Roche, With Ocrevus And Fenebrutinib Advancement, Should Be Top MS Contender

Roche Holding AG (OTCQX:RHHBY, OTCPK:RHHVF, OTCQX:RHHBF) is a good long-term biotech to own. That's because it already has received FDA approval for its multiple sclerosis [MS] drug OCREVUS. This drug has been approved to treat both primary progressive multiple sclerosis [PPMS] and relapsing multiple sclerosis [RMS]. The MS market is expected to grow into a very large market opportunity by 2030, and there are several big pharma companies that will benefit from this expansion, with Roche being one of them with OCREVUS.

Sales of OCREVUS in MS are expected to grow over the years, but this pharma is not only going to rely on this drug to help treat the MS patient population. It is advancing a BTK inhibitor by the name of fenebrutinib in the ongoing phase 3 program, which has deployed two studies using this drug to treat patients with relapsing and primary progressive MS, under the studies known as FENhance 2 and FENtrepid respectively.

The reason why I believe it is important to go over Roche now is because it has been making positive advancements with the use of its fenebrutinib drug towards these MS populations. Specifically, just last week, Roche posted positive results from its phase 2 FENopta study, which used fenebrutinib for the treatment of adults with relapsing forms of multiple sclerosis [RMS]. There are a few reasons why I believe that the advancement of another MS drug is going to be a good expansion opportunity for Roche. I will be going over several of these reasons below.

With the MS market expected to grow significantly by 2030, plus the ability to advance another drug for this specific market, these are the reasons why I believe that Roche Holding AG stock is a good long-term biotech to own.

OCREVUS Sales Are Just Getting Started

Roche has a good foothold on the MS market. It had received FDA approval of OCREVUS back in 2017, as the first and only medicine to be able to treat both forms of MS [meaning to be able to treat both primary progressive MS and Relapsing MS patients]. To take it even one step further than that, OCREVUS is still the first and only drug to receive approval as a disease-modifying therapy for PPMS. Before this drug, PPMS patients had no treatment options. The way that this drug works is that it targets the CD20-positive B cell which is said to play an important role in this disease.

As I noted above, there are a few good reasons why the advancement of another MS drug for Roche is a good thing. The biggest reason of all would be the huge market opportunity. It is expected that the market opportunity for disease-modifying therapies for MS across the 7 major markets will reach $29.8 billion in 2030. Having OCREVUS to go after this large market is good enough in itself, but think of how much it can expand itself into this market with another drug that can target both forms of MS [PPMS and RMS]. A second reason would be the fact that fenebrutinib is an oral drug, whereas OCREVUS is given once every 6 months as an intravenous infusion.

It is expected that OCREVUS will take the top spot in the MS market with estimated sales of $6.3 billion in 2030. Which is then followed by Novartis (NVS) with Kesimpta [ofatumumab] with sales of $4.5 billion by 2030. Thus, as you can see, OCREVUS is going to be a top contender to go against in the MS market space. There is one drawback for Roche with fenebrutinib, and that would be that even though Roche is advancing this BTK inhibitor for the treatment of patients with both forms of MS, there are going to be several BTK inhibitors to possibly compete against.

In particular, such BTK inhibitors would be from Sanofi (SNY), which is advancing tolebrutinib, Novartis, which is advancing remibrutinib, and Merck KGaA (OTCPK:MKKGY) which is advancing evobrutinib. Still, the ability to get another MS drug to market will be another drug in Roche's pipeline to help fend off competition. In addition, it will be in good shape because as I previously stated, OCREVUS will likely be the top in sales in the MS space by 2030.

However, Roche might be in good shape, because a large part of the BTK inhibitor field for MS are dealing with clinical holds. Merck KGaA received a partial clinical hold of evobrutinib from the FDA due to the damage of the liver in two patients. As I noted directly above, this isn't the only pharma company with a clinical hold on its BTK inhibitor. Sanofi still has a partial clinical hold on tolebrutinib due to liver injuries in phase 3 studies. Biogen Inc. (BIIB), which obtained ex-China rights for orelabrutinib for MS, is handing the rights back to InnoCare Pharma.

While there is no guarantee of what will happen in terms of safety with respect to Roche's fenebrutinib, there is one major advantage it has over all these other BTK inhibitors for MS, which is that its drug is the only reversible BTK being developed for this specific indication. This fact of being the only reversible BTK inhibitor in phase 3 testing for MS is stated in the press release of the clinical data, which was just revealed from the phase 2 FENopta study.

BTK Inhibitor Drug Fenebrutinib Advancement Is Coming Along Well

As I stated directly above, fenebrutinib won't be the only BTK inhibitor which might ultimately be approved for MS. However, it does provide a 2nd drug in Roche's arsenal to go after this large market opportunity. Just to prove how well the advancement of fenebrutinib is coming along, it is important to highlight positive results that were released just last week. That is, Roche announced positive results from the phase 2 FENopta study, which evaluated fenebrutinib in adults with relapsing forms of multiple sclerosis [RMS].

This mid-stage double-blind, placebo-controlled, 12-week study enrolled 109 adult patients aged 18-55 years with RMS. The primary endpoint of this study was the total number of new gadolinium-enhancing T1 lesions as measured by MRI scans of the brain at weeks 4, 8 and 12. The secondary endpoint was to see the number of new or enlarging T2-weighted lesions as measured by MRI scans of the brain at weeks 4, 8 and 12. It was noted that fenebrutinib was able to meet both the primary and secondary endpoints of this study compared to placebo with statistical significance.

With respect to the primary endpoint, treatment with fenebrutinib achieved a statistically significant reduction in the number of new gadolinium-enhancing T1 brain lesions compared to placebo. This primary endpoint was achieved with statistical significance with a p-value of p=0.0022. This data established proof of concept in fenebrutinib being able to treat RMS patients. What's exciting for Roche is that it is advancing a phase 3 program for fenebrutinib. This entails two phase 3 studies which are known as FENtrepid and FENhance 2, for PPMS and RMS respectively. Results from these studies are not expected to be released for a few years, but the bottom line is that Roche Holding AG might have another MS drug to generate sales with.

Financials

Roche is a big pharma and generates billions of dollars in sales with many approved drugs. Its pharmaceutical division sales saw an increase of 9% to $12.9 billion for the 3 months ending Q1 of 2023. This was thanks to several drugs in its pipeline which include Vabysmo, OCREVUS, Hemlibra, Evrysdi and Tecentriq.

However the biggest growth driver for this period, and likely going forward would be with Vabysmo. Why is that? That's because this drug saw growth of over 500% for this reported period. Vabysmo, which was first launch in early 2022, has been the best in terms of percentage growth for it. Also, Consider that for the moment it has only been approved for two eye diseases at the moment, which are wet age-related macular degeneration [AMD] and diabetic macular edema [DME].

I bring this up, because there is a third indication for which Vabysmo might be approved for, which is retinal vein occlusion [RVO]. The FDA accepted the New Drug Application [NDA] of Vabysmo for the treatment of patients with RVO on May 9, 2023. Should this be approved, this would further accelerate sales of Vabysmo, which as I highlighted above has already been seeing over 500% growth with just two eye disease indications. A third indication could possibly provide an even greater boost in sales growth.

Risks To Business

There are several risks that traders/investors should look out for before investing in Roche. The first risk to consider would be with respect to OCREVUS. Even though it is slated to be a top contender with estimated MS sales of $6.3 billion by 2030, there is no guarantee that this will happen in light of competitors.

Besides the competitors I noted above, there are a few others to consider. One of them would be TG Therapeutics, Inc. (TGTX), which received FDA approval of BRIUMVI for RMS. An advantage for BRUMVI over OCREVUS is that it offers a short intravenous infusion time. Still, Roche's OCREVUS has been approved for both RMS and PPMS, while BRIUMVI can only be used for patients with RMS.

Another potential competitor which is making great progress would be Immunic, Inc. (IMUX), which is developing a drug with a novel mechanism of action by the name of vidofludimus calcium. Should this succeed in clinical testing, this would be provide an entirely new approach to treating MS patients (differentiated compared to anything else out there). I wrote a Seeking Alpha article on this biotech with the title of "Immunic: Multiple Sclerosis Data In H2 2023 Could Provide Major Shift." In essence, the company is expected to release phase 2 CALLIPER interim results using vidofludimus calcium in progressive MS in the 2nd half of 2023, with top line results at the end of 2024. In addition, it is advancing this drug in the phase 3 ENSURE program, which is utilizing two phase 3 studies to treat RMS patients. Interim results from this ENSURE program are expected in late 2024, with a data readout of the first ENSURE trials to be released by the end of 2025.

A second risk to consider would be with respect to the development of fenebrutinib for PPMS and RMS. That's because there is no guarantee that the final trial results will be positive, in which case, Roche will have to rely on OCREVUS for sales in the MS space. In addition, it has several other BTK inhibitors it is going up against, which could possibly mean a lot of competition.

There are two ways in which this company could see success in the BTK inhibitor space for MS. The first way would be if many of the other companies I highlighted above are not able to get their FDA partial clinical holds lifted. In this case, it would reduce the amount of competitors.

This leads me to the next advantage Roche would have in that it is the only one that is advancing a reversible BTK for MS specifically. Hopefully, these advantages are enough to overcome the risk of competition in the BTK inhibitor space for the treatment of patients with MS.

A third risk to consider would be with respect to ongoing sales of Vabysmo. As I highlighted above, it has been the biggest growth driver for Roche, generating over 500% in sales growth. There is no guarantee that such sales growth will continue moving forward. What might help to mitigate this risk though is if it receives FDA approval of Vabysmo for Retinal Vein Occlusion [RVO]. In this case, it could provide a huge boost in sales growth beyond what has been achieved thus far.

Conclusion

The final conclusion is that Roche Holding AG is a good long-term biotech to own. I believe that it will continue to do well with sales of its MS drug OCREVUS. As I highlighted above, it is expected to generate about $6.3 billion in sales by 2030.

In addition, Roche has fenebrutinib going for itself, where it is advancing phase 3 studies targeting both adults with PPMS and RMS. This could provide another drug for which it could use to target the large MS market. Again, an advantage here is that fenebrutiinb is the only reversible BTK inhibitor in phase 3 testing.

Finally it has Vabysmo, which has already been approved for wet age-related macular degeneration [Wet-AMD] and diabetic macular edema [DME]. It has had its NDA of Vabysmo for the treatment of patients with RVO accepted by the FDA on May 9, 2023. This could possibly be the third indication for Vabysmo, should it ultimately be approved by the agency.

With the MS market expected to grow significantly by 2030, plus the ability to advance another drug for this specific market, these are the reasons why I believe that Roche Holding AG stock is a good long-term biotech to own.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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