Radius Health (RDUS) Q2 2021 Earnings Call Transcript

Radius Health (RDUS 1.28%)
Q2 2021 Earnings Call
Aug 05, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the second-quarter 2021 Radius Health, Incorporated earnings conference call. My name is Hilda, and I will be your operator for today's call. [Operator instructions] And later, we will conduct a question-and-answer session. [Operator instructions] I will now turn the call over to Ethan Holdaway from head of investor relations.

You may begin. 

Ethan Holdaway -- Head of Investor Relations

Hello, everyone, and thank you for joining us today. A press release and presentation that we will 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 2.

This presentation includes forward-looking statements and non-GAAP financial measures. You can find the reconciliation of GAAP and non-GAAP at the end 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. Any forward-looking statements represent our views as of today only.

On today's call, Kelly Martin, president and CEO, will start with his opening comments. Jim Chopas, our principal finance and accounting officer, will then provide a financial update. Sal Grausso, chief commercial officer, will follow with an update on the TYMLOS commercial business. Chhaya Shah, chief business officer, will provide an update on the clinical and regulatory progress.

And Liz Messersmith, SVP and head of the orphan business group, will finish with an update on RAD011. We will then open the call up for questions. I'd now like to turn it over to Kelly. 

Kelly Martin -- President and Chief Executive Officer

Thanks very much, Ethan. Good morning, everybody, for those of you in the U.S. And I know some are calling in from Europe, so good afternoon. I do have some opening comments.

Then I'll turn the call to Jim Chopas, who will then turn the call to Sal, Chhaya, and Liz. So, it's my pleasure to have the chance with my teammates here to go through where Radius is from a Q2 perspective and, importantly, from a half-year perspective. On Page 4, opening comments. I've been asked by a few investors and analysts, you know, you -- Kelly, you've been here roughly a year.

You know, it'd be great to hear some of your thoughts, kind of putting things in perspective over the course of the last year or so. What do you think? What are we doing? Why you have you done certain things, and how do you philosophically want to move things forward? So, I -- my comments this morning will be a little bit longer than I would normally do for a quarterly earnings report, so hopefully, it's helpful for you. So, first, the initiative was reposition the company. The company went public in 2014.

There's been a lot of progress, different iterations, particularly around the original molecules in the company, and the company made a tremendous amount of progress with regard to advancing the original thesis. There is a point in time where all companies need to rethink and reposition perhaps how it's going to go forward. And over the last year, we've been working on that sort of a repositioning of the company and how do you do that in a manner that would create potential for enhancing the shareholder value proposition of the company from the short-term, intermediate-term, and long-term point of view? Sort of fundamental to that is creating as much operating leverage as possible so that the P&L would come forth and that you become a self-sustaining company from a P&L and earnings point of view. That is a major goal for us.

And in doing that, in Bullet Point 3, you've got to set the direction and take the steps necessary to do that. You know, very simply, from an operating point of view, we want to generate more cash than we are spending. And we are well on our way to that as Jim Chopas will go through from a P&L point of view in a few minutes. We had last year three pivotal trials in flight.

All of them needed to be completed from an enrollment point of view. And once completed from an enrollment point of view, preparation and anticipation of readouts. And again, pleased to say, with the work of the team that we have in the company, the trials were fully enrolled and currently are in tremendous preparation for readouts over the course of the next few months, three pivotal trial readouts. Obviously, we'll be in those exciting time in the coming months for the company.

From a BD point of view, as everyone knows, we out-licensed elacestrant. I'll talk a little bit more about why we did that, but it had significant event risk for us. We think it's a fantastic molecule. We think the opportunity in the space is fascinating.

It's interesting. But from where we were at a point in time, it was a significant amount of event risk. So, taking that risk out of the equation was something that was a primary focus of ours. And then we in-license some additional technology.

RAD011, which Liz Messersmith will talk about in a few minutes, was something that we were able to bring in, something that we're able to integrate to the company, and we'll talk about that a bit more. That allowed us to distribute the risk around now three different molecules, all with different -- slightly different business models. But between abaloparatide, elacestrant, and RAD011, we have exposure to three technologies at much, much less risk than we had a year ago. Last but not least, certainly, abaloparatide is a phenomenal molecule in its characteristics, in its behavior, in its data -- in its real-world data.

It is a molecule that we are blessed to have. And very simply, we are working on how do we make sure that that molecule is positioned both in the U.S. and globally to create the most value possible for shareholders and get to or be in front of patients with the most significant need for the molecule. So that's sort of the last 12 to 14 months what we have been focusing on.

And there are many other things, but these -- those are the highlights. If you go to the next page, just reiterating the timeline. So, from today through the end of the year, as we have announced, we would anticipate with current plans that we would have three different readouts. And these are in no particular order by the way, so I wouldn't overread how they're listed.

But the ATOM trial or the male abaloparatide trial, we'll have a readout between now and year-end. We will have -- as publicized before, we will resubmit to the European market abaloparatide. Tremendous amount of work has been gone -- going on with regard to that. You'll hear from Chhaya about that momentarily.

We will have the EMERALD readout, elacestrant, we'll read out between now and year-end from a pivotal point of view. We will initiate the Prader-Willi phase 3 or the pivotal trial phase 2/3. We will initiate the trial in the fourth quarter. First patient in will be at the end of this year or the very early part of next year.

And last but certainly not least, the wearABLe trial -- pivotal trial will read out, the transdermal system i.e., the patch. That will read out as well. So, these are five rather significant events for the company. There are other events embedded in and around these and some additional ones.

But I think from a small company point of view to have this amount of things that will come to fruition over the next few months, having had a reasonable amount of experience in this industry is rather unique. And I can assure all of you that we're totally focused on the execution and follow-through of all of those things. Some additional commentary, Page 6. Again, keeping things simple, clear, and as crisp as I can communicate.

I know some of these topics I'm specifically speaking to because, again, very legitimately, they'd ask questions by either analysts or some of our current investors or some potential investors. So, the transdermal system or the patch, if approved, the way we think of it, it's going to be very accretive to cash flow. We have not put out models. We have not put out targets on it.

The way we're managing it, the way we're working on it is it's going to be accretive to our business, accretive to cash flow, and certainly, a value enhancer to the abaloparatide molecule. Number two, TYMLOS for male. How big is the male market? How big is it? How should that people think about it? How do we think about it? Well, we actually think that the male opportunity is somewhat bigger than sort of the common understanding or anticipation of the male business or opportunity. Regardless of whether it's X, Y, or Z from a size point of view, everything that we do in male will also be accretive to the cash flow and the P&L of abaloparatide.

Number three, as we have talked about, we are expanding the global footprints of TYMLOS. We have announced Canada at the end of last year. We have an established partner, a very excellent partner, Teijin, in Japan, which I would remind people is the largest anabolic market on the Earth. They are making great progress, but we're also working on and we're in current dialogue on several additional either regions or countries in addition to the European resubmission.

All of that would be accretive to the cash flow of abaloparatide. So, we continue to work on pushing forward on the infrastructure and the fundamental value enhancement of abaloparatide across the transdermal system, the male indication, and global expansion, in addition to all of the work that Sal and the commercial team are doing in the U.S., which you'll hear a bit more of in a few minutes. In addition to all of that, we had mentioned on a business update that we are looking at a depot opportunity. Some people thought we were looking at the depot opportunity because we didn't have confidence in the transdermal system, all of which would be a rather erroneous combination of things.

We actually think the transdermal system, as I said, is going to add some significant opportunity from a accretion point of view. Why the depot? Well, the depot could be transformational. If there's a way to administer abaloparatide either on a weekly, bi-weekly, or monthly basis, we think that that would be of enormous interest to patients and patient care. There's original dogma in the anabolic space which would indicate that perhaps the depot approach would not work.

There's been scientific data and literature which would suggest that actually could work. And so, we're going to spend some time and a little bit of capital on investigating more fully the preclinical data that you would need to make the go-forward strategy. The good news about the depot is if we did go forward on it, we would have the data in hand to scientifically and clinically justify why. And the timeframe on a depot potential delivery is three to five years as opposed to more multiple.

And the cost would be easily absorbable in our P&L. So, that's another piece of the puzzle that would, again, characteristically reinforce the fact that we are continuing to invest very prudently and hopefully very intelligently into creating as much value in the abaloparatide business and molecule as possible. Next topic, RAD011. People ask why did you in-license RAD011? Several reasons.

One is we never wanted to be -- you don't want to be a one-product company. That's number one. It's inefficient and it's illogical. Number two, we could acquire this asset at what we thought was a relatively inexpensive for us, consideration upfront.

Number three, the timeframe that we can move this asset forward is rather significant from a shortness of timeframe. As, again, we have already announced a pivotal trial for Prader-Willi. We have indicated that we will add other pieces to the lifecycle in the coming near term. And there are multiple orphan diseases that we could move this asset forward in.

I would also stress, also easily absorbable in our P&L and cash flow. So, it gives us a lot of potential upside with future progress and any future regulatory success. Other question is why did you out-license elacestrant? Well, elacestrant, at a point in time for Radius as a company, was what I would describe to all of you and I described to others as a way outsized risk. The event risk for elacestrant being positive or negative was way beyond the capacity of what Radius could have handled.

Obviously, it could read out positively, there's a gigantic upside. If it read out negatively, there was more than a gigantic downside. As a matter of fact, I think there's probably a catastrophic downside. So, in order to maintain a participation in elacestrant, massively reduce the enterprise risk for Radius, we out-licensed it.

We have a great partner with Menarini. They are moving it forward with us. There's lots of plans, which you'll hear from Chhaya about some lifecycle opportunities. Our relationship with them is excellent.

And Menarini and ourselves are delighted to be in the position we are. The SERD market is very exciting. It's rather crowded. We're in the lead.

We have a monotherapeutic molecule. We've talked to multiple oncologists about how they would use that kind of molecule. And I would say that we're in a very good position relative to where we were where we're kind of betting the farm on a molecule readout as opposed to still having a participation but no longer needing to bet the enterprise. From a commercial point of view, and, again, you'll hear a bit more from Sal, our strategy has been to narrow and deepen the focus around the fracture centers, the bone health centers, the orthopedic-related rheumatologist to go to where the fractures are as opposed to be -- to have big breadths, we're more focused on depth.

As Radius, with approximately 80 to 100 sales people in our company, there is absolutely zero chance that we're going to win on a breadth strategy, but we can win and we can win very significantly on a depth strategy, and there -- and we're making great progress with that, and we expect to make more progress with that. Last but not least, then I'm going to turn it to Jim Chopas, we try to announce about approximately every five weeks how we're doing with patient additions. I think you have seen if you've been following that our patient additions, particularly going from toward the end of last year, kind of coming out of some of COVID, and then to the first six months of this year, have been fairly robust. So, that focus from our commercial point of view has -- is working and we'll continue to work.

In addition to the new patients or the patients we're adding to the drug, we are also doubling back and focusing on our existing patients or refill patients, those patients that were already on drug and how can we continue to focus with -- in an appropriate manner on the refills of the existing drugs -- the existing patients. And that's a focus from both Sal and his team on increasing that. And as those two pieces of the equation, that over time give us our confidence that we have upside and the ability to continue to grow the revenue of this molecule in the SC product in the U.S. So, I can go on.

I'm sure there's more important things to get to. But I think these things are all important to understand as a point in time, what we've been focusing on for the last 12 to 14 months, why have we made certain decisions, and what it is we are trying to accomplish. And very simply, from a cash flow point of view, we want to be positive. From a risk point of view, we want to be distributed.

And from an optionality point of view, i.e., equity optionality value or the potential, we want to provide some significant optionality to shareholders for their judgments. So, with that, and I apologize for going on slightly longer than I would normally, but I'll turn the call now to Jim Chopas and he will take you through the financials with particular highlights on particular parts of the equation. So, Jim, over to you. 

Jim Chopas -- Principal Finance and Accounting Officer

Great. Thank you, Kelly. Our Q2 results show progress toward our 2021 goal of positive adjusted EBITDA or net loss on a non-GAAP basis narrowed from 31.1 million in Q2 of 2020 to 10.5 million in Q2 of 2021. The Q2 net loss per share narrowed by $0.60, or 63%, as a result of the strategic exit from oncology and the realignment of selling, general, and administrative resources.

Revenue increased by 1.7 million, or 3%, in comparison to Q2 2020. The increase in product revenue was primarily driven by increased unit volumes, which was partially offset by a decrease in net price in 2021, we -- which we expect to be transient in nature. Later in the presentation, we will discuss new patient growth, which, in combination with the dissipating impact of COVID-19 on net product revenue, will improve our revenue outlook for the second half of the year. On a non-GAAP basis, research and development decreased by 17.6 million, which is mainly the result of decreases in abaloparatide TD program specific cost of 10.7 million, and elacestrant program specific cost of 9 million, and other R&D expenses of 1.5 million, partially offset by increases in RAD011 program specific expenses of 3.6 million.

The decrease in abaloparatide TD program is the result of the timing of expenditures on the Kindeva scale-up and commercial supply agreement and clinical supply costs. The decrease in the elacestrant program was the result of reimbursed costs related to the transition services agreement entered into with Menarini related to our exit from oncology. RAD011 was initiated in 2021. On a non-GAAP basis, selling, general, and administrative costs decreased by 4.2 million, primarily as a result of a realignment of the selling, general, and administrative cost structure, driven by a $3.9 million decrease in professional support costs as a result of changes in our sales and marketing strategy, which Sal Grausso will cover in his update later in the presentation.

Moving on to the year-to-date income statement. The year-to-date Q2 net loss per share narrowed by $1.70, or 61%, as a result of the factors previously mentioned for Q2, as well as licensing activity. Total revenue increased by 10 million, or 10%, over the prior year as a result of an $11 million increase in license revenue, partially offset by a $1 million decrease in TYMLOS revenue. The $11 million increase in license revenue was primarily from the approval of Ostabaro abaloparatide acetate for the treatment of osteoporosis in Japan, which earned a milestone of $10 million.

The decrease in revenue was driven by volatility in patient activity as a result of COVID-19 during 2020 and 2021 and a small decrease in that price, which we expect to be transient in nature. Research and development costs decreased by 25 million on a non-GAAP basis, primarily as a result of the exit from oncology and related reimbursement of costs, resulting in a $16.6 million reduction in net less direct costs, the timing of expenses for abaloparatide TD, resulting in a $14 million reduction in expenses, and a decrease in net shared services costs of 4.1 million, primarily as a result of reimbursements. The decrease was partially offset by a $6.1 million increase in abaloparatide SC and a $3.6 million increase in RAD011, which initiated during 2021. The increase in abaloparatide SC is largely driven by a payment due to Ipsen in connection with the approval of abaloparatide in Japan.

Selling, general, and administrative costs have decreased by 9.4 million, or 14.5%, on a non-GAAP basis. The decrease is mainly the result of decreases in compensation of 4.2 million and professional fees by 5.2 million as a result of our efforts to reposition our selling, general, and administrative cost structure. Our total headcount decreased by 24% from 363 at the end of Q2 2020 to 276 at the end of Q2 2021. The cost reductions contribute to the operating leverage of the company and the ability to achieve positive adjusted EBITDA.

Moving onto the cash flow trend. As Kelly noted earlier, we have made meaningful and sustainable improvements in our P&L operating leverage and have taken steps necessary to become cash-flow positive while completing three phase 3 trials and investing in RAD011. Our cash burn for the fast -- first half of the year of 15 million, which negatively impacted by the timing of a $15 million reimbursement under our agreement with Menarini, which we received in July. With forecasted increases in revenue and the completion of our three phase 3 trials in 2021, we are well-positioned to become cash-flow positive.

Moving on to our next slide. We are reaffirming our adjusted EBITDA guidance of $10 million. We are reducing our TYMLOS revenue guidance by 10 million to 240 million as a result of the timing of new patient additions. Given new patient growth during Q4 2020 and the first half of 2021, we anticipate net revenue for TYMLOS in the second half of 2021 to be stronger than the first half of 2021.

Our initiative to improve the operating leverage of the company will allow us to offset the decrease in revenue and achieve our EBITDA guidance. With that, I'd like to turn over the presentation to Sal Grausso to provide an update on our commercial business. 

Sal Grausso -- Chief Commercial Officer

Thank you, Jim. Good morning, good afternoon, everyone. On Slide 13, I'll start off with an update on our new patient starts. So, in the second quarter, we achieved 5,094 new patients.

That was a 42% increase over same quarter prior year of 3,585. And then looking sequential to -- second quarter was 3% higher than first quarter. I think that we are set up very well, and looking at the graphic on the right, we've had really good patient additions for the first two quarters, which should bode well for us to see increasing amount of continuing patients for the rest of the year. The rebound, you know, from COVID, you know, clearly is taking time.

It's been an incremental build. And we've [Technical difficulty] leading indicator for future revenues. Moving on to Slide 14. I would say we achieved the [Technical difficulty] mentioned on the previous slide that that is a record high for abaloparatide since launch in terms of recorded new patients start.

So, you know, reiterating, that was 40% over the same quarter, which, you know, was, you know, the COVID quarter in the second quarter of '20. I think, also, it's important to say that it's 18% in the first half of '21 higher than the first half of '20. So, we've been able to achieve this with a consolidation of focus and the next goal point is some evidence of that. We're seeing much more productivity in our Top 500 prescribers whereby they account for 50% of our business in the second quarter versus 32% in the first quarter.

Also, 50% of our Top 125 prescribers are orthopedic or spine focused, which is aligned to the strategy that Kelly talked about before. Lastly, the new patient growth in that cohort is actually, you know, growing faster than the overall growth. In addition to that, we've -- our sales organization focus, you know, we've consolidated that focus to -- around the new strategy around the orthopedic space. We've added 20 fracture account specialists.

These are people that have orthopedic sales experience to, you know, generate more depth, you know, in that important customer segment. We've, you know, achieved new patients starts with a increase in productivity, a substantial increase of, you know, revenue per, you know, employee from second quarter versus first quarter. And we will continue to focus on depth, not breadth in order to further penetrate, you know, this market. There's still work to do.

There's going to be continuous refinement of our account segmentation in order to continue progressing more depth versus breadth. With that, I will hand the baton over to Chhaya Shah, who is going to give a clinical and regulatory update. Thank you. 

Chhaya Shah -- Chief Business Officer

Thank you, Sal, and good morning, everyone. As Kelly mentioned, we have three pivotal trials in progress, and I will walk us through the status of each of the trials. I'll also share with you the status of our globalization efforts for the abalo asset. So, first, for the abalo trial.

We are on track for both top-line data results and readouts in the second half of this year for ATOM, our male trial; and wearABLe, our transdermal program. So, currently, we're really focused and executing effectively to assure the quality of data is excellent as patients come off complete the trials. Our team is doing a tremendous job and staying focused on top-line data. In anticipation of the top-line readout, we are in parallel preparing the sNDAs module for male and the NDA modules for the transdermal product, which it includes the human factor study.

Earlier this year, we had positive outcome of the formative human factors study results, and currently, we're in the process of completing the summative human factor results. So, both for both of these programs. And all of this work is progressing well and on track to complete in the fourth quarter of this year. So, for elacestrant, our oncology drug, which were, as Kelly mentioned, in partnership with Menarini, an Italian-based company, I am so happy to share with you that we have passed our bioequivalency study between our clinical and commercial tablets.

This trial was to assure that our commercial drug product would meet the bioequivalence criteria. The study resulted in meeting the highest bioequivalence criteria set by the FDA. So, good progress on CMC front for elacestrant. And from a clinical trial perspective, our EMERALD trial, we are on track for top-line readout later this year also.

In parallel, just like the abalo program, we are preparing the NDA modules for filing, again, in anticipation of the top-line data. So, switching to globalization efforts on abaloparatide, earlier this year, we announced that, in partnership with Japan, our Teijin partners, that we achieved regulatory approval through PMDA for Ostabaro. This was a big milestone and accomplishment for Teijin and us as Jim pointed out earlier. So, in addition to the -- Japan, we are also in partnership with Paladin Labs in Canada, right, which continues to move forward, and we're having regulatory meetings with Health Canada to progress toward its submission.

Then switching to Europe. Tremendous efforts here as well. We've submitted a letter of intent to EMA, notifying them of our intent to resubmit the dossier in fourth quarter of this year. We're making great progress here in preparing the dossier based on the feedback we received from our -- the [Inaudible] and [Inaudible] in the first half of this year.

Lots of good meetings we've had, and we're progressing well on the dossier. Additionally, we have ongoing discussion at various stages, some in late-stage and some in earlier on, with potential commercial partners to outline Ostabaro in various regions across the globe. So, in summary, three pivotal trial readouts, that's tremendous for a small company, and we're on track, and great progress on globalization for abalo. With that, I will hand it off to Liz Messersmith to cover RAD011.

Thank you.

Liz Messersmith -- Senior Vice President and Head of the Orphan Business Group

Thank you, Chhaya. Good morning and good afternoon, everyone. And we'll start on Slide 18. Picking up from our press release in July 23, we have received the written confirmation from the Type C meeting that we held with the FDA.

This agency discussion primarily focused on the clinical design and development program to evaluate RAD011 in addressing hyperplasia in individuals with Prader-Willi syndrome. Now that we have the written outcome of these discussions, it enables us to turn our focus toward the execution of the PWS clinical development program. This study is a seamless phase 2/3 study evaluating RAD011 in approximately 200 individuals with Prader-Willi across 30 sites around the globe. We are currently targeting the study start of the SCOUT-015 study in either Q4 2021 or Q1 2022.

We view the SCOUT-015 study as the first indication for the RAD011 asset. We intend to continue to evaluate the global opportunities of RAD011 across a number of indications. And as Kelly mentioned, we plan to add two additional pivotal studies in orphan indications to the asset pipeline in the later half of 2021. Given what you've heard today, our intent is to sell fund to RAD011 development through the existing cash and collect cash flow.

That concludes the update for the RAD011. Ethan, I turn the meeting back to you.

Ethan Holdaway -- Head of Investor Relations

Thank you, Liz. I will now going to open it up for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] We're standing by for your questions. We have a question from Corinne Jenkins from Goldman Sachs. Please go ahead.

Corinne Jenkins -- Goldman Sachs -- Analyst

Hi, good morning. So, I think the obvious question here is as you think about the updated guidance of 240 million, that still implies pretty significant revenue growth half over half, and so I'm curious whether you get visibility from that on the existing patients that you've added over the prior few quarters or if that requires pretty significant new patient growth through the rest of the year as well? 

Kelly Martin -- President and Chief Executive Officer

I think, Sal, you should -- you and Jim should take that.

Sal Grausso -- Chief Commercial Officer

Yeah, absolutely. Yeah, thanks for the question. That's precisely why I think the, you know, the work we've done to grow our new patient starts, you know, in the second quarter, in the first quarter, and the fourth quarter is going to translate to a higher amount of continuing patients for the rest of the year. And we will see a ramp based on that, commiserate with, you know, hitting our updated guidance. 

Corinne Jenkins -- Goldman Sachs -- Analyst

OK. And then I'm curious if you can talk to -- if there's any sort of switching effects as you -- I don't know if that's the right word for it, but as you think about switching from your prior focus on endocrinologists, rheumatologists to this bone health-centered strategy, is there any sort of switching impact in terms of new patient growth or durability that patients are staying on therapy? 

Sal Grausso -- Chief Commercial Officer

No, not that I can say that, you know, we've really closely monitor and track our persistent rates. You know, our persistency rates have remained unchanged throughout, you know, the switch. You know, I think the issue we face, you know, like many companies in this situation is it's very unusual, you know, when you have a growth product to start to experience lower new patient cohorts, you know, in the middle of a growth phase, and that's precisely what happened with COVID. And so, those lower ends from last year, you know, right during the lockdown, the pandemic, now are starting to, you know, have translated into basically lower refills from what should be very productive patients along our persistency curve.

And, you know, now that those things are -- as we add more new patients, we have a stronger base, you know, to grow. So, you know, I don't really see any change in the patients. I would say though what we do see is an increase in patients that actually have a history of fracture. So, we've seen a pretty big increase in the patients who are on TYMLOS who have a previous history of an orthopedic or osteo product-related fracture.

Corinne Jenkins -- Goldman Sachs -- Analyst

OK. Thank you.

Operator

Thank you. The next question comes from Geoff Porges from SVB Leerink.

Anna Baran -- SVB Leerink -- Analyst

This is Anna Baran on for Geoff Porges. Thank you for taking our questions. First, on TYMLOS. The 40-plus percent patient growth was, obviously, a big step up from last quarter's growth.

Is the 18% new patient growth that we saw in the first half a more reasonable representation of the underlying demand that you expect for the remainder of the year? And how do you reconcile the 40% new patient growth this quarter with the single-digit revenue growth?

Kelly Martin -- President and Chief Executive Officer

Yeah, again, I think, Sal, you and Jim, on the commercial questions just take the lead and I can chime in, you know, afterwards if it's helpful.

Sal Grausso -- Chief Commercial Officer

Yeah, absolutely. I think that's a really good question. I think that's very observant. I think that -- you know, the way I look at it is, you know, the first two quarters together.

So, I do believe that the 18% growth is more indicative. The anomaly was the second quarter of '20 with the low starts. You know, from my perspective in all things kind of along the lines of what I said before is that it takes, you know, time to refill your continuing patient pipeline. And, you know, why -- what we're seeing is that our new patient starts are kind of out and ahead and leading overall revenue because it's leading, you know, overall demand.

But as we continue to move on for the rest of this year, you know, we will start to see the refills, you know, pick up significantly because of the, you know, high numbers of new patients start cohorts we've seen in the first two quarters. So, you know, we're very confident that, you know, new patients is a leading indicator. Revenue is really driven by your total patients or your continuing patients. I mean, in any product, you know, refills, you know, usually make up 85% of your total shipments.

So, you know, really, to me, it comes down to is that 2020 was challenging because of COVID because we had, you know, the low end on new patient starts, which, you know, basically, you know, play through and has impacted our total shipments, which will now change dramatically. My last point on this is, you know, even within the quarter of the second quarter, you know, we see a, you know, a ramp-up, you know, sequentially, month over month. So, you know, we feel very positive where we ended the quarter, and we feel very positive about the monthly trend going forward. 

Jim Chopas -- Principal Finance and Accounting Officer

To reiterate Sal's point, we feel comfortable with the momentum just given our business model. As Sal had mentioned, the momentum and the forward-looking numbers are really the new patient starts, but it does take time for that to work through. Just as -- when the numbers went down last year, our revenue didn't immediately go down. So, it takes time for those to work through our system.

And now, we feel comfortable with our momentum for the second half of the year. 

Anna Baran -- SVB Leerink -- Analyst

That makes sense. I have a separate last question on elacestrant. Are you seeing any discontinuation in that pivotal study? And if so, could you maybe give some color about the rates and what could be driving any of that?

Kelly Martin -- President and Chief Executive Officer

Yeah, we keep -- that's a blinded study, so, you know, that -- all that information would come out when we released the top-line data. 

Anna Baran -- SVB Leerink -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Annabel Samimy from Stifel.

Annabel Samimy -- Stifel Financial Corp. -- Analyst

Hi, all. Thanks for taking my question. Just to go back on the question of the new patient starts and persistence, I guess you made a point to say that you're making efforts to focus on refills. So, what are the specific steps that you're taking to make sure that patients are refilling the prescriptions? And I guess is there anything else going on within, you know, the net sales number such as, you know, decrease, you know, or increase gross to net, new, you know, from the new Humana contract, any kind of competitive dynamics that we should be thinking about other than just the 40% new patient starts? Thanks. 

Sal Grausso -- Chief Commercial Officer

Hi, Annabel. I'll start, and I think Jim could, you know, follow up. The persistence rate, I mean, I think some of the tactics that we've taken and as we communicated historically made lots of changes to, you know, our product acquisition process. In particular, we shifted to a specialty pharmacy model, which has given us great visibility into our business more than we've ever had.

And one of, you know, the side benefits of that is that we have, you know, now a precise view, you know, into our total active patients, you know, our discontinuations, the reasons why they're discontinuing. So, we are actively working, you know, with the specialty pharmacy partners, you know, on programs around adherence. We also have a clinical educator program that, you know, helps patients with injection training. You know, that also are -- is a tactic that can help enhance persistence on therapy.

As far as the gross to net or, you know, our average selling price -- and I remember your question about Humana last time. So, I thank you for that. Well, we feel -- from a gross net perspective and average net selling prices that, you know, it's been pretty stable. You know, as all companies, you know, I think what you're seeing is a lot more seasonality on gross to net.

So, a lot of the negative impact on gross to net is front-loaded in the first two quarters of the year, especially for products like ours, you know, that have a high, you know, population of Medicare patients because of the coverage, you know, gap dynamics. And then [Technical difficulty] ability for the rest of the year. So, it's a wild bumpy ride, and it's become more bumpy for the whole industry, especially post-COVID. But I could say that, you know, when the dust settles, I think that our average net selling price, you know, is relatively stable if you look at 2021 average versus 2020. 

Annabel Samimy -- Stifel Financial Corp. -- Analyst

OK. And if I could just ask one more question. You know, Kelly, you made a big, you know -- you talked very, very deeply about your -- the direction of the company going forward. I know that you're trying to focus a little bit more on some rare diseases with endocrinology with RAD011.

Should we think about any further BD for you, and are you in a position to consider anything with your current balance sheet position or should we just not assume that at this point? Just bigger picture, if you could just give us a little color there.

Kelly Martin -- President and Chief Executive Officer

Yeah. No, thanks. You know, as I said, we have to be very judicious on if we were to add anything, how we would do that and the size, scope from both the cash and a cash flow point of view. So, the overriding principle, just to be clear, is we're going to become a cash flow positive company.

You know, kind of a very basic way to run a business is you've got to generate more money than you're spending. And so, that is our overriding principle. So, if we could tuck in some other technology that makes sense, that doesn't deviate from that, then, you know, we should do that or we should explore that. But we will -- we certainly are not going to do anything that would require a significant financing situation at all.

And so, I think what we've done, which, again, appreciate the question, is we basically swapped what was $100 million risk with additional capital for elacestrant was $100 million of risk capital, and we swapped that for $12 million of a pivotal opportunity in RAD011. That's one pivotal. And as Liz Messersmith outlined, we anticipate adding two other orphan diseases from a pivotal opportunity point of view. So, we swapped a $100 million risk asset for $12 million asset, and we can do three pivotal trials on and absorb all of that in our balance sheet and our cash flow.

So, I think that's a -- that was a great way to reposition the company from a risk and an optionality point of view. If we could do that again, we'd be crazy not to. Those things are few and far between us as you would no doubt understand. But we continue to look and see if we can add things.

At the same time, you know, as you've heard and we are trying to do, the underlying commercial asset we have of abaloparatide is one that we believe we can continue to add both incremental and substantial value to by broadening it. So, I'm not directly answering your question. Although, I'm going to say we should always be looking at things, and if we can do things in a way that is absorbable from a cash and cash flow point of view and adds to the optionality, we'll do that. But other than that, we've got a very full plate.

You know, we have three pivotal readouts in the next few months. And what you've heard from us today is we have a pivotal that we're going to initiate in orphan. And we have two other pivotals that we're going to initiate in orphan. So that's six pivotal activities for a company of, you know, 280 people.

And I think that's plenty for now. And so, I hope that gives you a bit more context, and I do appreciate the opportunity to get -- answer that kind of question. 

Annabel Samimy -- Stifel Financial Corp. -- Analyst

OK. Great. Thank you so much.

Operator

Thank you. Our next question comes from Douglas Tsao from H.C. Wainwright. 

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

Hello, can you hear me? Hello, can you hear me? So, just -- I understand the explanation that there seemed to have been some disruption in terms of new patient starts last year because of COVID and sort of created a hole in your sort of patient backlog if you will. But I'm just curious, what sort of change and why, you know, versus the guidance and why that wasn't sort of incorporated into expectations for this year? Thank you. And I have a follow-up. 

Kelly Martin -- President and Chief Executive Officer

Yeah, well, let me start Doug, then I'll turn it to Jim and/or Sal. But the -- again, just to emphasize, we're kind of managing the P&L, so we didn't change our EBITDA cash flow guidance at all. We changed the top-line net revenue for the product in the U.S., and some of it, as Sal I think explained pretty well, is that there's still -- which is fairly consistent with many companies, there's still some fair amount of noise from patients reconciliation and patient starts, if you will, through the balance of last year, and we're kind of catching up to that. And so, I think that the 240 number relative to 250, you know, it's kind of material, but it's not that material.

I mean, what I focus on, frankly, is, you know, year over year, we have revenue that's about flat and we reduce the loss by 65%. So, the operating leverage in the P&L is dramatic. And the second half of the year, as Sal went through, should have stability and sort of a flushing out, if you will, of the patients' stability numbers, number one, number two, the volatility, and some of the gross to net pricing, which Sal referred to, you know, that should be dampened down dramatically. And then the catch-up of all these new patients that have added should bode well for the second half of the year.

So, hopefully, that explains the various pieces in a way that's helpful. I don't know if, Jim, if you want to add anything. You know, go ahead.

Jim Chopas -- Principal Finance and Accounting Officer

Thanks, Kelly. Also to reiterate, there, obviously, was kind of variability in terms of some of the things that were going on with COVID during the year in terms of we could track our leading indicators. You know, I think that a lot of other companies in the industry have experienced volatility in their numbers as I think it's not unusual, but we feel like we're getting a better read in the data. Things are stabilizing more and we're able to be more predictive with the data we have now than we were earlier in the process.

But it's just a normal evolution in terms of our ability to predict our numbers.

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

OK. And then just in terms of the new focus on specialty centers or bone centers, do you think that that would apply to the patch system as well or do you think that that product would potentially have sort of greater breadth across the prescribing universe as well?

Kelly Martin -- President and Chief Executive Officer

Maybe, Sal, you should take a lead on that, apologies.

Sal Grausso -- Chief Commercial Officer

Yes, thanks, Doug. It feels somewhat [Audio gap] the most from this molecule, abaloparatide, are those that are very high risk to fracture or those who have recently suffered an osteoporotic-related fracture. So, it's to that end that we certainly see, you know, this as an important option, you know, for those patients. And so, we believe that this is accretive because it is consistent with our, you know, our strategy, it fits right into what we're doing now. 

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

OK. And then if I can, just one final question. In terms of the depot, is the question that you need to answer regarding to sort of the need for a possibility in terms of the PK for the product? 

Kelly Martin -- President and Chief Executive Officer

Yes, Chhaya, why don't you take the lead on that, somebody who is rather expert in this topic.

Chhaya Shah -- Chief Business Officer

Thank you. Yeah, great question. For the depot program, we're in progress of looking at -- we've partnered with a company that would help us get to that in vitro profile. And exactly what you're saying is looking at the PK study and getting to that point.

So it's -- you know, it's discovery, right, but it's -- we've partnered with somebody that's excellent and have done this before. So, we're progressing on that very quickly. 

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

OK. Great. Thank you so much.

Kelly Martin -- President and Chief Executive Officer

But, Doug, it's Kelly. You're -- what -- you're zeroing in on what is sort of traditionally been the dogma of anabolics, and let's just say there is other research and there is other papers that would indicate that a depot administration could have a similar impact. And so, anyway, we're going to explore that because we think it's worth exploring and it's something that we look forward to kind of sharing with the market when we have those answers because if it is possible, we think that that would be, obviously, highly attractive. Just for reference, there is a -- in the Japan market, there is a one-week administration of the drug, and so there's certainly a fair amount of evidence to suggest that if we can tease it out the right way, that there could be a path forward that would be attractive for it. 

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

OK, great. Thank you so much, Kelly.

Kelly Martin -- President and Chief Executive Officer

Yup, no worries.

Operator

Thank you. Our next question comes from Jessica Fye from J.P. Morgan.

Unknown speaker

Hi, good morning. This [Inaudible] on for Jess. Thank you for taking our questions. In the latest business update in July, you mentioned that you plan to price the transdermal system at a premium to TYMLOS as you mean upwards.

Can you talk about the rationale behind that and maybe quantify the price you have in mind? And also as a follow-up, curious on your thoughts about how the patch could drive long-term revenue growth for the business. 

Kelly Martin -- President and Chief Executive Officer

I'll start, this is Kelly. On the patch pricing, kind of simple concept, the COGS for the patch, which would be sort of natural because it's a different administration, is different from the injectable. And, therefore, in order to make sure that the great progress we're making on this molecule from an injectable and business point of view for us isn't something that's eaten away at by a lower margin product. There's obviously an intersection there between the breadth and the opportunity of a new administration i.e., a transdermal system and the existing one.

And so, while we completely understand that, we think that to make sure that we capture or recapture or maintain some reasonable margin parity at a minimum is something that would be prudent for us to do and that's sort of the direction that we're going to go in. And with regard to the revenue opportunity in the patch or the transdermal system or the market opportunity more specifically, as I kind of went through on my comments, the way we're going to position it from a price point of view and a market point of view is it will be additive to the P&L and cash flow. It will not be something that detracts from it. And that's kind of where we're going to stand for now.

We're not going to start putting out different numbers on the patch. And one of the main reasons for that is we don't have the data. We would like to see the data. That would be rather normal before you start talking about market opportunities to actually see the data.

So, we're certainly going to wait to see if we have data. But however we position it, it will be accretive to our current business because we think that's very important to maintain and preserve and enhance the shareholder value.

Unknown speaker

Great. Thank you.

Operator

Thank you. The next question comes from Vikram Purohit from Morgan Stanley.

Vikram Purohit -- Morgan Stanley -- Analyst

Great. Good morning. Thanks for taking my question. So, staying on the topic of pipeline, just had two more I guess kind of housekeeping questions for you.

So, for the three readouts expected in the second half of this year, is there any clarity available about the cadence of those readouts? And then secondly, for the ATOM and wearABLe studies, what would you anticipate being included in those top-line readouts in terms of specific data parameters, level of detail, etc.? Any color there would be helpful.

Kelly Martin -- President and Chief Executive Officer

All right. I would tell you -- Vikram, thanks, it's Kelly. There is -- we're not going to share the cadence or the sequence of what's coming first, second, third, fourth. There's obviously a lot to juggle.

We do have, obviously, an internal schedule based on data and where things are. It's -- you know, we're talking about over the next four months approximately, you know, lots of different readouts. I don't know. Ethan or Chhaya, if you want to go through the specifics, but clearly, as you know, the readouts' top line will include the primary and/or secondary endpoints and, obviously, include any reference to any safety details.

Ethan or Chhaya, do you want to add anything more specific to that?

Chhaya Shah -- Chief Business Officer

Yeah, I think you've hit it, Kelly. Basically, it's the primary and secondary endpoints for the ATOM, which is the bone mineral density. And then the wearABLe, it's a 2% inferiority. So, it's a basic safety information and, you know, we're anticipating, like Kelly said, at the second half of this year for both. 

Vikram Purohit -- Morgan Stanley -- Analyst

OK. Got it. Thank you. 

Chhaya Shah -- Chief Business Officer

OK.

Operator

Thank you. We have no further questions. Do you have any final remarks?

Kelly Martin -- President and Chief Executive Officer

It's Kelly, I would just thank everyone for their time. Pretty comprehensive review as a point in time on where we are and some I think important dialogue as far as how we're thinking about the pieces, how they come together, and the balance of this year with regard to the activities. So, we appreciate everyone's participation and look forward to sharing progress as of when we can do that. Ethan, do you want to add anything? 

Ethan Holdaway -- Head of Investor Relations

No, that's it. Well said, Kelly. Thanks, everyone, for joining, and this concludes the Q2 earnings call.

Operator

[Operator signoff]

Duration: 61 minutes

Call participants:

Ethan Holdaway -- Head of Investor Relations

Kelly Martin -- President and Chief Executive Officer

Jim Chopas -- Principal Finance and Accounting Officer

Sal Grausso -- Chief Commercial Officer

Chhaya Shah -- Chief Business Officer

Liz Messersmith -- Senior Vice President and Head of the Orphan Business Group

Corinne Jenkins -- Goldman Sachs -- Analyst

Anna Baran -- SVB Leerink -- Analyst

Annabel Samimy -- Stifel Financial Corp. -- Analyst

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

Unknown speaker

Vikram Purohit -- Morgan Stanley -- Analyst

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