Roche's late-stage R&D strategy tests the enthusiasm for immuno-oncology

Roche CEO Severin Schwan

Rolling out disappointing numbers today, Roche CEO Severin Schwan played the immuno-oncology card while trying to make the case that the pharma giant still has a hot hand in the late-stage drug development game.

Over the course of this year, Roche says it will pursue Phase III data for its anti-PD-L1 drug in bladder cancer and three different tumor types, setting it up for its first potential regulatory approvals in 2016. Following a lead already taken by the pharma giant's cancer drug researchers, Roche is relying heavily on its own internal pipeline of drugs to do the kind of combination trials that Merck and others have had to reach outside the company for. And he put a hard emphasis on the pioneering time the immuno-oncology is still in, positioning the company as a leader in a field in which Merck and Bristol-Myers Squibb have increasingly hogged the spotlight.

There are other key late-stage readouts this year involving a slate of low-profile efforts. Roche zeroed in on two Phase III multiple sclerosis programs for ocrelizumab (Opera I/II and Oratorio), with etrolizumab (Crohn's disease) and ACE910 (hemophilia) starting their own Phase III studies. Taselisib, a PI3K inhibitor, is also starting Phase III.

For a company like Roche, which had to concede bitter setbacks for gantenerumab in Alzheimer's and bitopertin in schizophrenia in 2014, it wasn't enough to excite the analysts.

"Roche's relative lack of pipeline catalysts and greater potential generic competition with slower growth from some pipeline drugs are likely to add to share price pressures," said Kepler Cheuvreux analyst Fabian Wenner, according to a report in Reuters.

Roche isn't the only pharma giant that is hitting on the new checkpoint inhibitors--drugs designed to expose cancer cells to an immune system assault--as a huge near-term opportunity. With studies throwing around $35 billion and $40 billion figures for the market now at stake, most big players have touted their efforts in the field. Pfizer CEO Ian Read even went so far this week as to suggest that the company's $2.85 billion preclinical deal with Merck KGaA--with a rich $850 million upfront--was important enough to take the heat off of doing major deals. And AstraZeneca's resurgence with analysts has relied heavily on the IO game plan.

But while Big Pharma and a host of biotechs pour billions into the latest blockbuster R&D game to come along, the companies also raise the prospect of advancing a whole new wave of therapies that will compete against each other while catering to an increasingly savvy group of drug buyers, from countries like Germany to the big pharmaceutical benefit managers in the U.S. And that big bonanza that they're all relying on may not look so big once it's divvied up among all the players now piling in.

For Roche, with its legendary cancer division Genentech, it's increasingly important to demonstrate rapid success with its late-stage pipeline. 

Like much of its top competition, Roche also revealed today that it's been upping the ante in R&D, boosting its research budget last year by 4% to 8.9 billion Swiss francs ($9.8 billion by today's exchange rate), up from 8.7 billion Swiss francs in 2013. That would put Novartis at the top in terms of total R&D spending in 2014, with a bit more than $9.9 billion in research costs across all divisions.

- here are the numbers from Roche
- here's the report from Reuters