Radius Recycling, Inc.

Good day and welcome to the fourth quarter RADIUS Health, Inc. earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your touchstone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. I would now like to turn the call over to Ethan Holdaway, Head of Investor Relations. You may begin.

Thank you. Hello, everyone, and thanks for joining us today. The 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 will also be available on our website following the call. Before we begin, I'd like to remind everyone of our safe harbor statement on page two. This presentation includes forward-looking statements and non-GAAP financial measures. You can find the reconciliation of GAAP to non-GAAP at the end of the 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. Kelly Martin, President and CEO, will kick off the call with his opening comments. Steve Helwig, Principal Finance and Accounting Officer, will then provide a financial update. Bob Valentine, Head of Business Intelligence and Digital, will follow with a commercial update. Chaya Shah, Senior Vice President of Abole Apartheid and Elastostrant, will provide an update on Abole Apartheid and Elastostrant progress. And Cole Ikela, Head of Neuroscience Business Operations, will finish up with a neuroscience update. From there, we'll open up the call for questions, and I would now like to turn it over to Kelly. Thanks, Ethan.

Welcome, everybody. to our call, which is both Q4 and full year 21 and some discussion on full year 22. Obviously a little unusual giving an earnings call during an outbreak of a European war, but we'll all do our jobs and hopefully everything winds up in the right place for all concerned. As Ethan said, a few of the senior team of Radius will be speaking today, Steve, Bob, Shia, and Cole. They represent an outstanding leadership team for the company, some of whom you've heard from, some of whom you'll hear from in the future. It's part of the 2020 and 2021 remake of the company to move leaders into the right seats and or recruit people and vastly improve the opportunity to create value for shareholders. Next slide. In the release, which was rather exhaustive, there's a fairly long quote from myself. Some of you know me well. Some of you don't know me at all. I rarely have quotes in there. This is a doozy. It's pretty long. There's lots of things that we've could talk about. What I tried to do in the quote was frame out those things that are most important, at least to me in my seat. There's dozens of other relevant and important items to be aware of and for us to share over the course of the year. From a progression of the company point of view, as I say in my quote, 2022 is absolutely a year to pivot the company. The company went public in 2014. Now, I joined the company in the second quarter of 2020. We had a new chairman in the second quarter of 2020, and we've added three new board members since the second quarter of 2020. From an approach and philosophy point of view, as you can see on the slide, number one, return of capital. Elastostrand was a critically important asset for the company. You'll hear more from Shaya Shah later on it. We did a transaction, as many of you know, with Menorini. We took all of the risk out of the future prospects of that molecule. We also saved future spend of somewhere between $100 and $150 million. We're working exceptionally well with our partner, Menorini. As and when that asset gets clarity from a regulatory point of view and then into the commercial arena, we will return all of that capital of net milestones and royalties to shareholders. And you'll hear more on that later. I've said dozens of times our goal is to go from cash burning to cash generating. So that's an underpinning philosophically of how we run the business and how we will continue to run the business. We have over the years accumulated $1.7 billion of NOLs. The vast majority of those are federal NOLs. Some of those are state NOLs. we will endeavor to crystallize those, as we say in the release, through either earnings or asset sales or some combination of those things. Some of us have a lot of experience with NOLs, and we look forward to utilizing those and crystallizing the value to shareholders. The Tim Los business, you'll hear from Bob Valentine a bit more. The team that we have in charge of that product, Bob, Danielle, and Shia, are outstanding in every way. We have an outstanding understanding of all the pieces of this business. It's a pretty complicated product, but I am highly confident and very constructive on the 2022 and 2023 and beyond opportunities in that business. RAD011 is something that we have not spoken a lot about. You'll hear from Cole Ikla around that molecule. how we purchased it, and what we've been doing to strengthen the molecule from a quality point of view. And as we said in the release, as and when it's appropriate in a gating way, we have plans to move forward, and in particular plans to move forward in the seizure arena, orphan epilepsy space, which is one that the market seems to perceive as somewhere between very valuable and exceptionally valuable. We manage the assets as a portfolio. between balance sheet, liabilities, and cash assets, be they commercial or financial from an Elastistrand point of view or clinical from a RAD point of view. Last but not least, particularly in this era, talent and culture is the only way to really sustain yourselves in the world of both hybrid and virtualization. Having the right people in the right seats with the right culture is just paramount to any continued or intermediate-term success, and we are working exceptionally hard on that. Next slide. Here are some of the key 2022 objectives. There are more, as I said, underneath all the different pieces of the puzzle. Financially, our target for TMLOS net revenue is specifically $232 million. It's a modest uptick from where we ended 2021. And we did that deliberately, frankly, to emphasize the operating leverage within the company, that with modest TMLOS growth, we could significantly change the operating P&L of the company. We also have learned over the years, and we certainly learned last year, that this is a very seasonal business. So we're going to budget our business as 42% specifically for the first six months of the year in net revenue and 58% for the second half. We will be roughly a break-even company, plus or minus, from a net loss or net profit point of view. Lots of pieces of that puzzle. You'll hear some from Steve as far as look back in 21 and some discussion about 22. Productivity is a very important piece of our puzzle as we manage the business. I'll talk about that in a second. But we have worked extremely hard to be more efficient. We don't run the company on headcounts, but we run the company on how do we get the best people in the best seats and what do we need actually functionally or organizationally to move things forward. And last but not least, on the financial side, we want to grow the cash flow and increase the margins. We did significantly increase the Avalo operating margin in 2021, despite the fact that our final revenue number was below our initial guidance, but we significantly improved the margin of Avalo Paratide, and we will continue to do that. On the asset side, it's It was a very busy 21. It will then be a busy 22 to follow up on that. You'll hear a bit more from Shia later. Abalaparatide, the male indication output was outstanding from a statistical point of view. That's a very important indication for this molecule, and we plan on filing that SND in Q1 of 2022. Alassistran is on target with our partner Menorini to file that NDA in the second quarter of 22. More on that later from Shia. The patch, the last time we had a conference call with people was in December about the patch. We said there were three important things for the patch to move forward. I fully understand it's been the investment thesis of many investors since 2017 and 18. To move forward, we need clarity from the regulator, and we're in the process of securing a meeting to have that discussion. The second piece of the puzzle is to fix the business construct that we have on the supply chain. Currently, that business construct is mostly redacted as far as the details, but from my seat, the risk is asymmetric. That radius has a preponderance of the risk in that supply chain and would have to be fixed. in order for us to move that forward. And thirdly, we would need capital that's not radius capital. We've spent enough on the patch. We think it's very interesting. We think it's potentially strategically attractive. But from our shareholder and stakeholder point of view, we would need external capture in some project finance structure, some of which some of us have dozens of years of experience doing those things. From RAD 011 point of view, you'll hear from Cole, Liz Messerschmidt, is on a well-deserved vacation, and so we have Cole pitching in. He's not a clinician, but he's in charge of gluing that business together and all the various pieces. You've heard us talk about Prader-Willi in the past. We had data from that when we purchased the asset. For the first time, we're going to talk about Angelman syndrome and infantile spasms. Why that is particularly relevant is both of those are in the families of seizures and And as you'll hear from Cole, there's a walk across from the botanical competitor in the seizure space. And it's a validated both mechanism and target for us to pursue on the synthetic side of things. Before I turn it to Steve, I want to emphasize a couple of things, a couple of additional things. The adjusted EBITDA in 2020, the company lost fifty four million dollars. In 2021, the negative was $24 million. Our target this year, our objective, is plus $35 to plus $45 million. So that's a swing of, from 2020, when I started, when we had a new chairman and three new board members, the swing is roughly $100 million. The swing from 21 is $60 to $70 million. So we continue to make progress and are exceptionally focused on the P&L, the operating P&L, and the performance of the company. Secondly, productivity in the commercial space has been a spectacular success. 2020, the revenue per commercial employee was roughly $1.1 million. 2021, it was $1.6 million, as we had in the release. And our objective for this year is $1.9 million. The uptick year-over-year in productivity for commercial is about a 50% increase, 21% versus objective. And the uptick in productivity from 2020 is 70% to 75%. So we're doing way more with less. The sales force we have is spectacularly talented. I have, even through COVID, met most of them. The RBD team that we have is spectacular. I have definitely met all of them, and they have met me. We have a new head of sales with Danielle, and I, again, couldn't be more pleased on the sales force, how they're focused, and the ability to grow productivity and grow net revenue. And you'll hear more from Bob Valentine, who has to piece all this together from a business analytics product marketing point of view shortly. Lastly, in 2021, all in, we burned about $3 million of cash. There was many, many things that we did. We in-licensed and purchased RAD. We refiled Abalo for the EU. We completed the mail study. We completed the infamous tax study. We completed mostly the second source for Abalo because we only had a single source. We began to sort out the supply chain for RAD 011. And we had modest growth in RAD. So the operating infrastructure and the leverage we have is enormous. is very significant. And despite all those ins and outs, we end the year with roughly the same amount of cash that we started from. And I would say that bodes very well from an execution point of view and direction point of view for the company as we go into 2022. So with that, you're probably sick of listening to me. I will now turn it to Steve Helwig, who's done a great job as our principal finance officer.