Genentech has kicked off the reporting season by posting a 21% jump in third-quarter net income to $685 million and revenues of just over $2.9 billion (+22%) once again on the back of strong growth from its cancer agent Avastin.
US product sales climbed 18% to $2.16 billion in the quarter, with
Avastin (bevacizumab) shooting up 37% to $597 million, helped by the Food and Drug Administration's approval at the end of last year to expand use of the treatment to patients with non-small cell lung cancer. The performance of Avastin would seem to have put to bed fears over a study which showed that both the standard and a lower dose of the drug, in combination with chemotherapy, improved progression-free survival in patients with NSCLC. This had led analysts to believe that doctors would use the lower, and therefore less expensive, dose in the majority of lung cancer patients and negatively impact sales.
As for Genentech's other key products, the arthritis and non-Hodgkin's lymphoma drug Rituxan (rituximab) was again a big earner, up 12% to $572 million, though US sales of the breast cancer drug Herceptin (trastuzumab) were up just 6% to $320 million, some $20 million below analysts’ estimates. Brokers were also a little disappointed with Lucentis (ranibuzumab) for wet age-related macular degeneration, though it still brought in $198 million, a rise of 29%.
However second-quarter sales had been $209 million and Lucentis' growth has slowed down of late due to competition from Avastin, which is being used off-label in very small doses at a much cheaper price than the former treatment. To combat this problem, Genentech last week announced that Avastin will no longer be supplied to independent compounding pharmacies that divide vials so that ophthalmologists can use it in an unapproved way to treat AMD.
Sales of Tarceva (erlotinib) for lung and pancreatic cancers sneaked up 1% to $101 million. while Xolair (omalizumab) for severe asthma increased 13% to $121 million. Overall, however, the results failed to impress analysts and the stock barely moved but all eyes are now on Genentech’s bid to get approval for Avastin as a treatment for breast cancer. A supplemental Biologic License Application has recently been resubmitted to the FDA and an action date has been set for February 23 next year.