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Will Radius Health (RDUS) Disappoint This Earnings Season?

Radius Health, Inc. RDUS is scheduled to report third-quarter 2017 results on Nov 2.

 

 

Radius’ share price has decreased 22% year to date compared with the industry’s 6.6% decline.

Radius Health has a disappointing track record so far. The company reported wider-than-expected loss in three of the four trailing quarters with a negative average surprise of 6.9%.

Let’s see how things are shaping up for this quarter.

Factors at Play

Radius focuses on the development of therapeutics for the treatment of osteoporosis, oncology and endocrine diseases.

The company’s lead drug, Tymlos, was approved in the United States in April. The drug was approved for treating postmenopausal women with osteoporosis at high risk for fracture defined as history of osteoporotic fracture and multiple risk factors for fracture. The drug can also be used for patients who have failed or are intolerant to other available osteoporosis therapies.

The company reported sales of Tymlos of $1.0 million from the first four weeks of launch.  The company is moving ahead with its plans in contracting with managed care organizations with access to over 133 million covered lives across Commercial and Medicare Part D plans.

Hence, we expect investors to focus on the uptake of the drug during the upcoming earnings call.

Although the osteoporosis market in the United States has great potential as approximately 1.4 million postmenopausal women experience osteoporotic fractures each year, Tymlos is expected to face significant competition from Eli Lilly &Co's LLY Forteo and Amgen. Inc’s AMGN Prolia.

Meanwhile, the company’s Marketing Authorisation Application for Eladynos (abaloparatide-SC) in Europe for the treatment of postmenopausal women with osteoporosis was under review.  However, the company suffered a setback when the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency issued a second Day-180 List of Outstanding Issues and requested additional data analyses related to the safety and efficacy of abaloparatide-SC. Consequently, Radius is working with the CHMP to address these issues and the company expects a response for Eladynos prior to the end of 2017.

In May, Radius Health announced positive top-line results from the completed 24-month ACTIVExtend clinical trial on Tymlos, which met all of its primary and secondary endpoints. The company expects to submit a sNDA to the FDA in connection with the ACTIVExtend results by year end.

The FDA granted Fast Track designation to pipeline candidate elacestrant, an experimental selective estrogen receptor down-regulator/degrader for the treatment of women with ER+ and HER2- advanced or metastatic breast cancer. The elacestrant clinical development program is currently ongoing with two phase I studies in patients with ER+, HER2- advanced or metastatic breast cancer who have been heavily pre-treated (median of three prior lines of therapy) and have evaluable disease.

Hence, we expect the management to throw light on pipeline progress.

Earnings Whispers

Our proven model does not conclusively show that Radius is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Radius Health is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $1.28. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter..

Zacks Rank: Radius Health has a Zacks Rank #3. Although the rank is favorable, the company’s 0.00% ESP makes surprise prediction difficult. Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is a pharma company that you may consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Incyte Corporation INCY has an Earnings ESP of +40.11% and a Zacks Rank #3. The company is expected to release results on Oct 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Eli Lilly and Company (LLY): Free Stock Analysis Report
 
Amgen Inc. (AMGN): Free Stock Analysis Report
 
Incyte Corporation (INCY): Free Stock Analysis Report
 
Radius Health, Inc. (RDUS): Free Stock Analysis Report
 
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