Roche suffers double blow in drug trials

Shares in Roche suffered their biggest one-day drop in five years on Friday after a double setback in trials of new drugs for breast cancer and Alzheimer's disease.

The main factor behind the 5 per cent stock price fall was disappointing data about the Kadcyla medicine which the Swiss pharmaceutical group is relying on to maintain its dominance in an important part of the breast cancer market.

Kadcyla has already been approved by US and European regulators as a treatment for late-stage HER2-positive breast cancer but it has faced resistance in some markets, including the UK, over its high price.

The company had hoped that a combination of Kadcyla and another Roche drug, Perjeta, would prove superior to existing combination therapies but results from a study of 1,095 patients announced on Friday failed to show additional benefit.

The findings dealt a blow to Roche's attempts to build Kadcyla into a powerful successor to Herceptin, the company's third biggest-selling drug, which is facing competition from copycat "biosimilars" after 16 years on the market.

While not a mortal blow to Kadcyla, Fabian Wenner, analyst at Kepler Cheuvreux in Zurich, said sales estimates for the medicine would "come down significantly" as a result of the data.

The setback highlighted broader questions over Roche's ability to sustain its broader leadership in cancer therapy at a time of mounting competition and fast-moving science in one of the most lucrative segments of the pharmaceuticals market.

It also underscored the challenge faced by Roche and its rivals to develop new products with sufficient superiority over existing drugs to justify their high prices at a time of mounting pressure on healthcare budgets around the world.

In August, the National Institute for Health and Care Excellence, the UK's drug cost watchdog, refused to recommend Kadcyla's use by the National Health Service saying that its price - listed at £90,000 a patient - was not cost-effective.

Responding to Friday's data, Sandra Horning, Roche's chief medical officer, said: "While [the trial] didn't achieve this result, we will continue to study these medicines, as well as investigational treatments for other types of breast cancer, with the goal of improving outcomes for patients."

Meanwhile, there was further disappointment for Roche over an Alzheimer's disease medicine under development in partnership with MorphoSys of Germany.

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A trial of their Gantenerumab medicine for people in the early stages of the memory-erasing condition failed to show significant benefits. Analysts said there had not been high expectations for the drug after a long series of similar failures in dementia research.

"[The trial] highlights the high-risk/high-reward nature of the space," said Andrew Baum, an analyst at Citi.

The results highlighted the lack of progress by the pharmaceuticals industry in tackling one of the biggest public health challenges facing the western world - and increasingly developing countries such as China as their populations age.

There have been more than 100 failed trials of Alzheimer's drugs since 1998, according to an industry study. Roche said another trial of Gantenerumab in patients with mild dementia would continue.

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