Roche Holdings (PINK:RHHBY) seems to have emerged as the leader in the development of Alzheimer drug after some of its largest competitors failed late stage clinical trials. Roche currently has four Alzheimer drugs that are undergoing clinical trials. There is no complete cure available for Alzheimer’s presently, and the current treatment only improves a patient’s condition by a little. Hence, any breakthrough will prove to be very beneficial for Roche as it will bring in multi-billion dollars in revenues due to huge market potential.
The Alzheimer drug market has huge unmet demand as nearly 36 million people worldwide are estimated to be suffering from Alzheimer’s disease or other dementia and, without any effective treatment, the number could surge to nearly 66 million and 115 million by 2030 and 2050, respectively. In the U.S. alone, approximately 5.4 million people suffer from Alzheimer’s and this is projected to increase to 15 million by 2050.  Many estimate the potential market size at more than $20 billion and, currently, there is no complete cure to treat or prevent the disease. 
For the same reasons, many pharmaceutical giants including Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) and Eli Lily have been striving to find an effective drug to tap the lucrative market. However, after recent failures in clinical trials on patients, Pfizer and Johnson & Johnson decided to wind up development of their Alzheimer drug, Bapineuzumab. While Eli Lily’s Solanezumab did show some sings of improvement in patients with mild disease, but the results were inconclusive. And, whether Solanezumab can be used for mild Alzheimer’s or in the early stages of Alzheimer would require further trials that can take about three years. This has changed the competitive landscape for Roche completely. 
Roche has four Alzheimer drugs in its pipeline which are undergoing clinical trials even as the pharmaceutical giant has shifted its focus from treatment to prevention. Two of the pipeline drugs, Crenezumab and Gantenerumab, are the most promising. Recently, the National Institute of Health agreed to fund a new study of Crenezumab that will test its ability to delay or prevent Alzheimer’s in Colombian families suffering an exorbitantly high rate of the disease. In addition, Gantenerumab is shown to reduce beta amyloid plaques in the brain (high-level results into Alzheimer) more rapidly than other drugs, according to the company. 
With an unknown risk of success or failure at this stage, most of Roche’s pipeline drugs are capable of being commercially successful. And, if approved, it can boost the company’s sales to a large extent and, consequently, our price estimate for Roche.
Our price estimate for Roche Holdings currently stands at $47, about 5% ahead of the current market price.Notes:
- The Facts on Alzheimer’s Disease, American Health Assistance Foundation [↩]
- Roche snags another Alzheimer’s antibody from AC Immune in $418M-plus deal, Fierce Biotech, June 18 2012 [↩]
- Roche ramps up Alzheimer’s drug trial as rivals stumble, courant.com, Sept. 07 2012 [↩] [↩]