Genentech profit rises nearly 21%

Genentech Inc. reported Monday that its third-quarter profit rose nearly 21% from a year earlier, beating Wall Street expectations by a penny a share, thanks to strong sales of the cancer-fighting drug Avastin.

The world’s second-largest biotechnology company by revenue reported net profit of $685 million, or 64 cents a share, compared with $568 million, or 53 cents, in the same period in 2006. Revenue increased 22% to $2.91 billion.

Not counting expenses, including those related to the $919-million buyout of biotechnology company Tanox Inc. last quarter, the company earned $778 million, or 73 cents a share.

On that basis, which does not comply with generally accepted accounting principles, analysts had expected Genentech to earn 72 cents a share on revenue of $2.93 billion.

The 73 cents a share is a 22% increase from a year earlier, when Genentech earned $637 million, or 59 cents a share.

Executives at the South San Francisco-based company said they were particularly pleased with $597 million in third-quarter sales of Avastin, which treats lung, breast and colon cancer. That’s up 37% from the year-earlier quarter, easily exceeding analysts’ tepid expectations for the drug.

Genentech’s partner on Avastin, Swiss healthcare giant Roche, received European approval to treat certain forms of lung cancer with the drug. Genentech is also seeking approval from the U.S. Food and Drug Administration to use Avastin against metastatic breast cancer, or breast cancer that has spread to other parts of the body.

Sales of its breast cancer drug Herceptin rose 6% to $320 million.

Rituxan, which is approved to treat rheumatoid arthritis and non-Hodgkin’s lymphoma, brought in $572 million in sales in the quarter, 12% more than a year earlier.

Genentech’s macular degeneration drug, Lucentis, approved in June 2006, had sales of $198 million, a 29% jump.

Genentech spent $578 million on research and development, up 38% from the third quarter of last year.

The company reaffirmed its outlook for full-year profit of $2.85 to $2.95 a share, excluding charges. Wall Street analysts are predicting earnings of $2.95 a share.

Shares of Genentech finished Monday’s trading at $77.50, up 25 cents.