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Roche Holding AG (RHHBY - Free Report) posted strong sales number for the first quarter of 2018 propelled by demand for new drugs amid biosimilar competition for legacy drugs.
Sales came in at $14.5 billion, beating the Zacks Consensus Estimate of $13.8 billion. The Swiss pharma giant reported sales of CHF13.6 billion in the first quarter, up 6% from the year-ago period.
The company reports results under two divisions: Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Sales at the Pharmaceuticals division increased 7% driven by strong growth in Ocrevus and Perjeta, which more than offset lower sales of MabThera/Rituxan, Tarceva and Avastin. Diagnostics division sales climbed 5% primarily on the back of strong immunodiagnostic business.
Results in Detail
Herceptin sales grew 2% due to increasing demand in the United States. Perjeta sales grew 18% following increased demand in the neoadjuvant and metastatic settings. Sales also got a boost from the FDA approval of Perjeta for use in combination with Herceptin and chemotherapy for adjuvant (after surgery) treatment of HER2-positive early breast cancer at high risk of recurrence in late 2017. Sales of Kadcyla (+6%) were driven by increasing demand in international markets.
Strong Ocrevus sales further boosted the top line. The drug, used to treat two forms of multiple sclerosis, continued to gain traction in the United States. The company also launched it in Europe and other countries worldwide during the first quarter.
Recently launched drugs, Tecentriq and Alecensa for lung cancer have also had an encouraging start. Immuno-oncology drug, Tecentriq, recorded 29% growth in sales. Alcenesa sales were up 81% as it witnessed solid demand in the United States, Europe and in Japan.
Performance of the immunology franchise was driven by increased sales of Actemra/RoActemra (13%) and Xolair (7%). Gazyva/Gazyvaro sales were up 27% due to growth in the United States and Europe.
Ophthalmology drug Lucentis’ sales were up 6%. The growth was driven by increased demand for 0.5 mg prefilled syringes in wet age-related macular degeneration and continued growth in diabetic retinopathy.
However, sales of Avastin fell 2% due to increasing use of cancer immunotherapy medicines in lung cancer. Sales of Rituxan/MabThera were also down 8% due to entry of biosimilars in the market.
However, sales of Tarceva declined (32%) due to growing use of other therapeutic options. Sales of Xeloda (2%) continue to be hit by generic competition.
Revenues at the Diagnostics division climbed 5% on the back of solid performance of the Centralised and Point of Care Solutions (+4%) unit, which was in turn, propelled by Immunodiagnostics (+5%). Tissue Diagnostics (+7%) and Molecular Diagnostics (+6%) also performed impressively. Diabetes Care sales increased 5%.
2018 Outlook Raised
Roche’s sales expected to grow in low-single digits compared to the earlier guidance of being stable or grow in low-single digits. The company expects core earnings to grow in high-single digits. The company intends to further increase dividend in 2018 in local currency.
Pipeline Progress
In January 2018, the European Medicines Agency (“EMA”) approved Ocrevus for the treatment of relapsing and primary progressive forms of multiple sclerosis. In February 2018, the EMA also granted approval for Hemlibra for people with haemophilia A with inhibitors to factor VIII. In March 2018, the FDA approved Lucentis 0.3 mg prefilled syringe as a new method of administering the medicine to treat all forms of diabetic retinopathy.
In April 2018, the FDA granted Hemlibra a Breakthrough Therapy Designation for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in patients with hemophilia A without inhibitors to factor VIII.
During the quarter, Roche acquired Flatiron Health and Ignyta, Inc. While Flatiron Health will enable accelerate development and delivery of breakthrough medicines for oncology patients, Ignyta’s lead molecule entrectinib targets tumors with one of two genetically defined gene rearrangements: ROS1 fusions in NSCLC, and NTRK fusions across a broad range of solid tumors.
Our Take
Roche beat estimates in the first quarter of 2018 driven by contribution from newly launched drugs. The label expansion of key drugs, Perjeta, Tecentriq and Alecensa will further drive growth. Ocrevus and Hemlibra have been successfully launched. However, sales of Avastin and Tarceva continue to decline.
Roche’s stock has lost 12.9% in the last 12 months compared with industry’s gain of 8.4%.
Approval of new drugs and a potential label expansion of existing drugs bode well for Roche as its legacy drugs like Herceptin, MabThera are facing competition from biosimilars. Novartis (NVS - Free Report) has already launched its biosimilar version of Rituxan/ MabThera in Europe. Amgen (AMGN - Free Report) also obtained FDA approval for a biosimilar version of Avastin for treatment of five types of cancers including lung cancer, colorectal cancer, glioblastoma, renal cell carcinoma and cervix cancer.
Ligand’s earnings per share estimates have moved up from $3.92 to $4.40 for 2018 and from $4.75 to $5.32 for 2019 in the last 60 days. The company delivered a positive surprise in three of the trailing four quarters with an average beat of 24.88%. Share price of the company has soared 39.1% over a year.
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Image: Bigstock
Roche (RHHBY) Q1 Earnings: Ocrevus, Perjeta Drive Sales Beat
Roche Holding AG (RHHBY - Free Report) posted strong sales number for the first quarter of 2018 propelled by demand for new drugs amid biosimilar competition for legacy drugs.
Sales came in at $14.5 billion, beating the Zacks Consensus Estimate of $13.8 billion. The Swiss pharma giant reported sales of CHF13.6 billion in the first quarter, up 6% from the year-ago period.
The company reports results under two divisions: Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Sales at the Pharmaceuticals division increased 7% driven by strong growth in Ocrevus and Perjeta, which more than offset lower sales of MabThera/Rituxan, Tarceva and Avastin. Diagnostics division sales climbed 5% primarily on the back of strong immunodiagnostic business.
Results in Detail
Herceptin sales grew 2% due to increasing demand in the United States. Perjeta sales grew 18% following increased demand in the neoadjuvant and metastatic settings. Sales also got a boost from the FDA approval of Perjeta for use in combination with Herceptin and chemotherapy for adjuvant (after surgery) treatment of HER2-positive early breast cancer at high risk of recurrence in late 2017. Sales of Kadcyla (+6%) were driven by increasing demand in international markets.
Strong Ocrevus sales further boosted the top line. The drug, used to treat two forms of multiple sclerosis, continued to gain traction in the United States. The company also launched it in Europe and other countries worldwide during the first quarter.
Recently launched drugs, Tecentriq and Alecensa for lung cancer have also had an encouraging start. Immuno-oncology drug, Tecentriq, recorded 29% growth in sales. Alcenesa sales were up 81% as it witnessed solid demand in the United States, Europe and in Japan.
Performance of the immunology franchise was driven by increased sales of Actemra/RoActemra (13%) and Xolair (7%). Gazyva/Gazyvaro sales were up 27% due to growth in the United States and Europe.
Ophthalmology drug Lucentis’ sales were up 6%. The growth was driven by increased demand for 0.5 mg prefilled syringes in wet age-related macular degeneration and continued growth in diabetic retinopathy.
However, sales of Avastin fell 2% due to increasing use of cancer immunotherapy medicines in lung cancer. Sales of Rituxan/MabThera were also down 8% due to entry of biosimilars in the market.
However, sales of Tarceva declined (32%) due to growing use of other therapeutic options. Sales of Xeloda (2%) continue to be hit by generic competition.
Revenues at the Diagnostics division climbed 5% on the back of solid performance of the Centralised and Point of Care Solutions (+4%) unit, which was in turn, propelled by Immunodiagnostics (+5%). Tissue Diagnostics (+7%) and Molecular Diagnostics (+6%) also performed impressively. Diabetes Care sales increased 5%.
2018 Outlook Raised
Roche’s sales expected to grow in low-single digits compared to the earlier guidance of being stable or grow in low-single digits. The company expects core earnings to grow in high-single digits. The company intends to further increase dividend in 2018 in local currency.
Pipeline Progress
In January 2018, the European Medicines Agency (“EMA”) approved Ocrevus for the treatment of relapsing and primary progressive forms of multiple sclerosis. In February 2018, the EMA also granted approval for Hemlibra for people with haemophilia A with inhibitors to factor VIII. In March 2018, the FDA approved Lucentis 0.3 mg prefilled syringe as a new method of administering the medicine to treat all forms of diabetic retinopathy.
In April 2018, the FDA granted Hemlibra a Breakthrough Therapy Designation for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in patients with hemophilia A without inhibitors to factor VIII.
During the quarter, Roche acquired Flatiron Health and Ignyta, Inc. While Flatiron Health will enable accelerate development and delivery of breakthrough medicines for oncology patients, Ignyta’s lead molecule entrectinib targets tumors with one of two genetically defined gene rearrangements: ROS1 fusions in NSCLC, and NTRK fusions across a broad range of solid tumors.
Our Take
Roche beat estimates in the first quarter of 2018 driven by contribution from newly launched drugs. The label expansion of key drugs, Perjeta, Tecentriq and Alecensa will further drive growth. Ocrevus and Hemlibra have been successfully launched. However, sales of Avastin and Tarceva continue to decline.
Roche’s stock has lost 12.9% in the last 12 months compared with industry’s gain of 8.4%.
Approval of new drugs and a potential label expansion of existing drugs bode well for Roche as its legacy drugs like Herceptin, MabThera are facing competition from biosimilars. Novartis (NVS - Free Report) has already launched its biosimilar version of Rituxan/ MabThera in Europe. Amgen (AMGN - Free Report) also obtained FDA approval for a biosimilar version of Avastin for treatment of five types of cancers including lung cancer, colorectal cancer, glioblastoma, renal cell carcinoma and cervix cancer.
Zacks Rank & Stock to Consider
Roche carries a Zacks Rank #3 (Hold).
A better-ranked stock in the healthcare sector is Ligand Pharmaceuticals Inc. (LGND - Free Report) with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ligand’s earnings per share estimates have moved up from $3.92 to $4.40 for 2018 and from $4.75 to $5.32 for 2019 in the last 60 days. The company delivered a positive surprise in three of the trailing four quarters with an average beat of 24.88%. Share price of the company has soared 39.1% over a year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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