Genentech earnings boosted by cancer drugs

|

genentechBoasting its 20th consecutive profitable quarter, biotechnology powerhouse Genentech on Wednesday reported a 75 percent increase in net income for the fourth quarter of 2006, compared with the same period a year ago.

The South San Francisco company's net income for the three-month period that ended Dec. 31 totaled $594 million, or 55 cents a share. That was up from $339 million, or 31 cents a share, for the fourth quarter of 2005.

Aside from stock options or other special expenses unrelated to its ongoing operations, Genentech said it would have earned 61 cents a share, 5 cents more than what most analysts surveyed by Thomson Financial had predicted.

Quarterly sales of its cancer drugs and other medicines also topped $2 billion for the first time, according to Genentech executives.

The earnings report was made public after the end of trading. At the market's close, shares of Genentech stock fell 95 cents to $83.74. But three hours later, in after-hours trading, the stock rose $1.11 to $84.85.

The quarter capped an impressive year for the company, which reported $2.1 billion in net income for the past 12 months, a 65 percent increase over 2005.

"2006 was another year of significant growth for Genentech," Chief Executive Arthur Levinson told analysts during a Web conference. He said he was especially proud of the company's expanding therapeutic portfolio.

Genentech's three major drugs for treating cancer -- Rituxan, Avastin and Herceptin -- each posted double-digit percentage gains in sales for the quarter, compared with the same period a year ago. Several of its other medicines also did well. That included Lucentis, which federal regulators approved in June for treating the so-called wet form of age-related macular degeneration, an eye disorder that affects about 1.6 million people in the United States.

Lucentis racked up sales of $217 million for the quarter, making it the company's fourth-hottest drug for the period.

"Lucentis' launch has been a major success," said Ian Clark, Genentech's executive vice president for commercial operations.

But Shiv Kapoor, an analyst with investment bank Montgomery, who owns no Genentech stock, cautioned in a note to his clients last week that Genentech could face challenges in the near future.

For one thing, he said, other companies are developing cancer treatments that might cut into sales of Avastin, Rituxan and Herceptin. Moreover, he warned, Genentech's drug production lines are nearing their limits.

"We expect Genentech to require much more manufacturing capacity than it currently has if it is to continue its growth," Kapoor said.

via Twincities