Genentech Results No Cure For Anxiety
Drug maker's earnings fall short of expectations.
While revenue was also slightly higher than Wall Street's expectations, which projected revenue of $3.23 billion, I think there's cause for concern in Genentech's performance. Avastin, a key cancer drug, grew 15% in the period; while this is certainly respectable growth, I do get the sense that it's less than the investment community hoped to see.
Moreover, management increased their full-year earnings outlook from $3.35-$3.45 per share to $3.40-$3.50 per share, which could possibly offset the second-quarter disappointments. The sell side could then elect to increase their numbers, driving up shares.
The earnings report was overshadowed, however, by the release of results from Avastin's clinical combo trials, which found that some patients who took the drug alongside Pfizer's (PFE) Sutent developed a particularly severe form of anemia. The combination is not currently approved or recommended by the Food and Drug Administration.
The drug, which is approved to treat colon, lung and breast cancer, accounted for about 25.6% of total product sales in the quarter.
While this news might therefore be viewed as cause for concern, it should be noted that Sutent is used only in advanced stages of kidney cancer - just a fraction of Avastin's intended market. The majority of drug sales are expected to be for the treatment of metastatic breast cancer.
Rituxan -- a treatment for non-Hodgkin's lymphoma and rheumatoid arthritis developed in concert with Biogen Idec (BIIB) -- reported sales of $651 million, a more than 11.9% improvement on 2007's sales. But that drug too could face obstacles, given that its safety profile for the treatment of rheumatoid arthritis is still unclear.
Genentech closed at $75.39, down $2.36, or 3.04%. The shares were up just over a point in after hours trading.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter