Ladies and gentlemen, welcome to the Rush First Quarter Sales 2019 Audio Webcast and Conference Call. I'm Cher, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Doctor. Sven Schwann, CEO of the Roche Group. Please go ahead, sir.
Thank you, and welcome to our briefing on the quarter 1 sales. Going right into the presentation on Slide 6, you've seen that we started with strong sales growth into the current year, 10 percentage points up in pharma, very much driven by the newly launched medicines, 1% in diagnostics, 8% sales growth for the group. You see on Slide 7, we keep a good momentum on a quarterly basis. And turning to Slide 8, we have now 27% of our pharma sales coming from the more recently launched medicines. I mean, just to highlight 3 of them, OCREVUS, as you know, the best launch ever at Roche continues to grow strongly.
HEMLIBRA really excellent growth now, also in the non inhibitor segment where we have received recently approval in the United States that was really driving the growth there. And then lastly for Tecentriq, we saw very strong sales growth, very much driven by the approvals in the new indications of triple -breast cancer and small cell lung cancer. Turning to the pipeline on Page 9, you see that we have received another 2 breakthrough therapy designations in the Q1, one for VENCLEXTA and an additional one for Gazyva. As far as Spark is concerned, we expect the transaction to close this quarter still in the first half of twenty nineteen. On Slide 11, I just highlight AAN, American Academy of Neurology, which is upcoming and where we will present additional data on OCREVUS, very much look forward to that.
We will also show combination data, Phase 3 combination data for satralizumab, combination with steroids. And we also very much look forward to give you an update on risdiplam, our molecule in SMA. Now based on the strong performance in the Q1, We expect sales now to grow in the mid single digits. So we raised the outlook from low to mid single digits, which we gave you earlier this year. Core EPS to grow broadly in line with sales and on that basis to further increase our dividend in Swiss francs.
That's just a last comment on Slide 13. You see a high number of opportunities in late stage development. Let me just confirm and point out that we expect approval for entrectinib and polatuzumab still this year. And as far as risdiplam and satralizumab is concerned, we expect filing still for the current year. On that positive note, let me hand over to Bill for pharma.
Thank you.
Great. So as Severin mentioned, a very strong start to the year for the Pharma business.
You can
see here that the highlights in terms of revenues, 10% overall growth in constant exchange rate, 12% in Swiss francs. And it was actually quite a broad based effect with really the only exception being a little softness in Europe based on biosimilars. But I would say even there given the rate of decline in biosimilars that the minus 6% is still a pretty strong figure. But you can see obviously with U. S.
Growing at 14%, international outside of Europe and Japan at 17% and then even Japan at 7% in a challenging Japanese market. We're very pleased with what we saw as a start to the year. And looking a little deeper at the specific products, again, you can see that the top 4 were all newer products led by OCREVUS
with a growth
of about 2 thirds over last year. And again, you can see that in the U. S. And Europe and international. Perjeta which we'll come back to, but again sort of broad based strength on uptake of affinity in the early breast cancer setting.
HEMLIBRA very strong both inhibitors and non inhibitors and then Tecentriq based on new approvals. I'd also highlight that you can see sort of down at the bottom of the slide and see the biosimilar impact. And I think again Q1 was really living out what we've been planning for, for many years and talking about for many years that we plan to have our new launches offset the impact of biosimilars and in fact that we've done that in a very strong way. So if we drill down a little bit into the therapy areas, starting with oncology, very pleased to see 7% growth in Q1 despite the biosimilar impacts led by the HER2 franchise with 7% growth. And this is really 2 main effects, which is the uptake of PERJETA in adjuvant setting, but also KADCYLA, which is a newer phenomenon based on the CATHERINE data in patients who had failed in neoadjuvant therapy that the finding that patients who got Kadcyla did better than patients on Herceptin on standard of care.
And we saw early uptake of that spontaneous growth ahead of the approval which we expect in the U. S. Shortly. Moving down to the other franchise, again you can see strengthen with Avastin, which was partly due to newer indications like ovarian use of Avastin in combination with TECENTRIQ primarily in lung cancer. As you know, we have a number of other indications that we're pursuing with Avastin and TECENTRIQ.
So it's encouraging to
see that. And then hematology we'll talk about a little bit more
shortly.
So drilling down a little deeper in the HER2 franchise, you can see 36% growth in the U. S. Which is very strong on PERJETA in the EU growing at 27 So nice uptake of APHINITY. Again, this is just based on the data which suggests that 3 or 4 patients out of 100 additional will be capable of having a cure with PERJETA. On Kadcyla, again the early impact of the KATHERINE data primarily in the US and we would look forward to seeing that impact of KATHERINE in the years ahead in other regions.
In lung cancer, we're seeing the beginnings I think of a strengthening of the franchise. And primarily we see this with TECENTRIQ and Avastin in first line lung cancer where we have the ability to treat patients with liver mets. I think that's been one of the more typical uses of the Empower 150 results where you have patients with significant liver mets especially larger tumors And the doctors are choosing Avastin and that combination for for its ability to shrink the tumors and help the patients contend with their metastatic disease, but also the fact that we're labeled to cover patients who previously had positive patients or EGFR positive patients who've had progression on one of those therapies. So some advantages there. And then most recently the with the approval in extensive stage small cell lung cancer, another really important setting and one that we see growth we've seen growth in Q1 and we'll continue to see growth through the year.
This slide shows the impact in TECENTRIQ on small cell lung cancer and in second line where we still see gains in Europe. And again, you can see a nice growth for TECENTRIQ 135% year over year. And we believe we'll see this momentum maintained through the year. So it's quite a positive growth for TECENTRIQ and the result of Phase 3 studies that have read out. We have additional approvals anticipated in 2019 in Europe and a number of pivotal studies, which we'll be reading out in the next three quarters.
So good momentum for TECENTRIQ hopefully good signs of things to come. On ALECENSA, primarily we're seeing the gains in first line. We're now at above 70% share in the U. S. And close to 70% in Japan.
So now what we start to see is actually gains that accrued due to patients staying on therapy longer. So as we've sort of reached something probably close to the maximum share in new patients. But because patients live a long time without progression on ALECENSA, we'll continue to accrue additional patients as new patients come in and the existing patients stay on longer. And we continue to pursue the launches in other territories including Europe. In immunology, we were led by Esbriet with 10% growth and it's I'd say hard earned growth because this is a difficult market and in terms of some of the patient characteristics and encouraging patients to stay on therapy.
But our efforts have paid off and this is an area we'll continue to invest. Also Actemra with strength despite competition of sort of similar MOA molecules, but we managed to grow an additional 6%. And then Xolair also hanging in with a lot of competition in the asthma space. And there have been questions about how would we hold up. But I think the benefits of Xolair both in asthma with the broad approvals including pediatric, but also in other indications like chronic urticaria have helped Xolair to maintain sales in the face of additional competition.
In neuroscience beginning with OCREVUS, it's a very strong story. OCREVUS has really the broadest possible label. So far OCREVUS has shown strong data in both relapsing remitting disease as well as sort of active secondary progressive disease and primary progressive disease. It's the only it's the only therapy that has shown an effect in primary progressive and is labeled for that. And really the sort of remaining part of MS which is the non active secondary progressive.
These are patients who are no longer having relapses and no longer displaying sort of MRI lesion activity and that's a very difficult to treat patient population. So but in the other 90% we're having very strong uptake. We have 37% of new patients and switchers in the U. S. Which I mean compared if you look at the overall market share, OCREVUS is at 16% and we're getting 37% of new and switch.
So again it portends well for continued growth. If you look at this slide, I think if you look from quarter to quarter, what we see is the underlying growth has been rather steady throughout the last five quarters. Perhaps Q4 was a bit soft and what we see in Q1 is a return to the growth rate that we saw over the 2017 2018 period. So again very strong results on OCREVUS and we see this continuing in the foreseeable future. Coming to hemophilia, we've talked a bit about the different patient populations that would be eligible.
But I think what's most notable is we're beginning to get approvals in the non inhibitor segment. We were approved in the second half of last year in the U. S. And have seen very strong adoption in the non inhibitor patients. And then we were just approved in March in the EU in that category.
So we haven't actually seen the impact yet, but we look forward to that because the adoption as I mentioned has been really strong in the U. S. And patients are choosing the option to have a good control of their disease with a drug that can be dosed either once a week or once a month in a convenient subcutaneous form is very attractive. So again, really strong results and we look forward to benefiting many, many more patients with hemophilia in years ahead. Then in terms of the outlook, I think the slide on the right sort of displays our momentum in terms of new product approvals and we're very pleased to see that we have now 27% of our total pharma sales are from these products that we've launched in the past 7 or 8 years.
And again, I think if you look at the sales not only is it 27%, but the momentum is actually increasing on these new products and we have more where they came from. So we look forward to the approvals of both polatuzumab and entrectinib in oncology this year and then filings for satralizumab and risdiplam this year for approvals next year. You can look forward to seeing some additional data in conferences ahead. As Severin mentioned, some of these at the AAN, which will be in the 2nd week of May in Philadelphia. But I think most notably risdiplam and SMA, satralizumab with the combination data with steroids and satra in neuromyelitis optica.
The Huntington's data will highlight both sort of how we came to chose to choose the dose that we have in the pivotal study, but also more information from the pivotal study, the initial phase with the dosing and how we've made our decision around bimonthly and 3 times a year dosing which we're taking forward in Phase 3. On OCREVUS there's some really interesting data coming out both on the long term follow-up, but especially I would say the PKPD data and exposure response analysis from the Phase 3 studies. This answers some really important questions about how B cell therapies should be dosed in MS. And I think really highlights the importance of a high dose to obtain the maximum possible B cell depletion early on to drive efficacy, particularly efficacy on disability progression, which is sort of the ultimate goal in MS is preventing declines over time. So you can look forward to that as well as strong safety updates.
And then at ASCO, another big year for Roche and Genentech at ASCO was VENCLEXTA, TECENTRIQ, PERJETA and Herceptin and also some good data on TECENTRIQ, Avastin and in combination and entrectinib. And then just again looking forward at some of the things that are coming, you can see a number of check marks on the slide. So it's actually been a really strong year for results and approvals, but we have some additional readouts coming. And so I think probably the VENCLEXTA Gazyva is certainly one that we're looking forward to with the CLL14 data in non Hodgkin lymphoma. And I think this is a really interesting one because it's a combination of 2 biologics, 2 biotech drugs in a chemo free regimen in CLL and something that could be very useful for patients.
So with that, I'll turn it over to Michael Heuer for the diagnostics update.
Thank you, Phil. Good morning, good afternoon, everybody. I'm happy to present the Diagnostics division sales. With sales of roughly €2,900,000,000 we had 1% growth driven by molecular diagnostics growing at 7% and diabetes care growing at 1%. Onetime effects impacted our centralized and tissue diagnostics units, where we see a decline of 1%, which is unusual.
Sales in centralized and point of care solutions were affected by distributors reducing inventories in China. A return to normal ordering patterns was observed at the end of Q1 already. Sales in tissue diagnostic were impacted by shipment delays of instruments in Q1, and we will resume shipments as of April and expect to completely resolve the issue within the next few months. Diabetes Care increased by 1%, mainly driven by 18% growth in North America due to recent management care contract wins and the good adoption of the AquaJet Guide and AquaJet Instant Products. For the full year, we expect our revenue growth going forward.
Looking at our regional sales growth, this is driven by EMEA with 3% Latin America with 8%. Asia Pacific saw 0% growth, while North America and Japan had negative growth of 3% each. The ECELLA Cup, which grew at 1%, mainly impacted by sales in China. The reason for the decline in Japan is due to customer ordering
patterns. Sales in
the U. S. Were impacted by onetime supply chain effects in coagulation monitoring. This has been resolved and we are back to normal. Looking at the growth drivers in our business areas, we see that centralizing point of care solutions continues to bring in the most revenue.
Sales declined 1%, while the immunodiagnostics business grew 3%, clinical chemistry was down 2%, affected by reduced distributor inventory levels in China and onetime supply chain effects in Coronation Monitoring in the U. S. As I referred before. Sales in Molecular Diagnostics increased 7%, making this unit the largest contributor to the division sales growth, driven by point of care Molecular Diagnostics with 18% growth, blood screening was 14% and the cervical cancer portfolio with 52% growth. Tissue Diagnostics sales were down by 1%.
Sales were impacted by onetime supply chain effects caused by benchmark ULTRA and discovery instrument shipment delays during the Q1, resulting in lower instrument placements in North America and the Asia Pacific regions. Diabetes Care sales increased 1%, mainly driven by the new AquaCheck Guide and AquaCheck Instant Plus glucose monitoring systems, which has a great pickup in the market. Roche expanded the collaboration agreement with Senseonics for the distribution of the Eversense insertable continuous glucose monitoring sensor in 17 additional markets. On this slide, you see that with our strong commercial presence and growth steps manual, Roche is continuously approaching the market. And on the next slide, I would like to present now some highlights of the Q1.
The cobalt vivo DX system reinforces our tradition of innovation by offering a novel diagnostic technology to address the global threat of ever evolving drug resistance bacteria. We are currently in the process of engaging and organizing early access to key customers in Europe to work with the CE Mark cobas in vivo Dx system. Roche will also feature the system at the European Congress of Clinical Microbiology and Infectious Diseases. On the next slide, you see that the VENTANA PDL-one SP142 assay is the 1st FDA companion diagnostics approval for use in first line triple negative breast cancer or TNBC. This assay has been used for patients enrollment in the IMpassion 130 trial where the first positive Phase III immunotherapy study was shown for first line TNBC.
The test has been designed to enhance visual contract of tumor infiltrating immune cells staining within tumor microenvironment. On the next slide, you will see the COVID-nineteenFINITY 3.0. This is a proven global lab software solution for diagnostic laboratories to help them maintain high operational performance, quality, integration and security within their labs across multiple locations. One new feature further improves the intelligent routing of samples in high volume testing labs by dynamically adapting the changing lab conditions as priority testing to reduce time to results. New improved quality control features ensure that the highest quality results are reported consistently, while new monitoring features secures high performance and stability of analyzers and reagents 20 fourseven without additional costs.
The addition of more work areas for different clinical laboratory disciplines such as molecular, hematology and combination enable lab staff to focus on what matters most to them. And following on our digital transformation journey, we launched the RenataFi Mutation Profiler as a software, as a medical device, aiding labs to overcome a major workload challenge in clinical next generation sequencing, interpreting complex NGS datasets to identify clinically actionable findings and treatment options. Navifib mutation provider combined with Navifib's therapy matcher offers a curated knowledge base of genetic variants to help interpret the clinical significance of mutations and identify suitable therapies. This is another leap in personalized healthcare and in becoming a leader in digital diagnostics. With cobas vivoDx, COVID-nineteen Infinity Central Lab and Infinity and NaviFi Notation Profiler and Therapy Matcher, we have achieved important launches in Q1 2019.
More to come as we move forward. And with this, I hand over to Alan for the financials.
Thanks, Michael. Let's go directly to 42. Hello to everybody out there. Thanks for participating. I think starting with sales, I think my colleagues did a great deal and leading you through this.
We have great momentum as you've seen and has certainly encouraged us to bring the guidance up. On the M and A side, when you look at Spark, nothing unusual here, closing is expected in the first half of twenty nineteen. It's going to be an all cash transaction that will be financed by the available funds and our commercial paper program. And let me also mention that the transaction is not expected to have an impact on the financial guidance for 2019. But then I come to the currencies and I better do that on Slide 43.
And when you look at 43, you see the sales growth of Roche Group in order of magnitude. So what has contributed where and on the right hand side you see that sales have grown by more than a €1,000,000,000 in Q1 2019 compared to Q1 2018. In concentrates was 8% and in Swiss francs with 9% and the difference is a €149,000,000 and I will dig into this on the next slide. But on the left hand side, let me mention here, if you see the growth in the respective business areas and Bill alluded to that when he talked about pharma and especially pharma in Europe And there you see that we have a decline of a month minus 125. Last year we had a decline of a minus 166.
So you see really a good momentum moving forward. And with that let's go to Slide 44. And this is the bridge for the development of group growth first quarter in concentrates on the left hand side for less than and in Swiss francs on the right hand side with 9.2% to be very precise. And you see the current impacts that we have seen in the Q1. On one hand the US dollar which has strengthened gave us a positive with plus 2.7 percentage points in growth.
And then you see against that negatively the euro was minus 0.5 percentage points and LatAm was minus 0.7 percentage points driven by Argentina and Brazil. With that, let's go to Slide 45. And here this is what we basically expect from the currency impacts for the year to go and you notice a rather simple model. What we're doing here is that we're assuming that the March 31 exchange rates remain stable until year end 2019, let me mention it's early days. And these things will change for sure, but nevertheless I think gives you a good guidance how much the impact will be when everything remains stable.
And what you're seeing is basically for the rest of the year, so for half year, September, year to date and full year, we don't expect a lot. Everything remains stable. As said, it's very hypothetical. When you look really at the left hand side, I think you see really that the positive impact of the US dollar diminishing a little bit in our model, If you take that assumption into account that I've described before, whereby on the euro, the negative impact remains stable, if you apply the assumption that I've mentioned. And with that, let's once again to the guidance, very happy to bring the guidance up.
Group sales growth now assumed to be in with the mid single digit growth and compared to a low to mid single digit growth that we expected before. Our core EPS growth will also up and brought in under sales growth as it is connected to sales. And then the dividend outlook as Severin mentioned further increased dividend in Swiss francs. And with that, we are very happy to take your questions. Thanks.
We will now begin the question and answer session. The first question comes from the line of Richard Parker, Deutsche Bank. Please go ahead.
Hi, thanks for taking my questions. This is Richard Parks from Deutsche Bank. I've got 3, if that's okay. Firstly, on Avastin, Herceptin, Rituxan. You had good performance of Avastin and Herceptin in international markets in particular.
And I'm just wondering if you could talk about the price difference for those big three drugs in international markets, particularly in China, where you've had NRDL inclusions versus Western markets. And I'm wondering how we should think about that segment of those sales being protected from pressures given maybe less room for price leverage in that segment? The second question, I wondered if you could talk about a little bit more what we can expect to AAN from the Huntington's program in terms of longer term clinical follow-up. I'm wondering when you might be able to make a decision as to whether that data could be fileable or whether we'll have to wait for the Phase III. And then third question, I just wondered if you could give us your thoughts on potential longer term competition for the HER2 franchise.
We've seen some significant business development in that area. And I wondered whether you've got any plans to develop your own next generation products to improve on projected Kadcyla? Thank you very much.
Okay. Yeah, thanks for the questions. So on the first one, which I think you're sort of getting at is are the prices in places like China on Avastin, Herceptin and MabThera low enough that that provides a protection from future biosimilar competition. And I guess what I would say on that is while we have substantially discounted those products in order to gain broad coverage in emerging markets including China. I wouldn't want to provide a reassurance that the prices are so low that there won't be a space for biosimilars.
I mean, I think there still is room for biosimilars there. I think probably our source of competitive advantage in a place like China will be that we do have an attractive price and we have a trusted product. And I think that there'll be relatively little biosimilar activity or competition against those products maybe 1 competitor each in the next few years. And I think in that basis we feel like we can continue to compete and grow in China. The second one about the Huntington's data and when we'll be able to decide whether we can file with what we have versus waiting for Phase 3.
I think we've already pretty much commented on it. We had some initial promising discussions with regulatory authorities. It's obviously a disease of extraordinarily high unmet need. There's really no therapy available. And so I don't think I really have anything to add.
We will be taking the data as it emerges from the several studies we're running and sharing them with regulators. And so I think it's too early to really give a more specific timeline, but we are hopeful that there'll be a sort of a faster market option available. And I say hopeful because the patients are definitely needing it. And then the last question about long term competition in the HER2 space. I think as we've been very involved in the HER2 area for many years and have run studies in different segments including HER2 low, including everything from neoadjuvant to adjuvant 1st, 2nd, 3rd line and with combinations and without combinations.
I think it would be worth noting that you'll sort of know it when you see it. And I think that there's a lot of yes, there's a lot of mileage ahead for any product that's coming into that space in terms of safety questions, combinability questions, efficacy questions in the different settings. So I think we're not overly alarmed. We've got a strong portfolio still emerging from research and early development in HER2 space and we think we'll be a leader there for many years to come.
Great. Thank you.
Yes. I have a question here via the telephone line. Michael, this is going to you, Du. I mean, it's from Michael Leuchten from UBS. And he asks if the inventory reduction in China, you believe is a question for China itself?
Or is it more a Roche specific question? That's what the first question you had. Yes.
Thanks for the question. In China, I cannot comment whether this is a general Chinese situation. We see this specifically with our distributors. They trigger these changes by efficiency improvements they wanted to achieve in their supply chain. And meanwhile, since March, we see already very positive signs with the distributor inventory indicating that the market growth remains very strong as it has been shown also during the whole quarter from the in market sales perspective that we see with our products.
A return to normal volume patterns was observed, and we believe this return will continue in good Q2 and as
we go forward. So Michael Leuchten has the second question on Hemlibra. So he asked about the overall safety efficacy profile going forward and how you see the value proposition for ANLEVA in view of the fact that it's new drug, your introduction, questions on safety, efficacy balances
now and going forward? Yes. So I think we always have our viewpoint on this, but it's also what's more important is what are the key opinion leaders think, what are the patient advocates in the case of hemophilia. Patients are very involved in these decisions. And I think we're very pleased with the response we see from both groups that we have a very nice safety profile that's holding up very well.
We continue to update the safety profile with findings as they come. We're committed to that. We post updates every quarter in terms of observations things like deaths or adverse events. In the latest update for example we did list 3 additional deaths in our safety database. Obviously very unfortunate that that well anytime there's a death it's obviously a great loss.
In these cases though once again there was no causation or these deaths were not attributed to Hemlibra treatment. So I think that the safety profile is holding up very well.
We move forward
with confidence. Thank you. Next question.
Next question from the phone is from Tim Anderson. Please go ahead.
Thank you.
A couple of questions. First one is on adjuvant data with TECENTRIQ and specifically what we may see in 2019 on our radar had been triple negative breast and bladder. But on triple negative, your Slide 30 shows that you had an interim analysis that has subsequently passed. I'm guessing that suggests we won't see any data in 2019. So if no data in 2019, when might we see data?
And is bladder still potentially on track to read out in 2019? 2nd question goes back to Huntington's. If you can just describe in a little more detail whether you have any data at this point showing that lowering the mutant protein with your product is translating specifically into a clinical benefit, not just biomarker engagement? Thank you.
Right. Thanks, Tim. Let's see. Maybe coming to the second question first. I think that we won't have strong confidence in the clinical effect of reducing the Huntington's protein until we have a large controlled study.
So I don't think there's anything new to say about that. I think what we do know is this is a disease that's caused by the accumulated effect of mutant Huntington's protein and we have an agent that lowers the levels of Huntington's protein. And we and I think we're going to have to wait on the data to know for sure.
We're going
to have to wait on the data to know for sure. In terms of the question you had about neoadjuvant and adjuvant data with TECENTRIQ, So TNBC we did pass an interim analysis. We don't think we'll have the final analysis though in neoadjuvant until the second half of twenty twenty. And then in terms of adjuvant, we are hopeful to have adjuvant data in high risk patients with metastatic bladder cancer in yet in Q4 of this year.
And I think I'll have
to follow-up and see if there's anything more I can say about adjuvant. But I think you may be aware of the list of studies we have, but I don't have any updates on the readout timelines on this.
Thank you.
Next question is from Steve Scala, Cowen and Co. Please go ahead.
Thank you. I have three questions. First, Roche has warned several times now that treatment breaks and presumably softer sales between OCREVUS cycles is expected, but it doesn't seem to happen. Are new patient starts and launches overwhelming treatment breaks or are treatment breaks not occurring to the extent you expected? So that's the first question.
2nd, concerning the VENCLEXTA BELLINI trial, what have you learned post the recent stoppage of enrollment? And is the study still on track for completion in September of this year? And then lastly, I apologize, another Huntington's program question. You mentioned the dosing data at AAN, but just to clarify, might we also see efficacy data in small numbers of patients at the meeting or is there no chance of that? Thank you.
Right. So maybe going in reverse order. Yes,
you shouldn't expect to see efficacy data in
Huntington's disease at AAN. That's coming later. In terms of your question about VENCLEXTA and BELLINI, this study of VENCLEXTA and chemo in multiple myeloma. So we announced earlier that the results while we stopped the BELLINI study and the FDA placed a partial clinical hold on the VENCLEXTA studies in multiple myeloma based on safety findings which was basically an imbalance of deaths in the VENCLEXTA arm versus the control arm. We're still investigating sort of the cause of this.
But I think we did see some encouraging signs in the Bellini study in terms of based on biomarkers. And so we're not I would say we're taking the finding of the imbalance of deaths very seriously in terms of what it means in multiple myeloma. But we're not counting ourselves out of multiple myeloma with VENCLEXTA yet because we do see some promising indications in the biomarker subsets. And let's see, your first question is about treatment breaks with OCREVUS. And I have to say, this is something we've been watching closely and we see the treatment intervals actually quite tight.
It's very close to the label recommendation which is twice a year. And so it's not a question of new patient starts sort of overwhelming the effect of treatment breaks or offsetting it, but we're not really seeing that as a phenomenon right now. The dosing is being followed very or the recommended dosing is being followed very closely by the physicians and patients.
There's a question from Maria Zamemits from the PROPRIMA venue. She was asking about the margin outlook, specifically in Diagnostics. We usually do not comment on margins for the subscriptions, but Michael just wants to do for Severin. Any comments on that?
Yes. I'd just like to iterate our group guidance,
which is
to increase earnings broadly in line with sales. So I just want to point out with the increase of the sales guidance indirectly, of course, this is also an increase of our earnings guidance. But we wouldn't go into detailed margin discussions on a divisional level.
Okay. Thank you.
Next question from the phone is from Matthew Weston, Credit Suisse. Please go ahead.
Thank you very much. Three questions, if I can, please. The first coming back to international growth and really asking around the sustainability in pharma of the very strong growth rates we're seeing at the moment. Bill, do you envisage that we'll see we're essentially seeing a bolus of China growth being driven by the listings of the products that will moderate as we get towards 4Q? Or do you believe that this double digit growth rate is more sustainable?
Secondly, can we have a quick update on expectations for U. S. Biosimilar entrants with respect to rituxan and Herceptin and Avastin over the course of the next couple of months? Have we had any changes in terms of your view of settlements and the risk of at risk launches? And then one final question, Bill.
I was intrigued with your commentary around data at Acrevis at AAN with respect to the response being linked to the depth of B cell depletion. Am I reading it right that essentially you're contrasting high dose deep B cell depletion with potentially more mild continuous B cell depletion we could see from a competitor with monthly dosing and you believe you'll show data to say that that depth of depletion is necessary to get maximum efficacy?
Yes. Okay. Thanks. Thanks for the questions, Matthew. Let's see.
The first one you asked about sales in China, is it sustainable? I mean, I think what we are seeing is truly extraordinary and it's actually very encouraging to see really 100 of 1,000,000 larger population being having the possibility of treatment with drugs like Herceptin, MepThera, Avastin. I mean there certainly is a new uptake effect that is occurring right now that can't be sustained forever. But we do believe that we'll have sustained growth in China through 2019, 2020 beyond. So it's a good harbinger of things to come.
But I think to think we would continue to see at the rates we've been seeing it for the last two quarters That might be a little more than we could hope for. But I think again continued strong market for those drugs in China as well as we're seeing strong uptake of drugs like PERJETA and we're encouraged with the launch of ALECENSA in China as well. So I think the development in China is really positive both in terms of broadening access, but also the fact that the Chinese regulators are being much faster to approve new drugs and we're able to launch them. So I think we're quite optimistic about our future in China. In the U.
S, there's not a lot more to say than what we said already about biosimilar entrants. We do expect to see biosimilar competition for Rituxan and for Herceptin in the second half. And with Avastin, potential biosimilar competition would probably be not until Q4 at the earliest. And let's see, your last question, I'll write about the OCREVUS data. I mean, I think you have to form your own conclusions, but I think we chose to go with the IV dose knowing that from a pure convenience standpoint subcutaneous is generally better than IV, but also knowing the nature of the anti CD20 therapy and the history with Rituxan, with Gazyva, with Rituxan in immunology, with Rituxan in oncology that this really is an area where you benefit from getting a deep dose and a deep suppression of the B cells that are implicated.
And we also know that these B cells work not only in the periphery but they're lurking in the bone marrow. They're in the CNS in the case of MS. And so we did a lot of thinking and studying back this goes back even 10, 12 years ago about the best way to dose these drugs and we concluded that IV was the way to go and that a less frequent dosing was all that was required with IV. And so we went with that. And I think that the new data that we're seeing coming out of the reanalysis of the Phase 3 data is really sort of adding to that.
In addition, some of the leading researchers in MS have been looking at this question of what does it take to really stop progression because as you probably know the field has done much better for example at suppressing MRI activity. We're really good at stopping lesions but not as good at stopping progression. And there's been this emerging hypothesis that what's going on is that there is a residual sort of autoimmune activity that's taking place at a level that's it doesn't show up in the MRI, it doesn't show up as discrete lesions, but it's sort of a smoldering activity. And the way to get at that is a more profound suppression of the offending immune cells. And the analysis I think will show it AAN is strongly supporting that.
So look forward to more discussions on that as we present the data.
Thank you.
Next question is from Richard Foster, JPMorgan. Please go ahead.
Hi, thanks for taking my questions. A couple, please. Firstly, just thinking about U. S. Price reforms, perhaps you could update us on how you're seeing these reforms develop?
How receptive has the administration been to your proposals around Part B reform? And maybe some comments on how likely you now see international reference pricing or maybe over the last few days Medicare for all being adopted? And then second question, just going back to HEMLIBRA and the uptake. Perhaps, can you just give us a bit more color on the uptake in non inhibitors? What share of patients do you think you have at this point in specialist centers relative to maybe more community hospitals and what the feedback has been there and maybe a split of revenue between non inhibitors and inhibitors if possible?
And then finally, actually one final question, just thinking about Tecentriq. The label update for small cell lung cancer and triple negative breast cancer, didn't mention anything about antibody levels. Has this now been put to bed with data that you've submitted to the FDA? I think it was due to be there in Q1. Is that now off the table as a concern?
Thanks
very much.
That's a long list.
Let's see.
I guess the first one, we can spend all afternoon talking about the healthcare reform and pricing pressures in the U. S. But let's not do that because I don't think we would add much value to the discussion. I think we continue to have good discussions with other stakeholders including other pharma companies, providers, payers, other entities and the administration about some of our proposals for reforming pricing and introducing market based competition in Part B. I think it is true that there's a lot of competing proposals in Washington coming from very different sources and the range is quite extreme including things like this sort of so called Medicare for all.
I think in terms of international reference pricing, I think this is something where we and the rest of the industry, but a lot of other folks that are knowledgeable in healthcare think is a really bad idea because we think the price controls that exist in countries like the UK is not good for innovation. It doesn't support innovation. And at a time where the biomedical research and development enterprise is never making it's never made more gains than today to introduce things that would severely limit innovation. It just seems like really a horrible idea for humankind. And so we'll continue to oppose those things.
But meanwhile we press ahead and we try to offer concrete proposals and we try to make sure that our behavior is consistent with our values. And I think we've done that in terms of pricing and everything else. In terms of HEMLIBRA, the questions about non inhibitors and market share. I think in the U. S.
We may be approaching 10% market share in non inhibitors and this is based on approval in what was it September or October last year. So I think it was a very quick uptake. People were wondering and we were wondering what would the rate of uptake be for patients that are I would say in quotes kind of well controlled because they don't have inhibitors. And I think what we're finding is that the ability to give up the frequent IV infusions for those patients who are on prophylaxis or the ability to have control and to have more freedom in life, freedom from bleeds and from having to avoid activities for those patients who are on demand and not on prophylaxis is proving quite compelling. And we just have a really strong package with the option of once a month dosing, a very reasonable price.
It's proved very popular. We have broad coverage from a payer standpoint and now we have the approval in Europe in just in March. So we're looking forward to hopefully similar types of trends. You asked about the specialist versus community. There are some specialists who've gone very rapidly to converting patients over to HEMLIBRA, but we see also quite healthy adoption in the community.
And then you asked about the share of revenues that was non inhibitors versus inhibitors. And I think what you can think of is our sales in Q3 was virtually entirely inhibitor patients and then almost all of the change in sales since Q3 is in non inhibitor patients. So that's a pretty good way to think about it. We had highly penetrated the inhibitor population by the end of Q3. So think of that as a baseline.
And finally, you asked about antidrug antibodies with TECENTRIQ. We were still analyzing this. We have numerous Phase III trials and Phase II studies and we have large data sets on this. So far we're not finding any anything that's very concerning about it. But we take it very seriously and we'll continue to study this matter and provide updates to regulatory authorities on it.
So I think that's an ongoing discussion we're having with the FDA and other regulatory bodies. But we feel like we're sort of on top of it and we'll continue to evaluate it.
Thank you.
Next question comes from Simeon Baker, Redburn. Please go ahead.
Yes. Thank you for taking my questions. A couple, if I may, please. Firstly, on European rituxan and Herceptin sales. We saw relative certainly to market expectations, a better performance for Itaxan, a weak performance for Herceptin.
And I was wondering if we could read anything into that from the with regard to the trajectory of biosimilar penetration. Is it a case of relative to what we expect and perhaps what you expected that initial erosion is quicker and then starts to abate over time. So any color you could offer there would be helpful. And then secondly, moving on to Diagnostics, I wonder if you could give us any quantification of the impact of the distributor inventory level changes in China. I know you said that it has now resolved itself, but I just wonder if you could quantify the impact in Q1.
Thanks so much.
On the rate of uptake of biosimilars in Europe in MabThera and Herceptin. I would say the pattern is very similar for the 2 drugs. And the reason I think you cited sort of better performance on MabThera this year. I think that's really because there's not so much left to lose. Yes, we had a steep loss in 2018 on MabThera.
And so this year there's just there's yes, there's not as much to lose. And with Herceptin, it's a similar pattern, but maybe 6 or 9 months later.
On the diagnostic side, I cannot give you the detailed numbers, but I can only refer to a significant impact of the efficiency improvements in the distributors' inventory levels. And we compare that always with the in market sales and there we see major discrepancy between what is going out to the market, what was in the inventories of the distributors. And we see also the pickup now of the sales and purchases from the distributors to Roche since March. So this was an individual topic, single event in the month of January February, and we are above that. And we see a positive development from Exane.
Please go
ahead. All right. Thanks
so much. Next question
comes from the line of Luisa Hector from Exane. Please go ahead.
Hello. Good afternoon. I have a few more questions on international sales, please. I noticed that Rituxan was a bit weak and I just wondered if there was anything specific behind that in the international region. I'm sorry if I missed it, but did you actually give the China Pharma growth in the quarter please?
And were there any in pharma now was there anything in terms of stocking or tenders that you would mention for the quarter? And then a second question on HEMLIBRA, just looking at that European label, so good to see the approval. But as you flagged it the full year results, the label is restricted to severe patients for the non inhibitor group. So I just wondered what would be required to then expand the label? Do you need another study?
Or is it can you use real world data, for example? Thank you.
Okay. Let's see. So the first question was about MabThera and international. Yes, I don't think there's any particular trend there other than there are some non comparable biologics and biosimilar competition in the international region to both MabThera and Herceptin. And in the case of Herceptin, we had stronger new uptake in China.
It was offsetting the biosimilars and non comparable biologics. So I think that's just probably the difference between Herceptin and MabThera. You asked about China growth and we do provide that on the on the IR web page. So if you want to look at the details on that, you can find it in I think just check it there. And then on HEMLIBRA you asked about the effect of being limited to severe patients in Europe.
And I think the slide we showed in my presentation gave the segmentation, the patient segmentation. And the bottom line is independent on the country and which study you look at severe patients are between 50%, 60% up to 70% of the patients. But in terms of use of Factor A or use of the bypassing agents in the case inhibitor patients, it's a much higher proportion, so up 85% or 90% of the market. So we don't believe that the limitation of the European label to severe will have a significant effect on the ultimate potential of Hemlibra in Europe. Yes, and I'm looking at the IR web page for the China sales growth in the quarter and it was up 63%.
So yes, a very strong result I think by any account.
Thank you.
Next question comes from the line of Peter Welford from Jefferies. Please go ahead.
Hi. Yes, a couple of follow-up questions, please, if you don't mind. OCREUS, first of all, just with regards to the PPMS and RMS split, I wonder if you're willing to give any sort of detail on that and also any sort of rough percentage of those patients who are coming back the new starts for the 2nd infusion? So any sort of data you have on the, I guess, discontinuation rate prior to the 2nd infusion? Secondly then, just on Herceptin Hylectra in the U.
S, I appreciate it's still early days, but any sort of feedback you have on the adoption of that in the U. S. Since approval, particularly, I guess, if you can draw any comparisons to how you saw it's adopted in some of the key European markets when you also got that approval? And then just finally on sorry, going back to Huntington's again. But just curious, given the change of the protocol and obviously the stop to the generation trial, while you did that protocol change to change the dosing to Q3.
And I'm just wondering whether or not that change in dosing schedule has any impact on the regulatory discussions? And I guess what I'm wondering is do you have to get some sort of data on the effect of the Q3 on dosing before you're able to go back to regulators, given obviously that's a pretty lengthy dose interval for many patients? Thank you.
Okay. Let's see. Let me try to answer and if I miss one of your questions, please go back. As I was taking notes and I'm not sure I got them all. But yes about OCREVUS and the retreatment rates and we're not providing specific numbers on that, but it's the retreatment has been very strong.
The vast majority of patients are getting the 2nd dose and third dose frankly higher than we had anticipated before the launch. We continue to follow that very closely. But I would say by any precedence of other chronic therapies I've been around, it's very strong. And I think it's basically that combination of very strong efficacy. The fact that they only have to get dosed twice a year and that the side effect profile is quite good.
So again, very encouraged by what we see there. You asked about the Herceptin subcu launch in the U. S. And I think we've commented before that subcutaneous dosing, while it's a nice convenience advantage for patients in the U. S.
Healthcare system. Physicians are very comfortable with IV dosing. That's very much their system and their setup. So the amount of uptake of subcu is quite small and both for Rituxan and now with Herceptin subcutaneous. We've only just recently received the approval, but we don't anticipate it will be a major part of the market, but we think it's a good option for patients to have.
And then you asked about the dosing change in the pivotal studies for the antisense therapy for Huntington's. And we don't think that I mean we basically we were following a monthly and a bimonthly approach And the early data that we were looking at suggested that there wasn't an incremental benefit or monthly over bimonthly. And so we decided to drop that arm and then because we have the option to explore 2 arms, we decided to look at a less frequent dosing basis. So I think you said 3 monthly, but it's actually every 4 months. So there's dosing some patients being dosed every 2 months and others every 4 months.
And but we don't anticipate that to have an effect on our discussions regarding faster market approaches for yes with the regulatory authorities. Did I answer your questions?
That's great. Thank you.
Thank you.
Next question comes from the line of Naresh Chouhan, Intrinsic Health. Please go ahead.
Hi, there. Thanks for taking my questions. Just wanted to ask in the U. S, was there any material price rise on Avastin? And then with Tecentriq in the second line, it would seem based on some of the conversations we had with KOLs that the second line setting in the second line setting, Century has become standard of care post to KEYTRUDA use in Europe at least.
Would you are you seeing that? And can you help us understand what the penetration rates in the second line and also in the first line are in the U. S. And Europe? Thank you.
Yes. We'll see on Avastin, okay, so we haven't had any price increases in the U. S. Since last July. And I think any price increase we had on Avastin was rather modest in 20 18.
So I think we're mostly seeing a volume effect on Avastin. The price effect would be very minimal. And as I think I mentioned, we mostly see that on new indications like ovarian cancer as well as the use of Avastin in combination with TECENTRIQ. In terms of second line use of TECENTRIQ and I guess you said first and second line in lung cancer in the U. S.
So again, the place where we're hearing from physicians that they're liking to use TECENTRIQ is the patients that have been previously received an EGFR inhibitor or an ALK inhibitor or patients with large metastases, large tumor volumes where they're keen to default the tumors and they know the effect of Avastin and then the EMPOWUR 150 regimen with TECENTRIQ plus Avastin plus chemo had a very high response rate and strong anti tumor effect. And so that's where we're seeing most of the use there in first line. In second line, it's tough competition between TECENTRIQ, KEYTRUDA and Opdivo. All three products had good data in second line in there. I think it's more of a kind of tough battle.
And because we refer to market that's in lung cancer that's a harder area. In terms of in the EU we've done rather stronger in second line and first line it's too early to say because we've just been approved with the AMPOWER 150 regimen in Europe and haven't yet had approval in the small cell lung cancer, but we look forward to that later this year.
Next question?
Next question comes from the line of Sachin Jain, Bank of America. Please go ahead.
Sachin Jain from Bank of America. Thank you for taking my questions. Just two product questions. Firstly, on the Spark acquisition and SPK-eight thousand and eleven product for hemophilia. I wonder if you comment on the competitive profile versus a BioMarin gene therapy and your level of comfort that you've acquired a potentially best in class asset or any other factor behind that acquisition?
And then secondly, just apologies going back to Huntington's. Just to follow-up on two comments. Firstly, on efficacy, functional outcomes correlation to protein. I believe you had a post hoc analysis at AAN last year correlating protein reduction to functional outcomes. So I just wanted to clarify your prior comment, Bill.
Do you not put a lot of credence in that post hoc analysis or is data internally potentially changing? And then on the filing strategy, your partner has been fairly vocal that you have an agreement to use the Phase 1 open label extension in comparison to the natural history study. I just wanted to check whether that was correct. And if it is, are you essentially just waiting for the data to discuss with the regulators? Or are there any other factors still pending in that discussion?
Thank you.
This is Severin. Perhaps I'll just comment on hemophilia and the Spark acquisition. So we expect data still this year, competitive data, which will further inform us. Spark is at the earlier stage in terms of the development. So it's simply a question of time to await for the clinical data to see how the different opportunities for patients will eventually play out.
But from all of what we have seen, we think that Spark has a good chance to be well positioned in this market. Bill, over to you.
Yes. Thanks Sachin for on Huntington's. I appreciate you asking, but there's really no news there. Basically, so there's no you asked whether there's some change in the internal data, change in our view. There's no change in the outlook.
I think my answer was because you mentioned in the post talk analysis and the correlation and that's all good and nothing's changed on that. But I was I think what I was answering earlier is when will we know what the clinical impact is? And I guess I would say the word no is a high bar and we'll know it when we have randomized controlled data. We're optimistic with what we have. And again, because of the high unmet need in Huntington's, both we the Huntington's community and the regulators are looking at innovative ways to make a product available.
But there's really no news on it. We're going to get the data from the studies we're running. We will continue to share it as it emerges with the regulatory agencies and we will all be working on the most expeditious possible way to make the products available to patients. But in the meantime, I don't think there's anything else to say and we'll be waiting on those results. Is there any comment
you can make to your partner's commentary re your filing strategy?
I don't think there's anything else to say.
Thank you.
The last question is from Graham Doyle from Liberum. Please go ahead.
Hi, thanks for taking my questions. Just 2, please. 1 on HEMLIBRA. Assuming Spark's gene therapy does indeed work, what type of patient population do you envision staying on HEMLIBRA? And then just the second one on OCREVUS.
Considering the sort of potential competition in a subcut form, obviously, this has been discussed a little bit earlier. Do you think you'll be able to replicate the data you have shown, the efficacy you've shown with the intravenous form of OCREVUS in a subcut version? And does it leave that option open longer term? Thank you.
Right. So on hemophilia and how is AMLIVRA positioned against the potential gene therapy. Again, it will very much depend on the data. We still have to wait for the data and analyze how response rates are, how safety profiles show up, etcetera, for the various patient groups. But we could well see a situation where we have a complementary positioning.
So they're still used for factor VIII, for example, in very mild patients. There will definitely continue to be a market for Hemlibra. And then depending on the data for gene therapies, they are a potential option for a number of patients as well. And it might also be that over time you need a combination. We don't have long term data yet by the very nature of development of these new modalities then.
But it will also depend a lot on how the effect from gene therapies plays out in the long term. And you could potentially even see for those patients who go on gene therapies, a combination with a medicine like Ombre over time. So really bottom line is that we have to wait for the data to be more granular of how the market will segment in the future.
Great. And regarding OCREVUS and you mentioned subcutaneous, I mean it's I think probably the most important factor is that the IV formulation is well tolerated. It happens every 6 months and patients are typically going in to see the physician about every 6 months. And so I think what we're finding is that the combination of the current OCREVUS profile of the dosing profile, safety profile, the tolerability in terms of sort of nuisance side effects and things that are seen with other MS therapies. And then just really the compelling efficacy, which is ultimately the name of the game.
It makes OCREVUS a very attractive option. And so I think if we were considering what are the benefits of a different dosing regimen, we have to consider also that we have 37% of basically switches and new starts in a market with I don't even I think we've lost count, there's either 14 or 15 products. So we're by far the number one used product. So I think that kind of puts it in context. And obviously we keep our options open in terms of alternative dosing approaches, but I don't think I would say anymore at this point.
That's great. Thank you.
So thank you very much for attending our briefing today. Thank you for your interest and have a good day.
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