Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Roche Holding AG has been a dominant cancer-drug maker for years, meaning the annual meeting of the American Society for Clinical Oncology (ASCO) is usually a showcase for it. 

Not this time. 

One of the company's leading cancer drugs, Perjeta, had an unexpectedly poor showing on Monday at this year's ASCO in Chicago. A much-anticipated trial of the drug in post-surgery breast cancer patients showed it has a low impact on the chance of cancer reoccurring when used with the company's blockbuster Herceptin, according to data from Roche. News of generally positive results in March boosted Roche ADRs by 6 percent. Monday's new details caused shares to fall as much as 8 percent Monday.

Read the Fine Print
Roche shares soared on the news its drug Perjeta had a statistically significant benefit in post-surgery breast-cancer patients, but fell when Roche revealed the benefit was small
Source: Bloomberg

As with most clinical-trial readouts, the appeal of this data is in the eye of the beholder. Roche emphasizes this was a successful trial, saying the drug passed a high bar to show to show a positive effect at all, because Herceptin is so effective on its own. It also noted Perjeta's effect increased over time. 

But Perjeta only reduced breast-cancer reoccurrence by around 1 percent, didn't benefit some patients at all, and may face serious competition from a rival drug in development by Puma Biotechnology Inc.

Wall Street analysts expect Perjeta's annual sales to grow by $3 billion by 2021, dampening the blow of expected declines for Roche's three best-selling medicines, Herceptin, Rituxan, and Avastin. 

The drug is already approved for some breast-cancer patients and managed nearly $2 billion in sales last year. But if it isn't widely adopted as part of a post-surgery regimen, then growth expectations will suffer. The relatively small effect of the drug would be an issue no matter what, but the fact that adding Perjeta to Herceptin would double the cost of treatment should add to market concerns.

Combining Perjeta and Herceptin also has the potential to offset price competition for the older medicine. These trial results won't help that strategy. 

Big Need
Analysts expect Perjeta to be Roche's largest driver of sales growth over the next four years
Source: Bloomberg

The question of whether Roche can overcome competition for its three biggest products from biosimilars -- like generics, but for drugs made with living cells -- is arguably the only one that matters for the company. Monday's news isn't reassuring in that regard, especially as one of the other medicines expected to drive Roche's future growth -- the immune-oncology drug Tecentriq -- had a recent trial setback in bladder cancer that could dampen its sales potential. 

ASCO wasn’t all bad for Roche -- its lung-cancer drug Alecensa wiped the floor with Pfizer Inc.'s rival Xalkori in a trial. But that medicine’s sales are forecast to peak at one-sixth of Perjeta’s.

The initial report of Perjeta's success helped soothe investors who were beginning to get antsy about the fate of Roche's stalwart drugs. Now the company is back to having to convince those investors its pipeline is strong enough to handle the pressure.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net