Positive news flowed in for Roche (RHHBY) when it announced that the FDA has approved Lucentis (ranibizumab injection) for the treatment of diabetic retinopathy (DR) in patients suffering from diabetic macular edema (DME).
We note that the drug was granted Breakthrough Therapy designation in the U.S. for this indication. The FDA also granted priority review to Lucentis for this indication based on results from two phase III trials – RISE and RIDE. Hence, a probable approval was in the cards.
Lucentis was one of the top-selling drugs for Roche in 2014, generating sales of CHF1.7 billion, up 2% year over year due to its increased adoption for treating DME. Label expansion of the drug will further boost its sales.
We remind investors that Lucentis was approved by the FDA for the treatment of DME in 2012. The drug is also approved for patients with wet age-related macular degeneration (wet AMD) and macular edema following retinal vein occlusion.
As per Roche, nearly 750,000 people in the U.S. suffer from DME, of which about 10% are DR patients.
Roche markets Lucentis in the U.S., while Novartis (NVS) has exclusive commercial rights for the rest of the world.
However, Lucentis is expected to face strong competition in the DME and wet AMD space in 2015, which will adversely impact sales.
We note that Regeneron Pharmaceuticals, Inc.’s (REGN) Eylea is also approved for DME in the U.S.
Roche currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the health care sector worth considering is Allergan (AGN), carrying a Zacks Rank #2 (Buy).
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