Q - Unidentified Analyst

Perfect, perfect. Great. So, I guess maybe TYMLOS is probably a great place to start. Maybe you could talk a little bit about how you see the launch progressing versus your expectations? How you see prescriptions tracking? And then, we can talk a little bit about some of the other factors driving the launch.

Jesper Høiland

Absolutely. Yes, TYMLOS is of course our key product. That's everything that we are right now because the other compounds that we're having is basically opportunities that hopefully will emerge, but what we have right now in front us is TYMLOS and it's crucial. We have just updated the data on our website for market access and insider package, so you can see this after this presentation. But basically, if you're looking at it, which is the first and foremost things to do, look at of course pricing. I am going to revert to that, but market access is really what is all about. And we now have 153 million lives covered by market access; that means that we have plus 70% in the Commercial segment and 30% in the Part D segment, the two key segments to operate in.

Part D is course more important than the commercial market because we're talking mainly, at least for the time being, I hope that trend and treatment modality is going to change as part of what the talk was in Denver. But the last part of our patients, our patients over the age of 65, and as a consequence of that of course is Part D patients. And I think to have that sort of market access, if I look back on my past four years, I have not heard of anyone being so bold in terms of pricing and getting certain access. Now of course, the trick of the trade is to convert that into performance in terms of sales.

And there I also think we're faring over our expectations. We are up to little shy of 10% new patients in a way we calculated. So basically, what we have done is, we have broken down the data and say how many patients are there that can be put on TYMLOS every month. And on the basis of -- and we've broken it down every week. And then we're saying within that timeframe how many of the patients then gets onto TYMLOS compared to the total PTH market and there, we're really doing fine. It doesn't look so nice, if you're looking at it from TRx point of view because it's of course early days. And there is not the same sort of switches that you see in other marketplaces because as soon as a woman has been put on treatment, then she will also stay on that treatment, you'll not switch products, which you might see in other categories. So, all-in-all, good.

So, what I'm trying to say is the NBRX that we're seeing from IMS which is of course only indicative but they're basically trendsetter for where our business is going to be in a year from now. So, if we're having plus 10% of the business right now, three months into the launch, I think it's going to be very, very fine. And of course as we -- each month progressing, we're getting more market access and even as of 1st of January, I think it’s a testament to what Radius has done in terms of pricing, Express Scripts has in the commercial market given us exclusivity, and that’s of course when we really will start to see the ramp up of numbers.

Unidentified Analyst

So, two follow-ups if I could. First is, what you need to do to expand the Medicare market, because obviously a lot of older women one might be a key market here? And then, I've a second one after that.

Jesper Høiland

So, the talk of the town in Denver was really to change the treatment algorithm, if you will. So, instead of using TYMLOS and the PTH category as the anabolic category as the last resource, using it earlier in the treatment pattern. And I think also our own ACTIVExtend confirmed that strong opportunity of doing that to really secure strong bones for the women at early stage. So, in the way I see it, if you're looking at it, the market potential is definitely there. There's plus a 1 million women that get fractures and are in the risk category with osteoporosis a year, although so only a fragment really gets treated, at least anabolicly. If you're looking at it from an anabolic point of view, the market is anywhere between 40,000 or 50,000 women only per year, and that's of course by far too little. And if you look back and that in historical settings just four or five years ago that number was plus 100,000 on PTH alone. But with the pricing approach that competition has taken, and I don't really want to elaborate on what competition is doing, focusing on what are we doing at Radius and how can we as a company will go and expand. Our viewpoint is that first, we want to get to market leadership, that's what it's all about. And as soon as we're there, then it’s the expansion of the category because of course you could imagine a 20-fold opportunity in terms of treatment -- women that should be treated with TYMLOS.

Unidentified Analyst

And so, then specifically on the Medicare population, how do you take that payor access from 30% up to 90%, 100%. But, at this time, what else needs to happen there?

Jesper Høiland

Time is the key factor there, because in the way that the CMS market access works, basically you close the book by April with the health plans, the Humanas of the world, which is one of the big players in it, and that means that when they're out of time and coming out in the market late May, it was basically too late and I think it's strongly indicative that we despite that not being present when the negotiations took place, we still get 30% market access, I really think is a strong point to the pricing, responsible pricing policy that we have applied, meaning basically our compound despite its news to the market with all its good features is priced roughly half of what competition is doing on whack. Of course I do know that rebates play a bigger role. But rebates has not played such a big role in the anabolic segment because you have to see the competition has been alone there for 15 years. So, here is our opportunity to make a difference to the marketplace. And I think certainly, market access has changed it. Now we need to see the scripts come through and I'm comfortable that we're going to see that.

Unidentified Analyst

Okay, perfect. And then, you talked about competition a couple of times. But, I guess my question on competition would be, what sort of response have you seen from them in the marketplace with accounts and any sort of issues you see from that?

Jesper Høiland

I mean, besides that they last year took four price increases that they have basically quadrupled the price over the last five years. That is one initiative that typical big pharma is doing. Competing with competition for the last 30 years, so I know them fairly well in Indianapolis, our approach is different. And as a consequence of that we will also anticipate to see different outcomes, as far as I am concerned. Then, when it comes to what has competition done, not that much. Two things is their initiative, that sampling, of course samples helps reducing cost from the patient point of view to a certain extent, but we're also out there sampling in a responsible way and making sure that our products get used.

The other thing that I have observed is that they rely on, I mean, in pharmaceutical industry, everything is built based on relationships, which is not that surprising. I think, most businesses are based on that. So, it's all about people. And they go out and say, do you remember me doctor? We have worked together for the last 15 years, please prescribe my product. But if that’s the only argument that you're having, being obligated to Radius, I think you're going to lose the game and that's really what I believe. If I look at the organization, we have a full fledged sales and market organization, and not only sales and marketing, we have key account managers, we have MSLs, we have the whole enchilada. And the way I see it, many of them have already worked for competition being Amgen or Lilly and joined us. So that’s sort of relationship that we're talking about that is so important, we have been able to carry forward to our company because that's the most important thing that the people are having. The next thing is the reputation of the Company and then comes the product features. And there, of course, we do have the best package we feel to offer also on the basis of pricing, but pricing is really the last resource. The first three components is what makes difference and make doctors to prescribe your product.

Unidentified Analyst

Okay, perfect.

Jesper Høiland

The market access is of course also key element there, getting reimbursement.

Unidentified Analyst

So, I was going to ask about ACTIVExtend, you mentioned it a little bit. What the process for getting that included in the label, how important is that getting included in the label? How you think about that as a driver of the product?

Jesper Høiland

Professor Bone [ph] gave the presentation on Sunday in Denver. And that I think is the most important starting point because that is to educate the purpose into the medical journals and start to get the talk going. How does the anabolic works? How does it stand out? What does it look like after 43 months of treatment? And what's the benefit of basically changing the treatment modality from being last resource to use anabolic upfront? And our hope is to be able to expand the label going forward, not only with the ACTIVExtend but as a general that will be part of what we will invest parts of the proceedings that we have just raised $300 million and Pepe can elaborate on, part of that money will be spent on getting the vital indications because on the basis of that I am absolutely certain that we will see better prescription, more support to Radius and to TYMLOS.

Unidentified Analyst

Okay. Can we talk about Europe? Obviously, you had a second request in EU. Just here, remind us what the status of the EU application is? What else needs to be done? And we should think about potential to launch in Europe?

Jesper Høiland

Yes. I think there is an opportunity to put our CFO at work. So, Pepe, if you will elaborate on it, we like tandem being together and have done this over and over. So, I think Pepe, if you will elaborate a little on it?

Pepe Carmona

Sure. Just one thing on the previous comment. We're expected to file an sNDA in the balance of the year and obviously depending on how the discussion goes with the FDA, what is going to go to expand the PI or not. On the European side, just to give context, the European business overall is about 10% of the global market. So, it's a smaller portion. Prices there are roughly a fifth of what is in the U.S. So, it's a much lower margin as well, and much more complex structure. And that's the context on the importance of the European approval.

Now, what we disclosed before is that there were two sites that had DCP issues during the trial. To knock out any concern on the U.S., the FDA was on notice on that and they did a full review of the site, of one of the sites, the two sites, one with a 12% of patients enrolled, the other one with 3%. They worked two weeks on the one with 12% and they found no issue. So, there's no data integrity issue or things like that, there was just a criterion enrollment issue that we have discrepancy with the CHMP and EMA. We were surprised with the day one, question [ph] but right now, we're working and we have a meeting shortly with the rapporteur to agree on how the path forward should look like. We expect that by year end or before year end, we'll have a CHMP opinion. And we're pretty confident that the product is approvable, the question probably is more about if you need to cut the data in certain form that limit the power of it, then what’s label and the importance of the label to get the commercial asset there.

Unidentified Analyst

So, maybe one more pipeline question on TYMLOS and then we can maybe move on to oncology. But, you also have a patch you're working on, maybe just remind us where that is in development and how you see that as important to the commercial strategy?

Jesper Høiland

Because we've made it relatively short, we're very comfortable with the data that we're having now with the financing in place, we can also finance it; that means that we can move forward with the patch. We have also been out saying on the basis of what we know right now, we'll make an announcement to the market before the year-end, so in a very near future we are going to tell what will the trial look like, number of patients enrolled, outlook and so on and so forth. And I think that will guide the market. The way I see the patch is basically ideal from a point of view, when I see the timing coming on to the market to further expand to market. But we need right now to make TYMLOS the market leader. And on the basis of that, we need to expand the market. And coming out with a patch I see as a line extension; it helps us on a patent, from a patent point of view, give us a handful of years more. And in everything thing I can see, the patch will really bring us back into the big numbers in terms of number of women being treated on TYMLOS, either subcutaneously and/or by patch. I see both routes being an opportunity.

Unidentified Analyst

And I guess I should also ask Forteo’s patents are near term, coming up; I think, clearly people probably worried about what's the impact of, what you want to call it biosimilar or generic Forteo, how do you think about that impact on the marketplace and impact on your product?

Jesper Høiland

I think I mean, let's wait and see what's going to happen in the marketplace, yes, it's going to come up patent by December of next year, I think the good question to ask Eli Lilly, what their plans are in that respect. Somehow we're anticipating what will happen is that is going to be a 505(b)(2) pathway that has to be pursued on the basis of that. Getting onto the market is likely around 2020.

I have been competing quite substantially over the years with what I consider branded generics that’s basically from the other multinational companies i.e. Sanofi and Lilly. I have also tried to compete face-to-face with the big generic companies such as Teva and Sandoz. What I have seen in the biosimilars space because we're not talking generics, we're talking biosimilars, because of the different features that your compound come with, you have to build your sales force completely as a Radius Health has done and thereby the attractiveness to the market to go out and make recombinant DNA technology available to compete in a segment that is relatively small, under pressure to competitors coming in, I mean with us and then second one potentially with generic or biosimilar. I think it's going to be an uphill battle. And so you need to build the complete infrastructure to compete because there will not be just switches taking place at pharmacy levels. And how we're going to price it? Because the generics have made their fortunes on the first 180 days exclusivity, price minus 20. If they do that, then there are quite substantial dip down to TYMLOS’s launch. If you then have to take the TYMLOS price and reduce that with further 20%. How are you going to do that whole thing and how do you ensure that you're going to see that conversion that you then will be aiming for and hoping for?

And the best real example that I can come with is that Teva was fighting very, very hard in the growth hormone segment for good numbers of years, which is my reference point from my past. They approached the point where they had 7%, 8%; they couldn't turn it into profitable business for themselves. So, they withdraw from the market. And the market leader which was Novo Nordisk at that point of time, continued to gain momentum and gain plus 10% market share on that. The only two competitors that were there were Sandoz and they competed on exactly the same basis with the same parameters that Novo Nordisk did.

So from that point of view, I think it's going to be a different ballgame even when they come, but also I would -- if I was then remind myself that Radius is having a patch coming also in the pipeline, how is that going to look at that point of time for them, if you’ve just come out with a generic, and need to -- who needs [indiscernible] at this point of time. If I am honest, the biggest generic player, I would anticipate to see would be Lilly because of their coming of patent, how they then go into do the pricing and approach. But if they lower the price significantly on their compound, it’s going to hit operating profit. So, I firmly believe that we can get to market leadership in foreseeable time, which is what is all about. I have worked 30 years with Novo Nordisk and that was only in one product category of all the categories we are competing that we were not market leader. So, I am firm believer in marker leadership, it’s what drives you.

Unidentified Analyst

Okay, perfect. Oncology, so maybe in last couple of minutes, just remind us what your strategy is there and what the compounds that you have in development?

Jesper Høiland

We need to buy some extra minutes. Okay, Matt. But I think -- will you take on oncology?

Pepe Carmona

Yes, sure. So, at ASCO, we shared the data that the Phase 1 study had. So, to remind everybody, an objective response rate of 23%, median PFS of 4.5 months and there were still 15 patients ongoing. We expect to provide a bit more update on that trial with a poster at San Antonio. And we'll provide also an update on the 106 study at that time. After the ASCO data was released, we had a meeting with the FDA, which we have a pretty strong alignment on how to move forward with the asset.

We announced that we have a pathway on a single arm monotherapy study that we'll be enrolling patients. The size of the study is up to 200 patients and the primary endpoints will be objective response rate and duration effect. We haven't provided more data on that patient population. We will provide that as soon as we enroll the first patient, which we expect to happen at the beginning of 2018. So, that should cover what we believe will be the kind of -- the best asset on a third line therapy in the space as an ER plus or ER positive breast cancer drug.

And then, the question is how do you maximize the value of entire asset, because that would be kind of a speed to market strategy; that's where we believe we can get fast into monetizing what we have on hand. For that we're assessing all strategic options. And obviously, there's several players that we could partner, the asset with from a CDK4/6 perspective. What is good about where we are right now, we have the cash on hand to finance the monotherapy and we don't have that pressure to -- in case, we partner the asset that we would need to give penny for the $1 on that front. What we're thinking on is we will reserve rights on the asset. We want to be in the U.S., we'll not expand globally, but the partnership would look like more keeping more of the value of the asset going forward, no of type of deal where we would transform the asset into a financial asset going to exit the category.

Unidentified Analyst

So, then, just remind us, I mean the next study that you start, is there an approval pathway for that study, or do you think you think you're going to have run a Phase 3 program after that?

Pepe Carmona

No, the idea is that the data is right, this should be a pivotal study. We would need to do a comparative study that could be anchor on a combination trial. But basically with this trial of less than 200 patients, we can go to market if the data is right and then do the comparative study while we're in the market.

Unidentified Analyst

And do you have a good feeling of what sort of response rate you need to deliver or what the profile you need to deliver to make that an approvable asset? I mean, if you reproduce the profile we've seen so far, is that sufficient?

Pepe Carmona

Yes. Well, the FDA was very excited about this. I have seen very few times in my career where the FDA after meeting, the day after, in the morning they send you the minutes and they ask you to proceed. So, then some KOLs have said that this is best in class. After a few assets in the category that from larger companies have failed to deliver, we have the front-runner asset in this space. So, we believe that if we have a good set of numbers, we'll have a pivotal study.

Unidentified Analyst

Perfect, great. Jasper, Pepe, thanks very much. I appreciate it.

Jesper Høiland

Thanks for your time.

Pepe Carmona

Thank you.