Genentech Earnings: Great Release Form, Not So Good Sales

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I know that a number of pharma and biotech PR people read this blog, so I wanted to hold up the Genentechearnings releaseas what I think is a great example of user-friendliness.

It is really heads and shoulders above the quarterly communications that come out of most of the companies I cover.

For example, check out the way they put the earnings per share numbers in a handy-dandy, easy-to-read graph:

Non-GAAP Diluted EPSEmployee Stock-Based Compensation ExpenseNet Charges related to Redemption, Acquisition and Special ItemsReported GAAP Diluted EPS
Q1 2008$0.84($0.07)($0.03)$0.74
Q1 2007$0.74($0.06)($0.02)$0.66

And the world's biggest biotech does the same thing for its all-important drug sales numbers:

Three Months
Ended March 31,



% Change

Rituxan® $605$53513%

This kind of quick-glance clarity is really important and oh-so-helpful for reporters at CNBC and at wire services which have to get, process and regurgitate the information immediately. I can't begin to tell you how difficult it is to decipher the results of poorly written, lawyered-up earnings releases from other companies.

Part of the credit, I assume, has to go to Genentech's CEO Art Levinson who I've read has zero tolerance for corporate-speak. And maybe another reason for the easy-to-understand financial release is that I'm told the Genentech corporate communications team reports to the Chief Financial Officer, David Ebersman. That might seem like an odd structure, but it looks to me like it might have at least this one outside benefit.

I may like the way the numbers are laid out, but investors don't like the numbers.

Based on Thomson consensus estimates, sales of the top four drugs all came in below the Street's expectations. (I know there are other data sources that have at least a couple of the products posting higher-than-expected revenue.) Sales of Avastin actually went down from the fourth quarter to the first quarter.

Here are a few of the bearish titles of this morning's analyst research notes to clients:

Cowen and Company: "Another Uninspiring Quarter"

Wachovia: "Sluggish Avastin Growth Persists"

And the harshest of the bunch:

Leerink Swann: "Biotech Earnings Season Starts With A Thud"

I want to close with what I think was a pretty revealing comment from last night's Genentech conference call which could possibly have an effect throughout the pharma-biotech sectors.

The company's president of product development, Dr. Susan Desmond-Hellmann, said she's less worried about dealing with the Food and Drug Administration than she is about "enrollment rates in a highly competitive clinical trials era." If that's true, it could slow down the pace of drug development because it'll take longer to fully enroll some human studies. And especially for biotech and its investors, time is money.