Roche limits biosim damage to cancer blockbusters, but it's still early, execs warn

Avastin and Herceptin only saw limited impact from biosimilar launches in the U.S. so far, but execs still warned against drawing any conclusions now. (Roche)

It’s the moment of truth for Roche’s legacy cancer blockbusters in the U.S., with biosimilars recently landing on the scene. But while the drugs are largely standing their ground so far, executives cautioned Wednesday about drawing any hasty conclusions.

Facing off against biosimilars to Herceptin and Avastin in the U.S. for the first time in Q3, Roche chalked up a victory of sorts, with the copycats’ pullback on the two originators’ sales turning out to be weaker than what industry watchers had expected.

After Amgen launched Avastin biosim Mvasi and Herceptin copy Kanjinti at 15% discounts mid-July, Avastin generated CHF 742 million ($745 million) in the U.S. for the quarter, with sales even increasing 1% year over year. But that 1% growth rate marked a decline from 9% growth Roche saw in the first half of the year.

Herceptin, meanwhile, collected CHF 665 million ($667 million), down 6%. That drop accelerated from only 1% in the first six months, ODDO BHF analysts noted in an investor memo Wednesday, calling the slowdown “not very pronounced” but “visible.”

Wolfe Pharma analyst Tim Anderson attributed Herceptin's U.S. slide to Roche using contracting to combat biosimilars. During a Wednesday conference call with investors, Roche pharma chief Bill Anderson also cited some patient transition to newer HER2 drug Kadcyla after its recent FDA approval for adjuvant treatment of breast cancer.

Globally, Avastin’s $1.81 billion and Herceptin’s $1.56 billion hauls were 5.3% and 2.7% ahead of analysts’ consensus, respectively.

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Compared with the 30% to 40% slump those two drugs have seen in Europe amid biosim assaults, the U.S. impact has so far been limited. But Roche execs cautioned about extrapolating the early results.

“In the U.S., we will have a significant impact of biosimilars for the coming year, but on the balance, driven by the strong demand for our new medicines, we are confident that we’ll grow our business beyond this year,” Roche CEO Severin Schwan said in an interview with Bloomberg.

The two biosimilars have only been available for a few weeks, and negotiations with payers take time, Anderson told investors the call Wednesday. Besides, the Swiss drugmaker expects to see several more Herceptin copies in the next six months and at least one additional Avastin knockoff by year-end or early 2020, and the first copy to Rituxan made by Teva and Celltrion could come in the fourth quarter, he added.

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Luckily for Roche, those three legacy cancer drugs are still growing well in China, thanks to their inclusion on the national reimbursement list. But they could also face biosimilars soon; Chinese regulators have already approved the first Rituxan copycat, made by Shanghai Henlius Biotech.

Still, Roche only expects “a limited number” of biosimilars in China, Anderson said. Because “there may be some questions about the quality of some of the early biosimilars, we see ourselves able to compete,” he said.

In the EU, where biosimilars have hit hard, Roche was finally able to turn up sales growth in Q3 after several quarters of decline.

All told, newer drugs including hemophilia A therapy Hemlibra, multiple sclerosis blockbuster Ocrevus and PD-L1 inhibitor Tecentriq helped contribute $3.94 billion additional sales in the first nine months of 2019 over the same period last year, more than enough to offset the $1.02 billion blow from biosims.

Thanks to the strong momentum of those medicines and the better-than-expected biosim situation, Roche’s pharma division racked up $12.4 billion in sales in Q3, 15% ahead of last year’s tally and beating the Street’s consensus by 3.2%.

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But it's not all bright and sunny for the pharma giant. Amid launches of rival MS drugs in the form of Novartis' Mayzent and Merck KGaG's Mavenclad, Ocrevus' CHF 929 million ($932 million) sales in the quarter—though a 46.8% increase over the previous year—came 2.3% below analysts' expectations. Roche also decided not to file for approval for Tecentriq in squamous non-small cell lung cancer after a chemo combo failed to outdo solo chemo at extending the lives of previously untreated patients.

Looking ahead, the Swiss pharma has dialed up its sales growth forecast for a third time this year, from an increase in the mid- to high-single digits to the high-single digits.