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Is a Beat in Store for Radius Health (RDUS) in Q2 Earnings?

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Radius Health, Inc. (RDUS - Free Report) is scheduled to report second-quarter 2018 results on Aug 7.

Radius Health, Inc. Price and Consensus

 

Radius Health, Inc. Price and Consensus | Radius Health, Inc. Quote

Although Radius Health reported a narrower-than-expected loss in the last quarter, the company’s track record is dismal. The company has reported wider-than-expected loss in three of the four trailing quarters, the average negative earnings surprise being 6.48%.

Radius Health’s shares have lost 27.8% in the year so far compared with the industry’s 1.0% decline.

 

Let’s see how things are shaping up for the quarter under review.

Why a Likely Positive Surprise?

Our proven model shows that Radius Health is likely to beat estimates this quarter as it has the right combination of the two key ingredients — a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Radius Health carries a Zacks Rank #3, which when combined with a positive Earnings ESP increases the chances of an earnings beat.

Conversely, 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.

Factors at Play

Radius Health develops therapeutics for the treatment of osteoporosis, oncology and endocrine diseases.

The company’s lead drug, Tymlos, was approved in the United States in April 2017. The drug was approved for treating postmenopausal women with osteoporosis at high risk for fracture, defined as history of osteoporotic fracture and multiple risk factors for fracture. The drug can also be used for patients who have failed or are intolerant to other available osteoporosis therapies.

The company reported Tymlos sales of $14.5 million in the first quarter of 2018, an increase of 90% from the fourth quarter of 2017. Tymlos continues to gain traction with approximately 263 million covered lives and 88% coverage in commercial plans.

Hence, we expect investors to focus on the uptake of the drug during the upcoming earnings call, given the stiff competition from established players like Eli Lilly & Co's LLY Forteo and Amgen’s (AMGN - Free Report) Prolia.

Meanwhile, the company’s Marketing Authorisation Application (MAA) for Eladynos (abaloparatide-SC) in Europe for the treatment of postmenopausal women with osteoporosis was under review. However, the company recently announced that the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the European Medicines Agency (EMA), has communicated a negative trend vote for the MAA after an oral explanation following a re-examination procedure. A negative trend vote means that it is likely that the CHMP will maintain its negative opinion for the MAA at its formal final vote. The delay in getting approval in Europe is disappointing given the market potential. Investors will look forward to further updates from the company on the same along with pipeline progress with other candidates.

Radius Health plans to conduct a single, randomized, phase III trial of elacestrant as a third-line monotherapy in approximately 300 patients with ER positive/HER2 negative advanced/metastatic breast cancer.  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 and we expect the management to throw more light on the same.

Another Stock to Consider

Here is a pharma company that you may consider, as our model shows that it has the right combination of elements to deliver an earnings beat this quarter.

BioDelivery Sciences (BDSI - Free Report) has an Earnings ESP of +3.23% and a Zacks Rank of 2. The company is expected to release second-quarter results on Aug 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

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