Genentech Inc. reported Thursday an earnings increase of more than100 percent for 1994 compared to 1993 numbers. The company'sper-share earnings, however, were lower than analysts' estimates,mostly due to increased research and development spending.
Meg Malloy, a biotechnology analyst for Needham & Co. Inc., ofNew York, told BioWorld "the revenue growth was very strong forthe year, in line with our expectations on a product-by-productbasis."
The South San Francisco company's 1994 earnings were up 111percent to $124.4 million, or $1.04 per share, on revenues of $795.4million. In 1993 Genentech had earnings of $58.9 million (58 centsper share) on revenues of $649.7 million. For the fourth quarter thecompany had earnings of $18.6 million, or 15 cents per share.
Malloy said the consensus of analysts was that Genentech wouldhave per-share earnings of 23 cents for the quarter and $1.11 for theyear. "The differences were completely due to higher R&D expensesthan my model reflected," she said. "That's not significant. They didsay they would be increasing R&D expenses in the fourth quarter.
"With their product pipeline, the higher R&D expenses are apositive. The most important thing is the revenue growth was there."
Laura Leber, Genentech's director of corporate communications,told BioWorld the earnings are in line with what company officialstold analysts. Part of the fourth-quarter expense was related to thecollaboration with Scios Nova Inc. in which Genentech madeinvestments in the Mountain View, Calif., company in exchange forrights to co-develop Auriculin for acute renal failure.
Sales of Activase, or t-PA, increased 19 percent in 1994 to $280.9million, and its market share increased from 65 to 70 percent, thecompany said. Sales of its growth hormone products, Protropin andNutropin, increased 4 percent to $225.4 million.
Initial worldwide sales of Pulmozyme, or DNase, for cystic fibrosiswere $88.3 million. Sales of Actimmune (interferon gamma)increased to $6.4 million from $4.3 million in 1993.
"They really did experience good growth in Pulmozyme sales,"Malloy said. "It was a nice ramp-up for a new product launch.Activase also continued to experience strong growth."
Leber said Pulmozyme sales reflect an acceptance of it byphysicians, patients and insurers.
G. Kirk Raab, Genentech's president and CEO, said in a preparedstatement: "Our revenues reflect the continued strength of ourmarketed products, sales of which increased 31 percent in 1994.[The] results show Genentech is on the right path. Our clear focus,disciplined management, strong products and rich pipeline shouldlead to continued strong growth."
Genentech's stock (NYSE:GNE) closed up 25 cents per shareThursday at $45.63.n
-- Jim Shrine
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