Investors May Prefer to Stay Away from DNA

Genentech (DNA) reported full-year 2007 earnings Monday and, while the company beat on the bottom line and guided 2008 in-line, investors sent shares down again as its major drugs missed revenue estimates. Shares of DNA have traditionally traded on the company's revenues, and this time is no different.

Fourth quarter revenues for cancer drug Avastin came in at $603 million (a respectable 23% growth), but analysts expected sales of $616 million. Lymphoma drug Rituxan had sales of $596 million, but analysts expected $603 million. Same goes for breast cancer treatment Herceptin ($327 vs. an expected $332) and eye-disease drug Lucentis ($197 vs. $200).

DNA has been losing money for investors since 2005, when the stock hit an all-time high of $99.60. Now, 2008 may shape up as more of the same. The only thing that might save DNA shares is an FDA announcement in February on the approval of Avastin for breast cancer. However, an FDA panel already recommended to not approve Avastin for breast cancer last month.

The final FDA decision is set for February 23. Investors might want to stay away from DNA, unless the FDA pulls a fast-one and goes against the panel's recommendation. I don't see that as likely.

Disclosure: I do not have a position in DNA.

Comments

[runtolive]

help is on the way for DNA.. ... the cavalry is rounding up its horses. DNA has a drug in phase 2 trials.. TRASTUZUMAB-DM1 for the treatment of MBC. metastatic breast cancer. early indications show both treatment regimens .. once a week , and once every three weeks, both are working to halt the disease progression in patients with breast cancer. TRASTUZUMAB-DM1 is a monoclonal antibody, HECERPTIN, conjugated via a liker, MCC, to a MAYTANSINE toxin. performs in the same manner as HERCEPTIN alone, but now has a poison attached which kills the cancer.

we currently have anecdotal evidence that this drug is staving off tumor progression, clearing metastatic tumors of the liver and lung. in just a few doses.. and in patients who have already failed up to 3 previous therapy regimens of chemotherapy. it wont be long, late 2009 before DNA gets approval for this drug.