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ZURICH, April 27 (Reuters) -
Roche Holding AG's patchy reputation in bringing new drugs
to market was dealt a fresh blow on Friday after U.S. regulators
sought more information on clinical trials for a key new drug.
The company said it still hoped to launch hepatitis C medicine
Pegasys on schedule, but could not rule out a delay.The stock
market reacted poorly to news of a potential stumble in rolling
out the Swiss drug and diagnostics group's most important
new medicine this year.
Traders said the news could add pressure on Roche to do a
major acquisition or merger to bolster its weak product pipeline,
but financial analysts argued it was too early to hit the
panic button until the problem with Pegasys was clearer.
Roche certificates, which have been fallen as much as 30
percent this year amid slack sales at Roche's flagship drugs
division, fell 4.4 percent to 11,750 Swiss francs before recovering
somewhat to 12,045 in a generally weaker market.
"We hope that (a delay) is not going to happen. This depends
on the quality of the questions. Our experts are looking into
this now," a Roche spokesman said.
"I would not say there is an immediate delay to the whole
thing. This cannot be completely ruled out, but there is not
an immediate indication for that," he added. This depended
in part on when talks with the U.S. Food and Drug Administration
could take place. Roche had applied last May for U.S. marketing
authorisation of Pegasys, a longer-lasting version of its
interferon drug Roferon-A that was expected to be one of its
key sales drivers at a time of listless pharmaceutical turnover
growth.
It had expected to start selling the drug in the U.S. market
in the fourth quarter of 2001. Analysts have estimated the
drug could have annual sales of close to a billion francs
by 2004.
Commerzbank said in a research note that it was downgrading
Roche to "accumulate" from "buy" and cutting its price target
to 14,000 francs from 15,500 given a development that it said
could well result in a roughly six-month launch delay.
The Roche spokesman said an FDA review panel had raised questions
about clinical trial data for Pegasys, which uses a molecule
developed and produced by U.S.-based Shearwater Corp. "As
is expected in these filings and reviews they are coming up
with some additional questions on the clinical data. This
is quite usual for such an application. We will provide additional
information and the procedure goes on," he said.
LIBERATING BLOW?
The stock market buzzed with speculation Roche would strike
a liberating blow from its current pipeline woes by making
a big acquisition, perhaps of Germany's Schering AG. They
cited Roche's $12 billion cash pile that company officials
have said it will not hoard forever but eventually use to
bolster its core businesses. "Now Roche is really under pressure
finally to do something," one share trader said.
But Roche executives have also said they will not do a big
deal just to spur sluggish drug sales, and analysts said the
jury was still out on how bad the Pegasys problem was. "The
problem is we don't know exactly which issues have been raised.
We only know it is not a safety issue, which is good news,"
said Birgit Kulhoff at Lombard Odier. She said Roche told
analysts it can respond to the issues by "summer," so the
best-case scenario is still for a rollout late this year and
the worst case is the second quarter of 2002. Denise Anderson
at Bank Julius Baer said Roche must have known all along that
some issues were still open or else it would have not have
forecast a fourth-quarter launch for a drug expected to get
FDA approval by May. She stuck to her forecast the drug would
generate 900 million francs in sales by 2004.
It is the latest in a series of late-stage problems for Roche
drugs. It halted developing a promising Alzheimer's drug in
1999 when some patients had liver problems during trials.
In 1998 it had to pull heart drug Posicor and sharply restrict
sales of Parkinson's drug Tasmar amid concerns about side
effects. "If it's a company where everything is going along
more or less OK, a well-oiled machine, something like this
is frankly part of doing business," Anderson said. "If you
have a company like Roche where this is a vital launch --
if this launch doesn't go well the company is totally dead
-- then there is a lot of psychological impact." But she said
the problem did not put more pressure on Roche to do a big
deal unless the drug flops when it is launched. Kulhoff said
the focus now was on data Roche is set to present in May on
the efficacy of Pegasys in combination with ribovirin.
This is important because Schering-Plough Corp is already
on the market with its monotherapy pegylated interferon and
has already filed combination data. "With this delay Roche
has a chance to get meaningful market share only if the combination
data are good," she said.
©Copyright 2001 Reuters Limited. All rights reserved.
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