April 12, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Roche has been a pretty strong to invest in for some time, but the last five months have shown a definite upswing. Shares traded for $220.10 on November 4, 2016, and are currently trading for $258.40. Jim Crumly, writing for The Motley Fool, outlines four reasons why Roche is likely to have the best growth in big pharma.
1. Tecentriq
This drug, which inhibits PDL-1, marks Roche’s entry into the immuno-oncology market. It was approved for second-line bladder cancer and non-small cell lung cancer. It has eaten away at Bristol-Myers Squibb ’s Opdivo dominance by about 10 percent in a very short time.
Crumly writes, “The beautiful thing about these drugs is that they tend to work against a broad range of cancer types and in combination with a lot of other therapies.”
For example, Roche is evaluating Tecentriq in renal cell cancer, prostate, colorectal, ovarian, breast, solid tumors, melanoma, multiple myeloma, and leukemia.
2. Perjeta
Roche has plenty of power in oncology, especially in HER2-positive breast cancer. Herceptin and Kadcyla brought in $7.5 billion in 2016, but does appear to be slowing. Crumly writes, “Perjeta attacks the HER2 pathway using a different mechanism, opening up the possibility of being used in combination with these existing therapies and reinvigorating growth for Roche’s breast cancer segment.”
3. Ocrevus
The U.S. Food and Drug Administration (FDA) approved Ocrevus (ocrelizumab) on March 29 as the first and only drug for both relapsing and primary progressive forms of multiple sclerosis (MS). It is a humanized monoclonal antibody that selectively targets CD20-positive B cells, a type of immune cell that is believed to contribute to the damage caused to myelin and nerve cells.
Crumly notes that it has the potential to snatch a sizable piece of the $20 billion MS market.
4. Diagnostics
Diagnostics accounts for 23 percent of Roche’s overall revenue. Crumly writes, “Sales of test instruments are not subject to the binary risk of trial results, nor are they affected by patent expirations as much as are pharmaceuticals. Besides the stability this adds to Roche’s results, the segment is also boosting growth, with a 7 percent revenue gain in 2016 compared with the company’s overall 4 percent.”
Lest anyone think Roche is a slam dunk, Crumly notes that Roche is widely believed to be a very high risk from generics and biosimilars. Examples include patent expiration on antiviral Tamiflu, which raised $786 million in 2016. Upcoming patent expirations from 2018 through 2020 include Herceptin, Avastin and MabThera/Rituxan. Combined revenue for those drugs last year was $20 billion, or about 41 percent of total revenue.
Crumly writes, “While the risk resulting from patent expiration is real, Roche investors should take heart. The company not only has a commanding position in oncology and blockbusters in immunology and ophthalmology, it also has massive resources to find new indications for its older drugs, enter new therapeutic areas, and replace lost sales with innovative new products.”
That includes 50 ongoing clinical trials in oncology immunotherapy alone.
