Genentech Sees Its Net Income Increase 61%
Genentech Inc.’s net income soared 61% in the first quarter on higher royalties and sales of its cancer drugs, the biotechnology company said Monday.
Net income was $284.2 million, or 27 cents a share, compared with $176.6 million, or 16 cents, in the year-earlier quarter.
Excluding legal costs and other one-time items, net income was $311.6 million, or 29 cents a share, compared with $207.6 million, or 19 cents. On that basis, South San Francisco-based Genentech beat Wall Street’s consensus forecast by 4 cents, according to Thomson First Call.
Revenue was $1.46 billion, up 50% from $975 million a year earlier.
“We are very pleased with the continued growth,” said Chief Financial Officer David Ebersman, noting product sales rose 55%. “We think that is a really solid and noteworthy performance for us.”
Ebersman cautioned that net income would not continue to grow at the same pace throughout the year, in part because sales and marketing expenses were expected to rise. The company expects net income to grow 30% for the year, he said, in line with analysts’ expectations.
Avastin, a colon cancer drug launched in February 2004, set a record for first-year sales of an oncology drug, Genentech said. The intravenous medicine posted sales of $675.9 million during its first 12 months.
Nonetheless, Avastin’s first-quarter sales of $202 million were below the Wall Street consensus forecast of $219 million, suggesting that the drug may be peaking as a treatment for colon cancer. Ian Clark, chief of cancer drug sales for Genentech, said the company was very satisfied with Avastin’s performance.
“The way we see Avastin is that it is off to a great start,” Clark said. “We are not worrying too much about $5 million to $10 million either way in a quarter.”
Genentech said it was in discussions with the Food and Drug Administration about marketing Avastin to lung cancer patients, based on recent positive clinical trial results. The company recently started testing the drug in prostate cancer patients, Genentech said.
Avastin sales were on track to exceed $800 million this year, Clark said. Wall Street analysts have been expecting full-year Avastin sales of at least $1 billion.
Rituxan, a drug for non-Hodgkin’s lymphoma, had its best quarter in 18 months, Clark said, with sales of $473 million.
Sales of Tarceva, a lung cancer pill co-marketed with OSI Pharmaceuticals Inc., were $47 million in the quarter, exceeding the $33 million anticipated on Wall Street.
Royalty revenue rose 51% to $231.9 million. The company attributed the increase to new royalty arrangements, including a patent licensing deal with ImClone Systems Inc. that included payments retroactive for 2004.
Genentech released its earnings after the market close. Its shares fell $1.06 to $56.60 on the New York Stock Exchange.
