Genentech Profit Up on Strong Sales
Genentech Inc. swung to a profit in the second quarter on sharply higher sales of its mainstay cancer drugs, the company said Wednesday.
The strong results capped a quarter in which Genentech’s market value nearly doubled in anticipation of a promising colon cancer treatment called Avastin that could add $1 billion to the South San Francisco-based company’s top line.
Avastin could receive regulatory approval early next year, Genentech’s chief medical officer, Susan Desmond-Hellman, said Wednesday.
It would be the first drug to treat cancer by pruning the blood vessels that feed tumors. In a large human test, the injectable drug extended the lives of patients with metastatic colon cancer by five months.
Second-quarter profit was $132.3 million, or 25 cents a share, contrasted with a year-earlier loss of $213.6 million, or 41 cents, Genentech reported.
The year-ago results included a $518-million charge related to a lawsuit with the City of Hope National Medical Center in Duarte.
Excluding litigation charges and other special items, second-quarter profit rose to 31 cents a share from 23 cents a year earlier, topping Wall Street’s estimate of 26 cents, according to Thomson First Call.
Revenue climbed to $799.7 million, up 29%, from $622.3 million a year earlier, led by strong sales of the cancer drugs Herceptin and Rituxan.
Contract revenue more than doubled to $32.6 million, buoyed by a payment from Swiss drug maker Roche Holding for international rights to Avastin.
Genentech’s Raptiva remains on track to receive regulatory approval for psoriasis by year-end, Desmond-Hellman said.
During the second quarter, Genentech received regulatory approval for Xolair, the first biotechnology drug for asthma. Genentech and marketing partner Novartis plan to launch Xolair this month.
“The transforming events of the last few months have positioned us for significant growth ahead,” Chief Executive Arthur D. Levinson said in a conference call.
John McCamant, editor of the Medical Technology Stock Letter in Berkeley, said Genentech was the first large biotech drug maker to report results in what should be a strong quarter for the sector. He called Genentech “a tremendous growth story.”
On Wednesday, industry bellwether Blue Cross of California said it would reimburse patients for the use of Xolair when the drug is administered in a physician’s office.
Blue Cross says the injectable drug will be difficult for patients to prepare on their own because it will come in powdered form and must be mixed with water.
Insurance reimbursement had been expected to be an issue with Xolair, which will cost $12,000 annually.
But Genentech said Wednesday that the largest private insurers had agreed to cover the asthma medication, though many planned to control use of the drug by demanding higher co-payments and prior authorization of prescriptions.
UCLA health economics professor Stuart O. Schweitzer said the Blue Cross policy could discourage use of Xolair because it would require patients to visit their doctors. “It’s a hassle,” he said.
Genentech released its results after the market closed Wednesday. Its shares ended the day at $77.38, up 89 cents, on the New York Stock Exchange.
