Why Radius Health Inc is Soaring Today

By Brian FeroldiFool.com

What: Shares of Radius Health ,a biopharmaceutical company focused on developing products that treat osteoporosis and other endocrine-mediated diseases, were up more than 17% on huge trading volume on what appear to be rumors of a possible takeover bid.

So what:Investors appear to be bidding up shares based on a rumor that Shire PLC is working on a deal to offer $90 per share to acquire Radius. With the company opening trading today at around $54, investors are clearly excited by the rumor and having been bidding the stock higher all day.

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So far neither company has issued a press release related to any potential takeover, and when reached for comment both companies said had nothing to say about the matter.

However, earlier in the week Radius reported positive Phase 3 data from its ACTIVExtend trial, and presented the data at the American Society for Bone and Mineral Research annual meeting. Radius showed that when patients use its investigational drug abaloparatide-SC followed by alendronate they experience a reduction in new vertebral, non-vertebral, and clinical osteoporotic fractures.

The company noted that they look forward to submitting their drug for both U.S. and European regulatory approval, which they have previously communicated would happen before the end of 2015.

Now what:Osteoporosis has been declared a public health crisis by the World Health Organization, as about one in every two women over age 50 will break a bone because of the disease. An estimatedtwo million fractures happen each year in the U.S. alone because of osteoporosis, so if Radius is successful in showing that abaloparatide can help reduce the incidence of fractures it could certainly be a blockbuster treatment.

As for the stock itself,while short-term stock pops are alwaysfun,trying to make money off of the rumors mill is never a good idea. If you are invested in Radius Health because of the opportunity that exists for abaloparatide then you should have a smile on your face from today's pop. Traders who are only buying shares because of a takeover rumor may or may not get what they are after.

The article Why Radius Health Inc is Soaring Today originally appeared on Fool.com.

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