Roche stock up 12 billion dollars on cancer, hemophilia trials; rivals hit

ZURICH: Roche shares were lifted on Monday by two trial wins for its new cancer and hemophilia drugs, potential blockbusters that the Swiss drugmaker is counting on to offset shrinking revenue from older medicines.

Along with Roche's multiple sclerosis medicine Ocrevus, the drugs are pillars of Chief Executive Severin Schwan's plan to offset the patent expiry of top-sellers Rituxan, Avastin, and Herceptin which account for $20 billion in annual sales.

Roche said Tecentriq had cut the risk of lung cancer worsening when mixed with other treatments, while hemophilia agent Hemlibra had reduced bleeds in a new group of patients. This weighed on other pharmaceutical stocks - The Shire, a rival in the hemophilia market, fell 3 percent, while Merck & Co and Bristol-Myers Squibb, key competitors in cancer, fell 2.5 and 1.3 percent respectively.

Roche's shares were up 6.5 percent at 1555 GMT, adding more than $12 billion to the company's market capitalization.

"We view these results as likely sufficient to begin turning the tide of biosimilar pessimism," Barclays analyst Emmanuel Papadakis, who has an "overweight" rating on the shares, said.

CANCER COCKTAIL

With lung cancer easily the largest oncology market, Roche's trial of Tecentriq, Avastin and chemotherapy has been closely watched as it seeks to catch rivals in cancer immunotherapy.

The mixture "provided a statistically significant and clinically meaningful reduction" in the risk of disease worsening or death compared to Avastin plus chemotherapy in first-line treatment of advanced non-squamous non-small cell lung cancer (NSCLC), Roche said.

Initial observations on improving overall survival were "encouraging" and will be reported in the first half of 2018, it added.

"We are extremely encouraged by these results and will submit these data to health authorities globally with the goal of bringing a potential new standard of care for the initial treatment of lung cancer," Sandra Horning, Roche's chief medical officer, said.

So far, Tecentriq's sales - expected at around $500 million this year - pale compared to Keytruda from Merck and Opdivo from Bristol-Myers.

Keytruda, which has an edge in lung cancer after U.S. approval as a first-line treatment, should hit $3.7 billion in sales this year, analysts estimate, while Opdivo revenue is on track to rise nearly four-fold to $4.8 billion.

Monday's readout from Roche, while giving only bare details, may help the Basel-based drugmaker make up ground since results from Merck's and BMS's own combination lung cancer trials are still some way off.

Meanwhile, AstraZeneca's immuno-oncology drug cocktail against lung cancer failed earlier this year, raising concerns about the approach as chemotherapy combinations like Roche's rack up trial wins.

Hemlibra's latest trial result comes after the $482,000-per-year medicine was approved last week in the United States for patients who have developed resistance to clotting factors.

In Monday's readout, Roche's drug reduced the risk of treated bleeds in patients without resistance.

Peak sales of Hemlibra, estimated by some analysts at more than $4 billion, will hinge on getting approval for all hemophilia patients.

"Hemlibra is poised to become a major product in the hemophilia A market ... while Tecentriq could now become an important first-line option in non-small-cell lung carcinoma," said Berenberg analyst Alistair Campbell.