Radius Raises $91 Million to Advance Osteoporosis Drug, Makes Strides Towards Public Listing

5/24/11Follow @arleneweintraub

Today marks a major milestone in Cambridge, MA-based Radius Health’s long quest to enter the multibillion-dollar osteoporosis market. The company announced that it has raised $91 million in a third financing round, which includes $66 million in equity. What’s more, upon the closing of the financing, Radius merged with an unlisted shell company (“MAC”), so that it can take on the status of an SEC-reporting company and apply to be listed on a national stock exchange. The financing will be used to complete pivotal Phase 3 clinical trials.

CEO C. Richard Lyttle says Radius was able to make a convincing case to investors that its treatment will break new ground in osteoporosis, the gradual loss of bone that affects many aging people, especially women. “Investors want to put money towards products with really good data behind them, and we had Phase 2 data showing this drug is able to build bone in women,” he says. “We believe we’ll be able to offer women a new agent to treat osteoporosis.”

Radius is developing a novel “anabolic,” or bone-building drug, called BA058, which is an analog of human parathyroid hormone-related protein. In early studies of the drug—which Radius is formulating both as an injection and a skin patch—patients have re-grown some bone, while facing little risk of hypercalcemia, or too much calcium in the blood, which can be a side effect of current treatments.

The treatment is so promising that Radius has had little trouble raising cash in what has been an extremely challenging fundraising environment for most life sciences companies. Prior to today’s financing, the company had raised $106 million in venture capital from an A-list group of investors including MPM Capital, BB Biotech Ventures, MPM Bio IV NVS Strategic Fund, the Wellcome Trust, HealthCare Ventures, and Scottish Widows Investment Partnership.

The new round includes those investors, along with newcomers BB Biotech, Brookside Capital, Saints Capital, Nordic Bioscience, and Ipsen Pharma. It also includes a commitment to a $25 million loan facility from GE Capital, Healthcare Financial Services, and Oxford Finance. Nordic will also manage the Phase 3 trials of BA058—a coup, says Harvey, because Nordic is a renowned leader in osteoporosis, having been involved in trials of Amgen’s (NASDAQ: AMGN) recently approved denosumab (Prolia) and other osteoporosis treatments.

No doubt those investors were attracted to what is becoming an incredibly rich market opportunity. The aging of the population has led to a rapid increase in osteoporosis around the world. According to a recent study by Global Industry Analysts of San Jose, the annual market for osteoporosis treatments will reach $8.8 billion by 2015, even though many of the most popular treatments are losing their patent protection and going generic. Radius’s CFO, Nick Harvey, points to a Cowen & Co. report estimating … Next Page »

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