Thursday, April 10, 2008

DNA Earnings Call Summary

Genentech Earnings Call Summary

On the call, the co says Avastin grew due to small cell lung cancer and metastatic
breast cancer; Rituxan sales soft due to Q4 high inventory; Lucentis sales lower due to new patient share in the 40's compared to 50's earlier due to unapproved use of Avastin due to continued unapproved of Avastin and reimbursement concerns from retinal specialists. The co also noted the challenging regulatory environment; FDA has been understaffed for a while and now has to implement new rules passed by lawmakers; co said it'll have to give more time to the FDA for approvals and applications/etc... The co sees 15-25% royalties growth in 2008 relative to 2007; forecast 5% contract rev growth for FY08 over FY07. For 2008, DNA continues to forecast an operating margin of about 41-42%... The co does not anticipate any writedowns on its investment portfolio. Q2 could be an important quarter for DNA as there could be a significant amount of clinical developments. An analyst asked a question regarding the Avastin marketplace, noting that there were 3 straight quarters without any growth -mgmt said that lung cancer is seeing gradual progression, co does have some challenges about people's eligibility; breast cancer physicians became a little worried after the ODEC, but after the label all signs have been very good, that mkt isn't straight forward, it's a fragmented market; also the co is not in a full promotional mode yet. (Stock trading at $77.87 after hours)
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