Wednesday, October 11, 2006

Genentech Soars

Genentech Soars
Profits Surge by 58 Percent
By Paul Elias/AP Biotechnology Writer

SAN FRANCISCO - Third-quarter profits for biotechnology company Genentech Inc. surged 58 percent due to strong drugs sales and the introduction of a new treatment for an eye disorder, the company announced Tuesday.

South San Francisco-based Genentech (which has a facility in Vacaville) reported a profit of $568 million, or 53 cents a share, for the quarter, compared to $359 million, or 33 cents a share, for the same period last year.

If not for special expenses, including employee stock options, the company said it would have earned $637 million, or 59 cents a share. On that basis, the company exceeded Wall Street analysts' expectations by 8 cents a share, according to research firm Thomson Financial.

The company said it expected earnings per share to grow by 65 percent to 70 percent for the full year.

Revenue rose 36 percent to $2.39 billion for the quarter, largely because of the continued popularity of Genentech's pricey cancer-fighting drugs. The sales of non-Hodgkin's lymphoma treatment Rituxan rose 12 percent to $509 million for the quarter while sales for its colon cancer staple Avastin shot up 34 percent to $435 million.

The Food and Drug Administration approved the drug in 2004 for use by the sickest colon cancer patients. But a number of recent scientific studies show it's likely to combat several other forms of cancer, including cancers of the lung and breast.
However, the Food and Drug Administration demanded more scientific data before it approved Avastin for treating breast cancer. The company said it hopes to reapply in the middle of next year.

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 $2 billion in annual sales by 2007.

Company executives said on a conference call with analysts that they hope to receive FDA approval as soon as today to use Avastin for lung cancer.

The company's newest drug, eye-disease treatment Lucentis, had sales of $153 million in the quarter. The Food and Drug Administration approved Lucentis on June 30. It is rapidly becoming the primary treatment for macular degeneration, the leading cause of blindness among the elderly.

Genentech shares fell 68 cents, or 0.8 percent, to close Tuesday at $85.60 on the New York Stock Exchange. In extended trading, after the release of the results, the shares were down $1.25, or 1.5 percent.

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