Q2 2017 Earnings Call Transcript

Published: 4 Aug 2017

[Operator:]

Good afternoon everyone and welcome to Radius Health's Second Quarter 2017 Results and Business Update. Today’s call is being recorded. At this time I’d like to turn the call over to Barbara Ryan, Radius Health, Head of Investor Relations. Please begin.

[Barbara Ryan:]

Thank you, Nicole. Good afternoon, and thank you to all of you joining us on our second quarter 2017 financial results conference call and webcast. Joining me this afternoon to make formal remarks are Jesper Høiland, President and Chief Executive Officer, David Snow, Chief Commercial Officer; Dr. Gary Hattersley, Chief Scientific Officer; Dr. Greg Williams, our Chief Development Officer, and Pepe Carmona, our Chief Financial Officer. In addition Dr. Bruce Mitlak, Vice President of Clinical Development joins us today for the Q&A portion of this call. 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 quarterly report on Form 10-Q and other reports filed with the Securities and Exchange Commission. Any forward-looking statements represent our views as of today, August 3, 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 our conference call replay in today's press release as well as on the website. Today’s agenda is intended to provide you with the review of the TYMLOS launch, our second quarter 2017 financials, and update on our development plan for our pipeline and upcoming corporate milestone. It is my great pleasure to turn the call over to Jesper Høiland, President and Chief Executive Officer of Radius Health.

[Jesper Høiland:]

Thank you, Barbara. Welcome everybody. I'm excited to be here with you together with several members of our executive leadership team. This is the perfect time for me to join Radius as we launched TYMLOS and get prepared to rapidly advance our oncology portfolio. In my first 17 days I've already had a chance to talk to many stakeholders like physicians, payers, patients, investors, analysts and of course employees. It gives me great confidence in the company I joined. Radius is an important inflection point. Hence I have learned that the organization is fortunate to have strong leaders with a required pharmaceutical experience to drive growth of TYMLOS and accelerate our pipeline towards commercialization. My 30 years of pharmaceutical experience tells me that Radius will deliver on its short- and long-term goals. In the second quarter of this year the company accomplished several important milestones. As you know TYMLOS was approved and launched in the U.S. in late May with an experienced commercial team. The sales representatives, key account managers, market access teams and medical science liaisons have long track records. And a big plus, many of them have worked in the osteoporosis market. I have been able to observe firsthand the positive feedback we are receiving from physicians, payers and patients. TYMLOS has had a rapid uptick for market access for major payers and are tracking very favorable versus any comparable drop this early in its launch. David will provide more insights on the progress of the TYMLOS launch later in the presentation. We recently signed a license agreement with Teijin in Japan, which gives us access to the important Japanese market. Let's remind ourselves, that the U.S. and Japan combined represent approximately 80% of the global anabolic market. Additionally, in May we announced the positive top line result from the completed 24 months ACTIVExtend trial of TYMLOS, which met all of the primary and secondary endpoints. Today Gary will cover some additional insights for the ACTIVExtend data that further reinforces the differentiated profile and value proposition for TYMLOS in osteoporosis market. We look forward to presenting this data at the American Society for Bone and Mineral Research Annual Meeting in September. I also would like to share that despite only having been here for just a couple of weeks I'm extremely optimistic about our own oncology portfolio. With a positive Elacestrant data presented in June at ASCO, we have recently aligned with the FDA on a potential pathway for our speed to market strategy for this asset. Gary with update you further later in this call. While I've just highlighted several of the key accomplishments in the second quarter, it is important to mention that we've also had setback on Eladynos with the CHMP. We have received a second set of day-180 questions. Although we continue to believe that Eladynos will be approved in Europe, recent regulatory challenges have post risk we will work to overcome. We plan to work closely with the European authorities and expect to receive an opinion from the CHMP before the end of this year. Executing with excellence on our key strategic priorities remains our primary focus. Our number one priority is to drive robust launch execution and over time establish a market leadership position for TYMLOS in the U.S. We seek to maximize the TYMLOS opportunity for global expansion, lifecycle management and category leadership; success in these efforts that drives sustainable growth for Radius. We continue to work with EMA to expand into Europe and we will actively engage with other regulatory agencies to expand the TYMLOS footprint in five emerging markets. Radius will move rapidly advancing the development of Elacestrant in breast cancer as per our recent discussion with FDA. We also continue to assess the opportunities to advance Elacestrant into earlier lines of care therapy and drive its peak sales potential. Our partnership decisions will be made on the basis of what is financially sound for our shareholders and in the best interest of patients. And finally we will continue to strengthen the organization to ensure flawless execution. I now turn the call over to David Snow, our Chief Commercial Officer.

[David Snow:]

Thanks Jesper. It's great to be with you again today to provide the latest TYMLOS launch update for the first eight weeks of market availability. We continue to build momentum and confidence in our launch execution, value proposition, share of covered lives, sales team engagement and most importantly prescriptions trends. Our commercial teams remain focused on achieving market leadership in the anabolic category. As we stated previously we are competing in a large category with more than 10 million postmenopausal osteoporotic women. Only half of these women are diagnosed and a substantial portion that had a fracture and would be considered anabolic appropriate patients. Those women with osteoporotic fracture have a substantial risk of a second fracture both in the year immediately following the fracture and for a sustained period afterwards. Further, a majority of osteoporotic fracture are non-vertebral and a major cause of hospitalizations and healthcare costs. Overall anabolic use is low within this risk group what we estimate is only 40,000 to 50,000 treated patients annually. So there remains a substantial treatment gap in at risk postmenopausal osteoporotic women who are also anabolic appropriate patients. One key factor affecting this treatment gap is out of pocket affordability which drove our responsible pricing approach. We're already seeing encouraging acceptance by PBM’s and health plans to the TYMLOS brand. As of August we now have contract in hand for over 130 million covered lives. To put this in context, recent specialty launch benchmark suggest normally takes new therapies up to six months in commercial and 12 months for Medicare coverage. We're clearly moving at a faster pace with the top pharmacy benefit management firms. This puts us at 68% coverage of all commercial covered lives and 28% of total Medicare lives. I’m equally pleased with our team's efforts to work with payers to align health plan treatment design or utilization management consistent with our label. This aligns with standard of care to improve outcomes by defining the appropriate patients and simplifying the prior our process. As an example we've recently finalized the 28 green with CVS Caremark silver script and Medicare to align the UN. And we believe this will substantially reduce the frustration factor for physicians for scribing TYMLOS. In addition CVS Caremark is also removed as of yesterday the in DC block on TYMLOS. So we now have a commercial coverage in this major PBM. TYMLOS has also been added to the specially brand to European UnitedHealth Care, the largest single Medicare provider in the country. Finally, we're excited to see Express Scripts the largest U.S. PBM make an announcement this week to add TYMLOS to its National preferred formularies as of January. When looking at HCP response to the TYMLOS profile, we’re achieving significant sales coverage in seeing strong demand for branded and unbranded information even from typically no HCP’s. Our sales team has already reached over 90% of the top 7,000 anabolic writing HCPs with a high frequency of coverage. This group is heavily represented by rheumatologist and endocrinologist who cover about 40% of our anabolic prescriptions. The sales team is also achieved high rates of coverage across the top 200 anabolic writing HCP's who account for some 16% of total anabolic volume. 20% of these HCP’s have already written at least one TYMLOS prescription and this is probably under representative of the total number since we only currently report what we capture through our patient support center. For me and other pleasant surprise has been early acceptance of TYMLOS by key academic centers acting as early adopters. These institutions are certainly rigorous in their clinical and safety reviews and we've been pleased to see the quick acceptance across influential centers like the Cleveland Clinic which is also a major bone care center with substantial anabolic usage. When looking at prescription data for the first eight weeks of launch, you can see positive trends with dispensed pens or PMOT patient months of therapy. The dip is in the graph with the July 4 holiday. We're pleased to see the growth to date, we've added a linear trend line pointing forward. On the graph to the right you see TYMLOS anabolic class market share and an anabolic class with FORTEO. As a July 14, share was 1.2% and again you see the increasing trend. This is very early date as a reminder it doesn't fully capture all specially pharmacies. Will see improved data accuracy over time as we continue to make progress with our specially pharmacy network and see further expansion in prescribing Finally, I'd like to briefly cover some early evidence of how our reorienting to market towards our target patient, as we aim to substantially increase the use of TYMLOS among postmenopausal women with osteoporosis and high risk of fracture. Here's where the fast onset of affected TYMLOS in fracture risk reduction the short 80 month course of therapy in a responsible pricing are key to driving an option. We've had several hundred patients coming through our patient support center and when we review this information we're encouraged by the consistency to our target patient profile around 40% of postmenopausal women in the 50 to 65 age range. We also see good geographic distribution of enrollments coming from across the country. The majority from high anabolic fear state, and finally it's good to already see short enrollment to approval rates below 30-days something we feel is critical to improving the patient experience. So in summary we're seeing positive TYMLOS access overall HCP engagement, target patient positioning and prescription trends. I look forward to sharing more in months ahead. I’d now like to turn the webcast over to Gary to discuss the ACTIVExtend data.

[Gary Hattersley:]

Thanks David. In May this year, we had the opportunity to report some of the top line results from the full two years of the ACTIVExtend. We are now pleased to be able to report additional top line data from this study. The objective to this study was to determine the utility of sequential therapy, where a short course of anabolic treatment is followed antiresorptive therapy and to determine whether the vertebral and nonvertebral fracture risk reduction achieved with TYMLOS in the 18 months of ACTIVE study could be extended through 3.5 years following a two year course of a [indiscernible]. The previously reported top line data from ACTIVExtend was based on all patients that enrolled in ACTIVExtend, where there are approximately 550 patients that it previously received TYMLOS for 18 months and approximately 550 patients that have previously received vertebral, for total of 1,139patients. In this group at 43 months we reported a significant robust risk reduction in the incidence of new vertebral, nonvertebral clinical and major osteoporotic project fractures. In its latest dataset, we looked at all patients that involved in ACTIVE across 43 months of treatment where there were approximately 820 patients previously treated with TYMLOS and also about 820 patients previously treated with placebo for a total of 1,645patients. In its more complete patient population following all patients after 43 months we continue to see a statistically significant facture product TYMLOS treatments on fracture risk reduction for new vertebral, nonvertebral clinical and major osteoporotic fractures compared to placebo. But it's notable in his more comprehensive patient population. We also see a significant reduction in the incidence of hip fractures in the prior TYMLOS treated group compared to prior placebo with P-value of 0.027 The safety profile was similar between prior TYMLOS and previous placebo groups and consistent with the known alendronate safety profile. Importantly cardiovascular adverse events including serious adverse events were similar groups. And isn't consistent with our prior experience we've seen no cases of osteonecrosis of jaw or atypical femoral fracture [indiscernible] in prior TYMLOS treated patients. We're looking forward to providing more details of the results from ACTIVExtend at the upcoming ASBMR scientific meeting and we also expect to submit a supplemental NDA with this 43 month data in the second half of 2018 We believe that this additional data from ACTIVExtend validates a new treatment paradigm. Highlighting the potential benefit to sequential treatments both these results confirming that the early and significant fracture risk reduction seen was TYMLOS can be sustained for years when followed by alendronate. I’ll now turn the call over to Greg Williams, our Chief Development Officer.

[Greg Williams:]

Thank you Gary, and good afternoon. I'd like update you on the status of our European MAA for Eladynos or abaloparatide injection which is approved in the U.S. as TYMLOS. As Jesper mentioned, we've had a setback on Eladynos with the CHMP. As we've previously disclosed on July 21 the CHMP issued a second Day-180 List of Outstanding Issues. And we were not expecting these additional questions. This second list of 180-Day questions includes two major objections related to our inclusion of data from two clinical trial sites that based upon EMA inspection findings are not considered to comply with good clinical practice or GCP requirements. If these data are excluded the statistical power of our submitted clinical data is reduced impacting statistical significance and the overall benefit risk assessment. These questions include requests for additional data analogies related to the safety and efficacy of Eladynos and we are working collaboratively with the Rapporteurs and CHMP to address their questions. We have maintained full transparency with the FDA through their review and approval of the TYMLOS, NDA. The FDA assessment of TYMLOS included thorough and independent and statistical analyses and GCP inspections at key clinical sites. Although we continue to believe that Eladynos will be approved in Europe. There are sometimes regional regulatory challenges to overcome and based on this second list of 180-Day questions we now expect the CHMP to issue an opinion on the MAA before the end of 2017. And now back to Gary for the Elacestrant update.

[Gary Hattersley:]

Thanks Greg. At ASCO in June we had the opportunity to provide an exciting update on the progress of our ongoing U.S. Phase 1 clinical study with Elacestrant. This was in patients with advanced and metastatic breast cancer. This study enrolled a heavily pretreated patient population that had progressed after multiple rounds of monotherapy and include many patients that had been previously treated with fulvestrant and CDK4/6 inhibitors. And about 50% of these patients have SO1 mutations. Among patients with measurable diseases saw a high encouraging 23% objective response rate and a median PFS of 4.5 months. And notably a significant number of patients with a long treatment together with a favorable tolerability, profile and no DLT is reported. Based on the progress with our Elacestrant program we met with the FDA to discuss an on line on the next steps in the development of the Elacestrant. This was an engaged and productive discussion and we gained alignment on defining the design of the Phase 2 clinical study. This will be a single-arm monotherapy study with 400 milligrams of Elacestrant wants daily which will enrolled on the 200 patients. And the primary endpoint this study will be objective response rate coupled with duration of response. Based on the discussion with the agency and handing review of the totality of this data by the agency. This Phase 2 study could be considered to be a pivotal study to support accelerated approval. We are very excited by the progress with Elacestrant program and will provide more details on the design of the Phase 2 study when it's initiated which we expect to occur in early 2018. I would now like to introduce our CFO, Pepe Carmona

[Pepe Carmona:]

Thank you, Gary. For the three months ended June 30, 2017, Radius reported a net loss of $68.4 million, or $1.58 per share, as compared to a net loss of $43.4 million, or $1.01 per share, for the three months ended June 30, 2016. The increase in net loss for the 2016 period to the 2017 period was primarily due to an increase in selling general and administrative expenses, which now includes fully [indiscernible] commercial organization that was recorded in the first quarter of 2017. This increase was partially offset by a decrease in research and development expenses as I would made you clinical programs went down. If you see the same figures an unarmed U.S. GAAP basis which excludes share based compensation you can see a similar trend but the net loss is lower, which call for hopefully provides more clarity on our cost structure. You can see the reconciliation between GAAP and non-GAAP in the footnote. We're excited that we are now a commercial company and have reported our first month of sales. So this figures represent just one month achievement discounted by gross to net adjustment. Our revenue recognition policy is in line with U.S. GAAP and it is described in our quarterly report on Form 10-Q that were file today. Our gross margin includes a 5% royalty and cost of product sold which you should expect to be mid-to-low single digit range. We’re allocating our resources in accordance to our strategy which is to drive TYMLOS growth and continue developing our pipeline. Our cash, cash equivalents and marketable securities balance as of June 30, 2017, was $215 million. In the second quarter, we paid a milestone related to the approval of the TYMLOS NDA of $9 million. We paid for external R&D investment of $7 million and invested in TYMLOS commercialization and selling general and administrative expenses or $44 million. We believe that, prior to the consideration of proceeds from partnering and/or collaboration activities, we have sufficient capital to fund our development plans, U.S. commercial and other operational activities for not less than twelve months from the date. Radius is well positioned to create value for shareholders. We operate in a large and financially categories. In osteoporosis we now have access to the two largest anabolics markets in the world. Under the Teijin agreement announced in July 13, Radius will receive an upfront payment and milestone for up to an aggregate amount of $50 million and a low double-digit royalty rate. Radius also successfully negotiate an option to co-promote the abaloparatide-SC in Japan. And maintained the full global rights for abaloparatide transdermal patch. In oncology the Elacestrant is poise to prudently play an important role in a large metastatic market. The new ACTIVExtend results provide s all the differentiation of TYMLOS and as you heard from David, I would differentiate the data responsible pricing strategy is being very well received by pay your physicians for patients. We are excited of focused on driving Elacestrant on an economically sound regulatory pathway on its peak market strategy. Finally, we have a strong economic structure .Our gross margin in TYMLOS is around 90% and to slightly improve us we grow the business. We have a lean cost structure which is fully staffed to commercialize TYMLOS. Radius balanced it strong and we have no debt from a back perspective as of the end of 2016 we had $527 million of net operating loss carry forward available to offset future taxable income. On a forward-looking tax credit basis, the company created an entity and removed it. Radius Pharmaceutical LTV supported by outside U.S. Elacestrant IP that provides significant financial benefits for Elacestrant international. I will now turn the call over to Jesper to provide final remarks

[Jesper Høiland:]

Thanks Pepe. As you have adjusted it we have achieved several important milestones and we anticipate reporting on our continued progress over the coming year. We look forward to meeting with many of you at upcoming conferences and events in the coming months. I now would like to open up the call for your questions.

[Operator:]

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

[Jessica Fye:]

Great, thanks. And thanks for taking my questions. I have a couple. First, can you elaborate on what threshold the FDA wants to see superiority to when they talk about looking at the response rate and duration of response for the Elacestrant study you mentioned? How soon would you be able to start that potentially pivotal study? Second, for the patch update you alluded to before you’re ending the press release. Can you give us a framework for how to think about what types of things you might communicate then? Is this – we're going to hear plans and timelines for starting a bioequivalence study or just a manufacturing update or something else? On the CHMP topic; what percentage of the patients in the ACTIVE study were enrolled at the sites that you mentioned that the CHMP is taking issue with? And lastly just financial question; can you talk about how you think about operating expenses for the back half of the year given that the sales force was fully hired as of I think the end of 1Q? Should we look at Q2 as a good run rate for the back half? Thank you.

[Jesper Høiland:]

Thank you, Jessica. That was a lot of questions, but I'll try to delegate to someone. First part on that will be talking to is Gary.

[Gary Hattersley:]

Hi, Jess, thanks for the questions. So, not take them in the exact audio of the system, but you asked the start of the upcoming Phase 2. We are – the team is working very actively on working towards that study as rapidly as possible. We expect that study to be initiated in early 2018. In terms of the threshold for the endpoint pivotal study, at this point we're not guiding on the target ORR, both Radius and the FDA agreed that substantial improvements in efficacy and/or safety against other treatment options will be needed to be demonstrated. In this heavily pretreated patient population we've already seen impressive response in patients who have failed both fulvestrant and CDK4/6 inhibitors. And the opinion of Radius and key opinion leaders, we’ve been very encouraged by the emerging efficacy profile. And we would be looking to see how that data evolves in the next study.

[Jesper Høiland:]

And then I think Pepe your comment.

[Pepe Carmona:]

Hi, Jessica. So we do not provide guidance at this time, but it is fair to assume that from an SG&A perspective we are fully established as I said before and as you said as well. So from a TYMLOS perspective, we are probably more stable; from an R&D perspective, some programs are going to wind down. And as you know and have seen some others are going to start ramping up. So you’ll major changes going on from a total expense or operating expenses perspective.

[Gary Hattersley:]

Jess, I think you also had a question about the transdermal patch program. I certainly can address that one. We continue to be very focused on the ongoing optimization of the patch with the goal of achieving bioequivalence to TYMLOS injection. As we previously described our focus at this point is primarily form the completion of a series of CMC activities that would be needed to support that pivotal bioequivalence study. We plan to provide our further updates on the progress with this program before the end of this year.

[Greg Williams:]

Hi, Jessica, this is Greg Williams. Regarding the CHMP question. So thank you for the question. And first, I'd like to let you know we remain confident in the integrity of the ACTIVE and the ACTIVExtend data, and we were surprised by the second set of 180-day questions. We believe that it's important to be transparent with our investors and we continue to expect that Eladynos will be approved in Europe. With respect to the two sites, about 15% of the active population would be impacted if we exclude those two sites from future analyses. However, we have seen consistent and favorable effects in fracture reduction across all the company sites. We look forward to working with Rapporteurs and CHMP and addressing their questions, and we look forward to an opinion before the end of this year.

[Jesper Høiland:]

Thank you, Greg. I hope that answers your questions, Jessica.

[Jessica Fye:]

Thank you. Yes, I know they’re a lot. Thank you.

[Operator:]

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

[Mara Goldstein:]

Great. Thanks for taking the question. So I wanted to ask, you made the statement in the opening remarks that Japan and the U.S. are 80% of the anabolic used, which would leave 20% in the rest of the world territories. And so I'm wondering; A, if the limited use relative to other regions is perhaps affecting the regulatory process to some degree given the statement about clinical risk benefit. And separately from a commercial perspective, as it relates to licensing with limited use of anabolics today in Europe, what's the commercial proposition to a potential licenser?

[Jesper Høiland:]

Thank you, Mara, for your question. I think we'll start out with a commercial and then we’ll answer your first question. So, David.

[David Snow:]

So, Mara, thanks for the question. I’d just give you a viewpoint. Japan is a really interesting anabolic market. It's well developed. There are a lot of patients. The diagnosis, treatment and overall utilization of anabolic there is quite strong. And it's probably somewhere in the neighborhood of $600 million market. The situation in Europe is quite interesting because anabolics are in total Europe probably in the $250 million range. However, the number of patients there who are anabolic patients is quite substantial. In fact, there’s 3 million fractures a year across Europe. It’s just a process as you know of the regulatory filing getting your reimbursement aligned being able to work through that process. So it’s not quite as – it’s not quite as strong in terms representation compared to Japan or the U.S. even. But clearly having very strong data, working with the various ORR organizations – in total, and that would certainly given where we have, the information we got around TYMLOS or Eladynos, we feel very strong about the value proposition that we would be presuming there. That certainly would be meaningful to a partner.

[Jesper Høiland:]

Thank you, David. Mara, I hope that cover. Now back to your first question the regulatory implications. And Greg will answer that.

[Greg Williams:]

Sure. Mara, could you please just repeat your question once crystal clear on…

[Mara Goldstein:]

So I curious just given the use of anabolics in Europe is less than you would see in the rest of the world. And the statements made around the risk benefit given the issue with these trial sites not yet being compliant around the good clinical practices. And so if the European, I guess, I'm just trying to understand whether the issues around the data generated is really a function of what the data says in those trial sites or there's just less familiarity broadly with anabolics and that's playing into the regulatory questioning.

[Greg Williams:]

Right. So, as we mentioned, the major objections tend to the two clinical product sites that’s based upon EMA inspection and finance were not consider to comply. We don't believe that there's any other implications globally and we look forward to continuing to become a global franchise with a anabolic type.

[Pepe Carmona:]

And Mara, just to close on the European situation, the reason why the European market is relatively low is due to the pricing situation in Europe that we'll find today.

[Mara Goldstein:]

Okay. And if I could just ask a question on Elacestrant and the Phase 2 trial. Is it anticipated that that Phase 2 trial population will essentially mirror what we've seen in the Phase 1. And do you think you'll be able to start dosing before the end of this year?

[Jesper Høiland:]

I’ll let Gary answer that.

[Gary Hattersley:]

Thanks. I’ll answer the last part first. So we’re guiding at this point that we would start the study in the early 2018. But of course importantly we are really excited to being able to align with the FDA on this potential, this next clinical study. As you know, I said – I think we absolutely appreciate that investors are keenly interested in the specifics of the Phase 2 design and the population that we are targeting. And of course those T cells will available on both clinicaltrials.gov and by press release clinical study. But of course in support of a speed to market strategy, I'm sure you can appreciate that it's not in our best collective interest to really tip our hand to the competition, who could potentially tie up our patients. And so again, we would be looking forward to providing more details on the design of the Phase 2 study, I wanted the studies initiated.

[Mara Goldstein:]

All right. Thank you. I appreciate it.

[Jesper Høiland:]

Thank you, Mara.

[Operator:]

Thank you. Our next question comes from the line of Ying Huang of Bank of America. Your line is now open.

[Ying Huang:]

Hi. Thanks for taking my question. And thanks for that clarity about the CHMP. I appreciate it. I’ll now ask a couple above that. First, can you clarify if the U.S. FDA actually inspected any of those two sites that are questioned by CHMP? And then secondly, hypothetically, if you did exclude the data from those two sites, I assume the P value would not have reached the hurdle. I assume that, but can you clarify on that? And then I have another question on TYMLOS formulary access. We saw that you have the preferred status with Express Scripts. Can you talk about whether you are also planning to sign with other payers or PBMs similar preferred formulary access with that TYMLOS? Thank you.

[Jesper Høiland:]

Thank you, Ying. I think we'll let Greg take the first one and then David the second one.

[Gary Hattersley:]

Hi, Ying. Thanks again for the question. So we expect that the EMA review of the Eladynos MAA will have no effect on TYMLOS. We've maintained full transparency with the FDA through their review and approval of TYMLOS. And the FDA’s assessment of TYMLOS included thorough and independent analyses as well as GCP inspections of key clinical sites. With respect to the possibility of our P value is changing as a result of reduced power if we remove a certain number of patients, yes, that's a possibility. And we are continuing to perform additional analyses. And I'm not able to give you any further clarity at this point. We're going to be working with the Rapporteurs and the CHMP to address their questions. And we'll let you know when we know more.

[David Snow:]

Ying, it’s David. Related to the Express Scripts, they've already made – independently made decisions to add TYMLOS to this National Preferred Formulary. Really pleased to have that as we're both aligned around providing better access in appropriate therapies for reducing out of pocket cost, particularly in the Part D segment as well, I think that's a big focus for us. We don't necessarily see payers broadly choosing down on this path due to relatively low spinning in the RCO product category, and given the fact as we're talking about especially tier. But as with DSI, I think that's a decision that other payers could make as well. And again, they'll be making their decision, I think we've got very good response from payers thus far.

[Ying Huang:]

Thank you.

[Operator:]

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

[Chris Shibutani:]

Thank you. First a question on TYMLOS. Can you just comment on what kind of gross to net pricing we should be thinking about at this stage and kind of in the near-term?

[Jesper Høiland:]

Thank you, Chris. Pepe will answer that one.

[Pepe Carmona:]

Hi, Chris, thanks for the question. In the 10-Q we explained our revenue recognition method, which is in line and in compliance with the U.S. GAAP and ASC 606 guidance. The specifics on discounts and rebates are not going to be disclosed as it is too early on the launch plan. In due time we may decide to provide you more clarity [indiscernible] but right now it’s too early on the launch to make those disclosures.

[Chris Shibutani:]

Okay. Then if I could switch over to ask some questions about Elacestrant. In your press release when you talk about the feedback from the FDA, the Phase 2 study and the single-arm study, it sounds as if you have what you said “objective response rate coupled with durability of response”. Does that mean that those are co-primary endpoints?

[Gary Hattersley:]

No, they would not be co-primary endpoints. But of course the agency’s view is that duration of response is an important part of all the way that we look at the total study data.

[Chris Shibutani:]

Great. And then you further comment that you will be looking to understand available therapies at the time that the study will be completed. So in the future it kind of begs the question of whether or not you're giving consideration to combination studies. Can you comment on any plans to initiate combinations in particular for instance with CDK4/6 inhibitors? Thank you.

[Gary Hattersley:]

So right now our primary focus remains on the speed to market strategy. As a monotherapy in the third line based on the existing data we have from our ongoing Phase 1, we believe that that is very powerful, very important data that demonstrates the potential benefit in that patient population. Remember that patient population is one that has seen multiple lines of endocrine therapy that many of the patients have seen fulvestrant, many of them have seem CDK4/6 inhibitors. And as we look at the emerging landscape, we can expect when we’re seeing earlier use of fulvestrant and increasing use of CDK4/6 inhibitors, we can see that the patients whose diseases progressed, there is a need for agents that are effective after – fulvestrant and other endocrine agents and CDK4/6 inhibitors are current Phase 1 data, I think demonstrates that there is a potential benefit for Elacestrant as a monotherapy there. Great question about the potential combination. We see actually the opportunity for Elacestrant being even greater than just the late-line monotherapy. We’re certainly interested in earlier lines of treatment with Elacestrant as a combination agent. So thanks for the question.

[Operator:]

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

[Kyung Yang:]

Thank you. Question on the Japan partnership with the Teijin. You guys just said that you’ll receive upfront milestones and royalties. So when do you expect upfront payment and what other events related to milestones and what’s the royalty rate?

[Pepe Carmona:]

Yes. So thanks for the question. The upfront payment is going to be reflected in our Q3 results. So I hope that you’re going to wait for that to be in the disclosures. And the following milestones are going to be in the disclosure at that time as well. So everything will come pretty soon. The royalty rate is in the low double-digit rate. For now we have agreed not to disclose further than that.

[Kyung Yang:]

Okay. And then on RAD1901, in the press release it says that when you start the Phase 2 study you will continue to pursue additional pathways to accelerate approval. So can you kind of elaborate on what are the additional pathways? Thank you.

[Greg Williams:]

Yes, I think we – as we've already said, we're very encouraged by the emerging data for Elacestrant. We’re very encouraged by the interaction we had with the agency so far. Of course the agency provides multiple different pathways for further engagement and opportunities for us to work closely with the agency. With the dataset we have in hand, we believe there are multiple different ways of interacting with the agency. And of course as that occurs we’ll provide further updates.

[Operator:]

Thank you. And I'm showing no further questions at this time. Again, I’ll call back over to management for any closing remarks.

[Jesper Høiland:]

Thank you to every one that listened in. Thank you for your interest in Radius Health. I look forward to meet all of you, many of you on the one to one we’re going to have at the upcoming events. The first one that I’ll be participating in is on the 9 August, at the Canaccord Conference. So once again, thanks for listening in and looking forward to seeing you all.

[Operator:]

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