Biotechnology company Genentech Inc.'s 2-year-old hot streak continued Tuesday when it reported a 48 percent jump in first-quarter income, fueled by strong sales of its cancer medicines.
For the quarter ended March 31, the South San Francisco, Calif.-based company earned $421 million, or 39 cents a share, compared with the previous year's first-quarter earnings of $284.2 million, or 27 cents a share.
Excluding special expenses, Genentech said it would have earned $491 million, or 46 cents a share. On that basis, the results exceeded the per-share estimate among Wall Street analysts by 5 cents, according to research firm Thomson Financial.
Revenue was $1.99 billion in the quarter, an increase of 36 percent from the $1.46 billion a year earlier.
"It was a nice quarter," said Michael King, an analyst with Rodman and Renshaw.
Genentech also said it expects sales to be stronger than initially forecast in 2006 and earnings per share to grow by 45 percent to 55 percent in 2006 from last year.
Ahead of the report, Genentech shares rose $1.07, or 1.3 percent, to close at $81.70 Tuesday on the New York Stock Exchange. The stock lost 1.6 percent, or $1.34, in extended session trading.
The company's share price rose 70 percent in 2005, boosted by strong sales and a string of positive scientific results of the cancer-fighting drug, Avastin. But Genentech shares have slumped 12 percent this year as analysts warn that the stock has become too expensive.
The drug was approved in February 2004 to treat colon cancer patients and accounted for $398 million in U.S. sales in the first quarter, a 96 percent increase over the previous year's quarter of $203 million.
The company also said Tuesday it had applied to the Food and Drug Administration to approve Avastin to treat some lung cancer patients.
Avastin is designed to choke the blood supply that feeds tumors and is the first drug of its kind to be approved by the FDA. When used with chemotherapy, it extends the life of the sickest patients by an average of about five months.
Analysts expect the drug, which costs each patient about $4,400 per month, to surpass $2 billion in annual sales in the next few years. The company also is investigating Avastin's possibilities to treat other forms of cancer, including breast, prostate and kidney.
The company's cancer-fighting Rituxan drug sales in the United States rose 8 percent to $477 million and sales of the breast cancer drug Herceptin surged 123 percent to $290 million the first quarter. The FDA last month approved Rituxan for rheumatoid arthritis.
"The launch is going as well as we had expected," executive vice president Ian Clark said.
Lung cancer fighting Tarceva U.S. sales rose 94 percent to $93 million and asthma drug Xolair sales were $65 million, an increase of 46 percent.