Wednesday, October 06, 2004

Genentech profits soar

By PAUL ELIAS, Associated Press

SAN FRANCISCO - Fueled by strong drug sales across the board, Genentech Inc. reported Wednesday its profits surged 52 percent in the third quarter.

The results, released after the stock market closed Wednesday, beat analysts' expectations. The company also raised its annual earnings per share forecast from between 75 cents and 80 cents to a range of 80 cents to 83 cents.

For the quarter ended Sept. 30, the South San Francisco-based company earned $230.9 million, or 21 cents a share, a 52 percent increase over the previous year's third-quarter earnings of $152 million, or 14 cents a share.

Excluding special expenses and income related to litigation, Genentech said it would have posted a profit of $259.6 million, or 24 cents a share. On that basis, the results exceeded the per-share estimate among Wall Street analysts by 3 cents, according to research firm Thomson First Call.

"We have maintained consistently strong performance across our product portfolio," said Myrtle Potter, president of commercial operations.

The rosy earnings report was tempered by the company's disclosure Monday that it had received a subpoena from federal prosecutors in Philadelphia. The company said the subpoena related to promotion of Rituxan, its flagship drug for non-Hodgkin's lymphoma.

Revenue was $1.2 billion in the quarter, an increase of 47 percent from a year earlier. The company's new colon cancer drug, Avastin, was approved for sale in February and accounted for $183 million in sales in the third quarter.

Avastin is designed to choke the blood supply that feeds tumors and is the first drug of its kind to be approved by the FDA. When used with chemotherapy, it extends the life of the sickest patients by an average of about five months.

Analysts expect the drug, which costs each patient about $4,400 per month, to surpass $1 billion in annual sales in the next few years. The company also is investigating Avastin's possibilities to treat other forms of cancer, including breast, lung and kidney.

Meanwhile, sales of Genentech's two established cancer drugs also reported increased sales in the first quarter.

Sales of Rituxan increased 18 percent to $437.7 million in the third quarter. Breast cancer fighter Herceptin sales in the quarter increased 17 percent to $126 million.

In trading Wednesday on the New York Stock Exchange, Genentech shares fell 88 cents to close at $50.25. They gained 75 cents in the extended session.

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