Healthy Prospects

Roche H1:13 EPS of 7.58 Swiss francs (+10%) was 0.28 francs above our 7.30 francs estimate. Q2 Group revenues of 11,706 million francs (+3%) were 166 million francs above our estimate: Pharmaceutical sales of 8,992 million francs (+2%) and Diagnostic revenues of 2,714 million francs were 18 million francs below and 184 million francs above our forecasts, respectively. Net financial loss of 838 million francs was 157 million francs above our forecast. Tax rate of 23.1% was 60 basis points above our estimate (clipped 0.06 francs per share).

Avastin, Lucentis, CellCept, Tarceva, and three others together were 215 million francs above our estimates; Avastin alone beat by 71 million francs. 2013 guidance of sales increasing in-line with last year’s sales growth at a constant exchange rate (CER) and EPS targeted to grow ahead of sales was reiterated. Our 2013 revenue estimate of 46,464 million francs (+2%) and EPS estimate of 14.20 francs (+5%) remain intact.

Edward Nash

Cowen & Co.
[email protected]
646-562-1385

Inovio Pharmaceuticals is a biopharmaceutical company focused on the development of DNA vaccines for both oncology and infectious diseases. The company’s lead program is focused on targeting human papilloma virus (HPV), which is the cause of cervical cancer.

Approximately 2.8 million women worldwide have the HPV 16 and/or 18 strains, which account for 80% of HPV infections. The only currently approved vaccine for HPV in women is administered as a prophylaxis and is not used to treat the infection, dysplasia, or resulting cancers.

In addition to HPV infection, Inovio is developing vaccines for leukemia in collaboration with Merck and for infectious disease indications such as pandemic flu, specifically H5N1, universal flu and HIV as a therapeutic and as a prophylaxis in collaboration with academic centers and government agencies.

We believe Inovio will partner all of its vaccine programs given the sizable markets for which they are being developed. We assume a 2017 launch for VGX-3100 for the treatment of cervical cancer, with royalty revenue of $43.4 million on sales of $289.4 million.

Inovio reported positive preclinical results from the H7N9 vaccine program and also published results of Phase I PENNVAX-B HIV vaccine program. While these results are early stage, we believe the strong fundamental scientific underpinnings illustrate the true strength of the company’s platform technology.

The Chinese Center for Disease Control and Prevention reported more than 130 cases of H7N9 to date with a 30% death rate. The virus’ ability to bind both salient human and bird receptors, as well as infect the upper rather than lower respiratory tract, makes H7N9 highly transmissible. Furthermore, reported cases of resistance of H7N9 against antiviral drugs gives H7N9 pandemic potential. Inovio’s report of 100% protection against H7N9 in animal models after vaccination with Inovio’s DNA vaccine is very timely and promising.