Radius Health Announces Acquisition of Orphan Disease Program

Radius Health announced a definitive agreement to acquire the global development and commercialization rights to Benuvia Therapeutics (Benuvia) synthetic cannabidiol oral solution (RAD011). The Company plans to initiate a pivotal Phase 2/3 study for patients with Prader-Willi syndrome (PWS) in the second half of 2021 pending regulatory discussion with the U.S. Food and Drug Administration (FDA).

Under the terms of the agreement, Radius acquired RAD011 for $12.5 million, with an additional $15 million to be paid contingent on the successful conclusion of PWS development milestones. For the next three indications, any or all of which can be pursued at Radius’ discretion, the Company may pay up to $45 million in development milestones. In addition, Radius may pay sales-based milestone payments and a tiered, high single-digit effective royalty.

The Company has financed the acquisition through cash on hand and the utilization of $15 million from an existing debt facility, resulting in no equity dilution to Radius shareholders. On an operating basis, the Company believes the combination of a rationalized cost structure and expected ongoing growth in TYMLOS® net revenue will fully fund the development of RAD011 through the top line readout in 2023 with minimal impact on near term cashflow generation. As part of this transaction, the Company expects to take a one-time charge of up to $16 million in the fourth quarter of 2020.

“This acquisition advances our business across several dimensions. It increases the optionality to the Company’s value proposition, leverages our endocrine expertise and adds a late-stage pivotal trial-ready orphan disease product to the existing Phase 3 programs for abaloparatide and elacestrant,” said Radius Chief Executive Officer, Kelly Martin. “RAD011 has the potential for broad clinical applicability. We intend to use PWS as the anchor indication and will further investigate additional orphan disease opportunities in due course.”

“Benuvia is excited to partner with the leadership of Radius Health to progress the late-stage development and commercialization of our synthetic cannabidiol oral solution for the treatment of rare and underserved diseases. We look forward to supporting Radius through our U.S. based contract manufacturing business, Benuvia Manufacturing, which has significant chemistry and formulation capabilities, including manufacturing our FDA-approved cannabinoid drug, SYNDROS®,” said Todd C. Davis, executive chairman of Benuvia.

PWS is an orphan disease with major endocrine and behavioral manifestations and no FDA-approved therapies for the treatment of hyperphagia. Caregivers of these patients often prioritize hyperphagia, the most common genetic cause of life-threatening childhood obesity, and anxiety as the most important symptoms for treatment of the disease. From existing literature and previous clinical trial data generated, cannabidiol has a multifactorial mechanism of action showing clear biological activity against both of these symptoms.

Lynne M. Bird, M.D., medical director of Rady Children's Hospital multidisciplinary Prader-Willi Syndrome Clinic, said, “Currently, there is no treatment for Prader-Willi syndrome. For many patients with the disorder, ameliorating some of the most difficult symptoms, such as insatiable appetite and anxiety, would be life-changing for them and their families.”

The efficacy and safety of Benuvia’s synthetic cannabidiol oral solution has been assessed in over 150 patients across multiple indications. Existing data demonstrates that safety and tolerability have been favorable. In the PWS indication, efficacy data from an abbreviated Phase 2 trial with RAD011 is directionally supportive of reducing both hyperphagia as well as demonstrating a reduction in weight. The reduced appetite and associated weight reduction are further supported by additional RAD011 trials as well as published data from other botanical cannabidiol products.

Radius plans to promptly request a meeting with the FDA to discuss the initiation of a pivotal Phase 2/3 study for the treatment of patients with PWS. The study design will be informed by learnings from previous clinical studies that have been conducted in the PWS patient population. RAD011 was granted Fast Track Designation in 2017 and Orphan Drug Designation in August 2020 for the treatment of hyperphagia behavior and weight loss in patients with PWS. In addition to seven years orphan regulatory exclusivity for the PWS indication, there is an extensive global patent portfolio which will provide protection for the novel formulations through 2035 and, if granted, novel methods of manufacturing through 2040. Top line data could be available in approximately two years from a trial initiation in the second half of 2021.