The entry of Pulmozyme into the cystic fibrosis market, as well asstrong sales for other products, helped Genentech Inc. post first-quarterearnings of $38.9 million, almost three times more than the $14.3million earned in the same quarter of 1993.The earnings per share for the quarter were 33 cents compared to 12cents per share a year ago. Revenues increased 30 percent to $198.9million over the $153 million reported in first-quarter 1993."The first quarter of 1994 was an excellent one for Genentech," said G.Kirk Raab, president and chief executive officer of the South SanFrancisco company, founded in 1976. "Besides our good financialresults, we launched two new products: Nutropin human growthhormone for treating growth failure resulting from chronic renalinsufficiency and Pulmozyme DNase for cystic fibrosis (CF)."In addition, we received approval to market Nutropin for a secondindication, growth hormone inadequacy in children."Sales of Pulmozyme for CF were $22.4 million in the quarter. Sales ofActivase t-PA, for heart attacks, increased 43 percent to $70.2 millionfrom $49.2 million in last year's first quarter. The product grew inmarket share to more than 70 percent from about 50 percent, where ithad fallen after trial results showed possible equivocacy. But theproduct regained share after positive results of the GUSTO trial inApril 1993. Activase sales increased 4 percent from fourth-quarter1993, when they were $67.8 million.The bottom line on earnings, said analyst Maureen McGann, waswhere Merrill Lynch & Co. expected it to be. The breakdown,however, wasn't."It was mostly due to lower-than-expected operating expenses," shesaid. "We kept our 1994 estimate at $1 per share. I think at this pointthe shares are fairly valued. Longer term, I feel a little more optimisticabout the shares."Sales of Genentech's two human growth factor products, Protropin andNutropin, increased 3 percent from first-quarter 1993 to $53.6 million.Actimmune sales, for chronic granulomatous disease, were $1.6million in the quarter.Carol Werther, an analyst for Cowen & Co., attributed the strong salesnumbers to the launch of Pulmozyme and the fact that Genentech doesnot yet have competition for its human growth hormone.Cowen & Co. is projecting human growth hormone sales for the year tobe about $190 million, down from about $216 million in 1993.McGann also is projecting growth hormone sales of $190 million,while the company is projecting sales of $185 million.Werther said growth hormone products from Novo Nordisk A/S, Bio-Technology General Corp. and Ares Serono Inc. are pending before theFDA and could be approved anytime.McGann projects Activase sales at $300 million for the year, whileWerther projects $295 million.Genentech (NYSE:GNE) stock is trading at about $44 per share. RocheHoldings has a buyout option in June 1995 for $60 per share, whichmany analysts expect to be exercised."If it doesn't get bought out it has the potential to go beyond $60 pershare, perhaps not immediately," Werther said, "but because of theearning power and Genentech's tremendous product pipeline."
Genentech, Inc.First Quarter Financial Results(In thousands, except per share amounts)
Three Months Ended March 31Revenues: 1994 1993Product sales $147,798 $102,658Royalties $33,679 $29,342Contract & Other $7,527 $10,529Interest $9,866 $10,468Total Revenue $198,870 $152,997
Costs And Expenses $158,396 $138,663
Other Financial DataNet Income $38,855 $14,334Net income per share $.33 $.12Total assets $1,525,279 $1,344,854Total current liabilities $186,092 $144,934Total stockholders equity $1,176,172 $1,035,170
-- Jim Shrine
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