Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Group sales increased by 8%, with Pharma growing 8% and Diagnostics growing 9%.
- Core operating profit rose by 11%, driven by effective cost management.
- Several key regulatory approvals and filings were achieved, including Ocrevus subcutaneous in the EU and US, and Vabysmo prefilled syringe in the US.
- Strong performance in the base business, with high-single digit growth excluding COVID-19 impacts.
- Positive readouts in the obesity space and multiple new product launches in Diagnostics, such as the cobas Liat Respiratory Panel and continuous glucose monitoring system.
Negative Points
- Significant sales decrease in COVID-19 related products, impacting overall revenue by CHF 0.8 billion.
- Loss of exclusivity (LOE) impact of CHF 0.6 billion, affecting sales.
- Challenges in the Japanese market due to mandatory price cuts and a decline in Ronapreve sales.
- Increased financial expenses due to higher debt levels from previous M&A activities.
- Disappointing Phase 2/3 results for tiragolumab in non-small cell lung cancer, leading to the discontinuation of certain trials.
Q & A Highlights
Q: How do you expect the obesity market to play out, and how does it inform your thinking of the potential designs of Phase 3 trials for both CT-388 and CT-996?
A: The obesity market is expected to be huge, with about 50% of the world's population projected to be obese by 2035. Roche has the advantage of both an injectable (CT-388) and an oral (CT-996) treatment. The oral treatment, being a synthetic small molecule, can be scaled much faster using Roche's existing manufacturing network. Maintenance therapy with the oral treatment post-injectable is one potential strategy. Roche believes its molecules have best-in-disease potential and plans to move them to market faster than current assumptions.
Q: How are you achieving decreases in gross margins, particularly in the Pharma division?
A: The reduction in cost of goods is the result of several years of work, culminating in the divestment of the Vacaville facility. Roche has been focused on creating a more efficient manufacturing footprint, leading to dramatic increases in efficiency and lower costs. The benefits of these efforts are now being realized.
Q: What is Roche's strategy in the obesity space, given the competitive landscape?
A: Roche believes it has potential best-in-disease molecules with CT-388 and CT-996. The company is also exploring combinations with other assets in its pipeline, such as those targeting kidney disease, ophthalmology, and neurology. Roche's approach includes leveraging its differentiated molecules and fast-tracking certain programs to bring them to market quickly. The company is also open to potential deals to further strengthen its position in the obesity market.
Q: Can you provide more details on the Phase 2 PADOVA study for prasinezumab in Parkinson's disease?
A: The PADOVA study is a Phase 2b trial evaluating the efficacy and safety of prasinezumab in patients with early-stage Parkinson's disease on stable symptomatic medication. The primary endpoint is the MDS UPDRS part III, with a focus on functional improvement. While accelerated approval is a possibility, it is not the base case, given the high-risk nature of the program.
Q: How representative are the Phase 1 data for CT-388 and CT-996 in obesity, and what are the theoretical differentiations of these molecules?
A: The Phase 1 data for CT-388 and CT-996 are considered representative, with no dropouts and significant weight loss observed. The molecules are designed to have minimal to no beta arrestin recruitment, which is believed to provide prolonged pharmacological activity. Roche is confident in the differentiation of these molecules and their potential best-in-disease status.
Q: What is the outlook for Tecentriq in small cell lung cancer, given the competitive landscape?
A: While Roche expects some competitive impact in small cell lung cancer, the company believes that Tecentriq's entrenched position and strong data will prevent a wholesale switch to competitors. Roche remains confident in Tecentriq's effectiveness in its approved indications.
Q: How is Roche addressing the need for devices in its portfolio, particularly for obesity and immunology treatments?
A: Roche recognizes the importance of devices, especially as healthcare shifts more towards home care. The company is doubling down on its efforts in this area, focusing on developing and improving devices to support its treatments in obesity, immunology, and other areas.
Q: What are Roche's expectations for the launch and approval timeline of Elevidys in Europe?
A: Roche is working closely with regulators to review Elevidys data as quickly as possible, given its importance for patients. The company expects approval in Europe next year.
Q: How does Roche plan to manage the financial impact of large studies required for advancing obesity treatments?
A: Roche is committed to defending its margins and will not allow margin erosion. The company sees opportunities to become more efficient and ensure that resources are allocated effectively to support investments in obesity treatments and other areas.
Q: What is Roche's approach to combining obesity treatments with other therapies, such as those for cardiovascular or kidney diseases?
A: Roche is focused on combining obesity treatments with therapies that address muscle wasting, which is a significant issue in obesity. The company believes that combining treatments to reduce muscle loss will provide more sustainable weight loss and better overall outcomes for patients.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
