It's a good thing I'm working the graveyard shift this month anchoring "Worldwide Exchange" at four o'clock in the morning. It was about the time that I woke up to go to work yesterday at 1 a.m. ET that Roche (OTCQX:RHHBY) and Genentech sent out their press releases announcing that their cancer drug Avastin didn't meet the main goal of a study to see if it extended the lives of people with early stage colon cancer. This was a highly anticipated clinical trial report.
Analysts had forecast that if the drug worked well in this test it could have added several hundred million dollars, maybe even billions, to Avastin's annual revenue. The thinking was that the read-through by oncologists would have revealed that the drug might also work in early stages of other cancers and start using Avastin on those tumors as well. But they'll have to wait. The companies say they're still confident Avastin might work on early stage colon cancer and they're continuing with eight other studies testing the drug in the early stages of different tumors.
Nonetheless, shares of the Swiss drugmaker Roche are getting hammered in overseas trading. They're only sold over the counter in the US.
When Roche was chasing Genentech, a lot of people speculated the company was in a hurry to get the deal done before these results came out. The purported fear was if the drug worked, Genentech's stock price would soar and possibly put the company out of Roche's price range. Some even floated the idea that Roche had an inkling the study might be positive and, therefore, it was in a rush to come to terms with DNA. This, I think, proves those speculators wrong. I even wonder whether Roche might be kicking itself now for not having the chutzpah to roll the dice and wait until these results came in. Maybe it could've picked up Genentech on the cheap. Analysts thought DNA shares would've tanked if the test turned out this way.