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Avastin shines for Genentech

Genentech's Q3 FY07 profits increased approximately 21 per cent on Q3 FY06 on the back of strong sales of cancer drug, Avastin

US biotech Genentech has revealed that its Q3 FY07 profits increased approximately 21 per cent on Q3 FY06 on the back of strong sales of cancer drug, Avastin (bevacizumab).

The company also reported a net profit of USD 685m (USD 0.64 a share), compared with USD 568m (USD 0.53 a share) for Q3 FY06. Revenue rose 22 per cent to rest at USD 2.9bn.

Not counting expenses, including those related to the USD 919m purchase of US-based biotech Tanox in Q2 FY07, Genentech earned USD 778m (USD 0.73 per share). Analysts had expected the company to earn USD 0.72 per share on revenue of USD 2.9bn.

Sales of Avastin in Q3 were USD 597m. The drug, which treats lung, breast and colon cancers, showed a 37 per cent increase, compared with the same quarter of FY06 and exceeded analysts' sales expectations.

The increased sales were derived from co-marketing partner, Swiss-based Roche, which won EU approval to treat certain forms of lung cancer with the drug during the quarter.

Genentech is currently seeking approval from the FDA to use Avastin as a treatment for metastatic breast cancer. Sales of its breast cancer drug Herceptin (trastuzumab) rose six per cent to reach USD 320m.

Rheumatoid arthritis (RA) and non-Hodgkin's lymphoma treatment Rituxan (rituximab) racked up sales of USD 572m in Q3, a rise of 12 per cent on Q3 FY06.

The company's macular degeneration drug, Lucentis (ranibizumab), which was approved in June 2006, posted sales of USD 198m, a rise of 29 per cent.

Genentech's R&D spend for Q3 FY07 was USD 578m, a healthy 38 per cent increase on last year's quarter.

The world's second-largest biotechnology company maintained its FY07 profit outlook in the range of USD 2.85 to USD 2.95 a share, excluding charges. Analysts are predicting earnings of USD 2.95 per share.

In a.m. trading on 15 October 2007 Genentech's shares were trading at USD 77.50, an increase of USD 0.25.

Genentech seeks to restrict off-label use of Avastin
Genentech will restrict the use of Avastin by ophthalmologists who use the drug off-label to treat wet age-related macular degeneration.

Ophthalmologist say the move will force them to use the company's more expensive drug Lucentis instead, thus pushing up the price of treatment for elderly patients.

Lucentis is approved to treat wet age-related macular degeneration, the most common cause of blindness in the elderly, but costs around USD 2,000 per dose. As a result, many doctors prefer to use Avastin off-label, as it costs just USD 50 per dose. Avastin, says Genentech, has not been rigorously tested for this use, even though it has the same mechanism of action as Lucentis.

Genentech said in a letter to ophthalmologists that its wholesalers would no longer provide Avastin to companies which, under sterile conditions, divide a vial of Avastin into tiny portions for use in the eye. The company said the distribution change would take effect from 30 November.

Genentech added that the FDA had expressed concern about possible contamination when a vial of Avastin was split into multiple doses. The agency sent a warning letter to one pharmacy in December 2006.

A Genentech executive said that Lucentis was being used to treat 55 per cent of new patients with the relevant form of macular degeneration and 50 per cent of all such patients. Ophthalmologists argue that Avastin has been used safely for about two years and accounted for nearly half the market.

30th September 2008


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