Roche Teams Up with Ascletis - Analyst Blog

Roche ( RHHBY ) recently announced that it has entered into a collaboration agreement with Ascletis to develop and commercialize Roche's candidate danoprevir in China for treating patients suffering from hepatitis-c virus (HCV).

The candidate is currently in a phase II study.

As per the collaboration agreement, Ascletis will fund and be responsible for the development, regulatory affairs and manufacturing of danoprevir in greater China, including Taiwan, Hong Kong and Macau in return for payments from Roche as and when commercial milestones are achieved.

The potential market for HCV is estimated at 10 million in China with a majority of patients infected with genotype 1b. Danoprevir is a protease inhibitor that is highly active against genotype 1b.

Hence, Roche aims to develop a therapy and an effective new treatment option for Chinese patients with HCV.

We note that Roche already has Pegasys in its kitty, which is indicated for hepatitis B and hepatitis C. Sales of Pegasys were down 15% year over year in the first quarter of 2013 as sales fell in the US and Europe due to the launch of the triple-combination therapy.

Pegasys plus ribavirin received approval in Europe in Mar 2013 for the treatment of chronic hepatitis C in children aged five and above.

Additionally, other candidates being developed for HCV by Roche are RG7128 (mericitabine) and RG7790 (setrobuvir). We note that companies like Merck & Co. ( MRK ) and Vertex Pharmaceuticals ( VRTX ) have a presence in the HCV market with drugs like PegIntron and Incivek (telaprevir) respectively.

Meanwhile, Roche continues to expect sales in 2013 to be flat year over year as stated during the first quarter results on Apr 11, 2013. Sales are expected to be strong in emerging markets in 2013. Roche expects core earnings per share to grow at a higher rate than sales in 2013. Roche expects to further increase its dividend in 2013 as well.

Roche currently has a Zacks Rank #4 (Sell). As of now, UCB SA ( UCBJF ) looks well placed with a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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