Shares of biotechnology giant Genentech Inc. (NYSE: DNA) have been trading slightly lower despite the company posting yesterday evening that it beat analysts' per-share earnings estimates by 2 cents. Hurting the stock this morning are the company's sales of cancer drugs Avastin, which disappointed analysts.Genentech announced that its profit during the first-quarter rose 12% to $790 million, or 74 cents per share, boosted by strong cancer drug sales. These numbers are up from $706 million, or 66 cents a share reported in the same period a year ago. Excluding special items, the company's earnings would have come at 84 cents a share, exceeding analysts' forecasts for a quarterly profit of 82 cents a share.
The company's quarterly revenue saw a growth of 8% to $3.06 billion, up from $2.84 billion a year ago. However, this was not enough to beat analysts' predictions for sales of $3.1 billion in the quarter, according to Thomson Financial.
For this period, the biotechnology company benefited from strong sales of its top-selling cancer drugs, Avastin and Rituxan, which jumped 13%. Sales of Rituxan increased 13% year over year to $605 million, while cancer drug Avastin sales totaled $600 million, but missed analysts' forecast for $622 million in sales.
Analysts were waiting for Genentech to show higher Avastin sales especially after the company won U.S. regulatory approval for the drug as a breast cancer treatment in February, despite an agency panel's vote for a negative recommendation.
Genentech's executives believe the weak sales numbers were brought by physicians' safety worries before the Food and Drug Administration approval. However, they see "all of the signs" as "very good" as the weak sales growth came after they "only had the label for four or five weeks within the quarter.''
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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