Genentech earnings, revenue surge
California-based biotech reports $3 billion in second-quarter operating revenue, easily beating Wall Street's estimates.
NEW YORK (CNNMoney.com) -- Genentech reported a quarterly surge in earnings and revenue, handily beating Wall Street estimates.
The California-based biotech reported $3 billion in operating revenue for the second quarter, a 37 percent increase over the same period last year, and 78 cents earnings per share, excluding charges, a jump of 39 percent.
Analysts had projected $2.856 billion in operating revenue for the second quarter, and EPS of 71 cents, according to consensus from Thomson.
Genentech's top-selling drug Rituxan, for the treatment of non-Hodgkin's lymphoma and rheumatoid arthritis, totaled $582 million in second-quarter sales, an 11 percent jump year-to-year.
The biotech's second biggest seller, Avastin, for treatment of lung and colorectal cancer, was the fastest-growing product in the company's arsenal. Avastin grew by a third, to $564 million.
Shiv Kapoor, analyst for the investment research firm Montgomery & Co., said that Avastin's growth was largely responsible for Genentech's strong earnings. Kapoor said Avastin was able to grow despite a study, announced at the American Society of Clinical Oncology conference in June, showing that half-doses were as effective as full doses in lung cancer treatment.
"Avastin was not affected by the fallout of the AVAIL study," said Kapoor, referring to the Avastin study by name. "I think the stock should react positively to this."
Nonetheless, sales for the company's breast cancer drug Herceptin were sluggish: a mere 3 percent increase from the year before, totaling $329 million for the quarter.
The company posted strong sales overall, totaling $2.4 billion in product sales in the second quarter, up from $1.8 billion during the same period in 2006. Royalties from its partnership with the Swiss drug giant Roche jumped to $484 million in the second quarter, up from $316 million year-to-year.
Chief Executive Arthur Levinson said in a webcast to analysts and the media that his company is well-prepared to take on the competitive threat posed by a biogenerics bill that is moving through Congress.
This bill would help the Food and Drug Administration create a system for regulating generic versions of biotech drugs. This would allow generic drugmakers to create low-cost versions of name-brand biotech drugs once their patents expire, driving down revenues for biotechs.
"We believe that we will remain in a favorable market position," Levinson said, adding that his company would continue to develop new drugs and defend itself through strong patents. "Genentech's intention is to innovate in order to outpace our competitors."