Genentech profit rises on cancer drugs
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Genentech continued its torrid financial pace Tuesday, announcing it boosted its profits by 48 percent in the first quarter this year largely on the stellar performance of its cancer-fighting drugs.
The South San Francisco company said its net income for the first three months of the year totaled $421 million or 39 cents a share. That compared with $284 million -- 27 cents a share -- for the same quarter in 2005, when Genentech was not required under federal accounting rules to include the cost of stock options.
It was the biotechnology giant's 17th consecutive quarter showing profit gain.
Its streak of success has put it in a see-saw competition in recent months with Amgen of Thousand Oaks for bragging rights as the world's biggest biotechnology company. Based on the stock market value of the two companies Tuesday, Genentech had the edge. It was valued at $86.1 billion, compared with Amgen, whose stock was worth $83.2 billion.
David Ebersman, Genentech's chief financial officer, told analysts Tuesday during a conference call there was no reason to think the firm's impressive fortunes would change.
``We have a strong foundation for continued success for 2006 and beyond,'' he said.
Excluding special expenses, Genentech said, it would have earned $491 million, or 46 cents a share, in the first quarter. On that basis, the results exceeded Wall Street's estimate by 5 cents a share, according to research firm Thomson Financial.
Genentech has 12 drugs on the market for treating everything from rheumatoid arthritis to asthma. But its anti-cancer drugs have proven the biggest winners: The most promising of these is Avastin, which has been building momentum since the U.S. Food and Drug Administration approved it in 2004 for treating colorectal cancer.
Avastin generated $398 million during the first quarter of this year, an increase of 96 percent over sales for the first quarter of 2005.
Herceptin, approved by the FDA in 1998 for use in late-stage breast cancer, accounted for $290 million during the first quarter of this year, up 123 percent from a year ago.
Genentech's biggest-selling drug, Rituxan, approved in 1997 for treating non-Hodgkin's lymphoma, earned $477 million in sales the first quarter, an increase of 8 percent from a year ago.
Overall, Genentech said, its U.S. drug sales for the quarter were about $1.6 billion, a 44 percent increase over the same period in 2005.
``The Rituxan number was lower than expected, but Herceptin was strong,'' said Shiv Kapoor of investment bank Montgomery & Co. He owns no Genentech stock. All in all, he added, ``I'm very happy with this quarter.''
Genentech has big plans to win FDA approval to use all three drugs on a wide variety of additional cancers and other ailments.
Among other things, it hopes to get Avastin approved for breast, lung and kidney cancer; Rituxan for use by patients with rheumatoid arthritis and multiple sclerosis; and Herceptin for treating early-stage breast cancer patients.
In addition, the company has 20 other potential drugs in early development for possible use on everything from lupus to diabetes.
That gives analysts reason to think the company will stay profitable for some time.
John McCamant, editor of the Medical Technology Stock Letter in Berkeley -- he owns no Genentech stock -- is especially keen on the prospects for Avastin, which combats tumors by cutting off their blood supply.
``Given Avastin's mechanism of action, it can work basically in all cancers,'' he said. ``They're going to leverage that significantly . . . It's a dominant drug.''
Genentech's stock closed up $1.07 at $81.70, before earnings were announced. In after-hours trading, it fell $1.59 to $80.11.
Associated Press contributed to this report. Contact Steve Johnson at sjohnson@mercurynews.com or (408) 920-5043. '); '); '); '); } '); NewsThis is cache, read story here