Staff Writer

Radius Health Inc. raised $91 million – $66 million in equity financing and a $25 million term loan facility – primarily for a Phase III trial of lead candidate BA058 for the treatment of osteoporosis.

The Cambridge, Mass.-based company, which has raised more than $197 million since it was founded in 2003, also announced that it has started the process of becoming a public company via a merger with a shell company and plans to apply for a listing on a national securities exchange in about six months.

Radius President and CEO C. Richard Lyttle told BioWorld Today that the Phase III trial started patient dosing in April and is being managed by Nordic Bioscience, of Herlev, Denmark, a contract research organization that he said specializes in osteoporosis and osteoarthritis programs. Lyttle said the study will ultimately enroll 2,400 patients at 11 medical centers in eight countries in Europe, Latin America and Asia. Patients will undergo 18 months of treatment, and data are anticipated at the end of 2013, he said.

The primary objective of the study is to determine the safety and efficacy of BA058 Injection 80 mcg compared to placebo for prevention of vertebral fracture in otherwise healthy ambulatory postmenopausal women between 50 to 85 years at risk of fracture from severe osteoporosis. Secondary objectives are to determine the safety and efficacy of BA058 80 mcg compared to placebo for prevention of non-vertebral fractures and for change in vertical height. BA058 also will be compared to Eli Lilly and Co.'s Forteo (teriparatide) for other key secondary efficacy outcomes such as bone mineral density (BMD) of the spine, hip and femoral neck and hypercalcemia. Patients will receive either BA058 80 mcg, a placebo, or Forteo 20 mcg for 18 months.

Radius is targeting Forteo, which was launched by Lilly in December 2002 and is the only approved therapy in the U.S. that increases BMD into the normal range, Radius said. Forteo had worldwide sales of $830 million in 2010, but Radius contended that BA058 may demonstrate greater efficacy, faster benefit and a shorter course of therapy and that the Phase III trial will show that BMD gains for BA058 patients will be earlier than for Forteo patients.

But the Phase III trial of BA058 – for which Radius acquired worldwide rights, except Japan, from Ipsen Pharma SAS in September 2005 – has been a while coming. In August 2009 Radius reported top line Phase II data that the company said demonstrated BA058 significantly increased BMD at the lumbar spine and femoral neck after six months of therapy, and that gains were further increased in a subset of patients who elected to continue therapy for a total of 12 months. At both time points, the changes were greater than those seen with Forteo (teriparatide), the reference drug used in the dose-finding study, the company said.

Despite those results, partner Novartis AG decided not to exercise an option for exclusive, worldwide rights to BA058 outside of Japan. That deal called for potential development, regulatory and commercial milestone payments of as much as $500 million. Lyttle said Novartis made a strategic decision not to exercise the option on BA058, but continues its investment support of the program through its MPM fund. (See BioWorld Today, Sept. 18, 2007.)

But the Phase III study for BA058 Injection was submitted to the FDA as a draft protocol in December 2009 and later revised and submitted in December 2010. "I think it was a bit longer gap than hoped," Lyttle noted.

Now with the Phase III under way, Radius said it is in the process of going public. The company said it merged with MPM Acquisition Corp., an unlisted public reporting shell company, and that the surviving company has been renamed Radius Health Inc. and will continue as a reporting company with the SEC. Radius shareholders will hold 100 percent of the equity in the new company, which will apply for a listing on a national securities exchange.

Radius Chief Financial Officer Nick Harvey said the net result is that Radius will soon become a public company. The next step, he said, will be to register the company's private stock for resale with the SEC. He expects that in six month the company will begin over-the-counter trading and eventually will be listed with Nasdaq.

"This reversed the order of a typical IPO," Harvey told BioWorld Today. Rather than dealing with the uncertainty of proceeds that come with a traditional IPO as the company initiated its Phase III study, it opted for the certainty of a private offering followed by a shift to public status, he said.

The $91 million financing included a commitment by GE Capital, Healthcare Financial Services and Oxford Finance LLC to a $25 million multi-draw term loan facility and $66 million in equity financing from new investors BB Biotech AG, Brookside Capital, Saints Capital, Nordic Bioscience and Ipsen Pharma SAS and existing investors MPM Capital, BB Biotech Ventures, MPM Bio IV NVS Strategic Fund, The Wellcome Trust, HealthCare Ventures and Scottish Widows Investment Partnership.

Radius said that it received gross proceeds of $22 million in equity, $6.25 million in debt, and $1.4 million of preferred stock issued to Ipsen in lieu of a cash milestone payment, at the initial closing and will receive the balance in two subsequent tranches.

Leerink Swann acted as exclusive placement agent for the equity financing. Previous financings generated proceeds of $82.5 million in April 2007 and $24 million in November 2003.

Radius and 3M Drug Delivery Systems, of St. Paul, Minn., also announced an agreement to collaborate on the development of a transdermal delivery option of BA058 – a Microneedle Patch that will use 3M's microneedle technology to administer BA058 through the skin, as an alternative to subcutaneous injection.

Terms of the agreement were not disclosed. The BA058 Microneedle Patch is being studied in a Phase Ib trial that began in December 2010, Radius said.

Besides the BA058 Injection and BA058 Microneedle Patch, Radius is developing candidate RAD1901, which was licensed from Eisai Co. in 2006, for treatment of vasomotor symptoms (hot flashes) in women entering menopause.