Herceptin drops on contracting ahead of U.S. biosim, but Roche sales stomp anyway

Biosimilars to Roche’s top-selling cancer drugs Herceptin and Avastin entered the U.S. last week. But thanks to PD-L1 inhibitor Tecentriq, hemophilia drug Hemlibra and multiple sclerosis therapy Ocrevus, Roche is still counting on sales growth this year.

In the U.S., Herceptin sales in the second quarter dropped 8%—versus an increase of 3% in Q1—to 718 million Swiss francs ($727 million) "on the back of contracting ahead of biosimilar entry," Wolfe Research analyst Tim Anderson noted in an investor’s report Thursday.

Amgen launched Avastin biosim Mvasi and Herceptin copycat Kanjinti at 15% discounts last week after a U.S. district court judge in Delaware denied Roche’s motions for an injunction against them. Roche is currently appealing the decision in the hope of protecting a combined $5.9 billion in 2018 U.S. sales.

It's too early to tell how much those biosims will affect Roche's brands—or how quickly. Roche Pharmaceuticals chief Bill Anderson said Thursday that the company hasn't "seen much disruption in the market" so far.

The thing is, biosimilars, in general, have suffered much slower launches in the U.S. than in Europe, and Roche executives have explicitly said they don't expect the same 40% to 50% sales declines its drugs are seeing in the EU.

Declines for those key drugs are expected to show in the second half of the year, though. Or as ODOO BHF analyst Pierre Corby put it in a Thursday note, this is "possibly the last good quarter for some time." Nevertheless, Roche has dialed up its forecast for 2019 on the upbeat Q2. It now expects group sales to grow in the mid- to high-single digits, up from the previous mid-single digits, despite the biosimilars attack.

Why? Its newer drugs are delivering strong numbers.

Roche's immuno-oncology drug Tecentriq is the obvious growth engine. Its sales jumped 32.7% quarter-over-quarter to CHF 446 million, which topped analysts’ expectations by an impressive 17%. The solid sales got a boost from two first-in-class approvals in first-line extensive-stage small cell lung cancer and triple-negative breast cancer.

Tecentriq was already making "significant" inroads in SCLC before the approval came mid-March, Anderson said. The drug has penetrated about half of the patient population in the U.S. for the indication, but "there is probably some considerable room to go because there’s some question around eligible population, and I think that may be expanding," he added.

As for TNBC, he estimated the testing rate for those relative biomarkers is just reaching 70%, and within them, Tecentriq has nabbed around 70% of patients.

It was not all good news for the immuno-oncology therapy, though. The Swiss drugmaker capped two Tecentriq trials in castration-resistant prostate cancer, according to a pipeline update. And AstraZeneca’s rival PD-L1 Imfinzi could enter SCLC soon.

Meanwhile, the hemophilia launch Hemlibra, with a second-quarter haul of CHF 316 million, did 23% better than expected, driven mainly by a new approval in the U.S. non-inhibitor market. In the EU, Roche is still "very early" in its reimbursement talks for non-inhibitor use, Anderson said.

MS drug Ocrevus also came in slightly ahead of analyst expectations at CHF 899 million—a whopping 59% increase over the same period last year. So far, Ocrevus has steadily grown its new-to-brand share in the U.S. toward 40%, making it the No.1 disease-modifying treatment for MS patients starting a new therapy. It did that despite the recent launch of Novartis’ Mayzent, and Roche seems confident it will hold the ground.

"Yes, we have seen an impact [from competitive launches]—the impact is that Ocrevus share goes up," Anderson said during the call. "We hope there are more competitive launches like that."

All told, Roche's pharma division brought in CHF 12.27 billion for the quarter, up 11% year over year, while its entire group sales, including diagnostics, hit CHF 15.64 billion.