Genentech Profit Rises 59% in 1st Quarter
Genentech Inc., the world’s second-largest biotechnology company, said Wednesday that first-quarter profit rose 59% because of higher sales of its cancer drugs and a lower tax rate.
The South San Francisco-based company reported net income of $151.5 million, or 29 cents a share, compared with $95.3 million, or 19 cents, a year earlier. Wall Street had forecast earnings of 28 cents for the latest quarter. Revenue rose 32% to $749.7 million from $568.1 million in the first quarter of last year.
Sales of the cancer drug Rituxan, Genentech’s biggest product, rose 38% to $341 million from $247.5 million in the same period a year earlier. However, Rituxan sales fell slightly from $346.6 million in the fourth quarter and missed analysts’ expectations of $351 million for the first quarter.
Disappointment about Rituxan sales drove Genentech’s shares down $1.42 to $35 in after-hours trading. The company released its financial results after the market closed. In regular trading on the New York Stock Exchange, Genentech shares fell 33 cents to $36.42.
Shares of Idec Pharmaceuticals Corp. of San Diego, which co-markets Rituxan, sank $2.82 to $31.12 after hours. In regular Nasdaq trading, Idec dropped 64 cents to $33.94.
Analysts said Rituxan sales in the fourth quarter may have been inflated by inventory stocking by wholesalers in advance of a 5.5% price increase for the drug that went into effect March 7. However, Myrtle Potter, Genentech’s chief operating officer, said Rituxan purchases by wholesalers were “within the typical range” and did not indicate stockpiling.
Analyst Craig Parker of Lehman Bros. said he wasn’t satisfied with Potter’s explanation. “What is troubling from a demand or disclosure point of view is your protestation that inventory buildup did not contribute to fourth-quarter strength,” he told Potter during a conference call.
On the product development front, Genentech Chief Medical Officer Susan Desmond-Hellmann said some patients in a human test of the company’s experimental cancer drug Tarceva no longer were receiving it because of unspecified safety concerns. Desmond-Hellman said an independent monitoring board alerted the company to a “safety signal” involving lung cancer patients who took Tarceva after their disease continued to spread. But the company wasn’t told what the safety problem is, she said.
Desmond-Hellmann said other patients in the test were continuing to receive the drug, which Genentech is developing with OSI Pharmaceuticals Inc. of New York. Analysts say Tarceva is an important but high-risk venture for Genentech.
