Shares of Swiss pharmaceuticals giant Roche Holdings (RHHBY +0.16%) stock popped 2.5% in early trading Thursday before giving back about half of its gains.
Roche announced this morning that the U.S. Food and Drug Administration has awarded the "Breakthrough Device Designation" to its new Elecsys pTau217 plasma biomarker test for identifying amyloid pathology, a key feature of Alzheimer's disease. Roche stock closed the day up a modest 1.2%.
OTC: RHHBY
Key Data Points
A cure for Alzheimer's?
The test in question, which Roche is developing in cooperation with Eli Lilly (LLY +2.53%) wouldn't be an Alzheimer's cure, but rather a test to tell patients if they're at risk of developing the disease judging from the levels of amyloid plaques detected. Of greater importance for investors is the fact that awarding Breakthrough Device Designation status doesn't mean the FDA will ultimately approve the test.
Clinical trials must first be set up and run through, and even if the results are positive, the test must still win FDA approval before being rolled out to market. Long story short, we're still closer to the start of this race than the finish -- and even if all goes well, any revenue arising from this test will ultimately be split with Lilly. It won't all go to Roche.
Is Roche stock a buy?
That said, at least Roche has passed the starting line. Ahead lies a market 7 million patients-big (the number of Americans who are believed to suffer from Alzheimer's) today, and expected to nearly double to 13 million patients by 2050. (Globally, the World Health Organization thinks there are closer to 55 million patients today, so this problem is about 8 times bigger than the U.S. alone).
How long it will take Roche to benefit from Elecsys pTau217 remains to be seen. It the meantime, the stock's still a reasonably priced pharmaceutical play at less than 16 times earnings and paying a generous 4.3% dividend. It's not growing particularly quickly, at only 4% annually.
Here's hoping Elecsys pTau217 can change that.
