Roche boosted by trial success with blood cancer drug

[May 27, 2016]  ZURICH (Reuters) - Roche got a big boost on Friday when a clinical trial testing its new blood cancer drug Gazyva proved successful, lifting prospects for a new medicine that will be pivotal as the Swiss company fights the threat of biosimilar competition.

Roche said Gazyva proved significantly better than its older drug Rituxan at delaying the progression of disease in people with previously untreated follicular lymphoma.

Clinical trials with the new drug are important in deciding how well the Swiss drugmaker is placed to fend off cheaper competition from so-called biosimilar copies of Rituxan, which are likely to hit the market in the next couple of years.

Shares in Roche rose 3.4 percent at 0725 GMT, outperforming a 0.4 percent higher European pharma index.

"Gazyva has long been considered as superior to Rituxan," said ZKB analyst Michael Nawrath in a note. He said follicular lymphoma was a much bigger indication than previously untreated chronic lymphocytic leukemia, for which Gazyva is already approved in more than 70 countries.

"The U.S. approval of Gayzva for previously treated follicular lymphoma (in February) didn't lead to a breakthrough in sales, but the approval as a first-line treatment will," said Nawrath who has an "Overweight" recommendation on the stock.

Vontobel analyst Stefan Schneider, who has a "Buy" recommendation on the share and raised his price target to 330 Swiss francs from 309 francs on the news, said it could bring the possible launch of the drug for the new use forward by one year.

"Replacing Rituxan with Gazyva protects Roche's CD20 franchise revenues from biosimilar erosion," he said.

Follicular lymphoma is considered incurable and relapse is common. It is estimated that more than 75,000 people are diagnosed with this most common form of non-Hodgkin lymphoma each year worldwide, Roche said.

(Reporting by Silke Koltrowitz and Ben Hirschler)

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