Radius Health (RDUS) Down 33.3% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Radius Health (RDUS). Shares have lost about 33.3% 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 its most recent earnings report in order to get a better handle on the important drivers.

Radius Q4 Earnings Beat Estimates on Tymlos Strength

Radius incurred a loss of 54 cents per share in the fourth quarter, narrower than the year-ago quarter’s loss of 90 cents and the Zacks Consensus Estimate of a loss of 74 cents. This year-over-year improvement was backed by increased revenues.

The company reported revenues of $55.6 million, surpassing the Zacks Consensus Estimate of $53 million. The figure increased from the year-ago quarter’s $34.4 million.

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 commenced shipments of the drug to wholesalers at the end of May 2017.

Revenues increased 19% sequentially. In 2019, Tymlos captured, on average, 36% of the U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT). In the fourth quarter of 2019, the average U.S. anabolic market share of Tymlos increased to 41% and it achieved a 50% share of new anabolic patient starts.

Research & development expenses for the reported quarter were $34.5 million, flaring up 44% year over year primarily due to rise in elacestrant project costs and abaloparatide-patch project costs. General & administrative expenses decreased 19% to $35.7 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 expects to complete recruitment of the phase III study, ATOM, later this year. The study is assessing the efficacy and safety of abaloparatide-SC in male osteoporosis and expects to report top-line data in the second half of 2021.

In August 2019, 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. The study is currently enrolling. Radius implemented a revised enrollment plan, added more clinical sites in the United States, and made progress filing regulatory submissions to expand sites outside the nation. The screen failure rate, which started higher than expected at the initiation of the study is improving, driven by higher screening success at targeted bone specialty sites. Top-line data from the study is expected in the second half of 2021.

2019 Results

Radius recorded $173.3 million of net product revenues in 2019 compared with $99.2 million for 2018.

2020 Guidance

Radius expects Tymlos net revenues to be $220-$235 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -54.04% due to these changes.

VGM Scores

Currently, Radius Health has a great 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 bottom 20% 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Radius Health has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.