Alan Hippe CFO Roche Group New York, June 2015
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; and 11 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 protected. 3
Performance update Up-date on immune-oncology Pharma pipeline update Outlook 4
Q1 2015: Sales growth for 5 th consecutive year 10% 8% 6% 6% 6% 6% 8% 7% 5% 5% 6% 4% 4% 4% 4% 4% 5% 2% 2% 0% 0% 0% 1% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 All growth rates at Constant Exchange Rates (CER) 5
Q1 2015: Continued strong growth in all regions CHFbn 6 5 4 3 2 1 0-3% -10% * +6% +3% +10% +1% +14% +3% +6% +9% +1% -2% Japan International Europe US * Japanese sales impacted by consumption tax base effect Diagnostics Pharma CER=Constant Exchange Rates 6
2014: Core operating profit and margin Margin at high levels CHFm 37.7% 38.3% 37.2% 17,160 17,904 +3 % 1 (-1 %) 17,636 (-0.1%p 2 ) -0.5 %p 1 (-1.1 %p) 44.0% 44.4% 43.6% 15,488 16,108 +4 % 1 (-1 %) 16,001 (+0.3%p 2 ) -0.2 %p 1 (-0.8 %p) % of sales 21.3% 20.8% 19.5% -0.9 %p 1 (-1.3 %p) 2012 2013 2014 2,187 2,177 +2 % 1 (-4 %) 2,096 Roche Group Pharma Division Diagnostics Division 1 CER=Constant Exchange Rates 2 At CER excluding one-time double charge for the US Branded Prescription Drug fee in 2014 7
Roche: Making progress in advancing patient care Recognising innovation 2012-15 7 Breakthrough Therapy Designations Rank Company # 1 Roche 7 2 GSK 6 3 Novartis 5 4 Merck 4 5 Boehringer I. 3 Q1/2 2015 2014 2013 Anti-PDL1 (NSCLC) BCL2 (CLL, 17p depleted) Esbriet Lucentis Diabetic Retinopathy Anti-PDL1 (bladder) Alectinib Gazyva Source: FDA 8
2014: Dividend and payout ratio further increased CHF 10.00 9.00 8.00 7.00 6.00 5.00 4.00 2014 payout ratio: 56.0% 38.8 31.9 34.5 Dividend payout ratio (%) 51.6 48.6 44.8 55.3 54.5 54.7 56.0 8.00 3.00 2.00 1.00 0.00 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Payout ratio calculated as dividend per share divided by core earnings per share (diluted); 2014 dividend as proposed by the Board of 1 Directors; compound Note: annual For 1995, growth a special rate dividend was paid out to mark F. Hoffmann-La Roche s 100th anniversary in 1996 9
Performance update Up-date on immune-oncology Pharma pipeline update Outlook 10
Premium for innovation Roche strategy: Focused on medically differentiated therapies Pharma Dia Regulators: Optimised benefit / risk ratio Focus Payors: Optimised benefit / cost ratio MedTech Generics OTC Differentiation 11
Immune-oncology: Early data suggests that anti- PDL1/PD-1 is active across a wide range of tumor types Renal cancer Lung cancer Bladder cancer Breast cancer Head & Neck cancer Melanoma Broad activity but only subset of patients benefit ORR ~10-30% Hodgkin s lymphoma Most patients will need alternative treatments/combination therapy 12
Cancer Immunology: 3 main open questions Biomarker/ Tools Can we create a personalized immunotherapy paradigm? Indication/ Patient Pop. Can we convert an unresponsive tumour to a responsive one? Therapy Efficacy/ Safety What influences durability of response? 13
Atezolizumab in 2/3L NSCLC (POPLAR) OS benefit correlates with PD-L1 expression N = 287 OS PFS TC3 or IC3 (16%)* TC2/3 or IC2/3 (37%)* TC1/2/3 or IC1/2/3 (68%)* TC0 and IC0 (32%)* 0.46 0.56 0.63 1.12 1.93 0 0.5 1 1.5 HR a In favor of atezolizumab In favor of docetaxel 0.57 0.70 0.87 1.17 1.87 0 0.5 1 1.5 HR a In favor of atezolizumab In favor of docetaxel Biomarker identifies patients most likely to benefit from atezolizumab PD-L1 negative patients seem to benefit rather from the standard chemo a = Unstratified HR; * = eligible patient population Spira A. et al, ASCO 2015 14
Efficacy Predictability of treatment outcomes also crucial for reimbursement decisions Example: Biomarker data for PD-L1/ PD-1 inh. in NSCL 1 Prevalence PDL+ PDL- PD-L1+ 50% 46% Higher likelihood of reimbursement Roche 20% 46% 18% A 43% 26% 10% B 65% 15% 14% Roche 33% 26% 17% 15% A 0% 0% High 20% Medium 40% Low 60% 80% Cut-off for prevalence B Lower likelihood of reimbursement 1 Soria et. al. ESMO 2014 Dx+ 5% IC, Brahmer et. al. ASCO 2014, Dx+ 5% TC, Antonia et. al. ESMO 2014 Dx+ not disclosed 15
Change in Sum of Largest Diameters from Baseline (%) Atezolizumab + chemo in 1L NSCLC (Ph1) Encouraging preliminary efficacy data atezolizumab + carboplatin/paclitaxel (Arm C) atezolizumab + carboplatin/pemetrexed (Arm D) atezolizumab + carboplatin/nab-paclitaxel (Arm E) CR/PR (n=3) SD (n=2) PD (n=0) CR/PR (n=9) SD (n=1) PD (n=1) CR/PR (n=8) SD (n=4) PD (n=1) 0 42 84 126 168 210 252 294 0 42 84 126 168 210 252 294 0 42 84 126 168 210 252 294 Response, n (%) Arm C n = 5 Time on study (days) Arm D n = 12 Arm E n = 13 All n = 30 ORR (95% CI) 3 (60%) (19-92) 9 (75%) (45-93) 8 (62%) (33-83) 20 (67%) (48-82) CR = complete response; PR = partial response; SD = stable disease; PD = progressive disease Liu S. et al, ASCO 2015 16
Roche cancer immunotherapy PDL1+Tarceva NSCLC PDL1+Zelboraf Melanoma PDL1 Solid tumors PDL1+Avastin Solid tumors PDL1+cobimetinib Solid tumors PDL1+ipilimumab Solid tumors PDL1+IFN-alfa Solid tumors PDL1+CD40 Solid tumors PDL1+Avastin+FOLFOX CRC PDL1 + Gazyva Blood cancer PDL1 TNBC PDL1+chemo Solid tumors CSF-1R Solid tumors CEA IL2v Solid tumors Phase I Status as at May 15, 2015 OX40 Solid tumors CEA CD3 Solid tumors IDO Solid tumors PDL1+OX40** Solid tumors PDL1+CSF-1R** Solid tumors PDL1+CEA IL2v** Solid tumors PDL1+Zelboraf+cobi** Solid tumors PDL** tba PDL1** tba PDL1** tba ** Phase II PDL1 NSCLC (Dx+) PDL1 2/3L NSCLC PDL1+Avastin 1L Renal PDL1 1/2L Bladder Anti-PDL1 trials NMEs monotherapy Immune doublets 2015 readout expected Study start in 2015 Data at ASCO 2015 Phase III PDL1 2/3L NSCLC PDL1** 2/3L Bladder PDL1+Avastin+chemo** 1L non sq NSCLC PDL1+chemo** 1L non sq NSCLC PDL1+chemo** 1L sq NSCLC PDL1** 1L non sq NSCLC (Dx+) PDL1** 1L sq NSCLC (Dx+) PDL1+chemo** 1L TNBC PDL1+Avastin** 1L RCC PDL1** Adjuvant bladder PDL1** tba 17
Anti-PDL1 is being studied as both monotherapy and in multiple combinations Dx + Monotherapy Examples: mrcc (Ph II) mubc (Ph II) 2L mnsclc (Ph II BIRCH, POPLAR, FIR, Ph III OAK ) Dx+ 1L NSCLC (2x: Sq/NSq, Ph III) Dx+ mubc (Ph III) Strategic pillars of our PDL1 development approach Dx+ Monotherapy Chemotherapy Combinations Combination with Chemotherapy Examples: 1L NSCLC Squamous and Non- Squamous with platinum doublets (x3, Ph III) 1L TNBC with Abraxane (Ph III) Immune Doublets Combination with Targeted Therapy Examples: Loc adv/ metastatic solid tumours with ipilimumab or Interferon alfa-2b (Ph Ib) Combination with CSF-1R (Ph Ib) Combination with anti-cd40 (Ph Ib) Combination with Incyte s IDOi (Ph Ib) Combination with anti-ox40 (Ph Ib) Combination with CEA-IL2v (Ph Ib) Combination with Celldex anti-cd27 Immune Doublets Targeted Therapy Combinations Examples: mrcc with Avastin (Ph II) mrcc with Avastin (Ph III) EGFR+ NSCLC w/tarceva (Ph Ib) ALK+ NSCLC w/alectinib (Ph Ib) Solid tumours with Avastin (Ph Ib) Solid tumors w/cobimetinib (Ph Ib) Lymphoma with Gazyva (Ph Ib) HER2+ with Herceptin, Kadcyla, Perjeta (multi-arm, Ph Ib) 18
Performance update Up-date on immune-oncology Pharma pipeline update Outlook 19
Gazyva in Rituximab-refractory inhl (GADOLIN) Significant PFS improvement achieved PFS HR a = 0.55 (0.40-0.74) OS not reached 14.9m PFS: HR=0.55 (IRF-assessed), HR 0.52 (Investigator-assessed) OS data immature a = Stratified HR Sehn L. et al, ASCO 2015 20
% Looking for the next step in Multiple Sclerosis therapy 90 80 70 60 Relative reduction in Annualized Relapse Rate (ARR) Pattern indicates phase II Solid indicates phase III 50 40 30 20 10 0 ocrelizumab natalizumab cladribine rituximab fingolimod interferon ß-1a ß-1a sc sc interferon ß-1b ß-1bsc glatiramer acetate Trial durations vary from 6 mos. to 3 yrs; studies included different patient populations, different in/exclusion criteria, different ARR definitions and data were collected over a time span of more than 20 years 21
INHIBITOR NON-INHIBITOR ACE 910 in Hemophilia A A novel FVIIIa mimetic bispecific antibody FVIIIa On-demand treatment 1-3 times/bleeding event, IV Prophylaxis 3 times/week, IV ACE 910 Inhibiting Factor VIII antibodies in 20-33% of the patients Immune Tolerance Induction 70-80 % success rate limitation due to very high cost and heavy burden for patients Kitazawa, Shima, Yoshioka, Hattori. Nature Medicine 2012;18(10):1570, Sampei, et al. PLoS One 2013;8(2):e57479, Muto, Shima, Hattori. J Thromb Haemost 2014;12:206 On-demand treatment with bypassing agents 2-3h intervals, IV Prophylaxis with bypassing agents Every other day, IV Mode of action Novel approach promoting FX activation and acceleration of coagulation Targeted product profile Less frequent dosing Subcutaneous Avoid induction of inhibiting antibodies In collaboration with Chugai 22
Lampalizumab: Pivotal Ph 3 started Q3 14 Dry AMD 30-50m pts Initially, visual acuity minimally affected; signs are anatomic (drusen & pigmentary changes) with symptoms of visual function impairment CHROMA & SPECTRI: 2 identical, randomized studies (c.940 pts each) Primary endpoint: Reduction in the rate of GA 1 disease progression Phase 2 (MAHALO): Showed high efficacy in subpopulation with exploratory biomarker GA (late Dry AMD) 5m pts Bilateral GA 2.2m pts CFI+ 1m pts Increasingly fovea threaning Unilateral GA 2m pts CFI- 0.8m pts neovascularization GA + AMD 1m pts other Wet AMD 5m pts Phase 3 study population 23
Performance update Up-date on immune-oncology Pharma pipeline update Outlook 24
Progressing in Personalised Healthcare 60% of phase 2 & 3 products have PHC component Phase 2 Phase 3/Registration Marketed FIXa/FX bispecific MAb MAO-B inh PD-L1 MAb Tarceva SERD GABRA5 NAM venetoclax (Bcl-2 inh) Zelboraf CSF-1R MAb bitopertin alectinib (ALK inh) Erivedge Ang2-VEGF MAb basimglurant taselisib Rituxan ipatasertib V1 receptor antag cobimetinib Gazyva polatuzumab vedotin crenezumab lebrikizumab Herceptin lifastuzumab vedotin olesoxime etrolizumab Perjeta glypican-3 MAb danoprevir gantenerumab Kadcyla Flu A MAb ocrelizumab Avastin LptD antibiotic lampalizumab Xeloda Esbriet Pulmozyme Oncology Immunology Infectious Diseases Neuroscience Ophthalmology Molecular Diagnostics Tissue Diagnostics Professional Diagnostics Xolair Actemra Lucentis 25
ASCO 2015: Roche highlights Skin cancer cobimetinib + Zelboraf: Ph III (cobrim) in 1L BRAF+ mm; PFS & biomarker update cobimetinib + Zelboraf: Ph Ib (BRIM7) in BRAF+ mm; OS update Lung cancer alectinib: two Ph II in 2L ALK+ NSCLC Anti-PDL1: POPLAR, COMBO, FIR Avastin: mesothelioma Bladder cancer Anti-PDL1: Ph I update in bladder Breast cancer Kadcyla: Ph II (ADAPT) neoadjuvant 12 weeks HER2+ HR+ BC Kadcyla + Perjeta: Ph III (MARIANNE) in 1L HER2+ mbc Herceptin + Perjeta: Ph II (NEOPSPHERE) in neoadjuvant HER2+ BC Avastin + Letrozole: Ph III (CALGB40503) in 1L HR+ mbc Hematology Gazyva: Ph III (GADOLIN) in R/R inhl Venetoclax: Ph I in R/R NHL and R/R MM Collaborations: Zelboraf with Plexxikon; Cobimetinib iwith Exelixis; Alectinib with Chugai, Gazyva with Biogen Idec; Kadcyla with ImmunoGen 26
2015 outlook Group sales growth 1 Low to mid-single digit Core EPS growth 1 Ahead of sales growth 2 Dividend outlook Further increase dividend in Swiss francs 1 At constant exchange rates 2 Excluding sale of filgrastim rights in 2014 27
Doing now what patients need next
HER2 franchise expected to grow further Biosimilars delayed to 2017 Est. Biosimilars launch (EU) 2nd line mbc Xeloda + lapatinib Kadcyla (EMILIA) 1st line mbc Herceptin + chemo Herceptin & Perjeta + chemo (CLEOPATRA) Adjuvant BC Herceptin + chemo Herceptin sc + chemo (HannaH) Herceptin & Perjeta + chemo (APHINITY) Kadcyla (KATHERINE) Neoadjuvant BC Herceptin + chemo (NOAH) 1 Herceptin & Perjeta + chemo (Neosphere, Tryphaena) 2 Kadcyla & Perjeta + chemo (KRISTINE) Kadcyla & Perjeta (KAITLIN) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Established standard of care New standard of care Potential new standard of care Key priorities in 2015 Strengthen PERJETA as standard of care in 1L mbc & neoadjuvant, Kadcyla in 2L Secure durable conversion from Herceptin IV to SC Clinical data in 2015 PERJETA 2L PHEREXA final PFS & interim OS data expected Q3 15 Release of the NEOSPHERE final PFS/DFS data at ASCO 29
Anti-PDL1 (MPDL 3280A) in bladder cancer Early data support promise PD-L1 IHC (n) ORR (95% CI) Dx+ vs Dx- ORR (95% CI) Median PFS (range), weeks IHC 3 (n=10) 60% (27-85) Not reached (5 to 48+) 52% (34-69) IHC 2 (n=23) 48% (27-68) 24 (5 to 50+) IHC 1 (n=24) 17% (6-37) 11 (0.1+ to 30+) 14% (6-28) IHC 0 (n=12) 8% (0-35) 7 (5 to 24+) PD-L1 IHC Durability of response Anti-PDL1 is listed as MPDL3280A in clinicaltrials.gov. Diagnostic PD-L1-positive: IHC 2 ( 5% but < 10% ICs); IHC 3 ( 10%. ), PD-L1 negative: IHC 0 (< 1% of ICs) and IHC 1 ( 1% but < 5%). 30