Genentech’s Earnings Up 56% on Strong Sales

Genentech Inc. reported a 56% surge in third-quarter net income, fueled by strong sales of its newest colon cancer drug and its flagship breast cancer fighter.

The results, released Monday after the stock market closed, beat analysts’ expectations.

The South San Francisco-based company said it earned $359.4 million, or 33 cents a share, up from $230.9 million, or 21 cents, a year earlier.

Excluding special expenses and income related to litigation, Genentech said it would have posted a profit of $383.8 million, or 35 cents a share.

On that basis, the results exceeded the per-share estimate among Wall Street analysts by 5 cents, according to research firm Thomson Financial.

Third-quarter revenue increased 46% to $1.75 billion from $1.2 billion a year earlier.

The company also on Monday boosted its expected earnings for the year from a 35% increase to about 50% before special charges.

The company’s new colon cancer drug, Avastin, was approved for sale February 2004 and accounted for $325.2 million in sales in the third quarter, a 78% increase from $183 million a year earlier.

Avastin is designed to choke the blood supply that feeds tumors and is the first drug of its kind to be approved by the Food and Drug Administration. When used with chemotherapy, it extends the life of the sickest patients by an average of about five months.

Analysts expect the drug, which costs each patient about $4,400 a month, to surpass $1 billion in annual sales in the next few years.

The company also is investigating the possible uses of Avastin to treat other forms of cancer, including breast, lung and kidney cancer.

Meanwhile, sales of Genentech’s established breast cancer drug Herceptin rose 70% to $215.1 million in the third quarter compared with $126.3 million a year earlier.

Genentech shares climbed 5% to nearly $86 after the report was released. The stock had risen 85 cents to $82 in regular trading.

After hitting a 52-week high of $94.99 a share Sept. 1, the company’s stock price has sagged after the company announced Sept. 23 that it stopped an Avastin study in ovarian cancer patients because many of them developed a serious bowel problem.