Genentech Earnings Jump on Strong Growth For Key Cancer Drug
Biotech giant Genentech reported quarterly earnings above expectations amid solid sales growth for blockbuster cancer drug Avastin, posting a quarterly profit growth of 68%.
But shares initially fell in after-hours trading as sales for Lucentis, a treatment for age-related blindness, fell short of analysts' expectations.
Earnings for the South San Francisco, Calif.-based company, excluding one-time items, were 74 cents a share, above the analysts' consensus of 67 cents a share, according to Thomson Financial.
Quarterly sales rose 43% to $2.84 billion, above Wall Street estimates of $2.74 billion.
Lucentis, an offshoot of Avastin that's been on the market for less than a year, posted quarterly sales of $211 million, down $6 million from the previous quarter.
Sales for the company's top-selling Avastin jumped 34% to $533 million, at the high end of analysts' estimates, but sales of breast cancer drug Herceptin rose a modest 7% to $311 million while Rituxan, a cancer and arthritis treatment, rose 12% to $535 million.
"Not too shocking that there was a significant beat on the bottom line," Eric Schmidt, biotech analyst at Cowen and Company, told CNBC. "Investors are going to focus more on the top line (sales) ... and maybe some of the weakness for the those two significant cancer franchises."
Genentech last month said it expects 2007 earnings growth of 25% to 30% but warned that first-quarter sales would be flat from the fourth quarter of 2006.
"This is a great company. We're more concerned about valuation," Schmidt added. "For the last two to three years, this company has posted enormous growth. It will be difficult for these large biopharmaceutical companies to maintain that torrid pace of growth."
Genentech shares have gained just 2% in 2007, lagging a 5% rise in the broader Amex Biotechnology Index . Swiss drugmaker Roche has a majority stake in the company.
Rival Amgen, which has seen its shares fall 26% in 2007 amid drug safety issues, said Tuesday morning it would delay its quarterly earnings report by a few days so it could include new clinical trial data for cancer drug Aranesp.