ZURICH (Reuters) - Roche shares were lifted on Monday (Nov 20) by two trial wins for its new cancer and haemophilia 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 made advances against lung cancer when mixed with other treatments, while haemophilia agent Hemlibra had reduced bleeds in a new group of patients.
This weighed on other pharmaceutical stocks - Shire, a rival in the haemophilia market, slipped as much as 2 per cent, while AstraZeneca, a key competitor in cancer treatment, fell 0.5 per cent.
Roche's shares were up 6.4 per cent at 1207 GMT, adding some US$12 billion to the company's market capitalisation.
Analysts said the trial results put Roche's defence strategy on firmer ground.
"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.
Biosimilars - biological drugs with the same effectiveness as the older name-brand medicines they mimic - are quickly winning approval and denting Roche's revenue. Samsung Bioepis on Sunday won approval for a Herceptin copy in Europe.
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 US$500 million this year - pale compared to Keytruda from Merck and Opdivo from Bristol-Myers Squibb.
Keytruda, which has an edge in lung cancer after US approval as a first-line treatment, should hit US$3.7 billion in sales this year, analysts estimate, while Opdivo revenue is on track to rise nearly four-fold to US$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 US$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 US$4 billion, will hinge on getting approval for all haemophilia patients.
"Hemlibra is poised to become a major product in the haemophilia A market...while Tecentriq could now become an important first-line option in non-small-cell lung carcinoma,"said Berenberg analyst Alistair Campbell.
