J.P Morgan CAZENOVE Roche Reiterate OW: Pipeline catalysts including Bladder Cancer data to drive the shares Heading into ASCO, on May 31", where Roche will present new data for its PD-L1 in bladder cancer, we have examined the market potential of this cancer. While it is relatively small at only $0.8bn in PD-L1 high patients, the Roche data should serve to further highlight the immuno-onocolgy opportunity. Beyond bladder cancer data at ASCO, potential in other tumours and the data in combination with Avastin, if positive, have the potential to drive further upside to PD-L1 forecasts, although on the 1Q’14 call Roche seemed more cautious than previously around the Avastin combo opportunity. Beyond PD-L1, phase II ROMULUS data for the Anti-79b in NHL (ASCO on May 31") should provide another leg to Roche's growth strategy for the Rituxan franchise, and Kadcyla data in Ist line Breast Cancer from the MARIANNE trial in 2H’14 should cement growth for the HER 2 franchise. With these catalysts to come we reiterate our Overweight and Dec-14 SFr280 PT, offering 9% potential upside. e Bladder Cancer opportunity has potential to add a further $0.3bn in sales for Roche's PD-L1: Ahead of the ASCO meeting where first data will be presented for Roche's PD-L1 on Sat May 31 we have examined the market potential for Bladder cancer. Assuming just use in PD-LI high patients we see a market worth $0.8bn, while use in PD-L1 low patients could add a further $0.6bn. As Roche are only conducting a single arm phase II trial next, we conservatively assume that Roche will not reach the market until 2018 and can only take 40% of the market, yielding a $0.3bn peak sales opportunity See inside this note for our detailed review of the Bladder Cancer opportunity. e Roche continues to explore PD-LI in further tumour types, although there are no timelines for disclosure or data presentation: On the 1Q'14 conference call Roche highlighted that they continue to explore PD- LI in other tumour types, for which they will release data as they become mature. Based on disclosed Phase I clinical trials in colorectal cancer, we continue to believe that this could be one of these indications which would offer a PD-L1 positive market potential of $5.5bn. e Estimates trimmed post 1Q sales for slightly increased FX headwind: We have reduced our Core EPS estimates by 1% for 2014-2017 based on a 1% increase to the FX headwind on sales and Core Operating income. Roche (ROG.VX;ROG VX) Europe Equity Research 28 April 2014 Overweight ROG.VX, ROG VX Price: SF254.00 Price Target: SF280.00 European Healthcare (Pharma, Biotech) Richard Vosser “© Bloomberg JPMA VOSSER <GO> c 3 o in] a 3 e ® a i] °c Diana Na (44 20) 7742 7922 J.P. Morgan Securities plc For Specialist Sales advice please contact: Marjan Daeipour Price Performance ™m Ay An. sur h . iw yv m™ -|* \f J lad T T TT Apel) debtS Och-t) dan-ld Aged ROG.VX share price (Sw) MSCI-Eu (rebased) YTD im in 1am Abs 19% 4A% 44% o0% Rel 0A% 8.2% 1.0% “3.5% FYE Dec 2013A 2014E 2014E 2015E 2015E 2016E (Prev) (Curr) (Prev) (Cum) Revenue FY (SF mn) 46,780 47,059 46,723 49,766 49,336 §1,272 EBIT FY (SF mn) 17,904 18,001 17,857 19,244 18,991 19,884 EBIT Margin FY 38.3% 38.3% 38.2% 38.7% 38.5% 38.8% EBITDA FY (SF mn) 20,647 20,503 20,359 21,830 21,576 22,558 Net Profit FY (SF mn) 12,316 12,604 12,563 13,754 13,622 14,454 Adj. EPS FY (SF) 14.27 14.60 14.56 15.94 15.78 16.75 Adj P/E FY 17.8 17.4 17.4 15.9 16.1 152 Dividend Yield FY 3.1% 3.1% 3.2% 3.2% 3% 3.6% Source: Company data. Bloomberg, Mi Morgan estimates. Company Data Price (SF) 254.00 Date Of Price 25 Apr 14 Price Target (SF) 280.00 Price Target End Date 31-Dec-14 52-week Range (SF) 274.80-212.80 Market Cap (SF bn) 215.39 Shares O/S (mn) 848 See page 16 for analyst certification and important disclosures, including non-US analyst disclosures. | | Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com EFTA00309574

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poe sees Sauuly Researen J.P Morgan CAZENOVE Executive Summary Going into ASCO where Roche will present new data for its PD-L1 in bladder cancer on May 31 we have examined the market potential of this cancer. While it is a relatively small market opportunity at only $0.8bn in PD-L1 high patients, these data should serve to further highlight the immuno-onocolgy opportunity for Roche. Beyond bladder data at ASCO, PD-L1 potential in other tumours and the data in combination with Avastin, if positive, have the potential to drive upside to PD-L1 forecasts but also to remove concerns over the sustainability of the Avastin franchise (worth 17% of EmV). Although on the 1Q’14 call Roche seemed more cautious than previously around the Avastin combo opportunity. Beyond PD-L1, phase IT ROMULUS data for the Anti-79b in NHL (Non-Hodgkin's lymphoma) also at ASCO (May 31) should provide another leg to Roche's existing growth and protection strategies for the Rituxan franchise (which currently include Gazyva replacing Rituxan; BCL-2 use on-top of Rituxan) and Kadcyla data in Ist line Breast Cancer from the MARIANNE trial in 2H14, which should cement growth for the HER 2 franchise. With these catalysts to come we reiterate our Overweight and Dec-14 SFr280 Price Target, offering 9% potential upside. Table 1: Roche Key Expected Newsflow in 2014 1H 2014 mGlu5 negative allosteric madulator Phase Il data (Marigold) in adjunct treatment of MDD (data expected in H2 2013 - LIP decision in “THauis mGlue negallve allosteric modulator "Phase ll data (ArnDeco) i (decoglurant} “TH 2014 "Ant Factor D (lampalizumal a Raise Pirinasef mm acERen “TH 2014 apitolisib (PI3kinaselmTOR dual inhibitor a | May 31 Anti-PDL1 (MPOL32804 type ) {analyst ing ) _May31__Ant-70b ADC (polahuzumab vedoth) | ROMULUS, May 30 -Jun 3 Bel-2 inhibitor Phase | in CLL (combo with Rituxan) and DLBCL May 20-Jun 3 Avastin ____ HH Avastin vs. cotunimad in mCRC {CALGE 80408 Study) May 30 -Jun 3 Cobimetinib (MEK inhibitor) Phase Ib (BRIM7) data for Zeboraf + Cobimetinib dun 21 -Jun 24 Oral Octreotide Phase Ill data in acromegaly to be presented at ENDO (June 21-24) EFTA00309575