Genentech Boosts Earnings Forecast; Shares Rise
Genentech Inc. raised its current-year and five-year earnings growth forecasts Friday and boosted its target for major product approvals by 2010, sending its shares up 6.7%.
At its annual investor meeting, held in New York, Genentech said it expected 2006 earnings growth of 40% to 50% a share, excluding items, up from its previous forecast of 35% to 45%.
The world’s second-largest biotechnology company also forecast annual earnings growth of 25% over the five years ending in 2010, up from an earlier 20% outlook.
Driving the optimism was an expectation of a steady stream of product launches and expanded use of current products.
South San Francisco-based Genentech said it expected to have 15 approvals for new products or new uses for existing products by 2010, up from a previous target of 10.
“The stock is really hard to call right now because it’s still expensive,” said Geoffrey Porges, an analyst at Sanford C. Bernstein & Co.
“To get excited about it, you’ve got to believe that there is another shoe to drop for one of the big drugs.”
Genentech discussed a virtual warehouse full of possible “shoes.”
With the aim of maximizing the potential of existing products, Genentech said it expected to submit six applications for expanded uses for its drugs this year, including one for less frequent dosing of the eagerly anticipated macular degeneration drug Lucentis, which is awaiting initial approval by June.
The company said it also planned to move 20 new molecules into clinical development over the next five years.
It identified four potential molecules that could advance into early development this year, including ones for ovarian and prostate cancer and for non-Hodgkin’s lymphoma.
For the nearer term, Genentech outlined an ambitious expansion in clinical studies of the tremendously successful colon cancer drug Avastin for other types of tumors.
In addition to studies of Avastin for breast and lung cancer, the company plans to look at the drug’s effects on pancreatic, prostate, ovarian, kidney, brain and gastrointestinal cancers. Genentech also hopes to see Avastin approved eventually for use at all stages of cancer, including as an initial or front-line treatment, and after surgery.
Genentech said it was looking at its new lung cancer drug Tarceva in pancreatic and breast cancers. The non-Hodgkin’s lymphoma drug Rituxan, which recently won approval for rheumatoid arthritis, will also be studied in lupus, multiple sclerosis and Type 1 diabetes.
Genentech shares rose $5.55 to $88.14.
