Amgen Inc. and Genentech Inc., the biotechnology industry's toptwo companies, reported increased earnings for the third quarterwith Genentech's net income more than doubling from a year ago.Amgen Inc., of Thousand Oaks, Calif., reported an 11 percentearnings jump over the third quarter of 1993, from $103 million, or72 cents a share, to $114 million, or 82 cents a share, in the thirdquarter ending Sept. 30.South San Francisco-based Genentech's net income reached $33.6million, or 28 cents a share, for the third quarter, compared with$15.5 million, or 13 cents per share in the same quarter of 1993.Meg Malloy, an analyst with Needham & Co. Inc. in New York,said Genentech's performance was slightly better than expected.She estimated 26 cents a share."Sales and expenses were lighter than expected," Malloy said.Revenues from Activase for heart attacks were down comparedwith sales in the first two quarters of this year. Pulmozyme sales forcystic fibrosis also were lower than expected, she added. "Overallthe result was fine," she observed.Genentech reported sales of $193.8 million for the third quartercompared with $165.4 million in the third quarter of 1993, a 17percent increase.Robert Faulkner, an analyst with S.G. Warburg & Co. Inc., saidGenentech's earnings were slightly higher than anticipated becausethe company "kept the lid" on expenses, such as research anddevelopment and overhead."They were disciplined in their expenditures and they're good atthat," he said.However, the sales performance of Pulmozyme has caused Faulknerto cut his 1995 earnings estimate from $1.50 to $1.35 per share forGenentech."We thought sales would be higher for this new product in a fairlypoorly treated disease," he said. "It did well in its first year, but lessthan expected."Faulkner added that there are concerns about how Genentech willbe affected by recent negative publicity surrounding its growthhormone marketing practices.A top Genentech executive was indicted for alleged violations ofMedicare anti-kickback laws involving Protropin. And the companywas criticized for funding a height and weight screening program inpublic schools as a way to promote growth hormone sales.Genentech has suspended its financial support of the program.Faulkner said the bad publicity could result in loss of growthhormone sales to the company's competitor, Eli Lilly & Co., ofIndianapolis.As for the "Roche factor," Malloy said she would not predictwhether Switzerland-based Roche Holding Ltd. will exercise itsbuyout option or not by June 30, 1995. Roche owns 65 percent ofGenentech and has the option of purchasing the remainder of thecompany for $60 a share. If Roche doesn't exercise the option,Malloy said, "I think Genentech's shares could exceed $60."The company's stock (NYSE:GNE) closed Thursday at $51.37,down 62 cents.Amgen's reported revenues for the third quarter were $426 million,an increase of 20 percent over sales of $355 million for the sameperiod in 1993.Faulkner said the company's earnings for the quarter were 6 centshigher than he estimated. He cited stronger than expected sales ofEpogen and Neupogen as two reasons for the better than expectedearnings performance. A third factor was low costs for goods.He estimated earnings for the fourth quarter at 89 cents. Amgen'sgrowth potential, he added, now depends on whether its existingsales can support the company as it moves toward marketingproducts that are in advanced stages of development.Amgen's stock (NASDAQ:AMGN) closed Thursday at $58.75, up75 cents. n
-- Charles Craig
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