Genentech's ( DNA) profit rose in the third quarter on increased sales of its leading cancer drugs. Shares closed down $2.06, or 2.5%, at $79.12 in regular trading Tuesday, and were off by another 7 cents, or 0.1%, in recent post-market trading. On a GAAP basis, the company earned $731 million, or 68 cents a share, compared with $685 million, or 64 cents a share in the comparable 2007 period. Genentech reported adjusted profit of $863 million, or 81 cents a share, compared with $778 million, or 73 cents a share, in the year-ago quarter. Revenue rose to roughly $3.4 billion from $2.9 billion over 2007. Analysts on average expected 88 cents a share on revenue of $3.36 billion. Genentech said a few charges -- an employee-retention plan, the GlyCart collaboration and expenses related to the impairment of certain assets in the company's investment portfolio -- affected GAAP and non-GAAP EPS by about 13 cents collectively. (Genentech entered a joint development and commercialization agreement for GlycArt's GA101 molecule, which will be developed for the potential treatment of hematological malignancies and other cancer-related B-cell disorders such as non-Hodgkin's lymphoma.) Investors are expected to focus on a potential buyout by Roche. Genentech rejected a bid in July from the Swiss pharma company, which has yet to respond. Genentech's earnings release didn't include any new information on the matter. Third-quarter sales, however, surpassed expectations. The company reported revenue of $704 million from Avastin, vs. $597 million a year prior and well above the latest consensus target of $690. Avastin sales in the recent quarter benefited from a recognition of roughly $1 million in deferred revenue. Sales in the 2007 quarter benefitted from a recognition of $5 million in deferred revenue. Genentech reported $655 million in Rituxan sales, also above the consensus of $649 million.
Herceptin and Lucentis generated $368 million and $225 million, respectively, vs. the consensus of $344 million and $214 million. Herceptin sales benefited from an increase in channel inventory levels of approximately $12 million in the recent quarter. The company said it sees full-year 2008 adjusted earnings in the range of $3.40 to $3.45 a share, narrowed from $3.40 to $3.50 due to the cost of the employee-retention plan. Analysts are looking for $3.45 a share on revenue of $13.14 billion for the year, according to Thomson Reuters. Data are due out soon on Genentech's Ribbon1 study, which if successful will be submitted with other data to convert the company's accelerated FDA approval of Avastin for metastatic breast cancer to full approval.