Roche's Kadcyla Approval Will Have A Big Impact On Breast Cancer Patients

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About: Roche Holding AG (RHHBY), Includes: MYL, PFE, TEVA
by: Terry Chrisomalis
Summary

Roche obtains FDA approval for Kadcyla in patients with early-stage breast cancer with residual disease after having received taxane and Herceptin plus surgery.

Approval was based on Phase III KATHERINE study in which treatment with Kadycla was able to reduce risk of disease recurrence by half compared to Herceptin in the adjuvant setting.

Current adjuvant treatment is Herceptin, however, Kadcyla proved to be superior in reducing the risk of disease recurrence for early stage breast cancer patients.

Despite MabThera/Rituxan and Herceptin facing biosimilar competition, Roche was able to raise its 2019 sales guidance outlook based on other solid products in the pipeline.

Roche (OTCQX:RHHBY) announced that it had received FDA approval for Kadcyla in patients with early-stage breast cancer. This is a good win for both the company and the patients. For the company it helps to boost the possible revenue for Kadcyla. For patients, it gives them a better opportunity to prevent breast cancer recurrence. It is imperative that patients obtain a new treatment option in this setting, because the risk of recurrence after neoadjuvant therapy remains high.

FDA Approval For Kadcyla Could Change Lives

The FDA specifically approved Kadcyla for adjuvant treatment of patients with HER2 positive early breast cancer who have residual disease. Why is this FDA approval so crucial for these patients? That's because before having to go through surgery, patients receive taxane and Herceptin treatments. These are powerful treatments, the problem is that some of these patients have residual disease even after receiving these treatments plus surgery.

In essence, Kadcyla is used to clear and prevent disease recurrence for breast cancer patients. Breast cancer recurrence may occur months or years after receiving initial treatment. What happens is that not all cancer cells are targeted and killed by initial treatment along with surgery. That means it can recur again on the breast tissue, mastectomy surgery site, lymph nodes, bones, liver and many other places. Kadcyla was approved on the basis of positive results from the Phase III KATHERINE study.

This late-stage study showed that patients reduced the risk of invasive breast cancer recurrence or death for any cause by 50%. This was statistically significant with a p-value of p<0.0001. This statistical significance was achieved by Kadcyla compared to Herceptin as an adjuvant treatment in this patient population, even after receiving neoadjuvant treatment of taxane and Herceptin. After 3 years, 88.3% of those who were treated with Kadcyla did not have their breast cancer come back, compared to 77% of patients given Herceptin.

This was an improvement of 11% for those on Kadcyla. These were good results, but there is another reason that made the FDA approval that much more special. The regulatory application was approved quickly. Matter of fact, it was approved in just over 12 weeks thanks to the FDA's Real-Time Oncology Review pilot program. It's a pilot program that aims to speed up the review process and get drugs quickly to patients that need it. It doesn't come easy though, in order for a therapy to be reviewed in this manner, it has to meet several guidelines. One of those being that the drug in question must be superior over other current treatment options.

Shift To Kadcyla Is Important

Kadcyla has also already been approved to treat patients with HER2 positive breast cancer that has metastacized. The more approvals Roche gets for Kadcyla the better, because Herceptin is going to face a lot of competition. That's a problem because it is one of Roche's best-selling drugs. In 2018, sales for Herceptin were $7 billion. European sales in 2018 fell by 16%. Things are about to get much worse anyways. That's because there are a lot of biosimilars for Herceptin set to come out in the coming years.

These will be products from companies like Pfizer (PFE), Mylan (MYL), Celltrion and Teva (TEVA). Roche had generated Kadcyla sales of $981 million in 2018. The approval of this additional indication, for early stage breast cancer patients with residual disease, should help boost sales. The good news is that Roche also does have MabThera/Rituxan, which seems to be doing okay. Sales for MabThera/Rituxan in 2018 were $6.7 billion. Roche should be okay for now, but it will need to watch for the biosimilars of Herceptin entering the market soon enough.

Conclusion

The FDA approval for Kadcyla in early breast cancer patients that are HER2 positive should definitely help boost sales. The problem is that even though Kadcyla gains another indication, Roche is still set to face an onslaught of biosimilars in the coming years. That will be a major risk, because sales of Herceptin reached $7 billion last year alone. As additional biosimilars enter the market, sales of Herceptin could possibly start to erode.

The good news is that Roche does still have other products in its arsenal that should maintain sales for a while. Especially, until other products like Kadcyla start to gain traction over time. For instance, MabThera generated $6.7 billion in sales in 2018. However, sales for MabThera/Rituxan have also been declining from biosimilar competition. Even with such issues, Roche still had a strong earnings report for Q1 of 2019.

Despite MabThera/Rituxan and Herceptin sales dropping by 38% and 44% respectively, profit from many other products offset these losses. Such products which offset losses for Q1 were Tecentriq, Alecensa, Hemlibra, Perjeta and Ocrevus. Not only that, but the company also raised its outlook in 2019 for mid-single digits sales growth. As long as Roche can continue to advance its new products towards other indications, it should be in good shape.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.