Radius Recycling, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 full year 2020 RADIUS Health, Inc. earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to turn the call over to your speaker today, Mr. Martin. Thank you. Please go ahead, sir.

Thank you very much, operator. Good morning, everybody. Thank you for joining us this morning for our Q4 2020 and full year 2020 earnings call. And at the end, we'll be happy to take some questions. Slide-wise, first page that's important, obviously, is the safe harbor statement. I won't read the whole thing. It clearly refers to discussions and statements we make prospectively for the future or things that are subject to significant change. Importantly, though, for this particular presentation, because it's full year, we would highlight that there are certain gap and non-gap disclosures from a financial point of view, which we've included. in this deck for your reference. Next slide on the agenda. I'll just give a brief overview. Our principal finance officer, Jim Chopas, will go through the relevant and highlighted financial results from both Q4 and for the full year. And Sal Grosso will talk very specifically about our patient growth, which is the underlying fundamental to our Timmels SCUS business. And I will be happy, as I said, to answer questions that you may have. On the next slide, from an overview point of view, and I would say that these areas of focus are ones that we've tried to communicate with reasonable consistency over the last few months. But just to reiterate again, our focus from a company point of view is across these very important items. First and foremost, our focus, and Sal will speak about it later, is to grow our Tymlos SC franchise and business. We believe that the molecule, the valoparatide, is an outstanding molecule. The patient need remains broad and deep, and we are focused on growing that business. Secondly, A balaparatide is, as many people know, it's in a molecule that has two phase three readouts towards the end of this year, the second half of this year. One for male potential osteoporotic patients, and the other is for a transdermal system, aka patch. And both of those readouts will happen in the second half of this year. and important aspects and parts of the Avala Paratide underlying franchise and business opportunity. Thirdly, Avala Paratide on a global basis. We currently are up from a commercial point of view in the U.S., as you well know. We have a partner in Japan who are making progress regarding their own regulatory processes. We expect clarity on that in the first half of this year. It is a very large anabolic market, as many people know. We also did a deal towards the end of 2020 with Canada, an out-licensing from a commercial point of view with both SC and the transdermal system, and that partner is making initial steps towards regulatory pathways for Canada. In addition to those three current countries, which are U.S., Japan, and Canada, we have a goal of expanding the global footprint of the balaparatyde into other countries as we see fit and as we could find the right partner. The areas that we're looking in are economies that are reasonably good economies with aging populations. Southeast Asia is an interesting place to look. Australia is an interesting place to look. And we are also continuing to make progress on the regulatory side of the E.U., for future consideration in the EU. Fourth, we want to complete the Elastostrand Phase 3. That is on track. We hope to have that readout in the second half of this year, as previously communicated. It's important for both ourselves and our partner, Menorini Group, and we continue to work on progressing and finalizing that trial. Fifth, We in-licensed a very interesting asset, RAD011, synthetic CBD molecule. There's lots of things that we are doing behind the scenes on that space, but first and foremost, our focus and goal is to make advancements against an orphan indication called Prader-Willi syndrome, and we are in the process of developing engaging with a U.S. regulator on both a meeting and a pathway forward for that very important indication. And last but not least, as an overall business and an enterprise, our goal is squarely to be a cash flow positive company. As we move our business forward, that enables us to do many different things, and to manage our own business in a way that we believe can add value for both short-term and intermediate-term points of view. So it's a broad overview. Again, all of these things we've explained before, and I just wanted a chance to reiterate them on this call to all of you. So with that, I'm now going to turn it to Jim Chopas, our Principal Finance Officer, who will walk you through again, at a high-level relevant financial update for both Q4 and the full year of 2020. So, Jim, you take it from here.

Thanks, Kelly. I will briefly walk through the financial highlights of 2020, and afterwards I will share and confirm our financial guidance. On slide six, radius had a strong financial performance during 2020 with 20% stimulus revenue growth, the successful exit from oncology, and a reduction in cost which contributed to ending the year with $115 million in cash and investments. With a strong focus on new patient growth and specialists that treat osteoporotic-related fractures, we were able to complete the year with $208 million in product revenue, an increase of 20% over 2019, During Q3 2020, we successfully exited oncology through the license agreement for RAD1901 and the divestment of RAD140. During 2020, we realized and collected $30 million in licensing revenue for RAD1901. Additionally, we incurred reimbursable costs of $39 million in connection with RAD1901 services performed under the transition services agreement, which reduced our research and development costs. We also repositioned the company's overhead structure, resulting in a $13 million reduction in selling general and administrative expenses, excluding stock-based compensation. Slide 7 summarizes our Q4 2020 results. For the fourth quarter of 2020, we reported total revenue of $62.8 million. Importantly, we finished 2020 with strong momentum with $60 million in TMLOS revenue, which is a record quarter for RADIUS and represents an 8% increase versus the fourth quarter of 2019 and 19% sequential growth versus the third quarter of 2020. Sal Grosso will be discussing new patient growth later in the presentation. On a non-GAAP basis, R&D expenses increased by $3.7 million, primarily driven by $16 million in RAD 011 costs. and other R&D costs of $6.1 million, partially offset by an $18.4 million decrease in elastist rent costs. We reported a net loss of $21.4 million for the fourth quarter, which represents a net loss per share of $0.46 in comparison to a net loss of $24.7 million, and a net loss per share of $0.54 for the fourth quarter of 2019. Moving on to slide eight for our full-year results. On a four-year basis, TMLOS net sales of $208.4 million increased 20% versus the prior year. This was driven by a combination of price and sales volume. Research and development costs increased by $45.2 million on a non-GAAP basis. The increase was primarily a result of an increase of $39.9 million in program spending for the balloparotide transdermal program, an increase of $16 million in RAD 011 costs in connection with the purchase, The increases in spending are partially offset by an $11.9 million decrease in the Elastis grant program, which decreased as a result of reimbursable expenses. The company made significant progress in repositioning the selling general and administrative cost structure by reducing costs by $13.3 million or 10% on a non-GAAP basis. The reduction is mainly a result of decreases in compensation of $7.2 million and professional services of $6.3 million. The reductions in compensation are mainly due to the reduction in selling general and administrative company headcount in comparison to the prior year. The reductions in professional services are a result of increased commercial productivity. We reported a net loss of $109.2 million for 2020, which represents a net loss per share of $2.35 in comparison to to a net loss of $133 million and a net loss per share of $2.89 for 2019. Moving on to slide nine for our Q4 in historical net revenues. On slide nine, we show the trend in Q4 in historical net revenues. As discussed earlier, the fourth quarter of 2020 represented a record quarter and was a result of an increase in volume and seasonality of gross to net in comparison to the third quarter. The first quarter of each year is normally lower than the fourth quarter of the prior year, as noted in the first quarter of 2020 due to market and pricing seasonality. We expect similar seasonality and a decrease in sequential revenue in the first quarter of 2021. Slide 10 demonstrates improvement in our cash flow trend. On slide 10, as demonstrated in the trend, we have made progress in becoming a cash flow positive company. Through the exit of oncology and structural changes made during the year, we improved our cash outlook. As demonstrated on slide 11, we plan to be EBITDA positive in 2021. On slide 11, we reiterate our guidance of $250 million of product revenue and adjusted EBITDA of $10 million for 2021. We believe the continued strength in TMLO sales and profitability will fully fund our strategic investments in 2021. With that, I'd like to turn over the presentation to Sal to give an update on our commercial business.

Good morning. Just a brief update on new patient starts. In most U.S., new patient starts increased by 26% in Q4 2020 versus Q3 2020. That momentum carried forward to January 2021 with 1,692 new patient starts. representing 17% growth over the prior four-month average. With that, I'll turn it back over to Kelly for Q&A. Thanks.

Thank you, Jim, and thank you, Sal. Again, as we said at the beginning, we've spent a lot of time updating the markets on various pieces of our business and providing monthly updates on patient growth. I'll just reiterate what Sal outlined. We view that new patient starts in the U.S., which is defined as patients on drug, is the key to our both current and future growth from a net revenue point of view. So it remains a significant focus of Sal and the really fantastic commercial team that we have. And Jim did a great job walking everyone through, in a very transparent manner, our business, how we look at it, and how we're managing it. So with that operator, we'd be happy to open it up for questions that people may have.

Yes, as a reminder, to ask a question, you need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question line of Mohit Basal with Citigroup.

Great. Thanks for taking my question, and congrats on all the progress. Two questions, if I may, please. Number one, so if I look at on year-over-year basis, uh for q4 uh it does seem like there is a high single digit growth uh in your business do you think i mean i know you are not writing guidance but do you think this is a trend we we think could probably continue this momentum could continue in 2021 uh and the second one is could you remind us what uh is what was the issue with european uh filing last time and Where do you think the discussions could move forward as we talk more about Europe?

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

Yeah, absolutely. So as it relates to the commercial business, as we said earlier, new patient starts is the leading indicator for future growth. And we are laser focused on executing, you know, against generating new patient starts. So as all can imagine, COVID had a damper on new patient starts. We saw that momentum increase in Q4. We finished very strong. And January, we got off to a fast start. So I foresee that we will continue to build our new patients and see that trend go upwards on new patient starts.

And Mohit, thanks for the question. With regard to Europe, the issue previously around Europe, there were some challenges with one or two specific sites in the previous trial that corrupted or the view of the regulator was it corrupted the data or had the potential to corrupt some of the data. So there was a pretty meaningful site, I believe two sites, certainly one, that they excluded the data from. And by doing that, the power of the full result was a challenge. So I think it was an operational issue with a specific site. It took the patients out of the calculation, and by doing that, it changed the results. I can further elaborate that the discussions that we are having over the last couple months, you know, in general I can characterize as constructive, and we hope to gain complete clarity on a path forward on that in the coming month or two. We think that's an important potential step forward for the globalness, if you will, of a valoparatide given the strength of the molecule and the opportunity in a place like Europe, at least specifically for certain types of patients. So I believe that it was an operational issue, and that was something that occurred last time. our discussions now are rather constructive. And again, in the next couple of months, we hope to get some clarity on that. Awesome. Thank you very much.

No problem.

And your next question line of Jessica five with JP Morgan.

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

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

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

It would be 100% a commercial partner.

Okay, and then just maybe one more clarifying question. Why was there a $16 million expense for RAD 011 highlighted as a driver for 4Q R&D in the press release when that deal was announced in January?

because the deal was closed in December. It was closed. I believe the specific date was December 30th, I believe. And it was announced four days, four business days later. I can't, I don't have the calendar in front of me, but four business days later was January 6th. So it was actually, it was actually closed December of 2020. Okay.

Thanks for that clarity. Yep. No worries.

Next question, Paul Cho with Goldman Sachs.

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

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

Yeah, hi, Paul. That's a really good question, and I think about that often. I think there's a bit of a combination of both of those factors, but I would say that we are seeing de novo new patient growth, and the reason for that is we've really been shifting our selling and marketing effort, as we've previously indicated, to specialists that treat postmenopausal patients that have fragility fracture. So we're seeing a lot of our new patient growth in those specialists that were previously not prescribing and using Tymlos.

Okay, great. Thank you for that context. And I guess, you know, I think you know, one of the factors that has affected, you know, multiple classes of medicine is that, you know, because of the shelter-in-place dynamic, you know, a lot of sort of, you know, outdoor and, you know, outdoor physical activity has been limited. Would you sort of think about, you know, in terms of what is baked into your 2021 guidance, an increase in de novo growth, patient growth over the course of 2021 as sort of, you know, people's normal activity level resumes back to pre-pandemic levels?

You know, Paul, it's Kelly. I'll give you my view. Again, I joined the company May 1st. And I can't explain the dynamics, frankly, whatsoever. But if you look at our activity, you know, through the complete lockdown, you know, our business was actually pretty decent. If you go back to Q2 and Q3, you know, we did, you know, certainly let's assume most of Q2 and Q3. almost all of Q3 presumably was almost in some stage of virtual lockdown everywhere. And we, you know, we did 50 million and a quarter in net revenues. Now, I don't know why we did that. And I don't know why we, you know, I don't know all the dynamics obviously around the U S and the U S was sort of topsy turvy in different locations. But, um, you know, I, I, this is my view. And again, Sal, Sal or Jim should comment, but, uh, I'm not saying that we're completely, uh, not correlated to the COVID situation, what patients do or do not. But I think on a relative basis to other, you know, in office therapies, I mean, just sort of naturally, I think we're not as correlated. And I think that, uh, I think that shows in Sal's team with their ability to kind of grow, grow. These are new patients. These aren't all, most of these are new patients. So, uh, I don't want to say that COVID has no, no, you know, no impact on us. It clearly has some, but I think to us it's, it's, it's much less than I would have anticipated. I don't know, Sal, if you want to comment or, or Jim, either of you on that.

Yeah, I'll, I'll start Kelly. I think, uh, you know, you know, clearly with COVID there's a geographic disparities across the country, you know, as we know, but I think the thing that our providers have done is adopted to the situation or adapted to the situation. I'm sorry. So they, uh, They've really embraced telemedicine, and I think given the fact that TMLOS is something that could be delivered at home and is self-administered, that kind of has an inherent advantage where specialists can get patients therapy. So I think there's been good adapting to the environment, but I'm counting on TMLOS. you know, once things around those geographies return to normal, that we'll see more patients getting into the office physically and consultations, you know, for their postmenopausal osteoporosis.

Okay, great. Thank you for that. And if I can maybe squeeze in just one more on Willie Prater program. Kitty, you provide some, you know, sort of broad strokes, but any other incremental, you know, interactions since your last update announcing the program with regard to the agency and registrational ability of your trial design?

Yeah, Paul, thanks for that. I mean, we're in the process of getting prepared internally for an outreach to the agency. We hope to do that in the coming 30 days or so to then schedule a meeting. So we're making very good progress on that. We're slightly ahead of where we thought we would be, and we look forward to that. I think once we get a meeting scheduled, that would probably be something we would let the market know about because I think that's an important step for Radius since we in-licensed and bought this asset, and Prater-Willi is such an interesting indication. So I would say we're preparing for an agency request for a meeting and then hoping to have one late this spring.

Okay. Thank you very much for taking our questions. Thank you.

Your next question line of Jeff poses with SVB Lee Rink.

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

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

Yeah, I'll tackle the first question. Yeah, I think looking at, you know, third-party data, medical claims data, just in general, anabolics, for the most part, range anywhere between 25 to 30 percent of their usage is in patients that have a history of a fragility fracture in the last 12 months. So that's why we believe that there's a great opportunity. And we've seen our new patient growth actually in that cohort of patients that do have a history of a fragility fracture. So we think that bodes very well. And from a competitive standpoint, I think the way you pose the question is right. We believe that our Our market, our competition is the apathy in the market and the unmet need around treating these patients that have a jelly fracture for the underlying condition at the time when they suffered a fracture because it is common knowledge or any type of burden illness will say that the risk of another fracture happens immediately after the first fracture. So that's why I believe that we are growing that market, that very precise market around fragility fracture.

And the second question, was that the first and the second question, Sal?

The second question was about what your share is of new patient starts and what effect having the substitutable product and also identity is having in the market on both your share and the size of the market.

Yeah, I look, I can give you my two cents. And then Sal can probably correct all my views. But we, you know, Jeff, we look, I know, historically, it's been sort of a market share discussion. And, and I understand that. I think that's one way to look at it. The way we look at it is it's pretty big, like space out there. And, frankly, we don't think it's substitutable, to use your words, that if you go off of Tymlos and you go on to Avenity, it's sort of one-to-one. We think that there's a fairly large amount of patients that would benefit from, in broad definition, anabolic therapies. And if Avenity grows in some way, that's actually good for us. We have no issue with We have no current thoughts with regard to concern about terapervide substitutable or generic, like on the horizon. We don't factor that into even our thinking to any great degree. So we look at our basic measurement system is how many new patients can we get on drug, whether they come, you know, from... from another anabolic or they're brand new patients. And I think, Sal, you can talk about the number of fracture patients per day, per month that is out there. There are no drugs. Sal, you want to just outline for Jeff the amount of fracture patients that are out there just in the U.S.? And that's our market because they're not on any drug currently.

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

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

And then your latest thinking on male and patch.

Yes. So male, I can't necessarily quantify yet, but I can tell you we've done a lot of work on male. We think that the underlying population of male osteoporotic patients is somewhat bigger than might be normally or institutionally understood in Again, it's not in our label, but if you think about osteoporosis as both a bone disease and an aging disease, you know, it's a pretty significant opportunity. Our challenge with male is how do you find those patients? And I think what we'll probably find is sort of the same thing as Sal has articulated, to be male patients who are fracture patients. What we're going to do with both male and patch from a sort of broad market and sort of financial sort of framework point of view is by the middle of the year, talk about both of those, adding both of those to our underlying SC female postmenopausal market in the U.S. What does that mean to our business? We view both as incrementally positive. We view both as very positive for the market opportunity for various kinds of patients, for the For the patch, we've done work on existing patients, we've done work on potentially new patients, and we've done work on different kinds of new patients, some who may not like needles, some who may be in more of an acute setting, if you will, from a surgery point of view. Sometime in the middle of the year, we will have a framework that outlines both layering both mail and the patch on top of the USSC business, and we look forward to having a chance to do that.

Great. Thanks, Joey.

You're welcome. Thank you.

Your next question, Elaine, of Annabelle Sammy with Staple.

Hi. Thanks for taking my question. Just looking at the numbers, you've had some pretty good retention of the price increase that was taken and the gross net. So I'm guessing part of that is your switch over to specialty distribution that you've been able to generate some cost savings. How much is that sustainable going forward in 2021? And are there any other programs you're going to be implementing, patient support programs, or is there any additional rebating that you have to do through 2021 that we should factor into The second question I had, I guess I'm a little bit curious. You talk about the new patient starts. I'm a little bit curious about the retention, so I guess more the net new patients perhaps. Maybe you can talk about that. And then switching gears on the RAD 011 program, I guess you've mentioned several times that the FDA is very familiar with this asset. um and they had historically some constant dialogue on it i know that you haven't had discussions yet with fda um but maybe you can help us understand what the fda has specifically always honed in on with this asset and anything that needs to be designed into the trial that would satisfy any of their concerns or issues that they might have thanks thanks annabelle i think on the gross to net i think

Maybe, Jim, you start off from your perspective as the principal finance officer, and then, Sal, you should fill in from your point of view and then dovetail that into the specialty pharma model. Why don't we do that first?

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

Yeah. You want to talk about that and then also talk about retention, you know, retention of patients and duration?

Absolutely. So, Annabelle, just to add on to what Jim said, I think also with grossing that there's a bit of seasonality that's front-loaded earlier, you know, in the year because of, you know, out-of-pocket support for patients and those government programs that Jim had mentioned. And think, you know, dovetailing into adherence and the point about the limited specialty pharmacy network, one of the main drivers of that was to improve, have enhanced support for patients and namely to help improve adherence. So we believe that adherence continues to be a good opportunity for us. We think that by working with limited specialty pharmacies that we can work with them with programs to improve adherence. So I you know, public knowledge, and there's been papers on it that, you know, you have adherence rate on anabolics of, you know, eight or nine months, and we think that that can, you know, we can improve that dramatically.

And then your question on RAD011, Annabelle, a couple of things. So first of all, this, this molecule was in clinical trials as we've outlined before. So it, uh, you know, it went through an FDA process. So that's number one, number two, again, not speaking at all for the FDA, but from a safety point of view, it's a safe, uh, safe agent slash molecule. I think in this particular indication and other related and or similar indications in, um, orphan metabolic and endocrine diseases the discussion with the agency is around or we anticipate would be around further teasing out or clarity around endpoints and the calculation of endpoints with specific focus on hyperphasia which is a critical frankly the critical endpoint for for the Prader-Willi syndrome disease There has been previous to our getting involved, there's been a lot of discussion around how it's calculated. There has been some discussion about the scale itself and is the scale something that can, is it giving false readings, i.e., the scale has been around for a while. So when patients come in from a placebo point of view, do they already know kind of what the scale is and kind of how to, in quotes, game it? I think the agency has been open to rectifying or slightly adjusting or teasing out or refining or whatever the right word is, that particular scale, the hyperplasia scale. A couple other companies have tried in the Prater-Willi space to date. Nobody has been successful from a hitting endpoints point of view. We know all of those trials, you know, almost patient by patient. So, Presumably part of our discussion with the agency will be around the hyperbasia scale and are there refinements that we could make or should make relative to teasing out from a patient point of view the proper effect and impact of the underlying drug versus the behavioral change that you might see because somebody has anticipated what the scale is. That, I presume, would be a good part of our discussion with the agency.

Great. That's helpful. Thanks.

You're welcome.

Again, if you would like to ask a question, please press star then your number one on your telephone keypad. Again, that's star then your number one to ask a question. Your next question is from Douglas Toso with HC Wainwright.

Hi, good morning, thanks for taking the question. So obviously we've started to see some nice new patients start growth. I'm just curious, given the new commercial focus for the franchise, have you seen a similar increase in the prescriber base or sort of a shift to these new targeted clinicians? Thank you. Sal?

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

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

You know, Douglas Kelly, I think you have to be perfectly honest. I'm not sure where Amgen is or isn't. I think that we've looked at – we have a list of – we do have a list of countries where we know there's anabolic activity. Some of them are rather surprising, or at least to me. A couple of interesting countries in the Middle East Gulf region actually are pretty big countries. And so we're going to places where we think there's a fairly straightforward path from a BD and regulatory point of view. And as I said initially, there's economies that have, which are many economies, by the way, that are aging populations and or have economies that have robust, relatively straightforward pharmaceutical reimbursements, regulatory processes, et cetera, et cetera. So I think if we can add some number of countries and slowly expand the platform here, that's what we'll do. And we're hoping to have some reasonable success on that over the course of this year.

Okay, great. Thank you so much.

Thanks a lot.

Again, if you would like to ask a question, please press star thing and number one on your telephone keypad. Again, that's star thing and number one to ask a question. Your next question comes from Vikran Parat with Morgan Stanley.

Great. Thanks for taking my questions. So I had two on the PATS program. So thinking forward for both questions, first, assuming the Fade Through program reads out positively later this year, how much do you think you would need to increase or modify your current TMLOS commercial infrastructure in order to be able to be ready for a potential U.S. launch? And secondly, could you walk us through any key differences we should keep in mind for a potential FDA regulatory review of the patch versus a more traditional therapeutic given the transdermal patch application that's being evaluated?

I'll give you my answers then, Sal. You can correct either one. From an incremental cost point of view, I guess my answer to that would be it would be minimal. It wouldn't be zero, but it will be minimal, slightly incremental costs for the patch in the U.S. And with regard to regulatory pathway, I mean, it's fairly well defined. I couldn't articulate necessarily off the top of my head anything specific or unusual or or not previously outlined or discussed with regard to what the regulator is going to want to see and look at. Sal, you want to answer Ed to the first question?

Yeah, Kelly. I completely agree with Kelly. I see minimal incremental costs from a commercial perspective. I would say that the wiring is already in place. with what we're doing with the subcupaneous. So things like, you know, payer access and contracts are already set up. So, you know, we hope to be able to, you know, use our existing, you know, access and contracts to that regard. And the same thing goes with our distribution network. So from those standpoints, I think a lot of the heavy lifting has been done. And also from a selling and marketing perspective, we are already in, the specialist that we will want to see.

Yeah, I think originally some of the thought processes were that the patch would allow you to go, for instance, to a segment upper decile or two primary care doctors who may see patients and there well may be a reasonable trafficking of osteoporosis patients through that channel. But we have zero plans to go after that channel. We think it doesn't fit us. It would be the risk-reward, the infrastructure you'd need to go after a disparate amount of patients would be the opposite, 180 degrees opposite to what Sal and the team were doing. If we were to go after that channel, obviously that would be a reasonable, significant commitment as far as time, resources, marketing. But that's not a space that we, A, are going to go after and, B, doesn't fit our business model. I mean, as we went through some of these slides, we believe we're going to increase productivity by going much deeper into fewer places from an institutional point of view, and therefore the infrastructure that Sal and his team have built up is completely adequate to do that. And, again, there might be some incremental investment in certain things, but it would be kind of on the margin. So it's a very leverageable business as we've tried to communicate a number of times.

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

Yep. You're welcome.

Again, if you would like to ask a question, please press starting at number one on your telephone keypad. Again, that's starting at number one to ask a question. And there are no other questions at this time. I would now like to turn the call back over to Mr. Martin.

Thank you very much, Operator. We'd like to thank everyone for joining us. I hope you found it a good overview with a lot of clarity and transparency. I want to thank both Jim and Sal for doing a great job, and we look forward to continuing to update the market as we make progress in the coming months. So I appreciate everyone's time and effort and look forward to keeping you all updated. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating.