Shares in Radius Health (RDUS) spiked 10% in Thursday’s after-hours trading, after the company announced an exclusive global license agreement for development and commercialization of elacestrant with the Menarini Group.
Elacestrant is an oral SERD, a selective estrogen receptor degrader, currently being evaluated in the EMERALD Phase 3 study as hormonal treatment for postmenopausal women and men with advanced ER+/HER2- breast cancer- the most common form of the disease.
As part of the agreement, Radius will receive an upfront payment of $30 million and up to $320 million in additional payments based on the successful achievement of future development and sales milestones. Menarini Group will make tiered, low to mid-teen percentage royalty payments to Radius Health on global net sales.
Radius will continue to be responsible for the conduct and completion of the Phase 3 EMERALD study through NDA filing. Costs associated with this activity will be reimbursed by Menarini Group.
Kelly Martin, CEO of Radius commented, “Menarini will be a terrific global partner on this program and, given their recent investment and expansion in the oncology space, we are extremely pleased to have completed this transaction with them.” Martin further commented that “this transaction is a significant step for Radius and provides us with flexibility in moving forward.”
Under the agreement, Menarini Group will be responsible for worldwide commercialization of elacestrant, after the completion of EMERALD Phase 3 study and, assuming positive results, successful registration of elacestrant.
Unlike the current treatment option (fulvestrant), which is administered as an intramuscular injection, elacestrant, if approved, has the potential to improve the patient experience with oral dosing. In addition, preclinical data have shown elacestrant to have greater antitumor activity than fulvestrant in in vivo models suggesting the potential for improved efficacy in patients. Top-line data from the EMERALD study is expected to be reported in the second half of 2021.
Shares in Radius have plunged 30% year-to-date, and analysts have a cautiously optimistic Moderate Buy consensus on the stock’s outlook. That’s alongside a $24 average analyst price target (86% upside potential). (See Radius Health stock analysis on TipRanks)
“While elacestrant has an interesting profile, given the strength of the commercial infrastructure that Radius has established in endocrinology and osteoporosis, we think the company is better off focusing its efforts there” commented HC Wainwright analyst Douglas Tsao. He has a hold rating on the stock and $28 price target.
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