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Roche/AbbVie's Leukemia Drug Venclyxto Gains EU Approval

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Roche Holding AG (RHHBY - Free Report) and partner AbbVie Inc. (ABBV - Free Report) announced that the European Commission has granted conditional marketing approval to Venclyxto (U.S. trade name: Venclexta) for the treatment of chronic lymphocytic leukemia (CLL) in the presence of 17p deletion or TP53 mutation in adult patients who are unsuitable for or have failed a B-cell receptor pathway inhibitor; and for the treatment of CLL without 17p deletion or TP53 mutation in adult patients who have failed both chemo-immunotherapy and a B-cell receptor pathway inhibitor.

Note that the year-to-date share price movement shows that while Roche has underperformed the Zacks classified Large Cap Pharmaceuticals industry, AbbVie outperformed the same. Roche has lost 19.1%, while AbbVie gained 3.9% so far this year, compared to a drop of 7.1% for the industry.

This makes Venclyxto the first approved B-cell lymphoma-2 inhibitor in the EU. However, the EU approval did not come as a surprise as the European Committee for Medicinal Products for Human Use had issued a favorable opinion for a conditional marketing authorization of Venclyxto this October.

We note that a conditional marketing authorization is generally granted to treatments that address unmet medical need, where the benefit of its immediate availability to patients outweighs the risk of limited data availability, and where comprehensive data will be provided.

The latest approval is encouraging as it is expected to provide significant benefit to patients suffering from this hard-to-treat type of CLL. According to the press release issued by the companies, CLL is the most common type of leukemia in adults. The 17p deletion is found in 3–10% of previously untreated CLL cases and in up to 30–50% of patients of relapsed/refractory CLL cases.

We remind investors that Venclyxto gained accelerated approval in the U.S. in Apr 2016 for the treatment of patients with CLL with 17p deletion, as detected by an FDA approved test, who have received at least one prior therapy.

Venclyxto is being co-developed by Roche and AbbVie. While the companies are responsible for jointly commercializing the drug in the U.S., AbbVie will be responsible for commercialization outside the U.S.

Venclyxto is also being evaluated in a phase III program for the treatment of relapsed, refractory and previously untreated CLL, along with studies across several other cancers. Venclyxto enjoys Orphan Drug status in the EU for the treatment of multiple myeloma, diffuse large B-cell lymphoma CLL and acute myeloid leukemia.

Approval of Venclyxto has strengthened Roche’s hematology portfolio, which already boasts drugs like MabThera/Rituxan and Gazyva/Gazyvaro. The company also has a deep pipeline of candidates, including a small-molecule antagonist of MDM2 (idasanutlin/RG7388) among others.

While Roche carries a Zacks Rank #4 (Sell), AbbVie is a Zacks Rank #3 (Hold) stock.

Key Picks

A couple of better-ranked stocks in the health care sector include Sucampo Pharmaceuticals, Inc. and Vanda Pharmaceuticals, Inc. (VNDA - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vanda’s loss estimates narrowed from 62 cents to 52 cents for 2016, while its earnings estimates increased from 13 cents to 22 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 56.65%. Its share price has surged almost 71% year to date.

Sucampo’s earnings estimates increased from $1.03 to $1.22 for 2016 and from $1.30 to $1.58 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 35.55%.

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