Thank you, Ocrevus: Roche ups guidance as MS drug steams past blockbuster mark

Thanks to multiple sclerosis market disrupter Ocrevus, newer cancer drugs Perjeta and Alecensa, and even a little help from its late-blooming Tecentriq, Roche has dialed up its 2018 outlook for the second time this year.

Fueled by the increasingly strong performance from newer drugs and the U.S. market, the company’s first-half sales climbed 7% to CHF 28.1 billion ($28.3 billion)—their fastest clip in about three years—to handily beat analysts’ expectations.

In what CEO Severin Schwan called “the most successful launch in the history of Roche” on the earnings call Thursday, MS drug Ocrevus is so successful that it crossed the blockbuster threshold halfway through 2018, after being on the market for just over a year. For the six-month period, it brought in 1.04 billion Swiss francs ($1.05 billion), more than 90% of that in the U.S. And with its EU approval just six months old, there's more upside ahead.

That's very good news for Roche, because Ocrevus is one of several newer products Roche hopes can outgrow the loss from cheaper copies to its aging cancer blockbusters, including Herceptin and Rituxan. So far, that strategy is working.

Breast cancer therapy Perjeta—likely boosted by a new combo approval to treat high-risk HER2-positive breast cancer alongside Herceptin—saw sales jump 23% year over year at constant exchange rates, to CHF 1.31 billion. Another fast-growing drug, Alecensa, which won an FDA nod for previously untreated ALK-positive lung cancer last November, reaped CHF 279 million in half-year sales and now boasts a 60% share among new U.S. patients in that setting, said Roche Pharmaceuticals head Daniel O’Day on the call.

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Even its slow-starting immunotherapy Tecentriq chipped in CHF 320 million in the first half of 2018. Though still lagging far behind its PD-1/L1 checkpoint inhibitor rivals, including Merck’s Keytruda and Bristol-Myers Squibb’s Opdivo, Tecentriq sales beat consensus by more than 5%, noted ODDO BHF analyst Pierre Corby Thursday.

Plus, Tecentriq has recently turned up some new milestones to strengthen its case. It won an FDA breakthrough designation in liver cancer, put up positive survival results in small cell lung cancer and awaits an FDA decision on a combo approval in first-line non-squamous non-small cell lung cancer. More data's on its way, too; Roche plans to release a bunch of new, detailed numbers from Tecentriq trials later this year.

Pressed by one analyst to point to the most important Tecentriq developments, O’Day focused on its combination with Avastin, an older Roche drug that could itself see a boost from combination approvals with Tecentriq. “What I would say is the following," he said. "What’s been shown across multiple tumor types is that Avastin plus Tecentriq does play a role in enhancing, on top of what you would get with Tecentriq alone or Tecentriq plus chemotherapy combinations. We’ve seen that in renal cell carcinoma, we’ve seen it in lung cancer and we’ve seen in hepatocellular carcinoma.”

One study investors and rivals will focus on is the phase 3 IMpower132 study, which tests Tecentriq in tandem with chemo for previously untreated patients with non-small-cell lung cancer. The reason is that the chemo component is comparable to what Merck used in its own Keytruda study, Evercore ISI analyst Umer Raffat noted recently. Interim data showed the Tecentriq combo's benefit in cutting the risk of disease worsening or death, but not in the co-primary endpoint of overall survival. Roche will present the detailed data at the upcoming European Society for Medical Oncology annual conference and will release final OS results next year.

RELATED: Is Roche's latest Tecentriq win really a win for Merck's Keytruda?

“Given the very good, continuously growing uptake of our new medicines, we are well on track to rejuvenate our portfolio,” Schwan said in a statement. Overall, the company’s first-half 2018 sales climbed 7% to CHF 28.1 billion, despite a CHF 398 million drag from lower Rituxan sales in Europe, where it's facing a biosimilar. Core operating profit rose 10% to CHF 11.2 billion.

The Swiss pharma raised its 2018 outlook for the second time this year and now expects mid-single digit sales growth, up from the previous low single-digit increase. It doesn't expect the growth in H1 to continue at the same pace in the near future because of biosimilar competition in the EU. Biosims in the U.S. will have their turn at dragging down growth, too; for H1, Herceptin sales rose thanks to its 12% growth in the U.S., but both Herceptin and Avastin will start to see copycat erosion in the U.S. in 2019, said Schwan.