Stifel initiated coverage of Radius Health (NASDAQ:RDUS) with a “hold” rating and $20 target price. The stock closed at $17.18, up $1.43, on April 23.
Analyst Annabel Samimy writes that Radius established a solid foothold in the bone-building osteoporosis market segment by simultaneously disrupting a long-time monopoly and reviving the previously contracting market with the launch of lead, and only, commercial asset, Tymlos, as a once-daily injection in postmenopausal women in the U.S.
Radius’ growth strategy includes a line extension in men, geographic expansion in Japan, and reformulation of Tymlos as a transdermal patch, she said, adding that Radius estimates a three-fold expansion of the total bone-building osteoporosis market with the transdermal patch. Clinical data for the patch formulation is expected in the second half of 2021.
“Though we believe in its continued runway for growth, this magnitude of expansion is debatable,” Ms. Samimy said, adding that Tymlos is facing an evolving competitive landscape, “which we do not believe is fully captured in expectations.”
She said Amgen’s once-monthly Evenity is rapidly gaining share in the bone-building category, citing rapid bone-building capabilities, shorter treatment course, no lifetime cap on treatment and lower out-of-pocket costs.
A second biosimilar threat also could introduce another overhang. “Though Radius should benefit from treatment continuity in this current COVID environment, we think 2020 guidance of $220-million to $235-million is at risk. Shares have and still could recoup lost value, but coming into these competitive forces presents a tougher risk-reward,” Ms. Samimy said.
In conjunction with the initiation of Radius, Stifel surveyed 27 third-party payers to assess their perspective on an evolving osteoporosis treatment landscape, capturing the views of senior leaders at national health plans. “Overall, the survey confirms our near-term positive bias for Radius, but suggests possibility of future headwinds,” Ms. Samimy said.
