The Wall Street Journal-20080111-Earnings Digest- Genentech-s Growth Likely to Slow- Analysts Still Forecast A Profit Jump of 31- For Latest Fiscal Year
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Earnings Digest: Genentech's Growth Likely to Slow; Analysts Still Forecast A Profit Jump of 31% For Latest Fiscal Year
Genentech Inc.'s earnings results Monday are expected to be solid, but likely will reflect a cooling of the company's torrid growth as the biotechnology giant matures.
Analysts surveyed by Thomson Financial expect, on average, Genentech to report a 31% profit jump in its latest fiscal year to $2.92 a share, up from $2.23 a share the previous year, which represented growth of 74% from the year before that. Analysts' forecasts range from $2.85 to $3.01 a share.
The South San Francisco, Calif., company declined to comment on the analysts' forecast.
"We've been in a little bit of a quiet spot" after a run of new products from 2004 to 2006, Chief Executive Officer Arthur D. Levinson said in a speech to the J.P. Morgan Healthcare Conference, which ended yesterday in San Francisco. But in 2008, he said, "That quiet spot will end."
A raft of pivotal studies this year could validate Genentech treatments for cancers of the breast and colon, and for immune-system disorders such as lupus and multiple sclerosis.
Genentech is striving to convince the Food and Drug Administration to approve its big-selling cancer drug Avastin as a first-line treatment for metastatic breast cancer that has migrated from its original site. An FDA advisory panel in December voted against approval. But Susan Desmond-Hellmann, Genentech's president of product development, said, "We remain convinced the drug helps patients."
The FDA is slated to rule next month.
Dr. Levinson also detailed Genentech's efforts to push the frontiers of personalized medicine by creating new compounds, carving fresh pathways to curb tumor malignancy and identifying the people who most need such treatments.
One such approach seeks to trigger apoptosis, or programmed cell death -- a kind of mass cellular suicide that could foil tumors ranging from lung cancer to lymphoma. Genentech is developing new weapons called Apo2L/Trail and ApoMab that aim to trigger self- destruction of cancer cells.
Because individuals respond differently to such therapies, Dr. Levinson said the company has studied giving the new products to patients prescreened with "embedded diagnostic tests" -- gene assays on chips called microarrays -- to detect who will and won't benefit. He signaled Genentech's focus on treatments targeted to those who can benefit.
"We're all over it. . . . We're committed to it." Dr. Levinson said, adding, "Drugs don't work for 100% of patients."
