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Roche (RHHBY) recently announced that it has obtained approval for an additional indication of oncology drug Tarceva from the Japanese Ministry of Health, Labour and Welfare (MHLW).

Tarceva can now be used in Japan for the first-line treatment of patients suffering from unresectable, metastatic non-small cell lung cancer (NSCLC) with tumors that have certain epidermal growth factor receptor (EFGR) activating mutations.

The approval was based on positive results from two different trials. Roche had filed for approval for the additional indication based on results from a phase II trial in Japan and a phase III trial (EURTAC study) conducted outside Japan.

In the EURTAC study, the first-line use of Tarceva as a monotherapy was evaluated vis-à-vis platinum-based chemotherapy in NSCLC patients with EGFR mutations.

Both studies met their primary endpoints.

We remind investors that Tarceva was approved in Europe in 2012 for the first-line treatment of NSCLC with EGFR activating mutations.

The US Food and Drug Administration (FDA) also approved Tarceva for the same indication in May 2013.

Tarceva is already approved for treating unresectable recurrent NSCLC, which progressed after chemotherapy in Japan.  It is also approved to treat pancreatic cancer.

The approval of the new indication should boost the sales potential of the drug, which was one of the top-selling drugs of Roche in 2012 with sales of CHF 1.3 billion.

We note that AstraZeneca’s (AZN) Iressa is also approved for the same indication.

Concurrently, Roche also obtained MHLW approval for Herceptin for an additional dosage and once-weekly administration for postoperative adjuvant chemotherapy in breast cancer that overexpresses HER2.

We are encouraged by Roche’s recent progress in Japan. Roche launched the subcutaneous injection formulation of its rheumatoid arthritis (RA) drug Actemra in Japan in May 2013 after receiving approval for the same in Mar 2013.

Roche currently carries a Zacks Rank #4 (Sell). Right now, Novo Nordisk (NVO) and Cubist Pharmaceuticals (CBST) look well placed with a Zacks Rank #2 (Buy).

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