Q1 2018 Earnings Call Transcript

Published: 10 May 2018

[Operator:]

Good morning everyone, and welcome to the Radius Health's First Quarter 2018 Financial Results and Business Update. 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 call is being recorded. I would now like to turn the conference over to Elhan Webb, Head of Investor Relations at Radius Health, please go ahead.

[Elhan Webb:]

Thank you, Chelsea. Good morning, and thank you for all joining us on the conference call and webcast for Radius first quarter 2018 financial results and business update. 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 quarterly report on Form 10-Q and other reports filed with the Securities and Exchange Commission. Any forward-looking statements represent our views as of today, May 10, 2018, only. A replay of this call will be available on the company's Web site, www.radiuspharm.com. And you can find the dial-in information for the conference call replay in today's press release as well as on the company's Web site. On today's call, we will provide you with a review of Radius Health first quarter 2018 financial an update on development plans for our pipeline and upcoming corporate milestone. Joining me on the call this morning are Jesper Høiland, President and Chief Executive Officer of Radius Health; Joe Kelly, Senior Vice President of Sales and Marketing; Amanda Mott, Senior Vice President of Market Access; Gary Hattersley, Chief Scientific Officer; and Pepe Carmona, Chief Financial Officer. The team will also be available for a Q&A session at the conclusion of our remarks. I like to now turn the call over to Jesper Høiland, Radius President and CEO for an overview of our first quarter results for 2018.

[Jesper Høiland:]

Thank you, Elhan. Welcome everybody and thank you for joining us on the call today. Today marks almost one year since TYMLOS was launched in the U.S. market and I'm pleased to be able to report on what continues to be a strong commercial launch. We have made substantial progress in expanding TYMLOS markets share in the anabolic market and supporting our long-term goal to become a leader in this space. In the first quarter, TYMLOS achieved an average total market share of 13% in the anabolic osteoporosis market and reached first quarter sales of $14.5 million representing a 90% increase over fourth quarter of 2017 sales. Our sales growth and penetration in the anabolic market was driven by the expansion of our prescriber base and increasing market share with those physicians based on the differentiation of TYMLOS. Our strengthened commercial access combined with exclusive coverage with Express Scripts and achieving priority access to several important health plans also contributed to our successful performance in Q1. Joe and Amanda will be providing more details on our commercial up tick and market access with TYMLOS later in the call. I'm also extremely pleased about the significant progress that we have made in advancing our clinical pipeline in the first quarter. After finalizing our development pathways for elacestrant and abaloparatide-patch and signing a commercial supply agreement with the 3M Company. We remain on track with our preparations to launch these global pivotal studies, elacestrant in the second half of this year and our patch mid next year. In the month of March, we also initiated the Phase 3 study for abaloparatide male Osteoporosis. If successful, we will file this trial as a part of an SNDA to seek to expand our TYMLOS label to include treatment for male osteoporosis patients. I will now turn the call over to Joe Kelly, our Senior Vice President of Sales and Marketing for an update on our TYMLOS commercial results.

[Joe Kelly:]

Thank you, Jesper, and good morning everyone. I am excited to present our commercial update for TYMLOS sales for the first three months of 2018. So now turn to Slide 7. This slide shows growth by quarterly volume changes in the anabolic class. Prior to the second quarter of 2017, the anabolic segment had been in decline for five years. What we see now is high-single digit year-over-year quarterly volume growth since the launch of TYMLOS in May of last year. Our focused efforts across the commercial team and promoting TYMLOS has resulted in playing a significant role in the growth of the anabolic marketplace. The next slide shows since the launch of TYMLOS last year, we've seen solid growth trends capturing 13% of the anabolic market share and 31% of new patient starts both up significantly from the fourth quarter of last year. We expect that both the commercial and Part D books of business will continue to provide sustainable growth for TYMLOS helping us to achieve our overall market share goals driving us towards that leadership position in the anabolic space with TYMLOS. Please go to Slide 9. Starting in January of 2018, we began to share with HCP's, the complete data from the three treatment groups in the ACTIVE Phase 3 study which was published in JAMA 2016. This information is consistent with the approved labeling for TYMLOS. We are sharing it in accordance with recent FDA draft guidance. For the most recent HCP survey data with inclusion of this information in our messaging healthcare providers now recall non-vertebral fracture risk reduction as one of their top attributes for TYMLOS. Next Slide approaching the one-year mark of TYMLOS commercialization, we'd like to share with you key certain performance indicators which show the underlying growth for the TYMLOS brand which gives us confidence to attain our goal of reaching market leadership that was a strong correlation between awareness and tend to prescribe TYMLOS uptake. The source of this information is awareness, trial and usage survey data which includes over 800 top anabolic prescribers in the mentioned surveys. Now during the first quarter awareness grows to 80% for TYMLOS and intend to prescribe one-year exceeded abaloparatide. And I would remind you that TYMLOS has been on the market for almost one-year versus abaloparatide's 15 years when considering this data. Both data points on the slide provides a large potential for further TYMLOS adoption going forward. On slide 11, we continue to see further evidence of TYMLOS uptake. So far the number of TYMLOS riders has more than doubled from December 2017 to March of this year. Among those TYMLOS prescribers as you see on the right-hand side of the slide, the share of anabolic prescriptions has grown significantly year-to-date. As of March, TYMLOS is capturing nearly half of the new patient market share with our current prescriber base that is expanding on a weekly basis. Finally, our mission of becoming the leader within the anabolic space continues to be our number one priority for TYMLOS. Thank you. Now, I'll turn the call over to Amanda Mott, Senior Vice President of Market Access.

[Amanda Mott:]

Slide 13, TYMLOS continues to see uptake and managed care access as covered live grows to over 263 million lives with increases across all segments. Since the launch of TYMLOS, we see a shift of the anabolic patient mix towards the commercial segment or TYMLOS coverage and 12 months already exceeds abaloparatide. With 88% of the U.S. insured population now having access to TYMLOS, we see market share growth and both the covered accounts as well as spillover growth and non-covered accounts. Slide 14, for 2018 and 2019, we have a three-prong access approach, expand access, drive uptake and evolve the treatment paradigm. First, we are focused on increasing access and Medicare Part D with active engagement in the 2019 review cycle and additional off-cycle reviews for 2018. At the same time, we are actively supporting the conversion of this access to increasing the number of prescribers and the volume of prescribing. Next, we are providing continued evidence of the clinical and cost effective value of treating earlier to build bone followed by maintenance treatments. At the Academy of Managed Care Pharmacy, AMCP, annual meeting on April 25, Radius presented two posters supporting the differentiated value of TYMLOS and the paradigm shift. Sequential therapy of TYMLOS followed by generic alendronate we've shown to improve outcomes for a lower total cost of care compared to teriparatide followed by alendronate for the treatment of U.S. women at high risk for fractures. Also sequential therapy with TYMLOS followed by generic alendronate was also shown to improve outcomes for a total cost of care compared to starting with generic alendronate for women at high risk of fracture. On Slide 15, as we execute on the access plan for Medicare Part D, it's important to note the CMS established timelines. Products approved after Q2 such as TYMLOS was in 2017 are now part of the standard Part D bidding process and therefore require off-cycle review. We are pleased to report that TYMLOS is already covered for 43% of lives through these off-cycle reviews due to its clinical profile combined with its savings for both patients and the government and the catastrophic phase. This includes coverage on UnitedHealth the nation's largest Medicare Part D insurance plan. We are currently in active negotiations with Part D plan sponsors as they submit their 2019 benefit design to CMS for a review and approval. This is an ongoing process as formularies and contracts are finalized with opportunities for additional 2018 off-cycle additions. Final formularies are published by the sponsors in 4Q to align with the open enrollment period for Medicare Part D patient. We look forward to continuing to share TYMLOS wins when formulary and contracts are finalized. I would now like to turn the call over to our Chief Scientific Officer, Dr. Gary Hattersley for an update on our clinical pipeline.

[Gary Hattersley:]

Thanks Amanda. I'd like to provide a short update on our R&D pipeline. We continue to be very encouraged by recent progress with a significant focus on both lifecycle management for TYMLOS and our two clinical stage oncology programs elacestrant and RAD 140 with the elacestrant Phase 3 study expected to start in the second half of 2018. The next slide provides some additional detail in the status of our pipeline. We recently initiated our male osteoporosis bridging study, which is a randomized double blind placebo controlled study that will enroll approximately 225 men with osteoporosis. The primary endpoint will be the change in lumbar spine BMD compared to placebo at 12 months and will also include a subset of patients that will undergo a high resolution CT imaging to provide information on both tubular and cortical bone structure. Pending positive outcome from this study, this data would be the basis for a supplemental NDA submission to seek an expanded TYMLOS label. We see this as an important study as part of lifecycle management for TYMLOS as men represent approximately 10% of the anabolic market. We were also initiating a short-term clinical Bone Histomorphometry study in the first half of 2018 and believe this will provide important information to enhance our understanding and differentiation of the early anabolic effects of TYMLOS with bone samples collected after only three months of treatment where the relative contribution of bone modeling and remodeling to anabolic activity will be evaluated. We remain on track for initiation of the Phase 3 study with our short wear time Abaloparatide-patch which we believe could provide an important alternative to daily self injection that has the potential to enhance patient convenience. As previously reported, we met with the FDA in January to align on the development path which includes a single pivotal non-inferiority BMD study with patients randomized one-to-one to receive either abaloparatide by subcutaneous injection or the patch where the primary endpoint will be change in lumbar spine BMD at 12 months. Following completion of the commercial supply agreement with 3M, the current focus remains on manufacturing scale up activities for both the patch and applicator. With CMC preparation and manufacturing of clinical supplies, the key activities to support the initiation of this pivotal Phase 3 study which we expect to be in mid-2019. We also remain on track to initiate a Phase 3 study for elacestrant in the second half of 2018. As previously guided, the study would enroll approximately 300 patients with estrogen-receptor-positive, HER2 negative locally advanced for metastatic breast cancer that will be randomized to receive either elacestrant or investigator choice of hormonal agent with PFS as a primary endpoint. And as a randomized comparative controlled Phase 3, this study could have the potential to support global regulatory submission. Our current focus is on study startup activities which include revision of finalization of the study particle and statistical analysis plan, revised site selection and CRO engagement. We look forward to providing more details on this study when initiated which we expect to occur in the second half of 2018. We're also making continued progress with the ongoing Phase 1 study with RAD 140, a tissue selective angio receptor modulator. Dose escalation continues in this study, which is enrolling patients with hormone receptor positive advanced metastatic breast cancer. To-date there have been no reported dose limiting toxicities and the MTD yet to be determined. We expect to provide a more detailed update on this development program by the end of the year. And I'd now like to pass the call over to our CFO, Pepe Carmona. Pepe?

[Pepe Carmona:]

Thanks Gary. I will briefly walk through the income statement and uses of cash in Q1 2018 and afterwards as previously discussed, I will provide some basic metrics of commercial expectations we have for 2018. For the three months ended, March 31, 2018, Radius report that net sales of $14.5 million and a loss of $61.6 million or $1.37 per share as compared to a net loss of $56.9 million or $1.32 per share for three months ended March 31, 2017. The $14.5 million sales figure represents three months of shipments discounted by gross to net adjustments. Our recognition policy is in line with U.S. GAAP and it is described in our Form 10-Q that we filed today. On the right side of the slide, we showed figures on non-U.S. GAAP basis, which exclude, share based compensation, intangible asset amortization and non-cash interest from the convertible note. You can see the reconciliation between GAAP and non-GAAP in the appendix. Radius on a non-US GAAP basis for the period March 31, 2018 a net loss of $50.5 million or $1.12 per share as compared to a net loss of $47.8 million or $1.11 per share for the three months ended March 31, 2017. I would like to highlight three points, first, our non-GAAP gross margin continues to be 92%, which includes 5% of royalties. Second, the slight increase in our knee expenses versus Q1 2017 is mostly driven by a one-off income from abaloparatide-SC that were refunded in Q1, 2017. In Q1 2018, we are investing in elacestrant, RAD 140 and the male Osteoporosis study. Last, the SG&A increase is driven by the ramp-up in support of TYMLOS commercialization which in this period last year, we had approximately only one-month with a full sale force and support functions. The company is fully staffed to manage TYMLOS commercialization and run our pipeline clinical programs. On our Slide 21, we show our 2018 cash allocation. As we've said to you before we're allocating resources to drive TYMLOS growth and continue advancing our osteoporosis and oncology pipeline. Our cash, cash equivalents and marketable securities balance as of March 31, 2018 was $367 million. In the first quarter, we reduced our cash balance by $62.5 million. Most of the uses of cash were for TYMLOS commercialization, R&D external expenses related to the ramp-up with our pipeline and annual employee bonus payout. We have cash inflows from TYMLOS revenues and income from options and wireless exercised in the period. We have sufficient capital to fund our U.S. commercialization of TYMLOS and advanced our osteoporosis and oncology pipeline. Moving to Slide 22. Now, before I share the indicators expected for 2018, I would like to briefly explain the patient model for TYMLOS. In an anabolic therapy, it is very unlikely to have a suite after a patient is on therapy unless it is influenced by the healthcare insurance plan. Consequently, the growth of a brand is dependent on capturing new patients, which is represented in the slide by the light blue figures or NBRx. And they persist through the duration of the therapy to build a total patients and unit sold in a specific period and total market share or TRx. At the end, TRx is a number of pens we have sold to patients, and as of now it is highly correlated to our sales in the market. Finally in Slide 23, you can see our 2018 expectations and key performance indicators. We expect of the U.S. anabolic market will grow between 5% and 7% based on the growth we are seeing of new patients starting anabolic therapy. As Joe showed earlier in this call, we have already seen a slight growth of this market with 1% and 8% growth in Q3 and Q4 of 2017 and hence we have a high growth in the first quarter of 2018 and slightly lower growth in the second half that we will be growing over and over the larger anabolic market. From a TRX perspective, we expect to have an average market share between 19% and 21%. In Q1 2018, we had a 13% average market share and we expect this to grow along the year driven by an increase in the share of new patients starting therapy and maintaining patients that are already on therapy with TYMLOS. I look forward to your questions at the end of the call. With that, I will pass the call back to Jesper for the closing remarks. Jesper?

[Jesper Høiland:]

Slide 25, upcoming milestones. As we approach the end of our presentation, I would like to remind you of our most important goals and our upcoming milestones. As I mentioned before, we have finalized our development pathways of both our abaloparatide patch and elacestrant after receiving regulatory feedback in the first quarter and signing the commercial supply agreements with 3M. We were disappointed to receive a negative opinion from the CHMP on our European MAA for abaloparatide subcutaneous and appeal their decision in April. We also initiated our Male Osteoporosis study in the end of March 2018. We plan to focus our Investor Day on osteoporosis on June 8 in New York City and hope to see you all attending in person or listening to our webcast. We expect to continue achieving our goals in 2018 and driving stimulus growth in the anabolic market. I'd like to thank you all for your support to Radius Health. We would ask Chelsea, now to open the call for questions.

[Operator:]

Thank you. [Operator Instructions] Thank you. And our first question will come from Jessica Fye with JPMorgan. Your line is open.

[Jessica Fye:]

Hey there. Thanks for taking my question. Just a couple on the guidance hoping to get a little more color there. I guess can you talk about what this could imply or how you're thinking about the exact market share for 2018 for TYMLOS on either PMOT, TRx or NRX basis. And also just as we try to think about net price, can you quantify the benefit to 1Q from inventory? Thank you.

[Jesper Høiland:]

Thank you, Jessica for your question. I'll pass it over to Pepe who are sitting more than ready.

[Pepe Carmona:]

Hi, Jessica. So, first one on the exit market share, we were explicitly not trying to guide that one because it's highly volatile. Now I think it's pretty straightforward. The lines are pretty straight and as you can take where we started the year where we are right now and what the average is. And I think that you're not going to be off there. From an inventory perspective, by the end of the year, where inventory positioned was pretty much where we wanted to be and by the end of Q1, it was pretty much there. No money big turn up carry between 15 and 25 days, it varies very little so revenue is coming from that is, is not much coming from the inventory.

[Jessica Fye:]

Great. Then you also made a comment about gross margin, should we think of the current gross margin as sustainable. Is there any room for improvement as you continue to grow volumes or should we think of this as kind of the go-forward gross margin?

[Pepe Carmona:]

Yes. Good question. And the reason why highlight that is exactly for this is 5% royalty, out of the eight points, of course, [goods] [ph] five points is royalty which is going to remain the same, over the period it would be only on key points. I couldn't predict much but change there.

[Jessica Fye:]

Okay. Thank you.

[Operator:]

Thank you. Our next question comes from Ying Huang with Bank of America Merrill Lynch. Your line is open.

[Ying Huang:]

Hey, good morning. Thanks for taking my questions. Maybe Pepe, can you talk about the gross to net in Q1, and then, what do you think the trend will be for the rest of the year? And then, secondly, based on your guidance on the Script growth for the class and also you are expecting market share. I kind of like did my quick back on the envelope math to get to about $95 million for U.S. sales for TYMLOS this year. Maybe you can confirm whether that's kind of like a right ballpark you are talking about? And then, lastly, can you talk about the persistence and also compliance from the patients on TYMLOS, since you launched about a year ago?

[Pepe Carmona:]

Yes. So, three questions, gross to net sales guidance and persistency model. So on the gross to net, normally you would expect it at the beginning of the year you have some impact on from the co-bridge gap from the donut hole. And definitely that was properly accrued for. I would expect that in Q2, you would continue to look a little bit on that and then that's going to be spacing of gross to net as you go along. During the year, it is very early to give any guidance on this because the number of CMS report that we have received since launch and not so many and it is difficult to predict how much they come out of, did they offer drug and all that to see how that's going to play out through the year. So, for the net sales of the year, we are explicitly not providing net sales guidance. I think that the key question is going to be your gross to net assumptions. What I can say is, the range from a market size perspective is, I think it's pretty much on a spot. Our market share should predict the number of pencil -- number of pens is going to be pretty much fine with what we gave you. And I believe that if you start doing the math on our report to net sales and number of pens that have been going out, you will start getting roughly to the numbers for what the gross to net is. So that's as much as I can tell you. Last question, business -- so far remember we have been only in the market for slightly less than 12 months and it's a therapy that should last between 18 and 24 months. So it is too early for us to predict the persistency. We do have some indicators, but they are very early and as well remember this is all about that dealings as well. There is the mix of persistency and compliance on it. What I can say and to be a bit optimistic on this is, we're not doing price increases as competitors are doing and so it's not a double-digit or twice price increases a year without pockets get off the Asian. So that that comes from a persistency perspective as well as being a pen that you just after the first usage, you just put it on your purse. It's a -- you expect that potentially there's a compliance ratio there. But -- and the persistency and compliance models from our competitors are public, we can share them with you offline. But that right now, my guidance would be assume our competitors [indiscernible] they are a little late, and then, definitely as we go along we will learn more. We will give you some updates on how we see this metrics moving.

[Ying Huang:]

Yes. Thank you very much.

[Jesper Høiland:]

Thank you.

[Pepe Carmona:]

Thank you.

[Operator:]

And our next question comes from Geoffrey Porges with Leerink. Your line is open.

[Geoffrey Porges:]

Thank you very much and appreciate all the transparency. So if you would just come and build models for us that would be perfect. First, could you update us what you're thinking on the timing and likely pricing and impact of generic teriparatide would have. Secondly, could you comment on the sustainability of the anabolic market growth that you're seeing now, do you think that's a multi-year phenomenon or a temporary phenomenon associated with the launch of TYMLOS. And thirdly, could you take us through some of the detail bridging between where we are now on the patch and the start of the clinical trial in the middle of 2019 because it's certainly longer. So what are the things that you could update us on between now and then, so that we know that that project is on track? Thank you.

[Jesper Høiland:]

I can start out with the first answer to your question, Geoff and that will be on the price. It's very difficult to predict what sort of price that potential generic is going to come into the market with the timing off it as we anticipate it is would it be at earliest in August of 2019 that they will come in. But of course, it remains to be seen. They also have some regulatory hurdles that they still have to overcome in terms of the initiative and approval in that respect and can get their products onto the market. So remains to be seen in terms of guidance, we think we have taken our cautious guidance of giving you 5% to 7% market increase. We think the increase is here to stay. But of course it remains to be seen what happens in the marketplace from a competitive point of view. We certainly believe that there should be a much, much bigger number in terms of number of patients being treated. On an anabolic, we hope to see a change of what we call the treatment mortality from last resource to early usage that's where we are of course out trying to communicate because that's where the patient, the postmenopausal women will get the biggest impact building the bone fast and building it strong and they maintain it with generic alendronate. This basic is the way forward that we're seeing. So it's of course difficult to give you all the obvious good guidance on the market growth but we certainly after we now I've seen since we launched TYMLOS onto the market we have seen a consistent growth of the market from 1% to 8% on the basis of the three quarters that we presented here. We are giving you the guidance that we certainly think that's going to continue until the year end. We all know that there's less than 50,000 women that are getting treated and also that that in reality should be plus 800,000 women that is candidates for getting treatment. So all in all, we have a huge market potential that we need to work on. But, the first and foremost and most important thing for us is to get to market leadership, when we get to market leadership then we will also be the ones that shape the market and drive the market going forward. The last point in respect to the patch, I will pass over to my colleague Gary, who sits here next to me.

[Gary Hattersley:]

Yes. Thanks Geoff. That's a good question. So back in March at the last earnings call, we did provide guidance on the start of that Phase 3 study which is mid 2019 as well as, updates on alignment with the FDA on the overall development plan. Today, we remain on track with that timeline that we previously guided until the key activities right now really relate to CMC preparations and preparations for clinical supply materials both patch and applicator will enable us to start back a full study. Of course, also with the initiation, the completion of the 3M supply agreement Radius and 3M are working very closely together to move this program ahead as smoothly and efficiently as possible. We're also working together to get a contract manufacturer to do commercial scale up and this will enable us to be able to meet the timeline for a potential launch. So it's a very busy time. We remain on track for that study start and fully committed to making it successful.

[Geoffrey Porges:]

Thanks very for the answers.

[Joe Kelly:]

Just one thing Geoff, in a couple of weeks as Jesper said we will have an osteo R&D day. We will probably provide a bit more updates there and obviously as we go along do the year, as soon as, we see that's more relevant information that give you updates on our development, we will share it with the market.

[Jesper Høiland:]

8 of June in New York City that we will give the presentation.

[Geoffrey Porges:]

Okay. Thanks guys.

[Jesper Høiland:]

Thank you.

[Operator:]

Thank you. Our next question is from Chris Shibutani with Cowen. Your line is open.

[Chris Shibutani:]

Thank you very much. I guess I'll shift it over a little bit to the pipeline with elacestrant. Gary, could you just help us understand how you guys are thinking about this study. I know that you'll provide more details later, but if we think about what kind of TFS differential that you think would be meaningful versus a competitor armed consisting of investigator choice, what kind of minimum threshold would you think that we should be expecting as well as what you think would be sort of exciting clinically meaningful or compelling?

[Gary Hattersley:]

Yes. Thanks Chris. That's a good question. So I think when we when we look at the literature and we look at the data that we presented at San Antonio back in end of 2017 with elacestrant. I think we were able to get a good handle on how currently approved monotherapies form. We would certainly guide towards looking at the BELLE-3 study as being a good example of third line patient population that is heavily refractory. We think is a good analog for this third line patient population. In that study there was elacestrant monotherapy on and there we see a PFS about 1.8 months and response rates of approximately 1.2%. We think this provides actually good points of reference for how single agents' monotherapy perform in this late-line refractory patient population. If we look at that data in the context of what we've seen with elacestrant so far, I think we feel very encouraged. In December, we did update our data set with an ongoing study dataset with elacestrant where we saw 5.4 month of PFS with elacestrant as a single agent in the late-line population. And as a reminder, those are patients that had seen a variety of different agents about 40% of those patients have previously seen CDK 4/6 inhibitors. We obviously recognize the increased usage of CDK 4/6 inhibitors becoming much, much more common. And so I think our study that has a good representation of those patients, I think is very meaningful. We have also had about 40% of patients who had previously received elacestrant and also of course many of the patients -- most patients had previously seen Aromatase inhibitors and a number of other targeted agents. So I think those data sets really could put the elacestrant data in appropriate context and give us a frame of reference as to what we could potentially see as we move forward in clinical development.

[Chris Shibutani:]

Can you remind us, when we might expect a next maybe additional update, will we see any posters or any additional information at the upcoming ASCO meeting?

[Gary Hattersley:]

So we haven't provided any additional guidance on additional presentations, but as we have already guided once we initiate the Phase 3 study in the second half of 2018, we will absolutely be looking forward to providing more detail on the study and on the development program.

[Chris Shibutani:]

And for combinations, can you add anything there in terms of what you are thinking?

[Gary Hattersley:]

Yes. Combinations continue to be a significant area of interest for us. We certainly recognized the potential of the ability to combine the elacestrant with a number of targeted agents. There's been a preclinical proof of concept work done. We had a couple of different targeted agents at this point in each of those preclinical models. We've shown quite nicely the ability to enhance the anti-tumor activity of elacestrant by combining with the second agents. We certainly recognized that this is a very appealing and very interesting part to moving elacestrant earlier in the treatment paradigm and something that we are looking to pursue through partnership and additional engagements.

[Chris Shibutani:]

Okay. We'll look forward to hearing what those plans will be. Thank you.

[Joe Kelly:]

Thanks Chris. So do we.

[Operator:]

Thank you. Our next question is from Matthew Harrison with Morgan Stanley. Your line is open.

[Matthew Harrison:]

Hey, good morning. Thanks for taking the questions. Just a couple for me. I guess first on net price, can you talk about if you think there are any reasons that gross to net would get worse throughout the year. Do you think this is the lowest level for -- the highest level for gross to net in the first quarter? And then, on your guidance, can you just tell us what 2017 full year market number is that you're looking for the 5% to 7% growth off of? And then, finally, on the third, can you just talk a little bit about what you're doing right now to be ready to start that study in the second half of '18 and what factors could push you to the beginning of the second half of '18 versus the latter half of the second half of '18? Thanks.

[Jesper Høiland:]

Pepe will take the gross to net. I will talk about the 5% to 7%. And Gary will of course talking about the start.

[Pepe Carmona:]

Hi Matthew. So I wouldn't expect that things are going to get much worse here gross to net, there's going to be variability because its commercial things got going to gross to net. So there's something usually at the beginning of the year you have coverage gap and when you go with the donut hole that impact. But remember, we're very early stage in the large portion of our patients come from new patients and then they keep the donut hole as they go in. So is it going to get better? I wouldn't be that aggressive so far.

[Jesper Høiland:]

So if I could add just one small thing to it, which we have to keep in mind that is, if a health plan except TYMLOS on to a patient then and we don't have a contract with them then they will buy it at a wet price whereas of course it will be at the price that we have agreed with them. So all in all, I anticipate that you should see it being flattening out, being at the level where we are seeing it right now. Coming to the 5% to 7% growth, if you take the number of pen sold last year in 2017 that's the amount of pens that we anticipate to increase the 5% to 7% for the end of this year, over the course of the year. So you're seeing of course -- you've seen the last two quarters going up with 8%. And then you saw 1%, we think and that's also why we're guiding the way that we are that since TYMLOS was not on to the market in the beginning of the year, you'll see higher percentages in the first half of the year less in the second half of the year. You of course have to take into consideration the TYMLOS was available on the market and Gary will you comment? Yes.

[Matthew Harrison:]

Sorry. Can I just follow up?

[Jesper Høiland:]

Go ahead.

[Matthew Harrison:]

I guess what I was asking for is, what was the 2017 number of pens just so we understand what the value is that you're using to grow off of?

[Jesper Høiland:]

The PMO these are roughly 300,000 PMO pens. We can send you the exact number just not to misquote what is in IMS. But it's basically IMS converted into pens.

[Matthew Harrison:]

Yes. Okay. Thank you.

[Jesper Høiland:]

You are welcome. And you know, what's your question?

[Gary Hattersley:]

Yes. So you had a question about the timing and activities associated with initiation of elacestrant Phase 3 study. So we do continue to be on track as we've guided for starting in second half of the 2018. And the elacestrant Phase 2 really is, the highest priority in our pipeline. So we are working very diligently to move ahead with the initiation of that study. And so just to comment on some of the activities associated with the initiation of that study. So we've changed our strategy as we described during the last earnings call from a single arm study to a larger randomized comparative controlled study and this entails some fairly significant but actually fairly routine operational activities that need to be conducted as part of that change in transition. There are too many to really to list them in all details, but just to give you some sort of layman some sort of sense, these include significant redevelopment revision and finalization of the clinical study protocol, revision of the statistical analysis plan. So a selection of additional clinical sites, interactions with additional clinical investigators as well as working closely with all of the vendors that are part of the clinical development plan to put this into action. So again, this is something that's -- it's a very high priority for Radius and something that we're working on very diligently and remain on track for initiation of what we believe is actually a very, very exciting and very important study for us.

[Jesper Høiland:]

Thank you, Matthew.

[Operator:]

Thank you. And our next question comes from Robyn Karnauskas with Citi. Your line is open.

[Greg Harrison:]

Hi. This is Greg Harrison on for Robyn. Thank you for taking the question. So, I see the elacestrant study is now referred to as Phase 3 potentially registrational study. I think previously it was called a Phase 2. Could you talk about the reason for this change and why you would consider it potentially registrational and what needs to happen for it to be actually considered pivotal for approval?

[Gary Hattersley:]

Yes, absolutely. I can say comments on that. So previously when we talked about the single arm study that was a single arm study that had a response rate endpoint that had the potential to achieve accelerated approval, but would require a confirmatory study to achieve full approval. In that context confirmatory study would typically be a randomized comparative control study with PFS as an endpoint. In the change in strategy, our current proposed study is a randomized comparative controlled study with PFS as an endpoint, PFS an endpoint is appropriate for full approval. So that's really the reason for appropriately defining this as a Phase 3 study that can potentially support pending successful outcome of the study defining the study as -- the study that could support registration and therefore Phase 3 study.

[Greg Harrison:]

Great. And is there a specific reason why you used the term potentially or is that just being conservative?

[Gary Hattersley:]

Just being conservative, obviously, since we don't have results from the study in hands at this point. So just probably cautionary language that's all.

[Greg Harrison:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Mara Goldstein with Cantor Fitzgerald. Your line is open.

[Mara Goldstein:]

Great. Thanks for taking the question. I have a couple of questions. First is just on the male osteoporosis study, what your realistic expectations about what that market potential is and also secondarily, what is the hurdle for efficacy in that population? And then, I had some questions on financials, but I think we can do that after.

[Jesper Høiland:]

I will take the market potential. If we're looking at the stats to-date we know that one out of five males will get osteoporosis. However, they are not getting the treatment to the same extent as we're seeing. The market we estimate to be slightly above 10% totally in terms of males being treated on the clinical trial.

[Gary Hattersley:]

Yes. In terms of the study itself, so the primary endpoint for the study is changing lumbar spine BMD at 12 months versus placebo. So there is a placebo arm in this study. And so it's a 2

[Mara Goldstein:]

Okay. Thank you. And then, on the other 3M arrangement, when do you anticipate starting to make payments to 3M and when can we -- will we see that in the P&L? And then, secondarily, the company has discussed in the past, the idea of reaching breakeven and I'm just curious as to what the expectations on timing or that given some change in some of the clinical trials in terms of the size and scope. Can you comment on that, that would be great?

[Pepe Carmona:]

This is Pepe, Mara.

[Mara Goldstein:]

Hi, Pepe.

[Pepe Carmona:]

Good talking to you again. So first let me address the second question first. The cash from breakeven because this is -- we are being clear on this. So, do we final four is, themeless commercialization and from a cash to breakeven perspective we haven't provided guidance exactly on timing or when that's going to happen. But we leave the current trend that we see and if that one continues, we see a good line of sight -- a good line of sight cash breakeven. Now, from the pipeline perspective, all the investments that were making were a plan of the uses of proceeding the convertible offering that we made last year. So, we are financing the TYMLOS patch program, elacestrant monotherapy study and lifecycle manager for TYMLOS like the male study that we're running or [informative study on science] [ph]. What we'll not finance for and I would like to be very clear on this is, we will not finance for any other lines of therapy for elacestrant. So a combination trials wouldn't be financed. And then if there's a smaller study of RAD 140, which is also financed for the Part A -- Phase 1, Part A study, if we would need to progress on that one that's not fine. Hopefully that answers your questions.

[Jesper Høiland:]

On 3M.

[Pepe Carmona:]

The 3M agreement is reasonably clear. For most of the equipments we have a pass through that we need to pay for. And then, there's some margin on their cost of goods. There's going to be investments in the -- probably most likely in the second half of this year from equipment perspective. You can start a little earlier, we're obviously trying to accelerate as fast as -- as much as we can the program. And during the first half of next year as well and then we'll start seeing more rather than manufacturing type of expenses that are going to fall in our ambiguous state where we are. There's going to be more on the clinical trials that we need of next year when we get the first patient in.

[Mara Goldstein:]

Okay. Thank you.

[Jesper Høiland:]

You're welcome.

[Operator:]

Thank you. And our next question comes from Eun Yang with Jefferies. Your line is open.

[Eun Yang:]

Thank you. I know you have talked about not providing sales guidance on the first quarter call, but it's not clear to me the reasons that -- the reason is that, I think in the past when we had discussions it was clear to me that you were to provide a sales guidance once you have clarity -- some clarity from the conversion from four deal under the Express Script deal. So is it fair to say that based on your discussion that the reason why you are not providing sales guidance for this year is because of the variance in gross net discount.

[Joe Kelly:]

No.

[Gary Hattersley:]

No. There's several reasons, which that one could be one, but what I think is more important for us in providing guidance is, if this is a market that it's all about capturing new patients and it's a market that has been declining over the last five, six years. And I think that we need to start showing and I feel very comfortable and for me that there is a trend that is changing in the market. We're capturing new patients that wouldn't have been captured before. We're capturing or we are activating prescribers that were not being that have left the anabolic category before. And that's why we're guiding that the market now is growing. From a market share perspective, as I said, our persistence model in which you capture patients and just are start building their base and the market share is kind of a snowball. You will see growing as we go along and we're very comfortable on getting to those levels of [19 to 51] [ph] and we said. And also as Joe explained, in the places where we have activated prescribers, our market share is of NRX, so number of prescriptions that those prescribers have activated that are putting in patients, we're closer to 49%. So it's a -- we feel very good about the trend. We're not going to provide revenue guidance. It's too early stage to do that. Hopefully that answers the question.

[Eun Yang:]

Okay. Then, are you planning to provide a guidance at some point this year?

[Gary Hattersley:]

We're not committed to that. We have never said that that would be the case. We always talk about leading indicators that will help the market where things are going.

[Jesper Høiland:]

And if I can just add, we feel that with the guidance that we've given on the market growth and the average market share for the year that we have given, provided to you with an insight that can calculate, I will give you a very good range so where we see the numbers for the full year. And the reason why we took the average of the year for, it's difficult to say if it's year-end, is that the last day of the year, is that the last week of the year, is that the last month or quarter of the year. So we felt it was better to provide you with a number where you can see what is the trend line that we're having in front of us and thereby we would be able to help you. So that -- was that in mind that we provided for the number. And then, of course the gross to net is something you will have to keep in mind that as we are moving into 2019 that's really where we will see the next big point for that because that's where we're negotiating for the contract and market access in 2019 and that is taking place as we are speaking for vis-à-vis the Part D segment and for the commercial market that will happen over the summer. Nevertheless, keep again in mind, with the price point that we have picked, rebate is not really where you should be thinking of it in respect to where other companies are giving it. We have given a very, very responsible price to the market and thereby rebate is not really what we think that we should be negotiating with. We have given the whole thing upfront you could say by taking a different price point. I hope that gave clarity.

[Eun Yang:]

Thank you. And then, second question is on the price increase that took place in February 5.9%. What would be your net realized price increase just from 5.9%? Thank you.

[Jesper Høiland:]

Yes. We haven't provided the guidance on what percentage of the 5.9% goes into net or obviously, nothing goes into net, it goes into gross to net. So and -- but I would say a large portion of the 5.9% will go through to net at least 50%, let's call it. And what happened there is, when you have a price increase, there is several things in the context of that all kind of inter link between each other. You have things that kick in like administration fees or things that connect one contact to be other that that taking -- not rebate, but on the contract kind of rebate that is increasingly across the net and that doesn't through the net.

[Eun Yang:]

Thank you.

[Operator:]

Thank you. And I'm showing no further questions at this time. I'd now like to turn the call back to Jesper Høiland, President and CEO for closing remarks.

[Jesper Høiland:]

Thank you very much. Thanks to everyone for your interest in Radius Health. Maybe we weren't clear enough upfront, but we also had Amanda Mott and Joe Kelly here with us. We have decided that the first quarter focus should be on the commercial thereby Joe Kelly is also going to join us for the road trip that we are going to make. We are going to be in New York tomorrow. And we of course, also available for calls, should you want to give us a call, you have Elhan contact details, so she will be able to provide that sort of link it to us, should you have any further questions that you would like us to elaborate on. But, as for now, I can only say that we are pleased with our first quarter result and as we used to say one down, three to go, then the year is gone. There is a lot of things taking place at Radius as we are speaking and we certainly look forward to meet with all of you in the future and discuss that further. So, thanks from our end and look forward to see you and talk to you in the near future. Thank you.

[Operator:]

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