UPDATE: Genentech 4Q Profit Rises 47%; '09 View Misses Mark
January 15 2009 - 5:42PM
Dow Jones News
Genentech Inc.'s (DNA) fourth-quarter profit rose 47% on strong
sales of its cancer drugs, but it gave a disappointing 2009
earnings outlook reflecting the current economic uncertainty.
The South San Francisco, Calif., biotech giant said it expects
2009 per-share earnings between $3.55 and $3.90, below expectations
of $3.92 a share, noting there are a "large number of business
uncertainties that make it a difficult year to forecast."
Analyst Eric Schmidt of Cowen & Co. said the guidance could
be an issue for investors and expressed surprise at the company's
uncharacteristically broad range.
Shares fell 1% to $84.15 in after-hours trading.
Genentech's earnings continue to be overshadowed by questions of
whether majority shareholder Roche Holding AG (RHHBY) will increase
its already rejected takeover offer of $89 a share.
Earlier this week, Roche Chief Financial Officer Erich Hunziker
said plans to acquire the 44% of Genentech it doesn't already own
are on track. Despite Roche's consistent reassurance, many have
questioned whether the Swiss company can raise the money needed in
a difficult credit environment and with a stronger dollar.
Genentech's stock rose 24% in 2008, but has traded well under
its August high of $99.14 on those concerns.
For the quarter ended Dec. 31, Genentech reported net income of
$931 million, or 87 cents a share, up from year-ago earnings of
$632 million, or 59 cents a share.
Excluding per-share stock-based compensation costs and other
charges, Genentech reported earnings of 95 cents a share, just
below a Thomson Reuters average analyst estimate of 96 cents a
share.
Revenue rose 25% to $3.71 billion, above the average Street
projection of $$3.66 billion.
"Genentech is still more a top-line story than bottom," said
Schmidt, noting that the company's top products did "about as well
as expected" on the whole.
"People still want to see those top-line products grow; it
doesn't bother me that they posted non-GAAP EPS a penny below
consensus," he said.
Avastin, approved to treat advanced breast, lung and colorectal
cancer, had U.S. sales of $731 million in the quarter, up 21% from
a year ago and in line with a consensus estimate of $731.6 million,
according to health-care market research firm MDRx Financial.
Cancer and rheumatoid arthritis treatment Rituxan, co-marketed
with Biogen Idec Inc. (BIIB), posted sales of $677 million for the
quarter, up 14% and beating Wall Street expectations of $671.1
million.
Breast-cancer drug Herceptin's sales rose 3% to $336 million,
missing expectations of $347.8 million.
Sales of Lucentis, which treats wet age-related macular
degeneration, rose 20% to $236 million, beating expectations of
$219.1 million.
-By Thomas Gryta, Dow Jones Newswires; 201-938-2053;
thomas.gryta@dowjones.com
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