UPDATE 1-U.S. panel shakes confidence in Roche’s top drug

* Roche shares fall to lowest level since April 2009

* U.S. panel rejects Avastin in advanced breast cancer

* U.S. decision unlikely to change Avastin label in Europe

* Avastin peak sales could be reduced by up to $1 bln

(Adds details, updates with closing stock price)

By Katie Reid

ZURICH, July 21 (BestGrowthStock) – Roche stock slid to its lowest
level in over a year on Wednesday after a U.S. panel called on
officials to revoke its approval for top-selling drug Avastin in
advanced breast cancer, once again shaking confidence in the
medicine.

The panel’s near-unanimous rejection of the
multibillion-dollar drug means it is very likely Roche will no
longer be able to promote the drug for use in this setting and
fewer U.S. patients will be treated with it, possibly shaving up
to $1 billion off peak sales. [ID:nN20257144]

Doctors still could prescribe Avastin for breast cancer as
it would retain approval for colon, lung, brain and kidney
cancers.

The news is the latest blow for Avastin, which stumbled at
key hurdles this year when it failed in late-stage stomach and
prostate cancer studies.

Roche stock closed 4.2 percent lower at 137 Swiss francs,
paring some of its earlier losses when it fell to 135.50 francs,
its lowest level since April last year.

Avastin is already widely used to treat a number of cancers
and has been tipped to become the world’s biggest selling
prescription drug by 2014, with annual sales topping $9 billion.
[IDnLDE63B1XF]

AVASTIN IN EUROPE

The drug, which accounted for 13 percent of Roche’s sales in
2009, has full approval for metastatic breast cancer in Europe
and analysts do not expect European authorities to copy any U.S.
decision to revoke its label.

The Food and Drug Administration is due to reach a decision
on the drug’s use by Sept. 17.

“We doubt the (European Medicines Agency) EMA will amend the
EU label given the absence of new data,” Morgan Stanley analysts
said.

“However, we suspect that over time, EU usage will slowly
decline,” the analysts said, adding they are reducing their $9
billion-estimate for Avastin sales in 2016 by around 15 percent.

Avastin has already been turned down by Britain’s health
cost watchdog NICE in breast cancer. [ID:nLDE667109]

The National Institute for Health and Clinical Excellence
(NICE) decides if drugs should be paid for by the country’s
taxpayer-funded National Health Service.

Cash-strapped governments across the world are wrestling
with record budget deficits by slashing drug prices and the
Morgan Stanley analysts said worries about the price of Avastin
may have played a role in the U.S. advisory panel’s decision not
to back it.

The wholesale price of Avastin is about $8,000 per month for
advanced breast cancer. Roche limits the annual cost for any
FDA-approved use to about $57,000.

CROWN SLIPPING

Roche, once regarded as the darling of the pharmaceutical
industry, has seen its crown slip after recent setbacks in
pipeline development and its stock has underperformed the
European healthcare index (.SXDP: ) this year.

“This is the cheapest the shares have been versus the Swiss
market for at least the last 15 years,” analysts at Jefferies
said in a note.

“We advocate building positions in the shares at these
levels in expectation of solid first-half results and further
guidance/cost saving measures from management,” they said.

Roche is seen posting a 42 percent jump in first-half net
profit on Thursday and most analysts have a buy rating thanks to
strong growth prospects in oncology. [ID:nLDE66J1AD]

“Over the long term we believe Roche still deserves to trade
at a premium to large cap pharma peers,” analysts at Deutsche
Bank said.

Roche is currently trading at 9.7 times 2011 earnings,
clinging on to its premium over cross-town rival Novartis
(NOVN.VX: ) and Britain’s GlaxoSmithKline (GSK.L: ).

INDUSTRY IMPACT

The panel’s decision also raises questions about whether
progression free survival (PFS) will, in the future, be seen as
a valid way of proving how effective a drug is.

The effectiveness of Avastin in advanced breast cancer was
based on an improvement in PFS, but the U.S. panel wanted
evidence that Avastin improved the overall survival rate (OS).

PFS is the length of time during and after treatment in
which a patient is living with a disease that does not get
worse, while OS is the percentage of people who are alive for a
certain period after they were diagnosed with or treated for a
disease.

“The panel bodes negatively for the industry overall as we
believe hurdles for new agents in breast and other cancers have
become almost insurmountable in the United States,” analysts at
Societe Generale said.

Investing Research
(Editing by David Cowell)

UPDATE 1-U.S. panel shakes confidence in Roche’s top drug