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Edited Transcript of RDUS earnings conference call or presentation 5-Nov-19 9:30pm GMT

Q3 2019 Radius Health Inc Earnings Call

Cambridge Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Radius Health Inc earnings conference call or presentation Tuesday, November 5, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Charles Q. Morris

Radius Health, Inc. - Chief Medical Officer

* Elhan Webb

Radius Health, Inc. - Head of IR & External Communications

* Jesper Høiland

Radius Health, Inc. - President, CEO & Director

* Jose Carmona

Radius Health, Inc. - CFO, Senior VP & Treasurer

* Joseph Kelly

Radius Health, Inc. - SVP of Sales & Marketing

* Sal Grausso

Radius Health, Inc. - SVP of Market Access

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Conference Call Participants

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* Christopher John Zopf

Cowen and Company, LLC, Research Division - Associate

* Connor McGuinness Meehan

Morgan Stanley, Research Division - Research Associate

* Eun Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Keith Richard Tapper

Citigroup Inc, Research Division - Research Analyst

* Kyuwon Choi

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Neil Puri

SVB Leerink LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good afternoon, everyone, and welcome to Radius Health Q3 earnings webcast. (Operator Instructions) I'd now like to turn the conference over to Elhan Webb VP, Investor Relations at Radius Health. Elhan, please go ahead.

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Elhan Webb, Radius Health, Inc. - Head of IR & External Communications [2]

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Thank you. Hello, everybody. Thanks for joining us today.

Our press release and presentation that we will use to guide our discussion today can be found in the Investors section on our website. A replay of the call will also be available on our company website, in 3 hours following this call. Before we begin, I would like to remind you with our Safe Harbor slide that will have some forward-looking statements and include non-GAAP financial measures in our presentation today.

Our 10-K and subsequent filings identify factors that could cause our actual results to differ materially from those indicated by these forward-looking statements. Any forward-looking statements represent our views as of today only. Here is our agenda on slide 3. Jesper will start with touching on highlights of the quarter and our refined strategic focus for Radius. After Jesper's comments, Joe will provide the commercial review of TYMLOS and Sal will provide more insights on our market access. Charlie will then follow with an update on our clinical programs. Lastly, Pepe will review our financial results for the third quarter.

I'd like to now turn the call over to Jesper.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [3]

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Thank you, Elhan. Welcome, everybody, and thank you for joining us on the call today.

I'm very pleased to report another strong commercial quarter of Radius, as we continue increasing our market share gains for TYMLOS. In the third quarter of 2019, we achieved $47 million in net sales for TYMLOS, reaching an average of 38% total market share. Our market share continued to improve in October, as we capture half of all-new patient starts on anabolic therapy, in line with our goal for the second half of this year. This positions TYMLOS to become the anabolic market leader in 2020 and Radius to continue growing in the market for the years to come, including with the potential introduction of our innovative abaloparatide-patch. We are very pleased to have Sal Grausso on the call, having recently joined Radius to lead our market access efforts. With more than 20 years of industry experience in the US market, Sal has a tremendous knowledge of the payer landscape, having managed portfolios in leading biotechnology and pharmaceutical companies.

Sal will be providing a detailed update on our market during the call. With our continued strong performance, we are tightening our full year guidance for delivering $168 million to $272 million net sales for TYMLOS. Following our productivity initiatives and continued financial discipline, we are also pleased to increase our end of the year cash balance guidance from $120 million to $130 million. After the completion, I'll have strategic review. We are excited to announce our decision to refine our strategic focus to build on our core strengths and expand our strong platform in the osteoporosis and targeted integrated diseases.

Consistent with our new direction and after a comprehensive partnership evaluation for elacestrant, we will be exploring all strategic options in order to maximize the value for our oncology portfolio. We have already started this process and are currently in discussions. In line with our refined strategy focus, we will not initiate further clinical development for elacestrant or 140, beyond the ongoing Emerald study. With our new strategy, we aim to enhance value for our assets and allocate our resources efficiently on our core strength to maximize opportunities for our business, shareholders and patients.

I will now turn the call over to Joe for a review of our commercial performance on TYMLOS.

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Joseph Kelly, Radius Health, Inc. - SVP of Sales & Marketing [4]

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Thank you. Jesper, and hello, everyone. I'm excited to present our commercial update for TYMLOS sales for the third quarter of 2019. Please turn to slide 7. Since the launch of TYMLOS just over 2 years ago, we've seen a solid overall market-share growth pattern which continued in Q3 of this year. While there were some data anomalies publicly addressed by IQVIA in Q3, as it relates to new-to-brand market share NBRx. We have continued to see positive growth trends in October, where we captured half of new patient starts on anabolics.

We expect this will translate to an overall anabolic leadership position in 2020, a great milestone for TYMLOS and the organization. Based on our overall performance, we expect to deliver an increase and TYMLOS net sales with the revised guidance of $168 million to $172 million for the year.

On the next slide, you can see our ability to add new to anabolic prescribers to the marketplace, as this segment of HCPs continues to contribute more to the short and long-term success of TYMLOS. These trends show the confidence that health care providers have in TYMLOS due to its clinical profile around fracture risk reduction, the convenience of using TYMLOS requiring no refrigeration once-in-use and our organization's dedication to women with postmenopausal osteoporosis. The focused efforts of the organization continue to drive strong TYMLOS growth, as we expect that both the commercial and Part D books of business will provide continued NBRx leadership for the rest of this year and overall market leadership in 2020.

Thank you all and I will now hand the call over to Sal.

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Sal Grausso, Radius Health, Inc. - SVP of Market Access [5]

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Thank you, Joe, and good afternoon, everyone. I'm very excited to be part of Radius and this management team. As you can see on slide 10, the overall TYMLOS formulary coverage profile will improve next year. Effective January 1st, 2020, TYMLOS will be covered by Aetna and Cigna Medicare Part D plans, increasing TYMLOS coverage from 67% to 79% of Medicare Part D lives.

We expect this enhanced coverage to translate to meaningful 2020 unit growth, based on our success executing against 2019 Medicare Part D formulary wins. Also we believe that our enhanced Medicare Part D coverage will further strengthen health care provider perception and intent to prescribe TYMLOS. We anticipate full year 2020 average net price to be flat versus 2019, due in part to enhanced coverage and increased manufacturer reimbursement in the Medicare Part D coverage gap.

Thank you. I will now hand the call over to Charles.

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Charles Q. Morris, Radius Health, Inc. - Chief Medical Officer [6]

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Thank you, Sal, and good afternoon, everyone. Our major focus in R&D continues to be our Phase III trials for elacestrant, ER-positive, HER2-negative advanced or metastatic breast cancer and for the abaloparatide-patch in high-risk postmenopausal osteoporosis. The multinational EMERALD trial for elacestrant has made good progress operationally, with the majority of the targeted sites open and activated.

An important aspect of the design of this trial is that the primary end point of progression-free survival will be tested in 2 populations, the overall population and in those patients whose tumors harbor mutations in the ESR1 gene. Our statistical assumptions are based on detecting ESR1 mutations in approximately 45% of the patients and we are encouraged that the rate of mutations seen in the patients recruited to date is tracking closely to that percentage.

Patient recruitment is ongoing and we continue to target completion of recruitment in the third quarter of 2020. The Phase III WearABLe study for the abaloparatide-patch is also ongoing. As a reminder, this is a noninferiority trial conducted under a Special Protocol Assessment agreement with FDA, with a comparison of change in bone mineral density at 12 months between patients randomized to abaloparatide administered subcutaneously or administered transdermally by patch developed in collaboration with 3M. More than 60 sites in the US are now open, representing more than 90% of the targeted sites.

Our investigators are enthusiastic and are actively looking for eligible patients. Recruitment is however behind our original targets, largely because of the higher-than-anticipated screen failure rate. The FDA required we include patients that matched the BMD and fractured criteria used in the Phase III active study for subcutaneous abaloparatide.

Our eligibility criteria specify the patient should not have recently received various osteoporosis therapies prior to entering the trial. We are therefore largely looking for previously undiagnosed patients who have not received previous treatment. As a result, many patients enter screening, whose T-score and/or fracture history are found not to match those required for inclusion in the protocol. And that is the most common reason for screen failure.

To address these challenges, we are expanding the number of sites. I'm including sites in non-U.S. countries. This will help us accelerate recruitment and unable to expect top line data readout from the study in the second half of 2021.

I would now like to hand over to Pepe to review the financials.

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Jose Carmona, Radius Health, Inc. - CFO, Senior VP & Treasurer [7]

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Thanks, Charlie. I will briefly walk through the income statement of Q3 2019 and afterwards, I will share our revenue and cost evolution over the past year and a half and provide updated guidance for 2019. In Q3 2019, Radius report the net sales of $47 million and a net loss of $30 million or $0.65 per share, as compared to net sales of $28 million and our net loss of $50 million or $1.19 per share for Q3 2018.

On the right side of the slide, we show the figures on non-U.S. GAAP basis, which excludes share-based compensation, intangible asset amortization, noncash interest from the convertible note and other one-offs. You can see the reconciliation between GAAP and non-GAAP in the appendix. Radius on a non-U.S. GAAP basis for Q3 2019 reported a net loss of $20 million or $0.44 per share, as compared to net loss of $38 million or $0.84 per share for Q3 2018.

Let me share a few highlights on the income statement. First, our sales growth continues to grow align to our TRx demand volume and gross margin is now stabilizing at 92%, Second, our R&D expenses grew sequentially and versus Q3 2018, as WearABLe and Emerald Phase III trials activate sites and enroll new patients. Last, SG&A continues to decrease, as we continue to identify productivity initiatives as committed in our financial guidance.

On the next slide, we show the sequential growth in net sales of TYMLOS of compared to Q2 2019. You can see that all 3 drivers for net sales are positively impacting revenue growth and it's aligned to our guidance provided in the last quarter. The anabolic market is sequentially larger in the second half versus the first half.

Our market share continues to grow to now 38% average in Q3 compared to 35% average in Q2 2019. And finally, our net price improves as we turn in the second half with lower reimbursement of the Medicare Part D coverage gap and lower support needed for patient deductibles in the commercial book of business.

Finally on slide 18, we show continued management of cash and expenses while driving TYMLOS growth. You can see in the bottom of the slide, the decrease of SG&A and R&D fixed cost or internal R&D. The productivity initiatives and revenue growth has now strongly positioned the company financially, in which TYMLOS revenues is fully covering for all SG&A and fixed cost in R&D and is now partially funding our pipeline. This was one of our goals for this year and we're excited to see that this happened in Q3 2019, and expected to continue as we end the year as well as in the full year 2020 and beyond.

The pipeline-related R&D investment is expected to grow, driven by 2 Phase III programs. Based on the current cash on hand of $169 million, we feel Radius has a strong cash position to execute on our programs and continued driving TYMLOS growth. Finally, I will update on guidance for 2019.

On slide 17, we show the revenue and cash guidance which we have increased versus prior quarter. We expect revenues to be between $168 million to $172 million in the full year 2019. The increase is driven by the strong market share uptake, with now TRx trending over 40%. From a cash balance perspective, we expect to deliver over $130 million by year-end versus over $120 million guided in Q2. We continue to drive productivity initiatives, which is helping to drive an improved cash balance

I look forward to your questions at the end of the call. With that, I will pass the call back to Jesper for the closing remarks.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [8]

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Thank you, Pepe. With our refined focus, I'm very excited that we'll enhance value for our shareholders and be able to serve more patients in the future. Our strong R&D expertise-proven track record and commercial capabilities in osteoporosis puts us on a strong foundation to accelerate growth and expand successfully in our core strength areas.

In the near term, we are extremely committed to make the treatment of choice for high-risk osteoporosis patients and further transform the treatment paradigm with the potential launch of our abaloparatide-patch. As we built and expand, we will continue to employ financial discipline and leverage TYMLOS profitability to invest for growth. Here are some of the reminding milestones for the rest of this year on slide 20. With our continued strong commercial performance, we are confident in delivering our full year financial guidance realizing $168 million to $172 million in revenue for TYMLOS.

We will also continue to advance recruitment of both our patch and elacestrant Phase III studies. As Pepe underlined, with our continued financial discipline, we expect to have over $130 million end-of-year cash balance.

Now I would like the moderator to open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Jessica Fye of JPMorgan.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [2]

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I have 3. First one for Charlie. With enrollment in the EMERALD trial set to complete in the third quarter of 2020, when should we think about when you could report top line data?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [3]

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I think it will come some point, mid to late of '21. Obviously, it's always event-driven, so we'll be watching for that, but we're comfortable with the way that we're tracking in terms of recruitment. I think we should be expecting that as a '21 event.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [4]

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Okay. Great. I mean is it possible to comment at all on what the selection has tended to be so far for the control arm?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [5]

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No.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [6]

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Okay. Maybe even on the WearABLe trial, just wanted to make sure I understand this comment about the reasons for screen failure. So what exactly is the reason? I feel like you said they essentially tended to have some characteristic that was in the exclusion criteria which sounded kind of broad? Was it did that they had prior osteoporosis statement, it was too recent?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [7]

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Yes, what we're tending to see is that there are a number of potential routes into the trial, based on either a history of fracture or, in older patients over the age of 65, based on a particularly low T-score of minus 3. It's those criteria, which seem to be the ones that people have been failing at on the higher-than-expected rate, largely because it's what we're trying to identify to a large extent, patients who have not had previous treatment because they're not allowed certain other treatments in the recent past. So as we screen patients to identify that they have osteoporosis, a large number, turned out not to do so or have osteoporosis, but not at the level of severity that matches the entry criteria for the protocol. Did I clarify that?

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [8]

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Yes. And then maybe just last one, I'm not sure if this is for you, Charlie, or Jesper, or Pepe, but on the update about exploring strategic options for the oncology assets, I thought you had been exploring a potential partnership for elacestrant already. I guess what is it that this update really mean?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [9]

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Let me take that. Jessica, we have been running a very robust evaluation process through 4 clinical collaboration and co-promotion in the US. In parallel, after a strategic review, we decided to focus our corporate strategy towards our core strengths in TYMLOS, abalo-patch and targeted endocrine diseases. Hence, we decided to the growth in the partnership opportunities by considering all strategic options which would include full-out licensing.

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Operator [10]

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And our next question comes from Mohit Bansal.

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Keith Richard Tapper, Citigroup Inc, Research Division - Research Analyst [11]

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This is Keith on for Mohit. Congrats on the progress with TYMLOS. Just one on portfolio expansion. You mentioned recently that you're laying groundwork for potential line extensions and new indications for TYMLOS and perhaps the patch. When can we expect to hear about this and are you focusing on expanding use in similar populations or entirely new ones. And I've got one follow-up.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [12]

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I'm sorry, just to be clear, you're asking about indications beyond osteoporosis.

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Keith Richard Tapper, Citigroup Inc, Research Division - Research Analyst [13]

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In populations, you mentioned I think in a recent conference, you were looking at line extensions and new indications for TYMLOS and I just wanted to get a sense of what you were thinking in terms of expanding the patient population.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [14]

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Obviously, we had been talking about it today, but we do have the mail Phase III ongoing. So obviously, that would be the first. And the larger part of the broader abaloparatide family, of course, is going to be the patches it come through. We continue to evaluate some opportunities around, in particular, interest in fracture healing, though, and we're exploring that as a potential, but have not made any commitments at this point as to whether we're going to invest in that particular area.

So basically what we want, just to add onto and we want to play on the strength that we are already having in with TYMLOS and in the area of osteoporosis. We have a strong clinical platform. We have a strong commercial platform and we do believe, with that, we have a new direction that we can take. That's the core part of our business and then we can add on to that within the same target audience. That's the idea, that we really use the success that we have had in this area.

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Keith Richard Tapper, Citigroup Inc, Research Division - Research Analyst [15]

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Okay. Terrific. And then just a follow-up on the Medicare. So you mentioned there was an increase. I think 67% to 78% for 2020, is that a number that's going to be the final for the full year, or might have increase throughout the year or midpoint of 2020?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [16]

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Okay. We're very pleased with our coverage as it stands at the end of 2019. So going into 2020 increasing at the 79% is very positive. 8 out of 10 patients, Medicare patients will have access to TYMLOS. As it stands, that's where we're going to 2020 and we're confident that we'll begin to end the year at that level.

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Operator [17]

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And our next question comes from Geoffrey Porges of SVB Leerink.

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Neil Puri, SVB Leerink LLC, Research Division - Analyst [18]

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This is Neil sitting in for Geoff. I had two questions, the first is on elacestrant. In regards to your decision to explore strategic options, could you provide a little bit more color on what that says about how you feel about the value of the asset? Is this more due to operational considerations or are there other things you're seeing that make you feel that another company or another partner may be the best developer? And then just a quick add on, regarding your updated time line for the WearABLe trial, do you have any sense of when enrollment should be completed? And perhaps, how much would that impact R&D spend in 2020?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [19]

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Yes, sure. Let me take the first one, a little bit of WearABLe update will be Charlie. And then I'll go back to cost. So the monotherapy study is a valuable opportunity for us. We believe that the peak sales potential for that asset alone is up to $0.5 billion and we're comfortable and continue developing the asset. So to provide a little bit more color on why the shift in strategy and the full development of this asset would require a combination trial and that could complete the enhancement of value for elacestrant.

Partners that we were in discussion with were interested in the elacestrant, they wanted to see more extensive combo data to properly design a Phase III trial. And for us to generate the combo data, we will need to further invest in this asset which is, as I explained before, is a noncore asset for us and that would be inconsistent to our refined strategy that Jesper framed at the beginning of the meeting. So consequently, we will continue to execute on EMERALD, but not part of an investment combination trial. And just to be clear, from a partnership perspective, we are currently in discussions with several companies, but in a broader structure of the strategic options.

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Joseph Kelly, Radius Health, Inc. - SVP of Sales & Marketing [20]

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There is no clarification on that, on WearABLe as we said on the call, we are expecting data in the second half of '21. We're not guiding currently on the completion of recruitment, but Pepe can take the cost element.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [21]

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Yes. So we haven't provided single asset clinical trial cost to the street and we feel it's not needed at this time. Now from cash projections and so on, as I said, we already in this quarter achieved a critical milestone, which is basically the TYMLOS gross profit is paying for all the SG&A of the Company, all the fixed infrastructure of the company and already partially paying for the pipeline. And with the $168 million that we have on cash and having TYMLOS continues to grow, we believe we're in a good position ,with a good line of sight cash breakeven, including the financing of both the WearABLe and the EMERALD study.

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Operator [22]

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And our next question comes from Kyuwon Choi of Goldman Sachs.

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Kyuwon Choi, Goldman Sachs Group Inc., Research Division - Equity Analyst [23]

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So for the team, I was just curious with FORTEO losing exclusivity and a potential launch coming up here from Alvogen and Phoenix. I was curious if, in terms of market behavior, you're seeing any changes with regard to either distributor, wholesaler buying patterns ahead of these potential changes in the market?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [24]

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I think Joe, and maybe a comment from Sal.

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Joseph Kelly, Radius Health, Inc. - SVP of Sales & Marketing [25]

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This is Joe. No, we haven't seen any changes in the marketplace. We continue to get in front of our key providers and making sure that they understand the difference between TYMLOS and teriparatide, regardless of how it shows up, whether it's branded, biosimilar, or generic. We feel that we have a differentiated asset as far as onset of action, a convenience when it comes to nonrefrigeration once and use and, of course, our duration of therapy being at 18 months. So we're ready if one does come to the market, but regardless, we're continuing to grow share, grow volume, and we'll continue to exceed our forecast. Sal?

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Sal Grausso, Radius Health, Inc. - SVP of Market Access [26]

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Yes, just to add and to answer the question. We haven't seen any or heard from anyone in the trade channel regarding any new teriparatide entrants.

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Kyuwon Choi, Goldman Sachs Group Inc., Research Division - Equity Analyst [27]

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And also I think on the PBM side, we haven't heard anything that would create a pause there?

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Sal Grausso, Radius Health, Inc. - SVP of Market Access [28]

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That's correct.

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Kyuwon Choi, Goldman Sachs Group Inc., Research Division - Equity Analyst [29]

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Okay. Great. And then just as a follow-up, you have highlighted that your market access, with regard to both the commercial and Medicare and Medicaid remains, is very high now, but on the go forward and thinking about 2020 and beyond, is there any expectation about any potential shifts with regard to either contracting and/or formulary positions that you have any visibility on?

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Sal Grausso, Radius Health, Inc. - SVP of Market Access [30]

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Yes, thanks for the question. This is Sal. I'll answer that one. We feel very good with our positioning for 2020, in both the commercial and Part D books of business. We've obviously been in active discussions with the payer community and the former position that we have is very solid. So we don't foresee any changes to formulary coverage and, as we said, we are guiding that our net price will be flat '20, versus '19. So no changes in rate from that perspective. And some of our contracts are even reaching further out in 2020. So we feel very comfortable with the situation that we're in, in terms of having market access and continue to penetrate the market with now more than 50% of the NBRx.

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Operator [31]

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And our next question comes from Vikram Purohit of Morgan Stanley.

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Connor McGuinness Meehan, Morgan Stanley, Research Division - Research Associate [32]

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This is Connor Meehan for Vikram. So we are just curious, a little bit more about the TYMLOS space as well. And so just to follow-up on some prior question, could you guys comment a little bit on the impact of Pfenex' drug, does in fact obtain therapeutic equivalence? And then what informs your confidence in TYMLOS' market share and growth prospects going forward?

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Joseph Kelly, Radius Health, Inc. - SVP of Sales & Marketing [33]

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Yes. This is Joe. The approval of Pfenex and the product Bonsity, I think it's called, is in line with our projections. And in case of an A rating, I remind you that this drug will be substitutable only to a teriparatide, not TYMLOS, and as I stated earlier, we believe in the strong differentiation of TYMLOS versus any form of teriparatide. Because of our increase in market share and the feedback that we're getting from HCPs, we feel as if we're in a position of strength when it comes to TYMLOS and a more competitive environment, if a biosimilar generic does come our way.

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Operator [34]

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And our next question comes from Chris Shibutani of Cowen.

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Christopher John Zopf, Cowen and Company, LLC, Research Division - Associate [35]

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This is CJ for Chris Shibutani tonight. I just wanted to go back to the abaloparatide-patch study if we could. I know you're not giving guidance on what the enrollment, when we should expect it to complete. With respect to the fraction of patients that were failing versus what was expected, how do those 2 related and how does the scope of the site expansion, how close does that get you back to your expected enrollment pace? And then you pointed out, you're going to be doing that, a lot of ex-US sites, is this all part of the Special Protocol agreement with the FDA? Or, are there any concerns about coming up with imbalances in the analysis for ex-US domestic patients?

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Joseph Kelly, Radius Health, Inc. - SVP of Sales & Marketing [36]

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So yes, the high screen file. Going into the study, we had a number of CROs, including the one that we chose, and we also have the feedback from our investigators and our own experiences, that we're comfortable that this was something that could be delivered in the time frame. As we said, the screen fill rate is higher, not stating [just] numbers, but higher than anticipated and any of those working assumptions and that's why we are now looking to expand sites and to go internationally. In terms of the SPA, the SPA did not and the protocol does not address where this is going to be done specifically in terms of countries. You'll remember that the active studies were predominantly conducted ex-US. So I think this is not new for us. And I don't think that in and of itself is a particular concern.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [37]

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And this is Jesper, just to add, there is a high enthusiasm in the marketplace. I've been out working in the field myself and talked to a number of the investigators and I can only report back that the patch idea and the concept is really, really well perceived in the marketplace. So now what we need to do is to ramp up and get going to the speed that we want to see it and then we are very confident on the patch.

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Christopher John Zopf, Cowen and Company, LLC, Research Division - Associate [38]

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Great. And then with respect to the eligibility criteria versus your prior expectations for the number of patients you would see, does what was observed here impact your expectations for how the patch might expand the market at all versus what the potential label could be?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [39]

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I don't believe that the requirements that we see for the eligibility for the study, I think narrower than the wording that is within the prescribing information. Certainly, there's no restriction there around prior therapies and so forth. Our challenge here is, of course, because we're trying to demonstrate noninferiority, we can only demonstrate noninferiority to a data set which has been established. And that was established in patients with these exact criteria, so we don't have the flexibility to change those criteria. So to get more patients and we feel that we need to expand the sites and expand the range of countries in which we're working.

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Joseph Kelly, Radius Health, Inc. - SVP of Sales & Marketing [40]

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And just to report back, you remember that we have presented this data on market perception and the opportunity and the needle itself is still one of the major hurdles that is in the marketplace. We do believe there is still, you could see a 3-fold increase in terms of usage, coming from some 44,000 patients roughly being treated today to over 200,000 patients is not far away. And if you look back in history that's really what the anabolics have looked like 7, 8 years ago.

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Operator [41]

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And our next question comes from Douglas Tsao from H.C. Wainwright. (Operator Instructions)

And our next question comes from Eun Kyung Yang of Jefferies.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [42]

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I have a question on elacestrant. So now that you are exploring strategic options for this program. I'm assuming 140 product as well. Do you think that you could find a strategic partner who would take over before the Phase III data in second half of 2021, or do you think it's something that you could you do in the near term?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [43]

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Well, thanks for the question. We are, we are right now in discussions with several companies. We don't want to provide now a date in which we may end up with the partnership. But right now, we're in discussions with several companies with a broader set of strategic options.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [44]

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Okay. I made just a hypothetical question, but in the event that you could not find a buyer or partner, then once the data comes out positive, would you be willing to commercialize on your own or at this point, or are you going to be looking for a commercial partner?

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [45]

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No, we will maximize the value of the assets through a partner. So we will know, we are not expecting to commercialize the assets in the US. We do believe that we have the core competence in the area of osteoporosis and targeted into chronology areas and therefore, we think the oncology space, we certainly have very strong skills, but we just don't have the skills in terms of commercializing it, as we're speaking because that's really where we have shown ourselves with TYMLOS and what we also anticipate to do with the Patch. Yes, can I just ask you more thing, I know that you have been in partnering discussions for some time. So what has been the bottleneck in terms of finalizing the deal?

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Sal Grausso, Radius Health, Inc. - SVP of Market Access [46]

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Well, as I said before to a previous question, we value monotherapy, and we continue to evaluate, but the combination trials are a critical path, a part of our development strategy for this asset. Partners are interested in the last term, but they want to see more extensive combination data to properly define a Phase III trial. So for us to generate that, we will need to invest Pharma in a noncore asset, which could be inconsistent to our strategy. So we can see there a proper risk/return for Radius at the moment. We will continue to execute on that, but we will not invest in combination trials.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [47]

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And if I can just add, the market potential for this next-generation oral SERD seems to be very, very attractive. If you take a look at how many companies that are investing into it and we firmly believe that it has value in the marketplace. That's how we are seeing it. We would just like to shift the direction towards the endocrine space going forward, and by the endocrine, I don't mean type 2 diabetes or anything like that, but targeted endocrine.

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Operator [48]

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(Operator Instructions) And this does conclude our question-and-answer session. I would now like to turn the call back over to Jesper Hoiland for closing remarks.

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Jesper Høiland, Radius Health, Inc. - President, CEO & Director [49]

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Yes, I just want to thank, everyone, for listening in and I would repeat what basically we have said during this call is that we have lifting our guidance in terms of our net sales for the year $268 million to $272 million. We're also lifting our cash guidance to $130 million and, all in all, a very, very important driver behind this is, of course, our market leadership with terminals in terms of NPR, which we firmly believe is going to lead to market leadership in the latter half of 2020, in terms of TRx, meaning the overall market share.

Then again, what we are driving at here is the shift that we are taking in terms of the strategic outlook. We are saying TYMLOS is doing very well. The Patch, we see a golden opportunity with and then of course, also in the other endocrine areas where we see less opportunity, less strength. So basically what we are trying to do, we're trying to operate from our strength position and taking the company forward in that direction.

Thank you, everyone, for listening and look forward to have your calls individually.

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Operator [50]

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All ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.