Roche Shares Jump Following Successful Studies for Two Drugs

Updated on
  • Tecentriq delays worsening of lung tumors in combination
  • Rivals Merck, Bristol-Myers see shares fall on study news
The company logo for Roche Holding AG is seen on a glass doorway at the company's headquarters in Basel, Switzerland, on Wednesday, Feb. 1, 2017. Roche Holding AG is bracing for slower earnings growth this year as its ageing cancer blockbusters face competition and the Swiss drugmaker readies a new generation of medicines. Photographer: Michele Limina/Bloomberg

Roche Holding AG shares surged after two experimental medicines for cancer and hemophilia succeeded in much-anticipated patient trials, boding well for the Swiss drugmaker’s ability to grow as its biggest drugs face competition.

A cancer treatment called Tecentriq delayed the worsening of lung tumors when given together with chemotherapy and an older Roche medicine, Avastin. Meanwhile, a drug known as Hemlibra succeeded in a late-stage study of the biggest group of hemophilia A patients, putting the company in a position to shake up the $10 billion global market for treating the blood disorder.

Both trials are key metrics of whether Roche, the world’s biggest maker of cancer drugs, can rebuild its portfolio as its best-selling treatments face cheaper copycat rivals for the first time. The company is entering a three-year transition period as it tries to push forward new treatments, Chief Executive Officer Severin Schwan told investors last month.

“Roche has delivered a best-case scenario,” Jeffrey Holford, an analyst with Jefferies LLC in London, wrote in a note on Monday. Investors had been skeptical about both studies, according to Holford.

New and Old

The shares rose 6.6 percent to 245.30 francs at 4:51 p.m. in Zurich, their biggest increase since March 2. Roche has returned 8.8 percent this year, lagging the 19 percent increase in the Swiss Performance Index.

The lung cancer trial, dubbed ImPower 150, is a milestone as Roche races drugmakers including Merck & Co., Bristol-Myers Squibb Co., AstraZeneca Plc in the field of immune therapy: drugs that free the body’s own defenses to attack tumors. How best to combine the new medicines -- whether with existing chemotherapy or other immune treatments -- has been an open question. In a strategic wrinkle, Roche tested its candidate Tecentriq with its own Avastin, a combination that could prop up the older medicine’s sales as well.

Bristol-Myers was down 1.3 percent to $60.55 in New York, while Merck fell 2.7 percent to $53.73. Both companies are trying to expand use of their drugs, although Merck’s blockbuster Keytruda has been considered the leading medicine for previously untreated lung cancer. The recent withdrawal of a European regulatory application for Keytruda has raised concerns about its growth potential.

Still to come in the first half of next year are results to show whether Roche’s new cocktail can help patients live longer. But showing it can extend the time before tumors get worse is an important first step.

The results for Hemlibra, also known as emicizumab, suggest that the medicine could compete in the broader hemophilia market after winning U.S. Food and Drug Administration approval on Nov. 16 for a smaller patient group. Hemlibra’s previous success was in so-called inhibitor patients, people who develop resistance to replacement therapy for factor VIII, the clotting protein that, when it’s missing, results in bleeds. 

The Roche hemophilia drug is priced at $448,000 a year for long-term treatment. That’s far below the cost of other prophylactic treatment for inhibitor patients but competitive with medicines for the larger group of people studied in the latest trial, according to Sanford C. Bernstein & Co. analysts.

Full results of both studies will be presented at upcoming medical meetings.

— With assistance by Jared S Hopkins

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