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Radius Health (RDUS) Down 11.6% Since Earnings Report: Can It Rebound?

Zacks Equity Research
Updated

A month has gone by since the last earnings report for Radius Health, Inc. RDUS. Shares have lost about 11.6% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.

Radius Health Posts Wider Loss in Q4

Radius posted a loss of $1.22 per share in the fourth quarter of 2016, compared with a loss of $0.77 per share in the year-ago quarter and wider than the Zacks Consensus Estimate loss of $1.16. The year-over-year increase in net loss was attributable to an increase in research and development, and general and administrative expenses.

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With no approved product in its portfolio, the company has not generated any revenue yet. In this scenario, investors are expected to focus on pipeline updates by the company.

Quarter in Detail

Research and development expenses for the fourth quarter were $25.6 million, up 15.3% year over year primarily due to higher development costs associated with the development of its pipeline candidate RAD1901, to support a phase I study in metastatic breast cancer and a phase IIb study in postmenopausal vasomotor symptoms. Also, expenses were up on the back of higher compensation expense including stock-based compensation as a result of increased headcount.

General and administrative expenses for the reported quarter were $27.5 million, up 137.1%, significantly. The increase was primarily due to higher professional support costs, including costs associated with a rise in headcount and preparations for the potential commercialization of abaloparatide subcutaneous (abaloparatide-SC), assuming an approval.

2016 Update

The company posted a loss of $4.42 per share in 2016 compared with a net loss of $2.56 per share in 2015 and wider than the Zacks Consensus Estimate loss of $4.17.

Pipeline Update

Radius Health’s lead candidate, abaloparatide-SC, is being developed for the treatment of postmenopausal women with osteoporosis. The candidate is currently under review in both the U.S. and the EU. The company expects an opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use in 2017, while a response from the FDA is anticipated on Mar 30, 2017.

The company is also developing abaloparatide-transdermal as a short wear-time transdermal patch.

During the quarter, Radius Health reported encouraging results of its ongoing phase I studies of RAD1901 in advanced breast cancer. The company plans to file with regulatory agencies in order to take the next steps for the program in the first half of 2017, which would include the design of a phase II trial. Additionally, it anticipates to report results from its completed phase IIb trial in vasomotor symptoms in the first half of 2017.

Furthermore, the company submitted an investigational new drug application, to the FDA for RAD140, which is a selective androgen receptor modulator. Moving ahead, it expects to commence a first-in-human phase I study in women with hormone receptor positive breast cancer in 2017.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Radius Health, Inc. Price and Consensus

 

Radius Health, Inc. Price and Consensus | Radius Health, Inc. Quote

VGM Scores

At this time, Radius Health's stock has a subpar score of 'D' on both growth and momentum front. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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