Shares of biopharma Radius Health (NASDAQ:RDUS) were down sharply Friday after it announced fourth-quarter and full-year 2017 results Thursday after the closing bell.
The company enjoyed its second full-quarter of commercial sales for its first marketed drug, Tymlos, as a treatment for specific cases of osteoporosis. Additional trials for the drug are now underway that could expand the product label. Trials are also underway for a patch formulation of the active pharmaceutical ingredient of Tymlos (it's currently only available as an injection) and separate early-stage drug candidates.
So, why are shares losing value? Wall Street seems to be disappointed with the pace of Tymlos sales growth. As of 1:40 p.m. EST, Radius Health stock had settled to a 14.7% loss.
While additional supplemental studies have great potential to expand the market for Tymlos over time, the drug has a long way to go before it can hope to match the market power of the leading incumbent therapy: Forteo from Eli Lilly (NYSE:LLY). Forteo has been on the market for over 15 years, and generated $1.75 billion in revenue in 2017. It has continued to brush off concerns over Tymlos -- Forteo's first true competition, really, after similar drugs have failed or been delayed -- and sales even grew 17% last year.
By comparison, Tymlos had $12.1 million in sales in 2017, and $7.6 million in the fourth quarter. That said, Tymlos has some momentum in the insurance markets (recently being named by Express Scripts as the preferred treatment for osteoporosis indications for which it's approved, replacing Forteo), may be superior to Forteo in bone fracture reduction, and is cheaper as well.
Radius Health is in relatively robust financial shape, with $253 million in cash, cash equivalents, and marketable securities; but it lost $249 million from operations in 2017. Increasing the market presence of Tymlos won't come cheap, but if it can quickly pick up market share in 2018, that should ease some concerns on Wall Street over its mounting losses. Radius has yet to provide guidance or set shareholder expectations, so investors interested in the stock will have to closely watch the company's progress.