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Radius (RDUS) Q3 Earnings Beat Estimates on Tymlos Strength

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Radius Health, Inc. RDUS reported encouraging results for the third quarter of 2019, wherein loss was narrower than expected and sales surpassed estimates.

Shares of Radius have surged 70.4% in the year so far, outperforming the industry’s growth of 4.2%.

The company incurred a loss of 65 cents per share in the third quarter, narrower than the year-ago quarter’s loss of $1.09 and the Zacks Consensus Estimate of a loss of 80 cents. The year-over-year improvement was backed by increased revenues.

The company reported revenues of $46.8 million, marginally surpassing the Zacks Consensus Estimate of $46 million and increasing from $27.6 million in the year-ago quarter.

Quarter in Detail

We remind investors that Radius 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.

Tymlos gained traction in the third quarter of 2019. Radius increased its market share with Tymlos capturing 38% of the U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT), on average, in the third quarter. In October, Tymlos achieved 50% NBRx share, on average, and its total market TRx share increased to 40%. The anabolic market grew 4% in the third quarter from the prior-year quarter.

Research & development expenses for the reported quarter were $31.8 million, up 18.6% year over year. General & administrative expenses decreased 18.4% to $35.6 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.

Enrollment is ongoing in the EMERALD phase III monotherapy study of elacestrant, with completion of recruitment targeted in the third quarter of 2020.  However, Radius is evaluating all strategic options for its oncology assets to maximize their potential and does not plan to initiate further clinical trials for elacestrant or RAD140 beyond the ongoing EMERALD study.

In August, the first patient was randomized in the phase III wearABLe clinical trial, assessing the safety and efficacy of abaloparatide-patch in postmenopausal patients with osteoporosis at high risk for fracture. However, patient enrollment has been slower than expected due to a higher-than-anticipated screen failure rate. A revised enrollment plan is being implemented that includes identified measures to improve site recruitment efforts, including adding sites outside the United States. Top-line data from the study is expected in the second half of 2021.

2019 Sales Guidance

Radius now expects Tymlos net revenues to be $168-$172 million (the previous guidance was $165-$170 million) for 2019.

Our Take

The narrower-than-expected loss in the third quarter was encouraging as Tymlos continued to gain traction.  Effective Jan 1, 2020, Tymlos’ coverage will expand to approximately 290 million U.S. insured lives, representing approximately 99% of U.S. commercial and 79% of Medicare insured lives. This is likely to drive revenues for the company. However, the drug is expected to face significant competition from Eli Lilly & Co's LLY Forteo and Amgen's (AMGN - Free Report) Prolia.

Zacks Rank & A Stock to Consider

Radius currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in this space is Lannett Inc. LCI, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lannett’s earnings per share estimates have increased to $1.25 from $1.18 in the past 60 days.

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