SVB Leerink cuts Radius Health to MP; PT to $17 from $34

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SVB Leerink downgraded Radius Health (NASDAQ:RDUS) to “market perform” from “outperform” and halved its price target to $17 from $34, citing the company’s pipeline outlook. The stock closed at $14.06 on July 7.

“We believe the stock reflects the standalone value of Tymlos subcutaneous and do not believe potential quarterly estimate beats will be material enough to drive stock performance,” writes analyst Bradley Canino. 

“We also do not recommend Radius for the pipeline because data catalysts are beyond one year (second half of 2021, at the earliest) and increasing competitive intensity has impaired its optionality for investors,” he added. 

Mr. Canino said he doubts earnings will drive stock performance near term, noting that Tymlos subcutaneous U.S. sales trajectory is “visible and predictable.” The market of patients on the two osteoanabolics, Tymlos and Forteo, has trended at a less than 1% quarterly compound annual growth rate since the Tymlos launch in the third quarter of 2017, and market share is trending towards a 50/50 split, he added. 

Mr. Canino also reduced estimates for the Tymlos patch after a major Phase 3 delay, competitive market dynamics, and recent MEDACorp key opinion leader calls. 

Mr. Canino is modeling estimated revenue of $206-million in 2020, growing to $323-millon in 2023.These two estimates are below consensus by 4% and 19%, respectively, he said.