Why Roche Holding Stock Popped Today
Key Points
Roche reported positive Phase III results on trials of its new multiple sclerosis (MS) drug today.
Fenebrutinib appears effective at treating both relapsing multiple sclerosis and primary progressive multiple sclerosis.
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Roche Holding (OTC: RHHBY) stock jumped 3.4% through 1:05 p.m. ET Monday after the pharmaceutical giant's Genentech subsidiary announced positive phase 3 clinical trial results for its fenebrutinib drug for treatment of relapsing multiple sclerosis (RMS) and primary progressive multiple sclerosis (PPMS).
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One drug, two clinical trials
Conducted over more than 96 weeks, the first trial "significantly reduced the annualized relapse rate (ARR) compared to teriflunomide," an RMS drug developed by Sanofi and currently available as a generic from multiple manufacturers.
The second trial compared fenebrutinib to ocrelizumab, an MS drug developed by Roche itself and not available as a generic, in treatment of PPMS. This trial confirmed fenebrutinib is at least "non-inferior compared to ocrelizumab," which in turn is currently "the only approved therapy in PPMS." This second trial lasted more than 120 weeks.
Overall, Roche says "fenebrutinib substantially reduced the number of relapses in RMS and slowed disability progression in PPMS" -- two separate uses for one MS drug in a market that's been estimated at $27.8 billion in annual sales last year, with likely growth to $46.4 billion by 2033.
Clinical trial work on fenebrutinib is ongoing.
Is Roche stock a buy?
Valued in excess of $296 billion, Roche stock sells for 25.3 times trailing earnings but less than 15 times free cash flow. (At $19.9 billion generated over the past year, Roche generates nearly 70% more cash profit than it reports as net income.) The company also pays a very respectable 3.8% dividend yield.
Were Roche growing just a bit faster than the 6% annualized long-term growth rate that analysts project for it, the stock might already be a buy. As things stand, though, I still need to see Roche stock get cheaper before I can call it a buy.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.
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