Genentech's Net More Than Tripled
Amid Strong Sales of Cancer Drugs

DAVID P. HAMILTON / Wall Street Journal 11apr02

Genentech's cancer products accounted for $66,710,00.1 With a similar rate of increase, end of year profits would be $14,746,910. That's $14,747 million of profit on cancer ! In this first quarter: non-Hodgkin's lymphoma profit = $247.5 million2 breast-cancer profit  =  $86.8 million3 1 70% of profits as per this article 2  Rituxan 3  Herceptin

Genentech Inc. said first-quarter earnings more than tripled, thanks largely to an accounting change, although strong sales of two cancer drugs bolstered its results.

In addition, the South San Francisco, Calif., biotechnology firm said it plans to meet with the Food and Drug Administration in the second quarter to discuss its experimental psoriasis treatment Xanelim, which faces a regulatory delay because of manufacturing issues.

Genentech said net income in the first period soared to $95.3 million, or 18 cents a share, from $26.8 million, or five cents a share, in the year-earlier period. Revenue rose 14% to $613.5 million from $540.1 million.

Those results, however, included a $39.4 million boost in the most-recent quarter from a change in accounting standards at the end of last year. Previously, Genentech regularly took large goodwill-amortization charges related to the redemption of its shares by part owner Roche Holding AG of Switzerland in 1999.

As a result of the accounting change, however, Genentech is allowed to take a smaller recurring charge related to that share redemption. Setting aside that item, which the company considers peripheral to its core operations, Genentech said profit rose 30% to $118.7 million, or 22 cents a share, from $91.2 million, or 17 cents a share. Those results are in line with the expectations of analysts surveyed by Thomson Financial/First Call.

Genentech's cancer products accounted for 70% of its revenue. The company, which boosted its oncology sales force substantially in the quarter, saw sales of its non-Hodgkin's lymphoma treatment Rituxan rise 44% to $247.5 million, while sales of its breast-cancer drug Herceptin edged up 7% to $86.8 million.

This past Friday, shares of Genentech and partner Xoma Ltd. tumbled when the companies said a new study revealed significant differences in Xanelim produced by each company; earlier human tests of the psoriasis drug had used both versions as if they were comparable. As a result, the companies said their plan to file for Xanelim approval this summer would likely be delayed.

Genentech Chief Medical Officer Susan Hellmann said the company now hopes to prove that Xanelim produced by Genentech is "safe and effective." The company is currently conducting another late-stage trial of the drug involving only Xanelim manufactured by Genentech.

In 4 p.m. New York Stock Exchange composite trading Tuesday, Genentech shares were down $1.80 to $41.05. The company announced its results after the close of regular trading.