Radius Health's Overhangs Were Just Removed: Buy Time

The filing of NDA for Abaloparatide-SC removes a key overhang on the shares of Radius Health Inc (NASDAQ: RDUS), according to Cantor Fitzgerald.

Radius Health announced that it has submitted a New Drug Application (NDA) to the United States Food and Drug Administration (FDA) for abaloparatide–SC 80 mcg, an "investigational, once daily treatment for postmenopausal women with osteoporosis," according to the press release.

The brokerage said the U.S. filing has been of particular focus since the decision to delay the NDA filing by a quarter was announced in November 2015. What once created an "overhang" on the shares can now go away.

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Looking At The Overhangs

"We view the NDA filing as an opportunity for the shares to trade on fundamentals since the filing and competitive concerns have been alleviated, in our view," analyst Mara Goldstein wrote in a note to clients.

"We like Radius for the opportunity for abaloparatide-SC to take share from Forteo, with the remainder of the pipeline and other strategic initiatives offering upside," the analyst added.

On the competitive overhang, Goldstein said, "We think concerns regarding Amgen's romosozumab ('romo') have also been an overhang on the shares, as a potential competitor to abaloparatide-SC. However, with a broader data set on romosuzumab emerging (vertebral versus non-vertebral fractures) and the fact that abaloparatide-SC will likely target a different physician community, we think this overhang will continue to ebb."

The analyst thinks that the remaining overhang on the shares is the question of partnership or the possibility of acquisition.

"We think the market assumes that a partnership preempts the possibility of acquisition, which may not necessarily be the case based on other deals in biopharma sector. Nonetheless a commercial partner for ex-U.S. territories is likely, in our view, to be the last overhang on shares," Goldstein added.

Shares of Radius Health were down roughly 4 percent at $31.55. Goldstein has a Buy rating and $70 price target on the stock.

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