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Genentech profit up; sales disappoint

January 15, 2008|From Reuters

Biotechnology company Genentech Inc. said Monday that its fourth-quarter profit rose 6.4%, but sales of several drugs, including the blockbuster cancer treatment Avastin, fell short of investor expectations, sending the company's shares lower.

"Every single product relative to Street consensus was light," said Mike King, an analyst at Rodman & Renshaw. "When you've got the biggest products that are the biggest growth drivers -- Avastin and Lucentis -- light, that's disappointing."

The world's second-largest biotechnology company by sales posted a profit of $632 million, or 59 cents a share, compared with $594 million, or 55 cents, a year earlier.

Genentech, based in South San Francisco, said that, excluding one-time costs, it earned 69 cents a share, beating the average analyst estimate of 67 cents, as compiled by Reuters Estimates.

The company expects earnings per share this year to be $3.30 to $3.45, compared with the $3.38-a-share forecast by Wall Street analysts.

"We did not expect them to give very bullish guidance" because of a variety of unknowns, said Jason Kantor, an analyst with RBC Capital Markets. "It was solid but on the conservative side."

Quarterly U.S. sales of Avastin -- the colon-cancer and lung-cancer drug viewed as a key barometer of Genentech's fortunes -- rose 23% to $603 million but fell short of Wall Street expectations for sales near $616 million.

The Food and Drug Administration is expected to decide by late next month whether Avastin can also be used to treat advanced breast cancer, but an advisory panel to the agency recommended in December that the application be turned down.

Genentech's fourth-quarter revenue rose 9% to $2.97 billion, which, helped by higher-than-expected royalty revenue, was in line with the $2.96 billion expected by Wall Street. U.S. product sales rose 7% to $2.2 billion.

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