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Encouraging Data on Roche's Lampalizumab

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Roche (RHHBY - Free Report) recently announced encouraging data on lampalizumab from a multi-centre randomized phase II study, MAHALO.

The data from the study showed that patients suffering from advanced form of dry age-related macular degeneration (AMD) when treated with lampalizumab showed a 20.4% reduction in the area of geographic atrophy (GA) at the end of 18 months.

Hence, the phase II study met its primary end point in slowing the progression of GA lesions in patients suffering from advanced dry AMD.

We note that Roche already has Lucentis in its product portfolio for the treatment of wet AMD. While Roche has rights to Lucentis in the U.S., Novartis (NVS - Free Report) markets Lucentis in the rest of the world.

The successful development and commercialization of lampalizumab will further strengthen Roche’s ophthalmology franchise which accounted for 4% of total sales in 2012.

Lucentis is also approved to treat macular edema following retinal vein occlusion (RVO) and diabetic macular edema (DME). Lucentis generated sales of CHF 820 million in the first half of 2013, up 9% year over year.

In Feb 2013, the FDA approved a label expansion of Lucentis to include a less frequent dosing regimen in wet AMD.

We are encouraged by Roche’s efforts to expand its portfolio beyond oncology.

Roche currently carries a Zacks Rank #3 (Hold). We were impressed by the company’s solid performance in the first half of 2013.

Roche continues to expect sales in 2013 to increase in line with 2012 growth rates. Roche expects core earnings per share to grow at a higher rate than sales in 2013. We believe the company is likely to achieve its annual targets.

Right now, Jazz Pharmaceuticals (JAZZ - Free Report) and Ironwood Pharmaceuticals (IRWD - Free Report) look attractive, each with a Zacks Rank #2 (Buy).

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