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Genentech Profit Soars on Cancer Drug Sales

October 09, 2003|Denise Gellene | Times Staff Writer

Biotechnology giant Genentech Inc. reported a 70% jump in third-quarter profit on the strength of its mainstay cancer drugs Wednesday, but warned that marketing and research expenses would cut into fourth-quarter earnings.

Genentech's profit rose to $152 million, or 29 cents a share, from $89.3 million, or 17 cents, a year earlier.

Revenue rose 26% to $817 million from $650.1 million, driven by sales of its breast cancer drug, Herceptin, up 11%, and its lymphoma drug, Rituxan, up 26%.

Excluding special charges and litigation-related items, Genentech had a third-quarter profit of $143.9 million, or 27 cents a share, compared with earnings of $120.2 million, or 23 cents, last year.

Wall Street had expected earnings of 25 cents a share, according to a survey of analysts by Thomson First Call.

Myrtle Potter, chief operating officer of the South San Francisco-based company, said the quarterly results were "solid."

The company said its new asthma drug, Xolair, was launched on July 21 and had sales of $6.8 million in the quarter. Xolair, the first biotech drug for asthma, costs $12,000 a year, and managed-care companies have taken steps to prevent its overuse. So investors are closely monitoring its sales.

Physicians have placed 3,500 orders for Xolair, Potter said on a conference call. "We're very pleased with the total number of patients in the third quarter," she said.

Also Wednesday, Genentech said it had begun studying Xolair as a possible treatment for peanut allergies.

Genentech said it was preparing to launch Raptiva, a psoriasis drug that could receive Food and Drug Administration approval this month. Expenses related to Raptiva's introduction could affect profit in the fourth quarter, Chief Financial Officer Louis Lavigne Jr. warned on a conference call. Raptiva will face competition from Biogen Inc.'s Amevive and Amgen Inc.'s Enbrel.

Genentech's results were announced after the markets closed. Its shares fell 75 cents to $78.75 on the New York Stock Exchange. In after-hours trading, they rose to $80.80.

Genentech's stock has more than doubled since the company announced in May that its experimental cancer drug, Avastin, added five months to the lives of colon cancer patients in a large clinical trial. If the FDA approves the drug, analysts say Avastin's annual sales could exceed $1 billion.

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