Radius Health, Inc. - RDUS - close: 69.54 change: +0.06

Stop Loss: None, no stop at this time.
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 15, 2015
Time Frame: 6 to 8 weeks
Average Daily Volume = 811 thousand
New Positions: Yes, see below

Company Description

Trade Description:
The allure of biotech stocks can be irresistible. RDUS is a good example. The company went public on June 6, 2014. Shares priced at $8.00 and opened at $8.03. The stock hit $84.00 in July this year. That's impressive for a 13-month return.

As a relatively new biotech stock you may not be familiar with RDUS. According to the company, "Radius is a science-driven biopharmaceutical company developing new therapeutics for patients with advanced osteoporosis as well as other serious endocrine-mediated diseases including hormone responsive metastatic breast cancer. Radius' lead development candidate is the investigational drug abaloparatide for subcutaneous injection, which is completing Phase 3 development for the reduction of fracture risk in postmenopausal women with severe osteoporosis. The Radius clinical portfolio also includes an investigational abaloparatide transdermal patch for potential use in osteoporosis and the investigational drug RAD1901 for potential use in hormone driven, or hormone resistant, metastatic breast cancer including breast cancer brain metastases."

You can review RDUS' pipeline on their website: pipeline link.

The market seems to be focused on RDUS' osteoporosis drug and its breast cancer treatment. That's not surprising since the potential market for both is huge. The osteoporosis drug is closest to being approved.

Today there are almost 500 million people who suffer with osteoporosis, where the body does not produce enough bone tissue. That number is poised to soar with an aging population in Europe, Asia, and the U.S. The market for treatment is already over $6 billion a year.

RDUS' management discussed their results after their Q2 earnings report in July. Their CEO said,

"The ACTIVExtend trial is the 24 month open label extension in which patients from the abaloparatide and placebo treated groups of the ACTIVE trial were placed on alendronate therapy for osteoporosis management. The ACTIVExtend six month study results exceeded our expectations. The group previously treated with abaloparatide had not additional new vertebral fractures during the first six months of the ACTIVExtend trial. Please remember, that from the start of the ACTIVE study, the abaloparatide treated patient showed a statistically significant 87% reduction in new vertebral fractures, the highest reduction ever reported in an osteoporosis trial and highly significant reductions in non vertebral fractures, clinical fractures and major osteoporotic fractures as compared to placebo. We believe that these results support our view that abaloparatide has the potential to represent a new treatment paradigm for patients at high risk of an osteoporotic fracture."
RDUS plans to submit an New Drug Application (NDA) to the U.S. FDA and submit an MAA to the EU later this year for their osteoporosis treatment. That could keep investor interest bullish on the stock as they await an FDA approval.

Technically RDUS saw a sharp correction of more than -$30.00 from its July high to the August intraday low. After a -37% decline RDUS has bounced with traders consistently buying the dips. Today the point & figure chart is bullish and forecasting at $79.00 target. The stock is hovering just below resistance at $70.00 and its simple 50-dma.

We are suggesting a trigger to open bullish positions at $70.65. I want to remind readers that biotech stocks can be volatile. This is an aggressive, higher-risk trade. The right headline can send RDUS soaring while the wrong headline could produce a crash. Use small positions to limit risk. RDUS does have options but they're too expensive to trade.

NOTE: do NOT open positions if RDUS gaps open past $72.00. We'll re-evaluate this trade if shares gap open too high.

Trigger @ $70.65 *small positions to limit risk*

- Suggested Positions -

Buy RDUS stock @ $70.65

Daily Chart:

Weekly Chart: