Radius (RDUS) Q1 Wider than expected loss, revenue down

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Shares of Ray Health, Inc.. RDUS fell 13.87% following first quarter results that fell short of expectations.

The company suffered a loss of 39 cents per share in the first quarter, higher than Zacks’ consensus estimate of a loss of 21 cents and a year earlier loss of 34 cents.

The company’s revenue of $43.1 million missed Zacks’ consensus estimate by 16.07% and fell from the $56.2 million reported in the year-ago quarter. Revenue is derived from sales of the lead drug, Tymlos (abaloparatide-SC) injection, which is approved for the treatment of postmenopausal women with osteoporosis at high risk of fracture, and licensing revenue.

Shares of the company have lost 11.2% in the year so far, compared to a 19.7% decline in the industry.

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Quarter in detail

Tymlos revenue in the quarter was $43 million, compared to $45 million in the prior year quarter, primarily due to inventory destocking and seasonal payer dynamics.

Research and development expenses in the reported quarter were $22.7 million, compared to $31.4 million, due to lower costs for the abaloparatide-TD program.

Selling, general and administrative expenses were $30 million, down 11.8%.

Pipeline updates

Radius Health is evaluating Tymlos for additional guidance. The company has filed a Supplemental New Drug Application (sNDA) with the FDA for the subcutaneous injection of Tymlos (abaloparatide) in men with osteoporosis at high risk of fracture.

Another pipeline candidate, elacestrant, is being evaluated for the treatment of advanced or metastatic ER+HER2 breast cancer (mBC) in collaboration with Menarini Group. Both companies are working on regulatory submission in the US in the second quarter of 2022, with EU filing expected to follow later.

It is also developing RAD011, a pharmaceutical grade synthetic cannabidiol oral solution manufactured using traditional pharmaceutical manufacturing processes. The company plans to initiate two unique pivotal trials in Angelman syndrome (AS) in the third quarter and Prader-Willi syndrome (PWS) in the second quarter. The SCOUT-015 study evaluating binge eating in PWS is open for enrollment and has begun screening patients in the United States. It is also planning a phase II trial in infantile spasms (SI) evaluating the resolution of spasms.

Orientation 2022 reiterated

Tymlos revenue is expected to be $232 million, while first-half revenue is expected to be around $97 million.

Our opinion

Radius posted a larger loss in the first quarter due to lower revenue. However, the guidelines for 2022 have been reiterated. Tymlos most likely faces challenges.
In addition, competition is tough for Tymlos to Eli Lilly & Co’s LLY Forteo and Amgenby AMGN Prolia.

Eli Lilly’s Forteo generated sales of $137 million in the first quarter.

Sales of Amgen’s Prolia were up 12% year-over-year in the first quarter, driven by 10% volume growth and a higher net selling price. Amgen’s Evenity is also approved for the treatment of osteoporosis in women after menopause who are at high risk of fracture or cannot use other osteoporosis medications or other osteoporosis medications that do not didn’t work well.

Zacks Ranking and a Stock to Consider

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

A top-ranked stock in the health sector is Vertex Pharmaceuticals VRTX, which currently carries a Zacks Rank #2 (Buy). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vertex’s consensus earnings estimate for 2022 rose 25 cents over the past 60 days to $14.58. Shares of VRTX have gained 17.5% in the year to date.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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