Radius Recycling Inc (RDUS) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Radius Health Fourth Quarter and Full Year 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Elhan Webb, Head of Investor Relations. Ma'am, you may begin.

Thank you, Shannon. Good afternoon. Good evening, and thank you all for joining us on the conference call and webcast for Radius' fourth quarter and full year 2017 financial results and business update. Joining me today are Jesper Høiland, President and Chief Executive Officer; Joe Kelly, our Senior VP of Sales and Marketing; Gary Hattersley, our Chief Scientific Officer; and Pepe Carmona, our Chief Financial Officer.

Before we begin, I would like to remind you that 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 Annual Report on Form 10-K for the period ended December 31, 2017, and other reports filed with the Securities and Exchange Commission. Any forward-looking statements represent our views as of today, March 1, 2018 only. A replay of this call will be available on the company's website at www.radiuspharm.com, and you can find the dial-in information for the conference call replay in today's press release as well on the company's website.

Today's agenda is intended to provide you with a review of what we accomplished in 2017, an update on the TYMLOS launch, our fourth quarter and full year 2017 financials and update on our development plans for our abaloparatide patch, elacestrant and upcoming corporate milestones.

At the end of the call, the management team will be available to answer questions.

I'd like to now turn the call over to Jesper Høiland, Radius' President and Chief Executive Officer. Jesper?

Thank you, Elhan. Welcome, everybody, and thank you for joining us today. As many of you may already know, we brought on Elhan Webb as our new Head of Investor Relationships and External Communications at the beginning of this year.

She comes to us with a considerable global experience, working with both the sales side and buy side analysts as well as her experience as an investment portfolio manager. We are very happy to have Elhan on board.

On Slide #5, you will see that Radius achieved a lot in the year of 2017. It has been a transformational year for Radius Health, becoming a fully integrated commercial biopharmaceutical company committed to bone health and oncology through innovative therapies.

A few of our most significant achievements were the FDA approval and subsequent the U.S. consolidation of abaloparatide subcutaneously, named TYMLOS, a bone-building agent for the treatment of postmenopausal women, osteoporosis at high risk of fracture.

The initiation of our Phase I clinical trial for RAD140, a serum for the potential treatment of hormone receptor, positive breast cancer and the FDA Fast Track designation granted for elacestrant and all investigational search for the treatment of women in metastatic breast cancer.

Further, we ended the year with $430 million in cash and the balance sheet strength to support our future growth and plans. We have also built a strong commercial organization to establish TYMLOS leadership.

Finally, our successes will not be possible without the passion and dedication of our talented employees, and of course, the strong support of our investors. And I want to take this opportunity to thank all of you for your commitment and support. With our new management team in place, we will continue to build on the momentum with several key initiatives on the way to accelerate the advancement of our pipeline, establish a strong foundation to maximize our commercial potential and to continue to build shareholder value.

Slide #6. As you can see, we are well on the way to successfully penetrating the osteoporosis anabolic segment to become the #1 leader in the market. Our intention here is to expand further geographically by partnering outside of the U.S. while we focus our commercial efforts in the U.S. market. We are actively working on expanding and differentiating the TYMLOS label so that we can reach a leadership position in the osteoporosis market. We expect that TYMLOS patch to disrupt and significantly expand the anabolic osteoporosis market as well.

Today, we are announcing our path forward for the development of the abaloparatide patch after the alignment meeting with the FDA and our strategic partnership with the 3M Company. Gary and I will discuss this more in detail later on in the presentation.

In oncology, Radius continued to gain a foothold in breast cancer through elacestrant, a potential backbone hormonal therapy. Our focus is to initiate a study in third-line therapy and engage in collaboration agreements, further develop in earlier lines of therapy. We will be focused on the commercialization in the U.S. by partnering outside of the U.S. Additionally, we will continue to fuel our breast cancer pipeline with RAD140.

Today, we are also announcing that based on the feedback from FDA and EMEA, we have decided to initiate the compares of Phase II trial, potentially, a pivotal study, to support global registration. We believe elacestrant is the leading SERD in the development and has the potential to maximize its value through the global clinical and regulatory pathway.

And here on Slide #7, you're going to see that we recently announced our commercial leadership changes with the appointment of Joe Kelly, our Senior Vice President of Sales and Marketing and the promotion of Amanda Mott to Senior Vice President of Market Access. Those 2 will drive execution of our sales and marketing strategy to best position TYMLOS as the market leader.

Joe has over 20 years of experience in sales and marketing in the U.S, a proven track record in growing billion dollar businesses and successfully launched several products that achieved market leadership.

With more than 25 years of an industry experience in the U.S., Amanda has demonstrated a tremendous knowledge of the PR landscape and expertise in setting and executing on our market access strategy. She has managed several portfolios in leading pharmaceutical companies and achieved a #1 market access positions in the U.S. We hope you will have the opportunity to introduce both of them personally to you in the near future. I will now turn over the call to Joe Kelly to give you a commercial update. Joe?

Thank you, Jesper. I'm pleased to provide the full year 2017 TYMLOS performance update covering the brand in its ninth month of market availability. Our commercial teams remained focused on achieving anabolic market leadership, and throughout the launch process, we kept the strong focus on key opinion leaders and top prescribers in the osteoporosis space where we have gained most of our market share to-date.

On Slide 9, the response of TYMLOS from physicians, payers and patients has been very positive. Since launching TYMLOS in May of 2017, we've been collecting feedback from anabolic prescribers to gauge their perceptions of the product as compared to other treatment options. As part of our customer surveys, which tracks awareness, trial and usage of TYMLOS amongst targeted physicians, we've learned that current prescribers highlight key attributes of the product, which they perceive as being meaningful and differentiated from other available therapies. These include rapid onset of action and convenience for patients due to carry and storage.

On the next slide, I'm also pleased to share that we continue to see growth and manage market access across all segments as coverage increased to 259 million total coverage lives.

Since the launch of TYMLOS, we see a shifting of the anabolic patient mix towards commercial, where TYMLOS coverage in 9 months exceeds FORTEO's after 15 years on the market.

For Medicare Part D, products approved after the second quarter are not part of the standard Part D bidding process and require off-cycle reviews.

We are pleased to report that TYMLOS has already covered for 41% of lives through these off-cycle reviews due to its clinical profile, combined with savings for patients. And this includes coverage on UnitedHealthcare, the nation's largest Medicare Part D insurance plan. We are actively working with our managed care customers on Part D coverage in both off-cycle reviews and the 2019 standard bidding process. We look forward to sharing more wins when contracts are finalized.

On Slide 11, in addition to the exclusive win at ESI that went into effect January 1, TYMLOS is now the preferred anabolic agent on AETNA, Prime and Healthcare Services Corporation, also known as HCSC. Each having TYMLOS listed at their preferred anabolic for new patients, also as of January 1 of this year.

Because of these decisions, TYMLOS is now preferred for approximately 30% of the total anabolic bone volume in commercial. Performance wise, we are capturing patients with ESI book of business in alignment with expectations and seen growth in the non-ESI and Medicare Part D plans. For 2018, we'll continue to be focused on market share growth across all segments of business.

On the next slide, our top TYMLOS prescribers are coming from our most important customers in the top 200 and Tier 1 segments, which make up about 7,000 providers. With our strong focus on consistently calling on the highest potential healthcare providers in osteoporosis, results have been that 88% of TYMLOS business to date is coming from this important tier.

We've also built out our promotional speaker's bureau from 50 key opinion leaders to over 70, who have local, regional and national influence within the osteoporosis space.

Slide 13 shows that, prior to the second quarter of 2017, the anabolic class has been in decline for 5 years, what we see now is quarterly volume growth from 3% to 6% over the last 3 individual quarters, with our efforts across the commercial team in promoting TYMLOS, we are playing a significant part in the growth of the anabolic segment.

Also important, is when we look across the TYMLOS prescribers, we found new or returning writers account for 12% of total TYMLOS volumes to date. Since we are in the early stage of the launch, it's too soon to project market and new prescriber growth, but we do see this as encouraging signs of market potential.

On Slide 14, we're also seeing an acceleration in our ability to acquire new patients, as reflected by our NBRx trend, which has more than doubled since the beginning of November of last year. With NBRx being a lead indicator, we expect to see continued anabolic share growth as we improve coverage and get more time with healthcare providers who are active in treating their patients with osteoporosis.

In summary, our number one priority is to continue executing the launch of TYMLOS in the U.S. and to establish Radius as the market leader in the anabolic osteoporosis space.

We will continue our focus on strong execution by the commercial team and drive TYMLOS market share growth where we have formulary coverage with key commercial and Part D payers. We believe success in these efforts will drive sustainable growth for the organization, which, in turn, is beneficial for shareholders, and of course, the patients we serve. So thank you. Now I would like to turn over the call to Pepe Carmona to go over the fourth quarter and 2017 financials.

Thank you, Joe. This is our 2nd full quarter reporting TYMLOS sales. The 3 months ended December 31, 2017, Radius reported net sales of $7.7 million and a loss of $71 million or $1.59 per share, as compared to a net loss of $53 million or $1.22 per share for the 3 months ended December 31, 2016. The $7.7 million sales figure represents 3 months of shipments, discounted by gross-to-net adjustments. Our revenue recognition policy is in line with U.S. GAAP and it is described in our Form 10-K.

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, and noncash interest from the convertible note. You can see the reconciliation between GAAP and non-GAAP in the appendix. Radius, on a non-U. S. GAAP basis, for the same period, reported a net loss of $61 million or $1.38 per share as compared to a net loss of $45 million or $1.05 per share for the 3 months ended December 31, 2016.

I would like to highlight 3 points: First, our gross margin was reported at 92%, which includes a 5% of [Royal]. Second, the slight decline in R&D expenses versus Q4 2016 is driven by the reduction of the abaloparatide-SC study expenses.

Last, the SG&A increase is driven by the ramp-up in support of TYMLOS commercialization and some our back-office support functions. We are now a fully staffed commercial company, with over 200 sales reps working in the field, and approximately 20 on the sales, all working to support TYMLOS.

As we have said to you before, we are allocating resources in accordance with our strategy, which is to drive TYMLOS growth and continue advancing our pipeline.

Turning to Slide 17. We show our cash, cash equivalents and marketable securities dollars as of December 31, 2017, which was $430 million. In the fourth quarter, we reduce our cash balance by $38 million, most of the uses of cash was for the TYMLOS commercialization and R&D external expenses related to the ramp-up of the products in our pipeline. We have cash inflows from TYMLOS revenues and from the Teijin deal, from which, we recognized the license revenues in Q3 2017, but the actual cash was collected this quarter.

Finally, I would like to leave you with a thought that at the end of 2017, Radius is in a strong financial position. We have sufficient capital to fund our key development plans, U.S. commercial and other operational activities.

Moving to Slide 18. Let me quickly show you how we transform the company throughout the quarters in 2017. You can see that in Q1, we hired most of the commercial organization, which had a full quarter impact into Q2.

Then in Q2 of 2017, we launched TYMLOS and started to invest in promotional material, which was fully ramped up by Q3. Then, in Q3 of 2017, we started buying material and pay our CRO to prepare the elacestrant Phase II study. And finally, in Q4, we initiated investment to prepare the Male OP study and have some one-off legal IP and swing item cost. We are a fully staffed organization, so you can see that our personnel costs are relatively stable in the last 2 quarters of the year. I look forward to your questions at the end of the call.

With that, I will pass the call to Gary for the update on the clinical pipeline.

Thanks, Pepe. As shown on Slide 20, we are continuing to support both lifecycle management for TYMLOS and our oncology programs for elacestrant and RAD140.

For TYMLOS, as we have previously guided, we continue to expect a CHMP opinion on our MAA submission in the first half of 2018. We are initiating a male osteoporosis bridging study in the first quarter of 2018, which will be a randomized double-blind placebo-controlled study that would enroll approximately 225 men with osteoporosis.

The primary endpoint will be changed in lumbar spine BMD at 12 months and pending positive outcome from the study, this stage would be the basis for a supplemental NDA submission to seek an expanded TYMLOS label.

We are also initiating a short-term bone histomorphometry clinical study in the first half of 2018, and believe the study will provide important information to enhance our understanding of the early anabolic effects of TYMLOS, and the relative contribution of bone remodeling and modeling to its anabolic bone-building activity.

And today, we'll provide a significant update on the developments of the abaloparatide-type patch, following alignment with the FDA, and completion of the collaboration and supply agreement with 3M.

But first an update on the clinical development plan for elacestrant. At the recent San Antonio Breast Cancer Symposium in December, we provided a significant update on our ongoing Phase I study with elacestrant. In this study, which enrolled a heavily pretreated patient population, we reported a 27% ORR, a 47% CBR and a 5.4-month PFS.

Importantly, responses were seen in patients that have previously received fulvestrant, CDK4/6 inhibitors and in patients with ESR1 mutations. Elacestrant was generally well tolerated with the most common adverse events that were low-grade nausea, dyspepsia and vomiting.

We believe this data continues to be strongly supportive of the advancement of elacestrant to potentially pivotal Phase II study. Before providing details of the study, it's important to find some further context for our data, as shown on Slide 22. When we look at responses -- response rates to in a hormonal agent in the late line setting, for example, with fulvestrant in the BELLE-3 study, which represents a third-line patient population, there was a 2.1% response rate. And even in the second line population, in studies like PALOMA-3 and SOFEA, the response rate was less than 10%.

Similarly, for PFS, as shown on Slide 23, our Fulvestrant in the third line setting achieved a 1.8-month PFS. And in the second line population, the PFS was less than 5 months. So based on our -- based on our updates at San Antonio in December, we remain very encouraged by the potential for elacestrant.

As is typical in clinical development programs, we've recently had further engagement with the FDA around potential pathways to registration. And while the single-arm study, together with the confirmatory study remains an option, our strategy has been to have a pathway that supports both global approval. So we will -- we instead, intend to conduct a randomized comparator-controlled study. This is a well-established part that could support registration for elacestrant as a third-line monotherapy.

We've also engaged the MAA and received feedback for the comparator study, they also support EU registration. This study will enroll approximately 300 patients with estrogen receptor-positive, HER2-negative locally advanced metastatic breast cancer that will be randomized to receive either elacestrant or investigated choice of hormonal agent with PFS as a primary endpoint.

We'll provide more details on the Phase II study when it's initiated, which we expect to occur in the second half of 2018.

Based on the emerging clinical and preclinical profile for elacestrant, we see significant opportunity not only in the third line setting, but also in earlier lines of therapy, either as a monotherapy or in combination with other targeted agents. I partly intend to pursue through strategic collaboration agreements.

At this point, I'd like to switch focus and provide an update on the abaloparatide patch. We are pleased to report significant progress with our short wear time patch program, which is a key component to extend the TYMLOS franchise, which could provide an alternative to self-injection and a potential to enhance patient convenience.

Our strategy is to bridge the patch to our approved TYMLOS product, based on the BMD study. This is an established pathway to registration in osteoporosis, and one that provides important pharmacodynamic, long-term safety and patients experience data for the patch. It's also worth noting that the timelines to NDA submission is similar for either a BMD or PK bioequivalence strategy.

We've aligned with the FDA on the pathway to support bridging and we have also completed a collaboration of supply agreement with 3M. And yes, we will provide more details on this agreement later during this call.

So in January, we met with the FDA to discuss the development pathway for the patch. Those agreements on a single pivotal BMD noninferiority study, which will be a 2-arm study with one-to-one randomization of patients to receive either abaloparatide subcu or the patch, and the primary endpoint will change in lumbar spine BMD at 12 months.

Importantly, we have aligned on study power, sample size, and noninferiority margin as well as on the supported clinical and nonclinical studies required for NDA submission. We expect this pivotal study to initiate in mid-2019.

The noninferiority margin is based on preserving 75% of the treatment's effect of the active comparator, based on the lower bound of the 95% confidence interval.

So using our Phase III active data set as an example, where the mean change in lumbar spine BMD at 12 months was 9%, with a lower bound of 8.5%, to preserve 75% of the subcu treatment effect, the BMD, 95% confidence interval with the patch, would need to be greater than 6.4% to achieve noninferiority. Our recent focus has been on the continued optimization of the patch to achieve comparability to subcu.

As previously reported, our first prototype patch established the suitability and tolerability of this patch technology, with over 36,000 individual patch applications made to over 250 patients. But due to the highly versatile pharmacokinetic profile of this patch, BMD efficacy was sub-optimal compared to subcu.

Our second prototype patch introduced formulation technology, which was able to significantly enhance the pharmacokinetic profile with delayed Tmax, extended half-life and increased exposure. We have now completed optimization of the patch, which has been achieved through finalization of formulation, process optimization, selection of dose and introduction of new applicator.

As shown on Slide 31, this optimized patch achieves the target profile by further increasing half-life and exposure relative to earlier prototype patches. And importantly, as shown in the summary of clinical data in the table, now achieves the same exposure as subcu.

To evaluate the potential for this optimized patch to achieve BMD noninferiority, we work with a third-party PK/PD modeling and simulation company to develop and exposure-response relationship model, using our extensive Phase III active BMD and PK data set. This approach established a clear relationship between BMD and exposure. So together with our optimized patch data, this allows an estimation of BMD gains and thereby enables an estimation of the probability to achieve noninferiority.

Slide 33 shows the time course of predicted BMD gains of lumbar spine for subcu in orange and for the optimized patch in green, with both mean and 95% confidence into a value shown.

Also shown on the figure, is the BMD noninferiority bar at the 12-month time point. We believe this analysis predicts a high probability of success for the patch to achieve noninferiority in a 12-month BMD study.

At this point, we are continuing to focus on commercial manufacturing scale of activities for both the patch and the applicator, together with the supported clinical and nonclinical activities in preparation for the pivotal study and NDA.

CMC preparation of manufacturing of clinical supplies and now key activities to support the initiation of the pivotal Phase III study, which we expect to occur in mid-2019, with study completion in 2020.

At this point, I'd like to pass the call over to Jesper to provide comments on the patch opportunity and the collaboration agreements.

Thank you, Gary. I'm sure you can appreciate the excitement we had at Radius for the development of the patch. We believe it has the potential to disrupt and grow the anabolic market.

On Slide 35, we like to share with you some of the qualitative research we have performed with patients, physicians and payers. We have received consistent responses that needle avoidance is a significant issue as limit initiation and continuation of the anabolic therapy. There is a strong preference for patch versus an injection. Patients don't just fear injections, per se, they fear what injections represent, which is a serious illness. Patients will be much more willing to use a non-injectable anabolic treatment, because they feel a less -- lack of sickness and they're willing to confront their condition, rather than deny severity. Some physicians, notably PCPs, who don't currently prescribe injectable anabolics indicated their willingness to prescribe a patch rather than referring the patients to specialists. They felt by providing the option of a patch versus an injection, they would be able to convince many of their high-risk osteoporosis patients to start and stay on anabolic therapy and receive bone-building benefits.

And on Slide 36, you can see why we believe the -- abaloparatide patch, if approved, can change the treatment paradigm and expand the anabolic market significantly. We see a large opportunity to expand the treatment for osteoporosis patients with anabolic therapy, not only to the patients with prior fracture, but also to patients who are at high risk of fracture. All have failed, all have become intolerant to other available osteoporosis therapies.

For physicians, our analysis reveals that the current, only 17,000, physicians prescribing anabolics, with the majority of being specialists. With the introduction of the patch, we will be able to catch a high volume osteoporosis prescribers and substantially expand our prescriber base. As you can see on the right side of the slide, anabolics is not the major expenses for the payers. Based on feedback from payers, the patch would be a valuable as it has the potential to improve patient compliance, outcomes and defray fracture costs. Patch provides an opportunity to bring innovation and to be appropriately valued in the market. The osteoporosis market is valued at almost $3 billion.

We are currently very excited to announce that we have recently entered into the worldwide partnership agreement with 3M for the exclusive manufacturing and supply of the abaloparatide patches and the key terms for the agreements are shown here on Slide 37. In collaboration, we will cover certain capital expenditures entered by 3M to set up the commercial manufacturing facility. After launch, 3M will supply us with throat patches at cost-plus basis, in a tiered pricing structure, and will be entitled to a mid- to low single-digit royalty on worldwide net sales of the abaloparatide patch.

So to conclude, we are extremely excited to be moving forward with the development of our abaloparatide patch, having achieved an alignment with the regulatory path with FDA and collaboration agreement with 3M, the applied science leading innovator.

The abaloparatide patch, if approved, has the potential to provide benefits of bone-building therapy to many more osteoporosis patients. We see the patch as an important value driver for Radius, expanding the anabolic market and extending the abaloparatide franchise potentially up to 2037.

As you can see on Slide 40, we anticipate many inflection points that will significantly impact Radius going forward. So we expect 2018 to be very exciting for Radius with TYMLOS progressing towards market leadership and further advancing our pipeline. I would like to thank you all for your interest and support in Radius Health, and I would like to ask that we open it for calls now.

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

I want to ask a couple about the elacestrant study. Specifically, can you help us think about what you expect the mix of dealers' choice and the current therapies to be in that trial? And then your patients have seen aromatase inhibitor early on, potentially assert in the second line, what do you expect them to be randomized to in the control arm of your study? And then in addition, I think you mentioned an interim look in that one. Can you talk about, when you project that might occur from the timing standpoint or what number of patients or progression events would be -- would trigger that interim?

Thank you, Jessica. I will have Gary to answer.

Thanks, Jess, for the questions. At this point, we're not providing guidance on the details of the study. That is something that we'll do once the study has initiated in the second half of this year. But certainly, when we look at the types of hormonal agents that are used in a late line setting there is relatively small number of options. And of course, as I think we try to highlight with some of the data here and at San Antonio, when we look at the response rates and the PFS for those hormonal agents in the late line setting, I think we have a very good handle on how they perform, and I think it makes us very encouraged that elacestrant really has the potential to perform very well against the comparator. But again, we will provide more details when this study is initiated. We have guided that we are intending to perform an interim analysis. At this point we're not providing any further detail around when that patent information may be available.

Okay. And maybe just following up on that, I -- they're calling your Phase I patients had seen a [number] of prior therapies, including multiple different endocrine therapies. But should we expect the idea that these patients may have already seen multiple endocrine therapies to pose any enrollment challenges if an investigator might say, " I'd love for you to try 1901 but not sure, you should be trying another product that you might have already failed on", for example?

That's very good question. We know in this late line setting that as you described, many of these patients will have progressed through several hormonal therapies earlier in treatments. It's not uncommon for hormonal agents to be reintroduced in a late line. Obviously, these patients have relatively few treatment options on certainly, I think, when we think about how elacestrant could perform in this late line setting, or how we've seen it perform in our ongoing Phase I study. Again, against patients that have previously received these endocrine agents, I think we feel very encouraged by elacestrant's potential.

Okay, great. And maybe just last one on the patch study. Can you talk about your assumptions for enrollment? I just want to make sure I understand. You're starting the study in mid-'19 and expect to see data on a 12-month endpoint in 2020? Is it fair to imply you expect you'll have 500 patients enrolled in 6 months?

Obviously, we're not providing specific guidance around enrollments. Certainly, Radius has a long history of conducting many BMD studies through the course of development for abaloparatide. So we -- I think, we have a very good handle on what it would take to enroll these patients, how many sites that we would expect to be able to enroll these patients quickly. We certainly think with the study design, in which, patients are going to receive either the subcutaneous injection or the abaloparatide patch that this could be quite a study of patients may be enthusiastic about taking part in.

Okay. And maybe, forgive me, but just one more on the patch. If -- can you just talk a little bit more about how you got comfortable or convinced that the BMD effect is really AUC-driven and not affected by the shape of the curve, now that it looks like you're very close on AUC, but has moved away on Cmax and Tmax?

Yes, so the Cmax and the Tmax is the same -- within the target for subcutaneous injection. But it's really heavily driven by our experience with our active Phase III data set. That is a very rich dataset in which we have several thousand PK data points as well as we have BMD values from a large number of patients across multiple time points. That's really been a data set that's allowed us to construct this exposure-response model, to be able to look at multiple PK parameters. And I think our analysis, where we input the transdermal patch data into that model gives us a very high degree of confidence that the patch we have right now, this optimized patch, has the profile that it needs to be able to achieve the BMD endpoints and to be successful in a noninferiority BMD study.

Our next question comes from Matthew Harrison with Morgan Stanley.

I think, maybe 2 from me. So first on the SERD, can you just talk about when you think about registration timelines in the U.S. and EU, I think we focused a little bit less on the EU. How this strategy will accelerate your timeline in the EU and how quickly, if you can use this study, you might be able to get registered in the EU as well?

Yes, I think that's an important part of our strategy is to -- we see elacestrant is having important global value. And so this comparator study, we believe, could be sufficient to support registration both in the U.S. and EU. So we believe that's actually one of the potential values for the study. Of course, comparing to hormonal comparators as well, I think, will provide some very compelling information to understand the potential benefits of elacestrant.

Matthew, this is Jesper speaking. Just to add on to it, when we discussed with potential partners, we got the insight that they sincerely wanted us to go this way for us to create a partnership. So that we took into consideration and when we learned back from EMEA, we decided that this was the best way forward to create maximum value.

Okay. And then, second, you mentioned some nonclinical supportive studies that you need to run with the patch. Maybe could you just be a little bit more specific about what those studies are? And then I guess from a manufacturing standpoint, what sort of data and stability you need to provide to the FDA?

Yes, absolutely. So the supported clinical and nonclinical studies really fall into category of being, sort of, routine part of drug development. So there are some additional preclinical dermal tolerance studies that we expect to conduct. Certainly, very routine studies, very clear guidance on what is expected for those studies. They are absolutely not rate-limiting for our product development path. I'm sorry, you had a second part of the question? Oh, stability? So we expect, as is typical, to have to have 12 months of stability from our commercial lines to be available at the time of NDA submission.

Okay, great. And then, sorry, one other follow-up that I just wanted to ask. Can you just detail in terms of the PK data that you have on Slide 31, how many patients, what was the sample size that you had to generate the AUC exposure? You don't have any arrow bars, how variable was the response and how confident do you feel in patch-to-patch variability?

That's actually a great and actually a very important question. So the data set you're looking at on that slide is derived from 20 patients with our optimized patch. As from a PK perspective, that's actually quite a rich data set. That does actually give us a very good handle on what the variability of the patch is. And I think we're very encouraged to see that patch variability is in line with what we see with subcutaneous injection. And that's only been our pretext experience with our prior prototypes as well. And just to add on to that, when we contacted this exposure-response analysis, putting this transdermal PK data into that model, one of the things that it looks at is also the inherent variability. So when you see the estimated mean and 95% confidence intervals for the BMD change on Slide 32, you're actually seeing the integrated effects of variability in that model as well. Again, which I think, gives us high degree of confidence that we have a patch that is suitable to going to pivotal study with a great probability of success.

Absolutely.

Our next question comes from Ying Huang with Bank of America Merrill Lynch.

I have also a couple of quick ones on the patch. First, can you tell us a little bit more about the 20 patient study? Are they all on the patch, therefore, you're not comparing directly to any patients on the subcu in the same trial? And secondly, besides that AUC, what other PK or PD parameters are you collecting so that you feel confident about the bioequivalence between the subcu and the patch formulation? And lastly, how confident are you that you will be able to enroll 500 patients in a relatively short period of time so that you can stick to your timeline of 2020 NDA preparation?

Yes, thank you. Let me take the last question first. As I think I mentioned a couple of minutes ago, Radius does have a lot of experience in conducting osteoporosis studies, some with -- some based on BMD endpoints, some based on fracture endpoints. So this is a study population that we understand well, we've conducted many studies. So I think we have a very good handle on the enrollment times, the number of sites that we will need, the kinds of sites and the kinds of geographies that we would want to go into. So we have confidence in our ability to conduct this study as quickly as we recently can. Your other question was really related to how much PK data have we collected. Really, over the last almost 18 months, we've conducted many PK -- clinical Phase I PK studies with multiple iterations and multiple variations with the transdermal patch. There have been many variables that have been assessed. And so we've actually had patients that have cycled through several different patch prototypes. We have included, periodically, subcu injection arms within those studies so we continue to capture subcu data as part of that. And so when we look at all of that information, I think we're really able to get a good handle on the profile subcu, of course as well as the profile of the optimized patch. And it's really led us to a point where we are actually extremely comfortable with the patch that we have, its ability to deliver the profile that we needed to. And again, it's a patch that we're very, very enthusiastic about seeing, moving into a pivotal study.

Just a quick follow-up. So you have more than 20 patients on this current patch formulation in the Phase I trials?

The dataset you are seeing is derived from 20 patients. There have been a lot more different variations, a number of different iterations of this patch that have been evaluated over the course of the last 18 months.

(Operator Instructions) And our next question comes from Salveen Richter with Goldman Sachs.

This is Kevin Patel on for Salveen. My first question is for the elacestrant comparator-controlled study. How long will it take to data? And then the second one is for TYMLOS, you have the exclusive status to Express Scripts, so what percentage of Express Scripts patients are you tracking over the quarter, and how do you think about compliance?

So Kevin, I'll take the elacestrant question and I think maybe Joe can take the other one. So at this point, we're actually not guiding in terms of how long it will take to us to enroll the elacestrant study. We're guiding to when the study will be initiated, which is in the first half of -- I'm sorry, second half of 2018. Obviously, this is a -- it's a high priority for us. We're looking to execute the study as quickly as possible and to enroll as quickly as [recently] possible.

Thanks, Kevin. So when you look at what ESI represents from a commercial standpoint in the anabolic space, it's about 18%. Looking at total number of lives, there's about 57 million, of which, 24 million, we do have preferred status with TYMLOS. And right now, we are meeting expectations as far as what we've set as a goal to be at from a market share standpoint and also the goal that we agreed upon with Express Scripts. But we'll be sure to update you on the next call that we have together, it's a bit early in the game, as far as accurate data at the point. But I can say that both sides are satisfied with where we are right now.

Okay. Just one follow-up. Do you still -- based off the trends you're seeing now, do you still expect to provide guidance on the 1Q call?

This is Pepe speaking. So the expectations that are at the end of -- when we present the Q1 earnings call, we will give guidance in certain KPIs or aspects of the business for full year 2018.

So the answer is yes.

Our next question comes from Robyn Karnauskas with Citi.

This is Greg Harrison on for Robyn. With regards to the TYMLOS price increase, what proportion of that increase do you expect to realize? And what is their strategy with respect to balancing the price that reflects the value of the drug, with also having -- keeping the lower price in FORTEO and trying to use that to grow the market to where it has been previously?

Yes, this is Pepe speaking. So the -- in terms of what proportion of 5.9% goes to net. We haven't guided specifically on that, but we do expect a large portion of it to be reflected in net sales, as always when you have price increases like this and you have contract with the multiple players, you have administration fees and few other things that kick in. So it's going to be a portion of that, but it's the larger majority of it. From a pricing strategy perspective, we believe that we will continue to take price increases that are responsive to the market. We need to recover, obviously, costs, this cost increases from salaries to FDA fees to other things that we will continue to ensure that those are recovered from the business. We are still at a far distance from our competitor teriparatide in the market, so we don't see this as diminishing the potential of TYMLOS to continue penetrating and becoming market leader.

So Greg, if I may add to it, just because prices of my sincere interest and the price differentiation that you have seen is, of course, also you need to think about the potential injury of a biosimilar by end of 2019. So we have put ourselves at the point where we feel we can very much compete with whoever comes into the space at that point of time. Because the typical way forward for the biosimilars is of course, been to take a 20% to 30% price decrease of the WACC, and thereby going in within 180 days, skim the market if you will. We have taken a very different price approach because if that's what the biosimilars are going to do, then they will still be in the $30,000 when we are in the early $20,000. So as far as I'm concerned, we're in a very, very strong position going forward with the price point that we have guided on here. So all in all, we will navigate in the space, we have got the market access that we wanted, that's also a very important component, of course, within 9 months to have 259 million lives to be covered, I think it speaks for itself. And that's, of course, a part of the pricing strategy that we set up within the very initial phase.

Great, that's very helpful. Just one more, if I can, on the patch trial. So if you were to hit the noninferiority margin statistically, but still be numerically below subcutaneous. Would that be a problem clinically for doctors and for marketing the patients?

We're sitting here debating who should answer it.

Let's see, first. At the end of the day, the bridging study that was agreed with the FDA for -- from BMD is, if we see the number within that range, so above that threshold, we will have an approved product, and obviously, it will apply the TYMLOS label to it. Competitive wise, I think those are different questions. I think that's -- we will have a better understanding of how we're going to commercialize it later on.

And just think about the timelines that we've been up with the patch is very indicative for what -- or should be indicative for what will be the thinking for the potential biosimilars entering into the market, because we will -- with the price point that we have come up with, have a strong indicator that we are going to change the name of the game coming out with the patch. And we are very, very encouraged with the signature of 3M, which happened earlier this week. So all in all, we feel that we are in the right way forward for Radius Health.

I'm showing no further questions at this time. I'll like to turn the call back over to Jesper Høiland for closing remarks.

So thank you very much for your interest in Radius Health. We came out of 2017 with a strong performance. We are continuing whether as far as we are concerned, both with TYMLOS, but certainly, also with our way forward for our pipeline. With a signature from 3M and us, we are secure that we have a very strong path going forward to do the Phase III clinical trials, and we look really forward to report more as the year progress. So thank you to all of you for your interest and look forward to see you all out there in the frontline.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation. Have a wonderful day.