Roche's Hematology Franchise Almost 100% Protected From Biosimilars

| About: Roche Holding (RHHBY)

Summary

Roche has announced this morning positive results for the GALLIUM study.

This study further protects the Rituxan franchise which is the biggest drug of the company.

This study is also positive for the ongoing GOYA clinical trial.

Roche (OTCQX:RHHBY) has announced this morning positive data for the GALLIUM study. This study evaluates Gazyva vs. Rituxan in the first-line indolent Non-Hodgkin Lymphoma (iNHL). Roche has stopped the clinical study at interim results, which are a year ahead of time. Indeed, the clinical data were expected in 2017.

I will just remind you quickly what this announcement means for Roche.

Gazyva is the successor of Rituxan (also known as Mabthera) which is Roche's biggest drug, realizing more than 7B in revenue. Rituxan will lose US patent protection in 2018 and we expect biosimilar competition in Europe during the second half of 2017. Therefore, Gazyva is essential in the biosimilar defense strategy that Roche has implemented. The following chart shows how the revenue of Rituxan/Mabthera are split between the different indications.

The CLL11 and GADOLIN study have already been read out with positive results, thus 30% of the franchise was already protected. The GALLIUM study represents the largest indication with 40% of Rituxan sales. This positive read-out allows Roche to protect 70% of the franchise against biosimilars. The only indication, which is not protected for the moment is the aggressive Non-Hodgkin's lymphoma (aNHL). This indication represents the remaining 30% of sales and is currently covered by the GOYA study.

The GALLIUM clinical study has been stopped one year earlier than expected during its interim analysis. I guess that the data are impressive, otherwise, Roche would not have taken the risk to stop the clinical trial earlier. Moreover, this early data should allow Roche to obtain FDA approval earlier. Then, Roche will also be able to switch patients from Rituxan to Gazyva earlier and it will lead to a better protection for the hematology franchise. The positive results are also encouraging for the GOYA study that should read-out in second half 2016.

The GALLIUM study shows that Gazyva has a better efficacy to Rituxan. The study met its primary endpoint, which is the progression free survival (PFS). It means that people lived significantly longer without disease worsening or death when treated with Gazyva. Roche has not released figures or more information about the study. Full set of results will be communicated later.

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Disclosure: I am/we are long RHHBY.

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