Wednesday, December 22, 2010

Roche's Noise May Be A Buyer's Best Friend

It feels like it has been a long time since Roche (Nasdaq:RHHBY) had good news for the Street. Clinical setbacks have led to lower growth assumptions, competition from biosimilars has become a "when, not if" scenario, and the company seems to be falling further behind the likes of Illumina (Nasdaq:ILMN) and Life Technologies (Nasdaq:LIFE) in the high-multiple world of life sciences. Even a relatively broad cost-cutting initiative produced only a tepid ho-hum response from the Street. 

So, with the company now facing the possible loss of breast cancer labeling for its drug Avastin, is it crazy to think that this might be a good time to consider Roche as a value stock buy?

The Latest Bad News: Avastin in Breast Cancer
When Roche announced this summer that a clinical trial of Avastin in breast cancer failed to show much benefit, the clock began ticking on when the company would see a response from regulators in Europe and the U.S.. As expected, particularly given the FDA's recent obsession with safety, regulators are now moving to pull (or at least severely restrict) the use of Avastin in breast cancer.

While European regulators have recommended that Avastin remain available for use in breast cancer, that recommendation extends only to its use in combination with paclitaxel. Other combinations, with Sanofi aventis's (NYSE:SNY) Taxotere and Roche's other drug Xeloda, were struck down. The FDA was more stringent. It issued complete response letters (rejections) for use with other chemotherapy agents and as a second-line treatment, and moved to pull the labeling for breast cancer altogether. This is a relatively uncommon occurrence, as Pfizer (NYSE: PFE) was the first to go through the process of having a drug approved under accelerated approval subsequently pulled when Mylotarg was pulled this summer. 




Please follow this link for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Roche-Noise-May-Be-A-Buyers-Best-Friend-RHHBY-ILMN-LIFE-ABT-BEC-PFE-TEVA1222.aspx

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