Radius Recycling Inc (RDUS) 2017 Q2 法說會逐字稿

Good afternoon, everyone, and welcome to Radius Health's second quarter 2017 results and business update. Today's call is being recorded.

At this time I'd like to turn the call over to Barbara Ryan, Radius Health's Head of Investor Relations. Please begin.

Thank you, Nicole. Good afternoon and thank you to all of you joining us on our second quarter 2017 financial results conference call and webcast. Joining me this afternoon to make formal remarks are Jesper Hoeiland, President and Chief Executive Officer; David Snow, Chief Commercial Officer; Dr. Gary Hattersley, Chief Scientific Officer; Dr. Greg Williams, our Chief Development Officer; and Pepe Carmona, our Chief Financial Officer. In addition, Dr. Bruce Mitlak, Vice President of Clinical Development, joins us today for the Q&A portion of this call.

Before we begin, I would like to remind you that any statements made during this call that are not historical facts are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our most recent quarterly report on Form 10-Q and other reports filed with the Securities and Exchange Commission. Any forward-looking statements represent our views as of today, August 3, 2017, only.

A replay of this webcast will be available on the company's website, www.radiuspharm.com, and you can find the dial-in information for our conference call replay in today's press release, as well as on the website.

Today's agenda is intended to provide you with a review of the TYMLOS launch, our second quarter 2017 financials and an update on our development plans for our pipeline and upcoming corporate milestones.

It is now my great pleasure to turn the call over to Jesper Hoeiland, President and Chief Executive Officer of Radius Health.

Thank you, Barbara. Welcome, everybody. I'm excited to be here with you together with several members of our executive leadership team. This is the perfect time for me to join Radius as we launch TYMLOS and get prepared to rapidly advance our oncology portfolio.

In my first 17 days, I've already had a chance to talk to many stakeholders, like physicians, payers, patients, investors, analysts, and of course employees. It gives me great confidence in the company I joined.

Radius is at an important inflection point. Hence, I have learned that the organization is fortunate to have strong leaders with the required pharmaceutical experience to drive the growth of TYMLOS and accelerate our pipeline towards commercialization. My 30 years of pharmaceutical experience tells me that Radius will deliver on its short- and long-term goals.

In the second quarter this year, the company accomplished several important milestones. As you know, TYMLOS was approved and launched in the US in late May with an experienced commercial team. The sales representatives, key account managers, market access teams and medical science liaisons have long track records; and a big plus, many of them have worked in the osteoporosis market.

I have been able to observe firsthand the positive feedback we are receiving from physicians, payers and patients. TYMLOS has had a rapid uptake for market access from major payers and are tracking very favorable versus any comparable drug this early in its launch. David will provide more insights on the progress of the TYMLOS launch later in the presentation.

We recently signed a license agreement with Teijin in Japan, which gives us access to the important Japanese market. Let's remind ourselves that the US and Japan combined represent approximately 80% of the global anabolic market.

Additionally, in May we announced the positive top line result from the completed 24-months ACTIVExtend trial of TYMLOS, which met all of the primary and secondary endpoints. Today Gary will cover some additional insights from the ACTIVExtend data that further reinforces a differentiated profile and value proposition for TYMLOS in the osteoporosis market. We look forward to presenting this data at the American Society of Bone and Mineral Research annual meeting in September.

I also would like to share that despite only having been here for just a couple of weeks, I'm extremely optimistic about our oncology portfolio. With positive elacestrant data presented in June at ASCO, we have recently aligned with the FDA on a potential pathway for our speed-to-market strategy for this asset. Gary will update you further later in this call.

While I've just highlighted several of the key accomplishments in the second quarter, it is important to mention that we have also had a setback on Eladynos with the CHMP. We have received a second set of Day 180 questions. Although we continue to believe that Eladynos will be approved in Europe, recent regulatory challenges [have posed risk] we will work to overcome. We plan to work closely with the European authorities and expect to receive an opinion from the CHMP before the end of this year.

Executing with excellence on our key strategic priorities remains our primary focus. Our #1 priority is to drive robust launch execution and over time establish a market leadership position for TYMLOS in the US. We seek to maximize the TYMLOS opportunity through global expansion, life cycle management and category leadership. Success in these efforts will drive sustainable growth for Radius.

We continue to work with EMA to expand into Europe and will actively engage with other regulatory agencies to expand the TYMLOS footprint in [pharma emerging] markets. Radius will move rapidly, advancing the development of elacestrant in breast cancer as per our recent discussion with FDA. We also continue to assess the opportunities to advance elacestrant into earlier lines of therapy and drive its peak sales potential.

Our partnership decisions will be made on the basis of what is financially sound for our shareholders and in the best interest of patients.

And finally, we will continue to strengthen the organization to ensure flawless execution.

I now turn the call over to David Snow, our Chief Commercial Officer.

Thanks, Jesper. It's great to be with you again today to provide the latest TYMLOS launch update for the first 8 weeks of market availability. We continue to build momentum and confidence in our launch execution, value proposition, share of covered lives, sales team engagement and, most importantly, prescription trends. Our commercial teams remain focused on achieving market leadership in the anabolic category.

As we've stated previously, we are competing in a large category with more than 10 million postmenopausal osteoporotic women. Only half of these women are diagnosed, and a substantial portion have had a fracture and would be considered anabolic-appropriate patients. Those women with a osteoporotic fracture have a substantial risk of a second fracture, both in the year immediately following the fracture and for a sustained period afterwards.

Further, a majority of osteoporotic fractures are non-vertebral and a major cause of hospitalizations and healthcare costs. Overall anabolic use is low within this risk group: what we estimate is only 40,000 to 50,000 treated patients annually. So there remains a substantial treatment gap in at-risk postmenopausal osteoporotic women who are also anabolic-appropriate patients.

1 key factor affecting this treatment gap is out-of-pocket affordability, which drove our responsible pricing approach. We're already seeing encouraging acceptance by PBMs and health plans to the TYMLOS brand.

As of August, we now have contracts in hand for over 130 million covered lives. To put this in context, recent specialty launched benchmarks suggest it normally takes new therapies up to 6 months in commercial and 12 months for Medicare coverage. We're clearly moving at a faster pace, with the top pharmacy benefit management firms. This puts us at 68% coverage of all commercial covered lives and at 28% of total Medicare lives.

I'm equally pleased with our team's efforts to work with payers to align health plan treatment design, or utilization management, consistent with our label. This aligns with standard of care to improve outcomes by identifying the appropriate patients and simplifying the [prior-off] process.

As an example, we've recently finalized a 2018 agreement with CVS Caremark, SilverScript and Medicare to align to UM. And we believe this will substantially reduce the frustration factor for our physicians prescribing TYMLOS. In addition, CVS Caremark has also removed as of yesterday the NDC block on TYMLOS. So we now have a commercial coverage in this major PBM.

TYMLOS has also been added to the specialty brand tier of UnitedHealthcare, the largest single Medicare provider in the country.

Finally, we're excited to see Express Scripts, the largest US PBM, make an announcement this week to add TYMLOS to its national preferred formularies as of January.

When looking at HCP response to the TYMLOS profile, we're achieving significant sales coverage and seeing strong demand for branded and unbranded information, even from typically no-see HCPs. Our sales team has already reached over 90% of the top 7,000 anabolic-writing HCPs with a high frequency of coverage. This group is heavily represented by rheumatologists and endocrinologists, who cover about 40% of all anabolic prescriptions.

The sales team has also achieved high rates of coverage across the top 200 anabolic-writing HCPs, who account for some 16% of total anabolic volume. 20% of these HCPs have already written at least one TYMLOS prescription, and this is probably underrepresentative of the total number, since we only currently report what we capture through our patient support center.

For me, another pleasant surprise has been the early acceptance of TYMLOS by key academic centers acting as early adopters. These institutions are certainly rigorous in their clinical and safety reviews, and we've been pleased to see the quick acceptance across influential centers like the Cleveland Clinic, which is also a major bone care center with substantial anabolic usage.

When looking at prescription data for the first 8 weeks of launch, you can see positive trends with dispensed pens or PMOT, patient months of therapy. The dip you see in the graph was the July 4th holiday. We're pleased to see the growth to date, and we've added a linear trend line pointing forward.

On the graph to the right you see TYMLOS anabolic class market share and the anabolic class with FORTEO. As of July 14, share was 1.2%. And again you see the increasing trend. This is very early data, and as a reminder, it doesn't fully capture all specialty pharmacies. We'll see improved data accuracy over time as we continue to make progress with our specialty pharmacy network and see further expansion in prescribing.

Finally, I'd like to briefly cover some early evidence of how we're reorienting the market towards our target patient as we aim to substantially increase the use of TYMLOS among postmenopausal women with osteoporosis at high risk of fracture. Here's where the fast onset of effective TYMLOS in fracture risk reduction, the short 18-month course of therapy and our responsible pricing are keys to driving adoption.

We've had several hundred patients coming through our patient support center, and when we review this information we're encouraged by the consistency to our target patient profile: around 40% are postmenopausal women in the 50 to 65 age range. We also see good geographic distribution of enrollments coming from across the country, the majority from high anabolic share states. And finally, it's good to already see short enrollment-to-approval rates -- below 30 days -- something we feel is critical to improving the patient experience.

So, in summary, we're seeing positive TYMLOS access, overall HCP engagement, target patient positioning and prescription trends. I'll look forward to sharing more in the months ahead.

I'd now like to turn the webcast over to Gary, to discuss the ACTIVExtend data.

Thanks, David. In May this year we had the opportunity to report some of the top line results from the full 2 years of ACTIVExtend. We are now pleased to be able to report additional top line data from this study.

The objective of this study was to determine the utility of sequential therapy where a short course of anabolic treatment is followed by antiresorptive therapy and to determine whether the vertebral and non-vertebral fracture risk reduction achieved with TYMLOS in the 18 months of the ACTIVE study could be extended through 3.5 years following a 2-year course of alendronate.

The previously reported top line data from ACTIVExtend was based on all patients that enrolled in ACTIVExtend, where there are approximately 550 patients that had previously received TYMLOS for 18 months and approximately 550 patients that have previously received placebo, for a total of 1,139 patients.

In this group, at 43 months we reported a significant and robust risk reduction in the incidence of new vertebral, non-vertebral, clinical and major osteoporotic fractures. In this latest data set, we looked at all patients that enrolled in ACTIVE across 43 months of treatments, where there are approximately 820 patients previously treated with TYMLOS and also about 820 patients previously treated with placebo, for a total of 1,645 patients.

In this more complete patient population, following all patients up to 43 months, we continue to see a statistically significant effect of prior TYMLOS treatments on fracture risk reduction for new vertebral, non-vertebral, clinical and major osteoporotic fractures compared to placebo. But it's notable in this more comprehensive patient population we also see a significant reduction in the incidence of hip fractures in the prior TYMLOS-treated group compared to prior placebo, with a p-value of 0.027.

The safety profile was similar between prior-TYMLOS and prior-placebo groups and consistent with the known alendronate safety profile. Importantly, cardiovascular adverse events, including serious adverse events, was similar between groups. And consistent with our prior experience, we've seen no cases of osteonecrosis of the jaw or atypical femoral fractures or osteosarcoma in prior TYMLOS-treated patients.

We're looking forward to providing more details of the results from ACTIVExtend at the upcoming ASBMR scientific meeting, and we also expect to submit a supplemental NDA with this 43-month data in the second half of 2017. We believe that this additional data from ACTIVExtend validates a new treatment paradigm, highlighting the potential benefit for sequential treatments, with these results confirming that the early and significant fracture risk reduction seen for TYMLOS can be sustained for years when followed by alendronate.

I'll now turn the call over to Greg Williams, our Chief Development Officer.

Thank you, Gary, and good afternoon. I'd like to update you on the status of our European MAA for Eladynos, or abaloparatide injection, which is approved in the US as TYMLOS.

As Jesper mentioned, we've has a setback on Eladynos with the CHMP. As we've previously disclosed, on July 21 the CHMP issued a second Day 180 list of outstanding issues, and we were not expecting these additional questions.

This second list of 180 Day questions includes 2 major objections related to our inclusion of data from 2 clinical trial sites that, based upon EMA inspection findings, are not considered to comply with good clinical practice, or GCP, requirements. If these data are excluded, the statistical power of our submitted clinical data is reduced, impacting statistical significance and the overall benefit/risk assessment. These questions include requests for additional data analyses related to the safety and efficacy of Eladynos, and we are working collaboratively with the rapporteurs and CHMP to address their questions.

We have maintained full transparency with the FDA through their review and approval of the TYMLOS NDA. The FDA's assessment of TYMLOS included thorough and independent statistical analyses and GCP inspections at key clinical sites. Although we continue to believe that Eladynos will be approved in Europe, there are sometimes regional regulatory challenges to overcome. And based on this second list of 180 Day questions, we now expect the CHMP to issue an opinion on the MAA before the end of 2017.

And now back to Gary for the elacestrant update.

Thanks, Greg. At ASCO in June we had the opportunity to provide an exciting update on the progress of our ongoing US Phase I clinical study with elacestrant. This was in patients with advanced and metastatic breast cancer. This study enrolled a heavily pretreated patient population that had progressed after multiple rounds of prior hormonal therapy and included many patients that had been previously treated with fulvestrant and CDK4/6 inhibitors, and about 50% of these patients had ESR1 mutations.

Among patients with measurable [Cs] we saw a highly encouraging 23% objective response rate and a median PFS of 4.5 months -- and, notably, a significant number of patients who were still on treatment -- together with a favorable tolerability profile and no DLTs reported.

Based on the progress with our elacestrant program, we met with the FDA to discuss and align on the next steps in the development of elacestrant. This was an engaged and productive discussion, and we gained alignment on defining the design of a Phase II clinical study. This will be a single-arm monotherapy study with 400 milligrams of elacestrant once daily, which would enroll under 200 patients. And the primary endpoint for this study will be objective response rate coupled with duration of response.

Based on discussion with the agency and pending review of the totality of this data by the agency, this Phase II study could be considered to be a pivotal study to support accelerated approval. We are very excited by the progress of the elacestrant program, and we'll provide more details on the design of the Phase II study when it's initiated, which we expect to occur in early 2018.

I would now like to introduce our CFO, Pepe Carmona.

Thank you, Gary. For the 3 months ended June 30, 2017, Radius reported a net loss of $68.4 million, or $1.58 per share, as compared to a net loss of $43.4 million, or $1.01 per share, for the 3 months ended June 30, 2016. The increase in net loss from the 2016 period to the 2017 period was primarily due to an increase in selling, general and administrative expenses, which now includes a fully staffed commercial organization that was recruited in the first quarter of 2017. This increase was partially offset by a decrease in research and development expenses as our major clinical programs wind down.

If you see the same figures on a non-US GAAP basis, which excludes share-based compensation, you can see a similar trend, but the net loss is lower, which hopefully provides more clarity on our cost structure. You can see the reconciliation between GAAP and non-GAAP in the footnote.

We're excited that we're now a commercial company and have reported our first month of sales. So these figures represent just one month of shipments, discounted by gross-to-net adjustments. Our revenue recognition policy is in line with US GAAP, and it is described in our quarterly report on Form 10-Q that we filed today.

Our gross margin includes a 5% royalty and cost of products sold, which you should expect to be in the mid- to low-single-digit range.

We are allocating our resources in accordance to our strategy, which is to drive TYMLOS growth and continue developing our pipeline. Our cash, cash equivalent and marketable securities balance as of June 30, 2017, was $215 million. In the second quarter, we paid a milestone related to the approval of the TYMLOS NDA of $9 million. We paid for external R&D investment of $7 million and invested in TYMLOS commercialization in selling, general and administrative expenses of $44 million.

We believe that prior to the consideration of proceeds from partnering and our collaboration activities, we have sufficient capital to fund our development plan, US commercial and other operational activities for not less than 12 months from today's date.

Radius is well positioned to create value for shareholders. We operate in large and financially attractive categories.

In osteoporosis we now have access to the 2 largest anabolic markets in the world. Under the Teijin agreement announced on July 13, Radius will receive an upfront payment and milestone for up to an aggregate amount of $50 million and a low-double-digit royalty rate. Radius also successfully negotiated an option to co-promote abaloparatide-SC in Japan and maintained the full global rights for abaloparatide transdermal patch.

In oncology, elacestrant is poised to potentially play an important role in a large metastatic market. The new ACTIVExtend results provide further differentiation of TYMLOS and, as you heard from David, our differentiated data and responsible pricing strategy is being very well received by payers, physicians and patients. We're excited and focused on driving elacestrant on an economically sound regulatory pathway on a speed-to-market strategy.

Finally, we have a strong economic structure. Our gross margin in TYMLOS is around 90% and should slightly improve as we grow the business. We have a lean cost structure which is fully staffed to commercialize TYMLOS. Radius' balance sheet is strong, and we have no debt.

From a tax perspective, as of the end of 2016 we had $527 million of net operating loss carryforwards available to offset future taxable income. On a forward-looking tax strategy basis, the company created an entity in Bermuda, Radius Pharmaceuticals Ltd., supported by the outsize US elacestrant IP that provides significant financial benefits for elacestrant international.

I will now turn the call over to Jesper to provide final remarks.

Thanks, Pepe. As you have just heard, we have achieved several important milestones, and we anticipate reporting on our continued progress over the coming year. We look forward to meeting with many of you at upcoming conferences and events in the coming months.

I now would like to open up the call for your questions.

(Operator Instructions) Our first question comes from the line of Jessica Fye, of JP Morgan.

I have a couple. First, can you elaborate on what threshold the FDA wants to see superiority to when they talk about looking at the response rate and duration of response for the elacestrant study you mentioned? How soon would you be able to start that potentially pivotal study?

Second, for the patch update you alluded to before year-end in the press release, can you give us a framework for how to think about what types of things you might communicate then? Is this we're going to hear plans and timelines for starting a bioequivalent study? Or just a manufacturing update? Or something else?

On the CHMP topic, what percentage of the patients in the ACTIVE study were enrolled at the sites that you mentioned that the CHMP is taking issue with?

And lastly, just a financial question. Can you talk about how you think about operating expenses for the back half of the year? Given that the sales force was fully hired as of, I think, the end of 1Q, should we look at 2Q as a good run rate for the back half?

That was a lot of questions, but I'll try to delegate (inaudible). The first one that will be speaking to it is Gary.

So not to take them in the exact order you asked them, but you asked about the start of our upcoming Phase II study. The team is working very actively on working towards that study as rapidly as possible. We expect that study to be initiated in early 2018.

In terms of the threshold for the endpoint for this study, at this point we're not guiding on the target's ORR, but both Radius and the FDA agree that substantial improvements in efficacy and/or safety against other treatment options will be needed to be demonstrated. In this heavily pretreated patient population, we've already seen impressive response in patients who have failed both fulvestrant and CDK4/6 inhibitors. And in the opinion of Radius and key opinion leaders, we've been very encouraged by the emerging efficacy profile, and we'd be looking to see how the data evolves in the next study.

And then, Pepe, if you'll comment?

So we do not provide guidance at this time, but it is fair to assume that from an SG&A perspective we are fully staffed, as I said before and as you said, as well. So from a TYMLOS perspective we are probably more stable from an R&D perspective. Some programs are going to wind down and, as you know and have seen, some others are going to start ramping up. So I don't see major changes going on from a total expense or operating expenses perspective.

Jes, I think you also had a question about the transdermal patch program. I can certainly address that one. We're continuing to be very focused on the ongoing optimization of the patch, with the goal of achieving bioequivalence at the Subcu injection.

As we've previously described, our focus at this point is primarily upon the completion of a series of CMC activities that will be needed to support that pivotal bioequivalent study.

We plan to provide a further update on the progress with this program before the end of this year.

This is Greg Williams. Regarding the CHMP question, so thank you for the question. And first I'd like to let you know we remain confident in the integrity of the ACTIVE and the ACTIVExtend data, and we were surprised by the second set of 180 Day questions. We believe that it's important to be transparent with our investors, and we continue to expect that Eladynos will be approved in Europe.

With respect to the 2 sites, about 50% of the ACTIVE population would be impacted if we exclude those 2 sites from future analyses. However, we have seen consistent and favorable effects in fracture reduction across all the clinical sites. We look forward to working with the rapporteurs and the CHMP in addressing their questions, and we look forward to an opinion before the end of this year.

Thank you, Greg. I hope that answers your questions, Jessica.

Our next question comes from the line of Mara Goldstein, of Cantor Fitzgerald.

So I wanted to ask, you made the statement in the opening remarks that Japan and the US are 80% of the anabolic use, which would leave 20% in the rest-of-world territories. And so I wondering, a, if the limited use relative to other regions is perhaps affecting the regulatory process to some degree, given the statement about clinical risk benefit. And separately, from a commercial perspective as it relates to licensing and with limited use of anabolics today in Europe, what's the commercial proposition to a potential licenser?

I think we'll start out with the commercial, and then we'll answer your first question. So, David?

I'll just give you a viewpoint. Japan is a really interesting anabolic market. It's well developed. There are a lot of patients. The diagnosis and treatment and overall utilization of anabolics there is quite strong, and it's probably somewhere in the neighborhood of a $600 million market.

The situation in Europe is quite interesting, because anabolics are in total Europe probably in the $250 million range. However, the number of patients there who are anabolically appropriate patients is quite substantial. In fact, there's 3 million fractures a year across Europe. It's just a process, as you know, of the regulatory filing, getting your reimbursement aligned, being able to work in that process. So it's not quite as strong in terms of representation compared to Japan or the US, even.

But clearly, having very strong data, working with the various [ORR] organizations (inaudible) in total, and that would certainly -- given where we have, the information we've got around TYMLOS, or Eladynos, we feel very strong about the value proposition that we would be presenting there, and that certainly would be meaningful to a partner.

Thank you, David. Mara, I hope that covered. And now back to your first question, the regulatory implications, and Greg will answer that.

Sure. Mara, could you please just repeat your question so I'm crystal clear on what I (inaudible)?

So I was just curious, just given the use of anabolics in Europe is less than you would see in the rest of world and the statements made around the risk/benefit given the issue with these trial sites not being compliant with good clinical practices, and so if the European -- I guess I'm just trying to understand whether the issues around the data generated is really a function of what the data says in those trial sites or there's just less familiarity, broadly, with anabolics and that's playing into the regulatory questioning?

Right. So as we mentioned, the major objections pertain to the 2 clinical trial sites that based upon EMA inspection findings were not considered to comply. We don't believe that there's any

other implications globally, and we look forward to continuing to become a global franchise with abaloparatide.

And Mara, just to close on the European situation, the reason why the European market is relatively low is due to the pricing situation in Europe that we'll find today.

Okay. And if I could just ask a question on elacestrant and the Phase II trial, is it anticipated that that Phase II trial population will essentially mirror what we've seen in the Phase I? And do you think you'll be able to start dosing before the end of this year?

I'll let Gary answer that.

I'll answer the last part first. So we're guiding at this point that we would start the study in early 2018. But of course, importantly, we are very excited to have been able to align with the FDA on this potential, this next clinical study.

Certainly, I think we absolutely appreciate that investors are keenly interested in the specifics of the Phase II design and the population that we're targeting, and of course those details will become available on both clinicaltrials.gov and by press release once we've begun the study. But of course in support of a speed-to-market strategy, I'm sure you can appreciate that it's not in our best collective interests to really tip our hand to the competition who could potentially tie up patients. So, again, we'll be looking forward to providing more details on the design of the Phase II study once the study is initiated.

Our next question comes from the line of Ying Huang, of Bank of America.

Thanks for that clarity about the CHMP. That's really appreciated. But I want to ask a couple about that. First, can you clarify if the US FDA actually inspected any of those 2 sites that are questioned by CHMP? And then, secondly, hypothetically if you did exclude the data from those 2 sites, I assume the p-value would not have reached the hurdle. I assume that, but can you clarify on that?

And then I have another question on TYMLOS formulary access. We saw that you have the preferred status with Express Scripts. Can you talk about whether you're also planning to sign with other payers or PBMs similar preferred formulary access with TYMLOS?

I think we'll let Greg take the first one and then David the second one.

So we expect that the EMA review of the Eladynos MAA will have no effect on TYMLOS. We've maintained full transparency with the FDA through their review and approval of TYMLOS, and the FDA's assessment of TYMLOS included thorough and independent analyses as well as GCP inspections of key clinical sites.

With respect to the possibility of p-values changing as a result of reduced power if we remove a certain number of patients, yes, that's a possibility. And we are continuing to perform additional analyses, and I'm not able to give you any further clarity at this point. We're going to be working with the rapporteurs and the CHMP to address their questions, and we'll let you know when we know more.

Ying, it's David. Related to the Express Scripts, they've already made an independently made decision to add TYMLOS to this national preferred formularies. We're really pleased to have that, as we're both aligned around providing better access and appropriate therapies for reducing out-of-pocket costs and, particularly, in the Part D segment, as well. I think that's a big focus for us.

We don't necessarily see payers broadly choosing to go down this path due to the relatively low spending in the osteoporotic category and given the fact that we're talking about a specialty tier. But as with ESI, I think that's a decision that other payers could make, as well. And again, they'll be making their decisions. I think we've gotten very good response from payers thus far.

(Operator Instructions) Our next question comes from the line of Chris Shibutani, of Cowen.

First, a question on TYMLOS. Can you just comment on what kind of gross-to-net pricing we should be thinking about at this stage and kind of in the near term?

Pepe will answer that one.

In the 10-Q, we explain our revenue recognition methodology, which is in line and in compliance with the US GAAP and ASC 606 guidance. The specifics on discounts and rebates are not going to be disclosed as it is too early on the launch plan. In due time we may decide to provide more clarity in terms of the income statements, but right now it's too early on the launch to make those disclosures.

Okay. Then if I could switch over to ask some questions about elacestrant. In your press release when you talk about the feedback from the FDA, the Phase II study and the single-arm study, it sounds as if you have what you said "objective response rate, coupled with durability of response." Does that mean that those are co-primary endpoints?

No, they would not be co-primary endpoints. But of course the agency's view is that duration of response is an important part of the way that we look at the total study data.

Great. And then you further comment that you will be looking to understand the available therapies at the time that this study will be completed. So in the future it kind of begs the question of whether or not you're giving consideration to combination studies. Can you comment on any plans to initiate combinations, in particular, for instance, with CDK4/6 inhibitors?

So right now our primary focus remains on the speed-to-market strategy as a monotherapy in third line. Based upon the existing data we have from our ongoing Phase I, we believe that that is very powerful and very important data that demonstrates potential benefit in that patient population. Remember, that patient population is one that has seen multiple lines of endocrine therapy. Many of the patients have seen fulvestrant. Many of them have seen CDK4/6 inhibitors.

And as we look at the emerging landscape, we can expect -- when we're seeing earlier use of fulvestrant and increasing use of CDK4/6 inhibitors, we can see that the patients whose disease has progressed there is a need for agents that are effective after fulvestrant, other endocrine agents and CDK4/6 inhibitors. Our current Phase I data I think demonstrates that there is a potential benefit for elacestrant as a monotherapy there.

Great question about the potential combination. We see actually the opportunity for elacestrant being even greater than just the late-line monotherapy. We're certainly interested in earlier lines of treatment with elacestrant as a combination agent. So thanks for the question.

Our next question comes from the line of Eun Yang, of Jefferies.

A question on the Japan partnership with Teijin. You guys have said that you would receive upfront milestones and royalties. So when do you expect the upfront payment? And what are the events related to milestones? And what's the royalty rate?

The upfront payment is going to be reflected in our Q3 results. So there's -- I hope that you can wait for that to be in the disclosures. And the following milestones are going to be disclosed at that time, as well. So everything will come pretty soon. The royalty rate is in the low-double-digit rate. For now, we have agreed not to disclose further than that with Teijin.

Okay. And then on 1901, in the press release it says that when you start the Phase II study you will continue to pursue additional pathways to accelerate approval. So can you kind of elaborate on what are the additional pathways?

I think, as we've already said, we are very encouraged by the emerging data for elacestrant. We're very encouraged by the interaction we've had with the agency so far. Of course the agency provides multiple different pathways for further engagement and opportunities for us to work closely with the agency. With the data set we have in hand, we believe there are multiple different ways of interacting with the agency, and of course as that occurs we'll provide further updates.

And I'm showing no further questions at this time. I'd like to hand the call back over to management for any closing remarks.

Thank you to everyone that listened in. Thank you for your interest in Radius Health. I look forward to meet all of you or many of you on the one-to-one we're going to have at the upcoming events. The first one that I will be participating in is on the 9th of August, at the Canaccord conference.

So, once again, thanks for listening in and look forward to see you all.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's program. You may all disconnect. Everyone, have a great day.