ASCO Will Be Important For Roche
Our price estimate for Roche Holdings (NASDAQ:RHHBY) stands at $36.56, which is roughly in-line with the market. The company has performed well so far due to its leadership in the oncology segment, but a threat from biosimilars is looming. As a result, the company is taking a defensive stance by expanding into combination therapies. Apart from this, it is also investing in enhancing its immuno-oncology portfolio which is where many pharmaceutical companies are directing their efforts as well. The upcoming American Society for Clinical Oncology (ASCO) conference will be key as several pharma players, including Roche, will present important clinical trial data for upcoming cancer therapies. Here is what Roche, in particular, plans to do and how promising data can change future growth forecasts.
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Upcoming ASCO Will Hold Clues To Roche’s Future Growth Potential
Roche is already a powerful force in the oncology segment. However, the fast growing area of immuno-oncology is yet to be mastered. The company, along with other competitors, is making inroads in this arena and may have a lot to show in the upcoming conference.
Last month, Bristol-Myers Squibb stopped a phase 3 study of Opdivo early as the study met its endpoint. [1] Codenamed Checkmate-057, the clinical trial demonstrated better overall survival in previously treated patients with advanced non-squamous, non-small cell lung cancer. The outcome of this study is likely to lift investors’ hopes from immuno-oncology drugs, which means that it is critical for Roche to present promising data.
The company will present critical results for a couple of drugs. These include ALK inhibitor alectinib (investigational) in advanced non-small-cell lung cancer and Gazyva/Gazyvaro (obinutuzumab) in indolent non-Hodgkin’s Lymphoma. In addition, Roche will also present crucial data in advanced non-small-cell lung cancer for anti-PDL1 therapy MPDL3280A. Apart from this, the firm will show updated results for investigational drug cobimetinib for advanced BRAF-mutated melanoma, and Perjeta in neoadjuvant (therapy given before the main therapy) treatment of HER2+ breast cancer patients in early stage.
10% Upside To Roche If Pipeline Fires, Contingent On Promising Data
As mentioned above, Roche has been improving its pipeline by investing in immuno-oncolgy. Looking at the programs under phase 3 trials, we find that the company is giving a strong push to Perjeta, Kadcyla and Avastin for early, second line and adjuvant therapies in breast cancer, ovarian cancer and lung cancer. We currently expect the drugs in the pipeline to drive incremental annual revenues of $6 billion in the next few years, but our estimate may turn out to be conservative. If a few of the current phase 3 trials are successful and Roche expands much in adjuvant therapies, revenue from the pipeline drugs can easily cross $12 billion, resulting in a 10% upside to our price estimate.
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Notes:- CheckMate -057, a Pivotal Phase III Opdivo (nivolumab) Lung Cancer Trial, Stopped Early, BMY Press Release, Apr 17 2015 [↩]