US biotechnology giant Genentech has lifted the lower end of its annual earnings forecast to $3.35 to $3.45 per share from previous guidance of $3.30 to $3.45 per share.

The move, however, came as no surprise to the investment community as the group recently won expanded approval for its oncology drug Avastin (bevacizumab) in breast cancer, adding to its already approved indications in colon and lung cancer. The drug pulled in fourth-quarter sales of $603 million for group, and it is hoped that the latest green light in breast cancer will add some substantial ballast to its already strong sales.

Furthermore, at its investment meeting on Friday the company said it remains on track to achieve previously-stated 2010 targets of: a compound annual non-GAAP earnings per share growth rate of at least 25%; bringing at least 20 or more new molecules into clinical development and 15 major new products or indications onto the market; and becoming the number one US oncology company in terms of sales.

But despite the positive outlook and increased earnings expectations, Genentech’s shares closed down 3.2% at $78.83, perhaps reflecting investor disappointment that the upper end of the forecast was not raised.

Exercised Exelixis option
Meantime, the company has agreed to fund development of Exelixis’ early-stage cancer candidate XL518, triggering a milestone payment of $3 million to the latter firm.

XL518 is a selective and potent inhibitor of MEK, which is part of the MAP kinase pathway, one of the most frequently dysregulated pathways in human tumours, according to George Scangos, president and chief executive officer of Exelixis.

“Activating mutations of the pathway have been identified in many tumour types, including melanomas, thyroid carcinomas, non-small cell lung cancer and colon cancer [and] pathway inhibitors are likely to find broad utility as both single agents and in combination with other targeted agents and chemotherapeutics,” Scangos added, explaining the agent’s potential.

Under the terms of an agreement sealed in January 2007, Exelixis will continue to be responsible for the current Phase I clinical trial until the point that a maximum tolerated dose is determined, after which point Genentech will take over, completing the trial and the drug’s subsequent development.