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Roche wows cancer doctors, not investors

ROTKREUZ, Switzerland/LONDON (Reuters) - Roche stole the show at the world’s top cancer meeting at the weekend, but doubts if impressive clinical data will translate into big extra sales led to a lukewarm response from investors.

A worker makes its way on a bridge at Swiss pharmaceutical company Roche plant in Basel February 2, 2011. REUTERS/Christian Hartmann

The world’s leader in cancer treatments is starting to hit its stride again after a series of new product setbacks last year and doubts about the effectiveness of its $6 billion-a-year cancer treatment Avastin.

“We have had a perfect start to the year. We have had 18 studies and they have all had positive readouts for us,” Roche Chief Executive Severin Schwan told Reuters after opening a new 16-storey administrative center in the small Swiss town of Rotkreuz.

Roche showed it remains a leader in developing new cancer drugs at this year’s American Society of Clinical Oncology (ASCO) meeting in Chicago, with impressive data on its new and established drugs.

Yet while analysts agreed the mix of data looked good, most said it was unlikely to make them change their estimates and Roche stock also showed little reaction to the upbeat news.

At 1420 GMT, Roche stock, which has gained 7 percent so far this year, was trading 0.6 percent lower, underperforming a near flat European healthcare index..

The Swiss drugmaker’s experimental pill, vemurafenib, developed with Daiichi Sankyo, cut the risk of death by a remarkable 63 percent in patients with the deadliest form of skin cancer, a late-stage study showed.

But while the scale of the response was new, investors had already been told the vemurafenib study was a success and Nomura analyst Amit Roy said its sales were likely to be limited, since the drug works for only a sub-group of patients. Its effects also appear to wear off.

Indeed, analysts, on average, have forecast annual vemurafenib sales of a modest $452 million by 2015, according to Thomson Pharma.

HIGH COST

Another key study confirmed the value of Avastin in treating ovarian cancer, which Deutsche Bank analyst Richard Parkes said should “seal Avastin’s use in ovarian cancer.”

He believes it should give 700 million Swiss francs ($839 million) boost to Avastin sales -- a useful addition but another incremental boost compared to existing sales of Avastin and other cancer blockbusters like Rituxan and Herceptin.

Some doctors have also questioned the high cost of maintaining ovarian cancer patients on the drug, Parkes noted.

Demand for Avastin, used to treat a range of tumors, has fallen over recent quarters after the drug was hit by moves from healthcare authorities on both sides of the Atlantic to curb its use in breast cancer.

The medicine, also known as bevacizumab, helped women with ovarian cancer live for longer without their disease getting worse, according to the late-stage trial at ASCO.

“I think it is a huge progress and a big medical advantage for patients to now have this treatment option available,” Schwan told Reuters.

Analysts, on average, have projected 2015 sales of just over $7 billion for Avastin, according to Thomson Pharma.

Roche is now banking on its use in ovarian cancer to drive future sales growth and is planning to file for approval in the United States later this year once it has overall survival data. It has already filed for approval in Europe.

The biggest cancer surprise on Monday came not from ASCO but from news that a clinical trial testing an experimental prostate cancer drug from Bayer and Algeta had been halted early because it was so effective.

The announcement sent Algeta shares soaring 37 percent, while Bayer added 2 percent.

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