Radius Recycling Inc (RDUS) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Radius Health, Inc. Third Quarter 2021 Earnings Conference Call. (Operator Instructions) Please be advised today's conference may be recorded. (Operator Instructions) I'd now like to hand the conference over to your host today, Ethan Holdaway, Head of Investor Relations. Please go ahead.

Hello, everyone, and thank you for joining us today. A press release and presentation that we will use to guide the discussion can be found in the Investor Relations section of our website. A replay of the call will also be available on our website 3 hours afterwards.

Before we begin, I'd like to remind everyone of our safe harbor statement on Page 2. This presentation includes forward-looking statements and non-GAAP financial measures. You can find the reconciliation of GAAP to non-GAAP at the end of the presentation. Our most recently filed 10-K and subsequent filings identify factors that could cause our actual results to differ materially from those indicated by the forward-looking statements. Any forward-looking statements represent our views as of today only.

On today's call, Kelly Martin, President and CEO, will start with his opening comments. Steve Helwig, our Finance and Accounting Officer, will then provide a financial update. Chhaya Shah, Senior Vice President and Clinical Program Lead, will follow with an update on elacestrant and abaloparatide development progress; and Bob Valentine, Strategic Business Officer of abaloparatide, will finish up by providing a commercial update. We will then open the call for questions. And I would now like to turn it over to Kelly.

Thanks, Ethan, and good morning, everybody. Thank you for spending a few minutes with us today to go through our third quarter earnings and some of the results of the business. It was a very busy quarter for us. We don't necessarily run the company quarter-by-quarter, but the activity level is very high across all aspects of our business, and we'll share that with you this morning.

I'd like to highlight a number of things, which we think are particularly important from the quarter. First and foremost, abaloparatide. On the male study, we've announced positive results from the pivotal trial several weeks ago, a great step forward for that molecule and an interesting opportunity in the marketplace.

Secondly, for abaloparatide, we resubmitted into the European marketplace last week . We had indicated that, that was our goal, second half of this year that we would resubmit into Europe, and we accomplished that. Third thing for abaloparatide is the TD pivotal readout remains on time for Q4 readout for this year.

I know lots of people are focused and interested on that as we are as well. In the elacestrant molecule, we announced that the pivotal trial delivered positive results. So our partner, Menarini Group and ourselves are very pleased with that. We will go through with you very specifically during this call. Steve Helwig will outline the business relationship we have with Menarini. We also outlined that fairly explicitly in our earnings announcement. And Chhaya Shah will go through some of the highlights at the high level of that trial.

Clearly, an important step forward in the space and an important step forward for Menarini and ourselves. For RAD011, the Prader-Willi syndrome pivotal trial is on time to start towards the end of this year or the very early part of next year.

And importantly, we've completed our life cycle planning with that molecule. And over the next few weeks, we will announce and roll out additional indications that we will take forward with RAD011, all of which we're very excited about and looking forward to sharing that -- our thoughts and thinking with you in the very near term.

Our near-term focus as a business and as a company are multiple things, and we highlighted a few. First and foremost, TYMLOS commercial. We are focused on continuing from a growth point of view, a productivity point of view and very specifically a segment focused point of view.

As we indicated in the earnings announcement, our productivity is up. Our revenue is up. We would like to expand the denominator or the baseline of that business.

And that's what Danielle and Bob Valentine are working on from a business point of view. From abaloparatide, our preparation in anticipation of introducing male indication to abaloparatide. It's an important piece of work, something that we have done some work on to date, and we'll continue to emphasize over the next several months, again, in anticipation of including the male indication in the U.S. for abaloparatide.

We're also doing preparation as we have been doing on the transdermal system, or TD. Important to us is what the actual data will say. That data will give us some definitive information with regard to pricing, reimbursement and the segment that we -- segment or segments that we believe will be most applicable for TD.

Last but not least, on abaloparatide, we continue to expand the global footprint of this asset, as we again indicated in the earnings announcement, a lot of progress is being made in Canada. A lot of progress is also being made in Japan, which I remind folks is the largest anabolic market in the world. And we will look to expand the footprint in other countries and/or geographic regions as we conclude transactions.

From an elacestrant point of view, again, our focus with Menarini Group is to prepare and accelerate, if possible, the regulatory pathway and discussions in both the U.S. and Europe. It's something that we have an integrated approach to, and it's a very big focus of ourselves and the Menarini Group with regard to this asset. RAD011, we will initiate the Prader-Willi trial, and we'll also, as I said before, share some life-cycle opportunities for this asset. When we purchased RAD011, we very specifically indicated that this was a pipeline within a molecule. And we look forward to sharing that with all of you over the next few weeks.

The last thing I want to touch upon is something I've touched upon before, but just wanted to remind and continue to emphasize, which is our approach and philosophy in running the business at Radius and the things that are very important to us as we build a distinctive company.

First and foremost, our culture -- we continue to build a culture around exceptional people who are very team oriented and we've made great strides and progress on that over the last 18 months, and we'll continue to make more. It's kind of a never-ending goal and objective and one that we're very focused on. We're very focused on executing against plan in a very high-quality manner. In the last year or so, we completed the enrollment on 3 pivotal studies. We've had readouts on 2 of the 3. We're awaiting the third. We've resubmitted this asset into Europe. We are working closely with our partner in Japan of abaloparatide. We've in-licensed a synthetic CBD asset that has very broad applicability across neuro and neuro behavioral and psychiatric indications.

And last but not least, from a business P&L and cash point of view, we're very resolute on managing all of those pieces together in a high-quality way. From a perspective point of view, we manage for short-term progress, but we also do that within an intermediate-term map and road map. There's many things over the intermediate term we would like to accomplish, but you can only accomplish those if you get things done in the short term.

And so we balance both short term with an intermediate view of where we're going and how we intend to get there. Very importantly, we strive to be outstanding stewards of capital, people who provide us capital, whether it's debt equity cash. We want to make sure that we are managing that capital in a thoughtful manner, once again, managing for the short term, but balancing against intermediate-term objectives.

We look at the company from a portfolio basis. We try to consistently see where we can reduce risk, that risk may be execution risk, it may be partner risk, it may be competitive risk, it may be pricing risk, balance that risk with opportunity to create more on the upside, whether that's additional indications, additional geographies, additional partnerships.

So we continually look at our portfolio from a risk and return point of view, and we try to manage the risk down an opportunity of upside up. And last but not least, we will continue to be active in our own capital structure, not be passive participants in our capital structure.

When we have opportunities to improve our capital structure, we will do that at the right time and for the right reasons. And I think that's an important aspect of this company as you look forward to now 3 different assets with potential for both with success, potential revenue milestones and growth. And so using that capital, prospective capital and return, part of the usage of that will be to be active in our own capital structure. And I think that's an important thing to emphasize.

So with that, as Ethan said, joining me on this call, we have some fantastic people. I'm going to turn the call to Steve Helwig in a second. He's our Principal Finance Officer. He is doing a great job in that role. You'll hear from Chhaya about both elacestrant and abaloparatide in her role, guiding those 2 assets from a development and regulatory and operational point of view. And last, but certainly not least, you'll hear from Bob Valentine on some of the core topics and analysis within the commercial space.

So with that, I'm going to turn it over to the very capable hands of Steve Helwig, and he'll walk you through the key aspects of our financial performance for the quarter. Steve?

Thank you, Kelly. For Q3 2021, TYMLOS net revenue was $56.8 million versus $50.4 million in Q3 of 2020 or a 13% increase year-on-year. This third quarter increase was driven by an increase in unit volume as well as net price. The total net revenue for Q3 2021 was down $21 million or 27% versus Q3 of 2020.

This was due to the $27.4 million upfront licensing payment we received in Q3 2020 related to our agreement with Menarini for the out-licensing of the elacestrant asset. Moving on to the operating expenses on a non-GAAP basis.

R&D decreased versus the prior year by $4 million due to the wind down of our Phase III trials, and we expect the R&D expenses related to ATOM and wearable trials to decline substantially in 2022.

Our selling, general and administrative expenses were up $2 million for the same quarter versus a year ago, and this was due to a onetime increase on professional fees resulting from the implementation of Oracle, our new ERP system, offset by reductions in compensation from prior quarter reorganizations.

As a reminder, non-GAAP SG&A excludes stock-based compensation. This all resulted in a total company adjusted EBITDA of a loss of $10.9 million for Q3 of 2021 versus a positive $9.3 million in Q3 of 2020. This roughly $20 million swing, again, it's primarily due to the $27.4 million upfront licensing revenue payment from Menarini in Q3 of 2020, partially offset by increased TYMLOS net revenue in 2021.

Excluding the impact of the Menarini payment, the company made material progress in the reduction and realignment of its cost base, which also contributed to EBITDA improvement. Moving on to the year-to-date income statement. The total net revenue was down $10.9 million. This is due to a decrease in licensing revenue of $16.4 million, which was comprised of $27.4 million mentioned previously from Menarini in 2020, offset by $11 million in 2021, mainly from the approval of Otavalo in Japan.

This decrease in license revenue was offset by an increase in our TYMLOS net revenue of $5.5 million driven by an increase in both volume and price.

Our operating expenses on a non-GAAP basis, R&D decreased by $29 million. This is due to the fact that in 2021, all the Emerald costs had been reimbursed by Menarini and additionally factors previously mentioned for Q3. Selling, general and administrative costs are down $7.2 million, and this is mainly due to savings in compensation resulting from reorganizations that took place earlier in 2021.

We have made progress since transitioning our sales approach in osteoporosis and expect to make continued progress. However, due to lower-than-expected year-to-date TYMLOS revenue, we have adjusted our full year 2021 TYMLOS revenue forecast to a range of $210 million to $220 million versus the previous forecast of $240 million. We also forecast total company EBITDA to be in a range of $5 million to $15 million loss versus the previous forecast of a positive $10 million.

Moving on to the next slide for cash flow trends. As of September 30, 2021, we have a cash balance of $110 million. We had expected to be flat for the quarter with a cash balance of $100 million. This additional $10 million is the result of timing on an expected payment that did not occur until shortly after the Q3 2021 close.

Moving on to Slide 11. Here, we framed out what the elacestrant opportunity means for Radius. As part of the agreement with Menarini, we are eligible to receive up to $20 million in development and regulatory milestone payments, up to $300 million in sales milestone payments and tiered net royalties up to 9%.

And that royalty includes royalties that Radius is eligible to receive from Menarini as well as royalties radius pace to ESI. The royalties and sales milestones are based on global net sales of elacestrant and include monotherapy, combination therapies as well as other potential therapeutic applications of elacestrant.

On the next slide, we provide an overview of the assets intellectual property portfolio. Elacestrant currently has 3 issued patents, composition of matter expiring in August of 2026, and subject to patent extension up to August of 2030, method of treatment expiring in October of 2034, Polymorph expiring in January of 2038 and then there are also additional patents that are pending.

As a new chemical entity, elacestrant has the potential to receive regulatory exclusivity of 5 years in the U.S., 10 years in Europe and 8 years with us of generic competition in Japan, all of which are subject to regulatory approval. And with that, I'd like to turn it over to Chhaya to give an update on the elacestrant development. Chhaya?

Thank you, Steve, and good morning, everyone. As Kelly mentioned, in October, we announced positive top line results for EMERALD trial where elacestrant was evaluated as a monotherapy versus the standard of care in metastatic breast cancer patients. The design of the EMERALD study was a randomized open-label active comparator study. This trial met both its primary endpoints. The losses trend extended progression-free survival in overall population as well as the ESR1 mutation subgroup. This demonstrating superiority versus standard of care and all therapy.

Based on these positive results, we are working in partnership with Menarini Group on regulatory submissions for both U.S. and Europe. As a reminder, we will give detailed data and will be presented at the San Antonio Breast Cancer Symposium between December 7 and 9.

Menarini plans to further develop the elacestrant asset including the combo therapy trials as well as other potential therapeutic applications. It is a pleasure in partnership with Menarini to be able to deliver positive top line results for the first-ever oral SERD for metastatic breast cancer.

So moving on to the ATOM trial. We announced last month positive top line results in evaluating TYMLOS in men with osteoporosis. ATOM was a placebo-controlled trial with 12-month duration, men were randomized 2:1 of OSC with placebo. The trial results met primary endpoint and change in lumbar spine BMD at 12 months and p-value of less than 0.0001. The study also met secondary endpoints related to BMD for lumbar sign in 6 months as well as hip in from or NAC at 12 months.

The study demonstrated safety profile, which is consistent with the evolved paratide study. And based on these positive results, we plan to submit a supplemental NDA in quarter 1 of 2022. This will be a 10-month review cycle. We'll also present detailed data, which will be published in first half of 2022, and we'll present at upcoming medical conference.

So on the next page, go through a little bit more of additional development activities for abaloparatide. So with regards to TYMLOS label, in September, we announced an updated to our mechanism of action section into most label.

This was followed by our histo data which showed TYMLOS stimulated new bone formation in humans. This label change allows us to clearly explain mechanisms of action to health care providers and patients. We also expect to hear from FDA on potential removal of the box warning from TYMLOS label by the year-end. And as communicated, we're on track for the wearable trial to receive top line readout before the end of the year.

On the globalization front, on November 4, we submitted Abalo-SC to EMA for potential approval in Europe. This is -- this MMA is a full submission. It leverages in totality evidence data from pivotal study, real-world evidence, post-marketing surveillance data and Teijin, our Japanese partner Phase III trial data.

We are optimistic that this information will be -- provided will be in support of a favorable review. Our partners in Canada, Paladin Labs plan on submitting regulatory application to Help Canada in quarter 4 '21 by year-end. And we are discussing and progressing with additional ex U.S. partners in various regions and countries.

So this summarizes our elacestrant development activities as well as our volaparatide activities. And I will hand this off to Bob for a TYMLOS commercial update.

Thank you, Chhaya. Good morning, everyone. I will provide an update on the TYMLOS commercial progress. So if we could go to Slide 19. In the third quarter, our TYMLOS new patient shipments grew 10% year-over-year from the same quarter in 2020. And the 2021 quarters are collectively continuing to show year-over-year growth, building the patient cohorts for future contribution to revenue.

From a strategic perspective, we are tracking some additional key indicators of our focus on the fracture patient as well as efforts towards expanding depth in key accounts. So our new patient contribution from the top 500 prescribers remained at 50% from Q2 to Q3. Our new patient growth within the top 50 prescribers grew 15% or more from Q2 to Q3. And our new patient growth among that same top 50 prescriber group accelerated faster in the ortho and spine segments than outside that segment.

On the next page, we are also turning appropriate attention, the positioning TYMLOS for the future consumer growth. So beyond the depth over breadth, focus of our field force, we have a few key forward-looking priorities. We're working with some larger institutions to improve how postmenopausal osteoporosis patients are properly identified and how to improve processes for getting these patients the proper care for their underlying bone disease and bone conditions.

And as we know, so many patients, osteoporosis goes undiagnosed that it never gives them a chance to properly get on the anabolic therapy. We're also preparing the organization for what are a potential future mail indication as well as a potential abaloparatide transdermal system product.

So this includes steepening our understanding of these opportunities, both broadly and in specific segments and patient populations . And it also means outlining market building work that will need to be done in advance of launch. So with that, I'll turn it back over for Q&A.

(Operator Instructions) Our first question comes from Geoffrey Porges with SVB Leerink.

A couple of questions on TYMLOS and then one on elacestrant. First, could you give us a sense of what proportion of the surgical osteoporosis -- female osteoporosis cases you are now getting an anabolic? And then what your share of those starts is right now? And then secondly, could you talk about the relative price and access dynamics versus the generic abaloparatide, and how that is trending, what your expectations are there? And then lastly, on elacestrant, one of the big questions is relative to tolerability.

And I know the presentation is coming at San Antonio. But do you consider tolerability to be the Achilles heel of elacestrant compared to the other SERDs where we're starting to see data from pivotal trials as well?

Jeff, thanks for the questions. it's Kelly. I'll start with the last first. We're not going to comment on any of the data for elacestrant. I would just say what we -- we and Menarini put out in the announcement of the top line data was we did not flag safety as an issue. And I think that would just leave that stand as is. I think that sort of speaks for itself, with what we can see, right, in the data for elacestrant trend. I'll ask Bob to comment a little on a high level of how we're looking at the -- for going back to abaloparatide, sort of the fracture surgical market segment and some of the dynamics on the generic side, and I will add some commentary as well after Bob's comments.

Sure. So I think we know that there's somewhere between 1.5 million and 3 million fracture PMO patients in the United States, and we can all sort of do the math on how many of those patients are treated, though, important to note that both our TYMLOS patients are mixture of patients who have had a fracture and are surgical patients and those who are -- who haven't . So I won't try to point out exactly what our market share is, but I think that gives you a sense of the order of magnitude of the amount of patients and potential white space that there is for the entire market.

Yes. And I would just add, Jeff, I mean our overall market share -- or the overall market share amount of box remains relatively low, sort of frustratingly low on a broad basis. As you know well now, our focus has been let's do a lot more with fewer, and that's working. And so Bob and Daniel are working to expand those numbers. If you look at our top 10 clients or top 15 clients or top 20 clients, the preponderance of all of that business is fracture patients.

And therefore, that gives us opportunity to kind of continue to expand that. But if you look at the overall business, it's still an extremely small percentage of both treated patients and fracture patients. And again, we're not trying to be get over our skis as far as breadth.

But if we look at depth and continuing to add another 10 and another 10 and another 10, there's lots of opportunity there for anabolics in general and TYMLOS specifically.

And sorry, the question on the generic and your share of starts now?

When we look at the generic activity, it's an infinitesimal part of our -- of the business relative to us. It's -- there's some slight growth there at very, very low numbers but nothing that is really on our radar screen relative to scripts and patients. We track it. We look at it. It's very low single-digit numbers, and that hasn't moved that much.

It's slightly ticked up, Jeff, in the last few months, but nothing that has given us pause that something fundamental has changed at least from what we have seen to date.

Our next question comes from Corinne Jenkins with Goldman Sachs.

So just maybe as you think about the change in guidance over the course of the year, can you just help us understand what were the factors that drove that disconnect between what we expected and then what played out, whether maybe it was new patient growth persistence or some other factor?

Thanks, Karen. It's Kelly. I'll comment and then Bob can add comments. But I think there's 2 main factors One is the conversion of patients or new patients, i.e., defined as those with TYMLOS scripts continues to grow nicely, if not very nicely.

But for any variety of reasons, and there's several of them, the conversion of those -- if you took 100% of the script patients, there's a meaningful number of patients that, for a variety of reasons, didn't convert from script to drug. So that's one bucket. And then the second bucket is, as you said, its persistence. The average time on drug for a patient is something that we're very focused on.

And between Bob and Danielle and Sal Grasso , that is a big focus of ours. So we're adding patients, and we're adding patients in some depth in new sort of fracture-oriented practices but we frankly need to do a better job on converting those scripts to drug and then extending the persistence in the appropriate manner. I don't know, Bob, if you want to add anything to that.

Yes, I think that covers it pretty well. I'd just say, throughout the year, you kind of covered the back-end stuff. And throughout the year and inclusive of the third quarter, we've made efforts as well to continue better aligning our sales approach to the focus on the fracture patient. And so we, of course, expect to see long-term impact in a positive direction on those efforts as well and fixing some of the inherent pieces around conversion of patients and time on therapy, we'll just continue to add to that.

So it's an area, Corinne, we're not terribly pleased with the top line where it is. We even though we've grown year-over-year. We -- there's more to do there and there's more we have to get better at. And I think those 2 areas, conversion and length on drug are 2 very specific things that we're focused on.

Okay. That's helpful. Then maybe can you just help us understand the cadence of milestone payments related to elacestrant over the next year. And of the $20 million in development and regulatory milestones, how much of that is attributed to the monotherapy versus maybe other combinations, et cetera?

The development milestones are all related to the monotherapy progress. The royalties and the sales milestones are related to any -- in layman's terms, any utilization of the molecule, whether it's mono or combo in any number of combinations. We haven't outlined the milestone payments from a market point of view as of yet. I do realize that at some point, we need to figure out how to frame that out with even more detail. But for now, it's something that between Menarini and us is still part of a confidential arrangement.

The amplitude -- I mean, let's put it this way, the amplitude of the miles, the sales milestones are kind of split between approximately half up to a certain level on the other half above that. So there's big chunky payments there depending on where the molecule goes. I think this will become more important and more relevant once the data is released and once Menarini and ourselves come forth with additional regulatory filing approaches.

Our next question comes from Annabel Samimy with Stifel.

This is Nick on for Annabel. Congrats on the clinical success. As you look to increase the fracture surgical market, what are you doing in terms of building a clinical database around the orthopedics opportunity? And how are you currently positioning sales calls? And then switching to PWS, -- is there anything that you learned in the most recent negative AdCom for Levo therapeutics that could have any impact on how you design the SCOUT trial, and/or how you think about its efficacy, safety expectations?

That's great. Bob, do you want to take the first, and then I'll talk about Prader-Willi.

Yes. So I think the way to frame this up is to just mention, we kind of remain very committed to the fracture patient strategy and you're referring to as a surgical patient. And while the focus on fracture patients, first and foremost, is consistent, we're continuing to identify opportunities to refine where along the patient journey, we're actually intersecting with these fracture patients.

And then how we message to the health care providers on those calls about TYMLOS as part of that journey. So I think what we're doing is we're using data to identify the positions in the patient journey that are the best places to find those patients and communicate with the HCPs about the TYMLOS value prop there.

And with regard to Prader-Willi, thanks for asking that question. It's a great question. Well, the cut to the chase, we have learned and continue to learn an absolute ton from the other trials.

First and foremost, we applaud both Levo and Cellino's effort in the space. It's, as you know, a tough indication. We have gotten to know some of the patient advocacy organizations very well in the last year. Let's applaud them. They are super focused on their job of bringing forth potential therapeutic solutions to these patients.

But we've learned by looking at and examining even before the FDA meeting last year, all of the Levo detail and Cellino detail, it's been exceptionally instructive to us on things that would appear to be the right way to structure things, patient behavior, it's a behavior in addition to genetic issue, it's a behavioral disease. So anticipating behavioral actions, the differences between ages are very important where behaviors may change based on age.

Physiologically, also many of these patients as they grow from 10 to 12 years old through teenage years, through young adulthood. Obviously, there's a lot of physiological changes going on. This is an eating disorder. So think about your metabolism, your body weight, your body mass, et cetera, et cetera, et cetera.

So again, we certainly, in no way, shape or form, wish any of our competitors to fail. That's not our objective. But we have learned an enormous amount in detail about a way to construct our trial using RAD011 in the most effective risk-managed way.

And we're highly constructive on moving forward with a pivotal Prader-Willi trial. So more to come on that, and our team has done an exceptionally good job on preparing our pivotal trial in this space, and we can't wait to get started.

Our next question comes from Jessica Fye with JPMorgan.

First one is, can you talk about the commercial strategy for Abalo-patch assuming success in that trial? How will you position that product relative to TYMLOS.

Well, I think we put in the -- Jessica, it's Kelly. Thanks. Part of it is going to depend on the data. And I'll -- again, I'll let Bob talk a little bit about some of his thoughts with Daniel, and then I'll comment as well. But Bob, do you want to add some thoughts?

Yes. So I'll just preface by saying we're continuing to tap into the market and market research and understand how this product will be perceived and incorporated. But as you think about what the transdermal system is, I think there's a pretty clear and obvious set of patients that this would serve that current options are not serving and those are sort of the needle averse patients.

So that's the clear and obvious segment, but we need to understand a little bit better beyond that segment for the current patients that we currently target with TYMLOS, where do we position the transdermal system relative to those patients as well as relative to patients that are currently on TYMLOS, maybe on competitors or aren't on anabolic therapy at all.

To say more work to be done, we have some insights into some of the patient segments that are very clear and obvious and then more work to do to understand the other areas of opportunity.

Yes. And we've refreshed -- there was a lot of work done previously on market intelligence, market segment, market information and the team has begun to refresh some of that. And I would say that from a fresh pair of eyes point of view from myself, the feedback is more constructive and positive against certain segments, particularly in the most obvious or people who, for any variety of reasons, don't want to have a needle around and are needle phobic. There's a pretty good range of how big that market is and any of the numbers are pretty big from a denominator point of view. So I would say -- and Bob and Daniel and Salvane done a good job of sort of refreshing, but there's a lot of constructive optimism for segments of the market with the transdermal. And again, we look forward to getting the data and then moving forward from there.

Great. And can you also talk about how you think about the commercial opportunity associated with TYMLOS in Europe, including how you think about pricing in that market?

Pricing is a challenge. As you know well, sort of across the board. The -- that would be an asset, and I think I've referred to this before, but just to be transparent and highlighted again, it would be -- we would not build up a sales force in Europe. We would partner that asset. We've had a number of reverse inquiries coming in from European existing infrastructures.

The only way, obviously, to generate value is from a portfolio basis. So somebody else who has an infrastructure who has a portfolio could add this. Again, part of it -- part of the pricing is, again, based on data, as you know, based on competition. And it's something that we're exploring. So we will take a BD route in Europe. And again, we've had multiple people interested, and we're in early stages of that discussion.

But now that we filed, I think those discussions will become more tangible over the next few months.

Our next question comes from Yun Yang with Jefferies. Our next question comes from Vikram Purohit with Morgan Stanley.

This is [Guss] on for Vikram. My question is your release mentioned that you intend to use 50% percent of elacestrant milestone to strengthen your capital structure. Could you provide some detail on what this could look like?

This could look like as and/or when we ever received sales milestones that we will be active in our outstanding debt, should we have any or outstanding convertibles should we have any or presumably our outstanding equity, which we have. We'll be using those payments to address all 3 -- any part of our capital structure, which broadly defined that covers all of those things, plus any other thing that we have. So we could use it to purchase debt, purchase converts in the first instance, refinance debt, refinanced converts and/or as we get through all of that at some point in time, purchase equity. So we would use it as a financial tool to strengthen the capital structure across the board.

Our next question comes from Douglas Tsao with H.C. Wainright.

I think one of the things that you identified as sort of a key for jump starting the TYMLOS franchise was increasing or improving patient persistence. I'm just curious what you see as the key levers to doing that? And what are the drivers for patients not sort of going through their full course of treatment?

Doug, it's Kelly. Thanks for the question. Again, I'll have Bob comment and I'll give you my view as well if it's helpful.

Sure. Yes, there's going to be a variety of reasons in any therapeutic area, but specifically specialty pharma, whereas the daily injectable for patients to kind of maintain consistency with therapy, right? I think a lot of what we can do is around communication, both to the health care provider as well as the patient around the importance of compliance and adherence to therapy, and that's an area that we'll be able to continue to focus on.

And I think there's things we can do sort of mechanistically back office perspective to make sure that those access kind of hurdles are minimized. So between communication and minimizing some of the those sort of administrative hurdles, I think, are areas where we can certainly focus and I think we'll have a lot of traction with respect to persistence on therapy.

I think more generally, Doug, persistence for any therapy is a challenge across many indications. This is no different. I think this is particularly challenging when 80% of the people are asymptomatic. And that's why the more percentage of fracture patients we can have in our portfolio, the higher the probability is that we can extend persistency. And the more serious the fracture held (inaudible) back versus wrist, then again, you can extend it even further.

So part of us improving in persistency is to continue to migrate our patient population from asymptomatic patients to fracture patients. That takes time and it takes focus, but that's what we believe would give us the stickiest and best business as it relates to patient care and patient need relative to an anabolic like TYMLOS.

And I'm just curious, in terms of the comments around sort of things to help from an administrative standpoint? Or do you anticipate or what's the current sort of push to patients from the specialty pharmacy in terms of reminding them? And is it just when you say sort of some of the administrative is it just reimbursement? Or is it just patients not getting their scripts refilled themselves?

I think -- well, the answer to that is, so we work with the specialty pharma companies. And we have put in place a number of programs with the specialty pharma companies with regard to follow-up with patients. I think the reality is we're a one-product company. And we're a spit in the ocean to most of these big pharma distributors. So we have to do a better job internally. We have to take resources internally. We have to own it. We can't just assume that the specialty pharma people are going to walk in and say, what can I do to help Radius and TYMLOS today? And although while we get pretty good standard support and interaction from them. I think this is an area that we have to own and put the resources around and again, that's what Sal, Bob and Daniel are doing.

These are patients either on TYMLOS or should be on TYMLOS because they have a script, their HCP has made that determination. And we own that. It's most important to us. And so we're putting some resources to sort of provide an appropriate follow-up with those patients as best we can so we can convert more of them. Again, with the distributors, we have good relationships and the pharmacies. But we're a one-product company currently, and we're just not big enough to demand sort of gold-plated service. And we get good service, but we need to do better.

Our next question comes from Eun Yang with Jefferies.

This is [Naolin] on for Yun. Just a quick follow-up to Jessica's question. Could you please perhaps quantify what percentage of anabolic eligible patients are currently not on therapy due to injection fear?

We can give you a broad range. Do you want to a range you want to?

I mean it's -- yes, it's a big number.

Yes, I think our best estimate is somewhere between 10% to 20% of patients who get to the point where a physician would recommend an anabolic therapy and hasn't already sort of discounted them for being a sort of needle phobic, 10% to 20%, it's kind of what we're hearing so far is those patients would refuse on the premise alone of not wanting the sort of daily injection.

Yes. If you take -- as Bob said, to follow on, Naolin, you have -- you have 1 million to 1.5 million to 2 million fracture patients and 10% or 20% of those are needle phobic. Your denominator is that number, it's 200,000 to 400,000 potential patients. They're not going to all jump on the patch, at least from a fertile market point of view and a market segment point of view, those 2 lines intersecting is obviously a pretty good bull's-eye for a different administration of the drug.

Got it. And just a quick follow-up to that, how many -- could you maybe quantify how many percent are currently on TYMLOS and you would expect them to be interested in switching to the patch?

The current penetration of TYMLOS for fracture patients is small, low -- very low percentage. And that's for anabolics as a class, not just TYMLOS. We're not looking at the transdermal system as necessarily a switching opportunity. By definition, if you're already on the drug and you're on the injectable, you're probably comfortable with that and presumably or we would hope it has a positive impact on your bone health.

So we don't necessarily look at the launch of the patch as a switching opportunity. We look at it as an additive opportunity to the underlying patients. Anything you want to add to that?

Yes. And maybe the other angle of the question is for patients who would -- who are about to become on therapy and who had otherwise chosen to go on therapy with a daily injection, how many of those patients would choose the transdermal system. I think the answer to that question right now is that the feedback on the transdermal system from a health care provider perspective is extremely positive.

They view the system as quite novel. And so I think we can anticipate that the transdermal system will be viewed as a very viable alternative or option in the option set that includes TYMLOS subcutaneous. And so some combination of health care provider and patient choice will ultimately decide which patients end up on subcutaneous versus transdermal. So I think that's another way to talk about that question.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Kelly Martin for closing remarks.

Thank you, and thank you all for your time. I just wanted to highlight a couple of things. I would point you very specifically to our announcement detailing the elacestrant business relationship. There are many important parts to that. I'd highlight several. One is the IP, look closely at the IP and the runway in the already issued IP. That's number one.

Number two, with regard to elacestrant. We worked extremely closely with Menarini in all aspects of this program in this molecule. Chhaya taking the lead on the molecule itself and the clinical development and the operationalization of the molecule.

We also have dialogue with them on the future prospects of how to utilize the molecule. And that's a great open dialogue about many things. So I would point to the fact that our milestones and royalties travel. They travel geographically, they travel with combinations and they travel with indications. So if you add that plus the IP runway, the opportunity for us as a financial asset is not insignificant or as opposed to 2 double negatives, it is significant. And so I would just emphasize those things. We appreciate your time. We've had -- as pre advertised a second -- our second half of '21 was very full. It remains very full.

Third quarter as half of that was very busy with 2 pivotal readouts. We have one more to go in the fourth quarter. We look forward to sharing that data when we have it. We look forward to sharing with Menarini, the elacestrant data in December. And we look forward to advancing the RAD011 asset with more transparency with all of you in the near future. So with that, operator, we thank everyone for their time, and have a great day. We look forward to continuing our updates. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.