Radius Health, Inc. (RDUS) on Q1 2021 Results - Earnings Call Transcript
Operator: Good morning, ladies and gentlemen. And welcome to the Q1 2021 Radius Health Incorporated Earnings Conference Call. As a reminder, this conference is being recorded. I would now like turn the conference over to your host, Mr. Ethan Holdaway, Head of IR.
Ethan Holdaway: Thank you everyone. Thank you for joining us today. Our press release and presentation that we'll use to guide the discussion can be found in the Investor Relations section of our website. A replay of the call will also be available on our website three hours after the call. Before we begin, I'd like to remind everyone of our Safe Harbor statement on page two. This presentation includes forward-looking statements and non-GAAP financial measures. You can find the reconciliation of GAAP to non-GAAP at the end of the finance section of the presentation. Our most recently filed 10-k and subsequent filings identify factors that could cause our actual results to differ materially from those indicated by the forward-looking statements.
Kelly Martin: Thank you very much, Ethan. And welcome, everybody. Thanks for taking some time this morning, on this Friday morning for our Q1 update. As Ethan said, you'll hear from the leadership team on various parts of the business. With regard to RAD011, Liz will give you a brief update on where we stand with that molecule and program. In future calls, you'll also hear from Rupert Haynes, who's accountable for the franchise as we move that forward. On page 4, from an opening commentary point of view, I wanted to emphasize a couple important things. We run the company based on the assets that we have, we have three large and identified assets, obviously Abaloparatide, Elacestrant, and now RAD011. For Abaloparatide, the SC business in the US is an excellent business with high margins and a lot of upside. Sal, you'll hear more from Sal about the commercial pivots towards fracture patients. We believe that there's good upside with that business. In addition to that, there are three other areas for upside, we will obviously have the patch readout which you will hear from Chhaya in the second half of this year. You have the mail read out also the second half of this year. And you have an international opportunity to globalize the molecule into other markets. We've made progress in Japan and Canada. We hope to incrementally make more. I would characterize and characterize all three of those buckets as additional upside to the asset. Elacestrant is now partnered with our good partner, Menarini Group from Italy. That transaction in my opinion, last summer, was the most important thing over the last 12 months that we got accomplished. We'd like the space, meaning the breast cancer space; it is a crowded and sophisticated space. We do have with Menarini the lead molecule from a timeline point of view. And we would also characterize that data readout as upside to us, given the transaction that we did last year, which took out the event risk for us.
Jim Chopas: Thanks Kelly. Moving on to slide 6. Our Q1 results continue to demonstrate progress toward our 2021 goal of positive earnings on an adjusted EBITDA basis. Our net loss decreased from $37.7 million in Q1 2020 to $15.7 million in Q1 2021. The improvement was the result of increased total revenue, improved sales productivity, SG&A reductions and the exit from oncology.
Sal Grausso: Thank you, Jim. Good morning, everyone. I'm on slide 12. Talk a little bit about new patient starts as we previously communicated. We have the entire organization laser focused on new patient starts on therapy. March, we ended the quarter of the first quarter stronger March we had 1,723 new patients on therapy which was a 14% increase versus the prior four month averages, which led to a strong quarter-over-quarter growth where we grew 14% and new patient starts in the first quarter '21 versus the fourth quarter '20. On slide 13, two topics I'll provide further commentary on. We're very pleased to announce that on May 1 of this year 2021 that Humana has decided to add TYMLOS to the formulary of their Medicare Advantage plans that will have impact on approximately $5 million in beneficiaries. It gives us an opportunity to have instantaneous access to patients or patients having access to TYMLOS that did not previously have access through Humana Medicare Advantage. With that change are increased, we have an increase in our coverage for Medicare Part D from 83% to 91%, and also first line postmenopausal osteoporosis patients with our first line, but those that have a history of fracture has increased from 77% to 78%. We continue to focus on the patients that have fragility fracture and the HCPS that treat fragility fracture that have underlying postmenopausal osteoporosis. We are pleased with our progress in this shift in strategy in Q1, our new patient prescribers 42 of the Top 50 of those prescribers were either orthopedic or specialists of bone accounts. And that group of 42 actually grew new patient starts 26% versus the overall growth of 14% for total prescribers.
Chhaya Shah: Thank you, Sal and good morning, everyone. I will cover as Sal mentioned the clinic and regulatory progress we've made to date on abalo program. We remain totally focused on delivering our top line results that the second half of 2021 for both phase three trials, as Kelly mentioned, the Adam trial to add the male indication for TYMLOS and the wearable trial to add our new transdermal system, the patch program. For the transdermal product, we have proven in a clinical trial that our drug product used in Phase 3 is bioequivalent to our sterile drug product that is manufacturer now at our final commercial facility. Due to the success of the bioequivalent trial, we now have introduced commercially equivalent sterile drug products into our Phase 3 trial. This is all in agreement with our FDA alignment. So it's very good news for aligning the bioequivalence criteria. For our SC TYMLOS products, we have successfully completed the formative human factor study, which now includes men and as well as women to confirm that are appropriate instruction for use and overall use of the product. We anticipate including this data into our potential male sNDA submission. With the above successful activities, we are positioning ourselves to create a high quality regulatory submission, assuming top line results are positive. We've also made progress in our international space. First, I think Kelly mentioned earlier that we announced that our partner Teijin in Japan has achieved regulatory approval for osteoporo. This is an important first step in globalizing Abaloparatide type franchise, a big achievement and we have an effective partnership between Radius and Teijin. Second, we've made progress in European filing by submitting our letter of Intent in March to CHMP to target our submission to EMA in fourth quarter of this year. Additionally, we're in discussion at various stages, early in some advanced with multiple regions for partnership to expand the Abaloparatide footprint. Overall, I think we're making good progress on all fronts with the Abalo program. And with that said, I will hand it off to Ms Liz Messersmith, who will walk us through the RAD011 program.
Liz Messersmith: Thank you. Good morning, everyone. And thanks, Chhaya. So on slide 17, I just want to provide you a brief update on where the RAD011 team is working and focusing and that is right now on the Prader-Willi syndrome program. As Kelly mentioned, we do have a Type C meeting scheduled with the FDA that is scheduled to occur on June 16. And in that meeting, we will be presenting our clinical development plan as well as non clinical appropriateness for the program. In preparation for that meeting, we have been incorporating feedback from key opinion leaders as well as advocacy and foundation groups into our overall development plan. Based on the feedback we are assuming that we'll be in a good position to start our global pivotal trial in Prader-Willi in the second half of 2021.
Ethan Holdaway: Thank you, Liz and team for all the updates. We're now going to open up the call for questions.
Operator: Our first question comes from Corrine Jenkins from Goldman Sachs.
CorinneJenkins: Hey, so y'all talk about the mix of orthopedist and bone specialists in that top 50 prescribers base . How does that compare to maybe when you started this strategy or any time point in the past year or so.
KellyMartin: Yes, Corrine, this is Kelly, thanks for the question. I'll give you a couple of comments and then Sal can give you a deeper dive but the original marketing and sales strategy for the company was really based on sort of mirroring, if you will, the foretell sales and marketing footprint, which I think from a launch perspective, and initially years was probably completely logical. And as you can imagine, that really sort of footprint was very dispersed and diverse, and included primary care over or probably overly included endocrinologists. And so, that was the way things started. And Sal with his team had kind of done a pretty significant sort of hard ride into making sure that we get to the bone specialists. And so that's sort of a backdrop and maybe Sal, you can comment to Corrine on some of the specifics.
SalGrausso: Yes, hello, Corrine. Good morning. I guess just to further add, I think when we, before we started this, we looked at our prescribers mix, and we realized that we had a smattering of metabolic bone and orthopedic specialists in the top, and we realized that those were the most productive accounts because we knew that they saw a high flow of patients that had fragility fracture. So we definitely expanded that and I would say that we definitely see a cycling out of some of the general med rheumatologist endocrinologist in that top 50 and a cycling in of new orthopedic specialists. They see such high patient counts, if you turn on the new office, which isn't easy, and requires a lot of hard work. They quickly spool up in terms of new patient starts.
CorinneJenkins: That's helpful and then maybe separately, can you talk about some of the feedback you've received from KOL and patient advocacy groups as it relates to how you're thinking about their Prader-Willi trial design?
KellyMartin: Sure, that'd be great. Liz, why don't you take that obviously?
LizMessersmith: I'm sorry Kelly, my system just cut out. Could the question be repeated?
KellyMartin: Yes, the question -- yes, it was the question from Corrine is some of the feedback and input we got from some of the KOL is with regard to the Prader-Willi indication, trial, previous learnings from other participations, et cetera. So just some of the specific feedback we've gotten, I think it'd be helpful.
LizMessersmith: Yes, that's really great, really great question. Thank you very much. So, in the KOL feedback, what we've learned is hyperphagia, is absolutely one of the key criteria that patients and families and physicians are trying to manage within Prader-Willi, and that instrument around the HQCT, which is the validated instrument that is recognized by regulators is the key instrument by which that hyperphagia is measured. Now, there are some challenges with that instrument, as it's been around for a while. And there have been behavioral modifications that are implemented in the care of these patients that makes the administration of that instrument a little more difficult. So we'll be talking with the agency about a couple of questions in particular on the instrument and our thoughts on how we can still utilize that instrument in an effective way. So that's great. And then I think the other piece that we've learned from these inputs is there is a huge unmet medical need for this population. And the population overall, is very interested in supportive of new therapies to address their needs, all the way from the advocacy groups to the physicians treating these families. It's just quite impressive at the level of organization. And they've all been very engaging with us today, as we get up to speed on how we advanced the program.
KellyMartin: And I would just add to that, Corrine that from a regulatory point of view, this particular disease certainly has the attention of the highest levels within the neurology area.
Operator: Your next question comes from Geoff Porges from Leerink.
GeoffPorges: Thank you very much. And I appreciating taking couple of questions. First, could you remind us of the terms of your collaboration with Teijin in Japan? So how you get paid for that? And then could you characterize the size of the opportunity there? Reluctant to question will your partner to commercialize in Europe? And what terms would you advise us to expect? I mean, I know it's sort of open there right now. And then lastly, could you go through, again, the puts and takes in the reported revenue in the US for Q1, just TYMLOS, it sounds though there were quite a few moving parts and adjustments. And I'd love to know what the net price trend is, and whether that -- what that's going to look like for the rest of the year.
KellyMartin: Okay, great. Thanks, Geoff. We'll turn to Sal and Jim, for the third of your questions on the first two; I'll take like sort of frame it out for you. The answer to your Europe question is yes, absolutely, we would partner the asset, and we would partner the asset out. This is obviously for the SC product. On the heels of that we have a patch product. So you can envision that the discussions are not just SC but sort of SC plus other alternative delivery opportunities. As we've looked at Europe, and it's a bit premature to kind of get involved, we've had some preliminary discussions, but as would be totally logical any potential European partner would like to see where we get to, from a regulatory point of view, which is quite a ways out, as you go through the timeline and what Chhaya talked about in the second half of '22 assuming we file in the fourth quarter of this year, the second half of '22 is when we would have regulatory clarity. So sometime over the course of fourth quarter this year, first quarter next year, we would then be able to have a deeper dive with regulatory and with potential commercial partners, it would look like any standard, bog standard, presumably something upfront, milestones and royalties that are reasonable to us and reasonable to a partner. We view it as all incremental upside for us. The pricing construct as you would be well aware in Europe is very different. We're thinking just think aloud and Chhaya can comment, perhaps where we're thinking about narrowing our focus to more fracture patients or high super high risk patients as opposed to the sort of generic all comers and osteoporosis. We think that could be something that's interesting. So it would be an upfront and some milestones. And to be determined, I would say, over the next six to nine months, but we had had some discussions but not businesses --not termed discussions yet. With regard to Teijin. Jim, you want to Jim go through the specifics in addition to the upfront that we got in the first quarter?
JimChopas: Sure, Kelly. With regards to our Teijin agreement, we have regulatory and sales milestones of up to $40 million, $10 of which we received in April, which we recognized in Q1. In addition to that, we have a fixed low double digit royalty on net sales of Abaloparatide in Japan.
KellyMartin: And the Japan market, Geoff, as you would be well aware is the largest currently -- the largest anabolic market estimates of top line revenue in anabolic in Japan is somewhere in the high $2 billion to low $3 billions. Teijin is an excellent partner. And I would say it resolutely focused on launching Abaloparatide. So from a cash flow point of view, once launch occurs, presumably, it could be a pretty interesting high margin cash flow for us. And last but not least, Sal, the puts -- as you said very well, Geoff puts and calls I would just say first and foremost as I'm sure all your other companies are the 2020 with COVID had so many things going on with regard to patients' activity, AGP activity. And so there's a lot of noise and all that stuff. But Sal why don't you go through with Jim, some of the details that would be helpful to Geoff for the TYMLOS US as far as the variability?
SalGrausso: Absolutely. Jim, why don't you go first and kind of just talk through the numbers, and maybe I'll provide some commentary on each of those parts from a commercial perspective.
JimChopas: Certainly, thanks Sal. In terms of Q1, we have our natural seasonality as we had mentioned in our last call, where typically, Q1 is faced with some challenges with resetting of deductibles resetting of the coverage GAAP. To some degree earlier in the year, we have increased copay assistance as people are working through their deductibles. On a high deductible plans, we traditionally have seen it in terms of our history that there's usually a Q4 to Q1 challenge inherently. On top of that, we had some challenges where given kind of their duration of therapy, that some of -- we do get some impact from 2020, that rolls forward and impacts us during the first quarter. So we felt some impact from some variability in 2020, as we earlier mentioned, so at a high level, it was something that we see is transitory, we believe is transitory, but partially due to seasonality, and partly due to some of these transitory factors.
GeoffPorges: Great, thanks.
KellyMartin: Go ahead, Sal. Thank you for your comments, it would be helpful.
SalGrausso: Yes, I just add it. The first quarter was an interesting quarter. I think as Kelly mentioned, for the whole industry, I think some of that seasonality that we talked about that is seasonality as related to change in coverage year for patients and kind of payer pressures out of pocket cost is becoming more significant for across the industry for the first quarter. I would say that, as we said earlier, our equation is simple. It's our demand is new patient demand, which we said is 14% higher plus continuing patients gives us our overall demand. So I think a little more color on the continuing patient is that COVID, post COVID with some of our lowest new patient start cohorts that we've experienced and with that kind of catches up and creates a wall in the continuing patient pipeline. So that's why we're so laser focused on new patients, we're very confident that we get those new patient shipments or new patient demand up that that's going to repopulate that pipeline and we should see the unit -- the demand coming from the continuing patients start to rebound starting here going forward. I further add that as most companies there is, we all experience a loss of patients in the transition from December to January because of payer resets and out of pocket cost issues with patients and patients dropping off therapy. And then lastly it's, it was a big deal, the February kind of winter storm, I even think it had a name Uri really did have an impact on us in February in terms of business continuity. So I think all those factors blended together really kind of explain the quarter in Q1.
Operator: Your next question comes from Mohit Bansal from Citigroup.
MohitBansal: Thanks for taking my question and congrats on the progress here. Maybe so just a little bit, dwelling into Geoff's question. You also mentioned destocking in your press release. Could you characterize how much destocking was there? Or was it a big impact on first quarter? And the related question is where do you stand in terms of the wholesale inventory levels right now? And could it be a tailwind for next quarter?
KellyMartin: Yes, Mohit thanks for the question, it's a good question. Sal why don't you tackle that employee frame and I'll -- frame it out, you and Jim make it out; I think it'd be good.
SalGrausso: Yes, I think this is -- we've talked about before, we have with this transition to our limited distribution network, we have more visibility into all the dynamics of our business than we've ever had before. And I think the one area that we have complete visibility into, is because we have inventory, beginning month end inventory, month end -- beginning month inventory, and month end inventory for all of our channel partners. So we have a precise now be on inventory throughout the entire channel. And what simply happened is that in Q4, and that goes to part of that seasonality price changes have become predictable in the US market in January, across the industry. And so we saw a built in inventory occur in the channel in Q4, and then destock in Q1. And Mohit I think you're right, the inventory, the channel is mean in terms of inventory perspective. So that's something that we view as a positive for us going from second quarter forward.
MohitBansal: So basically, the demand was the real demand was probably lower than the $60 million number you posted in fourth quarter or is hard than the $45 million you're posting now. So we should think of something like in the middle there, as we think about second quarter roughly, is that a fair way to think about it?
KellyMartin: I think from a distribution point of view, the answer is yes. I think that the fourth quarter was slightly higher than in retrospect. And the first quarter is lower. And so we would normalize things out for the balance of the year. So that I think that as you're kind of rebound, in quotes from Q1 to Q2 on the distribution channel that would be an uptick.
MohitBansal: Awesome, thank you. And maybe if I can squeeze in one more for RAD011. Could you talk a little bit more about the ranges of -- range of possibilities or range of outcomes from your meeting with the FDA, what you are trying to discuss with the FDA? I assume the endpoints in the trial design and everything. So if you could walk us through that, and then would you be disclosing it when you meet with the FDA?
KellyMartin: Yes, I'll turn it to Liz on a second, but thank you, Mohit. We will update the market on RAD011 post clarity from the FDA. Now that clarity is both the meeting and then as you would be well aware sort of written confirmation. But we have spoken internally we think would be appropriate externally to have RAD011 only update to all of you sometime after we have that written not just with the results of the PWS discussions, but some other discussions on other things. So Liz, you want to provide some further content to Mohit's question.
LizMessersmith: Sure. Thanks Mohit. So this is the first time we will be talking with the agency about the program since we've acquired the asset. And so we need to go back and do some ground setting with them on our proposed non clinical and clinical development plans and how we plan to advance it and what data is currently within the asset. What other things we might need to address and how we plan to address those all in support of our goal to have this Phase 3 Prader-Willi study be looked at as a pivotal study for the agency. So that's key and upfront, it covers a lot of topics quite frankly, when you talk about adequacy of your overall development plan in organization. So we'll be trying to align with them on and as well as setting expectations of what we will execute in the future. And as Kelly mentioned, after we have their feedback, we'll come back and give more detailed update on the outcome.
Operator: Your next question comes from Jessica Fye from JP Morgan.
JessicaFye: Hey, guys, good morning. And thanks for taking my questions. First one is about TYMLOS I guess kind of volumes and commercial strategy with respect to those comments, you made about 42 of the top 50 writers being orthopedic or specialist bone practices. I guess at first, what proportion of TYMLOS scripts are being written by those 42 writers? What proportion are they responsible for?
KellyMartin: Thanks, Jessica. It's Kelly, I guess Sal you'll be in best position to kind of give, again, frame out the specific data on that. So why don't you do handle them?
SalGrausso: Yes, hi, Jess. In my estimation, those prescribers represent probably around 20% of the total new patients for the quarter.
JessicaFye: Okay, got it. And can you help us think about the new patient growth for writers outside of those 42? I know, you said that those 42 were kind of above average, what about the remainder? The other 80%?
SalGrausso: Yes, I'll just continue on that. I think that's the key for us. So I think that market is very broad. So we have a lot of general medicine prescribers and general med is what we would say rheumatologist, endocrinologist that treat other diseases and don't necessarily focus on bone as a primary. And so there's a lot of those prescribers we're getting we get breadth, and not lots of depth in terms of prescribing. So, I would say that for the most part the tail has been pretty consistent from quarter-over- quarter. And where the growth is happening is, as you kind of move up in the list to the more productive accounts, and the more productive accounts tend to be these ones that are bone focus. And we've talked about the top 50, but that same situation does go, let's say, from 50, to 150, et cetera, et cetera. So that's the key is putting more focus where we have the greatest opportunity to get the most productivity from those prescribers.
KellyMartin: I think it might be helpful Sal just to interject for Jessica, based on Jessica's question for you to give a high level overview of; you've done a lot of work on existing, to your point, sort of the broad distributed activity that we have, which is in of itself, not negative or positive, but it's not efficient. And it's not where the biggest flow of patients is. So maybe one or two factoids on for example, how many territories have five or less patients or whatever the right number you want us to give sort of the size of scale and what we're trying to correct versus what we're trying to get to it I think that might be helpful.
SalGrausso: Yes, that'd be great. So Jess I think we've talked previously about this fracture focus, and we talked about the different types of fractures. And we went back and we did a lot of work on our customer segmentation. And we basically bucketed our customers into four groups. Three of them are bone focused. So that's your traditional metabolic bone specialists that is a physician or a physician assistant or nurse practitioner that is solely focused on metabolic bone. Then we have the orthopedic practices. So this is orthopedic surgeons or people within the orthopedic practice that are basically treating patients for the underlying osteoporosis. Then we have the cohort of bone focus people that do spine and then in the fourth bucket is our general medicine. So I would say that what we find is in the general medicine, we do have a lot of prescribers that may prescribe one or two new patients in the quarter and may not prescribe next quarter and so there's a lot of transition and turnover of our tail. And so with that -- that's why we're kind of even further refining our focus and trying to move our effort more to that those bone focus categories without alienating or leaving the general medicine, prescribers that are productive. So that's the key to optimize what we're doing in gen med. And really for the, for those physicians that are just doing zero, or one or two perhaps that's not where we put our focus, because they'll never grow to what we need to -- where we need them to be. And then keep that focus on those gen med physicians that do have the patient flows where they are seeing and treating more patients, and then really turn and continue to shift the focus on those bone focused segments that we just laid out.
KellyMartin: I think that's great. Thanks.
JessicaFye: Great. And maybe just following up on I think, Geoff and Mohit's questions on the inventory swings. Sounds like you have pretty good visibility into the level of inventory in the channel. Can you just quantify the amount of the build in 4Q or as of quarter end? And then the amount of destock as of the end of 1Q? I guess that $1 million, $2 million, $3 million something in there?
KellyMartin: Sure. I would say Jim why don't you take that and Sal you comment would be my suggestion.
JimChopas: Sure, Kelly, in terms of -- we have a lot of visibility to it. In terms of the build and release of that inventory. I think that we're not disclosing the exact numbers, but it was roughly in terms of order of magnitude, it represented a good portion of the decrease in revenue account from Q4 to Q1. We're not quantifying it at this point. But there was a similar instance of destocking in Q4 to Q1 of the prior year, but it was greater this year.
KellyMartin: Sal, you want to add anything to it?
SalGrausso: Yes, I think the way that Mohit kind of talked about it is the way I think about it, I do think that there was a slight pull forward, that we were unawares, given the visibility. And when looking back after we have more robust reporting, I think that's right. So the put it this way, the buy-in in the fourth quarter, was equally offset as destock in the first quarter so I do think it was a phasing issue between the quarters.
JessicaFye: Okay, got it. And then just a couple on TYMLOS patch. Where do you stand with respect to generating stability data for the commercial scale, TYMLOS patch? And you've also talked about having completed the study comparing PK as a commercial sterile patch to the initial Phase 3 product, and kind of moving the remaining patients in the wearABLe study on to the commercial sterile product. How many patients do you expect will get the commercial product? And for how long on average? You should elaborate a little more on that shift?
KellyMartin: Yes. Thanks for those questions. Sal, you should take it. Yes, I would just comment that this tons and tons of work. This is sort of behind the curtain work, which is so critical and technically challenging and Chhaya and our partners have done, and our team have done a great job on it. So Chhaya you want to frame out those answers to Jessica's questions.
ChhayaShah: Absolutely. Thank you, Kelly, and thanks for the question, Jessica, really great questions. So I think your first question, if I got it right, is when do we put the product on stability, we put the product on stability as soon as we make registration batches for in our small scale of the equivalent sterile product. So that was months ago. And so we'll quickly get that data. And we'll put it into the NDA submission. Since now that we've had the bioequivalence which is comparing our low bioburden product that we've put in Phase 3 to our sterile product, which was a huge win for us. It derisk program, right? And it gets us into that area where we say, okay, we're confident that we can build make commercially equivalent sterile product at Thermo Fisher and our partners. So I think that was part one of your question, right? Part Two was with regards to and maybe Kelly and Sal you can comment on this as well is what is the segmentation of patients that will be on the patch versus how we positioning it.
KellyMartin: I think Chhaya it was for the completion of the trial, right. So that the crossover from -- exactly it was within the trial completing from into commercial product, approximate estimation.
ChhayaShah: Yes. So, yes, so we are -- as we've enrolled, it's a one to one randomized study, and we're about, I would say about halfway through completing our patients' enrollment as far as they're completing the study. And we're on track for our top line results at the end of this year.
KellyMartin: And I believe, Chhaya, the FDA had some guidelines for their wish for how many patients would be switched to commercial product, they had a certain percentage.
ChhayaShah: Yes, so the FDA said, as many patients as you can get into their product. And so we are, if we have met, half of the patients are off, so we're about between 20% to 30% of our patients should be on the sterile patch.
KellyMartin: Correct. So that Jessica, so the target with the -- the agreement with the FDA was at least 20%, we will deal with all the success that the technical team has made that that's we'll be able to check that box and then discuss the full filing with the FDA with that information incorporated into the filing.
JessicaFye: And whether at least 20% for a certain period of time, or just at least 20% get some exposure to that commercial product.
KellyMartin: I think it was the latter.
ChhayaShah: Exactly.
Operator: Your next question comes from Annabel Samimy from Stifel.
AnnabelSamimy: Hi, thanks for taking my question. I had a couple. So I guess congratulations on the Medicare win and I'm a little bit curious, putting aside seasonality and some of the destocking shifts, it's the Medicare program is going to maintain the level of growth at a much higher than before the gross net adjustments. So that's one question. And the second is with your shift to more metabolic bone specialists and ortho, what do you see in the landscape that competitors are doing? It makes logical sense that you want to focus on that. So where are your competitors in that landscape? And then finally, I also noted the discussion on the black box with regard to -- so can you discuss that with us? And what specifically you're looking for? Is there any upside that we can potentially see from any kind of discussions there? Thanks.
KellyMartin: Thanks Annabel. Maybe we start with your last question. First, Chhaya, if you could take the work that you and the team, Bruce, et cetera are doing on that. And then Sal I think you probably would take the other two questions. So Chhaya why don't you start.
ChhayaShah: Yes, sure. Thanks. So with regards to black box warning, we have submitted a supplement to the agency with a 10 month review, we submitted that in December of last year. And we justified it based on the fact that the removal of the black box is regards to the class of drug; we are in the same classes as KOL. So we are and we've included in there, additionally, that in our post marketing data, that there's a really justification to say that we can remove this and that the product is safe. So to remove the black box, we're also requesting in that same submission, the additional with regards to dosage and demonstration on duration of the treatment. Our PDUFA date for response back from the agency should occur in October of this year. So we're feeling good about that. We've had some communication with the agency and responded back to them on their questions.
KellyMartin: And the other two questions, I just would preface it before Sal talks Annabel as far as competitors and what they're doing, there are not that many competitors. What we can tell you is we're not -- we know which patients actually would have the highest utilization and clinical need for a bone strengthening assets. And that's continues to get reconfirmed and overly reconfirmed by people that are helping us sort of sort through that. So Sal you want to just take sort of that, the bone and the fracture folks and that sort of activity relative to, I think, maybe historically, sort of the anabolic words and ever what everyone's doing and how you analyze all those things. But we're trying to be very focused on where the most patient flow is. And, again, the other thing, which is not news to anybody on this call, but one of the challenges of osteoporosis, is 80% of the people are asymptomatic. So we're trying to narrow down where we focus and where the most patient flow is, and where we can be most efficient. But, Sal, you want to take that from there?
SalGrausso: Yes, absolutely, I would love to; I think there's good momentum. And the momentum is based on that there continues to be a tremendous unmet need for postmenopausal osteoporosis, patients that suffer fragility fracture, and the unmet need is secondary fracture prevention. And there's a lot of different organizations now making even more noise than before on this topic. And I think the one most interesting group, and there's been a paper published by put out by the American Orthopedic Association, where was actually two world renowned orthopedic surgeons, who talked about the importance of bone optimization, and the importance of treating the underlying condition of osteoporosis in overall bone health. So I think that there's a great momentum in the medical community around the importance of secondary fracture prevention, and the importance of treating the underlying condition and everyone doing more. And I think it's very encouraging that the people who see the patient at the time of the fracture are starting to look, and realize that they have a bigger role in that. So that's one, as far as the competitors we have one, and I would say that they are very much focused in the same way we are on the fracture patients, and important there. So, I think there we are unified as industry in the two people are involved, and the medical community of the importance of secondary fracture prevention. So, I think that we are doing and going in the same direction on that topic. And Annabel, as far as the second one, I think that was a very good question. You asked me about Humana, and you're absolutely right, I've been doing these things for a long time. But what's very encouraging is that with Humana and with Medicare, we tend to get rapid uptake of new patient starts, given how controlling Medicare plans are in terms of the before and after. So, you're right to say that, of course, in order to get access we had to basically concede price in the form of agreement with Humana, but we're very confident that at the end of the day, it's about net revenue, and that deal and that access will lead to increase in net revenue very rapidly in the next couple of months.
AnnabelSamimy: Got it. Can I just ask the follow up on the Ortho's? So, you just mentioned there's great momentum for the desire to treat secondary fractures, are those typically the ones that use these anabolic agents? I guess, in the past, you got an ortho you have a fracture, and they refer you back to your general physician or possibly an endocrinologist. So is this a new treatment area for them? Are they comfortable with it? Are they used to it? Just any color you can get around that?
KellyMartin: Sale why don't you, I mean I would -- some introductory comments is the orthopedic surgeon isn't going to -- they're not going to spend any time really on this but they recognize I think more broadly now that ongoing bone health and follow up particularly for certain age category and obviously, postmenopausal women you automatically have osteoporosis so what we have found, our most -- the best traction we have with accounts that are either completely new or relatively new are in I think, in general, I think Sal can correct me sort of rheumatologists who have set up relationships with orthopedic offices and/ or practices and they get referrals, post surgery, or post treatment to all the patients. So Sal, you want to broaden that commentary or even correct it?
SalGrausso: Yes, absolutely. I'd love to broaden. I think that's right, Annabel. That's why it's hard work to do. But I think what's happened is that everyone's acknowledging that it's pretty tragic that less than 10% of patients who are treated for a fragility fracture actually are given a consultation for the underlying condition. And then what's happening is, and a lot of literature says that those people that suffered fragility fracture are six to 12 times more likely to suffer a subsequent fracture in the next 12 months. And that's what the tragic situation is. And I think what the bone treatment community, orthopedic community is realizing is that as part of the care pathway, when they do follow us with patients, even if they don't feel comfortable in treating in their practice, that it's important that they ensure as part of the care pathway that somebody is giving that consultation on the underlying condition and I think that's what's different is that people are starting to have a more of a mind of the coordination of care with these patients, not just fix the fracture, and then kind of, they go off and have a risk of having a second fracture. And I think that's really in particularly important for people that treat vertebral compression fractures, because of the nature of that treatment, and wanting to prevent the secondary fracture or prevent the second facture from this. So, I think that's kind of know what we're so -- if it's not treat yourself, which some do, and some do have staff that do that or they refer to a metabolic bone expert, but in the very least ensure that patient is getting a consultation for the underlying disease and having an opportunity to get treated.
Operator: Your next question comes from Vikram Purohit from Morgan Stanley.
VikramPurohit: Great, good morning. Thanks for taking my question. So just two quick ones for me. First, on TYMLOS in Europe, could you just give us a sense of what the gating items are, and what the pending to do are for you internally, between now and a resubmission, in the fourth quarter. And then my second one was on RAD011. So understanding it's still relatively early days, but looking forward, how large of a commercial and salesforce build out, do you think you would need for this asset and Prader-Willi, if and when the time comes for commercialization? I just would like to get a sense based on your diligence of how this patient population is positioned across the US and how you're thinking of best reaching them when the time comes.
KellyMartin: Thanks Vikram. It's Kelly; I'll do the second one first. Yes, there's around 22,000 to 25,000 Prader-Willi patients in the US, they're highly concentrated on where they receive care, the care is also as Liz could attest and Rupert, it's integrated care is typically not a single doctor, it's a group approach, sort of early days would refine it, Vikram. But I would say sort of the commercial team, commercial defined as the face offs to those doctors, we are blessed within Radius of having an outstanding medical market access group. So we can certainly leverage that. I would say on the sales marketing side, you're looking at 2020, to maximum 30 people would be adequate, if not more than enough to cover the main centers. So it's not a big group, they'd be very focused. And I'd be comfortable saying that now. And kind of just with the asterisk I will, we'll refine it further probably over the course of the next nine to 12 months. And with regard to Europe and Abaloparatide, we're in great shape, maybe Chhaya; you want to add anything to it. But we know what we're sort of in mid flight, I think most of the things that we have needed to do we've done and it's now finalizing things. But Chhaya, why don't give Vikram your thoughts.
ChhayaShah: Sure. Thanks. Thanks for the question, Vikram. Yes, so as I mentioned earlier, we submitted the Letter of Intent in March, and we're waiting for meeting with the which should have been in sometime in the May timeframe. And then we're in mid flight, as Kelly says, is pulling together the dossier to be submitted in our fourth quarter. And I think we're on track for that.
KellyMartin: Yes. We spend a lot of time, Vikram on post as Chhaya said, we are aware of data and it's been, we have a lot of it. And it's all rather compelling directionally. So that's we're in good shape with all of that. And we've had a fair number of discussions in Europe with various countries. So we're, we have a real good sense of what we have, what we need to deliver and how to deliver it. We appreciate the question.
Operator: Your next question comes from Douglas Tsao from H.C. Wainwright.
DouglasTsao: Hi. Just following up on the sort of new focus on bone specialists. I'm just curious given this shift that you've seen in sort of nice growth, what were they largely prescribing? Meaning are they switching from Forte or are they using ? I'm just curious, what were they using prior to sort of using -- starting to switch to TYMLOS? And generally, not just once you switch but broadly, what's the sort of standard of care at those centers right now?
KellyMartin: Yes, I'll let Sal answer it. But and Doug, thanks for the question. Sal has all the numbers. But you'll be shocked there, I was certainly shocked as a relative newcomer here, but the vast majority of patients that have no therapy, and so sad, so it's not a switch market, really. So Sal why don't you to elaborate.
SalGrausso: Yes, that's exactly right. There's not much more to say, Doug. I think Kelly said most of the time, these patients tragically are not being consulted or diagnose or even treated for the osteoporosis. So I think it's usually a situation from very little so there's -- that's why we're very excited about the opportunity and why we're so focused there. And I would say -- okay, go ahead.
KellyMartin: We've listened to -- we have obviously a lot of reach out to different people, but any number of orthopedic surgeons or interventional radiologist they kind of understand now, and this with sort of population aging, and bone fragility, I think it's becoming more and more recognized that prospective bone health, once you fix an event in quotes, it's got to be incorporated into patient care. And again, we don't, we're a small company, we don't need to turn on 1000s and 1000s of places a few 100 will make a gigantic difference on our business. So I don't know, Sal you're going to add more things.
SalGrausso: No, that's it, I think that generally people are surprised with this kind of what they call the bone health crisis in the nation, I think a lot of people are surprised that these patients that they treat, don't make it back to the primary care and don't get the consultation, don't get treated for underlying conditions. So that's what it is, I think it's just the gap and apathy in the treatment paradigm and the pathway. And it seems like there's a group of people are now saying is that, hey, look, either we have to do something, or we have to figure out how something's done for these patients.
DouglasTsao: And if I could just have a quick follow up? I mean, is it -- those providers is it just a misconception around the safety, the efficacy? Or is it just sort of the sense of sort of an inclination not to treat because of like bad experiences with the ? I'm just curious, just sort of what's leading it, because clearly, this is such an important health issue, and yet, and there's seems to be such an obvious sort of answer.
KellyMartin: Yes. Go ahead, Sal.
SalGrausso: I think it's, and that's what's the challenge is, I mean orthopedic surgeons don't typically treat chronic disease or underlying diseases. So I think it's not something that's in their traditional flow. So that's what the issue is, and it's really hasn't been the responsibility historically, at least the perceived responsibility. So I think it's just, again, it's a gap in care, it's the handoff of the fragility fracture patient from an acute situation when they have the fracture to when someone fixes the fracture and there's just not an appropriate timely handoff to somebody that might be in a position to give the consultation and treat for the underlying osteoporosis. That's what's tragic, because again, like I said before, that these patients are more susceptible to a second fracture than the first year after their first fracture. So that's just what it is. It's just a kind of inefficiency gap in the care pathway. And so that's really what we're -- what needs to be addressed holistically.
Operator: Your next question comes from Raj Patel from Farallon.
RajPatel: Hey, guys, thanks for staying on extra long queue of questions, but just big picture outside of the inventory destocking, is there anything else that you didn't really expect? I think everybody keeps asking about that, I think. And my second question is the reaffirmation of the $250 million. And if Q4 was a little bit, exiting 2020 was a little bit of a lower run rate, because of more inventory stocking than you anticipated. Can you just provide some color around your confidence in that number for the rest of the year you've got it? You need some steep sequential increases.
KellyMartin: Yes, Raj, thanks. Thanks for staying on yourself. Yes, it's good.
RajPatel: It's fairly obvious.
KellyMartin:
1:10:29.0:
RajPatel: Yes, I know that's helpful, those final comments at least match my model. So that makes me feel better about it. But one question on the new patient expectations. What should we be looking for? Like, that 1,700 plus number in March, that obviously will be, it'll bounce around. And I know the world markets going to be hyper focused on a monthly number, right? You guys are putting out monthly. But what's the right? What are your expectations on those numbers going forward?
KellyMartin: Well, I'll comment and then Sal can add, but I mean compounding is a wonderful thing, right? So we want to continue, it's not like we have a set number for any given month, but we started with three months, but we expanded slightly to four months to take out some of the noise. But the way we look at the business trying to be transparent to the shareholders and the marketplaces it as long as we're above the four month moving average, the trend is your friends. And the compounding of works with you if you look at average duration of treatment. So it's not like we have a set number for each month, our number is to grow from the previous four months of activity. So every month, that is what we -- that is our goal, it doesn't mean we're going to achieve that every month, and then you usually have sort of the moving average kind of resets a little bit anyway, because you're not going to have massive volatility, but what we expect, internally, is to grow that number relative to the previous activity every month. You want to add anything or refine that answers Sal, please go ahead.
SalGrausso: Not refined, just add I appreciate the thought about the monthly perhaps some volatility and I think of it that way, too. And I think we're looking for just sustained persisting growth. So as Kelly said, as long as that we are above that four month average, and quite frankly, for the long view, as long as that four month average continues to improve as well, versus the prior four month average, these are the types of things just getting that sustained growth so we can get that patient pipeline built up significantly so that's all I would add there.
KellyMartin: And yes, just to add more. Raj as I tried to frame out early on the SC business, great business, we want to grow that and then the incremental upsides, which the company has spent, time energy and money on the male readout is important, the patch readout is important. And we've added some incremental, international locations, while none of them other than Japan will be a significant change in trajectory. But if you sum up the sort of somewhat globalizing the asset. We tried to position things where we're almost to a point where it's all upside at various levels of opportunity. And that's where we're close, feel very, very close, obviously, from a P&L sustainability point of view. I hope that's helpful.
RajPatel: Got it. Yes, I know it is. And one last thing since you mentioned Japan. Do you have any expectations you can share on Teijin's market share over time? How competitive is that market? Do they have competing products, any of that?
KellyMartin: We have done our own internal modeling. There wasn't an internal model, which we're actually redoing, as we speak. Teijin is positioned in the bone metabolic space, very powerfully in Japan, I would expect them to be a top two or three participant in the space, and they expect to be a top two or three participant in the space. I don't have market share necessarily. We have some internal numbers, which we won't share at this current time. But I would just say when we start thinking about translating all this into EPS opportunity; it's not insignificant for us at the Apex. Now the slope of the curve is something we're drilling in a little bit more on. So I guess we'll come back to the market where we have a framed out part of that piece. I think that's a legitimate thing for us to sort of frame out for the marketplace. Sort of here's the range in Japan that we think is possible.
RajPatel: Okay, thanks. I lied; there are more, your new focus different types of prescribers. Are you seeing any thing different on the duration of therapy of their patients?
KellyMartin: That's a great question. Sal, you want to handle that?
SalGrausso: Yes, that's a great question. We have not yet, it's too early, and I haven't seen the data. I just know that right now our persistence hasn't changed. It's too early to see the impact. I think that there's two factors together that in my estimation, will improve duration of therapy, and that is the focus on patients that are very severe and have the history of fracture, so more motivation to continue treatment. And I do believe that all the work we did on the limited Specialty Pharmacy network inevitably is going to ensure a better experience through specialty pharmacy with a better chance for patients stay on therapy throughout. So perhaps we'll comment more on that next time we have a call. I'm showing no further questions at this time. I would now like to turn the conference back to Ethan Holdaway. Thank you.
Ethan Holdaway: Thank you and thanks everyone for listening into the call. As a quick reminder, a replay and the presentation will be available on our website following the call. Thank you again. That concludes our Q1 2021 conference call.
Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect.
