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Roche (RHHBY) 1H18 Revenues Up Y/Y on Solid New Drug Sales
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Swiss pharma giant Roche Holding AG (RHHBY - Free Report) reported solid sales growth in the first half of 2018 as well as in the second quarter, propelled by growth in sales of new drugs. The company also upped its annual guidance for the second time in 2018.
The strong performance should boost investors’ sentiment. Roche’s stock has declined 0.9% in the year so far compared with the industry’s decline of 2.3%.
Sales for the first half of 2018 came in at CHF 28.1 billion, up 7% from the year-ago period. Earnings per share came in at CHF 9.84 in the first half, up from CHF 8.23 in the year-ago quarter. The company reported sales of CHF 14.5 billion in the second quarter of 2018, up 7% from the year-ago period.
The company reports results under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Sales at the Pharmaceuticals division increased 7%, driven by strong growth in Ocrevus, Tecentriq, Alecensa and Perjeta. Diagnostics division sales climbed 8% primarily on the back of strong immunodiagnostic business.
Results in Detail
Herceptin sales grew 2%, due to demand in the United States. Perjeta sales grew 23%, following increased demand in the neoadjuvant and metastatic settings. Sales also got a boost from the FDA approval of Perjeta for use in combination with Herceptin and chemotherapy for adjuvant (after surgery) treatment of HER2-positive early breast cancer at high risk of recurrence in late 2017. In total, the HER2-franchise (Herceptin, Perjeta and Kadcyla) was up 7%.
Strong Ocrevus sales further boosted the top line. The drug, used to treat two forms of multiple sclerosis (MS), continued to gain traction worldwide with sales of $1.0 billion. Approximately 50,000 patients were being treated globally as of June 2018.
Immuno-oncology drug, Tecentriq (for advanced bladder cancer and advanced lung cancer), recorded 37% growth in sales. Sales growth was driven by post-launch uptake in Europe, particularly in Germany. Lung cancer drug, Alcenesa sales were up 91% and witnessed solid growth across all regions.
Performance of the immunology franchise was driven by increased sales of Actemra/RoActemra (13%) and Xolair (10%). Gazyva/Gazyvaro sales were up 32%, due to growth in the United States and Europe.
Ophthalmology drug, Lucentis’ sales were up 16%. The growth was driven by the launch of prefilled syringes and sales increases were reported for all approved indications. Sales of Xolair (+10%) was driven by demand in chronic idiopathic urticaria.
Tamiflu contributed with high sales at the beginning of the year due to a severe flu season.
However, sales of Avastin were flat due to decline in the United States and Europe. Sales of Rituxan/MabThera were also down 9%, due to entry of biosimilars in Europe. Sales of Tarceva declined (32%), due to growing use of other therapeutic options. Sales of Xeloda (7%) continue to be hit by generic competition.
Revenues at the Diagnostics division climbed 6% on the back of solid performance of the Centralised and Point of Care Solutions (+6%) unit, which was, in turn, propelled by Immunodiagnostics (+9%). Tissue Diagnostics (+11%) and Molecular Diagnostics (+5%) also performed impressively. Diabetes Care sales increased 1%.
2018 Outlook Raised
Roche’s sales are expected to grow in mid-single digits compared to the earlier guidance of growth in low-single digits. The company expects core earnings to grow in mid-teen digits compared to the previous estimate of growth in high-single digits.
Pipeline Progress
The European Commission approved Perjeta in combination with Herceptin and chemotherapy for post-surgery (adjuvant) treatment of adult patients with HER2-positive early breast cancer (eBC) at high risk of recurrence.
The FDA also approved the subcutaneous formulation of Actemra for the treatment of active polyarticular juvenile idiopathic arthritis in patients two years of age and older. The FDA also granted approval to MabThera/Rituxan for the treatment of adults suffering from moderate to severe pemphigus vulgaris.
Roche and partner AbbVie (ABBV - Free Report) also won the FDA approval for Venclexta in combination with Rituxan/MabThera for the treatment of patients suffering from chronic lymphocytic leukaemia (CLL) or small lymphocytic lymphoma.
The FDA also granted Priority Review to Hemlibra for adults and children with haemophilia A without factor VIII inhibitors. The FDA also granted Breakthrough Therapy Designation for the combination of Tecentriq and Avastin as an initial (first-line) treatment for patients suffering from advanced or metastatic hepatocellular carcinoma (HCC). The FDA also granted priority review to baloxavir marboxil as a single-dose, oral treatment for acute, uncomplicated influenza in patients 12 years and older.
Roche also entered into a merger agreement with Foundation Medicine. The transaction will close in the second half of 2018. The acquisition will advance molecular insights and the broad availability of high-quality comprehensive genomic profiling, both key enablers for the development of new cancer treatments and optimal patient care.
Our Take
Roche’s performance in the first half of 2018 was impressive. Strong sales of Ocrevus, Perjeta, Tecentriq and Alecensa more than offset the decline from legacy drugs Rituxan, Avastin and Tarceva. In particular, MS drug Ocrevus witnessed strong growth, driven by increased demand.
The increase in guidance was encouraging too. Meanwhile, the company continues to progress with its pipeline as it looks to restructure its portfolio beyond oncology into MS and hemophilia among others. Approval of new drugs and a potential label expansion of existing drugs bode well for Roche, as its legacy drugs like Herceptin and MabThera are facing competition from biosimilars. Novartis (NVS - Free Report) has already launched its biosimilar version of Rituxan/ MabThera in Europe. Amgen (AMGN - Free Report) also obtained the FDA approval for a biosimilar version of Avastin for treatment of five types of cancers.
Roche is also looking to restructure its operations for better efficiency.
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New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Image: Bigstock
Roche (RHHBY) 1H18 Revenues Up Y/Y on Solid New Drug Sales
Swiss pharma giant Roche Holding AG (RHHBY - Free Report) reported solid sales growth in the first half of 2018 as well as in the second quarter, propelled by growth in sales of new drugs. The company also upped its annual guidance for the second time in 2018.
The strong performance should boost investors’ sentiment. Roche’s stock has declined 0.9% in the year so far compared with the industry’s decline of 2.3%.
Sales for the first half of 2018 came in at CHF 28.1 billion, up 7% from the year-ago period. Earnings per share came in at CHF 9.84 in the first half, up from CHF 8.23 in the year-ago quarter. The company reported sales of CHF 14.5 billion in the second quarter of 2018, up 7% from the year-ago period.
The company reports results under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Sales at the Pharmaceuticals division increased 7%, driven by strong growth in Ocrevus, Tecentriq, Alecensa and Perjeta. Diagnostics division sales climbed 8% primarily on the back of strong immunodiagnostic business.
Results in Detail
Herceptin sales grew 2%, due to demand in the United States. Perjeta sales grew 23%, following increased demand in the neoadjuvant and metastatic settings. Sales also got a boost from the FDA approval of Perjeta for use in combination with Herceptin and chemotherapy for adjuvant (after surgery) treatment of HER2-positive early breast cancer at high risk of recurrence in late 2017. In total, the HER2-franchise (Herceptin, Perjeta and Kadcyla) was up 7%.
Strong Ocrevus sales further boosted the top line. The drug, used to treat two forms of multiple sclerosis (MS), continued to gain traction worldwide with sales of $1.0 billion. Approximately 50,000 patients were being treated globally as of June 2018.
Immuno-oncology drug, Tecentriq (for advanced bladder cancer and advanced lung cancer), recorded 37% growth in sales. Sales growth was driven by post-launch uptake in Europe, particularly in Germany. Lung cancer drug, Alcenesa sales were up 91% and witnessed solid growth across all regions.
Performance of the immunology franchise was driven by increased sales of Actemra/RoActemra (13%) and Xolair (10%). Gazyva/Gazyvaro sales were up 32%, due to growth in the United States and Europe.
Ophthalmology drug, Lucentis’ sales were up 16%. The growth was driven by the launch of prefilled syringes and sales increases were reported for all approved indications. Sales of Xolair (+10%) was driven by demand in chronic idiopathic urticaria.
Tamiflu contributed with high sales at the beginning of the year due to a severe flu season.
However, sales of Avastin were flat due to decline in the United States and Europe. Sales of Rituxan/MabThera were also down 9%, due to entry of biosimilars in Europe. Sales of Tarceva declined (32%), due to growing use of other therapeutic options. Sales of Xeloda (7%) continue to be hit by generic competition.
Revenues at the Diagnostics division climbed 6% on the back of solid performance of the Centralised and Point of Care Solutions (+6%) unit, which was, in turn, propelled by Immunodiagnostics (+9%). Tissue Diagnostics (+11%) and Molecular Diagnostics (+5%) also performed impressively. Diabetes Care sales increased 1%.
2018 Outlook Raised
Roche’s sales are expected to grow in mid-single digits compared to the earlier guidance of growth in low-single digits. The company expects core earnings to grow in mid-teen digits compared to the previous estimate of growth in high-single digits.
Pipeline Progress
The European Commission approved Perjeta in combination with Herceptin and chemotherapy for post-surgery (adjuvant) treatment of adult patients with HER2-positive early breast cancer (eBC) at high risk of recurrence.
The FDA also approved the subcutaneous formulation of Actemra for the treatment of active polyarticular juvenile idiopathic arthritis in patients two years of age and older. The FDA also granted approval to MabThera/Rituxan for the treatment of adults suffering from moderate to severe pemphigus vulgaris.
Roche and partner AbbVie (ABBV - Free Report) also won the FDA approval for Venclexta in combination with Rituxan/MabThera for the treatment of patients suffering from chronic lymphocytic leukaemia (CLL) or small lymphocytic lymphoma.
The FDA also granted Priority Review to Hemlibra for adults and children with haemophilia A without factor VIII inhibitors. The FDA also granted Breakthrough Therapy Designation for the combination of Tecentriq and Avastin as an initial (first-line) treatment for patients suffering from advanced or metastatic hepatocellular carcinoma (HCC). The FDA also granted priority review to baloxavir marboxil as a single-dose, oral treatment for acute, uncomplicated influenza in patients 12 years and older.
Roche also entered into a merger agreement with Foundation Medicine. The transaction will close in the second half of 2018. The acquisition will advance molecular insights and the broad availability of high-quality comprehensive genomic profiling, both key enablers for the development of new cancer treatments and optimal patient care.
Our Take
Roche’s performance in the first half of 2018 was impressive. Strong sales of Ocrevus, Perjeta, Tecentriq and Alecensa more than offset the decline from legacy drugs Rituxan, Avastin and Tarceva. In particular, MS drug Ocrevus witnessed strong growth, driven by increased demand.
The increase in guidance was encouraging too. Meanwhile, the company continues to progress with its pipeline as it looks to restructure its portfolio beyond oncology into MS and hemophilia among others. Approval of new drugs and a potential label expansion of existing drugs bode well for Roche, as its legacy drugs like Herceptin and MabThera are facing competition from biosimilars. Novartis (NVS - Free Report) has already launched its biosimilar version of Rituxan/ MabThera in Europe. Amgen (AMGN - Free Report) also obtained the FDA approval for a biosimilar version of Avastin for treatment of five types of cancers.
Roche is also looking to restructure its operations for better efficiency.
Zacks Rank
Roche currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .
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Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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