Genentech's Stuck in the Morass for Now

Genentech(DNA Quote) has a management team I like and trust -- heck, the mutual fund I run owned the stock until two days ago. But I can tell you the bear rap on the company. My biotech hedge buddies say, "Genentech's pipeline stinks. There's no there there. It's not an exciting story."

Now, after the last two weeks, many of us are pining for a lack of excitement. The prospect of a steady 25% earnings-grower has suddenly become quite tolerable. But a more objective description of Genentech would be that it's temporarily stuck in the data swamp. That's the marshy place most biotech companies wade through when clinical trials are under way and no exciting data are due any time soon.

You wouldn't think a company such as Genentech would find itself in the "data swamp." After all, it's the granddaddy of all biotech firms, having been founded 25 years ago, and now with $1.7 billion in revenues, multiple approved products and 19 projects in development.

But the bears want excitement and they can't see any on the horizon. ...