Science, patient benefits, and productivity
Dr. Alan Hippe, CFO
Jefferies 2019 Healthcare Conference New York, June 2019
This presentation contains certain forward-looking statements. These forward-looking statements may be identified by words such as ‘believes’, ‘expects’, ‘anticipates’, ‘projects’, ‘intends’, ‘should’, ‘seeks’, ‘estimates’, ‘future’ or similar expressions or by discussion of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this presentation, among others:
1 pricing and product initiatives of competitors;2 legislative and regulatory developments and economic conditions; 3 delay or inability in obtaining regulatory approvals or bringing products to market; 4 fluctuations in currency exchange rates and general financial market conditions; 5 uncertainties in the discovery, development or marketing of new products or new uses of existing products, including without limitation
negative results of clinical trials or research projects, unexpected side-effects of pipeline or marketed products; 6 increased government pricing pressures; 7 interruptions in production; 8 loss of or inability to obtain adequate protection for intellectual property rights; 9 litigation;10 loss of key executives or other employees; and11 adverse publicity and news coverage.
Any statements regarding earnings per share growth is not a profit forecast and should not be interpreted to mean that Roche’s earnings or earnings per share for this year or any subsequent period will necessarily match or exceed the historical published earnings or earnings per share of Roche.
For marketed products discussed in this presentation, please see full prescribing information on our website – www.roche.com
All mentioned trademarks are legally protected2
Performance update
Growing new assets
Productivity
Outlook
3
4All growth rates at Constant Exchange Rates (CER)
2%
6%
4%
6% 6%
4%
8%
7%
5%
4%
5%
6%
5%
7%
6%
4% 4%
6%
3%3%
4%
6% 6%
5%
6%
7%7%
9%
8%
0%
2%
4%
6%
8%
10%
Q1…Q2…Q3…Q4…Q1…Q2…Q3…Q4…Q1…Q2…Q3…Q4…Q1…Q2…Q3…Q4…Q1…Q2…Q3…Q4…Q1…Q2…Q3…Q4…Q1…Q2…Q3…Q4…Q1…
Q1 2019: Group sales growth for the eighth consecutive year
New products with strong momentum
5All absolute values are presented in CHFm reported; 1 Erivedge, Perjeta, Kadcyla, Gazyva, Esbriet, Cotellic, Alecensa, Tecentriq, Ocrevus, Hemlibra, and Xofluza; 2 MabThera & Herceptin in Europe & JP
13,583 14,826
+1,204+442
-12-391
Pharma biosimilarsexposed2
Pharma new
products1Q1 2018 Q1 2019Diagnostics
divisionPharmaother
products
CHFmCHFm % of Pharma sales
6
36.4% 35.7% 36.1%
Core operating profit
% of sales
14.1
17.8
18.7
2016 2017 2018
27.9%33.4% 33.0%
Operating free cash flowCore EPS
14.53 15.34
18.14
2016 2017 2018
18.4 19.0
20.5
2016 2017 2018
CHFbn +9% at CER +5% at CER+19%1 at CERCHF CHFbn
CER=Constant Exchange Rates; 1+8% at CER excl. US tax reform
2018: Strong Core results, significant operating free cash flow
Roche significantly advancing patient careBTD’s and BDD’s reflecting the quality of our research
7* Real-Time Oncology Reviews (RTOR) pilot and BTD
2018: 32nd consecutive annual dividend increase
81 compound annual growth rate
8.70
0
1
2
3
4
5
6
7
8
9
1989 1994 1999 2004 2009 2014
CHF
2018 dividend as proposed by the Board of Directors; Note: For 1995, a special dividend was paid out to mark F. Hoffmann-La Roche’s 100th anniversary in 1996
Performance update
Growing new assets
Productivity
Outlook
9
Replace and extend the business: Excellent progressThrough continuously improving standard of care
Replace/extend existing businesses Entering new franchises
10
MabThera/Rituxan
Gazyva, Venclexta,
polatuzumab vedotin, mosunetuzumab,
CD20 x CD3
HerceptinPerjeta, Kadcyla,
Herceptin + Perjeta SC
AvastinTecentriq, Alecensa,entrectinib
Lucentis faricimab Port delivery system (PDS)
Tamiflu Xofluza
Achievements 2018
MS: Ocrevus
Hemophilia A: Hemlibra
CNS:SMA, Autism, Huntington’s,
Alzheimer’s, NMOSD
SMA=spinal muscular atrophy; NMOSD=neuromyelitis optica spectrum disorder; RMS=relapsing MS; PPMS=primary progressive MS; R/R CLL=relapsed/refractory chronic lymphocytic leukemia; AML=acute myeloid leukemia; BC=breast cancer; NSCLC=non-small cell lung cancer; SCLC=small cell lung cancer; TNBC=triple-negative BC; nAMD=neovascular age-related macular degeneration; DME=diabetic macular edema, PDS= Port Delivery System
Strong launches: Ocrevus, Perjeta, Hemlibra, Tecentriq, Alecensa
Pivotal readouts: Gazyva+Ven: 1L CLL Kadcyla: HER2+ eBCTecentriq: 1L non-sq NSCLC, 1L SCLC & 1L TNBC entrectinib: ROS1+ NSCLC & NTRK+ tumorsXofluza: US approval in influenza A and Bsatralizumab: NMOSDVenclexta: R/R CLL & 1L AML
Proof of concept: faricimab: Ophthalmology - nAMD and DMEPDS: Ophthalmology - nAMDrisdiplam: SMA- Type 1/2/3balovaptan: Autism in adults
Further growth momentum / new market entries
Hematology franchise: Encouraging signs with new launches
111 Datamonitor and internal estimates, US, JP, & EU5; CER=Constant Exchange Rates; FL=follicular lymphoma; R/R=relapsed/refractory; CLL=chronic lymphoid leukemia; AML=acute myeloid leukemia; MM=multiple myleloma; DLBCL=diffuse large B-cell lymphoma; * Venclexta sales are booked by partner AbbVie.
What we have achieved
YoY CER growthCHFm
Main drivers: (+) Gazyva (EU/US) in 1L FL(+) Venclexta* launched in R/R CLL, AML Early stage assets: CD20 x CD3 (Ph I), mosunetuzumab (Ph I)
MM
AML
MDS
CLL
DLBCL
13%
37%
14%
9%
17%
7%3%
Incidence rates (330,000 pts)1
iNHLRoche marketed
CLL 14 (Ph III) 1L unfit - filed
MIRROS (Ph III) R/R AML1L unfit AML - approved
CANOVA (Ph III) t(11;14) positive R/R MM
Ph II data in R/R DLBCL – filedPOLARIX (Ph III) 1L DLBCL
polatuzumab
idasanutlin
new opportunity
ALL
polatuzumab
12
Total lung cancer market growing from USD ~14bn in 2017 to ~33bn in 20242
1 IMpower133 in extensive stage SCLC; 2 Evaluate Pharma; CIT=Cancer Immunotherapy; SCLC=small cell lung cancer; NSCLC=non-small cell lung cancer; cb=carboplatin; pac=paclitaxel; nab-pac=nab-paclitaxel (Abraxane); cp=cisplatin; pem=pemetrexed
With liver metastases
= Roche with first CIT combination FDA-approved in 1L SCLC and EU-approved in 1L NSCLC incl. EGFR+ or ALK+ patients
Lung cancer franchise: Extend and replace current businessesBroad coverage with differentiated growth opportunities
IMpower131(Tecentriq+cb+pac/nab-pac)
PFS/OS
IMpower1331
(Tecentriq+cb+etoposide) PFS/OS
(PFS)
(PFS)(OS) IMpower150
(Tecentriq+cb/pac+/-Avastin)PFS/OS (H1 2018)
IMpower130(Tecentriq+cb+nab-pac)
PFS/OS
IMpower132(Tecentriq+cp/cb+pem)
PFS/OS
(PFS)(OS)
(PFS)
(PFS)(OS)
Further growth momentum / new market entriesWhat we have achieved
Tecentriq Strong US launch in 1L SCLC & 1L TNBC; 2L NSCLC share gains in EU
13
YoY CER growthCHFm
CER=Constant Exchange Rates; NSCLC=non-small cell lung cancer; SCLC=small cell lung cancer; TNBC=triple negative breast cancer; HCC=hepatocellular carcinoma
(+) 1L HCC: Ph III readout in 2019
(+) Adj bladder cancer: Ph III readout in 2019 /20
(+) 1L melanoma: Ph III readouts in 2019
Main drivers: (+) 1L NSCLC (US/EU)(+) 1L SCLC & 1L TNBC (US)
Our technology platforms in cancerRoche pipeline includes differentiated therapeutic platforms
14ADC=antibody–drug conjugate; iNeST=Individualized Neoantigen-Specific Therapy
Engage and activate T cells to kill tumour cells
CD20 x CD3CEA x CD3
Her2 x CD3mosunetuzumabglypican-3 x CD3
FAP x IL2v
Amplify immune response
iNeST
Patient’s neo-antigens for anti-tumour
immune response
Bi-specifics
polatuzumab vedotinHER2
VaccinesADC
Targeted tox load
mRNA
iNeST platform: mRNA-LPX Liposome
2:1 format 1:1 format
Replace and extend the business: Excellent progressThrough continuously improving standard of care
Replace/extend existing businesses Entering new franchises
15
MabThera/Rituxan
Gazyva, Venclexta,
polatuzumab vedotin, mosunetuzumab,
CD20 x CD3
HerceptinPerjeta, Kadcyla,
Herceptin + Perjeta SC
AvastinTecentriq, Alecensa,entrectinib
Lucentis faricimab Port delivery system (PDS)
Tamiflu Xofluza
Achievements 2018
MS: Ocrevus
Hemophilia A: Hemlibra
CNS:SMA, Autism, Huntington’s,
Alzheimer’s, NMOSD
SMA=spinal muscular atrophy; NMOSD=neuromyelitis optica spectrum disorder; RMS=relapsing MS; PPMS=primary progressive MS; R/R CLL=relapsed/refractory chronic lymphocytic leukemia; AML=acute myeloid leukemia; BC=breast cancer; NSCLC=non-small cell lung cancer; SCLC=small cell lung cancer; TNBC=triple-negative BC; nAMD=neovascular age-related macular degeneration; DME=diabetic macular edema, PDS= Port Delivery System
Strong launches: Ocrevus, Perjeta, Hemlibra, Tecentriq, Alecensa
Pivotal readouts: Gazyva+Ven: 1L CLL Kadcyla: HER2+ eBCTecentriq: 1L non-sq NSCLC, 1L SCLC & 1L TNBC entrectinib: ROS1+ NSCLC & NTRK+ tumorsXofluza: US approval in influenza A and Bsatralizumab: NMOSDVenclexta: R/R CLL & 1L AML
Proof of concept: faricimab: Ophthalmology - nAMD and DMEPDS: Ophthalmology - nAMDrisdiplam: SMA- Type 1/2/3balovaptan: Autism in adults
Neuroscience franchiseOcrevus growth driven by new/ switch patients
16CER=Constant Exchange Rates
What we have achieved
YoY CER growthCHFm
Main drivers: (+) Strong launch in US/ EU
Increasing US market share
8%16%
0%
20%
40%
60%
80%
100%Total patient share- R3M (Jan 2017 to Jan 2019)
AUBAGIO ABREPs COPAXONEGENERIC COPAXONE GILENYA LEMTRADARITUXAN TECFIDERA TYSABRIOCREVUS
17
Total global MS market USD ~22 bn in 20242
Neuroscience franchise: Ocrevus in MSUS label covers ~90% of MS patients including “active SPMS”
1 Roche analysis of MS prevalence epidemiological studies; 2EvaluatePharma
MS spectrum1 and US label
• Confirmed efficacy and safety profile in 100,000+ patients
• Continue moving into earlier lines displacing orals
• Continued fast enrollment in 13 Ph III/IV studies expected
Further growth momentum
Neuroscience franchise: Ocrevus in MSImportance of B-Cell depletion level (RMS)
Double-Blind and OLE OLE Period (rebaselined)
Prop
ortio
n of
pat
ient
s with
24W
-CDP
(%)
240BL 24 48 72 96 120 144 168 192 216 264 288 312Time to onset of confirmed disability progression (Weeks)
25
15
5
20
10
0
30
Prop
ortio
n of
pat
ient
s with
24W
-CDP
(%)
Time to onset of confirmed disability progression (Weeks)
30
15
5
25
10
0
20
0 24 48 72 96 120 144 168 192
IFN=interferon; OCR= ocrelizumab; RMS=relapsing multiple sclerosis; 24W-CDP=24 week-confirmed disability progression; Source: Hauser et al, AAN 2019
Higher exposure to Ocrevus correlated with lower B-cell levels and lower rates of disability progression
18
IFN β-1a B-cells = 0/µL B-cells >5/µLB-cells = 1–5/µL
Risdiplam in Type 1 spinal muscular atrophy FIREFISH Part 1: One year results summary
19* Event free is defined as alive with no permanent ventilation (i.e. no tracheostomy or BiPAP ≥16 hours per day continuously for >3 weeks or continuous intubation >3 weeks, in the absence of, or following the resolution of, an acute reversible event). † 1 infant was unable to swallow at baseline; Data cut-off: 27 February 2019.; BSID-III, Bayley Scales of Infant and Toddler Development, Third Edition; CHOP-INTEND, Children's Hospital of Philadelphia Infant Test of Neuromuscular Disorders; HINE-2, Hammersmith Infant Neurological Examination, Module 2; Source: Baranello et al AAN 2019, Servais et al AAN 2019
Risdiplam in Type 2/3 SMA dose finding (SUNFISH-1) Encouraging improvement in motor function milestones
20
12 months change from baseline SUNFISH Part 1 NatHis-SMA
Age range (years) 2–11 (n=24)†
12–25 (n=19)‡
2–25(n=43)*
2–30(n=39)
Total MFM32 change from baseline, mean (SD) 3.47 (3.77) 1.64 (3.43) 2.66 (3.70) -1.44 (3.68)
≥3 point change at Month 12, n (95% CI)
17 (71%)(49–87%)
8 (42%)(20–67%)
25 (58%)(42%–73%)
3 (7.6%)(2%–21%)
• MFM32 is a 32 item assessment classified into 3 domains• Each item is measured on a 4-point scale with a total score of 0–100 and with
higher scores indicating greater motor function• MFM32 has been validated for measuring motor function in patients with
neuromuscular diseases including SMA1,2
Domain 1:Standing, transfers and ambulation
Domain 2:Axial and proximal motor function
Domain 3:Distal motor function
*Excludes seven patients who performed the MFM20 assessment at baseline and one patient who had dropped out of the study prior to the Month 12 visit; †excludes seven patients who performed the MFM20 assessment at baseline; ‡excludes one patient who had dropped out of the study prior to the Month 12 visit. Based on change from adjusted baseline. SUNFISH data cut-off: 9th Jan 2019.; MFM=Motor Function Measure. 1. Bérard C, et al. Neuromuscul Disord. 2005; 15:463–470; 2. Vuillerot C, et al. Ann Phys Rehabil Med. 2013; 56:673–686.; Mercuri et al, AAN 2019
Hemophilia A franchiseTransforming the market
21
Needs-based segmentation1
Total hemophila A market growing to USD 13bn by 20242
75-80% target
population25%
45%
15%
10%
20%
1 Treated patients MORSE 2017 (prevalence), UKHCDO Annual Report 2016 and internal assumptions (treatment rate), target population based on the US label; 2 Source: Evaluate Pharma
Inhibitors Non-inhibitor adults on treatment with bleedsNon-inhibitor pediatric Non-inhibitor adults on treatment without bleedsNon-inhibitor mild patients
Sales (CHFm)
Ophthalmology market: Differentiation required
22
Q1M
Effic
acy
(vis
ual a
cuity
gai
ns)
Durability
Durability play in AMD
Q2M Q3M Q4M Q5M Q6M
Durability playCurrent available
products
+10 Letters
Efficacy play
More differentiatedLess differentiatedM
ore
diffe
rent
iate
dLe
ss d
iffer
entia
ted
Faricimabin AMD
Faricimabin DME
+5 Letters
PDS with ranibizumab
in AMD
For illustrative purposes only
PDS=Port Delivery System
Satralizumab in Neuromyelitis optica spectrum disorder (NMOSD)Significantly reduced risk of relapse (ITT and AQP4+ populations)
23
Risk reduction in AQP4+ populationPatient population
1/2 Blind within 5 yearsRequire wheelchair
9:1 Female : Male prevalence
0 Approved tx options
Per 100,000~5
Analysis based on ITT population; *p-value based on log-rank test stratified by geographic region and baseline relapse rate; Clinical Relapse as adjudicated by the investigator; AQP4-IgG=antibodies against aquaporin 4Source: Yamamura et al, AAN 2019
Huntington’s Disease: Most prevalent monogenetic neurodegenerative disease affecting approx. 300K* patients WW
24* Approximate calculation on the MORSE model 2015 for pre-symptomaic patients and MORSE model 2017 for other populations
Pre-symptomatic Prodromal
Manifest
Early Moderate Advanced
Cognitive/Affective Symptoms ~10 years before motor onset
Juvenile Onset HD
Premanifest
Juvenile Onset HD – onset of
symptoms before age of
20
Stage
Elderly“Motor Onset”
~65 years
Age of onset
Motor onset ~45
years
ElderlyOnset HD
Continuum of Huntington’s Disease
Age
1985Age 38
1998Age 51
Focus of initial HTT
ASO program
25
Phase II (VANILLA) results
Autism – balovaptan: Moved into pivotal stage for adults, proof of concept in pediatric patients in 2019
• Vasopressin (V)1a receptor modulates social behavior and is implicated in ASD
• Orally available, selective V1a receptor antagonist, well tolerated in Ph I and II studies
V1a receptor antagonist
• Primary EP (SRS-2) not met; however main secondary EP (VinelandTM-II) met• VinelandTM-II selected and agreed upon with health authorities as primary endpoint in
future studies• Phase III (V1aduct) enrolling
Primary endpoint Secondary endpoint
Bolognani F. et al., IMFAR 2017; ASD=autism spectrum disorder; SRS-2=social responsiveness scale-2; VinelandTM-II=Vineland Adaptive Behavior Scale 2nd Edition
New products close to annualized sales of CHF 13bn*Additional 4 NMEs approaching launch
26* Venclexta sales are booked by partner AbbVie and therefore not included.
CHFm % of Pharma sales
Performance update
Growing new assets
Productivity
Outlook
27
Continuing to evolve our operating modelBuild an effective organization for the future
• Simplify current set up for Corporate, Pharma and Dia
• Centers in Kuala Lumpur, Costa Rica, and Budapest
• Smaller, fit-for-purpose teams with power to decide & act
• Resource shift to support key launches
• Faster filing (strive for best in class)
• Innovative trial designs
28
Corporate:Shared Service Centers
Technical operations
• Reduction in COGS
• Cope with demand in China
• Lean management production program
+11%
+3%
Volume Core COGS and Period Costs
Sales organization
US
Europe
LATAM
APAC
EEMEA
US
International
Development
Adjusting to the new environment - efficiency through simplification of structures & processes, faster speed to market
29* Formerly with Life Cycle Portfolio Committee
Structure
• Two main regions only, and small and medium sized countries with flat structure
• Elimination of duplicate resources
ProcessesRadical simplification of key processes
Behaviours
• Holistic leadership program to embed agile principles and cultural change–Entrepreneurial, trusting others to take the right decision–Servant & supportive leadership
Development Commercial
Upgraded Life Cycle Leader role requirements in line with molecule
80% of portfolio decisions delegatedto Life Cycle Teams*
Continuous acceleration of development timelinesMore will be realized faster
Transformational dataPh1b, Ph2
Innovative TrialsPh1b to Ph3 Tecentriq +chemo in 1L SCLC
Tecentriq +nab-paclitaxel in 1L TNBC
Polatuzumab vedotin+ BR in R/R DLBCL
2019 2020 2021 2022
Q2 /Q32019
3.0 y
Venclexta + azacitidine in unfit 1L AML
3.0 y Q42018
Tecentriq + chemo +/- Avastin in 1L NSCLC
Q42018
2.5 y
Q12019
2.5 y
Q220192.5 y
Faster-Filing
2018: 21w/filing (-5.4w vs. ’17) Total 25 filings x -5.4w/filing=-2.6y
Target 2019: 16w/filing (-10.4w vs. ’17) Total 20 filings x -10.4w/filing=-4.0y
2.6 y
4.0 y
30
Polatuzumab vedotin+ BR in R/R DLBCL
Performance update
Growing new assets
Productivity
Outlook
31
Near term pipeline carries significant revenue potential
32
Submission Molecule Indication Market opportunity
2018
Hemlibra Hemophilia A, non-inhibitors
polatuzumab vedotin R/R DLBCL
Venclexta 1L AML
Tecentriq 1L NSq NSCLC
Tecentriq 1L ES SCLC
Tecentriq 1L TNBC
2019
entrectinib ROS1+ NSCLC, NTRK+
Venclexta + Gazyva 1L CLL
Tecentriq+Cotellic+/-Zelboraf BRAFm Mel, BRAFwt Mel
Tecentriq neoadj TNBC
Tecentriq + Avastin 1L HCC
2020
ipatasertib 1L CRPC, 1L TNBC, HER2-/HR+ BC
idasanutlin AML
Tecentriq + Avastin 1L RCC
Tecentriq 1L mUC
Tecentriq CRPC
Tecentriq + Avastin 1L OC
2021 polatuzumab vedotin 1L DLBCL
Submission Molecule Indication Market opportunity
2018 Xofluza Influenza A & B
2019satralizumab NMOSD
risdiplam SMA
2020 anti-myostatin DMD
2021 &beyond
HTT-ASO Huntington’s disease
balovaptan Autism
PDS wAMD
faricimab DME
etrolizumab UC/CD
Small: up to CHF 0.5 bn
medium= CHF 0.5 to CHF 1bn
large > CHF1bn
Oncology / Hematology
Neuroscience
Ophthalmology
Immunology
Infectious disease
33
Q1 2019: Record number of NMEs at pivotal stage
entrectinibpolatuzumab vedotin
ipatasertib Hemlibra (EU)
idasanutlinPerjeta+Herceptin FDC SC
PDS with ranibizumabfaricimabHTT-ASOrisdiplam
balovaptananti-myostatin adnectin
satralizumabgantenerumabXofluza (EU)etrolizumab
FY 2016 FY 2018
Hemlibraidasanutlin
taselisibAlecensaTecentriq
lampalizumabcrenezumabsatralizumab
gantenerumabOcrevus
etrolizumab
NM
Eslin
eex
tens
ions
5133
31373
Oncology
Neuroscience
Ophthalmology
Immunology
Infectious Disease
polatuzumab vedotinipatasertib Hemlibraidasanutlintaselisibfaricimabrisdiplam
balovaptananti-myostatin adnectin
crenezumabsatralizumab
gantenerumabOcrevusXofluza
etrolizumab
FY 20174131
NME=new molecular entities; FDC=Fixed dose combination; SC=Subcutaneous; PDS=Port delivery system; For details on the indications and line extensions please consult the pipeline appendix
entrectinibpolatuzumab vedotin
ipatasertib idasanutlin
Perjeta+Herceptin FDC SC
PDS with ranibizumabfaricimabHTT-ASOrisdiplam
balovaptananti-myostatin adnectin
satralizumabgantenerumabXofluza (EU)etrolizumab
Q1 201921
344
2019: Roche significantly advancing patient careAnother strong year expected
34
• Xofluza (baloxavir marboxil)• entrectinib in ROS1+ and NTRK+ tumors*• polatuzumab vedotin in R/R DLBCL*
33 NME launches
• Hemlibra (non-inhibitor) in EU• Kadcyla in adj HER2+ BC• Venclexta in 1L AML and 1L CLL• Tecentriq in 1L TNBC, 1L SCLC, 1L NSCLC
7 Major line extension launches
• satralizumab in NMOSD• risdiplam in SMA2 Major NME filings
• Further roll-out of cobas pro integrated solutions1 Diagnostics platform
* filed end of 2018; NME=new molecular entities; R/R CLL=relapsed/refractory diffuse large B-cell lymphoma; AML=acute myeloid leukemia; CLL= chronic lymphocytic leukemia; TNBC=triple-negative BC; SCLC=small cell lung cancer; NSCLC=non-small cell lung cancer; NMOSD=neuromyelitis optica spectrum disorder; SMA=spinal muscular atrophy
2019 outlook raised Sales growth to “mid-single digit” from “low- to mid-single digit”
35
Group sales growth1 • Mid-single digit (from low- to mid-single digit)
Core EPS growth1 • Broadly in line with sales
Dividend outlook • Further increase dividend in Swiss francs
1 At Constant Exchange Rates (CER)
Doing now what patients need next