Another Big Quarter for Genentech

Updated from Oct. 6

Genentech'sDNA third-quarter earnings released late Wednesday comfortably beat Wall Street estimates on a 47% jump in revenue. The biotech giant also brought its full-year earnings guidance up to a level consistent with analyst forecasts.

Nevertheless, shares fell 23 cents, or 0.5%, to $50.02 in premarket trading Thursday.

For the three months ended Sept. 30, Genentech earned $259.6 million, or 24 cents a share, on revenue of $1.2 billion. These are non-GAAP figures, which exclude recurring charges related to the 1999 Roche redemption of Genentech stock, special litigation items and a 2003 change in accounting. Roche owns 58.3% of Genentech's stock.

The consensus view on Wall Street for Genentech's third quarter was a profit of $228.9 million, or 21 cents a share, on revenue of $1.2 billion for the third quarter, which ended Sept. 30, according to Thomson First Call.

The company earned $143.9 million, or 14 cents a share on a split-adjusted basis, on revenue of $817 million for the same period last year.

The South San Francisco, Calif.-based biotech giant also said it was raising its predictions for full-year earnings per share to a range of 80 cents to 83 cents, up from a previous range of 75 cents to 80 cents. Analysts had been expecting a full-year EPS of 81 cents, according to a survey by Thomson First Call.

Genentech's new EPS guidance implies lower sequential earnings for the fourth quarter. On its conference call, CFO Lou Lavigne said the company expects higher expenses in the fourth quarter, mainly related to prelaunch spending for the lung cancer drug Tarceva, as well as to ongoing research and development activities. While fourth-quarter EPS will be lower on a sequential basis, the company still expects significant top-line revenue growth, Lavigne said.

The financial report was issued after markets had closed.

The company's revenue for the three months ended Sept. 30 was aided by Avastin, the new drug for treating advanced colon cancer. Avastin produced $183 million in sales, an increase of $50 million over the second quarter and a figure higher than many analysts had predicted. The drug was approved by the Food and Drug Administration in late February.