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Roche (RHHBY - Analyst Report) recently announced positive data on its ulcerative colitis (UC) candidate, etrolizumab (RG7413), from EUCALYPTUS, a phase II induction study (n=124).

The study is evaluating the efficacy and safety of etrolizumab for the treatment of moderate-to-severely active ulcerative colitis. 

The study met its primary endpoint of clinical remission at week 10. Roche observed that patients suffering from moderate-to-severely active UC treated with etrolizumab showed significantly higher rates of clinical remission compared to placebo at week 10.

Moreover, it was observed that etrolizumab was well tolerated without any significant safety concerns.

According to the press release issued by Roche, approximately 0.9 million people suffer from UC in the US and Western Europe. Hence, the successful development and commercialization of etrolizumab bodes well for Roche given the sales potential.

However, the course might not be easy for Roche given the existing stiff competition. We note that Shire (SHPG - Analyst Report) already has approved drugs like Lialda in the US for the treatment of patients with mild to moderately active UC. 

Lialda was one of the best selling drugs for Shire in the first quarter of 2013 driven by an increased market share in the US.

Moreover, AbbVie’s (ABBV - Analyst Report) Humira was approved by the European Commission and US Food and Drug Administration (FDA) in 2012 for the treatment of moderate to severe UC in adult patients, who responded inadequately to conventional therapy.

Nevertheless, we continue to be encouraged with the recent pipeline progress at Roche. Earlier in the month, Roche released positive initial results on its oncology candidate, obinutuzumab (GA101), from CLL11, a phase III study.

In addition, Roche obtained FDA approval for Tarceva (erlotinib) for the first-line treatment of patients suffering from metastatic non-small cell lung cancer.

Roche currently carries a Zacks Rank #3 (Hold). Right now, Salix Pharmaceuticals (SLXP - Analyst Report) looks attractive with a Zacks Rank #1 (Strong Buy).

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