Roche (RHHBY) announced that it will acquire privately-held French biotechnology company Trophos.
Trophos is developing its pipeline candidate olesoxime (TRO19622) for spinal muscular atrophy (SMA), a rare and debilitating genetic neuromuscular disease commonly diagnosed in children.
As per the terms of the agreement, shareholders of Trophos will receive an upfront cash payment of €120 million, plus milestone payments of up to €350 million.
The candidate enjoys orphan drug status in both the U.S. and the EU. We note that Trophos had presented encouraging data at the annual meeting of the American Academy of Neurology in April 2014. Results from a pivotal phase II clinical trial on olesoxime that showed a beneficial effect on the maintenance of neuromuscular function in patients with type II and non-ambulatory type III SMA were presented at the meeting. The study also showed a significant reduction in medical complications associated with the disease.
Roche specializes in drugs for oncology, immunology and infectious diseases. Apart from providing therapeutic products and services for diverse medical needs, the company focuses on innovative diagnostic solutions for early detection and treatment of diseases.
We are encouraged by Roche’s performance in 2014. Its oncology portfolio looks solid as ever and we expect further traction. We are also impressed by the company's efforts to grow beyond oncology to immunology and ophthalmology.
The Trophos acquisition will enable Roche to develop medicines for SMA and take it a step toward its aim to develop a portfolio beyond on oncology.
Roche currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include AbbVie (ABBV), Allergan (AGN) and Shire (SHPG). All these stocks carry a Zacks Rank #2 (Buy).
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