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 Its skin cancer treatment Zelboraf flopped, the company said on
Monday, while similar drugs from Novartis achieved their goals.
Additionally, analysts now doubt prospects for Roche's eye drug
lampalizumab after it failed a separate trial, jeopardizing more
than $2 billion in potential annual sales.
Roche has been counting on new drugs to bolster its business as
rivals produce cheaper biosimilar copies of its biggest sellers --
the $20 billion-a-year trio of cancer drugs Herceptin, Avastin and
Rituxan.
But the recent flops, coupled with disappointing results this year
on its immunotherapy Tecentriq and its Herceptin-Perjeta
combination, underscore the challenge Roche faces.
"In a best case, lampalizumab could have been a significant driver
of Roche earnings growth over the next five years," Kepler Cheuvreux
analyst David Evans wrote in a note.
"Virtually removing it from models will put more pressure on Roche
sales, and on Roche’s attempts to keep margins even flat, as
biosimilars start to take hold."
Roche shares were down 1.2 percent at 241.60 Swiss francs in early
trade while Switzerland's benchmark SMI rose.
Goldman Sachs analysts cut their price target on the stock to 325
francs from 335 francs.
Already, numerous versions of Roche's Rituxan, also called MabThera,
have been approved in Europe and are being reviewed in the United
States.
Copies of Herceptin and Avastin are hot on their heels.
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APPROVAL WINS
Despite trial mis-steps, Roche has enjoyed several approval wins.
Among top new drugs, Ocrevus is making headway in winning multiple
sclerosis patients, generating 192 million Swiss francs ($201.94
million) in the first half.
Moreover, the FDA is expected by mid-February to make a decision on
hemophilia medicine ACE910, which is expected eventually to add
billions to Roche's bottom line.
Roche, which upgraded its sales guidance for 2017 in July, continues
to expect its new drugs -- Tecentriq, Gazyva and Perjeta, at the top
of the list -- to drive sales growth despite erosion because of
biosimilars.
Jefferies analyst Jeffrey Holford was sanguine about the trial
failures, saying they will not derail Roche's sales growth.
"Other new product development and launches, such as Ocrevus,
Tecentriq and ACE910, look set to drive continued growth for the
company despite approaching biosimilar headwinds," he said.
($1 = 0.9508 Swiss francs)
(Reporting by John Miller; Editing by David Goodman)
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