Why Is Radius Health (RDUS) Down 2.7% Since The Last Earnings Report?

It has been about a month since the last earnings report for Radius Health, Inc. (NASDAQ:RDUS) . Shares have lost about 2.7% 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 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 Health Posts Wider Q1 Loss, Tymlos Approved

Radius posted a loss of $1.32 per share in the first quarter of 2017, compared with a loss of $0.94 per share in the year-ago quarter and wider than the Zacks Consensus Estimate loss of $1.25. The year-over-year increase in net loss was attributable to an increase in general and administrative expenses.

Quarter in Detail

Research and development expenses for the reported quarter were $19.5 million, down 28.9% year over year. The decline was attributed to a decrease in Tymlos/abaloparatide-SC, abaloparatide-TD and elacestrant program development costs, partially offset by an increase in RAD140 development costs.

General and administrative expenses for the reported quarter jumped to $38.1 million from $13.6 million. The increase came on the back of growth in professional support costs, including the costs associated with increasing headcount for the commercialization of Tymlos, including the completion of the build out of the commercial organization in the first quarter of 2017. This increase was also driven by an increase in compensation expenses, including stock-based compensation, due to an increase in headcount.

Pipeline Update

On Apr 28, the FDA approved Radius Health’s lead drug Tymlos (abaloparatide) injection for the treatment of postmenopausal women with high risk osteoporosis for fracture – defined as history of osteoporotic fracture – multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy. It is currently under review in the EU. The company expects an opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use in Jul 2017.

The company is also developing abaloparatide-transdermal as a short wear-time transdermal patch. The company posted positive results from the trial in Sep 2016. The company is currently focused on completing the manufacturing, scale up, and other required activities needed to initiate a pivotal study to evaluate bioequivalence to abaloparatide-SC.

The company also completed enrolment in its ongoing phase I studies of elacestrant in advanced metastatic breast cancer. Radius Health reported encouraging results from its ongoing phase I studies. The company plans 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 reporting 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. The application has been accepted. 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?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted lower by 89.6% due to these changes.

Radius Health, Inc. Price and Consensus

VGM Scores

At this time, Radius Health's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. Following the exact same course, 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

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.