April 22, 2015 / 5:36 AM / 4 years ago

UPDATE 2-Cancer drugs help Roche quarterly sales beat forecasts

* Q1 sales 11.83 billion francs vs f’cast 11.49 billion

* Strong franc knocks 2 pct points off sales in the quarter

* Sees FY sales growth of low- to mid-single-digits

* Shares up 2.7 percent, hit highest since January (Adds management and analyst comment, recasts)

By Katharina Bart

ZURICH, April 22 (Reuters) - Roche, the world’s biggest maker of cancer drugs, beat expectations for the first-quarter with a 3 percent rise in sales, on a strong showing from its cancer drugs and a recently launched treatment for a deadly lung disorder.

Its shares jumped 2.7 percent by 0715 GMT, hitting their highest since January.

For this year, Roche repeated it expects low- to mid-single-digit sales growth and for core earnings per share to grow ahead of sales, if exchange rates remained constant.

The drugmaker, which paid an 8.00 franc per share dividend for 2014, said it planned to further increase its payout in Swiss francs.

“Roche reported a very strong first-quarter sales update, with a 3 percent beat versus consensus being primarily driven by Herceptin, Rituxan and Esbriet,” analysts at Jefferies wrote in a note to investors. The brokerage rates Roche “buy” with a 315 franc target price.

Herceptin, Rituxan and Avastin treat various types of cancer. Esbriet, which Roche acquired when it bought InterMune for $8.3 billion last August, treats idiopathic pulmonary fibrosis, a fatal lung disease.

Roche needs to keep rolling out new medicines if it is to head off the threat posed by biosimilars, cheap copies of biotech drugs that could erode blockbuster cancer treatments like Rituxan and Herceptin.

The drugmaker is looking for possible buys of products and technology, Chief Executive Severin Schwan told reporters.

“What is important is that we really go for targeted acquisitions which complement our existing franchises, so (we are) not going for mega-mergers or bigger transactions,” Schwan said.

Despite its position in the hottest therapy area for drug research, Roche was knocked by the failure of two breast cancer and Alzheimer’s studies late last year, as well as the unpegging of the franc from the euro, which caused a surge in the Swiss currency.

Roche said the strong franc knocked 2 percentage points off its sales in the quarter.

Chief Financial Officer Alan Hippe said assuming current forex rates prevail for the rest of the year, that would knock 3 percent off sales and 8 percent off core earnings.

Roche, like several rivals, is pinning hopes on a new class of cancer drugs that harness the body’s immune system to fight tumours. Investors are eager to see how rapidly it will file its so-called PD-L1 immunotherapy drug MPDL3280A for approval to treat patients with lung cancer, with some analysts predicting a submission by mid-year.

Roche’s sales in the first three months climbed to 11.83 billion francs ($12.4 billion) from 11.5 billion a year ago, beating an average forecast of 11.49 billion in a Reuters poll. ($1 = 0.9543 Swiss francs) (Addirional reporting by Ben Hirschler in London; Editing by Stephen Coates and David Holmes)

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