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Radius Health (NASDAQ:RDUS)
Q4 2020 Earnings Call
Feb 25, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 full-year 2020 Radius Health Inc. earnings conference call. [Operator instructions] After the speaker presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded.

[Operator instructions] I would now like to ha -- turn the call over to your speaker today, Mr. Martin. Thank you. Please go ahead, sir.

Kelly Martin -- President and Chief Executive Officer

Thank you very much, Operator. Good morning, everybody. Thank you for joining us this morning for our Q4 2020 and full-year 2020 earnings call. And at the end, we'll -- we'll be happy to take some questions.

Slide-wise, first page, that's important obviously. It's the safe harbor statement. I won't read the whole thing as it clearly refers to di -- discussions and statements we make prospectively for the future are -- are things that are subject to significant change. Importantly though, for this particular presentation, because it's full-year, there are -- we -- we would highlight that there are cer -- certain GAAP and non-GAAP disclosures from a financial point of view which we've included in this -- in this deck for your reference.

Next slide, on the agenda, I'll just give a brief overview. Our principal finance officer, Jim Chopas, will go through the relevant and highlighted financial results from both Q4 and for the full year. And Sal Grausso will talk very specifically about our patient growth, which is the underlying fundamental to our -- to most SC U.S. business.

And I will be happy, as I said, to answer questions that you may have. On the next slide, from an overview point of view, and I would say that these -- these areas of focus are ones that we've tried to communicate with -- with reasonable consistency over the last few months. But just to reiterate again, our focus from a company point of view is ac -- across these very important items. First and foremost, we -- our focus, and Sal will speak about it later, is to grow Tim -- our TYMLOS SC franchise and business.

We believe that the molecule or the abaloparatide is an outstanding molecule. The patient need remains broad and deep. And we are focused on growing that business. Secondly, abaloparatide is, as many people know, it's -- it's in a molecule that has two-phase, three readouts toward the end of this year, the second half of this year, one for male potential osteoporotic patients, and the other is for transdermal system, aka patch.

And both of those readouts will happen in the second half of this year, an important aspects and parts of the abaloparatide underlying franchise and business opportunity. Thirdly, abaloparatide on a global basis. We currently are up from a commercial point of view in the U.S., as you well know. We have a partner in Japan who -- who are making progress regarding their own regulatory processes.

We expect clarity on that in the first half of this year. It is a very large anabolic market as many people know. We also did a deal toward the end of 2020 with Canada, an out-licensing from a commercial point of view with both SC and the transdermal system, and that partner is making initial steps toward regulatory pathways for Canada. In addition to those -- that -- those three current countries, which the U.S., Japan, and Canada, we have a goal of expanding the -- the -- the global footprint of abaloparatide into other countries as we see fit and as we could find the right partner.

The areas that we're looking in are economies that are reasonably good economies with aging populations. Southeast Asia is an interesting place to look. Australia is an interesting place to look. And we are also continue to make progress on the regulatory side of the EU for future consideration in the EU.

Fourth, we want to complete the last tran -- tran -- Phase 3. That is on track. We hope to have that readout in the second half of this year as previously communicated. It's important for both ourselves and our partner, Menarini group, and we continue to work on progressing and finalizing that trial.

Fifth, we in-licensed a very interesting assets, RAD011, synthetic CBD molecule. There's lots of things that we are doing behind the scenes on that space. But first and foremost, our focus and goal is to make advancements against the orphan indication called Prader Willi Syndrome, and we are in the process of engaging with U.S. regulator on -- on -- on both a meeting and a pathway forward for that very important indication.

And last but not least, as an overall business and an enterprise, our goal is squarely to be a cash flow positive company as we move our business forward that enables us to do many different things and to manage our own business in a way that we believe can add value for both short term and intermediate term points of view. So it's a broad overview. Again, all of these things, we've explained before and -- and I just wanted the chance to reiterate them on this call to -- to all of you. So with that, I'm now going to turn it to Jim Chopas, our principal finance officer, who will walk you through, again, at a high level relevant financial update for both Q4 and the full year of 2020.

So, Jim, you take it from here.

Jim Chopas -- Chairman

Thanks, Kelly. I -- I will briefly walk through the financial highlights of 2020. And afterwards, I will share and confirm our financial guidance. On -- on Slide 6, Radius had a strong financial performance during 2020 with 20% TYMLOS revenue growth, the successful exit from oncology, and a reduction in costs which contributed to ending the year with $115 million in cash and investments.

With a strong focus on new patient growth and specialists that treat osteoporotic-related fractures, we were really able to complete the year with $208 million in product revenue, an increase of 20% over 2019. During Q3 2020, we successfully exited oncology through the license agreement for RAD1901 and the divestment of RAD140. During 2020, we realized and collected $30 million in licensing revenue for RAD1901. Additionally, we incurred reimbursable costs of $39 million in connection with RAD1901 services performed under the transition services agreement, which reduced our research and development costs.

We also repositioned the company's overhead structure, resulting in a $13 million reduction in selling, general, and administrative expenses, excluding stock-based compensation. Slide 7 summarizes our Q4 2020 results. For the fourth quarter of 2020, we reported total revenue of $62.8 million. Importantly, we finished 2020 with strong momentum with $60 million in TYMLOS revenue, which is a record quarter for Radius and represents an 8% increase versus the fourth quarter of 2019 and 19% sequential growth versus the third quarter of 2020.

Sal Grausso will be discussing new patient growth later in the presentation. On non-GAAP basis, R&D expenses increased by $3.7 million, primarily driven by $16 million in RAD011 costs and other R&D costs of $6.1 million, partially offset by an $18.4 million decrease in elacestrant costs. We reported a net loss of $21.4 million for the fourth quarter, which represents a net loss per share of $0.46, in comparison to a net loss of $24.7 million and a net loss per share of $0.54 for the fourth quarter of 2019. Moving on to Slide 8 for our full-year results.

On a full-year basis, TYMLOS's net sales of $208.4 million increased 20% versus the prior year. This was driven by a combination of price and sales volume. Research and development costs increased by $45.2 million on a non-GAAP basis. The increase was primarily a result of an increase of $39.9 million in program spending for the abaloparatide transdermal program, an increase of $60 million in RAD011 costs in connection with the purchase.

The increases in spending were partially offset by an $11.9 million decrease in the elacestrant program, which de -- decrease as a result of reimbursable expenses. The company made significant progress in repre -- repositioning the sell -- selling, general, and administrative cost structure by reducing costs by $13.3 million or 10 -- 10% on a non-GAAP basis. The reduction is mainly a result of decreases in compensation of $7.2 million and professional services of $6.3 million. The reductions in compensation are mainly due to the reduction in selling, general, and administrative company headcount in comparison to the prior year.

The reductions in professional services are a result of increased commercial productivity. We reported a net loss of $109.2 million for 2020, which re -- represents a net loss per share of $2.35, in comparison to a net loss of $133 million and a net loss per share of $2.89 for 2019. Moving on to Slide 9 for our Q4 in historical net revenues. On Slide 9, we showed the trend in Q4 in historical net revenues.

As discussed earlier, the fourth quarter of 2020 represented a record quarter and was the result of an increase in volume and seasonality of gross to net in comparison to the third quarter. The first quarter of each year is normally lower than the fourth quarter of the prior year as noted in the first quarter of 2020 due to market and pricing seasonality. We expect similar seasonality and a decrease in sequential revenue in the first quarter of 2021. Slide 10 demonstrates improvement in our cash flow trend.

On Slide 10, as demonstrated in the trend, we have made progress in becoming a cash flow-positive company through the exit of oncology, and structural changes made during the year, we improved our cash outlook. As demonstrated on Slide 11, we plan to be EBITDA positive in 2021. On Slide 11, we -- we reiterate our guidance of $250 million of product revenue and adjusted EBITDA of $10 million for 2021. We believe the continued strength in TYMLOS' sales and profitability will fully fund our strategic investments in 2021.

With that, I'd like to turn over the presentation to Sal to give an update on our commercial business.

Sal Grausso -- Chief Commercial Officer

Good morning. Just a brief update on new patient starts. So most U.S. new patients starts increased by 26% in Q4 2020 versus Q3 2020.

That momentum carried forward to January 2021 with 1,692 new patient starts, representing 17% growth over the entire four-month average. With that, I'll turn it back over to Kelly for Q&A. Thanks.

Kelly Martin -- President and Chief Executive Officer

Thank you, Jim. And thank you, Sal. Again, as we said at the beginning, we've -- we've spent a lot of time updating the markets on various pieces of our business and providing monthly updates on patient growth. I'll just reiterate what Sal outlined.

We view that new patient starts in the U.S., which is defined as patients on drug, is the key to our both current and future growth from a net revenue point of view. So it re -- it remains a significant focus of Sal and the really fantastic commercial teams that we have. And Jim does a great job walking everyone through in a very transparent manner our business, how we look at it, and how we're managing it. So with that, Operator, we'd be happy to open it up for questions that people may have.

Questions & Answers:


Operator

[Operator instructions] Please stand by while we compile the Q&A roster. Your first question comes from the line of Mohit Bansal with Citigroup.

Mohit Bansal -- Citi -- Analyst

Good. Thanks for taking my question and congrats on all the progress. Two questions if I may, please. Number one, so if I look at on a year-over-year basis for -- for Q4, it does seem like there's a high single-digit growth in your business.

Do you think -- I mean I know you're not providing guidance, but do you think this is a trend we -- we think could probably continue this momentum could continue in 2021? And the second one is could you remind us what is -- what was the issue with European filing last time and where do you think the discussions could -- could move forward as we -- as we -- as we talk more about Europe?

Kelly Martin -- President and Chief Executive Officer

Sure. Sal, you want to comment on your view of the opportunity -- the continued opportunity in the U.S. on the commercial side, and then I'll -- I'll handle the European topic?

Sal Grausso -- Chief Commercial Officer

Yeah, absolutely. So as released today, commercial business, as we said earlier, new patient starts is the leading indicator for future growth, and we are laser-focused on executing against generating new patient starts. So [Audio gap] as all can imagine, COVID had a damper on new patient starts. We saw that momentum increased in Q4.

We finished very strong. And January, we have got off to a fast start. So I foresee that we will continue to build our new patients and see that trend go upwards on new patient starts.

Kelly Martin -- President and Chief Executive Officer

Hey, thanks for the question. With regard to Europe, the -- the -- the issue previously around Europe, there were some -- there were some challenges with one or two specific sites in the previous trial that corrupted, or the view of the regulator was corrupted the data or had the potential to corrupt some of the data. So, there was a pretty meaningful site, I believe, two sites, certainly, the one that they excluded the data from. And by doing that, the power of the full -- the full results was a challenge.

So, I think, it was an operational issue with a specific site. It took the patients out of the calculation and by doing that it changed the results. I can -- I can further elaborate that the discussions that we are having over the last couple of months, you know, in general, I can characterize as constructive and we hope to gain complete clarity on our path forward on that in the coming month or two. We think that's an important potential step forward for the global mess if you will of abaloparatide, given, you know, given the strength of the molecule and the opportunity in a place like Europe specifically for certain types of patients.

So, I believe, that it was an operational issue and that was something that occurred last time. Our discussions now are rather constructive and again in the next couple of months, we hope to get some clarity on that.

Mohit Bansal -- Citi -- Analyst

Awesome. Thank you very much. Helpful.

Kelly Martin -- President and Chief Executive Officer

No problem.

Operator

And your next question comes from the line of Jessica Fye with JP Morgan.

Unknown speaker

Hey, this is Luke on for Jessica Fye. Thanks for taking our questions. To start, can you remind us what skin tolerability has been like for the patch in prior studies, and has the FDA indicated anything that they want to see on that front?

Kelly Martin -- President and Chief Executive Officer

There -- there has been no significant issues around skin tolerability. And like all other parts of the trial, you know, that would be something from an output point of view that we have with the Phase 3 data, you know, as part of our natural evolution and output of all, you know, comprehensive data pack for the patch.

Unknown speaker

OK. And also on EU, have you guys had any discussions on, you know, following progress toward a path forward there? What you would think about commercially, whether it makes sense to have a team there yourself or -- or if commercial partners could make sense there?

Kelly Martin -- President and Chief Executive Officer

It would be 100% a commercial partner.

Unknown speaker

OK. And then, just maybe one more clarifying question why is there a $16 million expense for RAD011 highlighted as a driver for 4Q R&D in the press release when that deal is announced in January?

Kelly Martin -- President and Chief Executive Officer

Because the deal was closed in December. It was closed, I believe, the specific date was December 30th, I believe. And it was announced four days -- four business days later. I can't -- I don't have a counter but it's probably four business days later.

It was January 6. It was actually -- it was actually close December of 2020.

Unknown speaker

OK. Thanks for that clarity.

Kelly Martin -- President and Chief Executive Officer

Yup. No worries.

Operator

Next question is from the line of Paul Choi with Goldman Sachs.

Paul Choi -- Goldman Sachs -- Analyst

Good morning, and thank you very much for taking our questions. I want to maybe just return to sort of the market dynamics. And just with regard to the -- to the patient ads that you've described coming in here, can you maybe help clarify whether these are, you know, sort of a backlog of, you know, potentially pent-up demand due to either the pandemic or patients who missed visits during 2020 due -- due to COVID or would you say this is largely de novo, you know, sort of fracture market growth here.

Kelly Martin -- President and Chief Executive Officer

Sal, I think you should go ahead and comment. I think you'd have a good read on that.

Sal Grausso -- Chief Commercial Officer

Yeah. Hi, Paul. You know, that's a really good question and I think about that often. I think there is a bit of a combination of both those factors.

But I would say that we are seeing de novo new patient growth and the reason for that is we've really been shifting our selling and marketing effort as we've previously indicated to specialists that treat, you know, postmenopausal patients that have fragility fracture. So, we're seeing a lot of our new patient growth in those specialists that were previously not prescribing and using TYMLOS.

Paul Choi -- Goldman Sachs -- Analyst

OK. Great. Thank you for that context. And I guess, you know, I think one of the factors that has affected, you know, multiple classes of medicine is that because of the shelter in place dynamic in a lot of sort of outdoor and, you know, outdoor physical activity has been limited.

Would you sort of think about, you know, in terms of what is baked into your -- your 2021 guidance an increase in -- in de novo growth, patient growth over the course of a 2021 as sort of, you know, people's normal activity level resumes back to pre-pandemic levels?

Kelly Martin -- President and Chief Executive Officer

You know, Paul, it's Kelly. I'll give you my view. I can -- I join the company May 1st. And I -- I can't explain the dynamics frankly whatsoever, but if you look at our activity through the complete lockdown, you know, our business was actually pretty decent.

If you -- if you go back to Q2 and Q3, you know, we did, you know, certainly, let's assume most of Q2 and almost all of Q3, presumably, was almost in some stage of virtual lockdown everywhere. And we -- we did $50 million a quarter in net revenues. Now, I don't know why we did that. And I don't know why we, you know, I don't know all the dynamics, obviously, around the U.S.

and the U.S. we're sort of topsy turvy in different locations. But, you know, this is my view and again, Sal -- Sal or Jim should comment. But I'm not saying that we're completely not correlated to the COVID situation what patients do or do not.

But I think on a relative basis, to other, you know, in-office therapies, I mean, just sort of naturally. I think our -- we're not as correlated and I think that -- I think that shows in Sal's team with their ability to kind of grow -- grow -- these are new patients these aren't all -- most of these are new patients. So, I don't want to say that COVID has no -- no impact on us, it clearly has some. But, I think to us, it's -- it's -- it's much less than I would have anticipated.

I -- I don't know Sal if you want to comment or -- or Jim either of you on that.

Sal Grausso -- Chief Commercial Officer

Yeah. I'll -- I'll start, Kelly. I think you know, clearly, with COVID, there are geographic disparities across the country as we know but I think the thing that our providers have done is adapt to the situation or adapt to the situation, I'm sorry. So, they have now they've really embraced telemedicine.

And I think given the fact that TYMLOS is something that could be delivered at home and is self-administered, that kind of has inherent an advantage where -- where specialists can get patients therapy. So, I think, there's been good adapting to the environment. But I do know -- I'm counting on that once things around those geographies return to normal, that we'll see more patients getting into the office physically and consultations, you know, further postmenopausal osteoporosis.

Paul Choi -- Goldman Sachs -- Analyst

OK, great. Thank you for that. And if I can maybe squeeze in just one more. I'm really proud of our brand.

Kelly, you pride some, you know, broad strokes but any other incremental interaction since -- since your last update announcing the program with regard to the agency and -- and registrational ability of your trial design?

Kelly Martin -- President and Chief Executive Officer

Yeah. Paul, thanks for that. I mean, we're -- we're in the process of being getting prepared internally for an outreach to the agency. We hope to do that in the coming 30 days or so to then schedule a meeting.

So, we're -- we're making very good progress on tha. We're slightly ahead of where we thought we would be. And you know, we look forward to that. I think once we get a media schedule that probably is something we would let the market know about.

I think that's an important step for Radius since we, you know, in license have bought this asset and Prader-Willi is such an interesting indication. So, I would say we're preparing for an agency request for a meeting and then hoping to have one late this spring.

Paul Choi -- Goldman Sachs -- Analyst

OK. Thank you very much for taking our questions.

Kelly Martin -- President and Chief Executive Officer

Thank you.

Operator

Your next question is the line of Geoffrey Porges with SVB Leerink.

Geoff Porges -- SVB Leerink -- Analyst

Thank you very much for taking the question and congratulations on the progress. A few more questions about the market dynamics if I may. So, could you give us a sense of what proportion of your starts and now post-fracture and or immediately ex hospital? And is that trend increasing? Secondly, could you give us your impressions of your share of new patients starts and particularly whether the entry of competitors like severity and -- and the substitutable teriparatide? Are they increasing penetration or are they taking a share of starts? Which would kind of be hard to imagine given your -- your true trend. And then lastly, Kelly, could you talk about your latest assessment of the approximate percentage upside for the male and also the patch products compared to the current women-only indication? Thanks.

Kelly Martin -- President and Chief Executive Officer

Sure. Those are great questions. Sal, you want to tackle the first two? And Jim and or I could chime in on that and then I'll -- I'll take a lead on the third, and then you guys can chime in on that. That's a good plan

Sal Grausso -- Chief Commercial Officer

Yeah, l'll -- I'll tackle the first question. Yeah, I think looking at third-party data -- medical claims data just in general and a bollocks for the most part range anywhere between 25% to 30% of their usage is in patients that have a history of fragility fracture in the last 12 months. So, that's why we believe that there's a great opportunity and we've seen our new patient growth actually in that cohort of patients that do have a history of fragility fracture.So, we think that bodes very well. And from a competitive standpoint, I think, the way you posed the question is right.

We believe that our -- our market our competition is the apathy in the market and the unmet need around treating these patients that have fragility fracture for the underlying condition at the time when they suffered a fracture because it is, you know, it is common knowledge or any type of bone illness will say that the risk of another fracture happens immediately after the first fracture. So, that's why, I believe, that we are growing that market -- that very precise market, our fragility fracture.

Kelly Martin -- President and Chief Executive Officer

And the -- the second question. Was that the first and the second question, Sal?

Geoff Porges -- SVB Leerink -- Analyst

The second question was about the -- what your share is of new patients and what effect, you know, having the substitutable product and also vanity is having in the market on both your share and the size of the market.

Kelly Martin -- President and Chief Executive Officer

Yeah. Look, I -- I can give you my two cents, and then Sal can probably correct all my ideas but, you know, Geoff, we -- I know historically it's been sort of a market share discussion and then I understand that. I think that's one way to look at it. The way we look at it is it's pretty big white space out there and frankly, we don't think it's substitutable, to use your words, that if you -- if you go off of TYMLOS you belong to vanity, it's sort of one to one.

We think that there's a fairly large amount of patients that would benefit from -- in the broad definition of anabolic therapies and if a vanity grows in some way that's actually good for us. We have no issue -- we have -- we have no current thoughts with regard to concern about teriparatide substitutable or generics like on the horizon. We don't -- we don't factor that into even our thinking to any great degree. So I think -- so we look at our -- our basic measurement system is how many new patients can we get on drug whether they come from another anabolic or their brand new patients.

And I think, Sal, you can -- you can talk about the number of fracture patients per day per month that is out there. There are no drugs. Sal, you want to just outline for just the amount of fracture patients that are -- that are out there just in the U.S.? That -- that's -- then that's our market because they're not on any drug currently

Sal Grausso -- Chief Commercial Officer

I would -- I would love to. So, I mentioned earlier that we had 1,692 new patients starts on TYMLOS in January. And just to put that in context, 8,000 patients a day suffer fragility fracture, 2,000 are patients that suffer a vertebral fracture, you know, where our value proposition clinically is strongest. So, that's why we believe there's a huge opportunity because that 1,692 is a drop in the bucket in terms of the patients that need this therapy.

Kelly Martin -- President and Chief Executive Officer

So, that's the way we look at it, Geoff. And we continue -- the more data we have quarter over quarter about new patients, the more -- the more we believe that sort of the, you know, new patients and in particular fracture patients. There's plenty of patients to go around for if it's just really currently a vanity in ourselves. Well that's -- that's -- that's up to us to execute against growing -- growing net patients basically -- growing new patients.

Geof Porges

I mean, that allows -- now your latest thinking on -- on male and patch --

Kelly Martin -- President and Chief Executive Officer

Yes. Yup. So -- so, male -- male, I can't -- I can't necessarily quantify yet but I can tell you we've done a lot of work on that. We think that the underlying population of male osteoporotic patients is -- somewhat bigger than might be normally or institutionally understood.

If you -- if you -- again, it's not in our label but if you think about osteoporosis as both a bone disease and an aging disease, you know, it's a pretty significant opportunity. Our challenge with male is how do you get -- how do you find those patients. And I think what we'll probably find is sort of the same thing as Sal has articulated to be male patients who are fracture patients. What we're going to do with both male and patch from a sort of broad market and sort of the -- a financial sort of framework point of view is by the middle of the year, talk about both of those -- adding both of those to our underlying SC female post-menopausal market in the U.S.

But what does that mean to our business? We both -- we view both as incrementally positive. We -- we view both as very positive for the market opportunity for various kinds of patients for the -- for the patch. There are -- we've done work on existing patients and we've done work on potentially new patients, and we've done work on different kinds of new patients some who may not like needles, some who may be in -- in -- in more of an acute setting, if you will, from a -- from a surgery point of view. So, sometime in the middle of the year, we will have a framework that -- that outlines both -- layering both male and the patch on top of the USSC business and, you know, we look forward to having a chance to do that.

Geoff Porges -- SVB Leerink -- Analyst

Great. Thanks, guys.

Kelly Martin -- President and Chief Executive Officer

You're welcome. Thank you.

Operator

Your next question, line of Annabel Samimy with Stifel.

Annabel Samimy -- Stifel Financial Corp. -- Analyst

Hi. Thanks for taking my question. So, just looking at the numbers, you've had some pretty good retention of the -- price increase that was taken and the gross net. So, I'm guessing part of that is your switch over to specialty distribution that you've been able to generate some cost savings.

How much is that sustainable going forward in 2021? And are there any other programs you're going to be implementing, patient's programs or is there any additional rebating that you have to do through 2021 that should -- we should factor into net price. Second question I had, I guess, I'm a little bit curious. You talk about the new patient starts, I'm a little bit curious about the retention. So, I guess, more than net new patients perhaps, maybe you can talk about that.

And then switching gears on the RAD011 program, I guess you've mentioned several times that the FDA is very familiar with this asset and they have historically some constant dialogue on it. I know you haven't had discussions yet with the FDA but maybe you can help us understand what the FDA has specifically always hold -- honed in on with this asset and anything that needs to be designed into the trial that would satisfy any of their concerns or issues that they might have. Thanks.

Kelly Martin -- President and Chief Executive Officer

Thanks, Annabel. I think on the gross-to-net, I think, maybe Jim you start off from your perspective as the principal finance officer, and then Sal you should fill in from -- from your point of view, and then dovetail that into the specialty pharma model. Why don't we do that first?

Jim Chopas -- Chairman

Certainly, in terms of the sustainability on some of the -- I think gross-to-net improvements, we -- we do feel that the -- the improvements from the distributor change are -- are sustainable and something that we'll be able to realize on a go-forward basis. So, we'll continue to reap the benefits from that. You know, on -- on a go-forward basis, there -- there are usually headwinds on a go-forward basis in terms of expansion of government programs, in terms of coverage gap but we feel like that is manageable within -- within our structure and is baked into our guideline -- guidance.

Sal Grausso -- Chief Commercial Officer

Yes.

Kelly Martin -- President and Chief Executive Officer

And Sal, do you -- do you want -- do you want to -- let's talk about that and then I'll also talk about retention the, you know, retention on patients and duration.

Sal Grausso -- Chief Commercial Officer

Absolutely. So, Annabel, just to add, you know, add on to what Jim said, I think also with -- with gross-to-net, there's a bit of seasonality that's front-loaded earlier, you know, in the year because of, you know, K -- out of -- out-of-pocket support for patients and those the government programs that Jim have mentioned. And I think, you know, dovetailing into adherence and the point about the limited specialty pharmacy network, one of the main drivers of that was to improve have enhanced the support for patients, and namely to help improve adherence. So, we believe that adherence continues to be a good opportunity for us.

We think that by working with them in the specialty pharmacies that we can work with them with programs to improve adherence. So, I, you know, public knowledge and there's been papers on it that, you know, you have adherence rate anabolics of, you know, eight or nine months and we think that -- that can, you know, we can improve that dramatically.

Kelly Martin -- President and Chief Executive Officer

And then your question --

Annabel Samimy -- Stifel Financial Corp. -- Analyst

Go on.

Kelly Martin -- President and Chief Executive Officer

On -- on -- on RAD011, Annabel, a couple things. First -- first of all, this -- this molecule was in clinical trials as we outlined before. So, it, you know, it went through an FDA process. So, that's number one.

Number two, again, not speaking at all for the FDA but from a safety point of view, it's a -- it's a safe -- safe agent/molecule. I think in this particular indication and other related and or similar indications in the orphan metabolic and endocrine diseases, the discussion with the agency is around -- or we anticipate would be around further teasing out or clarity around endpoints and the calculation of endpoints with specific focus on hypoplasia which is the critical -- frankly, the critical endpoint for -- for the Prader-Willi syndrome disease. There -- there has been -- previous to our getting involved, there's been a lot of discussion around how it's calculated. There has -- there has been some discussion about the scale itself and is the scale something that can -- is it -- is it giving false readings i.e., the scale has been around for a while? So, when patients come in from a placebo point of view, do they already know kind of what the scale is and kind of have it in "gamut".

I think the agency has been open to rectifying or slightly adjusting or teasing out or refining or whatever the right word is that particular scale, the hypoplasia scale. Couple other companies have tried in high, you know, Prader-Willi space. To date, nobody has been successful from a hitting-endpoint's point of view. We know all of those trials, you know, person -- almost -- almost patient by patient.

So, presumably, our -- a part of our discussion with the agency will be around the hypoplasia scale and are there refinements that we could make or should make relative to teasing out from a patient point of view the proper effect and impact of the underlying drug versus the behavioral change that you might see because somebody is trying to tell -- somebody has anticipated what the scale is. So, that -- that's -- that I presume would be a -- a good part of our discussion with the agency.

Annabel Samimy -- Stifel Financial Corp. -- Analyst

Great. That's helpful. Thanks.

Kelly Martin -- President and Chief Executive Officer

You're welcome.

Operator

[Operator instructions] Your next question, line of Douglas Tsao with H.C. Wainwright.

Douglas Tsao -- H.C. Wainwright -- Analyst

Hi. Good morning. Thanks for taking the question. So, obviously, we started to see some nice new patient start growth.

I'm just curious given the new commercial focus for the franchise, have you seen a similar increase in the prescriber base or sort of a shift to these -- there new targeted clinicians? Thank you.

Kelly Martin -- President and Chief Executive Officer

Sal?

Sal Grausso -- Chief Commercial Officer

Yes. That's a -- a great question and I think what we're seeing is for these patients that have fragility fractures, where they're showing up in the healthcare system, you know, our, you know, accounts are areas that are oriented around orthopedic centers and bone health centers. And so, you know, therefore, we have a situation where endocrinology is a very broad field, you know, and orthopedics and bone health centers are more concentrated. So, I would say that what we're doing is we're seeing deeper penetration in those centers where these patients are being treated for their fragility fracture and we're able to make inroads in those accounts.

Douglas Tsao -- H.C. Wainwright -- Analyst

OK. Great. And then just when you think about global expansion for the franchise, you know, I'm just curious given some of the early success that Amgen has enjoyed with Evenity, are you sort of targeting some of those markets to piggyback their sort of commercial efforts in terms of expanding the bone formation message?

Kelly Martin -- President and Chief Executive Officer

You know, Doug, it's Kelly. I think, you know, to be perfectly honest, I'm -- I'm not sure where -- where Amgen is or isn't. I think that we -- we've looked at -- we have a list of -- we do have a list of countries where we know there's anabolic activity. Some of them are rather surprising, they were at least to me.

A couple -- couple interesting company -- countries in the Middle East Gulf region actually are pretty big. And so, you know, we're -- we're going to places where we think there's a fairly straightforward path from a -- a BD and regulatory point of view. And as I said initially, there's, you know, there's economies that have -- and which are many economies by the way, that are, you know, aging populations and or have economies that have robust, relatively straightforward, you know, pharmaceutical reimbursements, regulatory processes, etc, etc. So, you know, I think if we can add some number of countries and slowly expand the -- the platform here, that's what we'll do.

And, you know, we're hoping to have some reasonable success on that over the course of this year.

Douglas Tsao -- H.C. Wainwright -- Analyst

OK. Great. Thank you so much.

Kelly Martin -- President and Chief Executive Officer

Yeah. Thanks a lot.

Operator

[Operator instructions] Your next question, line of Vikram Purohit with Mor -- Morgan Stanley.

Vikram Purohit -- Morgan Stanley -- Analyst

Great. Thanks for taking my questions. So, I had to on the patch program. So, thinking forward for both questions.

First, assuming the Phase III program reads out positive with later this year, how much do you think you'd need to increase or modify your current stimulus commercial infrastructure in order to be able to -- to be ready for a potential U.S. launch. And secondly, could you walk us through any key differences we should keep in mind for a potential FDA regulatory review of the patch versus the more traditional therapeutic, given the transdermal patch application that -- that's being evaluated?

Kelly Martin -- President and Chief Executive Officer

I'll give you my answers then Sal, you can correct either one. But for me, incremental cost point of view, I would describe -- and I guess my answer to that would be it would be minimal. It wouldn't be zero, but it will be -- it will be minimal, slightly incremental cost for the patch in the U.S. And with regard to regulatory pathway, I mean, it's fairly well defined.

I -- I -- I couldn't articulate necessarily off the top my head anything specific or unusual or -- or -- or not previously outlined or discussed with regard to what the regulator is going to want to see and look at. Sal, you want -- you want to -- you want to answer -- add to the first -- the first question?

Sal Grausso -- Chief Commercial Officer

Yeah, Kelly, I -- hi, Vikram. I -- I completely agree with Kelly. I don't see -- I see minimal incremental costs from a commercial perspective. I -- I would say that the wiring is already in place with what we're doing with the subcutaneous.

So, things like, you know, payer access and contracts are already -- already set up. So, you know, we hope to be able to, you know, use our existing, you know, access and contracts to that regard. And the same thing goes with our distribution network. So, from those standpoint, I think a lot of the heavy lifting has been done.

And also, from the selling and marketing perspective, we are already in the specialist that we will want to see.

Kelly Martin -- President and Chief Executive Officer

Yeah. I -- I think, originally, Vikram that some -- some of the thought processes were that the patch would lead -- would allow you to go, for instance, to a -- a segment upper decile or two of primary care doctors who may see patients. And -- and there -- there -- there well maybe a reasonable trafficking of -- of osteoporosis patients through that channel, but we have zero plans to go after that channel. We -- we think it -- it's -- it doesn't fit us.

It would be -- the -- the -- the risk-reward, the infrastructure you'd need to go after a disparate amount of patients who would be the opposite -- 180-degrees opposite to what Sal and the -- and the team were doing. They, you know, if -- if we were to go after that -- that channel, obviously, that would be a reasonably -- reasonable, significant commitment as far as time, resources, marketing. But -- that's not a space that we: a, are going to go after; and b, doesn't fit our business model. I mean, as we went through some of these slides, we believe we're going to increase productivity by going much deeper into fewer places from an institutional point of view.

And therefore, the infrastructure that Sal and his team have built up is completely adequate to do that. And again, there might be some incremental investment in certain things, but it would be kind of on the margin. So, it's -- it's very leverageable business as we've tried to communicate a number of times.

Vikram Purohit -- Morgan Stanley -- Analyst

OK. Understood. That's helpful. Thank you.

Kelly Martin -- President and Chief Executive Officer

Yeah. You're welcome.

Operator

[Operator instructions] And there are no other questions at this time. I would now like to turn the call back over to Mr. Martin.

Kelly Martin -- President and Chief Executive Officer

Thank you very much, operator. We'd like to thank everyone for joining us. I hope you found it a good overview with a lot of clarity and transparency. I want to thank both Jim and Sal for doing a great job.

And we look forward to continuing to update the market as we make progress in the coming months. So, I appreciate everyone's time and effort and look forward to keeping you all updated. Thank you very much.

Operator

[Operator signoff]

Duration: 49 minutes

Call participants:

Kelly Martin -- President and Chief Executive Officer

Jim Chopas -- Chairman

Sal Grausso -- Chief Commercial Officer

Mohit Bansal -- Citi -- Analyst

Unknown speaker

Paul Choi -- Goldman Sachs -- Analyst

Geoff Porges -- SVB Leerink -- Analyst

Geof Porges

Annabel Samimy -- Stifel Financial Corp. -- Analyst

Douglas Tsao -- H.C. Wainwright -- Analyst

Vikram Purohit -- Morgan Stanley -- Analyst

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