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Radius Health (RDUS) Down 0.4% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Radius Health (RDUS - Free Report) . Shares have lost about 0.4% in that time frame, outperforming 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 Q1 Loss, Misses on Revenues

Radius incurred a loss of 94 cents per share in the quarter, narrower than the Zacks Consensus Estimate of a loss of 95 cents and the year-ago loss of $1.11. The year-over-year improvement was backed by an increase in revenues.

The company reported Tymlos’ sales of $29.8 million, missing the Zacks Consensus Estimate of $34.8 million.

Quarter in Detail

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 $14.6 million only. Tymlos U.S. net sales were negatively impacted by anabolic market seasonality that showed lower volumes in the quarter versus the fourth quarter of 2018, higher gross-to-net expenses due to the impact of the Medicare Part D coverage gap on manufacturers and increased support for commercial patient deductibles.

Tymlos captured, on average, 30% of the U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT) in the first quarter of 2019 and 42% of new anabolic patient starts. At the end of the first quarter of 2019, the drug was covered for approximately 283 million U.S. insured lives, representing approximately 99% of U.S. commercial, 67% of Medicare and 97% Medicaid/Other insured lives. Growth in new scripts in the commercial business was also strong, with a 17% increase from the fourth quarter of 2018.
Research and development expenses for the reported quarter were $23.3 million, up 1.7% year over year due to increases in elacestrant project costs and abaloparatide-patch project costs. General and administrative expenses decreased 14% to $41.2 million.

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.

Radius Health presented a post-hoc subset analysis on postmenopausal osteoporosis patients with type 2 diabetes from the phase III ACTIVExtend Study at the American Association of Clinical Endocrinologists conference in April 2019. The ACTIVE Study cohort included patients with Type 2 diabetes. The data from the study showed that use of abaloparatide-SC for 18 months led to significant improvement in lumbar spine TBS (trabecular bone score) and suggested that abaloparatide-SC improved bone microarchitecture.

As the incidence of both type 2 diabetes and osteoporosis increase with age, they frequently coexist and represent a high unmet medical need population with a lower diagnosis rate for osteoporosis, compromised bone quality and higher fracture risk.

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 August 2019.

2019 Sales Guidance Updated

Radius Health expects Tymlos net revenues to be $160-$175 million (previous guidance was $155-$175 million in 2019).
 

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 9.49% due to these changes.

VGM Scores

At this time, Radius Health has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, 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 C. 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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