Genentech Inc. (DNA) on Wednesday posted a 50 percent rise in quarterly profit and raised its full-year earnings forecast on strong sales of its new colon cancer drug, sending its shares higher in after-hours trading.
The world's second-largest biotechnology company reported a third-quarter net profit of $230.9 million, or 21 cents per share, compared with a profit of $152 million, or 14 cents, a year ago.
The company earned 24 cents per share excluding items, beating Wall Street expectations by 3 cents.
Genentech (search), which has said it aims to raise its earnings per share by an average of 20 percent per year over the next five years, reported sales of colon cancer treatment Avastin (search) of $183 million in its second full quarter on the market, also exceeding Wall Street estimates. Avastin recorded sales of $133 million in the previous quarter.
"Avastin is going to get to $1 billion very soon," said Jason Kantor, an analyst at WR Hambrecht & Co.
The South San Francisco, Calif.-based company, which reached $1 billion in quarterly product sales for the first time in its history, now expects 2004 earnings, excluding items, of 80 cents to 83 cents per share, up from its previous forecast of 75 cents to 80 cents a share.
It remains to be seen whether recent findings that Avastin increased the risk of blood clots will hamper future growth or Genentech's ability to win approval for use in a wider range of patients.
"We haven't noticed any impact," Myrtle Potter, president of commercial operations, said of the warning that went out to doctors in August.
Sales of Rituxan (search), a treatment for non-Hodgkin's lymphoma (search) which is the subject of a recently announced government probe of promotional practices, rose 18 percent to $437.7 million for the quarter. Sales of breast cancer drug Herceptin (search) rose 17 percent from a year ago to $126 million.
Doctors have been using Rituxan to treat other forms of non-Hodgkins lymphoma than the one for which it has been approved. However, Potter said the company's sales force does not promote the drug for those uses.
"We remain committed to promoting Rituxan in a legal and ethical manner," she said.
Xolair, the company's relatively new asthma drug, also continued to grow, with sales of $53.9 million after taking in $43.7 million in the second quarter.
Total costs rose to $864.6 million for the quarter from $520.9 million a year ago on continued spending for the Avastin launch and to promote other relatively new products.