Q2 2019 Earnings Call Transcript

Published: 8 Aug 2019

[Operator:]

Good day, ladies and gentlemen and welcome to the Second Quarter 2019 Radius Health Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Elhan Webb, Vice President Investor Relations. Please begin.

[Elhan Webb:]

Thank you, Norma. Hello, everybody. Thanks for joining us today. Our press release and presentations that we'll use to guide our discussion today can be found in the Investor Section on our website. A replay of the call will also be available on our company website in 3 hours following this call. Before we begin, I'd like to remind you with our Safe Harbor Slide that we'll have some forward-looking statements and include non-GAAP financial measures in our presentation today. Our 10-K and subsequent filings identify factors that could cause our actual results to differ materially from those indicated by the forward-looking statements. Any forward-looking statements represent our views as of today. Here's our agenda for today. Jesper will start with touching on highlights of the quarter. After Jesper's comments, Joe will provide a commercial review of TYMLOS. Charlie will then follow with a review of our latest clinical updates with our patch program. Pepe will review then our financial results for the second quarter and provide details on our 2019 guidance. Today, we are excited to have a guest speaker, Dr. Felicia Cosman. Dr. Cosman will be presenting the current treatment paradigm for the management of high-risk of the pros. Our management team, Dr. Cosmo accompanied by Chiang Bruce will be available for Q&A at the end of the call. I'd like to now turn the call over to Jesper for an overview of our second quarter 2019 results.

[Jesper Høiland:]

Thank you, Elhan. Welcome, everybody. And thank you for joining us on the call today. We're very pleased to report another strong commercial quarter for Radius. As we continue to increase our market share gains for TYMLOS. In the second quarter of 2019, we increased our sales for TYMLOS by 81% versus the previous year, achieving $41 million net sales reaching an average of $35 million total market share and 46% of new patients stats. We are well on our track to meet our guidance and to capture more than 50% new patients stats on anabolic therapy during the second half of 2019. This proposition TYMLOS should become the anabolic market leader in 2020 to continue shaping and growing the markets for the years to come and then disrupt the osteoporosis treatment with a potential introduction of our innovative abaloparatide patch. With a continued strong performance of TYMLOS, we are also confident in reaching our sale guidance of 2019. And tightening our guidance to deliver between $165 million to $175 million net sales for TYMLOS. The driving productivity initiatives that we will expect will enable us to exit the year with over $120 million cash balance. We are delighted to have achieved a major milestone towards our company's goal of addressing the needs of osteoporosis patients with a region initiation of the Phase 3 study for the abaloparatide patch. With encouraging results from our patient assessment study NVSPA agreement with the FDA, we believe that we have a clear clearly defined and followed the risk development and regulatory pathway for our pivotal program.I will now turn the call over to Joe for review of our Commercial performance on TYMLOS.

[Joseph Kelly:]

Thank you, Jesper. And hello everyone. I am excited to present our commercial update for TYMLOS sales for the second quarter of 2019. Please turn to Slide 7. Since the launch of TYMLOS 2 years ago, we've seen a solid overall market share growth pattern, which continued in Q2 of 2019. Growing to a 46% new to brand market share in the second quarter. We feel confident in our continued market share growth with TYMLOS and achieving our guidance of MVRX anabolic market leadership during the second half of this year, which in turn we believe will give us total market leadership in the second half of 2020. Based on our overall performance, we expect to deliver TYMLOS net sales in the range of $165 million to $170 million for the year. We focused effort so the organization continue to drive these strong trends and we expect that both the commercial and part of the books of business will provide sustainable TYMLOS growth for the rest of the year. On the next slide, you'll see that during the month of May, patient claims data shows that TYMLOS has a 64% MBRX market share with the top 400 anabolic prescribers, which make up 30% of the anabolic market. This segment is typically a predictor of future overall market growth based on their volume potential and influence within the osteoporosis marketplace. There are similar to positive MBRX growth with a tier A segment, which represents 80% of the anabolic market.You'll see on Slide 9 that we are also encouraged by the anabolic market growth with 4% year-over-year increase for the first half of 2019. We continue to see high growth in our targeted sources of business as we leverage our footprint to continue driving the anabolic market. Thank you all and I'll now turn over the call to Charlie.

[Charles Morris:]

Thank you, Joe. And good afternoon, everybody. As we reported early this week, I'm delighted that we have now initiated our Phase 3 study for the abaloparatide. The first patient has been randomized with multiple sites open with additional patients in screening. In addition to initiating the Phase 3 study, we're also excited to have some new clinical data to share. We previously indicated that we were undertaking some patient assessments to ensure that our instructions for use for the patch supported ease for use for patients allowing accurate self-administration in the home setting. Our data showed the patient acceptability is very high and our instructions enable higher accurate self-administration. In addition, we have 2 new pieces of information that help us reduce clinical and regulatory risk in the program.First, we obtain data in our patient assessment study on changes in P1 and P. A biomarker indicates bone formation. The data at 1 month looks very similar to the 1 month data we obtained for TYMLOS in the pivotal active study. There's a correlation between P1 and P change and change in mineral density. This further increases our confidence that we can deliver non-inferiority on BMD change in the wearable study. Secondly, I'm pleased to announce that the Phase 3 protocol has been agreed with FDA under special critical assessment. As a reminder, an FDA agreement provides concurs with the FDA that the study can be considered adequate and well-controlled in support for marketing application.On the next slide more details of the design that has been agreed under the SBA. We use the SBA process to gain agreement with FDA on key elements of the pastry protocol, including entry criteria, dose selection, endpoints and planned analyses. We plan to enroll approximately 470 postmenopausal women with osteoporosis at high risk of Frank. Patients will be randomized by the abaloparatide-SC or abaloparatide patch in a one to one ratio. Patients will be treated for 12 months and have a follow up visit one month after the completion of therapy. The primary endpoint of this study is percent change in spine BND at 12 months. And we have agreement with the FDA on a 2% non-inferiority margin that preserves at least 77% of the historical treatment of abaloparatide-SC.With that said, I'd like to hand over to Pepe for the financial review.

[Jose Carmona:]

Thanks, Charlie. I will walk through the income statement for Q2, 2019 and afterwards, I will share perspective of quarterly cash flows and financial guidance for 2019. For the 3 months ended June 30, 2019, Radius recorded net sales of $41 million and a net loss of $35.5 million or $0.77 per share. The dynamic on our Q2 2019 income statement is better explained on a non-GAAP basis, which is shown on the right side of the slide. These figures exclude expenses related to a share based compensation, intangible asset amortization, non-cash interest from the convertible loan and other one-offs. You can see the reconciliation between our GAAP and non-GAAP measures in the appendix. Radius on a non-GAAP basis, for the 3 months ended June 30, 2019, had an adjusted net loss of $25.4 million or $0.55 per share, as compared to an adjusted net loss of $44.6 million or $0.98 per share for the 3 months ended June 30, 2018. On a non-GAAP basis, I want to highlight first, our gross margin has slightly decreased tonight to 1%. Due to the seasonality of our gross to net. We expect gross margin to slightly increase in the second half of 2019.Second, R&D expenses grew versus Q2 2018 as we have invested on the Radius [ph] Phase 3 trials and abaloparatide study. We expect R&D expenses to continue growing in the second half of 2019. Last, SG&A continues to decrease as we continue to adjust our investment related to the launch of TYMLOS and drive productivity initiatives.On Slide 15 you can see the drivers for the sequential growth of net sales compared to the first quarter of 2019, this is similar to the slide that I shared in the past quarter. On the market side, sequentially compared to Q1 2019, the anabolic market grew approximately 5% and we experienced a balanced trend in stock and trade. The market share grew from 30% average in Q1 2019 to 25% in second quarter 2019 which drove net sales growth by $5 million. Finally, from a net price perspective and in line with normal payer dynamic in the U.S. business, we see a modest improvement in net price with continued impact of Medicare Part D and Radius report patients on the commercial book-of-business. With slight improvement in Q2 we're connecting is expected to follow improvement in the second half of 2019 as patients pass through the high deductible period in each group of business.On Slide 16 we show the continued decrease of cash burn as stimulus continues to grow and we drive productivity in SG&A. We ended the quarter with cash and investment balance of $189 million which is a strong balance sheet position as we continue to manage our expenses and drive stimulus growth. There are lead pipeline related expenses are expected to stop rolling as we continue advancing our Phase 3 and last set trail and abaloparatide-patch progress. We're expecting the fourth quarter of this year as the gross profit from -- and we're drawing TYMLOS revenues with fully financed SG&A and internal R&D and is now financing the pipeline.Next, I will share guidance for 2019. Facing down upon this market and the market share dynamic we're expecting net sales to be in the range of $165 million to $170 million. I'm also confirming guidance and we will cross the 50% market share of new patients in the second half of 2019 which positions TYMLOS towards anabolic market leadership in 2020. From a balance sheet perspective, we have been able to also accelerate from many programs, so we are increasing our cash, cash equivalent and investment balance to over $120 million by the end of this year. It is important to reiterate the dynamic on anabolic market year-over-year growth seasonality, the market contraction and gross to net is expected to improve as we deliver TYMLOS growth in the second half of 2019.Slide 18 shows the drivers for revenues as get into second half of 2019 of $94 million to $99 million compared to the net sales of $71 million in the first half of 2019. The anabolic market is expected to grow between 6% to 8% in the second half of 2019 which is similar to last year's dynamic, and should drive growth of $5 million to $6 million versus first half of 2019. We expect to continue driving TYMLOS TRx market share growth from 33% average in the first half of 2019 to a range of 37% to 38% average in the second half of 2019. As we have explained before in data of our four quarters to translate from NBRx to TRx share performance. The NMRx in the first half and second half of 2018 were 33% and 37% respectively which is in line to the first half of 2019 performance and the guidance for the second half of 2019. This increase in market share should drive $10 million to $12 million net sales growth in the second half compared to the first half of 2019.Finally, we expect the net price of TYMLOS; net of all revenue deductions, to increase by 10% to 12% as we cross the volumes in Medicare Part D and patients report for high deductibles in the commercial book-of-business. This should drive growth of $8 million to $10 million in net sales in the second half of 2019.I look forward to your questions at the end of the call. With that, I would pass the call back to Jesper Høiland for the closing remarks.

[Jesper Høiland:]

Thank you, Pepe. Since the beginning of this year, we successfully executed on multiple areas achieving our commercial and clinical development goals. The continued strong commercial performance of TYMLOS, we're confident in reaching anabolic market leadership in new patients in the second half of this year and delivering our full financial guidance realizing $165 million to $170 million revenues for TYMLOS. And we're entering our innovative pass program through this pivotal stage; as we had promised, it was a significant milestone for us. We are excited to have clearly defined and further derisk the development pathway for this program with the SPA agreement from the FDA, and the recent encouraging the thought from our patients assessment study. We expect to complete recruitment for our abaloparatide-patch Phase III study by the end of this year and continued towards our goal of bringing a potential transformative treatment option of our brochures to the market.Slide 21; on this slide you can see our expected milestones for the rest of this year. At this point of time, I'm pleased to introduce Dr. Cosman, who has more than 25 years of experience in research and treatment of osteoporosis therapies. Dr. Cosman will provide us with insights on osteoporosis treatment and the importance of anabolic therapy to address the unmet needs of osteoporosis patients. In addition to Dr. Cosman, we also have our SVP of Technical Operations, Chhaya Shah; and our VP of Clinical Development, Dr. Bruce Mitlak, joining us for the Q&A today.I would like to pass over to Dr. Cosman.

[Felicia Cosman:]

Thank you very much, it's a pleasure to be here speaking today. So as you are all aware, osteoporosis is a disease where weakened bone is susceptible to fracturing with minimal trauma. And osteoporosis-related fractures have consequences; mortality, morbidity, impaired quality of life and progressive frailties and loss of independence. And these fractures are common, about half of all women aged 50 and older will experience an osteoporosis-related fracture, a lifetime risk of a hip fracture is 15%, and fractures are costly. Each year about 2 million fractures, 432,000 hospital admissions and almost 200,000 nursing home admissions are attributable to the underlying disease of osteoporosis.But we have a bunch of challenges facing us today. We know that the majority of patients with highest risk for fracture and not being treated with anything. Below 20% of patients with new fractures are treated for their osteoporosis, there are a lot of reasons for this, many patients have osteoporosis T-scores, CMD T-scores that are slightly above the osteoporosis test point which continues it for modification and physicians, multiple fractures that member actually identified on X-ray, there was a tremendous inconsistency in the medical specialty timeline where the role of anabolic therapy is consistently under recognized. And many patients and physicians that understand the balance between benefits and risks of all of our medication, and they don't take into account the risks that's not treating the underlying disease, and as a result the compliance and persistence with osteoporosis therapy is really poor.We know that prior fracture is the most important risk factor for future fractures but this risk is not many or overtime, and actually a recent fracture suggests that very high imminent or near-term risk, and I'd like to call this an osteoporosis emergency, it suggests the need to treat these patients urgently to prevent more disabling fractures. As you can see in this graph, this followed 377,500 plus women had her first fracture followed perhaps in 5 years, and the risk of another fracture -- the absolute risk was 10% in the very next year and 20% in the next 2 years. So these patients are the highest risk that we have.We know that the patients who have this high near-term risk need treatment urgently that reduces the risk of fracture quickly and provides a sustained effect after transition to long-term therapy. This includes these recent fracture patients, as well as multiple fractured patients even if there were so many attempts [ph]. And it also includes a group of patients who have very [indiscernible] particularly if they concomitant clinical risk factors, and the optimal way to treat these patients is to begin with an anabolic therapy and then transition to an antiresorptive therapy to maximize their BMG gains and to improve more substantially their bone strength for the long-term.Antiresorptive agents, which are the standard-of-care do not repair structural dimension and those repaired bone density deficit for now, and as a result they may not work consistently or rapidly enough across [indiscernible]. You do see vertebral fracture risk reductions with these agents within a year on the order of 50% to 70% but non-vertebral fracture risk reduction are at best 20% to 25% in magnitude, and not seen before 3 years of treatment. In contrast with abaloparatide as I'll produce for you, you see fractured risk reductions and substantial bone density building very quickly within 18 months. As you recall, the active trial randomized osteoporosis affected women -- 2,450 plus women took placebo for abaloparatide or the positive competitior teroparatide for 18 months in therapy and then the placebo and abaloparatide groups transitioned to standard antiresorptive drug for the insulin to use and the extension helps.One of the first signs of efficacy for abaloparatide is the increase in CTRO1 [ph], a marker of bone coordination; but you see doubled already within a period of one month and stayed above the baseline level for the entire 18 months of the study. The bone degradation or bone resorption marker CTRO-peptide entered only about 20% and the increase was delayed with the peak of 3 months and then it put return back to baseline levels. Associated with these biochemical marker changes, you see the spine bone density goes up substantial, very quickly, within 18 months about 10% increase is seen, and then after transition to [indiscernible] therapy has a continued increase over the entire 2 year period. Associated with these bone density changes there was a very rapid production in new vertebral fracture occurrence and actually a near radication of vertebral fractures -- the in-patient is treated with abaloparatide, as you can see only four patients had vertebral fractures compared to 30 in the placebo group; an 86% risk reduction with abaloparatide.And this was seen also rather a risk reduction of similar magnitude in the extension period even though the middle set as far as here; this is where all the subjects are on therapy but the group that originally received abaloparatide has an 87% risk reduction for new vertebral fractures during the 2 year period compared to patients who are originally treated with placebo which is very convincing evidence of the sustained effect of bone strengthening with abaloparatide during the initial 18 months of therapy. We see a similar effect when we look at non-vertebral fracture, here the abaloparatide group in purple shows very wrongly separation from the placebo group and at the 18 months' timeframe, a 43% risk reduction in for non-vertebral fracture, as about twice the magnitude of the fracture risk reduction for non-vertebral fractures that we see but these are the best and to resorptive therapies in about half the time. We see this effect against non-vertebral fractures is sustained over the expansion period with an absolute and revenue risk production which are similar at the end of the 3.5 year active and exit extension study as they receive at the beginning of the active study.So in summary, we know that patients who have recent fractures have a very high risk of having another fracture in the next 2 years, about 1-in-5 will have another fracture; this is our urgent unmet need. Abaloparatide provides rapid and significant fracture risk reduction across the entire skeleton, spine and non-vertebral fractures. The reduction and risks are maintained after transition to [indiscernible] and their associated substantial increases in bone density, both of this defined and demonstrated when abaloparatide is used as first and as sequential therapy regiment. So optimally managed, the osteoporosis treatment of 2 million patients with fracture every year, however, requires not only specialist but also primary care providers and other healthcare providers as well. Transdermal abaloparatide has the potential to broaden both, patient and provider acceptance with this potent therapy and has the potential to significantly reduce the burden of disease and complications from osteoporosis.Thank you very much.

[Elhan Webb:]

Thank you, Dr. Cosman. Norma, we would like to take now -- open the call for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Jessica Fye of JPMorgan. Your line is open.

[Jessica Fye:]

Great, good afternoon, thanks for taking my questions. A couple on the updated guidance. I'm curious what you think about Trever's [ph] comments on generic foretail this morning? And what does your guidance reflects that product launching with back half of the year or when it reflects our product launching?

[Jesper Høiland:]

Hi Jessica, thanks for the question. And as we have stated before, we have considered several assumptions and expectations to provide the guidance but generic term our guide is what we have included but we don't consider it to be material to our work, so our guidance allow us growth, thus we move forward. So it's not something that is really impacting our expectations for the balance of the year.

[Jessica Fye:]

Okay, got it. And maybe you're sticking with the guidance update. What's your prime thinking for the 2019 anabolic market growth with what looks like a little flowing more recently? It seems like the second half market growth assumption might translate to something, more like 4% full year growth; is that fair?

[Jesper Høiland:]

Yes, roughly, you're right there. It's -- so if we see -- if you see last year, the second half of the year grew against the first half by 8% which is roughly what I'm guiding right now and I having translated to roughly those numbers that you're quoting.

[Jessica Fye:]

Okay. And then last one just on growth; it seems like the growth since you're projecting for the back half of 2019 might be a little steeper than what you've realized in the back half of 2018; is that fair?

[Jesper Høiland:]

Yes, that's correct. So remember that there is a change in Medicare Part D coverage gap that went from 50% to 70% and we have also added formulary access in -- since several programs to be a silver script for Medicare Part D; so that obviously increases the gross from net. Now what we have seen over the first six months of the year is that our growth has been significantly higher in Medicare Part D; so that's beyond our expectations which is changing the mix of business. And normally, Medicare Part D is slightly more costly, if you want to call it from a gross net perspective; that's what we have been experiencing.

[Jose Carmona:]

And Jessica, just on the access side; you will recall that last year we had 44% in the Part D segment that has for this year increased to 67%, that's of course [indiscernible].

[Jessica Fye:]

Okay, great. Thanks so much.

[Operator:]

Thank you. And our next question comes from Paul [ph] of Goldman Sachs. Your line is open.

[Unidentified Analyst:]

Hi, everyone. Thank you, good afternoon and thanks for taking our questions. Maybe just pivoting to the patch program and if you could maybe expand a little bit on the initial PIMP results that you disclosed? Can you maybe comment on -- are you saying in terms of additional follow-up with durability of the increased sustaining, is it plateauing or are you seeing the trends continue to increase as the exposure of time is expanding?

[Bruce Mitlak:]

Hi, Paul, this is Bruce Midlake. Thank you for your question. Maybe to be sure that I understand what you're asking, what we have presented now, are results from a study where we treated patients for 29 days. That 29 days, corresponds to the period of time where we see a peak in the P1NP response when patients are treated. In that study, we did not continue to follow patients. But we found -- our conclusion as we looked at this was because we saw a peak response that was very similar between the patients who had patches applied compared to patients who subcutaneous injection, we were projecting -- we basically concluded that that showed that the expected level of efficacy was being produced by the patch. And that increased our confidence that when we treated patients for the full years' time that we would see the efficacy that is needed to approach for the subQ product. Does that answer your question?

[Unidentified Analyst:]

Yes, in part. I appreciate that you didn't -- you haven't disclosed any or you didn't follow the patient's for a longer period. But I'm just curious if there is any additional studies that you plan to do just to make sure that the durability of the effect I guess is sustained.

[Bruce Mitlak:]

No. I think what we are starting is our phase three trial. And I think what we have shown in the short study is that patients can follow the instructions, apply the patch correctly, get the exposure we expected, and that we see the pharmacogenomics response to the month and that we're transitioning into our Phase 3 trial.

[Unidentified Analyst:]

Okay, thank you for that. And then one on the cash, burn-in cash position for Pepe. I guess just as you think about the spend for the back half of this year, should we think about your net cash burn picking up? I guess because looks like your net cash spend per quarter continues to trend down on an overall basis but with the phase 3 programs expanding here. Can you maybe just walk us through you know how we should think about the cash position for the next couple of quarters? Thank you very much.

[Jose Carmona:]

Yes. So we finished the second quarter with $189 million and we are guiding that we will -- that by the end of this year we will end up with over $220 million -- over sorry $120 million dollars. So that's -- there can calculate the cash plan for the second half. The dynamic there is that we expect things to continue to grow, which provide more cash from or generation of cash. And then SCNA has been decreasing as I showed in the slide and we will continue to drive productivity initiatives that make sense. And on the opposite side, our ambitions are growing as we continue to recruit patients in both [indiscernible] on the abaloparatide patch type. By the end of this year, so in the fourth quarter, I expect TYMLOS to pay for all the SCNA of the company or they can fix the infrastructure of R&D and start paying partially for the pipeline. That's how we do [ph].

[Unidentified Analyst:]

Great, thank you for that.

[Operator:]

Thank you. And the next question comes from Jeffrey Tougus [ph]. Your line is open.

[Unidentified Analyst:]

Thanks for taking my question. It doesn't seem like the patch study is large enough to really have an impact on TYMLOS sales. But since we all are watching the prescription data, do you expect the enrollment at all, to interrupt the MBRX trend that you're seeing towards that 50% guidance that you've put out for your end?

[Jesper Høiland:]

So the guidance already capture obviously that we are going to have a trial ongoing. But just to be clear that there's roughly 600 to 700 MBRX on new patients every week and the study will capture less than 500 as a whole so that we don't see this as a major impact to the -- to our audience.

[Unidentified Analyst:]

Okay, that's perfect. And then just on the Medicare Part D redesigns that have been floating around Congress. And could you comment on how that could impact your business here?

[Jose Carmona:]

This is Jose speaking. I think that's a little hard to predict because we haven't seen the final print. There's a lot of discussion going back and forth, so I think we will have to say that the final impact is or is going to be 2021-2022 as far as I'm concerned, and from what I've seen. So it's not something that is within our guidance as were speaking.

[Unidentified Analyst:]

Okay, thanks for taking the questions.

[Operator:]

Thank you. And our next question comes from [indiscernible] of CitiGroup. Your line is open.

[Unidentified Analyst:]

Thanks for taking our questions. Quick one regarding TYMLOS Medicare Party D Coverage versus private payer revenue growth. Should we watch for an inflection point later in the year or has that already happened? And then do you expect a gradual tailing going forward?

[Joseph Kelly:]

I this is Joe. So, of course, you have more patients that are now getting through the donor pool. So, yes, we would expect additional growth and some gross net impact as Pepe had mentioned. So certainly we'll have some advantages during the second half versus the first half in that particular segment.

[Jesper Høiland:]

Then there's a slide on the back that shows first half second half revenues. And that gives you an indication of the market growth in the second half that we expect to go between 6% and 8% against the first half. Markets share to pick up to about 47% to 48%, which is in line to the MBRX of the second half last year. And then the net price against the first half to improve between 10% and 12%. Those are the three components of trade that revenues for the second half against the first half.

[Unidentified Analyst:]

Okay, that's helpful. And any color on when we'll hear an update on RAD140 or the partnership with elacestrant. Thanks.

[Charles Morris:]

Okay, this is Charlie for RAD140 you'll see there is an update on the Phase 1 data that has been included in the queue. We have now data from the Phase 1 study. We have identified a maximum tolerated dose at 100 milligrams, and we have treated a number of patients. We understand the threshold [ph] kinetics. And we've seen some evidence clinical activities. In terms of next steps, what we've said is that we're going to continue to evaluate the potential in the end of [indiscernible] understand potential ways forward that there isn't an immediate plan to initiate Phase 1 restudy.

[Unidentified Analyst:]

Okay, that's great. Go ahead, sorry.

[Jesper Høiland:]

Regarding partnership, we continue to be in discussions with partners, and there should be an update before year end.

[Unidentified Analyst:]

Okay, that's helpful. Thank you.

[Jesper Høiland:]

Welcome.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Chris Shibutani of Cowen. Your line is open.

[Chris Shibutani:]

Great, thank you very much. Congratulations on the updated progress that you have with a patch. In particular, that was very reassuring in terms of your timelines. You have any comments about some of the research that you guys have done serving conditions, where you talk about a potential, quote, crippling of the market in PMOT or patient month on therapy. And you cite some pretty specific numbers 338,000 to over 1 million, and I'm just trying to figure out how I should be thinking about slicing and dicing that number. I think there are certain assumptions that seem to go into that month on therapy, including what kind of adherence that you expect for the injection versus the patch. Can you help us a little bit, understand better where those numbers are coming from and what the componentry is? Because it's a crippling of PMOT but there's some variables underneath that. It's certainly not crippling of units or patients, I would think that there's some other variables. Can you help us understand that?

[Jesper Høiland:]

Yes, let me just level that. This is a market research study done by one of the most well-known research companies in the US. It was a study that was done in the last quarter of last year. It included 200 physicians that treat osteoporosis and also included discussions with several PBSs and other players in the market. The study was done independent to radius. So it was -- we've attracted it, but it was done externally. What was the output of the study suggests is that in the -- compared to the market of 2018, which we have a bit over 300,000 patients from therapy which is the number of patients that are treated for a full month in a year. You see that the market is expected to triple in -- with the introduction of the patch and the development of a category as we move forward. It included several assumptions on pricing, on generic abaloparatide entrance. It also had some sensitivity to others. So it was a pretty comprehensive modeling with several assumptions included in it. And I would say the key takeaway for us is that we will not only expect to play in a triple market but as a franchise with SC and the patch will take a line share of that market. We expect around a 60% market share of that market.

[Jose Carmona:]

And, Chris just to put the numbers in perspective today, we anticipate that between 40,000 and 50,000 are traded. If we just go that take that number back to 2010-2011, that number was around 120,000. In other words, you have seen the strong decline since 2010 until the point of time, when [indiscernible] was introduced into the marketplace in June of 2017. And therefore, of course, from there on, you have seen a growth in the marketplace, which is, of course, what we are very, very encouraged by. And we do believe that these numbers are doable.

[Chris Shibutani:]

So then just to be clear, I'm understanding the numbers you're using. When you say 60% share that would be you expecting of the units of abaloparatide, 60% of those at some point would be from the patch and 40% would be from the injection is that correct?

[Jose Carmona:]

No, sorry for not being clear. Off the entire market, we expect 60% of that market to be abaloparatide, 40% to be the competition which could include teriparatide generic and branded.

[Chris Shibutani:]

Got it. And then within your abaloparatide, what do you foresee as being the potential split between patients on patch versus injection, particularly as you get to a more immature state, maybe 4 or 5, 6 years in?

[Jose Carmona:]

So the range is 47% for the patches and about 48% for SC. What will happen dynamically here is that the SC will take market leadership but we're guiding second half of next year to the MPRX market leaders. After the interaction of the patch, there will be a market growth and cannibalization from the SC. We don't expect SC to go away. There is a -- we believe that the two products will play well in the market and both will be used but the patch will be the largest business there. Then just to be more explicit on the growth, the growth of this market is coming primarily from [indiscernible] that right now treat osteoporosis but not with an anabolic; most of them are general practitioners that right now use it [ph]. And the issue of use and issue of train a patient with a patch helped to penetrate that prescriber base. That's one of the biggest drivers of the growth.

[Chris Shibutani:]

Okay. It's a busy earnings call but I have more to learn about this safety patch. I'll ask -- I'll talk to you guys with more questions in the future. But I appreciate the incremental insights. Thanks. That's the end of our quarter.

[Jesper Høiland:]

Thanks for your question Chris.

[Operator:]

Thank you. At this time, I'm showing no other questions. I'd like to turn the clock back over to Jesper Høiland for closing remarks.

[Jesper Høiland:]

Thank you, for everyone for joining us on the call today. We are really pleased with the performance that we have shown here in the second quarter. Of course, first and foremost in the commercial area, where radius continue to grow the TYMLOS market share. And also where we have really executed on our clinical programs now coming out with a Phase 3 program for the abaloparatide patch. So all in all, we feel that we are on a very good place this time of the year and we really look forward to towards the end of the year. So thank you to all of you for listening in and joining us today.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. You may disconnect everyone have a wonderful day.