Genentech financially strong while Amgen struggles
strong performance in the first quarter while its main rival Amgen
is trying to regain momentum after a difficult year.
Genentech has reported a 64 per cent increase in operating income to $1.1bn (€0.8bn) in the first quarter mainly driven by strong sales of its oncology drug Avastin (bevacizumab). The biotech company also recorded strong sales of $2.8bn in Q1, a 43 per cent increase compared to the previous quarter, with US sales for the period accounting for $2.04bn, up 30 per cent from Q1 of last year. Genentech said strong sales of cancer drugs Avastin and Rituxan (Rituximab) were the main growth drivers in the quarter results. Avastin generated $533m in revenue in Q1, a 34 per cent jump from last year. "Growth resulted primarily from increased sales in metastatic non-small cell lung cancer and in metastatic breast cancer, an approved use of Avastin in the US," said Ian Clark, executive vice president of Commercial Operations, in a conference call. In addition, the California-based company recorded a 12 per cent rise in sales of Rituxan - which treats rheumatoid arthritis and non-Hodgkin's lymphoma - to $535m. Meanwhile, revenue for its highly-publicised breast cancer drug Herceptin (Trastuzumab) in the period was $311m, a 7 per cent increase compared to last year. Moreover, the company reported that sales of its non-small cell lung cancer Tarceva (erlotinib) grew 10 per cent to $102m, while Lucentis (ranibizumab injection), which was approved in the US last July, recorded sales of $211m in the quarter. Meanwhile, the company has begun investing more in research and development, with R&D spend representing 20 per cent of operating revenues this quarter, an increase from 17 per cent over a year ago. "For 2007 we continue to expect R&D expense to be approximately 19 per cent to 20 per cent of revenues," David Ebersman, Genentech's chief financial officer (CFO), said during the conference call. He added that the company was expecting growth in business of 25 to 30 per cent for 2007. "We will continue to try and take advantage of the business opportunities in front of us, to remain disciplined in all of our spend areas, and to focus on expanding our R&D pipeline," he said. The biotech firm's results come at a time when its main competitor Amgen is trying to get back on its feet after a year of qualms. Amgen's CFO walked out this week and the company is still struggling with drug development setbacks. What is more, the biotech giant is currently the target of an informal Securities and Exchange Commission probe which is looking into the way Amgen handled one of the clinical studies for its leading anaemia drug Aranesp (darbepoetin alfa) - the study was halted in December, but the firm disclosed its failure three months later. The resignation came just a week after Amgen announced its plans to delay construction of its major new manufacturing plant in Cork, Ireland, part of a $1bn expansion programme announced last year. Originally due to become operational in 2009, the manufacturing facility will now be several years behind the original schedule, following a "global assessment" of manufacturing needs. Amgen was expected to announce its first quarter results next week but said that it would delay the release by four days, until 23 April, to include results from a late-stage study of Aranesp in patients with small-cell lung cancer receiving chemotherapy.