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Why Is Radius Health (RDUS) Down 11.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Radius Health (RDUS - Free Report) . Shares have lost about 11.8% in that time frame, underperforming the S&P 500.

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

Radius Posts Narrower Q2 Loss, Tymlos Sales Increase

Radius reported encouraging results for the second-quarter of 2018, wherein loss was narrower than expected and sales beat estimates.

The company reported a loss of $0.99 per share in the second quarter of 2018, narrower than both the Zacks Consensus Estimate of a loss of $1.32 and the year-ago period loss of $1.31.  Increase in revenues led to the narrower than anticipated loss on a year-over-year basis.

The company reported Tymlos’ sales of $22.6 million surpassing the Zacks Consensus Estimate of $20.8 million.

Quarter in Detail

Tymlos’ sales also increased 56% from the first quarter of 2018. We remind investors that Radius received the FDA approval for Tymlos (abaloparatide) injection 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. Hence, revenues recorded in the year-ago quarter were $0.9 million only.

Tymlos continues to gain traction with approximately 265 million covered lives in the U.S. market access. This represents 95% coverage in Commercial and Medicaid/All Other, and 44% coverage in Medicare Part D for a total of 88% of the U.S. insured population.

Tymlos’ market share reached approximately 34% of new anabolic patients starting anabolic therapy (NBRx) and the total prescriptions accounted for 19% of total U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT) in the second quarter of 2018.

Research and development expenses for the reported quarter were $26.3 million, up 33.9% year over year. General and administrative expenses for the reported quarter decreased 3.1% to $48.6 million due to decrease in compensation and travel-related expenses.

Pipeline Updates

The pipeline includes abaloparatide injection for potential use in the treatment of men with osteoporosis, abaloparatide patch for potential use in osteoporosis, elacestrant (RAD1901) for potential use in hormone-receptor positive breast cancer; and RAD140 for potential use in hormone-receptor positive breast cancer.

The company is developing two formulations — abaloparatide-Subcutaneous (SC) and abaloparatide-transdermal patch.  The company’s Marketing Authorisation Application (MAA) for abaloparatide-SC in Europe, for the treatment of postmenopausal women with osteoporosis, was under review. However, in Jul 2018, the company 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 following a re-examination procedure. Thereafter, the CHMP communicated that it maintained its negative opinion on the MAA at its formal final vote.

In June 2018, the FDA approved a labeling supplement for Tymlos to revise the needle length in the instructions for use from 8 mm to 5 to 8 mm. Moreover, in July 2018, Radius initiated a bone histomorphometry study, which will enrol approximately 25 postmenopausal women with osteoporosis to evaluate the early effects of abaloparatide-SC on tissue-based bone remodeling and structural indices.

Meanwhile, Radius 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 patients. Radius expects to provide an update on the RAD140 development program by the end of 2018.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.37% due to these changes.

VGM Scores

At this time, Radius Health has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Radius Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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