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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015.

Or

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             .

Commission File Number 001-35726

Radius Health, Inc.

(Exact name of registrant as specified in its charter)

(617) 551-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

Number of shares of the registrant’s Common Stock, $.0001 par value per share, outstanding as of October 30, 2015: 42,922,227 shares

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RADIUS HEALTH, INC.

QUARTERLY REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2015

ON FORM 10-Q

INDEX

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CURRENCY AND CONVERSIONS

In this report, references to “dollar” or “$” are to the legal currency of the United States, and references to “euro” or “€” are to the single currency introduced on January 1, 1999 at the start of the third stage of European Economic and Monetary Union, pursuant to the Treaty establishing the European Communities, as amended by the Treaty on European Union and the Treaty of Amsterdam. Unless otherwise indicated, the financial information in this report has been expressed in U.S. dollars. Unless otherwise stated, the U.S. dollar equivalent information translating euros into U.S. dollars has been made, for convenience purposes, on the basis of the noon buying rate published by the Board of Governors of the Federal Reserve as of September 30, 2015, which was €1.00 = $1.1162. Such translations should not be construed as a representation that the euro has been, could have been or could be converted into U.S. dollars at the rate indicated, any particular rate or at all.

Trademarks appearing in this report are the property of their respective holders.

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Item 1. Financial Statements

Radius Health, Inc.

Condensed Balance Sheets

(In thousands, except share and per share amounts)

See accompanying notes to unaudited condensed financial statements.

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Radius Health, Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited, in thousands, except share and per share amounts)

See accompanying notes to unaudited condensed financial statements.

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Radius Health, Inc.

Statement of Stockholders’ Equity

(Unaudited, in thousands except share amounts)

See accompanying notes to unaudited condensed financial statements.

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Radius Health, Inc.

Statements of Cash Flows

(Unaudited, in thousands)

See accompanying notes to unaudited condensed financial statements.

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Radius Health, Inc.

Notes to Financial Statements

(Unaudited)

1. Organization

Radius Health, Inc. (“Radius” or the “Company”) is a science-driven biopharmaceutical company developing new therapeutics for patients with advanced osteoporosis as well as other serious endocrine-mediated diseases including hormone responsive cancers. The Company’s lead product candidate is the investigational drug abaloparatide, a bone anabolic for potential use in the reduction of fracture risk in postmenopausal women with severe osteoporosis. The Company is developing two formulations of abaloparatide: abaloparatide-SC, an injectable subcutaneous formulation of abaloparatide, and abaloparatide-TD, a line extension of abaloparatide-SC in the form of a convenient, short-wear-time transdermal patch.

The Company’s current clinical product portfolio also includes the investigational drug RAD1901, a selective estrogen receptor degrader (“SERD”) and the investigational drug RAD140, a nonsteroidal selective androgen receptor modulator. The Company is developing RAD1901 at higher doses for potential use in the treatment of metastatic breast cancer and other estrogen receptor mediated applications.  The Company is also developing RAD1901 at lower doses, which in a successful Phase 2 proof of concept study has shown to be effective for the treatment of vasomotor symptoms such as hot flashes. RAD140 resulted from an internal drug discovery program focused on the androgen receptor pathway which is highly expressed in many breast cancers. Due to its receptor and tissue selectivity, potent oral activity and long duration half-life, RAD140 could have clinical potential in the treatment of breast cancer or possibly other conditions where androgen modulation may offer potential therapeutic benefit.

The Company is subject to the risks associated with emerging companies with a limited operating history, including dependence on key individuals, a developing business model, the necessity of securing regulatory approval to market its investigational product candidates, market acceptance of the Company’s investigational product candidates following receipt of regulatory approval, competition for its investigational product candidates following receipt of regulatory approval, and the continued ability to obtain adequate financing to fund the Company’s future operations. The Company has incurred losses and expects to continue to incur additional losses for the foreseeable future. As of September 30, 2015, the Company had an accumulated deficit of $412.5 million, and total cash, cash equivalents and short-term marketable securities of $500.8 million.

Based upon its cash, cash equivalents and short-term marketable securities balance as of September 30, 2015, the Company believes that, prior to the consideration of revenue from the potential future sales of any of its investigational products or proceeds from partnership activities, it has sufficient capital to fund its development plans, U.S. commercial scale-up and other operational activities into 2018. The Company expects to finance the future development costs of its clinical product portfolio with its existing cash and cash equivalents and marketable securities, or through strategic financing opportunities that could include, but are not limited to partnering or other collaboration agreements, future offerings of its equity, or the incurrence of debt.  However, there is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. If the Company fails to obtain additional future capital, it may be unable to complete its planned preclinical and clinical trials and obtain approval of certain investigational product candidates from the U.S. Food and Drug Administration or foreign regulatory authorities.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation—The accompanying unaudited condensed financial statements and the related disclosures of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included.

When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2015. Subsequent events have been evaluated up to the date of issuance of these financials. For further information, refer to the financial statements and footnotes included in the Company’s audited financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 10, 2015.

Significant Accounting Policies—The significant accounting policies identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 which require the Company to make estimates and assumptions include: research and development costs, stock-based compensation and fair value measures. There were no changes to significant accounting policies during the nine months ended September 30, 2015.

Accounting Standards Updates— In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an

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entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments under ASU 2014-15 are effective for interim and annual fiscal periods beginning after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its results of operations, financial position or cash flows.

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopics 225-20)(“ASU 2015-01”). ASU 2015-01 eliminates the concept of extraordinary items from GAAP. The amendments under ASU 2015-01 are effective for interim and annual fiscal periods beginning after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of ASU 2015-01 to have a material impact on its results of operations, financial position or cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30)(“ASU 2015-03”). ASU 2015-03 requires that, instead of presentation as an asset, debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments under ASU 2015-03 are effective for interim and annual fiscal periods beginning after December 15, 2015, with early adoption permitted, and should be applied on a retrospective basis. The Company does not expect the adoption of ASU 2015-03 to have a material impact on its results of operations, financial position or cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)(“ASU 2015-05”). ASU 2015-05 updates guidance regarding accounting for cloud computing arrangements.  The amendments under ASU 2015-05 are effective for interim and annual fiscal periods beginning after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of ASU 2015-05 to have a material impact on its results of operations, financial position or cash flows.

3. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

(1)         Includes amounts accrued ratably over the estimated per patient treatment period under the Work Statement NB-3 with Nordic Bioscience Clinical Development VII A/S (“Nordic”).  Amounts do not include pass-through costs which are expensed as incurred or upon delivery.  See note 8 for additional information.

4.  Loan and Security Agreement

On May 30, 2014, the Company entered into a Loan and Security Agreement (the “Credit Facility), with Solar Capital Ltd. (“Solar”), as collateral agent and a lender, and Oxford Finance LLC (“Oxford”), as a lender (the “Lenders”), pursuant to which Solar and Oxford agreed to make available to the Company $30.0 million in the aggregate subject to certain conditions to funding. An initial term loan was made on May 30, 2014 in an aggregate principal amount equal to $21.0 million (the “Initial Term Loan”).

On July 10, 2014, the Company entered into a first amendment to the Credit Facility (the “First Amendment”).  The terms of the First Amendment, among other things, provided the Company with, subject to certain customary funding conditions, additional term loans in an aggregate principal amount of $4.0 million upon the closing of the First Amendment. The Company borrowed the additional $4.0 million on July 10, 2014.

The Company had been required to make interest-only payments through December 1, 2015, and beginning on January 1, 2016, it would have been required to make payments of principal and accrued interest in equal monthly installments over a term of 30 months. The Initial Term Loan bore interest per annum at 9.85% plus one-month LIBOR (customarily defined). All principal and accrued interest on the Initial Term Loan had been due on June 1, 2018.

On August 4, 2015, the Company prepaid all amounts owed under the Credit Facility and the First Amendment.  After consideration of relevant fees required under the Credit Facility and the First Amendment, the total payment amounted to $26.5 million, which resulted in a loss on retirement of $1.6 million during the third quarter of 2015.

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5. Marketable Securities

Available-for-sale marketable securities and cash and cash equivalents consist of the following (in thousands):

There were no debt securities that had been in an unrealized loss position for more than 12 months as of September 30, 2015 or December 31, 2014. There were 29 debt securities in an unrealized loss position for less than 12 months at September 30, 2015 and there were 34 debt securities that had been in an unrealized loss position for less than 12 months at December 31, 2014. The aggregate unrealized loss on these securities as of September 30, 2015 was less than $52 thousand and the fair value was $97.3 million. The Company considered the decline in market value for these securities to be primarily attributable to current economic conditions. As it was not more likely than not that the Company would be required to sell these securities before the recovery of their amortized cost basis, which may be maturity, the Company did not consider these investments to be other-than-temporarily impaired as of September 30, 2015.

As of September 30, 2015, marketable securities consisted of investments that mature within 1 year.

6. Fair Value Measurements

The Company determines the fair values of its financial instruments based upon the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:

·                                Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

·                                Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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·                                Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table summarizes the financial instruments measured at fair value on a recurring basis in the accompanying condensed balance sheets as of September 30, 2015 and December 31, 2014 (in thousands):

(1)                           Fair value is based upon quoted market prices.

(2)                           Fair value is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.  Inputs are obtained from various sources, including market participants, dealers and brokers.

7. License Agreements

On September 27, 2005, the Company entered into a license agreement (the “Ipsen Agreement”), as amended, with SCRAS S.A.S, a French corporation on behalf of itself and its affiliates (collectively, “Ipsen”). Under the Ipsen Agreement, Ipsen granted to the Company an exclusive right and license under certain Ipsen compound technology and related patents to research, develop, manufacture and commercialize certain compounds and related products in all countries, except Japan (where the Company does not hold commercialization rights) and France (where the Company’s commercialization rights are subject to certain co-marketing and co-promotion rights retained by Ipsen). With respect to France, if Ipsen exercises its co-marketing and co-promotion rights, then Ipsen may elect to receive a percentage of the aggregate revenue from the sale of products by both parties in France (subject to a mid-double digit percentage cap), and Ipsen shall bear a corresponding percentage of the costs and expenses incurred by both parties with respect to such marketing and promotion efforts in France. Ipsen shall also pay the Company a mid-single digit royalty on Ipsen’s allocable portion of aggregate revenue from the sale of products by both parties in France. Abaloparatide is subject to the Ipsen Agreement. Ipsen also granted the Company an exclusive right and license under the Ipsen compound technology and related patents to make and have made compounds or product in Japan. Ipsen also granted the Company an exclusive right and license under certain Ipsen

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formulation technology and related patents solely for purposes of enabling the Company to develop, manufacture and commercialize compounds and products covered by the compound technology license in all countries, except Japan (where the Company does not hold commercialization rights) and France (where the Company’s commercialization rights are subject to certain co-marketing and co-promotion rights retained by Ipsen).

In consideration for these licenses, the Company made a nonrefundable, non-creditable payment of $0.25 million to Ipsen, which was expensed during 2005. The Ipsen Agreement provides for further payments upon the achievement of certain future regulatory and commercial milestones, including upon acceptance of an NDA submission, or any equivalent application, for review by the FDA or foreign regulatory authority. The range of milestone payments that could be paid under the agreement is €10.0 million to €36.0 million ($11.2 million to $40.2 million). Should abaloparatide be approved and subsequently commercialized, the Company will be obligated to pay to Ipsen a fixed five percent royalty based on net sales of the product by the Company or its sublicensees on a country-by-country basis until the later of the last to expire of the licensed patents or for a period of 10 years after the first commercial sale in such country.

If the Company sublicenses the rights licensed from Ipsen, then the Company will also be required to pay Ipsen a percentage of certain payments received from such sublicensee (in lieu of milestone payments not achieved at the time of such sublicense). The applicable percentage is in the low double digit range. In addition, if the Company or its sublicensees commercialize a product that includes a compound discovered by it based on or derived from confidential Ipsen know-how, it will be obligated to pay to Ipsen a fixed low single digit royalty on net sales of such product on a country-by-country basis until the later of the last to expire of licensed patents that cover such product or for a period of 10 years after the first commercial sale of such product in such country.

In June 2006, the Company entered into a license agreement (the “Eisai Agreement”), with Eisai Co. Ltd., (“Eisai”). Under the Eisai Agreement, Eisai granted to the Company an exclusive right and license to research, develop, manufacture and commercialize RAD1901 and related products from Eisai in all countries, except Japan. In consideration for the rights to RAD1901, the Company paid Eisai an initial license fee of $0.5 million, which was expensed during 2006. The Eisai Agreement provides for further payments in the range of $1.0 million to $20.0 million (inclusive of the $0.5 million initial license fee), payable upon the achievement of certain clinical and regulatory milestones.

On March 9, 2015, the Company entered into an amendment to the Eisai Agreement (the “Eisai Amendment”) in which Eisai granted to the Company the exclusive right and license to research, develop, manufacture and commercialize RAD1901 in Japan. In consideration for the rights to RAD1901 in Japan, the Company paid Eisai an initial license fee of $0.4 million upon execution of the Eisai Amendment, which was recognized as research and development expense during the three months ended March 31, 2015.

Under the Eisai Agreement, as amended, should a product covered by the licensed technology be commercialized, the Company will be obligated to pay to Eisai royalties in a variable mid-single digit range based on net sales of the product on a country-by-country basis until the later of the last to expire of the licensed patents or the expiration of data protection clauses covering such product in such country. The royalty rate shall then be subject to reduction, and the royalty obligation will expire at such time as sales of lawful generic version of such product account for more than a specified minimum percentage of the total sales of all products that contain the licensed compound. The latest valid claim to expire, barring any extension thereof, is expected on August 18, 2026.

The Eisai Agreement, as amended, also grants the Company the right to grant sublicenses with prior written approval from Eisai. If the Company sublicenses the licensed technology to a third party, the Company will be obligated to pay Eisai, in addition to the milestones referenced above, a fixed low double digit percentage of certain fees received from such sublicensee and royalties in low single digit range based on net sales of the sublicensee. The license agreement expires on a country-by-country basis on the later of (1) the date the last remaining valid claim in the licensed patents expires, lapses or is invalidated in that country, the product is not covered by data protection clauses, and the sales of a lawful generic version of the product account for more than a specified percentage of the total sales of all pharmaceutical products containing the licensed compound in that country; or (2) a period of 10 years after the first commercial sale of the licensed products in such country, unless it is sooner terminated.

8. Research Agreements

Abaloparatide-SC Phase 3 Clinical Trial—On March 29, 2011, the Company and Nordic entered into a Clinical Trial Services Agreement (the “Clinical Trial Services Agreement”), a Work Statement NB-1, as amended on December 9, 2011, June 18, 2012, March 28, 2014, May 19, 2014 and July 22, 2014 (the “Work Statement NB-1”) and a Stock Issuance Agreement, as amended and restated on May 16, 2011, and as further amended on February 21, 2013, March 28, 2014, and May 19, 2014 (the “Stock Issuance Agreement”). Pursuant to the Work Statement NB-1, Nordic managed the Phase 3 clinical trial of abaloparatide-SC (the “Phase 3 Clinical Trial”).

The Company recognized research and development expense for the amounts due to Nordic under the Work Statement NB-1 ratably over the estimated per patient treatment period beginning upon enrollment in the Phase 3 Clinical Trial, or a twenty-month period. The Company recognized research and development expense for the amounts due to Nordic under the fourth amendment to the Work Statement NB-1, which was recognized on a per patient basis when the end-of-study visit and all other required procedures were completed. The Company recorded no expense and $1.2 million of research and development expense during the three months ended September 30, 2015 and 2014, respectively, and no expense and $8.1 million during the nine months ended September 30, 2015 and

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2014, respectively, for per patient costs incurred for patients that had enrolled in the Phase 3 Clinical Study. As of September 30, 2015, all obligations due to Nordic under Work Statement NB-1 had been paid.

Abaloparatide-SC Phase 3 Clinical Extension Study— On February 21, 2013, the Company entered into a Work Statement NB-3, as amended on March 4, 2014 and April 30, 2015 (the “Work Statement NB-3”). Pursuant to the Work Statement NB-3, Nordic performed an extension study to evaluate six months of standard-of-care osteoporosis management following the completion of the Phase 3 Clinical Trial (the “Extension Study”), and, upon completion of this initial six months, an additional period of 18 months of standard-of-care osteoporosis management (the “Second Extension”).

In April 2015, the Company entered into an amendment to the Work Statement NB-3 (the “NB-3 Amendment”). The NB-3 Amendment was effective as of March 23, 2015 and provides that Nordic will perform additional services, including additional monitoring of patients enrolled in the Second Extension. Payments in cash to be made to Nordic under the NB-3 Amendment are denominated in euros and total up to approximately €4.1 million ($4.6 million).

Payments in cash to be made to Nordic under the Work Statement NB-3, as amended by the NB-3 Amendment, are denominated in both euros and U.S. dollars and total up to €11.6 million ($13.0 million) and $1.1 million, respectively. In addition, payments are due to Nordic in connection with the Work Statement NB-3 pursuant to the Stock Issuance Agreement, as discussed below. As of September 30, 2015, all obligations due to Nordic in relation to the Extension Study had been paid.

The Company recognizes research and development expense for the amounts due to Nordic under the Extension Study and the Second Extension ratably over the estimated per patient treatment periods beginning upon enrollment, or over a nine-month and nineteen-month period, respectively. The Company recorded $1.5 million and $2.3 million of research and development expense during the three months ended September 30, 2015 and 2014, respectively, and $4.1 million and $7.7 million for the nine months ended September 30, 2015 and 2014, respectively, for per patient costs incurred.

As of September 30, 2015, the Company had a liability of $3.1 million reflected in accrued expenses and other current liabilities on the balance sheet resulting from services provided by Nordic under the Second Extension, which are payable in cash.

Stock Issuance Agreement—Pursuant to the Stock Issuance Agreement, Nordic agreed to purchase 6,443 shares of the Company’s Series A-5 convertible preferred stock, which provided Nordic with the right to receive quarterly stock dividends, payable in shares of the Company’s Series A-6 convertible preferred stock (“Series A-6”) for services rendered under Work Statement NB-1 and Work Statement NB-3. The Stock Issuance Agreement was later amended to provide that in the event an initial public offering of the Company’s common stock occurred prior to June 30, 2014, any rights to receive stock dividends in relation to Work Statement NB-1 and Work Statement NB-3, for all periods of time after 2014, would be changed from the right to receive stock to the right to receive a total cash payment from the Company of $4.3 million, payable in ten equal monthly installments of $430,000 beginning on March 31, 2015.  The amendment also stipulated that all consideration to be paid to Nordic pursuant to the Stock Issuance Agreement at any time after the consummation of an initial public offering be payable in cash. As the Company completed an initial public offering on June 11, 2014, Nordic no longer has the right to receive stock from the Company and has been paid in cash for all periods after June 11, 2014.

Prior to the issuance of shares of stock to Nordic in satisfaction of quarterly dividends earned under Work Statement NB-1 and Work Statement NB-3, the liability to issue shares of stock was being accounted for as a liability in the Company’s balance sheet, based upon the fair value of the Series A-6. Changes in the fair value from the date of accrual to the date of issuance of the Series A-6 shares were recorded as a gain or loss in other (expense) income in the statement of operations.

9. Stock-Based Compensation

Stock Options

A summary of stock option activity during the nine months ended September 30, 2015 is as follows (in thousands, except for per share amounts):

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The weighted-average grant-date fair value per share of options granted during the three and nine months ended September 30, 2015 was $37.80 and $30.32, respectively. As of September 30, 2015, there was approximately $46.7 million of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 3 years.

Performance Units

In September 2015, the Company awarded 25,000 performance units (“PUs”) to an employee. Each PU which is earned entitles the holder to receive one share of the Company’s common stock if and when the PU vests. The PUs can be earned in the three years subsequent to the grant date if the Company’s average closing stock price over 45 consecutive trading days that begin and end during such three-year period reaches certain thresholds that were set at the time of issuance. The vesting of any earned units is subject to the employee’s continued employment one year from the last day of the measurement period for which the PUs are earned. Compensation expense is recognized over the derived service period, calculated using a Monte Carlo simulation analysis.

The weighted-average grant-date fair value per unit of PUs granted during the nine months ended September 30, 2015 was $49.59, which was calculated using a Monte Carlo simulation analysis. This valuation methodology utilizes several key assumptions including the forecasted stock price, stock price volatility, risk-free rate as of valuation date, stock price as of grant date and the trigger for the performance condition to be met.

As of September 30, 2015 there was $1.2 million of unrecognized share-based compensation expense related to all unvested PUs, not discounted for future forfeitures. This balance is expected to be recognized over a weighted-average period of 2 years.

10. Net Loss Per Share

Basic and diluted net loss per share is calculated as follows (in thousands, except share and per share numbers):

The following potentially dilutive securities, prior to the use of the treasury stock method, have been excluded from the computation of diluted weighted-average shares outstanding, as they would be anti-dilutive. For the three and nine months ended September 30,

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2015 and 2014, all of the Company’s classes of preferred stock, options to purchase common stock, warrants and performance units outstanding were assumed to be anti-dilutive as earnings attributable to common stockholders was in a loss position.

11. Commitments and Contingencies

The Company may be exposed, individually or in the aggregate, to certain claims or assessments in the ordinary course of business. In the opinion of management, the outcome of these matters is not likely to have any material effect on the financial statements of the Company.

12. Stockholders’ Equity and Convertible Preferred Stock

Common Stock— On June 11, 2014, the Company completed its initial public offering whereby the Company sold 6,500,000 shares of common stock at a price of $8.00 per share.  In connection with the offering, all outstanding shares of its convertible preferred stock converted into 19,465,132 shares of common stock and 2,862,654 shares of common stock were issued in satisfaction of accumulated dividends accrued on the preferred stock.

On June 18, 2014 and June 25, 2014, the underwriters purchased an additional 512,744 shares in the aggregate by exercising a portion of the over-allotment option granted to them in connection with the initial public offering. As a result of the closing of the initial public offering and subsequent exercise of the over-allotment option, the Company received aggregate proceeds, net of underwriting discounts, commissions and offering costs, of approximately $50.4 million.

On October 7, 2014, the Company completed an additional public offering whereby it sold 2,750,000 shares of common stock at a price of $18.25 per share, for aggregate proceeds, net of underwriting discounts, commissions and offering costs, of approximately $46.9 million. On October 7, 2014, the underwriters purchased an additional 378,524 shares in the aggregate by exercising a portion of the over-allotment option granted to them in connection with the offering. As a result of the public offering and subsequent exercise of the over-allotment option, the Company received aggregate proceeds, net of underwriting discounts, commissions and offering costs of approximately $53.4 million.

On January 28, 2015, the Company completed an additional public offering of 4,000,000 shares of its common stock at a price of $36.75 per share, for aggregate estimated proceeds, net of underwriting discounts, commissions and offering costs, of approximately $137.8 million. Also, on January 28, 2015, the underwriters purchased an additional 600,000 shares in the aggregate by exercising an option to purchase additional shares that was granted to them in connection with the offering. As a result of the public offering and subsequent exercise of the underwriters’ option, the Company received aggregate proceeds, net of underwriting discounts, commissions and offering costs of approximately $158.4 million.

On July 28, 2015, the Company completed an additional public offering of 4,054,054 shares of its common stock at a price of $74.00 per share, for aggregate proceeds, net of underwriting discounts, commissions and offering costs, of approximately $281.5 million. Also, on July 28, 2015, the underwriters purchased an additional 608,108 shares by exercising an option to purchase additional shares that was granted to them in connection with the offering. As a result of the public offering and subsequent exercise of the underwriters’ option, the Company received aggregate proceeds, net of underwriting discounts, commissions and estimated offering costs of approximately $323.8 million.

Convertible Preferred Stock—On February 14, 2014, the Company entered into a Series B-2 Convertible Preferred Stock and Warrant Purchase Agreement (the “Series B-2 Purchase Agreement”), pursuant to which the Company was able to raise up to approximately $40.2 million through the issuance of (1) up to 655,000 shares of its Series B-2 convertible preferred stock (“Series B-2”) and (2) warrants to acquire up to 718,201 shares of its common stock with an exercise price of $14.004 per share. In February and March 2014, the Company consummated closings under the Series B-2 Purchase Agreement, whereby, in exchange for aggregate gross proceeds to the Company of approximately $27.5 million, the Company issued an aggregate of 448,060 shares of Series B-2 and warrants to purchase up to a total of 491,293 shares of its common stock.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement

This Quarterly Report on Form 10-Q, including the information incorporated by reference herein, contains, in addition to historical information, forward-looking statements. We may, in some cases, use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “continue,” “should,” “would,” “could,” “potentially,” “will,” “may” or similar words and expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q may include, among other things, statements about:

·            the progress of, timing of and amount of expenses associated with our research, development and commercialization activities;

·            the success of our clinical studies for our investigational product candidates;

·            our ability to obtain U.S. and foreign regulatory approval for our product candidates and the ability of our product candidates to meet existing or future regulatory standards;

·            our expectations regarding federal, state and foreign regulatory requirements;

·            the therapeutic benefits and effectiveness of our product candidates;

·            the safety profile and related adverse events of our product candidates;

·            our ability to manufacture sufficient amounts of abaloparatide, RAD1901, and RAD140 for commercialization activities with target characteristics following regulatory approvals;

·            our plans with respect to collaborations and licenses related to the development, manufacture or sale of our product candidates;

·            our expectations as to future financial performance, expense levels and liquidity sources;

·            our ability to compete with other companies that are or may be developing or selling products that are competitive with our product candidates;

·            anticipated trends and challenges in our potential markets; and

·            our ability to attract and motivate key personnel.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include our financial performance, our ability to attract and retain customers, our development activities and those factors we discuss in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 10, 2015 under the caption “Risk Factors.” You should read these factors and the other cautionary statements made in this Quarterly Report on Form 10-Q as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report on Form 10-Q. These important factors are not exhaustive and other sections of this Quarterly Report on Form 10-Q may include additional factors which could adversely impact our business and financial performance.

You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and related notes set forth in this report. Unless the context otherwise requires, “we,” “our,” “us” and similar expressions used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section refer to Radius Health, Inc., a Delaware corporation.

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Executive Overview

We are a science-driven biopharmaceutical company developing new therapeutics for patients with advanced osteoporosis as well as other serious endocrine-mediated diseases including hormone responsive cancers. Our lead product candidate is the investigational drug abaloparatide, a bone anabolic for potential use in the reduction of fracture risk in postmenopausal women with severe osteoporosis. We are developing two formulations of abaloparatide: abaloparatide-SC, an injectable subcutaneous formulation of abaloparatide, and abaloparatide-TD, a line extension of abaloparatide-SC in the form of a convenient, short-wear-time, transdermal patch.

Our current clinical product portfolio also includes the investigational drug RAD1901, a selective estrogen receptor degrader, or SERD, and the investigational drug RAD140, a nonsteroidal selective androgen receptor modulator. We are developing RAD1901 at higher doses for potential use in the treatment of metastatic breast cancer and other estrogen receptor mediated applications.  We are also developing RAD1901 at lower doses, which in a successful Phase 2 proof of concept study has shown to be effective for the treatment of vasomotor symptoms such as hot flashes. RAD140 resulted from an internal drug discovery program focused on the androgen receptor pathway which is highly expressed in many breast cancers. Due to its receptor and tissue selectivity, potent oral activity and long duration half-life, RAD140 could have clinical potential in the treatment of breast cancer or possibly other conditions where androgen modulation may offer therapeutic benefit.

Abaloparatide

Abaloparatide is a novel synthetic peptide that interacts with the human parathyroid receptor 1, that we are developing as a bone anabolic treatment for potential use in the reduction of fracture risk in postmenopausal women with severe osteoporosis.  We also believe that, subject to further research and development, abaloparatide may have potential applications across a variety of skeletal or bone related diseases or medical conditions. We are developing two formulations of abaloparatide:

·                  Abaloparatide-SC - In December 2014, we announced the positive 18-month top-line data from our Phase 3 ACTIVE clinical trial, in which abaloparatide-SC met the primary endpoint with a statistically significant reduction in new vertebral fractures versus placebo, and in June 2015, we announced the positive top-line data from the first six months of the ACTIVExtend clinical trial and the 24-month combined data from ACTIVE and ACTIVExtend.  We are on track to submit a marketing authorization application, or MAA, in Europe and a new drug application, or NDA, in the United States, by the end of 2015. Subject to regulatory review and a favorable regulatory outcome, we anticipate our first commercial sales of abaloparatide-SC will take place in 2016.

·                  Abaloparatide-TD- During 2014, we reported progress towards the development of an optimized, short-wear-time transdermal patch that may be capable of demonstrating comparability to abaloparatide-SC injection. In preliminary, nonhuman primate pharmacokinetic studies, we achieved a desirable pharmacokinetic profile, with comparable AUC, Cmax, Tmax and T1/2 relative to abaloparatide-SC. We believe that these results support continued clinical development of abaloparatide-TD toward future global regulatory submissions as a potential post-approval line extension of the investigational drug abaloparatide-SC. We expect to commence the clinical evaluation of the optimized abaloparatide-TD patch by the end of 2015, with the goal of achieving comparability to abaloparatide-SC. We hold worldwide commercialization rights to the abaloparatide-TD technology.

RAD1901

RAD1901 is a novel potent SERD that is being evaluated for potential use in the treatment of metastatic breast cancer and other estrogen receptor mediated oncology applications. RAD1901 has been shown to bind with good selectivity to the estrogen receptor and to have both estrogen-like and estrogen-antagonistic effects in different tissues. We hold worldwide commercialization rights to RAD1901.

In June 2014, we commenced a Phase 1 maximum tolerated dose, or MTD, study of RAD1901 in healthy volunteers. The study was designed to evaluate the tolerability, safety and pharmacokinetics of RAD1901, and also to use 18F-estradiol positron emission tomography, or FES-PET, imaging to provide a pharmacodynamic assessment of estrogen receptor turnover following administration of RAD1901. In total, 52 subjects were treated with doses between 200 mg and 1000 mg for up to 7 days. In addition, a subset of subjects received baseline and FES-PET after 7 days to evaluate ER signal attenuation.  During the study, all doses were well tolerated and there were no reports of dose limiting toxicities or serious adverse events.  In addition, each of the subjects in the FES-PET subset demonstrated suppression of the FES-PET signal to background levels after six days of dosing.  We believe that the overall safety and tolerability experienced throughout this study is supportive of continued development of RAD1901.

In December 2014, we commenced a Phase 1, multicenter, open-label, two-part, dose-escalation study of RAD1901 in postmenopausal women with advanced estrogen receptor positive and HER2-negative breast cancer in the United States to determine the recommended dose for a Phase 2 clinical trial and to make a preliminary evaluation of the potential anti-tumor effect of RAD1901.

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We continue to enroll patients and expect to report further progress by the end of 2015. In addition, we expect to commence a Phase 1 FES-PET study in patients with metastatic breast cancer in the European Union by the end of 2015, and to initiate expansion cohorts in 2016.

On July 15, 2015, we announced that early but promising preclinical data show that our investigational drug RAD1901, in combination with Pfizer’s palbociclib, a CDK4/6 inhibitor, or Novartis’ everolimus, an mTOR inhibitor, was effective in shrinking tumors. In patient-derived xenograft (PDx) breast cancer models with either wild type or mutant ESR1, treatment with RAD1901 resulted in marked tumor growth inhibition, and the combination of RAD1901 with either agent, palbociclib or everolimus, showed anti-tumor activity that was significantly greater than either agent alone.  We are currently assessing the possibility of developing RAD1901 in combination with other agents either on our own or in collaboration with strategic partners.

In a successful Phase 2A proof of concept study, RAD1901 at lower doses has shown potential to be effective for the treatment of postmenopausal vasomotor symptoms such as hot flashes. We intend to commence a Phase 2B clinical study of RAD1901 for the potential treatment of postmenopausal vasomotor symptoms by the end of 2015.

Financial Overview

Research and Development Expenses

Research and development expenses consist primarily of clinical testing costs made to contract research organizations, salaries and related personnel costs, fees paid to consultants and outside service providers for regulatory and quality assurance support, licensing of drug compounds and other expenses relating to the manufacture, development, testing and enhancement of our product candidates. We expense our research and development costs as they are incurred.

None of the research and development expenses in relation to our product candidates are currently borne by third parties. Our lead product candidate is the investigational drug abaloparatide, and it represents the largest portion of our research and development expenses for our product candidates. We began tracking program expenses for abaloparatide-SC in 2005, and program expenses from inception to September 30, 2015 were approximately $191.4 million. We began tracking program expenses for abaloparatide-TD in 2007, and program expenses from inception to September 30, 2015 were approximately $32.4 million. We began tracking program expenses for RAD1901 in 2006, and program expenses from inception to September 30, 2015 were approximately $22.8 million. We began tracking program expenses for RAD140 in 2008, and program expenses from inception to September 30, 2015 were approximately $5.2 million. These expenses relate primarily to external costs associated with manufacturing, preclinical studies and clinical trial costs.

Costs related to facilities, depreciation, stock-based compensation and research and development support services are not directly charged to programs as they benefit multiple research programs that share resources.

The following table sets forth our research and development expenses that are directly attributable to the programs listed below for the three and nine months ended September 30, 2015 and 2014 (in thousands):

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, professional fees, business insurance, rent, general legal activities, including the cost of maintaining our intellectual property portfolio, and other corporate expenses.

Our results also include stock-based compensation expense as a result of the issuance of stock option grants to employees, directors and consultants. The stock-based compensation expense is included in the respective categories of expense in the statement of

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operations (research and development and general and administrative expenses). We expect to record additional non-cash stock-based compensation expense in the future, which may be significant.

Interest Income and Interest Expense

Interest income reflects interest earned on our cash, cash equivalents and marketable securities.

Interest expense for the three and nine months ended September 30, 2015 reflects interest due under our loan and security agreement, entered into on May 30, 2014 and amended on July 10, 2014, February 13, 2015 and April 8, 2015, or the New Credit Facility, with Solar Capital Ltd., or Solar, as agent and lender, and Oxford Finance LLC, or Oxford, as lender. Under the New Credit Facility, we drew $21.0 million under an initial term loan on May 30, 2014 and $4.0 million under a second term loan on July 10, 2014. On August, 4, 2015, we paid all amounts owed under our Credit Facility.  After consideration of relevant fees required under the New Credit Facility, the total payment amounted to $26.5 million. Interest expense for the three and nine months ended September 30, 2014 reflects interest due under the New Credit Facility and our loan and security agreement, entered into on May 23, 2011 with General Electric Capital Corporation, as agent and lender, and Oxford, as a lender, or the Original Credit Facility. Under the Original Credit Facility, we drew $12.5 million under an initial and second term loan during the year ended December 31, 2011 and an additional $12.5 million under a third term loan during the year ended December 31, 2012.  On May 30, 2014, we used approximately $9.3 million of the New Credit Facility to repay all the amounts owed under the Original Credit Facility.

Other (Expense) Income

For the nine months ended September 30, 2014, other (expense) income reflects changes in the fair value of our warrant liability and the Series A-6 convertible preferred stock liability and stock asset from the date of the initial accrual to the reporting date.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, as well as related disclosures. We evaluate our policies and estimates on an ongoing basis, including those related to accrued clinical expenses, research and development expenses, stock-based compensation and fair value measures, which we discussed in our Annual Report on Form 10-K for the year ended December 31, 2014. Management bases its estimates on historical experience and other various assumptions that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.

We have reviewed our policies and estimates to determine our critical accounting policies for the three and nine months ended September 30, 2015. We have made no material changes to the critical accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2014.

Results of Operations

Three Months Ended September 30, 2015 and September 30, 2014 (in thousands, except percentages)