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Testing time for Roche's breast cancer business
LONDON (Reuters) - Roche Holding AG, the world's biggest maker of cancer drugs, faces a testing time in its breast cancer business as a near-term threat to Herceptin, its third-biggest seller, could take the shine off the long-term promise of its new medicines.
The issue is likely to be centre-stage when the Swiss group gives a research and development presentation to investors in London on Wednesday.
Results of two opposing studies examining how long patients should use Herceptin could potentially boost or cut sales of the blockbuster medicine, which had sales last year of 5.25 billion Swiss francs ($5.5 billion).
First approved in 1998, Herceptin is a treatment for the 25-30 percent of breast cancer patients who have tumors that generate a protein called HER-2, which tends to make their disease more aggressive.
The drug is one of Roche's most lucrative and durable - with sales still growing 11 percent to 2.95 billion Swiss francs in the first half of 2012 - and the drugmaker is keen to eke out more profit before the medicine loses its patent from 2014.
Roche is due to publish data by year-end from the so-called HERA study investigating the benefit of using Herceptin for two years rather than the standard one, while an opposing French study called PHARE is looking at whether patients get the same benefit from using the drug for just six months.
While analysts on the whole are skeptical that using Herceptin for longer will show additional benefit, a convincing result from PHARE could see austerity-hit European healthcare systems cutting back their use of the drug substantially.
Kepler Capital Markets analyst Fabian Wenner says the drug's adverse side effects on the heart could also mitigate against longer use.
"What patient will want to use Herceptin plus chemotherapy for two years? That's a very high burden on the quality of life, not to mention the higher cardiac risk they are then exposed to," he said.
Positive results from PHARE have the potential to wipe $1.5 billion off Herceptin's revenue in the medium-term and could send the stock down some 5-10 percent, according to Wenner.
LONGER SHELF LIFE
Other analysts, however, believe the PHARE data will lack the punch to seriously damage Herceptin sales.
Barclays analyst Mark Purcell points to the relatively small size of the trial, sponsored by France's National Cancer Institute, with 3,400 patients compared to the 5,043 enrolled in Roche's joint HERA study with Breast International Group.
He also questioned why investigators have chosen to sit on the data until the San Antonio Breast Cancer Symposium on December 4-8 to reveal the results when the study finished in May.
"You'd have thought that if there was anything conclusive we'd have known by now," Purcell said. "I think in general the average length of therapy will go up as combination care becomes the new standard."
Roche is looking to promote a combination therapy of Herceptin plus its follow-on product Perjeta, which gained approval from U.S. health regulators in June and is also for the treatment of HER-2 positive breast cancer.
Perjeta, also known as pertuzumab, binds to a different part of the same protein, which the company says makes the drug extra effective.
Roche is also developing an "armed antibody" known as TDM-1 as a treatment for HER2-positive breast cancer. TDM-1 combines Herceptin with a derivative of a powerful type of chemotherapy and is designed to reduce unpleasant side effects.
JP Morgan analyst Alexandra Hauber is sanguine about the risk of PHARE, projecting 7-12 percent upside to 2015 core earnings per share, with negligible downside.
Analysts at Deutsche Bank said PHARE was a near-term risk but, overall, the expected strong launches of Perjeta and T-DM1 should more than offset any downside.
($1 = 0.9526 Swiss francs)
(Additional reporting by Ben Hirschler; Editing by Elaine Hardcastle)
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