NEW YORK (Money Magazine) - In late June, Arthur Levinson was talking with MONEY's Erica Garcia in his corner office in south San Francisco, nervously shaking a sneaker-clad foot while awaiting the decision from the Food and Drug Administration on Xolair, Genentech's asthma treatment.

Levinson, the biotech company's 53-year-old CEO, says he finds himself "nerve-racked" whenever Genentech is awaiting word from the FDA or results from Phase 3 clinical trials.

Genentech (DNA) Since we called Genentech one of the brightest stars in biotech in April, its stock has doubled. While biotechs tend to garner frothy P/E multiples, thanks to their stellar growth prospects, these stocks are very volatile. Kris Jenner, manager of T. Rowe Price's Health Sciences fund, is a fan of Genentech but not of its stock. "I'm more interested at lower prices," he says.     CEO:  Arthur Levinson  Tenure:  Eight years   Price:  $77.99  52-wk. range:  $27.40 -- $78.75  Dividend yield:  None   Revenue:  $2.9 billion  Est. '04 P/E:   50   Market cap:  $39.8 billion   Note: Data as of 7/17/03  Source:  Bloomberg, Thomson/Baseline

And no wonder: In May, when investors learned that Avastin, Genentech's colorectal cancer treatment, "markedly" extended patients' lives in trials, the stock soared 45 percent in one day to $54.85.

The company's business is thriving: Last year Rituxan (the non-Hodgkin's lymphoma treatment developed with IDEC Pharmaceuticals) and Herceptin (for breast cancer) had combined sales that topped $1.5 billion.

For about an hour, Levinson, who has a Ph.D. in biochemistry, talked with Garcia about what's next for this biotech powerhouse. Minutes after the meeting concluded, Levinson phoned Garcia with the news: Xolair was approved.

Genentech's stock traded recently at $77.

Q. How have recent successes changed your profit projections?

A. Last December we presented to the board our long-range plan, in which we envisioned leaving 2010 with double-digit earnings growth. Within a couple of days of the Avastin announcement, we asked ourselves, can we possibly set even more aggressive targets? Right now we're in the process of trying to answer that question.

Q. Are you focusing only on cancer?

A. We're going in two major areas: oncology and immunology. But we remain opportunistic; we let the science lead us. As an example: Lucentis, a treatment for blindness. Who would have thought years ago that we'd be looking at blindness?

Q. You tend to collaborate on product development. Why not just acquire?

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A. A lot of it starts with valuation. We don't see a lot of companies from an intermediate perspective -- three to five years -- for which we can make a compelling argument for an acquisition that would be highly likely to succeed. Acquisitions are extremely disruptive. We're all stretched pretty thin right now in terms of trying to deliver on all the potential that we've created over the past couple of years.

Q. What worries you?

A. The worst thing in the world is to have a lead and have it squandered. If we blow it, we should all be fired -- myself included. One of the things I'm thinking about right now, even though we've almost quadrupled manufacturing capacity over the past four years, is making sure that we have enough manufacturing capacity to meet any demand for our products down the road.