Biotech Sector Got It Right Last Quarter

Last Thursday, Celgene(CELG Quote), the last of six biotech bellwethers to report third-quarter results, closed out what proved to be a strong period for the sector.

Biotech stocks have no doubt suffered along with the rest of the market, but for the group, from an earnings standpoint at least, it seems to be business as usual.

Gilead(GILD Quote), Biogen Idec(BIIB Quote) and Amgen(AMGN Quote) delivered notable profit beats, while most of the six had better-than-expected sales.

Genentech's(DNA Quote) employee-retention plan, GlyCart collaboration, and expenses related to the impairment of certain assets in the company's investment portfolio affected GAAP and non-GAAP earnings by about 13 cents in the third quarter.

But sales of its key products, led by cancer drug Avastin, came in ahead of Wall Street's targets and generated enthusiasm for the biotech earnings season.

Genentech rejected a takeover bid in July from the Swiss pharma company Roche, which has yet to respond. In the meantime, Genentech executives said they would continue operating normally, including assessing opportunities to acquire companies or products.

After Genentech, Gilead exceeded analysts' third-quarter top- and bottom-line projections as sales of its HIV-fighting drugs surpassed estimates, and the company announced an accelerated $750 million share-buyback plan.

Analysts had anticipated that negative data on GlaxoSmithKline's (GSK Quote) Abacavir could be aiding the European launch of Atripla. The company confirmed on its conference call that it's starting to see the effects.

Spending on research and development and selling, general and administrative expenses increased more than expected. Last quarter, Gilead raised its forecast for operating expenses by about $50 million for the remainder of the year, primarily in those areas.