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Radius Health (RDUS) Incurs Narrower-Than-Expected Q1 Loss

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Radius Health, Inc. (RDUS - Free Report) reported a loss of $1.37 per share in the first quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of $1.43 but wider than the year-ago period loss of $1.32. Increase in general and administrative expenses led to the wider than anticipated net loss year over year.

The company reported sales of Tymlos (abaloparatide) of $14.5 million surpassing the Zacks Consensus Estimate of $13.8 million.

Quarter in Detail

Tymlos sales of $14.5 million increased 90% from the fourth quarter of 2017. Radius Health received the FDA approval for Tymlos in April 2017 for the treatment of postmenopausal women with osteoporosis at high risk of fracture. The company began shipments of the drug to wholesalers at the end of May 2017.

Tymlos continues to gain traction with approximately 263 million covered lives and 88% coverage in commercial plans. Tymlos market share reached approximately 31% of new anabolic patients starting anabolic therapy (NBRx) and 13% of total U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT) in the first quarter of 2018.

Research and development expenses for the reported quarter were $22.9 million, up 17% year over year.

General and administrative expenses for the reported quarter increased 26% to $48 million due to increase incompensation, travel related expenses and increase in selling,  general and administrative expenses.

Pipeline Updates

The company is developing two formulations of abaloparatide-SC and abaloparatide-transdermal. Radius Health suffered a setback when the Committee for Medicinal Products for Human Use of the European Medicines Agency (“EMA”) adopted a negative opinion on the Radius Health’s marketing authorization application for abaloparatide-SC in March 2018. Consequently, in April 2018, Radius Health submitted a request for re-examination of the CHMP’s opinion.

Radius Health initiated the phase III study, ATOM (Abaloparatide Treatment for Osteoporosis in Males) on abaloparatide-SC for the treatment of osteoporosis in men, which, if successful, will form the basis of a supplemental NDA seeking to expand the drug’s label.  The randomized, double-blind, placebo-controlled trial will enroll approximately 225 men with osteoporosis at high risk of fracture.  The study will include a primary endpoint of change in lumbar spine bone mineral density at 12 months versus placebo, and specialized high-resolution imaging of bone structure in a subset of the study participants.  Per estimates, male osteoporosis is estimated to account for approximately 10% of the total treated osteoporotic patient population.

During the quarter, Radius Health finalized a development pathway for abaloparatide-patch after regulatory alignment with the FDA and entered into a scale-up and commercial supply agreement with 3M Company.

Meanwhile, Radius Health will conduct a single, randomized, comparator controlled phase III trial of elacestrant as a third-line monotherapy in approximately 300 patients with ER positive/HER2 negative advanced/metastatic breast cancer as per the feedback from the FDA and EMA.  The results are expected to support applications for global marketing approvals if positive. Patients in the study would be randomized to receive either elacestrant or an investigator’s choice of an approved hormonal agent. The primary endpoint of the study will be progression-free survival. The study is planned to be initiated in the second half of 2018.

A phase I study evaluating the safety and maximum tolerated dose of RAD140 in patients with hormone receptor-positive, locally advanced or metastatic breast cancer is currently enrolling. Radius Health expects to provide an update on the RAD140 development program by the end of 2018.

Our Take

The company’s narrower-than-expected loss in the first quarter was encouraging as sales of Tymlos are picking up. Radius Health saw a 103% increase in the total number of U.S. physicians prescribing Tymlos in the first quarter of 2018 as compared to the fourth quarter. Tymlos’ share of new prescriptions by these physicians increased from 32% in the fourth quarter of 2017 to 49% in the first quarter of 2018. The price of the drug was increased by 5.9%, implemented on Feb 22, 2018.

Going forward, Radius Health expects Tymlos to capture on average 19-21% of the U.S. anabolic osteoporosis market in 2018, while anabolic market in the United States is expected to increase by 5-7% in volume.

Radius Health’ shares have rallied 14.7% in the last six months compared with the industry’s  gain of 7.0%.

 

 

Although the osteoporosis market in the United Sates has great potential as approximately 1.4 million postmenopausal women experience an osteoporotic fracture each year, Tymlos is expected to face significant competition from Eli Lilly &Co's (LLY - Free Report) Forteo and Amgen's (AMGN - Free Report) Prolia.

Zacks Rank & Stock to Consider

Radius Health currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the healthcare sector is Exelixis (EXEL - Free Report) which currently sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Exelixis’ earnings per share estimates increased from 54 cents to 86 cents for 2018 over the past 30 days.

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