Genentech Posts Loss on Lawsuit

Genentech Inc. on Wednesday posted a second-quarter loss of $213.6 million, or 41 cents a share, stemming from litigation with City of Hope National Medical Center.

Excluding the $518-million charge for litigation expenses, Genentech earned $101.5 million, or 23 cents a share, in line with analysts’ expectations.

The biotechnology company, based in South San Francisco, reported quarterly revenue of $652.3 million, up 26% from a year earlier. Genentech said growth was driven by higher sales of its cancer drugs.

Sales of Rituxan, its biggest drug, rose 46% to $274.9 million, thanks to increased market penetration for non-Hodgkin’s lymphoma. Genentech markets Rituxan with Idec Pharmaceuticals Corp. of San Diego.

Genentech said that as of June 30, it had $2.5 billion in cash and investments, some of which could be used for acquisitions. Chief Executive Art Levinson told analysts that as a result of the slide in biotechnology stock prices, “some companies that were not attractive to us before are beginning to appear so.”

Levinson added that Genentech does not need to do an acquisition to meet its sales and earnings targets. He has previously said that he is leery of large acquisitions because it is difficult to combine operations and cultures.

Levinson reiterated Wednesday that Genentech believes it honored its contract with City of Hope. The company said it would not pay any of the $500.2-million judgment against it until the appeals process runs its course.

Last month, a jury ordered Genentech to pay $300.2 million in compensatory damages and $200 million in punitive damages for withholding royalties from City of Hope, a cancer center in Duarte.

Genentech shares fell $1.65 to $25.50 on the New York Stock Exchange, on a day when biotechnology stocks generally were down.