Q2 2018 Earnings Call Transcript

Published: 1 Nov 2018

[Operator:]

Good morning, everyone. And welcome to Radius Health’s Third Quarter 2018 Financial Results and Business Update. [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. Elhan, please go ahead.

[Elhan Webb:]

Thank you, Daniel. Good morning. And thank you all for joining us on the conference call and webcast for Radius third quarter 2018 financial results and business update. Before we begin, I'd like to remind you that statements made during this call that are not historical facts are considered to the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our annual report on Form 10-K and other reports filed with the Securities and Exchange Commission. Any forward-looking statements represent our views as of today, November 1, 2018 only. During today's call, we may refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding our operating performance. These non-GAAP financial measures are not to be relied upon as a substitute for our financial information, presented in accordance with GAAP and are unlikely to be comparable to non-GAAP information provided by other companies. Please refer to the slide at the end of today's presentation, which contains the reconciliations between our non-GAAP and GAAP financial measures. A replay of this call will be available on our company website, and you can find the dial-in information for the conference call replay in today's press release as well as on our website. On today's call, we will provide you with a review of Radius Health third quarter 2018 financials, an update on our pipeline and our upcoming milestones. Joining me on the call now are Jesper Høiland, our President and CEO; Amanda Mott, SVP of Market Access; Joe Kelly, SVP Sales and Marketing; Charles Morris, Chief Medical Officer; Pepe Carmona, our Chief Financial Officer, our management here will also 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 third quarter 2018 results. Jesper?

[Jesper Høiland:]

Thank you, Elhan. Welcome everybody and thank you for joining us on the day today. I am very pleased with our third quarter results as we continue our strong commercial launch for TYMLOS. We have made substantial focus in increasing TYMLOS market share in the anabolic market and expanding the use of anabolic therapy for the continued growth of this market. In the third quarter, TYMLOS generated $27.6 million sales, a seven-fold increase to the third quarter sales last year. And we have achieved an average total market share of 22% in the anabolic osteoporosis market. With our commercial efforts, we have seen the U.S. anabolic market continue to grow, with 9% growth in volume in the third quarter over the third quarter last year. We have successfully increased the coverage for TYMLOS in Medicare Part D formulas for 2019 from 44 % to 64 %. I'm very happy to be able to provide our draw [ph] to a larger number of high risk osteoporosis women who might significantly benefit from treatment with an anabolic drug and at a lower costs to those patients TYMLOS. Amanda and Joe will be providing more details on our market access and commercial update for TYMLOS later in this call. I'm very glad to have hired Charles Morris as our Chief Medical Officer. Charlie joined us in early September and brings a tremendous expertise in oncology drug development, in particular in the area of breast cancer. His role as the lead physician for the global development of fulvestrant has already been to a great value for us, determining our next step for elacestrant. Taking into consideration his valuable input and FDA feedback, we have expanded our Phase 3 clinical protocol to address a larger and growing patient population by including both second and third line estrogen receptor positive metastatic breast cancer patients. Charlie will be walking you through our study design, the treatment paradigm and opportunity for elacestrant in more details later in this call. We are on track to start our Phase 3 study this quarter and are committed to show women's needs in oncology, as well as osteoporosis. I will now turn the call over to Amanda Mott for an update on our market access TYMLOS.

[Amanda Mott:]

Thank you, Jesper. Moving to Slide 7, in the third quarter of 2018, TYMLOS access was maintained at $265 million covered lives continuing to represent 95% coverage and commercial and Medicaid, all other and 44% coverage and Medicare Part D. In October, several large Medicare Part D plans and PBMs, including CVS SilverScript, WellCare and Prime Therapeutics announced their decision to cover TYMLOS effective January 1, 2019, which will make TYMLOS covered at parity or better on five of the seven largest Medicare Part D plans and PBMs in 2019. With these additions, TYMLOS will have 64 % coverage in Medicare Part D, up from 44 % in 2018, representing approximately a 50 % increase in covered Medicare lives. In addition, TYMLOS will maintain 95% coverage for commercial and the Medicaid all other segment in 2019. We are continuing to actively engage with the commercial and Medicare Part D accounts that have not yet announced 2019 formularies. With the foundation of TYMLOS' broad national coverage established with prescribers, TYMLOS market share has continued to grow across both the commercial, as well as the Medicare Part D segments, demonstrating the strength of the TYMLOS clinical, safety, tolerability and access profile. I would now like to turn the call over to Joe Kelly, Senior Vice President of Sales and Marketing, for an update on our commercial performance.

[Joe Kelly:]

Thank you, Amanda. Good morning everyone. I'm excited to present our commercial update for TYMLOS sales for the third quarter of 2018. Please turn to Slide 9. This data 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 seen now is near double digit year-over-year, quarterly volume growth since the launch of TYMLOS in May of last year alongside TYMLOS total volume growth of 22% when comparing Q3 versus Q2 of this year. Our focused efforts across the commercial team in promoting TYMLOS, has played a significant role in the growth of the anabolic marketplace. The next slide shows our continued positive growth across all market share measurements in quarter three. With TYMLOS capturing 22 % of the total anabolic market, and 35% of new patient starts, we expect that both the commercial and Part D books of business will continue to provide sustainable growth for TYMLOS, helping us achieve our overall market share and revenue goals. Please go to Slide 11. Here we see a continued TRx market share growth with activated TYMLOS prescribers from their quarter of initiation to the third quarter of 2018. This shows that activated TYMLOS prescribers build their confidence in the brand and continue to prescribe at a higher rate quarter-over-quarter as seen on the Y access, which gives the HCPs starting market share, and their current market share for TYMLOS to date. Also every quarter as we activate new prescribers, they start at a higher market share as you see on the left hand side of the graph with Q3 of 2018 activated prescribers starting out at a 45% TRx market share for TYMLOS, with expected, continued share growth with this group as seen by previously activated TYMLOS prescribers. The next slide shows our approach to new to anabolic prescribers and their TYMLOS following contribution during the third quarter with an average market share of 87%. We are taking a disruptive approach in getting non-anabolic prescribers to use TYMLOS. For the first 18 months of therapy than a bisphosphonate. As shown in our ACTIVExtend trial in which patients previously treated with abaloparatide followed by alendronate had a significant reduction in the risk in the incidents of new vertebral fractures of 87% at their six months of alendronate therapy, compared with patients who received placebo followed by alendronate as stated in our label. With this approach, we are simultaneously reaching a broader group of customers while still growing market share with experienced anabolic prescribers who we are capturing more than a 40% market share with. Slide 13, shows our guidance for all of 2018 is $95 million to $98 million in TYMLOS net sales. And for 2019, $155 million to $175 million TYMLOS net sales. We believe we can accomplish these goals based on our continued focus on growing breadth and depth with experienced anabolic prescribers with our active comparator data. And as mentioned, our improved overall Medicare Part D coverage in 2019 will be a catalyst for TYMLOS growth. Note that one of our competitors had discontinued personal promotion of teriparatide as of Q4 of this year, leaving Radius Health as the only company providing personal promotion of an anabolic agent for postmenopausal women with osteoporosis. Second, our efforts to expand the TYMLOS prescriber base by changing the treatment paradigm with ACTIVExtend and again more new to anabolic prescribers to believe in the benefits of building bone first with TYMLOS and then maintaining bone with an antiresorptive. This approach gives us access to a larger healthcare provider pool. And once they prescribed TYMLOS, the average market share is 85%. Finally, our success in driving growth with the anabolic space by having a strong personal promotion and resource investment in TYMLOS for the rest of this year and 2019. Now, so far, in early Q4, TYMLOS has a TRx market share of 25% and NRx market share of 30% and an NBRx exit share of 37% all exceeding Q3 measurements. Thank you. And I'll now turn the call over to Charlie.

[Charles Morris:]

Thank you, Joe. And good morning everyone. I'm excited to have recently joined Radius and to have the opportunity to lead the development of our portfolio of R&D programs in osteoporosis and oncology, which you will see on Slide 15. For TYMLOS, we are making progress with our Phase 3 male osteoporosis study and have begun recruitment to our bone histomorphometry study. In addition, preparations for our Phase 3 transdermal patch study are on track for that trial to begin in mid-2019. In oncology, our selective androgen receptor modulator, RAD140 is in Phase 1 dose escalation. And we will provide some color on the progress of that program around the San Antonio Breast Cancer Symposium in December. Most significantly, we are preparing to begin a Phase 3 clinical trial for elacestrant as a monotherapy for advanced metastatic breast cancer and we expect to start the study this quarter. After further discussion with FDA and additional considerations aimed at increasing the likelihood of success of the study, we have made some changes to the previously disclosed study design and I would like to walk you through those changes over the next few slides. On Slide 17, the treatment landscape for advancement metastatic breast cancer is going through a period of change with frontline metastatic disease treatment increasingly dominated by combination treatments, particularly with combinations of CDK 4/6 inhibitors such as Pfizer’s IBRANCE being combined with aromatase inhibitors like anastrozole, letrozole, or with the selective estrogen receptive degrader fulvestrant. CDK combination use is increasing in frontline treatment and this looks set to continue to grow. As a result, first line use of hormonal monotherapies is decreasing and we will therefore see greater use of single agent drugs in the second and third line. There is therefore an opportunity for elacestrant in both second and third line therapy for patients who have progressed after CDK combination therapy. On Slide 18, I will remind you that our Phase 1 study showed an encouraging level of activity for elacestrant in heavily pretreated patients who had received a median of three prior lines of therapy. Importantly, responses were achieved in patients with measurable disease that had progressed after price CDK therapy. The achievement of responses in patients who had previously progressed on fulvestrant therapy supposed our preclinical findings, that asset had differentiated profile from the approved set [ph] and the level of response and the progression free survival in patients whose TYMLOS harbored mutations and the estrogen-receptor gene 1 or ESR 1 was also highly encouraging. On Slide 19, we put these observations into context and can see that response rate and progression free survival in the Phase 1 study seems to compare favorably with single agent fulvestrant and aromatase inhibitors in a number of recent studies. Moving to Slide 20, we see where elacestrant could fit. There is a need to find the appropriate next line of therapy after progression on a CDK inhibitor containing combination, whether used in first or second line, and the elacestrant’s potential has been shown here in the Phase 1. TYMLOS with the ESR1 mutations have very little response to aromatase inhibitor therapy and the data for fulvestrant in these patients is mixed. Initial data for elacestrant suggests a potential to be a best-in-class therapy for these patients. The third class exemplified by fulvestrant has had success, but the preclinical and Phase 1 clinical data for elacestrant, suggests the potential to work in patients for whom fulvestrant has not been successful. And therefore there's the potential to benefit more patients. Up to this the good tolerability and the simplicity of once daily oral dosing and we see the potential for an overall preferred clinical profile for elacestrant. Taking into account all of these factors brings us to Slide 21, the updated and finalized design of our randomized Phase 3 EMERALD study. This study will compare progression free survival for elacestrant versus standard of care fulvestrant or an aromatase inhibitor in patients who have progressed after one or two prior lines of hormonal therapy, one of which must have included a CDK-4/6 inhibitor. To be clear, this is a second and third line population, larger than the third line population described in the previously disclosed version of this study. The primary endpoint will be evaluated in both the overall population and in those with the ESR1 mutations. As our one mutation testing will occur as part of the screening for the trial. The statistical design is such that the primary outcome can be declared positive in both populations or in either of the populations, even if the other population does not achieve the required significance level. The study will include approximately 460 patients, including 220 patients with ESR1 mutations. We anticipate recruitment taking 18 months to 21 months, meaning we should have the final data in 2021. So in Slide 22, you can see that the EMERALD study gives us the opportunity to define elacestrant’s role in the treatment of patients after progression on a CDK4/6 inhibitor and to become the hormonal therapy of choice in this setting. If the ESR1 mutation posted population derives greatest benefit, we can demonstrate that giving us two shots to approval in the overall population or in the ESR1 mutation positive patients. We aim to be the first also to gain regulatory approvals and our team is working exceptionally hard and is on track to start this study in the current quarter. With that, I'd like to hand over to Pepe for the financials.

[Pepe Carmona:]

Thanks Charlie. I will briefly walk through the income statement and uses of cash in Q3 2018. And afterwards I will provide sales and cash guidance for 2018 and 2019. For the three months ended September 30, 2018 Radius report that net sales of $27.6 million and a loss of $49.8 million, or $1.09 per share as compared to net sales of $3.5 million and a net loss of $57.8 million or $1.31 per share for the three months ended September 30, 2017. On the right side of the slide, we show the figures on the non-U.S. GAAP basis, which excludes 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 appendix. Radius on a non-U.S. GAAP basis for the period September 30, 2018 reported a net loss of $38.8 million or $0.85 per share, as compared to a net loss of $49.3 million or $1.12 per share for the three months ended September 30, 2017. On a non-U.S. GAAP basis, I want to highlight that. First, our sales growth at a relatively stable gross margin of 91% to 92% is starting to become a material source of gross profit for Radius. Second, the increase in R&D expenses versus Q3 of 2017 is mostly driven by the TYMLOS male and abaloparatide patch programs and the investment associated to the expected initiation of the elacestrant Phase 3 trial. Last, the SG&A is slightly decreasing as we have made some adjustment to our investment related to the initial launch of timbers and properly managing our expenses in back office. On the next slide, we share the cash flows in Q3 of 2018. We're focusing our resources to drive TYMLOS growth and advance our pipeline. Our cash, cash equivalent, and investment balance as of September 30, 2018 was $277 million. In the third quarter, we reduce our cash balance by $42 million. The use of cash was focus on TYMLOS commercialization and R&D external expenses related to the pipeline which was partially offset by increasing cash inflows from TYMLOS gross profit. Finally, in my last slide, I will share our guidance for 2018 and 2019. Previously we have guided the expected anabolic market growth in TYMLOS market share for 2018. We expect that the ranges provided in Q2 2018 for those metrics are within the expected range for the full year 2018. This means that we expect to see in full year 2018 an anabolic market growth of 7% to 9% over 2017 and TYMLOS average annual market share to be in the range of 19% to 21%. In view of the continued strength of our growth and knowledge of the anabolic market at this stage of the launch, we're providing guidance to our sales and cash balance for the year end, as well as setting up expectations for 2019. We expect to finish 2018 with full year net sales in the range of $95 million to $98 million and a cash, cash equivalent and investment balance of over $220 million. For 2019 we expect to deliver full year net sales in the range of $155 million to $175 million and end the year with cash, cash equivalent and investment balance of over $100 million. We’re allocating resources towards our key assets, while driving productivity across the organization. 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 Høiland:]

Thank you, Pepe. We’re approaching the end of our presentation. And I would like to remind you with this slide about our most important goals and upcoming milestones. In the fourth quarter this year, we are on track to start our elacestrant Phase 3 study for our second oncology asset, RAD140. We are planning to present abstracts at the San Antonio Breast Cancer Symposium and provide an update from an ongoing Phase 1a study. I'd like to thank you all for your support to Radius Health. And I would ask the moderator to now open the call for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Jessica Fye with JP Morgan. Your line is now open.

[Unidentified Analyst:]

Hi this is Yuko on the call for Jessica. Thank you for providing 2019 guidance. Can you elaborate on the market growth and market share assumption that feed into that TYMLOS guidance? And should we expect salesforce to remain roughly at the same size in 2019? And then a question for Charlie, I'm sorry if I missed this, but what proportion of patients do you expect to be second line versus third line? And then could you talk about your expectations for the mix of products and the dealers choice arm, choice arm, physicians enrolling patient in this trial would likely be choosing third such that control arm would be mostly [indiscernible]? Thank you.

[Jesper Høiland:]

Thank you. Joe, will you start out and Pepe?

[Joe Kelly:]

Yes. So I'll address the first question about growth for next year and how it plays into the guidance. As we mentioned we're still seeing a very nice growth within the anabolic space and right now it's expected to continue to grow from a modest acceleration standpoint. And when you look at the potential that's out there within the anabolic space, there was about 900,000 incidences of postmenopausal osteoporosis women that fracture each year that would be candidates for TYMLOS. And right now there’s only about 50,000 patients on anabolic therapy as a whole. So again, there's a modest expectation for growth next year built into the guidance for 2019.

[Jesper Høiland:]

And what about the sales force?

[Joe Kelly:]

Yes, sales force, we feel confident with where it is today. So right now we are covering about 98% of the potential that's out there from an anabolic and antiresorptive standpoint.

[Jesper Høiland:]

Good and Charlie?

[Charles Morris:]

So for the study, we are anticipating that majority use first line is likely to be aromatase inhibitor with CDK. So we think that most likely we will see majority second line in the EMERALD study and the majority comparator to orthodox, as you said.

[Jesper Høiland:]

Super. Thank you.

[Operator:]

Thank you.

[Charles Morris:]

Go ahead Daniel.

[Operator:]

Thank you. And our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open.

[Unidentified Analyst:]

Hello, this is Ismail on for Matthew. Quick question, how much risk do you think you have taken by moving into second line therapy with elacestrant given the data that you have is on late line patients? Thank you.

[Jesper Høiland:]

Charlie. Will you take that?

[Charles Morris:]

Yes, I think if we look at the history of hormonal therapy, you can see increasing response rate, progression free survival in the earlier lines of therapy. We've already seen from our Phase 1 data that we have a differentiated profile with patients who achieve responses despite the fact that they've already progressed on fulvestrant. So I think this is a reduced risk rather than an increased risk and it puts it in a larger population with the ability to both the overall and the ESR1 mutation population. So I think overall it's a well-balanced view of the risk.

[Unidentified Analyst:]

Okay. Thank you.

[Operator:]

Thank you. Our next question comes from Geoffrey Porges with Leerink. Your line is now open.

[Geoffrey Porges:]

Thanks very much for taking the questions. First, in the guidance that you provided, does it assume any generic teriparatide in the market? And if so, when and with what effect do you expect? And how do you envisage payors that you've negotiated contracts with handling TYMLOS if such a product is launched? And then Charlie, on the clinical trial, I just want to make sure we really understand who the patients will be. Your prior answer suggests that it’s mostly going to be second line where you'll be compared head-to-head with fulvestrant. In the case of the third line patients, what do you expect them to have been previously treated with? And presumably in the third line setting, you expect less treatment effect than the second line. So will the study be independently powered to show the benefit in just the second line patients or is there some uncertainty given the fact that you might not know what the mix of third and second line is going in?

[Jesper Høiland:]

Thank you, Geoffrey. That was a very short question, but we will start out with Pepe giving guidance on the generics and then Amanda will talk about the market access and of course Charlie is going to end up on the elacestrant. So, Pepe?

[Pepe Carmona:]

Thank you Geoff. The answer is yes, we of course see our generic entrants in the second half of next year, as you know we are highly differentiated, I guess, teriparatide and we believe that the impact on us is not significant. And we are well-positioned to defend our self and continue to grow.

[Amanda Mott:]

Hi Geoffrey it's Amanda. With respect to on the payor side, we knew the patent expiration date prior to our launch and so as we engage with the payor pre-launch, we took that into account based on kind of the guidance back and forth. And so we've already incorporated that into the plan. And at this point we have the multi-year contracts and feel confident that based on the differentiated profile, as well as where we've come in from a price point that we're well-positioned even with that generic competition entrants.

[Jesper Høiland:]

Thank you, Amanda. And Charlie?

[Charles Morris:]

As far as the design is concerned, yes, correct, we do think it will be majority second line, but there are groups of patients who go back to following second line, for example, focused of therapy will go back and have the second aromatase inhibitor particularly, exemestane in that third line setting. Occasionally you'll see the use of combinations in the second line maybe with the mTOR inhibitors and then subsequently third line monotherapy use. I think you're right, you’d expect response rate treatment effect to be lower in the third and second line, but our assumption is the treatment effect versus comparitor would be the assumption is similar in the second and third line. So whatever we are comparing and to whichever line we'd be looking to make the assumptions in hazard ratio [indiscernible] progression-free survival made shorter. And the way that the stratification works, where one of the stratification factors will be used to prior fulvestrant, which we think will sort of help to separate to them show the balance of second and third line between the arms.

[Geoffrey Porges:]

Got it. Thank you very much.

[Operator:]

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

[Ying Huang:]

Hey, good morning. Thanks for taking my question. Related to the last question, I was just wondering if you can provide a little more clarity on what percentage of your long-term contract actually covers 2019 and how many of your contract only extend for one year in 2019 to give us a better idea about that just in case generic is launched next year? And then secondly, I have a question on the design of Phase 3 elacestrant. So if you look at previous data, the fulvestrant monotherapy gives about two months in third line and then maybe 4.5 months PFS in second line. And you showed in your Phase 1/2 data that for the patient who had prior CDK 4/6 inhibitor, PFS was 3.8 months. So just wondering, if you can say that you are following this trial for non-inferiority or for inferiority in PFS? Thank you?

[Jesper Høiland:]

Thanks Ying. First Amanda on market access and then Charlie of course on elacestrant.

[Amanda Mott:]

Certainly, more than 95% of our contracts go into through 2020 with actual additional request to go into 2021.

[Ying Huang:]

And Amanda, just to follow-up, sorry is there any stipulation that this could change your either net price or a tearing if there's a generic introduced?

[Amanda Mott:]

So, we go constantly with our customers through when market changes, but at this point, no, it's stable through that period.

[Ying Huang:]

Thanks.

[Joe Kelly:]

From elacestrant perspective, Ying, we don't expect any material changes from 2018 to 2019.

[Jesper Høiland:]

And Charlie?

[Charles Morris:]

Yes, and from a design point of view the study is powered for superiority. The patients in the Phase 1 were clearly much more heavily pretreated than we seen in the second line and third line studies which have been described. In the end, we should remember that in prior studies, collaborative studies, for example, the CDKs were not available at the time. So we would not again think that the third line PFS would be a little shorter with those agents after prior CDK therapy based on available information.

[Operator:]

Thank you. And our next question comes from Salveen Richter with Goldman Sachs. Your line is now open.

[Unidentified Analyst:]

Hi, this is Ross on for Salveen. Two questions here. If you can just walk us through more broadly how the generic FORTEO landscape is playing out at this point? And then on the breast cancer study for the Phase 3, how long should we expect enrollment to be and when could we expect to see an interim work on data? Thank you.

[Jesper Høiland:]

Thank you. We will start out on the generic outlook. Joe will give us some insight to that and then Charlie will talk about the enrollment.

[Joe Kelly:]

Yes, so from a generic standpoint as far as timelines, we really have no clear evidence of exactly when but as far as we're concerned, we're focusing on volume driving share with TYMLOS at this point and it has been mentioned by Pepe we're very confident in our clinical profile and our ability to truly differentiate verse that molecule. So at this point we're moving forward and as we hear more concrete news about the potential generic, we'll react if we have to.

[Jesper Høiland:]

Super. And Charlie on enrollment?

[Charles Morris:]

In terms of the enrolment, we are looking at yield stands like 21 that targeting is around 18 months to 21 months. We do not have a formal interim analysis found in there. So obviously we will work with the Data Monitoring Committee on that to monitor how study is going.

[Unidentified Analyst:]

Great. Thank you guys very much.

[Operator:]

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

[Eun Yang:]

Thank you. So Phase 3 enrolment study for superiority, can you talk about your powering assumptions there? And I think also the interim look, I think, previously you mentioned that with the PFS endpoint you would have an interim analysis in the trial. So I just want to know if it is still the case. Thank you.

[Jesper Høiland:]

So Charlie you are popular today, first on the powering and secondly on the interim.

[Charles Morris:]

I'm fine with popularity. So the powering, there’s some detail that you'll see on the bottom of Slide 21 where you'll see the powering changes a little according to the outcomes in the different populations. But there's at least a 90% power and it’s actually up to about 97% power at 0.05 level for the overall population for a hazard ratio of 0.67. So that's about a 3% improvement. And in the ESR1 mutation subset, it’s starts with 80% rise as to about 87% at 0.05 level if both endpoints are 0.05. So as I mentioned, there is not a planned and formal interim analysis in this particular study, we think with the change in population, it could be less likely to serve as the basis of an accelerator approval. Our focus is on achieving a full approval as rapidly as we can. So we're going to be focused on delivering this trial and get into base rebound for seeking full approval.

[Ying Huang:]

Thank you. And then one quick question on the abaloparatide subcu. In the press release one of the upcoming, anticipated milestone is entering into a partnership outside of the U.S. and Japan. Which territory are you referring to? Thank you.

[Joe Kelly:]

100% clear Ying, you're talking about partnership outside of the U.S. for TYMLOS?

[Ying Huang:]

Yes, so one of the milestones listed in the press release says entering into partnership outside of the U.S. and Japan. So which territory are you referring to? Thank you.

[Joe Kelly:]

Basically what – of course this has happened because of the European situation, what we also have been now saying is that we have had more than 40 inbound calls from different companies who wanted to engage with us. And what we have done is we have taken basically region-by-region and we'll take them in that order in terms of negotiations. And that's ongoing as we're speaking.

[Ying Huang:]

Thank you.

[Operator:]

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

[Robyn Karnauskas:]

Hi thanks for taking my question. So just a question, follow-up from the last one. Given the market dynamics and the stock price and your guidance for cash, may be you could create run out of cash in 2020. I'm just curious if you think that you can do business development deals with the one you just mentioned, or you think you'll have to go to the capital markets or could you find an alternative to raise that money? My second question is around the guidance for the enrollment. And what is your thought for the breast cancer study? What is your thought on third line enrollment? And is that the rate way for the new steps you think second line will grow pretty quickly? Help us understand like what is the key to gaining factor for completing your enrollment. Thank you.

[Jesper Høiland:]

Thank you Robyn. The quality was not so good here, but I will just clarify. On the first one, I will let Pepe answer that. The question was, what about cash in 2020? We have guided that in cash and cash equivalent. 2019 is going to be plus 100%. So Pepe, please elaborate.

[Pepe Carmona:]

Sure. Hi Robyn. How are you? So focused from a partnership perspective, we would be looking to maximize the value of the asset for shareholders. So it is not something I would guide right now about how much would come from a cash in a partnership situation. And we're not guiding financing. So we felt that if TYMLOS continues to grow at this pace, we have a good line of sight, cash break even and we're committed to finance the anabolic [ph] patch program, as well as the elacestrant program, which have the two major Phase 3 trials that we will have ongoing in 2019.

[Jesper Høiland:]

Thank you. And Charlie on enrollment?

[Charles Morris:]

Yes in terms of the enrollment, we haven't set the specific numbers for second versus third line. So we'll take the patients as they come in. The key thing is whether or not they have had a prior CDK4/6 inhibitor therapy. So the gating standard, the only thing at the end of the study, we will have to look at the rate of inclusion of patients with the ESR1 mutation, so that we achieve the targetted number three from that analysis. And that’s something that we'll have to monitor as we go.

[Operator:]

Thank you. And our next question comes from Asthika Goonewardene with Bloomberg Intelligence. Your line is now open.

[Asthika Goonewardene:]

Hi, good morning and thank you for taking my questions guys. First off on the TYMLOS numbers for the quarter, how much community you are seeing right now? And then in your 2019 guidance how much community expansion are you expecting? And then on the elacestrant Phase 3, I'm just curious to know the ESR1 mutation, are you testing it with a blood or tumor tissue test. And looking into the future? How do you plan on getting this as an accepted test in treating breast cancer? Thanks.

[Jesper Høiland:]

So Joe will talk about TYMLOS outlook, we haven't guided on this specific market share data, but what's going to create our strong position in the marketplace…

[Joe Kelly:]

Yes. Of course, so we'll continue to focus on the experience to anabolic prescriber where on Slide 11, you'll see that once we activate them, you see market share growth from a TRx standpoint post quarters from activation and most recently if you isolate quarter three of this year, newly activated prescribers started off at a 45% TRx market share. So of course, the goal going into next year is to add on new prescribers knowing that once they do commit to the brand market share does grow. Not sure if that answered your whole question. But we feel that also there's an opportunity with the new to anabolic prescribers as mentioned on the call. And typically views our HCPs that write quite a bit of the antiresorptives that have an opportunity with their patient population to use more anabolics, specifically, TYMLOS.

[Jesper Høiland:]

Thanks Joe. And Charlie on enrollment?

[Joe Kelly:]

The ESR1.

[Charles Morris:]

Yes, so the ESR1 testing will be based on the circulating DNA. So it will be a liquid biopsy, from blood, so relatively simple of course from that at least from the patient's perspective. We are obviously working with a company on developing that to test and if the final population is only ESR1 mutation, then that would be developed as a companion diagnostic.

[Operator:]

Thank you. [Operator Instructions] Geoffrey Porges with Leerink. Your line is now open. Geoffrey, please check your mute button.

[Geoffrey Porges:]

Thanks very much for allowing me take the additional question. Pepe, I just want to ask you few modeling questions if I may. It looks as though if you are at the upper-end of your revenue guidance that you should be operationally breakeven next year apart from R&D of course, is that the right way to think about the outlook for SG&A? And then on the R&D side, it does look as though you are still forecasting a significant step up in R&D to accommodate these clinical trials. Will that begin in Q4 or is that more guided into next year? And then lastly, you mentioned in the press release a clinical collaboration agreement for elacestrant. What do you mean by clinical collaboration agreement? And should we anticipate that there might be some cash associated with that, or would it just be a joint clinical trial, funding, or something?

[Jesper Høiland:]

So Geoffrey that was three questions, but I'm sure Pepe can answer all three of them.

[Geoffrey Porges:]

He's quick.

[Pepe Carmona:]

Thank you Geoff. So as we said before we believe that if TYMLOS continues to grow, we do see a good line of sight to cash breakeven. Now from a spending on investment perspective, we're going to be now jumping into the third year of the launch of TYMLOS and we've had this obviously productivity and efficiencies that we can find in SG&A line. And we are actively working to always be optimizing our resources and focusing them on what makes more sense to have highest ROI. So that's expected. For the R&D investment, there is going to be a ramp up in the R&D expenses. But as we have said the elacestrant trial, we'll start in Q4 of this year and the patch program we will start in the middle of next year. So those programs are going to run over a period of time up to 2021. So the investment will be spread over that time period. But you should be seeing a slight increase in that investment. So that's to answer your first question. In regards to the clinical collaboration agreement, we expect that our clinical collaboration agreement will have normal terms in which I call this more like a cost reduction exercise in which we’ve partnered with another potential combination product like a CDK 4/6 or others. And we get a low cost, or no cost, or free drug to run the study at a more efficient level. Cash infusions in those types of deals are rare, I would say.

[Geoffrey Porges:]

Yes, that's very helpful. Thank you.

[Jesper Høiland:]

Thanks Geoffrey.

[Operator:]

Thank you. Ladies and gentlemen, that concludes our question-and-answer session for today's call. I would now like to turn the call back over to Jesper Høiland for any further remarks.

[Jesper Høiland:]

I would like to thank all of you for your support to Radius Health. Hope that you’all find the guidance that we have been giving this Q3 earnings has been helpful for you both for this year and of course most importantly for next year. And certainly also the insights that we have provided on elacestrant, I hope it was very helpful to you. And thank you to everyone for your support.

[Operator:]

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