Replies to post #61288 on Biotech Values

[DewDiligence]

Lucentis’ share of US new Rx’s slipped from 50% to the low 40’s in the most recent quarter as Lucentis is losing out to off-label Avastin among retinal specialists. (Source: Today’s DNA CC)

[DewDiligence]

Avastin Disappoints

http://www.reuters.com/article/marketsNews/idINN1042490320080410

>>
Thu Apr 10, 2008 7:05pm EDT
By Bill Berkrot

NEW YORK, April 10 (Reuters) - Genentech Inc (DNA) reported higher first-quarter profit on Thursday on increased demand for its cancer drugs and a jump in royalty revenue, but sales of its most important product, Avastin, disappointed investors.

Avastin, Genentech's most closely watched product and a key barometer of the company's fortunes, had U.S. sales of $600 million for the quarter.

While that was up 13 percent from a year ago, it was down slightly from the previous quarter and some $24 million shy of Wall Street expectations, despite a recent approval for breast cancer in addition to colon and lung cancer.

That tempered enthusiasm despite a profit that topped Wall Street by 2 cents per share and solid sales of other key medicines, and shares were down slightly in after-hours trading.

"It looks like the stock weakness is mostly reflective of Avastin, still Genentech's most important franchise," said Cowen and Co analyst Eric Schmidt. "All else was OK, though nothing to write home about."

"Genentech beat our earnings estimate, but Avastin sales were definitely light," said RBC Capital Markets analyst Jason Kantor.

The world's second-largest biotechnology company posted a net profit of $790 million, or 74 cents per share, compared with a profit of $706 million, or 66 cents per share, a year earlier. Excluding items, Genentech earned 84 cents per share, edging above analysts' average expectations, according to Reuters Estimates.

"People are looking for Avastin growth in breast cancer," said Rodman & Renshaw analyst Michael King, adding that FDA approval for that use came too late in the quarter to have a major impact on sales.

Ian Clark, head of Genentech's commercial operations, said the company's sales efforts in breast cancer are not yet up to speed and he is "optimistic we will see good growth as we move through the remainder of the year."

He also said Avastin is expected to see "gradual" growth as a treatment for lung cancer.

Revenue for the quarter rose to $3.06 billion from $2.84 billion a year ago, just shy of the $3.10 billion Wall Street was expecting.

U.S. sales of the breast cancer drug Herceptin rose 9 percent to $339 million for the quarter, topping analyst expectations of $329 million.

Sales of Rituxan for non-Hodgkin's lymphoma and rheumatoid arthritis rose 13 percent to $605 million, slightly ahead of expectations.

Royalty revenue jumped 46 percent to $612 million, helped by favorable foreign exchange rates against the weak dollar. Roche Holding AG, which owns a majority stake in Genentech and sells its drugs outside the United States, pays it royalties in Swiss francs.

Sales of the eye drug Lucentis were down 6 percent from a year ago to $198 million, but roughly in line with expectations as it faces competition from off-label use of Avastin, which works in a similar manner at a fraction of the cost.

Genentech said it still expects full-year earnings of $3.35 to $3.45 per share, excluding items.

Genentech shares fell as much as 2.5 percent in after-hours trading, but recovered to trade less than 1 percent below their close of $78 per share on the New York Stock Exchange.
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[DewDiligence]

DNA Reports 2Q08 Results

[No major surprises here. DNA raised EPS guidance for the year by $0.05/sh (about 1.5%). There was little change in the share price in AH trading.]

http://biz.yahoo.com/bw/080714/20080714006224.html

›Monday July 14, 4:02 pm ET

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Genentech, Inc. (NYSE: DNA - News) today announced financial results for the second quarter of 2008. Key results for the second quarter of 2008 include:

* U.S. product sales of $2,351 million, a 9 percent increase from U.S. product sales of $2,149 million in the second quarter of 2007.

* Non-GAAP operating revenue of $3,232 million1, an 8 percent increase from operating revenue of $3,004 million in the second quarter of 2007; GAAP operating revenue of $3,236 million, an 8 percent increase from operating revenue of $3,004 million in the second quarter of 2007.

* Non-GAAP net income of $871 million, a 4 percent increase from $834 million in the second quarter of 20071; GAAP net income of $782 million, a 5 percent increase from $747 million in the second quarter of 2007.

* Non-GAAP earnings per share of $0.82, a 5 percent increase from $0.78 in the second quarter of 20071; GAAP earnings per share of $0.73, a 4 percent increase from $0.70 in the second quarter of 2007.

The company is currently forecasting that full-year 2008 non-GAAP earnings are likely to be in the range of $3.40 to $3.50 per share, revised from $3.35 to $3.45 per share.1

Product Sales and Royalty Revenue

Information on product sales for the three months ended June 30, 2008 and 2007, are provided in the following tables (dollars in millions):

Three Months

Ended June 30,

2008 2007 % Change
Rituxan® $651 $582 12%
Avastin®+ 650 564 15
Herceptin® 338 329 3
Lucentis® 216 209 3
Xolair® 129 120 8
Tarceva® 119 102 17
Nutropin® Products 89 94 (5)
Thrombolytics 68 67 1
Pulmozyme® 63 55 15
Raptiva® 28 27 4
Total U.S. product sales ++ $2,351 $2,149 9

Net product sales to collaborators 185 294 (37)
Total product sales ++ $2,536 $2,443 4

+ Second quarter 2008 Avastin U.S. product sales results include a net deferral of approximately $1 million in conjunction with the company’s Avastin Patient Assistance Program. The net deferral related to the program in the second quarter of 2007 was not significant.

++ Amounts may not sum due to rounding.

Non-GAAP royalty revenue for the second quarter of 2008 was $625 million, a 29 percent increase over the second quarter of 2007.1 Excluding the impact of a collaboration agreement in the second quarter of 2007, which resulted in one-time royalty revenue of approximately $65 million in that quarter, non-GAAP royalty revenue in the second quarter of 2008 increased 49 percent. GAAP royalty revenue of $629 million in the second quarter of 2008 increased 30 percent over the second quarter of 2007. The increase was primarily due to growth in ex-U.S. sales of Genentech's products by collaborators and related foreign exchange benefits of the weak dollar.

Total Costs and Expenses

Information on costs and expenses including cost of sales (COS), research and development (R&D) and marketing, general and administrative (MG&A) expenses for the three months ended June 30, 2008 and 2007, are provided in the following tables (dollars in millions)2:

Three Months

Ended June 30,

2008 2007 % Change

non-GAAP2

COS $423 $413 2%
R&D 611 564 8
MG&A 518 485 7

GAAP

COS 441 429 3
R&D 649 603 8
MG&A 559 532 5

Reported non-GAAP and GAAP COS for the second quarter of 2008 both include a charge of approximately $50 million, related to failed lots from a manufacturing start-up campaign at one of Genentech's facilities.

Three Months

Ended June 30,
2008 2007

non-GAAP2

COS as a % of product sales 17% 17%
R&D as a % of operating revenue 19% 19%
MG&A as a % of operating revenue 16% 16%

GAAP

COS as a % of product sales 17% 18%
R&D as a % of operating revenue 20% 20%
MG&A as a % of operating revenue 17% 18%

Other Financial Items

The non-GAAP and GAAP income tax rates of 40 percent for the second quarter of 2008 include a $33 million settlement with the Internal Revenue Service related to prior years that was resolved in the second quarter of 2008.

Clinical Development

Genentech announced that enrollment was completed in seven Phase II and Phase III studies during the second quarter of 2008. These studies included two combination Phase III studies for Avastin® (bevacizumab) and Tarceva® (erlotinib) in first-line and second-line metastatic non-squamous non-small cell lung cancer (NSCLC) and a Phase II study for Trastuzumab-DM1 in HER2-positive metastatic breast cancer patients who have progressed on HER2-directed therapy.

Genentech also announced that, with its collaborator Abbott, it initiated a Phase II trial of ABT-869, a VEGFR targeted kinase inhibitor, in combination with chemotherapy for patients with advanced NSCLC. In addition, Genentech initiated a Phase III combination study (BETH) of Avastin and Herceptin® (Trastuzumab) for patients with adjuvant HER2-positive breast cancer.

Webcast

Genentech will be offering a live webcast of a discussion by Genentech management of its financial and other business results on Monday, July 14, 2008, at 1:45 p.m. Pacific Time (PT). The live webcast may be accessed on Genentech's website at http://www.gene.com. This webcast will be available via the website until 5:00 p.m. PT on August 4, 2008. A telephonic audio replay of the webcast will be available beginning at 4:45 p.m. PT on July 14, 2008 through 4:45 p.m. PT on July 21, 2008. Access numbers for this replay are: 1-800-642-1687 (U.S./Canada) and 1-706-645-9291 (international); conference ID number is 49949746.‹