Given the hope and hype surrounding cancer
immunotherapy/immuno-oncology (or IO), it almost seems anticlimactic
when a Big Pharma company talks about earnings or drugs outside of the
IO space. Roche (OTCQX:RHHBY)
posted good results for the first half of 2015 and the company has
recently reported some very encouraging data from drugs outside its core
oncology franchise - a welcome respite from what had been a litany of
failure that left the company's pipeline overly dependent upon oncology.
Roche
doesn't look remarkably cheap right now, but there's a lot of
uncertainty in some important value drivers. Depending upon what happens
with pivotal studies, the oncology markets that Roche is targeting with
its anti-PD-L1 antibody atezolizumab could be worth twice as much as I
currently expect, though there will most definitely be fierce
competition from Bristol-Myers (NYSE:BMY), Merck (NYSE:MRK), AstraZeneca (NYSE:AZN),
and others. A more bullish assessment of the size of these end-markets
in 2025 could take my target above $40, but I'm content to own Roche on
the expectation of high single-digit to low double-digit annual returns.
Read more here:
Everything's Coming Up Roches
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