By Mary Welch
Sales of new products are helping drive Genentech Inc., which reported a 26 percent increase in revenues in the third quarter, to $313.9 million from $248.9 million for the comparable 1997 quarter. Revenues for the first nine months of 1998 grew to $846.6 million from $739.7 million over the same period in 1997.
At the same time, the South San Francisco-based company's net income for this year's third quarter jumped a whopping 97 percent to $63.4 million ($0.49 per share) over the same period last year, when earnings totaled $32.1 million ($0.25 per share).
"It's a very positive quarter and absolutely in line with our long-range plans," said Laura Leber, head of Genentech's corporate communications. "We're optimistic about our clinical programs as well as our commercialization and sales efforts on Rituxan."
Marketed products continue to ring on the cash register, as sales increased 15 percent to $163.1 million from the $142.3 million of the same period last year. That figure for the nine months ending Sept. 30, 1998, was $504.1 million, up from $441.5 million for the same period last year. The increase can be largely attributed to Rituxan, which is currently approved in the U.S. as a single-agent therapy for the treatment of relapsed or refractory low-grade non-Hodgkin's lymphoma. Third-quarter sales were $39.4 million.
"It was a good quarter, and a good turnaround story," said Meirav Chovav, senior technology analyst with Solomon Smith Barney, in New York. "They've had success with the introduction of Rituxan, and Herceptin most likely will be a success. They've made good decisions about their product pipeline. At the same time, they've been able to cut R&D [costs] and still continue Phase III trials."
Rituxan, which is co-marketed with Idec Pharmaceuticals Corp., of San Diego, hit the market in the fourth quarter of 1997, with sales of $5.5 million in that period. The product registered $37.7 million in sales in the first quarter of 1998 and $34.8 million in the second quarter. The sales increase over the last quarter resulted primarily from initial stocking by wholesalers; previously Genentech shipped directly to customers.
The FDA's approval of Herceptin (trastuzumab) provided another third-quarter highlight. Herceptin is a new approach for treating one type of metastatic breast cancer and the first monoclonal antibody approved for use in this disease. The first shipment of Herceptin, a humanized monoclonal antibody against the growth factor receptor HER2, was on Oct. 5, just 10 days after approval.
Analysts have predicted that Herceptin could generate $50 million in sales next year and up to $110 million in 2001. (See BioWorld Today, Sept. 3, 1998. p. 1.)
On the down side, sales of Activase (Alteplase, recombinant) fell 26 percent to $45.1 million, from $60.7 million in the third quarter 1997, primarily due to market share. Sales of its three growth hormone products — Protropin (somatrem for injection), Nutropin (somatropin (rDNA origin) for injection), and Nutropin AQ (somatropin (rDNA origin),— slipped 7 percent to $52.9 million compared to $57 million in the third quarter of 1997, primarily from fluctuations in distributors' ordering patterns.
Up slightly in sales was Pulmozyme (dornase alfa) Inhalation Solution, which went up 4 percent to $24.7 million from $23.8 million in the same quarter last year. The gain can be attributed to a change in the labeling, which allows it to be given to very young children with cystic fibrosis, ages three months to four years.
Net income was $63.4 million, up from $32.1 million in the year-earlier period. Year-to-date net income is $144.8 million, up from $87.5 million for the same time frame last year.
The company has $987.7 million in cash, compared to $812.9 million for the period ended Sept. 30, 1997.
Total costs and expenses for the quarter were $225.9 million, up from $210.7 million from the same period last year. Year-to-date expenses were $645.6 million for this year, compared with $624.5 million for the same 1997 period.
Research and development expenses declined 15 percent to $99.9 million from $118.1 million in third-quarter 1997. The company had said it planned to decrease R&D spending as a percent of revenues as products progress through late-stage clinical trials and revenues increase.
Genentech's stock (NYSE:GNE) closed Wednesday at $74.564, up $1.018. *