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Why Is Radius Health (RDUS) Down 9.7% Since its Last Earnings Report?

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It has been about a month since the last earnings report for Radius Health, Inc. (RDUS - Free Report) . Shares have lost about 9.7% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is RDUS due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Radius Incurs Narrower-Than-Expected Q1 Loss

Radius 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 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.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.

VGM Scores

At this time, RDUS has a poor Growth Score of F, however its Momentum is doing a lot better with an A. However, the stock was also allocated a grade of F on the value side, putting it in the bottom 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

RDUS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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