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Radius Health (NASDAQ:RDUS)
Q3 2021 Earnings Call
Nov 08, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and thank you for standing by. Welcome to the Radius Health, Inc. third quarter 2021 earnings conference call. At this time all participants are in a listen-only mode.

After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] I'd now like to hand the conference over to your host today, Ethan Holdaway, head of investor relations. Please go ahead.

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 afterward. 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 to 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. Steve Helwig, our finance and accounting officer will then provide a financial update. Chhaya Shah, senior vice president and clinical program lead will follow with an update on elacestrant and abaloparatide development progress; and Bob Valentine, the strategic business officer of abaloparatide, will finish up by providing a commercial update. We will then open the call for questions.

I would now like to turn it over to Kelly.

Kelly Martin -- President and Chief Executive Officer

Thanks, Ethan, and good morning, everybody. Thank you for spending a few minutes with us today to go through our third quarter earnings and some of the results of the business. It was a very busy quarter for us. We don't necessarily run the company quarter by quarter, but the activity level is very high across all aspects of our business and we'll share that with you this morning.

I'd like to highlight a number of things, which we think are particularly important from the quarter. First and foremost, about abaloparatide on the male study, we announced positive results from the pivotal trial several weeks ago. A great step forward for that molecule and an interesting opportunity in the marketplace. Secondly, for abaloparatide, we resubmitted into the European marketplace last week.

We had indicated that that was our goal second half of this year that we would resubmit into Europe and we accomplished that. The third thing for abaloparatide is that the TD pivotal read-out remains on time for the Q4 read-out for this year. I know lots of people are focused and interested in that as we are as well. In the elacestrant molecule, we announced that the pivotal trial delivered positive results.

So our partner, Menarini Group and ourselves are very pleased with that. We will go through this with you very specifically during this call Steve Helwig will outline the business relationship we have with Menarini. We also outlined that fairly explicitly in our earnings announcements and Chhaya Shah will go through some of the highlights at the high level of that trial. Clearly an important step forward in the space and an important step forward for Menarini and ourselves.

For RAD011, the Prader-Willi syndrome pivotal trial is on time to start toward the end of this year or the very early part of next year. And importantly we've completed our lifecycle planning with that molecule and over the next few weeks, we will announce and roll out additional indications that we will take forward with RAD011. All of which we're very excited about and looking forward to sharing our thoughts and thinking with you in the very near term. Our near-term focus, as a business and as a company or multiple things and we highlighted a few.

First and foremost, TYMLOS commercial. We are focused on continuing from a growth point of view, a productivity point of view, and very specifically a segment focus point of view. As we indicated in the earnings announcement, our productivity is up. Our revenue is up.

Well, we would like to expand the denominator to the baseline of that business and that's what Danielle and Bob Valentine are working on from a business point of view. From abaloparatide, our preparation and anticipation of introducing male indication to abaloparatide. It's an important piece of work, something that we have done some work on to date, and we'll continue to emphasize over the next several months, again, in anticipation of including the male indication in the US for abaloparatide. We're also doing preparation, as we have been doing on the transdermal system or TD.

Important to us is what the actual data will say. That data will give us some definitive information with regard to pricing reimbursement and the segment or segments that we believe will be most applicable for TD. Our last but not least on abaloparatide, we continue to expand the global footprint of this asset, as we again indicated in the earnings announcement. A lot of progress is being made in Canada.

A lot of progress is also being made in Japan, which I remind folks is the largest anabolic market in the world. And we will look to expand the footprint in other countries and or geographic regions, as we conclude transactions. From an elacestrant point of view, again, our focus with the Menarini group is to prepare and accelerate, if possible, the regulatory pathway and discussions in both the US and Europe. It's something that we have an integrated approach to and it's a very big focus of ourselves and the Menarini group with regard to this asset.

RAD011, we will initiate the Prader-Willi trial and we'll also, as I said before to share some lifecycle opportunities for this asset. When we purchase RAD011, we very specifically indicated that this was a pipeline within a molecule and we look forward to sharing that with all of you in the next few weeks. The last thing I want to touch upon is something I've touched upon before but just wanted to remind you that continue to emphasize, which is our approach and philosophy in running the business at the Radius and the things that are very important to us, as we build a distinctive company. First and foremost our culture, we continue to build a culture around exceptional people who are very team-oriented and we've made great strides and progress on that over the last 18 months and we'll continue to make more.

It's kind of a never-ending goal and objective and one that we're very focused on. We're very focused on executing against plans in a very high-quality manner. In the last year or so we completed the enrollment on three pivotal studies. We've had readouts on two of the three.

We're awaiting the third. We resubmitted this asset into Europe. We are working closely with our partner in Japan on abaloparatide. We've in-licensed a synthetic CBD asset that has very broad applicability across neuro and neurobehavioral and psychiatric indications.

And last, but not least, from a business P&L and cash point of view, we're very resolute on managing all of those pieces together in a high-quality way. From a perspective point of view, we manage for short-term progress, but we also do that within an intermediate-term map and roadmap. There are many things over the intermediate term we would like to accomplish. But you can only accomplish those if you get things done in the short term.

So we balance both short-term with an intermediate view of where we're going and how we intend to get there. Very importantly, we strive to be outstanding stewards of capital, people who provide us capital whether it's debt-equity cash. We want to make sure that we are managing that capital in a thoughtful manner. Once again managing for the short term, but balancing against intermediate-term objectives.

We look at the company from a portfolio basis, we try to consistently see where we can reduce the risk. That risk may be execution risk, it may be partner risk, it may be a competitive risk, it may be pricing risk, and balance that risk with opportunity to create more on the upside whether that's additional indications, additional geographies, additional partnerships. So we continually look at our portfolio from a risk and return point of view and we try to manage the risk down and an opportunity of upside up. And last but not least, we will continue to be active in our own capital structure not to be passive participants in our capital structure when we have opportunities to improve our capital structure, we will do that at the right time and for the right reasons.

And I think that's an important aspect of this company, as you look forward to now three different assets with potential for both with success potential revenue, milestones, and growth. And so using that capital perspective capital and return part of the usage of that will be to be active in our own capital structure. And I think that's an important thing to emphasize. So with that, as Ethan said, joining me on this call we have some fantastic people.

I'm going to turn the call to Steve Helwig in a second. He's our principal financial officer. He's doing a great job in that role. You'll hear from Chhaya about both the elacestrant and abaloparatide and her role guiding those two assets from a development and regulatory and operational point of view.

And last, but certainly not least, you'll hear from Bob Valentine on some of the core topics and analyses within the commercial space. So with that, I'm going to turn it over to the very capable hands of Steve Helwig and he'll walk you through the key aspects of our financial performance for the quarter. Steve?

Steve Helwig -- Finance and Accounting Officer

Thank you, Kelly. For Q3 2021 TYMLOS, net revenue was $56.8 million versus $50.4 million in Q3 of 2020, or a 13% increase year on year. The third quarter increase was driven by an increase in unit volume as well as net price. The total net revenue for Q3 2021 was down $21 million or 27% versus Q3 of 2020.

This was due to the $27.4 million upfront licensing payment we received in Q3 2020 related to our agreement with Menari for the out-licensing of the elacestrant assets. Moving on to the operating expenses on a non-GAAP basis, R&D decreased versus the prior year by $4 million due to the wind-down of our Phase III trials and we expect the R&D expenses related to Adam and wearable trials to decline substantially in 2022. Our selling, general and administrative expenses were up $2 million for the same quarter versus a year ago. And this is due to a one-time increase in professional fees resulting from the implementation of Oracle our new ERP system offset by reductions in compensation from prior quarter reorganizations.

As a reminder, non-GAAP SG&A excludes stock-based compensation. This is all resulted in a total company adjusted EBITDA loss of $10.9 million for Q3 of 2021 versus a positive $9.3 million in Q3 of 2020. This roughly $20 million swing again is primarily due to the $27.4 million upfront licensing revenue payment from Menarini in Q3 of 2020 partially offset by increased TYMLOS net revenue in 2021. Excluding the impact of the Menarini payment, the company made material progress in the reduction and realignment of its cost base, which also contributed to EBITDA improvement.

Moving on to the year-to-date income statement. The total net revenue was down $10.9 million. This is due to a decrease in licensing revenue of $16.4 million, which was comprised of $27.4 million mentioned previously from Menarini in 2020. Offset by $11 million in 2021 mainly from the approval of Otavalo in Japan.

This decrease in license revenue was offset by an increase in our TYMLOS net revenue of $5.5 million driven by an increase in both volume and price. Our operating expenses on a non-GAAP basis, R&D decreased by $29 million. This is due to the fact that in 2021 all the Emerald costs had been reimbursed by Menarini and additionally factors previously mentioned for Q3. Selling, general and administrative costs are down $7.2 million.

This is mainly due to savings and compensation resulting from reorganizations that took place earlier in 2021. We have made progress since transitioning our sales approach to osteoporosis and expect to make continued progress. However, due to lower than expected year-to-date TYMLOS revenue, we've adjusted our full year 2021 TYMLOS revenue forecast to a range of $210 million to $220 million for us the previous forecast of $240 million. We also forecast total company EBITDA to be in a range of $5 million to $15 million loss versus a previous forecast of a positive $10 million.

Moving on to the next slide for cash flow trends. As of September 30, 2021, we have a cash balance of $110 million. We had expected to be flat for the quarter with a cash balance of $100 million. The traditional $10 is the result of timing on an expected payment that did not occur until shortly after the Q3 2021 close.

Moving on to Slide 11. Here, we framed out what the elacestrant opportunity means for Radius. As part of the agreement with Menarini, we are eligible to receive up to $20 million in development and regulatory milestone payments up to $300 million in sales milestone payments and tiered net royalties up to 9%. The net royalty includes royalties that Radius is eligible to receive from Menarini, as well as royalties Radius, paced to ESI.

The royalties and sales milestones are based on global net sales of elacestrant and include monotherapy, combination therapies, as well as other potential therapeutic applications of elacestrant. On the next slide, we provide an overview of the assets' intellectual property portfolio. Elacestrant currently has three issued patents. Composition of matter expiring in August of 2026 and subject to patent extension up to August of 2030, methods of treatment expiring in October of 2034, polymorph expiring in January of 2038, And then, there are also additional patents that are pending.

As a new chemical entity, elacestrant has the potential to receive regulatory exclusivity of five years in the US, 10 years in Europe, and eight years with generic competition in Japan. All of which is subject to regulatory approval. And with that, I'd like to turn it over to Chhaya to give an update on elacestrant development. Chhaya?

Chhaya Shah -- Senior Vice President and Clinical Program Lead

Thank you, Steve, and good morning, everyone. As Kelly mentioned, in October we announced positive top-line results for the Emerald trial where elacestrant was evaluated as monotherapy versus the standard of care of metastatic breast cancer patients. The design of the Emerald study was a randomized, open-label, active comparator study. This trial met both its primary endpoints.

The losses trend extended progression-free survival in the overall population as well as the ESR1 mutation subgroup. This demonstrates superiority versus standard of care and all therapy. Based on these positive results, we are working in partnership with the Menarini group on regulatory submissions for both US and Europe. As a reminder, we will give detailed data and it will be presented at the San Antonio Breast Cancer Symposium between December 7th and 9th.

Menarini plans to further develop the elacestrant asset including the combo therapy trials, as well as other potential therapeutic applications. It is a pleasure in partnership with Menarini to be able to deliver positive top-line results for the first-ever oral serve for SERD for metastatic breast cancer. So moving on to abaloparatide-SC trial, we announced last month positive top-line results in evaluating TYMLOS in men with osteoporosis. Adam was a placebo-controlled trial with a 12-month duration, men were randomized two to one of OSC with placebo.

The trial results met the primary endpoint and change in lumbar spine BMD at 12 months and p-value of less than 0.0001. The study also met secondary endpoints related to BMD for lumbar signs and six months as well as hip in from or NAC at 12 months. The study demonstrated a safety profile that took the system consistent with the abaloparatide study. And based on these positive results, we plan to submit a supplemental NDA in quarter one of 2022.

This will be a 10-month review cycle. We'll also present detailed data, which will be published in the first half of 2022 and will present at the upcoming medical conference. On the next page. Go through a little bit more additional development activities for abaloparatide.

So with regards to the TYMLOS label, in September, we announced an update to our mechanism of action section in TYMLOS labels. This was followed by our histo-data, which showed TYMLOS stimulating new bone formation in humans. This label change allows us to clearly explain the mechanism of action to healthcare providers and patients. We also expect to hear from FDA on the potential removal of the box warning from TYMLOS label by the year-end.

And as communicated, we're on track for the wearable trial to receive a top-line readout before the end of the year. On the globalization front, on November 4th, we submitted Abalo-SC to EMA for potential approval in Europe. This is a -- this MMA is a full submission. It leverages in totality evidence data from the pivotal study, real-world evidence, post-marketing surveillance data, and Teijin Japanese PARTNER Phase III trial data.

We are optimistic that this information will be provided will be the support of a favorable review. Our partners in Canada held in labs, plan on submitting a regulatory application to Health Canada in quarter 4, '21 by year-end. And we are discussing and progressing with additional ex-US partners in various regions and countries. So this summarizes our elacestrant development activities, as well as our abaloparatide activities.

And I will hand this off to Bob for a TYMLOS commercial update.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Thank you, Chhaya. Good morning, everyone. I will provide an update on the TYMLOS commercial progress. So if we could go to Slide 19.

In the third quarter, our TYMLOS new patient shipments grew 10% year over year from the same quarter in 2020. And the 2021 quarters are collectively continuing to show year-over-year growth. Building the patient cohorts for future contribution to revenue. From a strategic perspective, we are tracking some additional key indicators of our focus on the fracture patient, as well as efforts toward expanding depth in key accounts.

So our new patient contribution from the top 500 prescribers remains at 50% from Q2 to Q3. Our new patient growth within the top 50 prescribers grew 15% or more from Q2 to Q3. And our new patient growth among that same top 50 prescriber group accelerated faster in the ortho and spine segments than outside that segment. On the next page, we are also turning appropriate attention to positioning TYMLOS for future consumption growth.

So beyond the depth over breadth focus of our field force, we have a few key forward-looking [Inaudible]. We're working with some larger institutions to improve how postmenopausal osteoporosis patients are properly identified and how to improve processes for getting these patients the proper care for their underlying bone disease and bone conditions. And as we know so many patients. Osteoporosis goes undiagnosed that -- it never gives them a chance to properly get on anabolic therapy.

We're also preparing the organization for what are the potential future male indication as well as a potential abaloparatide transdermal system product. So this includes deepening our understanding of these opportunities both broadly and in specific segments and patient populations. And it also means outlining market-building work that will need to be done in advance of launch. So with that, I'll turn it back over for Q&A.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Geoffrey Porges with SVB Leerink.

Geoffrey Porges -- SVB Leerink -- Analyst

Thank you very much and I appreciate the color on the call. A couple of questions on TYMLOS and then one on elacestrant. First, could you give us a sense of what proportion of the surgical osteoporosis, female osteoporosis cases are you now getting an anabolic? And then, what your share of those starts is right now? And then secondly, could you talk about the relative price and access dynamics versus the generic abaloparatide, and how that is trending what your expectations are there? And then lastly, on elacestrant, one of the big questions is relative tolerability and I know the presentations coming in at San Antonio. But do you consider tolerability to be the Achilles' heel of elacestrant compared to the other SERDs, where we're starting to see data from the pivotal trials as well?

Kelly Martin -- President and Chief Executive Officer

Geoff, thanks for the questions. This is Kelly. I'll start with the last first. We're not going to comment on any of the data for elacestrant.

I would just say what we -- we and Menarini put out in the announcement of the top-line data as we did not flag safety as an issue and I think that would just leave that stand as is. I think that sort of speaks for itself with what -- what we can see right here in the data for elacestrant. I'll ask Bob to comment a little on a high level of how we're looking at -- before going back to about to abaloparatide sort of the fracture surgical market segment and some of the dynamics on the generics side. And I will add some commentary as well after Bob's comments.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Sure. So I think we know that there are somewhere between 1.5 million and 3 million fracture PMO patients in the United States. And we can all sort of do the math on how many of those patients are treated though. According to note that both our TYMLOS patients are a mixture of patients who have had a fracture and our surgical patients and those who are -- who haven't.

So, we're to try to point out exactly what our market share is. But I think that gives you a sense of the order of magnitude of the amount of patients and potential white space that there there is for the entire market.

Kelly Martin -- President and Chief Executive Officer

Yeah. And I would just add Geoff. I mean our overall market share -- or the overall market share amount of anabolics remains relatively low, sort of frustratingly low on a broad basis. As far, as well now, our focus has been let's do a lot more with fewer, and that's working.

And so Bob and Danielle are working to expand those numbers if you look at our top 10 clients our top 15 clients or our top 20 clients. The preponderance of all of that business is fracture patients and therefore that gives us the opportunity to kind of continue to expand that. But if you look at the overall business it's still an extremely small percentage of both treated patients and fractured patients. And again, we're not trying to get over our skis as far as breadth.

But if we look at the depth and continue to add another 10, and another 10, and another 10 there are lots of opportunities there for anabolics in general and TYMLOS specifically.

Geoffrey Porges -- SVB Leerink -- Analyst

And sorry, the question on the generic and your share of starts now.

Kelly Martin -- President and Chief Executive Officer

When we look at the generic activity, it's an infinitesimal part of our -- of the business relative to us. It's -- if there's some slight growth there at very, very low numbers but nothing that is really on our radar screen relative to scripts and patients. We track it. We look at it.

It's very low single-digit numbers. And that hasn't moved that much. It's slightly ticked up Geoff in the last few months, but nothing has given us pause that something fundamental has changed at least from what we have seen to date.

Geoffrey Porges -- SVB Leerink -- Analyst

Great. Thanks, Kelly.

Kelly Martin -- President and Chief Executive Officer

Thanks, Geoff.

Operator

Our next question comes from Corinne Jenkins with Goldman Sachs.

Corinne Jenkins -- Goldman Sachs -- Analyst

Yeah. Good morning. So just maybe as you think about the change in guidance over the course of the year. Can you just help us understand, what were the factors that drove that disconnect between what we expected and then what played out whether maybe this new patient growth persistence or some other factor?

Kelly Martin -- President and Chief Executive Officer

Thanks, Corinne. It's Kelly. I'll comment and then Bob can add comments, but I think there are two main factors. One is the conversion of patients, our new patients, i.e., defined as those with TYMLOS scripts continue to grow nicely, if not very nicely.

But for a variety of reasons and there are several of them. The conversion of those -- if you took 100% of the script patients there's a meaningful number of patients that for a variety of reasons didn't convert from script to drug. So that's one bucket. And then the second bucket, as you said is persistence.

The average time on drugs for a patient is something that we're very focused on. And between Bob, and Danielle, and Sal Grausso, that is a big focus of ours. So, we're adding patients and we're adding patients in some depth and new -- in new sort of fracture-oriented practices. But we frankly need to do a better job of converting those scripts to drugs and then extending the persistence in the appropriate manner.

I don't know Bob if you want to add anything to that.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Yeah. I think that covers it pretty well. I'd just say throughout the year you kind of cover the back-end stuff and throughout the year and inclusive of the third quarter, we've made efforts as well to continue better aligning our sales approach to the focus on the fracture patient. So we, of course, expect to see a long-term impact in a positive direction on those efforts as well in fixing some of the inherent pieces around the conversion of patients, and time on therapy will just continue to add to that, so --

Kelly Martin -- President and Chief Executive Officer

So it's an area, Corinne, we're not terribly pleased with the top line where it is. We even though we've grown year over year. We -- there's more to do there and there's more we have to get better at. And I think those two areas conversion and length on the drug are two very specific things that we're focused on.

Corinne Jenkins -- Goldman Sachs -- Analyst

OK, that's helpful. Then maybe can you just help us understand the cadence of milestone payments related to elacestrant less over the next year and of the $20 million in development and regulatory milestones? How much of that is attributed to the monotherapy versus maybe other combinations, etc.? 

Kelly Martin -- President and Chief Executive Officer

The development milestones are all related to the monotherapy progress. The royalties and the sales milestones are related to any -- in layman's terms any utilization of the molecule whether it's mono or combo and combo with any number of combinations, we haven't outlined the milestone payments from a market point of view as of yet. I do realize that at some point we need to figure out how to frame that out with even more detail. But for now, it's something that between Menarini and us is still part of a confidential arrangement.

The amplitude doesn't mean --- let's put it this way, the amplitude of the miles the sales milestones are kind of split between approximately half up to a certain level and the other half above that. So there are big chunky payments there depending on where the molecule goes. I think this will become more important and more relevant once the data is released and once the Menarini ourselves come forth with additional regulatory filing approaches.

Corinne Jenkins -- Goldman Sachs -- Analyst

Great. Thank you.

Operator

Our next question comes from Annabel Samimy with Stifel.

Unknown speaker

Good morning. This is Nick on for Annabel. Thanks for taking our questions and congrats on all the clinical success. As you look to increase the fracture surgical market, what are you doing in terms of building a clinical database around the orthopedics opportunity? And how are you currently positioning sales calls and then switching to PWS, -- is there anything that you learned in the most recent negative AdCom for Levo therapeutics that could have any impact on how you design the SCOUT trial, and/or how you think about its efficacy, safety expectations? Thank you.

Kelly Martin -- President and Chief Executive Officer

Yeah, that's great. Bob, you want to take the first and then I'll talk about Prader-Willi.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Yeah. So, I think the way to frame this is -- we just mentioned we kind of remain very committed to the fracture patient strategy and what you're referring to is as a surgical patient. And while the focus on fracture patients first and foremost is consistent, we're continuing to identify opportunities to refine where along the patient journey we're actually intersecting with these fracture patients. And then, how we message the healthcare providers on those calls about TYMLOS, as part of that journey.

So, I think, what we're doing is we're using data to identify the positions in the patient journey that are the best places to find those patients and communicate with the HCPs about the TYMLOS value prop there.

Kelly Martin -- President and Chief Executive Officer

And with regard to Prader-Willi. Thanks for asking that question is a great question. Well, the cut to the chase. We have learned and continue to learn an absolute ton from the other trials.

First and foremost, we applaud both Levo and Cellino's efforts in the spaces. As a tough indication, we have gotten to know some of the patient advocacy organizations very well in the last year. Let's applaud them, they are super focused on their job of bringing forth potential therapeutic solutions to these patients. But we've learned by looking at and examining even before the FDA meeting last year.

All of the Levo detail and Cellino detail it's been exceptionally instructive to us. On things that would appear to be the right way to structure things. Patient behavior is -- it's behavioral -- in addition to genetic issues, it's a behavioral disease. So anticipating behavioral actions, the differences between ages, very important.

Where behaviors may change based on age. Physiologically also many of these patients, as they grow from 10 to 12 years old through teenage years through young adulthood obviously there's a lot of physiological changes going on. This is an eating disorder. So think about your metabolism, your body weight your body mass, etc, etc, etc.

So again, we certainly in no way shape, or form with any of our competitors to fail. That's not our objective, but we have learned an enormous amount in detail about a way to construct our trial using RAD011 in the most effective risk-managed way and where we're highly constructive on moving forward with a Prader -- a pivotal period of Prader-Willi trial. So more to come on that and our team has done an exceptionally good job on preparing our pivotal trial in this space. And we can't wait to get started.

Unknown speaker

Awesome. Thank you.

Operator

Our next question comes from Jessica Fye with J.P. Morgan.

Jessica Fye -- J.P. Morgan -- Analyst

Hey guys. Good morning. Thanks for taking my questions. The first one is can you talk about the commercial strategy for Abalo-patch assuming success in that trial? How will you position that product relative to TYMLOS?

Kelly Martin -- President and Chief Executive Officer

Well, I think we put in the -- Jessica it's Kelly, thanks. Part of it is going to depend on the data and I'll again -- I'll let Bob talk a little bit about some of his thoughts with Danielle and then I'll comment as well. But Bob, do you want to add some thoughts.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Yes. So I'll just preface by saying where -- we're continuing to tap into the market and market research and understand how this product will be perceived and incorporated. But as you think about what the what transdermal demands. I think there is a pretty clear and obvious set of patients that this would serve that current offer options are not serving.

And those are sort of the needle-averse patients. So that's the clear and obvious segment. But we need to understand a little bit better beyond that segment for the current patients that talk -- that we currently target with TYMLOS. Where do we track -- where do we position the transdermal system relative to those patients, as well as relative to patients that are currently on TYMLOS.

Maybe on competitors or aren't on anabolic therapy at all. To say more work to be done, we have some insights into some of the patient segments that are very clear and obvious and then more work to do to understand the other areas of opportunity.

Kelly Martin -- President and Chief Executive Officer

And we've refreshed -- there's was a lot of work done previously on market intelligence, market segment, market information. And the team has begun to refresh some of that. And I would say that from a fresh pair of eyes point of view from myself, the feedback is more constructive and positive against certain segments particularly in the most obvious or people who for any variety of reasons don't want to have a needle and are needle-phobic. There's a pretty good range of how big that market is.

And any of the numbers are pretty big from a denominator point of view. So I would say -- and Bob, and Danielle, and Sal did a good job of sort of refreshing, but there is a lot of constructive optimism for segments of the market with what the transdermal and again we look forward to getting the data and then moving forward from there.

Jessica Fye -- J.P. Morgan -- Analyst

Great. And can you also talk about how you think about the commercial opportunity associated with TYMLOS in Europe? Including, how do you think about pricing in that market?

Kelly Martin -- President and Chief Executive Officer

Pricing is a challenge. As you know well, sort of across the board. That would be an asset. I think I've referred to this before, but just to be transparent the highlighted again, it would be -- we would not build up a sales force in Europe.

We would partner that assets. We've had a number of reverse inquiries coming in from European existing infrastructures. The only way obviously to generate value is from a portfolio basis. So somebody who also has an infrastructure who has a portfolio could add this.

Again, part of its -- part of the pricing is again based on data, as based on competition and it's something that we're exploring. So we will take a BD route in Europe and again we've had multiple people interested and we're in the early stages of that discussion. But now that we've filed I think those discussions will become more tangible over the next few months.

Jessica Fye -- J.P. Morgan -- Analyst

Great. Thank you.

Kelly Martin -- President and Chief Executive Officer

Thanks a lot.

Operator

Our next question comes from Eun Yang with Jefferies. Our next question comes from Vikram Purohit with Morgan Stanley.

Unknown speaker

Good morning and thank you for taking my call. This is [Inaudible] on for Vikram. My question is your release mentioned that you intend to use 50% of the elacestrant milestone to strengthen your capital structure. Could you provide some detail on what this could look like?

Kelly Martin -- President and Chief Executive Officer

This could look like as and/or when we ever received sales milestones that we will be active in our outstanding debt. Should we have any or outstanding convertibles? Should we have any? Or presumably, our outstanding equity, which we have. We will be using those payments to address all three -- any part of our capital structure, which broadly defined covers all of those things plus any other thing that we have. So we could use it to purchase that.

Purchase converts in the first instance refinanced at -- refinanced converts and or, as we get through all of that at some point in time purchase equity. So we would use it as a financial tool to strengthen the capital structure across the board.

Unknown speaker

Thank you very much.

Kelly Martin -- President and Chief Executive Officer

You're welcome.

Operator

Our next question comes from Douglas Tsao with H.C. Wainwright.

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

Hi. Good morning. Thanks for taking the questions. I think one of the things that you identified as sort of the key for jump-starting the TYMLOS franchise wasn't increasing or improving patient persistence.

I'm just curious, what do you see as the key levers to doing that? And what are the drivers for patients not sort of going through their full course of treatment? Thank you.

Kelly Martin -- President and Chief Executive Officer

Doug, It's Kelly. Thanks for the question. I'll have Bob's comment and I'll give you my view as well if it's helpful.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Sure. Yeah. There's going to be a variety of reasons. In any therapeutic area, but specifically, specialty pharma whereas the daily injectable for patients to kind of maintain consistency with therapy, right? I think a lot of what we can do is around communication both to the healthcare provider, as well as the patient around the importance of compliance and adherence to therapy and that's an area that will we'll be able to continue to focus on.

And I think there are things we can do sort of mechanistically back-office perspective to make sure that those access kind of hurdles is minimized. So between communication and minimizing some of those sorts of administrative hurdles, I think our areas where we can certainly focus and I think we'll have a lot of traction with respect to persistence on therapy.

Kelly Martin -- President and Chief Executive Officer

I think more generally, Doug. Persistence for any therapy is a challenge. Across many indications, this is no different. I think this is particularly challenging when 80% of the people are asymptomatic and that's why the more percentage of fractured patients we can have in our portfolio, the higher the probability is that we can extend persistency and the more serious the fracture pelvic or back versus wrist.

Then again you can extend it even further. So part of us improving in persistency is to continue to migrate our patient population from asymptomatic patients to fractured patients. That takes time and it takes focus. But that's what we believe would give us the stickiest and best business as it relates to patient care and patient needs relative to an anabolic like TYMLOS.

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

And I'm just curious, in terms of the comments around sort of things to help from an administrative standpoint for you. Do you anticipate or what's the current sort of push to patients from the specialty pharmacy in terms of reminding them? And is it just when you say sort of some of the administrative or is it just reimbursement or is it just patients not getting their scripts refilled themself?

Kelly Martin -- President and Chief Executive Officer

I said -- well the answer to that is, so we work with the specialty pharma companies. And we have put in place a number of programs with the specialty pharma companies with regard to follow-up with patients. I think the reality is we're a one-product company and we're a spit in the ocean to most of these big pharma distributors. So we have to do a better job internally.

We have to take resources internally. We have to own it. We can't just assume that the specialty pharma people are going to walk in and say what can I do to help Radius and TYMLOS today. Although why we get -- well we get pretty good standard support and interaction from them.

I think this is an area that we have to own and put the resources around. And again, that's what Sal, Bob, and Danielle are doing. We -- these are patients either on TYMLOS or should be on TYMLOS because they have a script. Their HCP has made that determination and we own that.

It's most important to us and so we're putting some resources to sort of providing an appropriate follow-up with those patients as best we can. So, we can convert more of them. Again, with the distributors, we have good relationships in the pharmacies but weren't -- we're a one-product company current and we're just not big enough to demand sort of gold-plated service and we get good service, but we need to do better.

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

OK. Great. Thank you so much, Kelly. 

Kelly Martin -- President and Chief Executive Officer

Yeah. You're welcome.

Operator

Our next question comes from the Eun Yang with Jefferies.

Unknown speaker

Hi. This is Marlin is on for Eun. Thank you very much for taking my question. Just a quick follow-up to Jessica's question.

Could you please perhaps quantify what percentage of anabolic eligible patients are currently not on therapy due to injection fear? Thank you very much.

Kelly Martin -- President and Chief Executive Officer

We can give you a broad range. Do you want to a range you want to? I mean it's -- yeah it's a big number.

Bob Valentine -- Strategic Business Officer, Abaloparatide

I think our best estimate is somewhere between 10% to 20% of patients who get to the point where a physician would recommend an anabolic therapy and hasn't already sorted or discounted them for being a sort of needle-phobic 10% to 20%. Kind of what we're hearing so far as those patients would refuse on the premise alone of not wanting the sort of daily injection.

Kelly Martin -- President and Chief Executive Officer

Yeah. If you take for as Bob said to follow on. Marlin, you have to have 1 million to 1.5 million to 2 million fractured patients and 10% or 20% of those are needle phobic. Your denominator is that number it's 200,000 to 400,000 potential patients.

They're not going to all jump on the patch, at least from a fertile market point of view and a market segment point of view that those two lines intersecting is obviously a pretty good bullseye for a different administration of the drug.

Unknown speaker

Got it. And just a quick follow-up to that. How many -- could you maybe quantify? How many percent are currently on TYMLOS and, you would expect them to be interested in switching to the patch? Thank you.

Kelly Martin -- President and Chief Executive Officer

The current penetration of TYMLOS for fractured patients is small, low -- very low percentage. And that's for anabolics as a class, not just TYMLOS. We're not looking at the transdermal system as necessarily a switching opportunity. By definition, if you're already on the drug and you're on the injectable you're probably comfortable with that and presumably or we would hope it has a positive impact on your bone health.

So we don't necessarily look at the launch of the patch as a switching opportunity. We look at it as an additive opportunity to the underlying patients. Anything you want to add to that.

Bob Valentine -- Strategic Business Officer, Abaloparatide

Yeah. And maybe the other angle of the question is for four patients who would -- who were about to become on therapy and who would have otherwise chosen to go on therapy with a daily injection. How many of those patients would choose the transdermal system? I think the answer to that question right now is that the feedback on the transdermal system from a healthcare provider perspective is extremely positive. They view the system as it's quite novel and so I think we can anticipate that the transdermal system will be viewed as a very viable alternative or option in the options set.

That includes TYMLOS subcutaneous and so some combination of healthcare provider and patient choice will ultimately decide, which patients end up on subcutaneous versus transdermal. So I think that's another way to talk about that question.

Unknown speaker

Very helpful. Thank you very much.

Kelly Martin -- President and Chief Executive Officer

Thank you.

Operator

I'm showing no further questions in queue at this time. I'd like to turn the call back to Kelly Martin for closing remarks.

Kelly Martin -- President and Chief Executive Officer

Thank you, and thank you all for your time. I just wanted to highlight a couple of things. I would point you very specifically to our announcement detailing the elacestrant business relationship. There are many important parts to that.

I'd highlight several. One is the IP, look closely at the IP and the runway in the for -- or ready-issued IP. That's number one. Number two, with regard to elacestrant, we worked extremely closely with Menarini on all aspects of this program and this molecule, Chhaya, taking the lead on the pro -- the molecule itself and the clinical development and the operationalization of the molecule.

We also have a dialog with them on the future prospects of how to utilize the molecule. And that's a great open dialogue about many things. So I would point to the fact that our milestones and royalties travel. They travel geographically, they travel with combinations, and they travel with indications.

So if you add that plus the IP runway. The opportunity for us as a financial asset is not insignificant or as opposed to two double negatives, it is significant. And so, I would just emphasize those things. We appreciate your time.

We've had that as pre-advertised. The second -- our second half of '21 was very full. It remains very full. Third quarter as half of that was very busy with two pivotal readouts.

We have one more to go in the fourth quarter. We look forward to sharing that data when we have it. We look forward to sharing with Menarini. The elacestrant data in December and we look forward to advancing the RAD011 asset with more transparency with all of you in the near future.

So with that, operator, we thank everyone for their time and have a great day. We look forward to continuing our updates. Thank you. 

Operator

[Operator signoff]

Duration: 55 minutes

Call participants:

Ethan Holdaway -- Head of Investor Relations

Kelly Martin -- President and Chief Executive Officer

Steve Helwig -- Finance and Accounting Officer

Chhaya Shah -- Senior Vice President and Clinical Program Lead

Bob Valentine -- Strategic Business Officer, Abaloparatide

Geoffrey Porges -- SVB Leerink -- Analyst

Corinne Jenkins -- Goldman Sachs -- Analyst

Unknown speaker

Jessica Fye -- J.P. Morgan -- Analyst

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

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