shares skidded somewhat Friday after an analyst reined in sales expectations for metastatic breast cancer therapy Herceptin, non-Hodgkin's lymphoma treatment Rituxan and macular-degeneration treatment Lucentis.
Merrill Lynch analyst Eric Ende lowered his price target to $99 from $104, predicting weaker short-term sales. However, he remains positive on long-term fundamentals. The report, issued Friday, anticipates stagnant stock price ahead of a December panel and the potential February approval and sales of Avastin in breast cancer. Those, and the 2008 Avastin data in adjuvant colorectal cancer, could re-energize the stock thereafter.
Specifically, Ende lowered estimated Herceptin sales to $1.26 billion from $1.28 billion in 2007 and to $2.28 billion from $2.3 billion in 2008. He pulled in estimated Rituxan sales to $2.28 billion from $2.30 billion in 2007 and to $2.59 billion from $2.64 billion in 2008. Ende also adjusted estimated Lucentis sales from $872 million down to $828 million in 2007 and from $1.09 billion to $869 million in 2008.
Genentech said in August that the Food and Drug Administration requested an Oncologic Drugs Advisory Committee
panel regarding Avastin for breast cancer. Merrill Lynch still anticipates a February approval for the indication and projects sales of $613 million in 2008, $1.2 billion in 2009 and $1.3 billion in 2010.
The analyst also expects positive data in adjuvant colorectal cancer by the end of 2008 -- though not positive enough for the study to halt early -- leading to sales of $42 million in 2009 and $378 million in 2010. The new price target of $99 is based on a 60% chance of positive data in the adjuvant indication.
Genentech will announce its third-quarter earnings after the close on Oct. 15. With second-quarter earnings, the company said it expected non-GAAP earnings in the range of $2.85 to $2.95 a share for the full year 2007, a 28% to 32% increase, in comparison to 2006.
Analysts surveyed by Thomson Financial are expecting 72 cents a share in the third and fourth quarters each, and $2.95 a share for the year.
Genentech was down $1.21, or 1.5%, to $77.86 in recent trading Friday.