Genentech Profit Rises on Strong Sales

Genentech's(DNA Quote) profit rose in the third quarter on increased sales of its leading cancer drugs.

Shares closed down $2.06, or 2.5%, at $79.12 in regular trading Tuesday, and were off by another 7 cents, or 0.1%, in recent post-market trading.

On a GAAP basis, the company earned $731 million, or 68 cents a share, compared with $685 million, or 64 cents a share in the comparable 2007 period.

Genentech reported adjusted profit of $863 million, or 81 cents a share, compared with $778 million, or 73 cents a share, in the year-ago quarter. Revenue rose to roughly $3.4 billion from $2.9 billion over 2007.

Analysts on average expected 88 cents a share on revenue of $3.36 billion.

Genentech said a few charges -- an employee-retention plan, the GlyCart collaboration and expenses related to the impairment of certain assets in the company's investment portfolio -- affected GAAP and non-GAAP EPS by about 13 cents collectively. (Genentech entered a joint development and commercialization agreement for GlycArt's GA101 molecule, which will be developed for the potential treatment of hematological malignancies and other cancer-related B-cell disorders such as non-Hodgkin's lymphoma.)

Investors are expected to focus on a potential buyout by Roche. Genentech rejected a bid in July from the Swiss pharma company, which has yet to respond. Genentech's earnings release didn't include any new information on the matter. Third-quarter sales, however, surpassed expectations.

The company reported revenue of $704 million from Avastin, vs. $597 million a year prior and well above the latest consensus target of $690. Avastin sales in the recent quarter benefited from a recognition of roughly $1 million in deferred revenue. Sales in the 2007 quarter benefitted from a recognition of $5 million in deferred revenue.

Genentech reported $655 million in Rituxan sales, also above the consensus of $649 million.