Roche Holding AG (RHHBY) Thursday said its experimental diabetes medicine taspoglutide showed promising results in a late phase test, raising chances the drug could live up to its blockbuster potential if it makes it to the market.

Separately, the Swiss pharmaceutical giant said its cancer drug Tarceva, which it licenses from U.S.-based OSI Pharmaceuticals Inc (OSIP), has been approved in the European Union for maintenance use in advanced lung cancer, providing more momentum to the drug which produced around $1.2 billion in sales last year.

Roche, the world's largest cancer drug maker by sales which is increasingly branching out into other disease areas such as diabetes, cholesterol management and schizophrenia, said taspoglutide met study goals in a phase III trial as the well-tolerated medicine was more effective than placebo.

Roche expects to file the medicine for approval in the U.S. and Europe by 2011. A market launch could follow later that year or in 2012, analysts say, expecting that marketing approval would add up more than $2 billion in peak sales, reducing Roche's dependence on its cancer franchise.

"We believe taspoglutide has the potential to develop substantial sales over time, which we believe could reach a peak of 3 billion Swiss francs ($2.8 billion)," said Karl-Heinz Koch, analyst at brokerage Helvea in Zurich. He said the recent test results "demonstrate the efficacy and safety of the drug." Roche will provide more trial details at the American Diabetes Association meeting at the end of June.

Chances that Roche could receive approval are intact and the likelihood that sales of the drug--which Roche licenses from France-based pharma company Ipsen (IPN.FR)--have risen since a similar experimental drug by rival Sanofi-Aventis SA (SAN.FR) showed slightly disappointing test results in a recent study, analysts said.

As taspoglutide is the first once-weekly human glucagon-like peptide-1 analogue being developed to address the unmet needs of patients with a specific form of diabetes, Roche's drug could receive "best-in-class" status if successful, further helping sales, analysts said.

An early approval of taspoglutide would also add credibility to Roche Chief Executive Severin Schwan, who is convinced that the company's experimental drug pipeline holds several potential blockbuster products that could allow the Swiss pharmaceuticals group to broaden its product scope and reduce dependence on its best-selling cancer medicines such as Avastin and MabThera, which have each annual sales of about $6 billion.

Company Web Site: www.roche.com

-By Goran Mijuk, Dow Jones Newswires; +41 43 443 80 47; goran.mijuk@dowjones.com
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