Genentech's mixed bag

Biotech giant beats expectations for earnings but sales only match forecasts.

Subscribe to Companies
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Genentech, the word's largest biotech in terms of market capitalization, reported a healthy increase in sales and earnings for the fourth quarter.

Genentech reported earnings per share of 69 cents, excluding charges, for the fourth quarter, up 13 percent from the same period the previous year. Analysts were predicting earnings of 67 cents per share.

The company reported sales of $2.9 billion, up 9 percent from a year ago and in line with analysts' expectations.

For the full year, Genentech (DNA) reported earnings per share of $2.94, without charges, a 32 percent surge from 2006. Sales came in at $11.7 billion, a 26 percent increase from 2006.

Genentech announced 2008 earnings guidance of $3.30 to $3.45 per share, without charges.

Shiv Kapoor, analyst for Ferris, Baker Watts, said that Genentech "continues to be one of the strongest players in the biotech industry" but "expectations are higher than what they delivered."

The biotech's top product was Avastin, a treatment for lung and colorectal cancer. Sales jumped 23 percent in the fourth quarter to more than $600 million. The drug's sales nearly reached $3 billion for the year, a 32 percent jump from 2006.

Nonetheless, Avastin is partially responsible for the company's 20 percent slide in stock last year. In December, an advisory panel for the Food and Drug Administration voted 5-4 against approving Avastin as a treatment for breast cancer. The final decision comes out in February.

"The majority expectation is that [Avastin] won't get approved [for breast cancer]," said Jason Kantor, analyst for RBC Capital Markets. "If it did get approved it would have an upside effect."

Ian Clark, executive vice president for Genentech, said, in a conference call with analysts, that "there is definitely room to grow" with Avastin, but "clearly not as much as we would get" with a breast cancer indication.

The company's No. 2 product Rituxan, a treatment for non-Hodgkin's lymphoma and rheumatoid arthritis, rose 10 percent for the year, totaling nearly $2.3 billion. Sales for breast cancer drug Herceptin rose an anemic 4 percent to nearly $1.3 billion for full-year 2007. Sales for Lucentis, a drug to curb age-related vision loss, more than doubled in 2007 to $815 million.

Genentech, based in South San Francisco, Calif., is the No. 2 biotech in terms of annual sales, behind Amgen (AMGN, Fortune 500), based in Thousand Oaks, Calif. To top of page

Photo Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.