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Genentech Q2 FY07 results boosted by cancer drug sales

Genentech has posted its financial results for Q2 FY07 with net profits boosted by sales of cancer drugs

US-headquartered biotechnology company Genentech has posted its financial results for Q2 FY07, with net profits boosted by sales of cancer drugs.

US product sales reached USD 2.2bn, up 25 per cent on Q2 FY06 sales of USD 1.7bn in Q2 FY06. Operating revenues of USD 3bn were a 37 per cent increase on operating revenues of USD 2.2bn in Q2 FY06.

Non-GAAP net income increased 39 per cent to reach USD 834m from USD 602m in Q2 FY06, while GAAP net income increase of 41 per cent to USD 747m from USD 531m reported in Q2 FY06.

Non-GAAP earnings per share increased 39 per cent to reach USD 0.78 per share from USD 0.56 per share in Q2 FY06. GAAP earnings per share increase of 43 per cent to USD 0.70 per share from USD 0.49 per share reported for Q2 FY06.
 
Genentech expects 28 to 32 per cent growth in non-GAAP earnings per share for FY07, relative to FY06, for a range of USD 2.85 to USD 2.95.

Table 1: Product sales in US 

Net US product sales

Q2 FY07

Q2 FY06

Per cent change

Rituxan

USD 582m

USD 526m

+11 per cent

Avastin

USD 564m

USD 423m

+33 per cent

Herceptin

USD 329m

USD 320m

+3 per cent

Lucentis

USD 209m

USD 10m

++

Xolair

USD 120m

USD 105m

+14 per cent

Tarceva

USD 102m

USD 103m

-1 per cent

Nutropin Products

USD 94m

USD 98m

-4 per cent

Thrombolytics

USD 67m

USD 62m

+8 per cent

Pulmozyme

USD 55m

USD 47m

17 per cent

Raptiva

USD 27m

USD 22m

+ 23 per cent

Total US product sales

USD 2.5bn

USD 1.7bn

+ 25 per cent

Non-GAAP R&D expenses increased 58 per cent to reach USD 564m from USD 356m in Q2 FY06. Non-GAAP R&D expenses, as a percentage of operating revenues, were 19 per cent, compared with 16 per cent for Q2 FY06. GAAP R&D expenses increased 55 per cent to USD 603m, including employee stock-based compensation expense of USD 39m, from USD 390m in Q2 FY06. Q2 FY07 GAAP R&D expenses were 20 per cent of operating revenues, compared with 18 per cent for Q2 FY06.

Spending on marketing and administration rose 13 per cent to USD 485m, the company added.

Clinical development highlights
For Q2 FY07, Genentech initiated eight phase III clinical trials: Lucentis (ranibizumab) in diabetic macular edema and retinal vein occlusion; Avastin (bevacizumab) in adjuvant non-small cell lung cancer and second-line metastatic colorectal cancer; and two additional trials of second-generation humanised anti-CD20 (ocrelizumab) for patients with rheumatoid arthritis.

Genentech also submitted two supplemental Biologics License Applications (sBLAs) to the FDA for Herceptin (trastuzumab) in adjuvant breast cancer based on data from the BCIRG-006 trial. One of the submissions could add a non-anthracycline-containing treatment regimen of docetaxel, carboplatin and Herceptin as a labelled option for women with HER2-positive breast cancer.

The company also provided information on the sBLA for Avastin with chemotherapy in first-line metastatic breast cancer based on data from the E2100 trial. Genentech indicated that it is planning to resubmit the sBLA to the FDA in August 2007.

Genentech announced that an interim analysis of a second phase III study of Avastin in advanced renal cell cancer showed that patients receiving Avastin in combination with interferon had increased progression-free survival and tumour response rate compared to patients receiving interferon alone. No new safety signals related to interferon and Avastin were observed.

The trial, conducted and analysed by the Cancer and Leukaemia Group B (CALGB), is ongoing. A final analysis of overall survival, the primary endpoint, will be conducted when the data are mature. The company plans to include information from the CALGB study as support for a potential sBLA submission based on Roche's AVOREN study.

Analyst reaction
RBC Capital Markets analysts said that Genentech exhibited solid performance across all their franchises, while nothing stood out as weak.

However, demand for Avastin may be hampered in the short term as some doctors switch to a lower dose for lung cancer, according to JP Morgan Securities Analysts. In June, researchers reported that the drug could slow the spread of lung tumours at both high and low doses. Avastin costs USD 8,800 per patient per month in a high dose for lung cancer.

18th July 2007

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