Think every $250 billion pharmaceutical company that generated $54.6 billion in revenue last year and dominates the breast cancer market is inherently going to be a NYSE-listed or NASDAQ-listed security?

At least 99% of the time, it would be. Roche (RHHBY) is the exception to the norm, however. Roche stock is only an OTC-listed equity (aka a bulletin board stock) despite its massive presence and stability.

Don’t get the wrong idea about RHHBY, though. While it’s only available to U.S. investors via the same exchange most penny stocks and struggling companies trade on, Roche stock isn’t in the same league as those wannabes and has-beens. It’s as legitimate as Merck (MRK), Johnson & Johnson (JNJ), and any other major pharma name … maybe even more so in the wake of recent news.

Don’t Let the OTC Listing Deter You From Roche Stock

First things first. Yes, RHHBY only trades as an over-the-counter equity here in the United States. Unlike most of the other OTC-listed names, however, that’s not because it can’t meet the NASDAQ’s or NYSE’s listing standards. It trades over the counter in the U.S. because it can be an enormous pain for a foreign stock (Roche is a Swiss company) to satisfy the United States’ exchange-listing rules.

And just for the record, it’s not like Roche stock is the only legitimate foreign equity to skip all the hoop-jumping required to maintain a listing on a major U.S. exchange. Nestle (NSRGY), Deutsche Telekom (DTEGY), Volvo (VOLVY), and Daimler (DDAIF) are just a few of many major companies that have chosen to keep their U.S. listing to only an over-the-counter listing, where international accounting rules prevail rather than U.S. rules.

In other words, don’t sweat the fact that Roche stock isn’t an NYSE or NASDAQ name. In fact, if anything, RHHBY became even more attractive on Monday.

A Big Leap on the Breast Cancer Front

Yesterday, Roche announced the results for a two-year study of how two of its drugs performed when used together to fight HER2-positive metastatic cases of breast cancer. They were nothing less than stellar.

The specifics: Relatively new cancer therapy Perjeta in combination with aging breast cancer treatment Herceptin — plus chemotherapy — extends life by an average of 15.7 months compared to the use of Herceptin and chemotherapy alone. All told, the median time of survival from the initial diagnosis of HER2-positive breast cancer reached 56 months with the Perjeta/Herceptin combo, versus an average of only 41 months for patients using Herceptin and chemotherapy alone, which was the proverbial “go to” option for most qualifying cases of breast cancer.

It’s a nearly unheard of efficacy/improvement.

Oh, and through its 2009 acquisition of Genentech, Roche also owns Herceptin. Not bad for a mere OTC-listed stock.

Why Perjeta and Herceptin Work Together

While HER2-positive breast cancer only accounts for about a fourth of all breast cancer cases, it’s also one of the more aggressive forms. And, until Herceptin was introduced, HER2-positive breast cancer was difficult to treat, and even then such treatment was only modestly successful.

The reason Herceptin was such a breakthrough stems largely from the fact that it was designed with an understanding of why HER2-positive breast cancers were so unresponsive to other cancer drugs. HER2 — short for human epidermal growth factor receptor 2 — is a protein found on cancer cells that promotes the growth of more cancer cells. This protein, however, if “plugged” by the right drug in the right way, can slow or even halt its cancer-promoting effects. Herceptin provides one of those plugs.

Perjeta also binds to the HER2 protein, stifling or stopping its ability to spur growth of more cancerous cells.

The reason the combination of Herceptin and Perjeta work so well together rather than on their own? They can attach to different types of HER2 receptors on the same cancer cell. The double-barreled approach means greater odds of cancerous cells being “found” and killed by the immune system while simultaneously preventing its replication.

The efficacy of this particular drug combination isn’t likely to be rivaled anytime soon. It’s the kind of leap most over-the-counter stocks — even the most-lauded OTC biotech names — never seem to make. Never even mind the fact that Perjeta sales were projected to exceed $1 billion in short order … even before the results of the study were posted.

Better Still

Truth be told, as compelling as the results of Perjeta with Herceptin were, it’s still not the best reason to own Roche stock. The reason RHHBY is such compelling pick for U.S. investors despite its lower-tier exchange is that it’s just a great company.

Not that Roche hasn’t had its fair share of patent expirations, currency volatility, and sales struggles, but it has more than proven its long-haul mettle.

For perspective, last year’s revenue of $50.3 billion is stronger than 2009’s $45.2 billion, and it’s a figure that’s projected to reach $54.8 billion by 2017. On the income front, 2009’s bottom line of $7.8 billion grew to $17.4 billion last year, and is expected to hit $16.3 billion in 2017.  The ups and downs during that long-term growth were minimal.

The key to the steady-Eddie growth from Roche? A well-managed and highly marketable portfolio of existing drugs, smart acquisitions like Genentech and Intermune, and an R&D arm that can clearly get new products on the market. The OTC listing isn’t going to change any of that anytime soon.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.