Updated from 4:48 p.m. EDT

Genentech

(DNA)

on Monday issued first-quarter results that stampeded analysts' profit predictions.

However, David Ebersman, the chief financial officer, told analysts that they shouldn't expect the same results for other quarters this year because Genentech will accelerate its R&D spending and will continue to spend substantially in new-product launches during the year.

The company earned $311.6 million, or 29 cents a share, on revenue of $1.46 billion, excluding one-time items, for the three months ended March 31. Analysts polled by Thomson First Call were expecting a first-quarter profit of $266.5 million, or 25 cents a share, on revenue of $1.38 billion.

For the same period last year, Genentech's non-GAAP profit was $207.6 million, or 19 cents a share, on revenue of $975.1 million.

When one-time items are included for the first quarter of 2005, the company's GAAP-based profit was $284.2 million, or 27 cents a share.

The company also said non-GAAP profit growth will be "greater than 30%" for 2005. The growth projection excludes accounting for stock options. In January, Genentech predicted a gain of more than 25% in non-GAAP profit for the year.

Analysts polled by Thomson First Call were predicting a 2005 profit of $1.18 billion, or $1.09 a share, on revenue of $6 billion. Based on a non-GAAP earnings per share of 83 cents last year, a 30% gain would yield an EPS of $1.08 in 2005.

The company was paced by strong growth in Avastin, for colon cancer, whose first-quarter revenue jumped to $202.8 million from $38.1 million for the same period last year. However, the sales fell below several analysts' predictions, which hovered in the range of $220 million. Avastin has been available for roughly 13 months.

The biggest-selling drug, Rituxan, for non-Hodgkins lymphoma, recorded first-quarter sales of $440.6 million, up from $361.8 million. Sales of the breast cancer drug Herceptin rose 19% to $129.6 million.

Total product sales jumped 55% to $1.19 billion during the first quarter of 2005 vs. the first quarter of 2004. Another $275 million in first-quarter 2005 revenue came from royalties and contract revenue.

Genentech says it plans to begin a phase III clinical trial of Avastin as a treatment for prostate cancer. Phase III is the final stage of clinical testing before a drug application is submitted to health care regulators.

The company recently announced favorable preliminary results of a test of Avastin as a treatment for non-small cell lung cancer. A more detailed presentation is expected to be submitted at a major cancer conference next month.

Genentech also has begun enrollment of patients in a phase II test of Avastin as a treatment for ovarian cancer patients.

The growth in clinical trials for Avastin and other products helped raise the R&D expense to $243.2 million for the first quarter of 2005 vs. $190.3 million for the same period last year. R&D expenses accounted for 17% of operating revenue for the first quarter, but the company expects to step up its R&D spending during the year.

By year-end, these costs will be about 21% of operating revenue -- the same percentage as last year.

Marketing and administrative expenses jumped to $315.2 million from $247.3 million, due to several product launches. Still, these expenses as a percentage of operating revenue declined to 22% from 25%.

Genentech released its financial results after markets had closed. In regular trading, the stock lost $1.06, or 1.8%, to close at $56.60. In after-hours trading, it lost another 32 cents.