Genentech: What's Really Behind The Earnings

Late last week,I blogged about keeping an eye on the Lucentissales number when Genentech reports earnings. Well, the company is just out with its releaseand, sure enough, revenue from the drug for age-related macular degeneration (AMD) fell sequentially from the second quarter to the third quarter.

Genentech sold $209 million worth of the injectable eye drug in Q2 and $198 million dollars worth in Q3. Investors buy stock in companies like this one for growth in sales, especially from a new drug like Lucentis which has been shown to not only preserve eyesight, but even improve it in some patients.

The issue for the company is that doctors have been using its cheaper cancer drug Avastin (a close cousin of Lucentis) instead of the more expensive Lucentis for AMD patients. Avastin sales were up $33 million sequentially and is the only one of the "Big 4" Genentech drugs to come in ahead of consensus.

So, I think now we know why last week, the company announced it is cracking down on Avastin use for AMD. The company, though, says the reason for the policy change is that Avastin is untested, unproven and possibly unsafe for AMD use.

A blog reader from France begs to disagree. This email arrived in the blog inbox over the weekend:

As a patient with wet macular degeneration who was treated with Avastin and had my sight completely restored, I am incensed by Genentech's decision on the availability of this drug for eye treatments. It always comes down to the question of money, doesn't it! Just wanted to share my personal experience regarding Avastin with you. Thank goodness I live in France!
Elizabeth & David Griffith

Vive la France!!

Questions? Comments?