Updated from 11:52 a.m. EDT
Leading biotechnology company
reported earnings on Monday that met Wall Street's expectations, largely because of strong cancer drug sales. However, investors were rattled by diminished cardiovascular and hormone drug sales, as well as a 26% increase in cost of sales.
Shares of Genentech finished down 8, or 5%, at 153 1/2.
For the second quarter ended June 30, pro forma net income rose to $78.3 million, or 29 cents a diluted share, from $73.2 million, or 27 cents a share, a year earlier, matching the consensus estimate of analysts polled by
First Call/Thomson Financial
Revenue rose to $413.7 million from $374.9 million a year ago, driven primarily by sales of cancer treatment Herceptin and Rituxan, a drug for non-Hodgkins lymphoma, as well as the sale of certain marketable equity securities. Sales of Herceptin increased 44% to $66.7 million from $46.2 million in the same quarter a year ago. Rituxan recorded a 38% rise in revenue, to $102.8 million from $74.4 million last year.
The South San Francisco, Calif.-based company's cardiovascular drugs fared less well, with combined sales of Activase and TNKase down 2% to $56.8 million from $58.1 million last year. Activase sales were down because of continued competition and a decline in the overall size of the market, the company said, while TNKase was launched only in mid-June.
Sales in Genentech's growth hormone products, such as Nutropin and Protropin, were also down, to $49.9 million from $59.3 million the same quarter a year ago, because of inconsistencies in ordering patterns of distributors.
Cost of sales rose to $66.2 million from $52.7 million last year, due mostly to the increase in product sales.
The pro forma figures exclude the effect of the redemption of Genentech's special common stock. Including the redemption, the company reported a net loss of $14.2 million, or 5 cents a diluted share.