How Roche aims to change the 'standard of care'

Speaking at the JPMorgan Healthcare Conference, Roche Pharmaceuticals (RHHBY) CEO Teresa Graham discusses the company's innovation focus and outlook with Yahoo Finance's Anjalee Khemlani.

Graham says Roche has "defined itself as a company that follows innovation" across health care sectors. Currently, they see huge potential in the obesity drug space as analysts forecast the weight loss market reaching $100 billion within years. However, Roche hopes to expand cretinism beyond obesity into neurological disease applications.

On dealmaking, Graham notes Roche pursues "groundbreaking science" that can "materially change the standard of care" for high unmet-need diseases. She stresses they remain open across therapeutic areas to back advances that drive health forward.

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Editor's note: This article was written by Angel Smith

Video transcript

[AUDIO LOGO]

ANJALEE KHEMLANI: Welcome back to Yahoo Finance Live. I'm senior health reporter Anjalee Khemlani and I'm here at the JPMorgan Health Conference in San Francisco. And joining me now to discuss a lot of interesting things is the Roche CEO of Pharmaceuticals, Teresa Graham. Theresa, thank you so much for joining us today.

TERESA GRAHAM: Thank you so much for having me.

ANJALEE KHEMLANI: It's so great to see you in person.

TERESA GRAHAM: Yeah.

ANJALEE KHEMLANI: So GLP-1s, I have to start there. We know that is the topic du jour. Everyone's focused on it, among some other things. But it's one that Roche has recently invested in coming back into this space after some time off. What is that like now? What is the company focused on? And how do you plan to differentiate in what is going to be a crowded field?

TERESA GRAHAM: Yeah, so at the beginning of last year, we really took a step back and took a hard look at the cardiovascular and metabolism space. I mean, I think more than anything else over its 125 year history, Roche has defined itself as a company that follows innovation.

We've been much less focused on specific therapeutic areas and much more around where do we see innovation that can actually drive global health forward. And, so as we are really having a little bit of a Renaissance in the cardiovascular and metabolism space, we're learning so much more about human biology, we're learning so much more about the genetics of disease, it really seemed to us the right time to take another look about how we expand our footprint in the cardiovascular and metabolism space.

So, obviously, our first move was the partnership that we did with Alnylam early in the year with bicerin around hypertension. But clearly as we were thinking about where did we want to go in cardiovascular-- an incretin just makes a lot of sense as a backbone for many other things that could potentially be possible.

And so we really put our heads together and said, OK, what's the kind of company that we want? We want somebody with a clinical ready asset. We want someone that's got something that's differentiated. We'd love someone with a pipeline. We'd love someone that has some really solid research experience in this space.

And we didn't have to look very far. We just had to look across the bridge into Berkeley to find Carmot and realized that it was really exactly the kind of company that we were looking for. And so, I think between the lead asset CT-388, which as you mentioned, is a dual antagonist.

And we really do believe has the opportunity to be a best-in-class drug. We also believe that there's a lot resonant in the Carmot acquisition that could actually be really useful as we think about where incretins might have applicability outside of obesity and weight loss.

ANJALEE KHEMLANI: Yeah, that was going to be my follow up, which is there's clearly that movement, right? You have to be able to differentiate yourself against the current duopoly because they've got that base market on lock. So in addition to coming out with a monotherapy for obesity, what else do you think is the potential? Where else do you see opportunity for Roche?

TERESA GRAHAM: So maybe let's just start with the obesity market itself because I think we get that question a lot, right? Like, how are you going to differentiate in this space? I mean, first of all, let's just sort of remember that in the next couple of years we expect something like four billion people around the world to be obese.

It's half the world's population. I think conservatively, many analysts estimate that this is something like a $100 billion market. So I think, clearly, there's going to be opportunity for multiple players to be in this space.

And we do think that the profile of CT-388 is such that it could actually be a best in disease, that it could be more tolerable, that it may be able to be more efficacious, and that it could just be a great second generation molecule. But, then I think, there's an emerging science in this area that particularly in certain neurological diseases, it seems like incretins might have scientific applicability.

And so, I think, that's really the next stage for us as we think about the deal closing. And we really start digging into the biology and where we might go from here. I mean, I think there is potential that we could see this particular pathway be relevant in more than just obesity.

ANJALEE KHEMLANI: We're at one of the biggest dealmaking conferences that the industry looks forward to. It's been kind of a slow one this year. But, it's not for lack of trying. There have been deals pre-JPM, Roche on the list of that.

And I wonder, what do you think is an area that you can focus on? What are some kinds of acquisitions you're looking to make or partnerships you're looking at right now considering you're one of the companies that really has the capacity to do so?

TERESA GRAHAM: Yeah, so I think last year, we did about 71-73 deals across our late and early stage. It's about the same number of deals that we typically do. I think what was different for us last year is we did a little bit more in the later stage.

I think we will continue to look across the entire spectrum of therapies or therapeutic areas to really think about where is there groundbreaking science. And, I think this is actually one of the things that's the coolest for me about working at a company like Roche is that while we have leadership in oncology and neuroscience and ophthalmology and we are we're making some really significant investments in cardiovascular and metabolism, we also are an immunology.

Obviously, with the Telavant deal that we did last year as well. I think, we really are singularly focused on just finding those therapies that can materially change the standard of care for diseases with high unmet need. So where are we focused? I think we're focused anywhere where we believe that there is breakthrough science out there.

And we are really committed to making sure that we maintain the financial flexibility that when we see that great science, you know, whether it's late stage, early stage, or preclinical that we can really jump on it.

ANJALEE KHEMLANI: So, basically, the doors are open. Do you hear that guys? Teresa Graham, Roche CEO of Pharmaceuticals, thank you so much.

TERESA GRAHAM: Thank you so much for having me. It was a real pleasure.