Roche Holdings Ltd. (RHHBY) recently announced the submission of a new drug application (NDA) for vemurafenib (RG7204, PLX4032) to the US Food and Drug Administration (FDA). The company is seeking to get the candidate approved for the treatment of people with BRAF V600 mutation-positive metastatic melanoma (skin cancer). Roche also submitted a marketing authorization application (MAA) for the drug to the European Medicines Agency (EMA), for the same indication.
We note that the submissions are based on results from two clinical studies – BRIM2 and BRIM3. These studies evaluated vemurafenib in people with BRAF V600 mutation-positive metastatic melanoma, determined by the investigational companion diagnostic test, which is also being developed by Roche.
Roche is developing vemurafenib under a license and collaboration agreement with Plexxikon, which was recently acquired by Daiichi Sankyo.
Last month, Roche reported its sales numbers for the first quarter of fiscal 2011. Total revenues for the quarter remained flat at $11,815 million, primarily due to weaker-than-expected performance of the Pharmaceutical segment. Excluding the impact of the previously anticipated decline in Tamiflu sales, group sales increased 2%. Sales were also slightly above the Zacks Consensus Estimate of $11,757 million.
Along with reporting sales figures for the first quarter, Roche provided guidance for 2011. The company expects total revenue and revenues from the Pharmaceuticals Division to grow at low single-digit rates. The growth rate excludes revenues from Tamiflu but includes the impact of the US healthcare reform and European austerity measures.
While Roche anticipates Pharmaceuticals sales to grow in line with the market, sales from the Diagnostics segment are expected to surpass the market. The performance of the Diagnostics segment is expected to be driven by the launch of new products.
Roche anticipates earnings and dividend payouts for fiscal 2011 to grow at a high single-digit rate. Furthermore, the company expects to reduce debt progressively and return to a net cash position by 2015.
Our Take
We currently have a Zacks #2 Rank (short-term 'Buy' rating) on Roche. We are encouraged by the overall top-line performance of Roche despite the challenges faced by the company like a maturing key drug franchise, top-line weakness in the US and Western Europe, as well as increasing threat from biosimilars.
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