Roche Holding AG

Ladies and gentlemen, welcome to Ro's third quarter sales webinar 2022. My name is Henrik and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there will be a question and answer session. You are invited to send in questions for this throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may raise also your virtual hand to address your questions verbally. For participants joining via phone, to raise your hand, use star nine on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star six to unmute yourself. One last remark. If you would like to follow the presented slides on your end as well, please feel free to go to roche.com slash investors to download the presentation. At this time, it's my pleasure to introduce you to Severin Schwan, CEO, Roche Group. Mr. Schwan, the stage is yours.

Thank you. And also a warm welcome from my side. Welcome to our Q3 sales briefing. Let's get right into it. Here we go. As you have seen, group sales are up by 2% at constant exchange rate. And I should say, in spite of the sharp decline we have seen with our COVID-related sales, both our COVID medicines, Ronabrief and Actemra on the pharma side, as well as the decline on the diagnostic side. And all of that was only possible because of the strong growth of the underlying business, of our newer medicines, and the strong performance of the base business in diagnostics. And Bill and Thomas will comment on that in more detail in a moment. So if you look at the numbers again, stable business in pharmaceuticals, 6% up. in diagnostics, which results in the 2% overall growth on a group level. So really here on this slide, you see the impact of COVID and the base effect versus last year. We had very strong COVID sales in Q3 last year. And you see here now the overall business coming down by 6% in the third quarter. Just to put it into perspective, in pharma alone, we lost $900 million versus previous year, just in the quarter, due to Ronadriv and Actemra. And likewise, on the diagnostic side, even to a lesser extent, but still we see now declining sales, minus $400 million, versus the previous year. Now, if we look forward into the fourth quarter, actually we expect that dynamic to change. And the reason is that we, I mean, on the COVID side, and the reason for that is that we have an outstanding order for owner brief in Japan in excess of $1 billion. And combined with the continued strong growth of the underlying business, that gave us the confidence also to confirm our outlook for the full year. We turn to the next slide. You can again see here the strong growth of the diagnostics-based business as well as the underlying pharma business. You see here in more detail again the effect of COVID-related sales with Rona Brief and Actemra. And you also see that we had a negative impact from the entry of biosimilars in terms of Avastin, Herceptin, and Maptero of roughly 1.5 billion. You know, the guidance we gave you at the beginning of the year was we expect a full-year effect of about 2.5 billion. From where we stand today, just for Avastin, Herceptin, Amaptera, it will probably be a bit less, a bit above 2 billion for the full year. On the other hand, we have seen a more pronounced effect in the erosion area of Lucentis and Esprit, where we have seen generics coming in. So overall, actually, even though the composition is slightly different, the 2.5 billion erosion still holds true. If you turn to the right-hand side of that slide, I think it's pretty interesting. impressive structural change of our portfolio just over the last five years. And you can see two things here. One is Avastin, Herceptin and Rituxan has now become a relatively small part of our portfolio. It's much more diversified. We have entered new areas like multiple sclerosis, hemophilia, etc. But what you also see is that in spite of the erosion, the massive erosion we have seen for those three years, top cancer medicines over the last five years, we could still grow the business from roughly 40 billion to 47 billion. So that's an increase of 20% in a period where we had to digest the entry of biosimilars for those three medicines. On the next slide, You can again see the underlying business if we correct for the COVID-related sales. So you see pharma in the third quarter at 2%. Also diagnostics, robust sales with 7% versus the negative evolution, including COVID. Right, so if we... look a bit into the future into our product portfolio I think we can say that we have a new record of new molecular entities in our clinical stage portfolio overall 85 new molecular entities you see here 13 projects in phase 3 and registration now you see the decline versus half year That's entirely due to the fact that some of those medicines have been launched in the meantime, and there's a lot coming through over the next quarters. We still have important readouts in the fourth quarter. Of course, we are all eagerly awaiting the results for Gantenarumab in Alzheimer. But beyond that, there is also important readouts for Vabaismo in an additional indication, RVO. And I should also mention the Klexter in multiple myeloma patients. Into 23, we have a whole range of important readouts, in particular in oncology, and I should highlight here the many readouts with D-centric in the adjuvant setting. Now, coming back to Alzheimer's, We will present results for Gantenero Map end of November at CTET. I just want to re-emphasize, we do not yet have any results in-house, so we have to wait for the results. We expect them in November. and we should be able to communicate more by the end of November. What I should also say is that we got a breakthrough designation for our blood-based diagnostic test, which obviously will be of high relevance, not only for us, but also for the field overall and for potential other medicines in this field. Right. I think with this, I'd like to close. As you have seen, we confirmed the outlook for the full year with stable to low single-digit sales growth, EPS to grow in the low to mid-single digits, and on that basis, we should also be able to increase our dividend in Swiss francs again. And with this, I'd like to hand over to Bill. Bill, over to you.

Thanks, Severin. Hi, everyone. Great to have the opportunity to share our latest results with you. It's been a very dynamic quarter and yeah, looking forward to more good things to come. So this is the geographic picture to start with. You know, overall in pharma, we had stable sales year over year, year to date. And this really reflects the the The competing forces, very strong delivery from our newer medicines, but at the same time offset by declines in H and R in in other medicines affected by loss of exclusivity like Esprit and lucentis and then also the decrease in the covid sales and this this happened pretty much the same in every in every area except for japan which actually had a small increase in covid sales and you can see the difference on the results this is the the product view And again, you can see what we're really pleased with is that excellent performance on our newer medicines, Ocrevus, Hemlibri, Evrizdi, Fezgo, Babizmo, T-Centric, all of them with sales right across the regions around the world. Very strong performance. Down at the bottom of the page, on the other hand, You can see the impact of AHNR declines, but also Actemra and Ronaprev with big reductions in COVID use. And then you can see Esbriet and Lucentis with the impacts of biosimilars or generics. And so I think what is very encouraging to us is the fact that the growth drivers will stay, whereas the things that are dragging down sales are on their way out. And so this really portends well for future quarters. Looking to oncology, the overall oncology sales for year-to-date are down 1%, which is pretty remarkable given the drop in A, H, and R. And this is really accomplished by strong growth in the HER2 franchise, 4% growth with Progetta, Kedsila, and Fezgo, offsetting the declines in Herceptin. Strong performance, you can see in T-Centric. In the hematology franchise, we have several things to point out. Polovi, which is now just starting to get uptake in first-line setting in Europe, so 79% growth year over year. Now we have a PDUFA date in April for the U.S. for Polovi, so we look forward to more growth from Polovi. And then also Linsumio, which is just launching in the EU, and we have a PDUFA date at the end of the year. in the US. So we look forward to more gains from Linsumio in the months ahead. And then finally, Allicenza with 16% growth. It's the leader and continuing to be the new patient share leader in all the major markets. So looking a little more closely at the HER2 franchise, so you can see Fezgo very strong uptake now at a 900 million annual run rate. This is the fixed dose combination of Herceptin plus Progetta. It's rapidly becoming the lead in many of the major markets. We also now have a phase three study in first line dual positive MBC, with Fezgo and Giridestrin. So I think Fezgo is going to continue to be a very important medicine for many years to come. And then Kedsila, which remains a leader in certain early cancer settings, as well as first line MBC. But we also have two phase three studies, one in first line MBC and one in adjuvant, with Kedsila and T-Centric. And so we're taking that power of an ADC combined with cancer immunotherapy. We think that as a proof of concept has already been demonstrated, and we're looking forward to bringing more advances to breast cancer patients with Kedsila and T-Centric. This slide have a couple of the graphs from studies we've shared this year at ESMO and ASCO, which really explains why we have confidence in G-redestrin as a SIRD. We think it's a best-in-class molecule based on its drug properties, based on its affinity for the target. And you can see that comes through, for example, in the later line setting in second and third line in patients that have an ESR1 mutation. which is a subset of patients that are still estrogen-sensitive. And you can see in these patients, we beat standard of care with a hazard ratio of 0.6. And then at the other end of the spectrum, in the adjuvant setting, with the Coopera study in neoadjuvant, and there we saw a strong impact in KI67, which is a biomarker for proliferation, and it's associated with improved long-term efficacy. And so we feel like we've got strong signals for why this molecule could be very important in the future, and the studies in adjuvant and first-line metastatic breast cancer are continuing to enroll. Turning to centric, so in Q3 we had 9% year-over-year growth, and this was basically strong growth in the U.S., in Europe, and international markets, somewhat offset by a small decline in Japan, which was a result of a price cut in Japan. We're mostly through the price cut dynamic, and we should see a return to growth there. for T-Centric in Japan as well. And I'd also like to point out we've got important adjuvant studies still to read out in T-Centric. The uptake is strong and growing around the world in the non-small cell lung adjuvant setting, but we're not done. We have more to come and look forward to more growth on T-Centric. Turning to hemophilia, Hemlibra, another really strong quarter, broad-based growth. You can see it's virtually linear. We now have 18,000 patients treated around the world. We've opted in now on the second generation bispecific, which is called NXT-007, and we'll be developing that in partnership with Chugai now around the world. What we're looking forward to in the near term with Hemlibra is the expansion to include mild to moderate patients in Europe, as well as the presentation of HAVEN-7, which is the infant study for babies. And we'll be presenting that at ASH in December. So hopefully you'll get to see it there. Turning to immunology here, you can see the impact primarily of lower sales of Actemra due to less COVID, which I think we're all happy that there's a lot less COVID in the world, and hopefully that trend will persist. Also, unfortunately, Esprit now affected by generic competition, so down about 48% in Q3. But these are offset by strong performance by Zolaire at 8%, and Zolaire remains the market leader in asthma, in biologics, and also we have strong growth continues in urticaria. So turning to the MS franchise, so I think we're seeing quite a strong year for MS therapies. We've maintained our market share, for example, in the US at 35%, new to brand share. And that's consistent, but yet you can see very strong sales volume and I think, you know, again, looks like more growth in store for Ocrevus. I'll talk a little bit more about that. I wanted to mention the Phenobrutinib Phase III program, where we have studies in RMS and PPMS that are accruing well. And, yeah, we believe this is really going to be an important molecule for us in the future as well. So far, we've had studies in multiple indications, and it seems to be a well-tolerated and safe medicine, and look forward to getting those studies enrolled and getting results for people with MS. I want to say a little more about the Ocrevus franchise, a couple of the major things going on there. One is our Ocrevus subcutaneous program. So we'll still, now you know we have IV six-month dosing, and now we're going to be moving to sub-Q but with six-month dosing. And really we have the opportunity to cut the infusion time down from hours to minutes. And we think this will be very attractive to patients to be able to receive a therapy for a disease as significant as MS to get that in minutes a year in two convenient injections. And so we expect data in 2023, and we will file rapidly after that. This will allow that patients not only could get Ocrevus in a doctor's office, but potentially in their home as well. And then we're still studying Ocrevus in higher dose. We think there's a potential to have greater efficacy even than the standard dose Ocrevus, and we have those studies ongoing in RMS and PPMS. Turning now to spinal muscular atrophy, another really excellent quarter for RISD. We have more than 7,000 patients now. We're the market leader in all the major markets. Growth is driven, continues to be driven by both switches and naive patient starts. We also shared the phase two jewelfish two-year data at WMS. This is really exciting. It's the largest SMA study in patients who've been previously treated with something else. And so that includes patients who've been previously treated with Spinraza or with gene therapy. And we saw in both groups a doubling of SMN protein, which is pretty exciting to see, including patients previously treated with gene therapy, that we could increase their SMN protein. I think this is really promising development for people with SMA and for Evrizdi. We look forward to label expansion in Europe. getting into the newborns and more opportunities to grow and make sure we can treat patients in every country in the world. So turning on to ophthalmology, another very exciting quarter for Vobeismo. The uptake in the US has been very strong. October 1st, we had our permanent J-code, which is really excellent because this means sort of the last remaining reimbursement obstacle has been cleared. And so now we really have broad coverage for Vibismo for virtually every type of patient in the U.S. We now have approval in Europe, and we've launched in a number of countries in Europe, and the initial response from physicians has been very strong. And also Japan, you can see the bar there. Actually, Japan is the number two country already. and with very strong uptake of Vibismo. Sustimo, I want to mention, unfortunately, we've had to do a voluntary recall due to a manufacturing issue. We noticed in our laboratory testing, sort of reliability testing, that in certain cases, the septum, which is sort of the seal on the port delivery device that prevents the medicine from leaking out once it's been injected in, that that seal could fail after repeated dosing. And so we decided, because it didn't meet our performance standards and we want to make sure that we have high reliability, we decided to voluntarily stop distribution of the port delivery system So patients who've already had the implant continue to receive their refills. There's no problem with that. But we want to make some corrections to the manufacturing process that we hope can assure much greater reliability. And we hope to have new port delivery systems available in the market as soon as possible. So that's an update on SysFemo. And as Severin mentioned, we have a number of important studies reading out in Q4 for Vivizimo and RVO. and for DME and diabetic retinopathy for cis-femo. Now, I did want to take a minute and just say a little bit more about the studies that we have for vivizimo, the phase 3s in DME and AMD, because this is an area of intense interest. There's competition here. There's a lot going on. And so I thought it would be a good time to remind folks of the data we have and what we're able to bring to patients and physicians First off, I think it's really noteworthy we have two-year results from Vibisbo in both these disease settings. That's really important because this is a chronic disease, and physicians are really looking for that longer-term data to understand what happens over time. The DME study was really the first time we had these treat and extend principles applied in a Phase III setting, and that's been – I think doctors really appreciate that because that very much approximates what they try to do in the practice setting. Using that protocol, we were able to show 78% of patients in year two getting dosing at Q12 or Q16, which is a big advance. And I think what's especially important, and when you look at the results, the efficacy results on the right, is that we did that at no sacrifice to patient efficacy. And you can see these lines are really superimposable whether you look at the less frequent dosing or the more frequent dosing of furosemab or the Q8 week of flibrocept. And then I think also what we hear a lot from physicians that they appreciate about furosemab that has not been seen before with any higher dose of anti-VEGF therapy alone is a greater drying. And you can see that in terms of the statistically significant greater level of anatomical improvement on the graph on the bottom. We've not seen that with higher-dose Lucentis when we tried that in the past, and so this is certainly an important indicator for physicians of disease control. Looking at the AMD study or studies, you see a similar thing, which is that we did here. We did a treat and extend in year two. In year one, we evaluated all the patients after a loading period. We evaluated them at week 20 and week 24 to see if they would be eligible for less frequent dosing. And we used, I would say. very stringent criteria for allowing patients to get less frequent dosing the whole point of this was to have the greatest opportunity for every patient to get maximum benefit and I think I think why that's important. I'm gonna I'm gonna demonstrate on the next slide But what we did was we said there were five different criteria that patients were evaluated at at week 20 and at week 24 and And they had to pass all five. If they failed on any one of the five, then they were not eligible for less frequent dosing. And you can see this here on illustrated on the bar along the top. with the five criteria, and what's key is the or. So if you failed on any of these criteria, you were ineligible for less frequent dosing. And using this very stringent criteria, basically 22% of patients failed one or more of those and were not eligible. 78%, though, were able to get Q12 or Q16-week dosing. Now, An alternate way to do that would be to say, oh, no, patients actually have to fail more than one criteria. And a competitor study recently had that approach where you had to fail both a visual test and an anatomical test. And if you didn't fail both, then you could be eligible. for less frequent dosing. Well, if we apply that criteria to the patient population in the Tenaya and Lucerne studies, so in the furosemab studies, if we applied that criteria, those criteria, instead of the stringent criteria we used, then only 4% of patients would fail and be ineligible for the less frequent dosing. And so I think the main point of this is to say, hey, you have to be very careful about making comparisons across these trials because there's a whole lot in the word and or the word or. And so you really have to look at the criteria that are used and make sure that's understood. Okay, let me just close with an update on the key late-stage news flow. I think probably the most significant thing to mention here is a number of the adjuvant studies that we have planned in 2022 to read out on Ticentric or Allocenza have shifted by events either to the very end of the year or early 2023 in the case of our peri-adjuvant study in non-small cell lung cancer and our liver cancer studies, adjuvant studies for T-centric or into mid or later 2023, as is the case for some of the other adjuvant studies. Other than that, we're pleased that we've been able to bring a number of important developments to patients around the world. and look forward to answering other questions you might have in a bit. And with that, I'll turn it over to Thomas. Thank you very much, Bill.