Surprisingly high second quarter earnings by Genentech Inc. andAmgen Inc. have been among the brightest lights in an otherwisedismal year for the biotechnology industry.Genentech, of South San Francisco, said its earnings tripled for thesecond quarter ending June 30, compared with a year ago. Thecompany reported net income of $33.4 million, or 28 cents a share, upfrom $10.4 million, or 9 cents a share, in the second quarter in 1993.Amgen, of Thousand Oaks, Calif., reported a net income of $107.5million or 77 cents a share, a 7.2 percent increase over the same quartera year ago. The 1993 quarterly total was $100.2 million, or 70 cents ashare, and included a one-time legal award of $13.9 million.In both cases, strong product sales fueled the better-than-expectedperformances. Most market analysts had estimated quarterly earningsof 72 cents a share for Amgen and 23 cents for Genentech.For Amgen, record sales of both Neupogen and Epogen led the surgewith a 19 percent increase to $388.6 million over last year's secondquarter total of $327.8 million.Sales of Neupogen worldwide were up 13 percent to $212 million andEpogen sales jumped 26 percent to $176.5 million. Both drugsstimulate blood cell production. Epogen increases red blood cells forthe treatment of anemia in dialysis patients. Neupogen boosts whiteblood cells to prevent chemotherapy-induced infections.Total second quarter revenues for Amgen jumped 21 percent to $415million this year compared with $343 million for the same period in1993."This is the first time in six quarters that both Neupogen and Epogenhave done better than expected," said Jay Silverman, an analyst withWertheim Schroder of New York.As a result of Amgen's second quarter performance, Silverman said heboosted his estimates for the company's annual earnings from $3 to$3.05 a share for 1994 and from $3.55 to $3.66 for 1995.As for Genentech, Silverman said the surprise occurred in theperformance of the company's growth hormone products, Protropinand Nutropin. Sales totaled $59.5 million, up 11 percent from $53.7million in sales of Protropin in the second quarter of 1993. Thecompany said among the factors generating the increase was theintroduction of Nutropin in 1994 for growth failure due to chronicrenal insufficiency.Genentech also experienced a 32 percent increase in second quartersales of Activase to $73.5 million from $55.8 million a year ago.Genentech's revenues for the second quarter were $194.9 million, anincrease of 15 percent over the total of $169.8 million for the samequarter last year.Despite the quarterly jump in earnings, Silverman said he hasmaintained his current estimates for Genentech's annual earningsthrough next year, based on anticipated higher spending by thecompany. He is projecting 1994 earnings of $1 a share and 1995earnings of $1.35.Silverman said Amgen and Genentech have been outperforming justabout everybody in the biotechnology industry on Wall Street."When you have good earnings in a market that has lost all speculation,those stocks with the good earnings will do the best," he said.For another company, Bio-Technology General Corp., of Iselin, N.J.,the second quarter this year marked the first time it made a profit. Bio-Technology reported a net income of $400,000, or 1 cent a share,compared with a net loss of $2.4 million, or 7 cents a share, in the samequarter in 1993.Revenues for the quarter totaled a record $7.8 million on the strengthof $5.4 million in product sales. The company's human growthprotein, called Bio-Tropin, accounted for a majority of the salesrevenue.For the first six months of 1994, Bio-Technology's revenues totaled$13.4 million, up 172 percent from the $5 million in the same periodlast year. The six-month total nearly equals the company's 1993revenues of $13.9 million.Bio-Technology General was formed in 1980. All its product sales areoutside the U.S.(For a look at more second quarter earnings reports, see the chartbelow.) n

-- Charles Craig

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