Roche suffers drug setbacks

A run of disappointing drug trials at Roche has left analysts suggesting the view from its new 41-storey office building in Basel, Switzerland, has become more clouded, with little chance of management now upgrading its growth forecast next week, when it reports first-half earnings.

Moreover, the first of a threatened flood of bio- similar copies of Roche’s $22bn (€19bn)-per-year trio of cancer drugs, Rituxan, Avastin and Herceptin, have now been approved in Europe and the US.

Chief executive Severin Schwan has long contended he can boost sales despite these new bio-similar drug launches.

However, Roche has just seen its new immunotherapy treatment Tecentriq fail a bladder cancer trial, even though a similar drug from rival Merck shone in a separate study.

That flop was closely followed by unimpressive data from Roche’s Aphinity study that showed combining Roche’s two breast cancer drugs Herceptin and Perjeta produced only a modest additional benefit.

Consequently, Kepler Cheuvreux analyst David Evans last month cut his forecasts for peak adjuvant sales of Perjeta to $1.5bn, from $3.5bn previously.

“Apart from the underwhelming Aphinity data, Roche has had some other setbacks”, Evans said, citing the Tecentriq failure and the approvals of rival bio-similars — near copies of branded drugs derived from living organisms that cannot be exactly duplicated but show the same effectiveness.

Roche now sees 2017 sales growth at a low- to mid-single-digit percentage, with core earnings per share growing in line with sales.

This year, the share price is up just 4.7%, half local rival Novartis’s rise and among the laggards in the Stoxx 600 Europe healthcare sector index up 6.3%, despite some good news on Roche’s development pipeline.

The US Food and Drug Administration’s approval of Ocrevus, the first regulator-backed drug against primary progressive multiple sclerosis, in March set the stage for Roche’s next blockbuster.

Additionally, Roche’s investigational haemophilia drug emicizumab is seen topping $1.5bn in sales by 2022 as it wrests business from rival Shire.

Roche also contends the Herceptin-Perjeta data is not as dire as some judge it and believes it still reinforces its case with regulators that the two medicines should be used together.

The company last year closed its only manufacturing plant in Ireland. n Reuters



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