US biotechnology giant Genentech turned in an extremely pleasing set of results for the fourth quarter of 2005, with a 64% leap in profit meeting Wall Street expectations.
The group posted net income of $339.2 million, or $0.32 per share, versus $206.6 million, or $0.19 a share, for the same period of 2004. This was driven by a 44% leap in revenues to $1.89 billion, on solid performances by its cancer medicines.
The company’s flagship drug, Rituxan (rituximab), which is used to treat non-Hodgkin's lymphoma, racked up sales of $484 million for the period, rising 13% over the year-ago quarter. And relatively new kid on the block, Avastin (bevacizumab), cleared to treat colon cancer by the US Food and Drug Administration (FDA) in 2004, rocketed 89% to $359 million, propelling the drug to blockbuster status with annual sales of $1.1 billion.
And yet, despite this gold-star performance, the group’s shares slipped 2.3% to $91.00 in after-hours trading, as investors were disappointed that results failed to beat analysts’ forecasts, in contrast to the other quarters of 2005. In addition, investor confidence was dented by the fact that sales of Avastin, although robust, fell shy of analysts’ consensus estimate of $381 million for the quarter.
But Arthur Levinson, Genentech’s chief executive, remained upbeat about the company’s future prospects, maintaining that it is well poised to achieve short-term financial growth as well as develop promising candidate drugs keep the engine running. Commenting on the group’s recent performance, he said: “We completed the last year of our 5x5 plan and are pleased with our average annual non-GAAP EPS [earnings per share] growth of 33% between 1999 and 2005. We continue to build on our strong scientific foundation and to focus on research and development to fuel our long-term growth.”
And, according to media reports, Genentech is planning to increase its current workforce around 15% this year, by adding around 1,400 employees. This marks a stark contrast from many of the group’s peers, which have been slashing workforces left, right and center, and again indicates that the firm is on fairly solid ground.