Biotech Stocks Day-in-Review: Genentech Beats Estimates

Genentech (DNA) continued its winning ways, reporting Q4 and full-year 2006 financials after the bell. The company beat Wall Street estimates in almost all categories. Total revenues were $2.7 billion, while analysts called for $2.45 billion.

Blindness drug Lucentis came in far above estimates, bringing in $217 million of revenue against a consensus forecast of $152 million. And cancer drug Avastin sold $490 million worth of product, while estimates called for $465 million. Profits per share were 61 cents (excluding option costs); the forecast was for 55 cents per share. Only Herceptin, which has recently received some negative publicity, fell short. And even Herceptin revenues came in at $322 million in Q4, a 29% increase from the year-earlier quarter.

In the regular session, Genentech was down 95 cents at $83.74. But Genentech more than made up the loss after the report, in after-market trading. At the time of this report, it was $1.56 higher at $85.30.

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ImClone (IMCL) and Bristol-Myers Squibb (BMY) said a Phase III trial of Erbitux showed the drug increased the median length of progression-free survival in previously untreated patients with metastatic colorectal cancer. Specific data were not released, but will be presented at the ASCO conference in June. Erbitux is currently approved to treat patients who have failed or are intolerant of chemotherapy. In the trial, Erbitux was given as an adjunct to FOLFIRI, an irinotecan-based chemotherapy regimen. The trial was conducted by the German Merck, which markets Erbitux outside the US. ImClone rode the news for a 5% gain, rising $1.56 to $30.78.

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Genomic Health (GHDX) signed a national payor contract with United HealthCare (UNH), which will cover the costs for Oncotype DX. Oncotype DX is a test that predicts the chances of breast cancer recurrence and also the probability that chemotherapy will benefit early-stage breast cancer patients. In the U.S., insurance coverage for Oncotype DX is now available for 98 million people. Genomic Health shot 18% higher. It was up $3.80 at $24.48.

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Cell Therapeutics (CTIC) filed for a Special Protocol Assessment with the FDA for the design of its Xyotax Phase III trial. The trial will enroll women with normal estrogen levels who suffer from advanced non-small cell lung cancer, the subset that benefited the most in the Phase II trial. Cell Therapeutics gained 7 cents to end at $1.79.

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King Pharmaceuticals (KG) signed an agreement with Vascular Solution (VASC) that allows King to market the hemostatic products from Vascular Solution, except to catheterization and electrophysiology laboratories. The products include King's bovine-based Thrombin-JMI[R] as a component. King rose 7 cents to $16.16, and Vascular Solution moved up 12 cents to $8.97.

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Introgen Therapeutics (INGN) said that INGN 241, using a new mechanism, caused programmed cell death in lung cancer cells in a laboratory test. The compound was given along with heat shock protein 90 (Hsp90) inhibitors and created a synergistic effect. Introgen slipped 9 cents to $4.75.

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MedImmune (MEDI) won an important, though technical, legal battle in its patent dispute with Genentech [DNA] over the Cabilly patent. The US Supreme Court ruled that MedImmune could continue to contest the validity of the Genentech patent, even though it has continued to pay the royalties, though it paid under protest. The Supreme Court decision reverses a lower court ruling. MedImmune is paying royalties on the drug Synagis, a treatment for respiratory tract virus that generated revenues of $112 million in the most recent quarter. The Supremes ruled 8-1 that MedImmune was wisely avoiding paying triple damages in case their suit did not prevail, not admitting the validity of the patent. MedImmune fell 5 cents to $34.78.

Biotech suffered another small loss, while the broad market moved higher. The Centient Biotech 200™ dropped 3 points to end at 3987, a loss of .08%. The S&P 500 gained .19% and Nasdaq was up by .63%.

Disclosure: Centient management holds a position in Genentech shares and does consulting work for Genentech.