Q1 2017 Earnings Call Transcript

Published: 4 May 2017

[Operator:]

Good day, ladies and gentlemen and welcome to Radius Health’s First Quarter 2017 Financial Results Update. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Barbara Ryan, Radius Health’s Head of Investor Relations. Please go ahead.

[Barbara Ryan:]

Thank you, Nova and good morning and thank you to all of you joining us on the webcast and conference call this morning for the TYMLOS and first quarter 2017 financial results update. Before we begin, I would like to remind you that any 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 most recent 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, May 1, 2017 only. A replay of this webcast will be available on the company’s website, 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 website. Joining me this morning are Robert Ward, President and Chief Executive Officer of Radius Health; David Snow, Chief Commercial Officer; Dr. Lorie Fitzpatrick, our Chief Medical Officer; and Gary Hattersley, Chief Scientific Officer; and Nick Harvey, our Chief Financial Officer, as well as Greg Williams, Chief Development Officer, will be available during the Q&A session. I would now like to turn the call over to Robert Ward, President and Chief Executive Officer of Radius Health.

[Robert Ward:]

Thank you, Barbara. Today is indeed an excellent time to be on the U.S. market in osteoporosis. The osteoporosis market has always been a blockbuster category. Fosamax, Merck’s once market-leading bisphosphonate brand, generated over $35 billion during the period of its branded commercial life. Indeed, the portfolios of many of the major pharmaceutical companies once included a blockbuster bisphosphonate. Today, Forteo has reached an estimated cumulative sales of over $11 billion and Prolia, with an estimated cumulative sales of over $5 billion, both continue to be placed in the blockbuster sales category. The osteoporosis development path is complex and challenging. Over the last few years, two of the other major clinical programs were discontinued. Achieving an acceptable safety profile and demonstrating both vertebral and non-vertebral fracture reduction are substantial hurdles. Because of these high clinical hurdles, there’s been a low level of competitive intensity. Forteo enjoyed almost 15 years as the only approved anabolic. And today, Prolia remains the only anti-RANK ligand on the market with no competitive programs in the late-stage pipeline. With the exception of the one brand undergoing regulatory review at the FDA, the late-stage pipeline is empty. We expect TYMLOS to enjoy a lengthy branded commercial life and for the brand to achieve blockbuster status. We are focused at launch on the existing market for bone anabolic agents, restoring growth to the category and ensuring that patients who experience an osteoporotic fracture have access to appropriate therapy. We have previously guided that approval by April was very important for success. This timing is key for formulary placement and Medicare reimbursement. David Snow will take us through our launch preparations and why our April approval is so important. Dr. Lorie Fitzpatrick will share with us the current changes in clinical practice, which are recommending earlier use of bone anabolics for high-risk patients. Remember, these patients include the 1.4 million postmenopausal women here in the U.S. who experienced an osteoporotic fracture each year. And then Dr. Hattersley will provide a progress report on the transdermal program, which opens the door to expanding to primary care, as well as an update on our oncology pipeline before Brian Harvey provides our quarterly earnings. Today is indeed a great day to be on the market. I would now like to turn the call to David Snow, our Chief Commercial Officer, to talk about the launch of TYMLOS.

[David Snow:]

Thank you, Bob. And on behalf of the commercial team, who have been ready and waiting for this magic moment, I couldn’t be more pleased to be here today. We’ve dedicated ourselves to doing everything possible to be ready to accelerate TYMLOS’ launch and uptake, and I’ll now share some key points of how we’re going to position TYMLOS towards market leadership. The TYMLOS name itself is easy to remember and easy to write. And everything we’re doing is focused on making it as easy as possible for clinicians and patients to get TYMLOS and stay on TYMLOS through the full course of treatment. Now, let’s take a look at the final label. I feel like this is a very positive and differentiated label, and that we have a lot to work with here. It all starts with the efficacy data. Our label is for postmenopausal women at high risk of fracture, regardless of their baseline risk characteristics. We have great information here about reducing the risk of fractures across all the key sites, vertebral and non-vertebral, with a special emphasis on its Kaplan-Meier curves to help show the speed of onset. And I also want to make a special note of the non-vertebral Kaplan-Meier data that’s a validation of the emerging treatment paradigm that build through 18 months and extend through 25 months. It’s notable that while we do have a boxed warning that’s consistent with class labeling, we were not required to have a REMS program. So let’s – there is also some key parts of the labeling I’d like to share with you around that are patient-friendly and that are important to also mention. We have a straightforward and easy-to-use subcutaneous pen design. We see this as an important component to building patient satisfaction and confidence. We also have a short 18-month course of treatment with strong fracture efficacy, which further builds confidence in patients and clinicians that are building bone and reducing the risk at a critical time. Each pen carries 30 daily doses that can translate into fewer pens and co-pays that the patient continues on therapy. And finally, TYMLOS doesn’t require refrigeration after the first dose, something we have seen repeatedly in previous market research as a nagging concern with patients on injectable anabolics. So where are we today with our launch activities? Well, we – first, we have held on to our launch, TYMLOS launch meeting in early May and that’s going to help us to finalize our label training and preparations. This means our clinical sales specialists will be educating and promoting TYMLOS in offices in early – by mid-May. We are also already engaging top targets and key opinion leaders and they will be visited at least once by June. There will be branded TYMLOS symposia at the upcoming AACE meeting this weekend, featuring Dr. Felicia Cosman. Our patient support center or hub and the call centers are already active. Our plan is to have our specialty pharmacy network stocked and ready to distribute product and actively managing reimbursement in June. Speaker programs are to be implemented within 30 days of our launch meeting, and I’ll be speaking more broadly on the payer activities in just a moment, but we’ve also activated our websites. And together with TYMLOS patient support, starter kits and co-pay programs are rolling – will be rolling out along with the product supply. This should give you a sense of the scope of efforts we’re putting into the launch. And now, let me just talk a little bit about what’s the focus necessary to achieve market leadership in the anabolic class. So there are four key drivers of adoption here that we must make happen to help lead the market leadership. First is category leading share of voice; secondly, to overcome access and affordability barriers; third, to rapidly capture anabolic market share; and fourth, we want to expand the use of the – to the anabolic-appropriate patient population. It’s no surprise that achieving appropriate share of voice is critical to a launch, especially when you are the first new anabolic therapy made available in nearly 15 years and the first new anabolic launched in the last 5 years. To make this happen, we had to make sure we identified the right target clinicians and brought on as an experienced a team as possible. As Bob has mentioned previously, we were able to be very selective as Radius received thousands of applicants for our clinical sales specialist roles to help us identify the best 230 candidates. What we are fielding today is an experienced sales team that averages over 5 years of osteoporosis experience and nearly everyone has been through a specialty launch in their careers. We know that they know the category, their customers and their territories. And getting the right level of experience and activity is crucial for the specialists, but only if they have the right target clinicians, I am confident the team has identified those. Our team will cover both the anabolic writers and a high majority of osteoporosis injectable writers. The CCS team will cover more than 20,000 osteoporosis injectable writers and they will fully cover these accounts at least once within the first 30 days after promotion begins. We are covering the injectable landscape. However, we also recognize a critical focus and planning necessary to engage the highest writing anabolic clinicians, about 200 of them that actually account for about 20% of today’s total anabolic volume. Achieving share of voice leadership will involve specialists, including the endocrinologist and rheumatologist as the critical specialties who make up around 40% of the core target list. Beyond that, our leading share of voice will be broad enough and the opportunity large enough that we will also reengage clinicians who may have declined in their overall anabolic prescribing. Now, let me move on to the second key driver of overcoming access and affordability barriers. We spend enormous time and effort to understand the current challenges facing clinicians and patients. And our market access team is executing on this most critical component of our launch plan. I am pleased that the response to our preview meetings in the top accounts that represent 75% to 85% of our targeted covered lives is going well. The next step is the medical and PMC reviews of our label. We anticipate initial formulary decisions flowing in the coming days and weeks. The branded osteoporosis treatments all face some type of prior authorization. And we expect that, that will continue to be there during the launch phase. Plans will continue to require a prior auth for anabolics. However, not all prior auths are the same. We believe that our labeling actually helps to assure that when clinicians submit or request for coverage that’s consistent with our label, it will be approved. We are well down this payer path and I am looking forward to providing more information. Perhaps, the most important component of our discussions has been our pricing strategy that supports fast payer acceptance. To get the market leadership and the support moving anabolic treatment earlier in the treatment path, we needed to reset the perspective on pricing. We must change the way clinicians, patients and payers see the anabolic class and establish TYMLOS as the leading bone building therapy. The chart you see on this slide is informative. Notice that since 2012, the price of Forteo has risen rapidly by double digits annually over the last 5 years. That’s also seen a predictable decline in overall patient volume, here identified as the total prescription volume. This pricing direction naturally challenges the notion of starting early with anabolics. Further, to win in the anabolic category and reach more anabolic appropriate patients, we have to reset the view on the Medicaid Part D patients, which is one of the most cost sensitive segments, patients who are paying a substantial out of pocket and transiting the doughnut hole. Frequently, in interviews, conversations and even symposia, clinicians tell us that they desire to use anabolics more frequently, but the out of pocket burden was so substantial that they were restricting the offer to many appropriate patients. If we were to expand use to more anabolic appropriate patients, we have to address this out of pocket challenge. So to address these concerns, we have carefully chosen to price TYMLOS at an annualized wholesaler acquisition cost of $19,500 or $1,625 per pen. If the initial comments we have gotten from payers has any indication, we expect to see a very favorable response from clinicians and patients. Our focus is not only on gaining market leadership, but regaining growth in the anabolic class. What other information do we have that gives us confidence that we can grow the market, I will share a couple points here. And first on this slide, we recently conducted a large study with target HCPs as part of a baseline view on osteoporosis treatment in their practices today. These – around 300 practitioners commented on three aspects around their osteoporosis patients. I would like to draw your attention to the gold pie segments in each chart. First, on the left, they reported that some 40% of their patients were at high risk of a fracture. Further, if you moved to the right, you can see that they are suggesting that almost 40% again of these patients had diagnostic result or DXA scans with BMD T-scores of minus 3.5 or worse, another indicator of substantial risk. And finally, on the graph at the bottom, you can see that these HCPs also reported nearly 20% of their osteoporosis patients had experienced a fracture over the past year. I think these are all clear indicators of anabolic appropriate patients and a big opportunity for TYMLOS. Secondly, our ACTIVE data supports a wide range of high risk patients, especially those who have had previous fracture history. We will initially focus on appropriate patients in the commercial plans. These patients were often in their 50s with a first fracture. We will also focus on that middle group there that have multiple risk factors, who may be in commercial or even in Medicare Part D. But these are not the traditional anabolic patient. It is not necessary that we also – we capture all of the patients to achieve our ambition. But I am confident that the TYMLOS profile will help us to gain a foothold and grow in these patient types. Finally, as we gain access to the Medicare Part D segment and plans, we fully expect to win in that traditional anabolics segment that you see on the right with a combination of strong efficacy, shortened treatment duration, improved affordability and convenience. For the anabolic appropriate patient, it’s now TYMLOS time. I would like to finally highlight our strong commercial bench that we brought in over the last 15 months. They have come to us with substantial experience in specialty launches. These leaders have also put together strong functional teams focused on getting us out of the blocks quickly and just as importantly, making sure patients have a complete TYMLOS experience. I will now turn the program over to Dr. Lorie Fitzpatrick, who will discuss the current dynamics in osteoporosis clinical setting and how that improves the opportunities for TYMLOS. Thank you.

[Lorie Fitzpatrick:]

Thank you, David. This is an amazing and exciting time for Radius Health. We are delighted with our approval on Friday. And we believe that there could not have been a better time for the launch of a new anabolic medication for the treatment of women with postmenopausal osteoporosis and high risk for fracture. At this time – point in time, there is a call to action to improve the diagnosis and treatment of postmenopausal women with osteoporosis. Experts in the field realize that we need to drive higher diagnosis rates and if appropriate, initiate treatment, especially if they are women at high risk for fracture. The focus on these high risk patients has never been higher. And it is this understanding the need to change guidelines. We believe that every postmenopausal woman with a fragility fracture should have access to diagnosis and treatment of their disease. And as a result, educational programs for healthcare professionals are focusing on recognizing, diagnosing and treating patients with high risk for fracture with clear messages to inform patients and clinicians about the real health risks of osteoporosis. Public health and research organizations are increasing focus and support for programs to ensure access to testing and to all currently available treatments. Action plans are being developed to identify the high risk patient. Private and public insurers need to cover the most effective services to improve diagnosis and treatment of osteoporosis. In addition, healthcare systems and medical practices must adopt and use quality measure to incentivize the clinician and healthcare systems to screen for osteoporosis and treat high risk individuals. So this is the time for the call to action, which has many different organizations working together to raise the profile of patients and healthcare providers, who need education and tools to identify and treat the high risk patient. We expect that there will be increasing diagnosis and treatment of postmenopausal osteoporosis through these efforts. Another change in clinical practice is the concept of treat to goal. For patients with hypertension, there are well established guidelines about the goal of the treatment of antihypertensive medication. The same is true for elevated cholesterol, which is associated with heart disease. We provide statins to lower cholesterol through a predetermined goal. In a similar fashion, the specialist by experts have suggested that in a patient with osteoporosis, using a potent bone build medication such as TYMLOS may lower the fracture risks more quickly and prevent future fractures. The ACTIVE and ACTIVExtend trials recapitulated these opinions by starting with the powerful bone-building agent and then following up with a generic bisphosphonate to extend the fracture-free interval. Today, new guidelines are recognized in the importance of anabolic or bone-building agents. The American College of Clinical Endocrinologists published new guidelines on the treatment of osteoporosis last September. For the first time, they recommended an anabolic agent as a first-line treatment for patients at high risk for fracture. There have been editorials written about how the sequence of therapy matters suggesting that the use of a bone-building agent followed by an anti-resorptive agent such as the bisphosphonate is the ideal way to improve bone density and decrease fracture risk in these patients. We expect early first line use of bone anabolics to increase as a result of these guidelines. It is the combination of the call to action in osteoporosis, educational program, changes in clinical guidance and clinical practice that make this an ideal time to have a bone-building treatment option like TYMLOS. In the label, we have information on both the ACTIVE trial, TYMLOS versus placebo 18 months and the 6-month extension, ACTIVExtend, where both TYMLOS and the placebo arms were switched to alendronate. The paradigm of building bone and then extending the fracture efficacy is consistent with the newer guidelines of thinking in the field of osteoporosis. The efficacy for fracture risk reduction for both vertebral and non-vertebral fractures, have been proven. We have increases in bone mineral density that are consistent with the reduction in fracture risk. The markers of bone formation are increased, consistent with bone-building activity. TYMLOS allows the medicine to be self-administered, letting the patient be empowered to take charge of her disease. We have great publications and data that are already in the public domain. We are particularly proud of the Phase 3 results comparing TYMLOS, placebo and Forteo in the general publication. This was followed by the publication of ACTIVExtend in the Mayo Clinic Proceedings. We have several other clinical and preclinical publications that help the clinician understand the mechanism of TYMLOS and the fact that it works in all patients regardless of age, prior fracture, bone mineral density at baseline or what country the patient lives in. Our Medical Affairs Group has initiated educational engagement to ensure awareness of our complete data set. We will also in the future be able to show you the full 2-year ACTIVExtend data in the second quarter of this year. We will continue to disseminate the science of TYMLOS at international conferences. Here are abstracts that have been presented thus far at various conferences, which have been very well received. We will soon include abstracts on our Phase 3 ACTIVExtend data in this list. We have an outstanding medical team to support TYMLOS and we will work closely with commercial to have the best evidence available for TYMLOS. We have the largest clients of group who are very experienced in the field of bone metabolism. We have recruited the very best people for these positions within R&D and Medical Affairs. I’d now like to introduce Gary Hattersley, Chief Scientific Officer, to review the portfolio.

[Gary Hattersley:]

Thanks, Lorie. The transdermal patch is a key component of expanding and extending our abaloparatide franchise. We are currently focused on completing the manufacturing optimization, scale-up and other required activities needed to initiate a pivotal study to evaluate bioequivalence to TYMLOS. These activities are necessary to establish the commercial manufacturing site, as patches for this pivotal study must come from the commercial site. We believe that the transdermal patch program has the potential to allow physicians who treat osteoporosis but rarely use injectable drugs an opportunity to expand their practices to include the use of anabolic therapy. In oncology, we have also continued to make substantial progress with both of our assets. For Elacestrant, which is a SERD, also known as RAD1901, we have completed enrollments of the 47 patients with advanced estrogen receptor positive HER2-negative breast cancer in the U.S. Phase 1 study and have also enrolled all 16 patients in the European FES-PET imaging study. It’s worth noting that these studies enrolled heavily pretreated patients, including those that have previously received fulvestrant and CDK4/6 inhibitors. And based on the responses observed in these patients to date, we continue to be highly encouraged by the emerging data from these two clinical studies. On June 4 at the 2017 Clinical Society of Clinical Oncology Annual Meeting, we will present an Elacestrant clinical study abstract at the poster session, which will then be discussed later in the day at the poster discussion session by the lead investigator, Dr. Aditya Bardia from Mass. General Hospital. Also in the first half of 2017, we plan to engage the FDA to gain alignment on defining the next steps for the Elacestrant breast cancer program. We are currently awaiting FDA response on our planned meeting, which would include discussion of the design of the monotherapy Phase 2 clinical trial. Our IND for RAD140, a selective androgen receptor modulator which has a mechanism anti-tumor activity that is distinct from estrogen receptor targeted therapies, has been accepted by the FDA. We plan to initiate a first-in-human Phase 1 clinical trial in women with hormone receptor positive advanced breast cancer in 2017. The progress with Elacestrant and the recent discoveries with RAD140 provide us with two very promising opportunities to expand our research and development efforts in breast cancer. I would now like to turn the call over to Nick Harvey, our Chief Financial Officer.

[Nick Harvey:]

Thank you, Gary. For the three months ended March 31, 2017, Radius reported a net loss of $56.9 million or $1.32 per share as compared to a net loss of $40.5 million or $0.94 per share for the three months ended March 31, 2016. The increase in net loss for the 2016 period to the 2017 period was primarily due to an increase in general and administrative expenses, including the completion of the build-out of our commercial organization in the first quarter of 2017 partially offset by a decrease in research and development expenses. Our cash, cash equivalents and marketable securities balance as of March 31, 2017 was $282.1 million. We believe that our cash, cash equivalents and marketable securities balance prior to the consideration of revenue from the potential future sales of TYMLOS and any of our other investigational products or proceeds from business development activities is sufficient to fund our development plans, U.S. commercial scale-up and other operational activities into 2018. I would like to turn the call back over to Bob.

[Robert Ward:]

Thank you, Nick. We are pleased to have successfully registered TYMLOS for marketing here in the U.S. Next, we expect a CHMP opinion on our MAA this July and continue our guidance of having a partnership in place by time of launch. We’ve guided that our next financing event would take place in the context of a partnership, and we are continuing that guidance. Later this quarter, we will be announcing the top line results from the full 2 years of the ACTIVExtend study. Please recall that the TYMLOS-treated patients and the placebo patients from the landmark ACTIVE study had the opportunity to enroll in the ACTIVExtend study to continue on alendronate for 2 years. This study is now complete. We anticipate reporting the complete results at a scientific meeting later this year. We are on track to meet with the FDA to gain alignment on the Phase 2 design for our very promising Elacestrant program focusing on breast cancer. And our IND application for RAD140 was accepted by the FDA and this will enable us to start Phase 1 studies with this arm targeting breast cancer as well this year. Later this week, we will be participating in the Deutsche Bank Healthcare Conference and webcasting our presentation on Thursday, May 4. Later this month, we’ll be attending the Bank of America/Merrill Lynch Healthcare Conference and also looking forward to ASCO on June 4 for the elacestrant poster and discussion. Later, June 13 to 14, we will be presenting at the Goldman Sachs Global Healthcare Conference. Nova, at this time, I would like to open the line for questions.

[Operator:]

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

[Jessica Fye:]

Hey, good morning. Thanks for taking my questions. Just a couple, first I hope you could elaborate on the comment about the approval timing as it relates to reimbursement for Medicare Part D and your level of confidence that you will have Medicare coverage in place for 2018. Second, I was hoping you could remind me of what you estimate the gross and net for Forteo is and whether you expect yours will be similar, higher or lower. And finally, on patch, when you say the optimization studies have been successfully completed showing demonstration of PK modification goals, can you elaborate on that, does that mean that you were able to clinically replicate the PK modeling for patch that you presented at ASBMR? Thank you.

[Robert Ward:]

Yes. Thanks Jess. Last year at ASBMR, we presented that data. And yes, the data is moving forward. As we mentioned, we are focused on the CMC activities around patch so that we have the manufacturing in place. With regards to Eli Lilly’s margins, I would really refer you to their securities filings or earnings estimates in order to determine what margin they experienced with their brand. As we think about the timing, being here in April was fantastic, because really this was as late as we could go in the year and have high confidence for not just adoption across commercial plans, but also with some ability to be on Medicare Part D in 2017 as well as full cycle for 2018. As we go later and later into the year, it’s more difficult to think about being able to get on to the Medicare Part D formularies. So David, when you think about this timing, today is May 1, we have a launch meeting coming up shortly, promotional and educational activities kicking off this month. Product and the supply chain by the 1 June. When you think about the key timing, particularly with the timing around covered lives, what should we expect for the coverage of TYMLOS by both commercial and for Medicare Part D plans?

[David Snow:]

As I’ve said before Bob, we have had very positive preview conversations with the top accounts that represent the vast majority of covered lives patients. I think consistent with other specialty launches, the PMCs for commercial tend to act more quickly in the first six months to nine months, followed by a flow of Medicare Part D. I am confident we are going to accelerate that. And then in the coming days and weeks, you will be seeing some of those decisions around those. First with commercial, but certainly following on with the Med Part D, where as you know, it’s easier to add new products on versus making changes to the formulary taking things off. But again, this is the critical moment in time here at the beginning of May to be able to engage in those conversations for that 2018 cycle.

[Robert Ward:]

Terrific. Now David, this is the first time in the category that there is really going to be head-to-head competition amongst branded products in osteoporosis, been a very quiet category. Many of the questions relate to marketing issues that related to the launch of Forteo 15 years ago. As you think about the introduction of head-to-head branded competition, how important is the data for payers as they make formulary decisions, do they read the medical literature?

[David Snow:]

They clearly do their homework, Bob. I can say that we have had a lot of support from our clinical team that’s been able to have these conversations. But they certainly do a rigorous review of all of the published data that’s out there. And they make decisions based on that published data and the totality of the information. So I am very confident about where we are and certainly how that helps to build the opportunity in the payer category.

[Robert Ward:]

So really Jess, that talks about the timing around reimbursement. But Lorie, you were mentioning that today is the first time that there have been clinical guidelines suggesting first-line use of anabolics. When you think about this trend in medical practice, how would you see that being uptake, are there areas where fracture liaison services change the treatment paradigm or what are the key things to be looking for, for a change in the medical practice?

[Lorie Fitzpatrick:]

Yes. Well Bob, I have been in medical practice in this the field for – it feels like forever, many years. And there certainly wasn’t a fracture liaison services when I was in clinical practice 15 years ago. What this does is create coordinated care for the patient. Before a patient I may or may not see who had a fracture, because they go to see the orthopedic surgeon and then be kind of lost. Maybe the next time they saw the general practitioner, they might mention they had a terrible fall and had a fracture when it really wasn’t, just a slip on an ice, on the ice and an osteoporotic fracture. Now when they see the orthopedic surgeons, there is a coordinator who makes sure that all of the other physicians are involved in the decision making, that the diagnosis is made and that there is appropriate treatment for the patient. And this has made a big difference in identifying patients at high risk for fracture in clinical practice today.

[Robert Ward:]

So for today then also Jess, the fracture liaison service makes it possible for that incident fracture patient to be referred for diagnosis and also for treatment, which is why we expect to see a continuing increase in diagnosis and treatment rates.

[Jessica Fye:]

Great. Thank you.

[Operator:]

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

[Mara Goldstein:]

Great. Thank you. I had a question just regarding the statement around the physicians that don’t use injectables and is that a phenomena that you see primarily in a specialist market or are you really talking about the community or internal medicine market. And then just secondarily on 1901 and ASCO, will we see data on all 47 patients in the Phase 1 and are all 16 in the FES-PET?

[Robert Ward:]

Yes. So Mara, thanks for your question. We think of the injectable category today, the most widely used brands in osteoporosis is daily self-injected Forteo, as well as physician administered Prolia, both of which are injectable agents. So there is a large number of physicians, who routinely use injectable products as their first line choice for managing osteoporosis. There is also about 10x as many physicians who write prescriptions for osteoporosis, but don’t often use either Forteo or Prolia. Part of that’s related to the promotional activity around the two brands. So David, I believe Prolia is in its sixth year, what’s the growth rate look for that injectable product?

[David Snow:]

They grew over 25% last year. I think what’s also notable is a lot of those primary care practice aren’t set up for Part B. I think that’s also a part of the issue there. And again, if you look at where anabolics have been over the last 5 years, there has been lowering promotion on that, so I think there has been a tightening of the number of physicians. But if you look historically, there are over 20,000 physicians who have familiarity with anabolics who have used themselves. There is a large audience out there, but clearly having the opportunity to expand further over time into primary care would be a really important move for us in the future.

[Robert Ward:]

So we do expect Mara, that with the introduction of a new product that physicians who have used injectable products in the past for osteoporosis are reenergized to both determine what are the new data mean for their patients, but also to identify does it mean now that they would once again think about who would be that anabolic appropriate patient. Now for 1901, the ASCO abstracts are embargoed until we are closer to the meeting. Of course, the titles have been disclosed for those who are registered for the meeting. So we are unable to comment on greater details around the ASCO presentation until the time of the meeting. However, at the meeting, we are intending to set up an opportunity to interact with the financial community around the data that will be presented and the poster discussion as well.

[Mara Goldstein:]

Okay. Thank you.

[Operator:]

Our next question comes from the line of Salveen Richter of Goldman Sachs. Your line is open.

[Salveen Richter:]

Good morning. Thanks for taking my question. So just a couple here, one is can you differentiate yourself from Forteo given the label did not provide any comparator data and you did have a boxed warning consistent with the class, though as you noted, you do have published data in medical journals, so how does this bode for formulary and reimbursement decisions and physician uptake and is generic Forteo coming up at all in these discussions?

[Robert Ward:]

Yes. Thank you, Salveen. One of the things that’s fascinating is with the landmark studies being published in the Journal of the American Medical Association, most of the key opinion leaders that we talk about read the medical literature. And certainly as David mentioned, for payers and for formulary decision makers, they make sure they review the totality of the data. But you are correct. The label highlights the importance of both ACTIVE and ACTIVExtend. Dr. Fitzpatrick shared the Kaplan-Meier curve showing the benefit for fracture reduction for both ACTIVE and ACTIVExtend, which is displayed in the package insert. With regards to how physicians make decisions, when the FDA puts together a product label, the main important focus is to ensure that physicians are able to use the products safely, particularly early in introduction and that is the focus. We have mentioned the FDA in this year in January 2017 put out new guidelines on promotions. And I would refer everyone to read the FDA guidelines, which addresses how the FDA looks at freedom to speech as well as the peer-reviewed landscape. And so we are very pleased to see such a large and robust publication base. But Dr. Fitzpatrick, you have mentioned that these major medical meetings earlier this year, we presented a wide variety of presentations both in Europe and here in the U.S. What would you expect to see in the major medical meetings as we move through this year?

[Lorie Fitzpatrick:]

Yes. So I think that there has been some really great data presented already. The one that I think is of great interest to payers was at the World Congress of Osteoporosis on the number of patients needed to treat in comparison with Forteo. And really, we came out looking very good there with those data. And then of course I think what’s even more exciting is that we will be presenting the Phase 2 – the Phase 3 ACTIVExtend data and the 2-year data is coming up and we can’t wait to share that with everyone.

[Robert Ward:]

Now Salveen, you also asked, well, is it true that there would or would not be generics? So we are aware that Pfenex, P-F-E-N-E-X, had publicly stated that the FDA had asked them to submit a 505(b)(2) application, including both bioequivalence and comparative immunogenicity data. As you are aware, the 505(b)(2) application is different than a generic application. So we are not aware that the FDA right now has made clear that there would be ANDA applicants since Pfenex had disclosed that they had to submit a 505(b)(2).

[Salveen Richter:]

Great. And then just in terms of your ex-U.S. or rest of world partnership, you mentioned that it will be ready in time for the EU launch. Can you just explain to us what the EU launch means? Is that Germany? Is that – I mean how should we think about what you mean by that?

[Robert Ward:]

Yes. I think what we have done, Salveen, is just given clear guidance that for globalizing TYMLOS around the world, we said with our first launch, we would focus on the U.S. and did not intend to build commercial infrastructure in Europe to support the launch. We did an extensive study of biotech companies with their first product, built commercial infrastructure and with the exception of Celgene, who did an exceptional job, in most other cases we felt that companies would have done better to have developed a partnership that could provide commercial resources to support key ex-U.S. markets. So that has remained our focus and we have guided that by the time of – see a European launch that we will have a partnership in place to make that possible.

[Salveen Richter:]

Okay. And then just a final question really on the models here. So just to clarify, on net price, we should be looking at an inline comparison to Forteo in terms of discounts and compliance. And then secondly, with you building out your sales force and starting new programs, how should we think about expense lines for 2017?

[Robert Ward:]

We haven’t given specific financial guidance yet, Salveen. I think the green shoots that I’ve encouraged folks to look for is adoption of managed care and looking at the number of covered lives that provide reimbursement. As David had mentioned in the upcoming days and weeks, we expect to see formulary announcements around comparative positioning of TYMLOS versus other existing products. The second element is reach and frequency. We believe that we will within 30 days of launch have met with all the key accounts and had discussions with them about their anabolic adoption. We continue to focus on having market leading share of voice in the category. I think that’s another green shoot for folks to look like. And then as we move towards the summer, we’ll talk more about NRx, new Rx and TRx, total Rx trends. So, those will be the key metrics as we look through the next few months that we will be focusing on.

[Salveen Richter:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Ying Huang of Bank of America.

[Ying Huang:]

Hi, good morning. Thanks for taking my questions. First of all, Bob, maybe can you talk about the percentage of Medicare and also Medicaid patients potentially covered under those programs? And then secondly, based on your discussion with the CHMP so far, do you expect the European label to be different or similar to what we saw from FDA on Friday? And then thirdly just a housekeeping question, would you block the IMS data or not so that we can track it every Friday? Thank you.

[Robert Ward:]

Sure, Ying. Just remember, with specialty distribution, when you use a specialty pharmacy, while IMS is indicative of uptick, IMS is not perfect in all respects, because some of the data is, of course, not reported through IMS. No, we are not planning to block IMS. We do think having transparency on the launch trajectory is a benefit for our company. And we are highly confident that launch trajectory will be supportive of accomplishing our goals. As we have mentioned previously, with regards to ongoing regulatory interactions, we don’t comment. And so with the European CHMP opinion and subsequent label, at the time when that becomes available publicly, we will be happy to talk about that with you.

[Lorie Fitzpatrick:]

Medicare.

[Robert Ward:]

Yes, Medicare Part D. David, it’s about two-thirds right now for Forteo, about two-thirds of Medicare Part D, about one-third commercial. But that’s also because the patients who currently are being prescribed are older than necessarily what we think is the full gamut of patients that have incident fractures. Of the 1.4 million women in America next year who will have a osteoporotic fracture I believe it’s 338,000 have a vertebral fracture and the other 1.1 million are all non-vertebral fractures, many of whom experienced risk fractures in their 50s. So, can you help us understand, as Ying had mentioned, if we have a historical mix of Medicare Part D versus commercial in part skewed by the age focus, what do you see as the distribution for TYMLOS and what are the keys for commercial and Medicare Part D adoption?

[David Snow:]

Yes, thanks. Thanks Bob. You are absolutely right that if we look at just categorizing postmenopausal women by age, you have about a 6.8% incidence of osteoporosis for women in their 50s. It goes up to over 12% in their 60s and 25% in their 70s or higher. So there is a large number that are certainly older and that’s kind of been the place where Forteo has been in terms of the older and generally the Med Part D patients, but we do absolutely, if you look at the ACTIVE data, we believe that there is opportunities in the younger patients. And certainly again, if you look at the launch rollout, we expect to get commercial plans. We’ve got a good message there, so we expect that we’ll probably have more commercial uptake earlier on. But in the overall opportunity, we think there is opportunities in women in their 50s, 60s and certainly in the 70s across both of these dynamics, commercial and Medicare Part D.

[Ying Huang:]

Thank you.

[Operator:]

Our next question comes from the line of Chris Shibutani of Cowen & Company. Your line is open.

[Chris Shibutani:]

Thank you. I just wanted to go back to the TD patch, if I could. I think Jessica asked a question earlier about whether some of the bioequivalence goals have been attained that you were following up after ASBMR meeting? And also, could you give us the sense for potential timelines for the start of a pivotal clinical program for that product? Thank you.

[Robert Ward:]

Yes, hi, Chris. We are focusing on the launch of TYMLOS, which the market-leading product today is daily subcutaneous Forteo, as we mentioned, in terms of the market focus. Daily subcutaneous TYMLOS, we expect to become the category leader in the field of osteoporosis. It’s terrific to have such great interest in our line extension. And I think we had guided before that at the time we are ready to start the pivotal study, we provide further guidance on that. When you think of the osteoporosis category, many people forget this is a category that’s been filled with blockbusters. There are very few products that have failed to achieve blockbuster status. But certainly, with the growth rates we observe today on injectables, we have seen that injectables are not only the market label, the market leaders, but injectables are showing the fastest growth rate within this category.

[Chris Shibutani:]

So then if I could just follow-up on the European timelines, you were more specific in your comments during the call on the EMA opinion expected in July, I believe you stated. And then just to make sure I have clarified the timing of which you would enter into a partnership is prior to commercialization, but your timing of commercialization in Europe is not specified necessarily. Is that correct?

[Robert Ward:]

I think, Chris, we gave a guidance that yes, you are correct CHMP opinion in July is a more defined guidance than we have provided and we haven’t changed our guidance around a partnership since that time.

[Operator:]

Thank you, sir. Our next question comes from the line of John Newman of Canaccord. Your line is open.

[John Newman:]

Hi, guys. Good morning and congrats on the approval. I know that you guys have worked very hard over many years to get this drug on the market. The question I had was I know that there are a lot of rules regarding promotion at FDA. And I also know that Radius is very conservative in terms of always complying with those rules. I am just wondering, in your promotional materials and when you promote TYMLOS, will you be able to either give out the primary publications directly to doctors or can you design promotional materials that will reference the design of the studies such they will be aware that there was a Forteo arm? And also, can you talk about the size of the sales force? Thanks.

[Robert Ward:]

Thanks, John. Yes, as you are aware, there is high awareness of TYMLOS in the totality of the data package. When we published, Lorie, in the Mayo Clinic Proceedings, perhaps you could just remind folks of what’s – how medical literature is assessed in terms of impact. And for example, for Mayo Clinic’s proceeding, where does that journal article go to?

[Lorie Fitzpatrick:]

So, it’s very interesting. One of the reasons we picked the Mayo Clinic Proceedings is because it goes free to every resident and intern in internal medicine across the country. So we knew it would have a wide distribution since it’s already given out gratis because Mayo Clinic is a not-for-profit organization, and they think education’s important. So there has been a wide dissemination already. Also, in response to requests from investigators or of physicians, we are allowed to give out JAMA article or the Mayo Clinic Proceedings articles. So we have had numbers – large numbers of requests for these publications already.

[Robert Ward:]

And so David, I think John was curious of the 230 sales reps that will be the frontline covering the U.S. market. Will they be able to leave the reprints behind as a leave behind?

[David Snow:]

Yes. We will be providing reprints to clinicians. We certainly are committed to making sure we appropriately promote our brands. As I said before, within this label, there is a lot to work with. There is a lot of differentiation within there. We are going to be, in some cases, reintroducing anabolics to physicians. So, we have lots of opportunities here. And our 230 reps are really excited about the opportunity to ready to get out there.

[Robert Ward:]

So in the label then, David, it will say it’s an 86% reduction in vertebral fractures?

[David Snow:]

Yes, that’s a pretty high number, Bob. I don’t think that, that’s been seen very often within the osteoporosis literature.

[Robert Ward:]

And then Lorie, when you showed us the Kaplan-Meier curve from the package insert that looks at both the 18 and 25-month data that the vertebral fracture reduction was 86% at 18 months, was then 87% at 25 months. And I believe the non-vertebral fracture reduction is expressed as well. And could you remind us of what the non-vertebral label will be?

[Lorie Fitzpatrick:]

Yes. So for ACTIVE, we have – for the first 18 months, we have 43% reduction in non-vertebral fractures. And if you go to ACTIVExtend with alendronate, there is a 52% reduction in non-vertebral fractures. One of the things I like best about ACTIVExtend is it’s a real world setting. I mean as a clinician, we start an anabolic. And the question is what do you do next? And we actually showed with a low cost alternative coming in with alendronate that you get great benefit by giving the anabolic and following it on with alendronate.

[Robert Ward:]

So I think what John is thinking about is in the Journal of the American Medical Association, it showed that the ACTIVE trial use of TYMLOS resulted in 70% fewer major osteoporotic fractures. And then there was also a comparison to a reduction of major osteoporotic fractures of 55% as compared to the open label Forteo arm. So for payers, recognize that major osteoporotic fractures represent a bulk of the cost of osteoporosis, being both the most intensely, medically impactful, but also resulting the highest costs. How do payers use those comparisons against both Forteo and placebo in assessing the cost effectiveness of drugs? Lorie?

[Lorie Fitzpatrick:]

Well, just as a reminder, major osteoporotic fractures are fractures of the hip, wrist, shoulder, forearm, or a clinical spine fracture. And you are right, Bob, they result in a lot of disability, a lot of lack of mobility for the patient and lack of independence. So I think having those data really will speak to payers as it will reduce healthcare costs if you can prevent those types of fractures.

[Robert Ward:]

So John, with the different audiences, if a physician has the question about medical use, they can directly interact with the medical science liaison to engage in peer-to-peer communication. You are correct. The sales representatives have a subset of information that’s cleared for representative promotion, because the medical science liaison is an individual that has a broader background and a higher level of experience. Remember, when you see direct-to-consumer advertising, that’s also quite different as well because the rules for direct-to-consumer advertising, the agency is really focused on making sure that people understand the safety elements of therapy as much as what we might consider the promotional elements. But we’re comfortable that our very positive and differentiated label will be in great shape for TYMLOS to achieve market leadership.

[John Newman:]

Great, thank you.

[Operator:]

Our next question comes from the line of Kyung Yang of Jefferies. Your line is open.

[Kyung Yang:]

Thank you. So in terms of a patent, the – if I remember it correctly, the composition of matter patent for abaloparatide has been expired the last year. So, can you talk about your legal strategy there? And second question is when you look at Forteo, sales in Asian markets have been growing nicely. So can you talk about your strategy in Japan? And lastly, in terms of Forteo, do you know what percent of a patient who have been treated with Forteo actually get retreated?

[Robert Ward:]

Thanks. So Kyung, let’s jump to the last question first. As you know, in the labels around re-treatment, the agency today has suggested that a lifetime cap of 2 years is appropriate. And the reason for this, there is an absence of medical studies right now to support retreatment. So for us to change the view on retreatment, we would have to engage in a clinical trial to demonstrate that there is a safety and efficacious reason to pursue that. So today, there is a 2-year lifetime limit in the category. Now remember, the category represents millions of patients. And Forteo has had that limit for the last 15 years that it’s been on the market. And remember, during those entire 15 years, since Forteo is 34 amino acids of a human peptide, Forteo has never had composition of matter patent. During that 15 years, their use patent, covering the use of Forteo for treatment of osteoporosis, has been the basis of exclusivity. And that’s the patent that people talk about expiring next year. So when you think of the intellectual property estate around TYMLOS, whether it’s methods of treating osteoporosis or what we also see as a whole variety of secondary intellectual property, we’re very comfortable that the commercial life of TYMLOS will extend 15 to 17 years from today where we do expect at launch that 100% of the sales will be daily subcutaneous administered TYMLOS. Now with regards to Japan, you are right, the Japanese market is very attractive from a couple of different reasons. Not only are anabolics widely used, but transdermal patch technology is used as a very attractive delivery device for Japan. And in fact, the price for anabolic therapy in Japan is higher than it is in the U.S. today. So we have guided that we have global rights for abaloparatide transdermal delivery, but that also with entourage to the TYMLOS registration both here and in Europe, no one currently holds right of reference to our package and so accelerating development in Japan would be the conductor bridging study to our approved U.S. registration pack. And we think that that’s an opportunity for us to engage with folks on how TYMLOS could be commercialized in Japan as well.

[Kyung Yang:]

Thank you.

[Operator:]

[Operator Instructions] We have a follow-up question from the line of Mara Goldstein of Cantor Fitzgerald. Mara, your line is open. Mara, your line is open.

[Robert Ward:]

Well, thank you, Nova.

[Operator:]

You’re welcome sir. And we have no further questions in the queue. So, I will turn the call back to you, sir.

[Robert Ward:]

Well, thank you everyone for participating on our TYMLOS launch and earnings update call today. We will look forward to those of you who we will see at the Deutsche Bank Conference this Thursday. And again, we will be webcasting the Radius Portfolio Presentation. Thank you for your attention today. That concludes the...

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the call. You may now disconnect. Everyone have a wonderful day.