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Will Radius Health (RDUS) Disappoint this Earnings Season?

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Radius Health, Inc. (RDUS - Free Report) is scheduled to report second-quarter 2017 financial results on Aug 3.

Radius Health’s shares have outperformed the industry in the year so far. The stock has gained 13.7% during this time period against a 6.8% industry’s gain.

Radius Health has a disappointing track record so far. The company has missed estimates in three of the four trailing quarters with a negative average surprise of 3.6%.

Let’s see how things are shaping up for this quarter.

Factors at Play

Radius Health focuses on the development of therapeutics for the treatment of osteoporosis, oncology and endocrine diseases.

The company’s new drug,Tymlos, was approved in the U.S. on Apr 28. The drug is instrumental in treating postmenopausal women with osteoporosis at high risk for fracture defined as history of osteoporotic fracture and multiple risk factors for fracture. The drug is also used for patients who have failed or are intolerant to other available osteoporosis therapy. The drug is under review in the EU. The drug is priced at an annualized wholesaler acquisition cost of $19,500 or $1,625 per pen.

Hence, we expect investors to focus on the impending launch during the upcoming earnings call.

Although the osteoporosis market in the U.S. has great potential as approximately 1.4 million postmenopausal women in the U.S. experience osteoporotic fractures each year, Tymlos is expected to face significant competition from Forteo and Prolia.

Meanwhile, the Committee for Medicinal Products for Human Use (CHMP) issued a second Day-180 List of Outstanding Issues and requested additional data analyses related to the safety and efficacy of abaloparatide-SC in the process of their ongoing regulatory review. The company expects the CHMP to issue an opinion regarding the MAA for abaloparatide-SC prior to the end of 2017.

The company is planning to file a supplemental New Drug Application for Tymlos based on the ACTIVExtend study. In May 2017, results from the ACTIVExtend trial showed statistically significant fracture risk reduction through the 3.5 years of sequential therapy: Tymlos followed by an antiresorptive.

In Jun 2017, the company announced encouraging results from an ongoing phase I study on pipeline candidate elacestrant (RAD1901) in patients suffering from estrogen receptor positive (ER+) breast cancer. The candidate,an oral selective estrogen receptor degrader (SERD), is being evaluated for potential use as an oral non-steroidal treatment for estrogen receptor positive breast cancer at high doses. During the first-quarter earnings call, the company stated that it plans to discuss the next steps for this program with the FDA. We expect the company to throw more light on the same.

Earnings Whispers

Our proven model does not conclusively show that Radius Health is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Radius Health is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $1.35. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Radius Health has a Zacks Rank #4 (Sell). Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few pharma companies that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Vertex Pharmaceuticals Incorporated (VRTX - Free Report) is scheduled to release results on Jul 26. The company has an Earnings ESP of +33.3% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intercept Pharmaceuticals, Inc. has an Earnings ESP of +9.39% and a Zacks Rank #3. The company is expected to release results on Aug 3.

Gilead Sciences, Inc. (GILD - Free Report) has an Earnings ESP of +3.32% and a Zacks Rank #3. The company is scheduled to release results on Jul 26.

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