Please ensure Javascript is enabled for purposes of website accessibility

Why Radius Health Stock Is Getting Pummeled Today

By Cory Renauer – Dec 8, 2021 at 1:33PM

Key Points

  • Radius Health presented results from a trial with breast cancer patients and elacestrant, an experimental breast cancer treatment.
  • The company wants to sell elacestrant to a larger patient population.
  • Today's presentation of results suggests elacestrant's addressable patient population could have more limitations than investors had hoped.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A closer look at the clinical trial results that drove the stock up in October was a little disappointing.

What happened

The stock of Radius Health (RDUS) is tumbling today after the company presented follow-up data for its experimental breast cancer treatment. Investors disappointed with the biopharmaceutical company's update pushed the stock 44.3% lower as of 12:44 p.m. ET on Wednesday.

So what 

Back in October, Radius stock shot up when the company told investors its elacestrant, a potential first-in-class selective estrogen receptor degrader (SERD), significantly reduced the risk of disease progression for advanced-stage breast cancer patients during the phase 3 Emerald trial.

Scientist looking down into a microscope.

Image source: Getty Images.

Investors were hoping a strong benefit was measured for all trial participants and not only patients with tumors that harbor estrogen receptor 1 (ESR1) mutations. The stock is tanking today because it looks like elacestrant's indication, if approved, will be limited to the smaller subgroup of ESR1-positive patients.

Now what

Treatment with elacestrant reduced patients' risk of disease progression by 30% compared to trial participants randomized to receive standard care. Among just the ESR1-positive patients, elacestrant reduced the risk of disease progression by 45% versus standard care.

At recent prices, Radius has a low $388 million market cap. That's less than half as much as the company was worth a couple of months ago. Even if we assume elacestrant will be limited to the ESR1-positive population, it looks like the market is underestimating its future sales potential.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.