Roche's (RHHBY) Rituxan Receives FDA Nod For Label Expansion

Roche Holding (SIX:ROG) AG (OTC:RHHBY) announced that the FDA approved the label expansion of Rituxan (rituximab). The agency approved the drug, in combination with glucocorticoids, for the treatment of two rare blood vessel disorders — granulomatosis with polyangiitis (GPA) and microscopic polyangiitis (MPA) — in pediatric patients aged two years and older. GPA and MPA are potentially life-threatening blood vessel disorders, which are rare in children. Per Roche, Rituxan is the first and only FDA-approved treatment for this indication.

The approval was supported by data from PePRS, a phase IIa, single-arm study investigating the safety, pharmacodynamics/pharmacokinetics and exploratory efficacy of intravenous Rituxan in 25 patients with severe GPA or MPA between six and 17 years of age. The study is the first global trial of the drug in pediatric patients with GPA or MPA. Efficacy was an exploratory endpoint and primarily assessed using the Paediatric Vasculitis Activity Score (PVAS). Efficacy assessment showed that 56% of patients achieved PVAS remission by month six, 92% by month 12 and 100% by month 18.

In June 2019, the FDA granted Priority Review status to Rituxan in this indication.

Roche’s stock has gained 17.3% year to date against the industry's decline of 0.6%.

Rituxan is currently approved for the treatment of four autoimmune indications-rheumatoid, GPA and MPA in adults, and pemphigus vulgaris.

We note that MabThera/Rituxan is one of Roche’s legacy drugs. However, the drug is facing biosimilar competition in Europe, which is adversely impacting sales.

Apart from Rituxan, Roche’s rheumatology portfolio has a first-in-class anti-IL-6 receptor therapy, Actemra/RoActemra. The drug is approved for RA, polyarticular and systemic juvenile idiopathic arthritis, giant cell arteritis, and chimeric antigen receptor T-cell-induced cytokine release syndrome..

In a separate release, the company announced that it extended the period of its previously-announced tender offer to purchase the outstanding shares of the common stock of Spark Therapeutics (NASDAQ:ONCE) for $114.50 per share.

Roche announced in February that it will acquire gene-therapy company, Spark, to bolster its portfolio.

The offer has now been extended to Oct 30 from Oct 1 to provide additional time to the U.S. Federal Trade Commission (“FTC”) and the U.K. Competition and Markets Authority (“CMA”) to complete their previously-disclosed reviews of the pending acquisition.

We remind investors, that in June 2019, both companies had received a request for additional information from the FTC under the Hart-Scott-Rodino Act. Roche had then announced an extension of the tender offer to Jul 31 to purchase the outstanding shares of the common stock of Spark. Thereafter, the offer was again extended to Sep 3 and then again to Oct 1 to provide additional time to the FTC and the CMA to complete their reviews.

While details of the FTC review were not mentioned, it has been widely speculated that the acquisition would make Roche a formidable player in the hemophilia A market, with its drug Hemlibra and two gene-therapy candidates that Spark is currently developing.

Zacks Rank and Stocks to Consider

Roche currently carries a Zacks Rank #4 (Sell).

Some better-ranked stock in the large-cap pharmaceutical sector are Novartis (NYSE:NVS) and AstraZeneca PLC (NYSE:AZN) , presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Novartis’ earnings per share estimates have increased from $5.06 to $5.15 for 2019 and from $5.71 to $5.77 for 2020 over the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters, the average beat being 2.84%.

AstraZeneca’s earnings per share estimates have increased from $1.79 to $1.81 for 2019 and from $2.06 to $2.10 for 2020 over the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, the average being 62.97%.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>