Radius Health Q2 Loss Wider than Expected, Narrower Y/Y

Radius Health, Inc. RDUS reported a loss of 61 cents per share in the second-quarter of 2015, wider than the Zacks Consensus Estimate of a loss of 50 cents but narrower than the year-ago loss of $2.22.

The company has yet to generate any revenues.

The Quarter in Detail

Research and development (R&D) expenses stood at $16.3 million, up 53.3% year over year. Higher R&D expenses reflect an increase in compensation costs, consulting costs related to the submission of a new drug application for abaloparatide-SC and contract service costs associated with the development of RAD1901.

General and administrative expenses almost doubled to $6 million. This was primarily due to an increase in professional support costs and legal fees, preparations for the potential commercialization of abaloparatide-SC and higher compensation costs.

Pipeline Update

Radius Health is on track to submit a new drug application to the FDA and a marketing authorization application to the European Medicines Agency for reducing the risk of fracture in postmenopausal women suffering from severe osteoporosis by the end of 2015. Additionally, Radius Health intends to study the optimized abaloparatide-TD patch (short-wear-time transdermal patch) later this year.

We note that in Jul 2015, the FDA refused to grant breakthrough therapy status to abaloparatide-SC.

Our Take

Although Radius Health’s second-quarter results were not impressive, the company’s efforts on developing its pipeline are encouraging. A number of studies are slated for initiation later this year. We expect investor focus to remain on pipeline updates from the company.

Radius Health carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the health care sector are Valeant Pharmaceuticals International, Inc. VRX, Corcept Therapeutics Inc. CORT and Anacor Pharmaceuticals, Inc. ANAC. While Valeant and Corcept hold a Zacks Rank #1 (Strong Buy), Anacor carries a Zack Rank #2 (Buy).

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