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Radius Health (RDUS) Posts Narrower-Than-Expected Q3 Loss

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Radius Health, Inc. (RDUS - Free Report) reported encouraging results for the third quarter of 2018, wherein loss was narrower than expected, while sales beat estimates.

Following the announcement of the results, shares gained 12.1%. However, Radius Health’s shares have lost 41.9% in the year so far, compared with the industry’s growth of 3.6%.

 

The company reported a loss of $0.85 per share in the quarter, narrower than both the Zacks Consensus Estimate of a loss of $1.01 and the year-ago period loss of $1.12. An increase in revenues led to the narrower-than-anticipated loss on a year-over-year basis.

The company reported Tymlos’ sales of $27.6 million, marginally surpassing the Zacks Consensus Estimate of $27.3 million.

Quarter in Detail

Tymlos’ sales also increased 22% sequentially. We remind investors that Radius Health obtained 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 $3.5 million only.

Total prescriptions accounted for 22% of total U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT) in the quarter.

In October 2018, the FDA approved a labeling supplement for Tymlos to include additional information from the ACTIVExtend study. The labeling now reflects that after 24 months of open-label alendronate therapy, the vertebral fracture risk reduction achieved with Tymlos therapy was maintained.

Research and development expenses for the reported quarter were $26.8 million, up 28% year over year. General and administrative expenses decreased 9% to $43.7 million, owing 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, and elacestrant (RAD1901) for potential use in hormone-receptor positive breast cancer.

The company is developing two formulations — abaloparatide-Subcutaneous (SC) and abaloparatide-transdermal patch. Radius Health is on track with its preparations for the phase III trial on abaloparatide patch and expects to start the study in mid-2019. The company is in the process of conducting development activities for the phase III trial and a potential NDA filing.

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 July 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.

During the third quarter, Radius Health finalized the phase III study protocol for elacestrant based on regulatory feedback and additional considerations. The phase III trial will be a single, randomized, open label, active-controlled study of elacestrant as a second- or third-line monotherapy in approximately 460 patients with ER+/HER2- advanced/metastatic breast cancer who have received prior treatment with one or two lines of endocrine therapy, including a cyclin-dependent kinase (CDK) 4/6 inhibitor.

Patients in the study will be randomized to receive either elacestrant or the investigator’s choice of an approved hormonal agent. The primary endpoint of the study will be progression-free survival (PFS).

Secondary endpoints will include evaluation of overall survival (OS), objective response rate (ORR), and duration of response (DOR). Radius Health expects to submit marketing approvals for elacestrant as a second- and third-line monotherapy in the U.S., European Union (EU), and other markets based on results from the trial. The phase III study will be initiated in the fourth quarter of 2018 with a planned recruitment period of 18-21 months and potential data read-out in 2021.

Guidance

Radius Health expects Tymlos net revenues around $95-$98 million in 2018 and $155-$175 million in 2019.

Our Take

The company’s narrower-than-expected loss in the third quarter was encouraging as sales of Tymlos continue to gain traction.

Radius Health expects Tymlos to capture an average of 19-21% of the U.S. anabolic osteoporosis market in 2018, while anabolic market in the United States is expected to increase 7-9% in volumes.  Tymlos is expected to be covered for approximately 274 million insured lives, representing approximately 95% of U.S. commercial and 64% of Medicare insured lives effective Jan 1, 2019.

Although the osteoporosis market in the United Sates has great potential, 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 #3 (Hold).

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

Gilead’s earnings per share estimates increased from $6.58 to $6.87 for 2018 and from $6.47 to $6.75 for 2019 over the last thirty days.

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