Genentech Still Can't Give a Timeline for Xolair

Rituxan boosts third-quarter revenue past estimates as the company stays confident about the future.
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Updated from 5:09 p.m. EDT

Genentech

(DNA)

said late Wednesday that it is still holding talks with U.S. drug regulators about the timing of its delayed asthma drug Xolair, preventing the biotech company from offering a new timetable for the drug's development.

In July, Genentech disclosed that Xolair's approval would not be considered by the

Food and Drug Administration

this year as expected, but would be delayed until 2003 or 2004, depending on the amount of new data requested by drug regulators. Xolair is important to Genentech because it's a key component to the company's stated goal of growing earnings 25% over the next five years.

During its third-quarter conference call Wednesday night, Genentech executives said they were happy with ongoing Xolair discussions with the FDA, but it will take a few more weeks before the company will know when the drug will be ready for resubmission. The company said discussions so far revolved around integrating existing Xolair data from completed clinical trials into its approval application. This may placate Wall Street fears that the FDA could force Genentech to conduct new, time-consuming studies of the drug.

While acknowledging the frustration of having two drugs -- Xolair and the psoriasis drug Xanelim -- delayed for various reasons, Genentech CFO Louis Lavigne says the company is still on track to grow 2001 earnings in the "high end" of the 20% to 25% range. Some Wall Street analysts have questioned Genentech's ability to grow earnings 25% over the next five years, as expected, but Lavigne reiterated that guidance Wednesday night.

Genentech posted third-quarter earnings of 20 cents per share, topping Wall Street estimates by a penny, on stronger-than-expected sales of its cancer-fighting drug, Rituxan.

The South San Francisco-based biotech company said net income for the third quarter reached $105.4 million, or 20 cents per share, compared to net income of $86.2 million, or 16 cents per share, in the third quarter last year.

Analysts were looking for earnings of 19 cents per share, according to consensus figures compiled by Thomson Financial/First Call.

Revenue for the quarter rose 24% to $556.1 million, driven largely by sales of Rituxan, used to treat non-Hodgkin's lymphoma. Rituxan sales for the third quarter were $212.8 million, an 80% rise from the year-ago quarter. Analysts were looking for Rituxan sales of around $200 million.

Shares of Genentech traded down $1.20, or 2.8%, to $40.80 per share in regular Wednesday trading. After hours, Genentech was moving up $1.85 per share to $42.60 per share.