Looking Beyond Genentech Earnings (DNA)

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After today’s close, we are expecting the earnings report of of biotech giant Genentech, Inc. (NYSE: DNA).  First Call estimates are for $0.88 EPS on $3.36 billion in revenue.  Today is going to be a very important day for Genentech shareholders, but we don’t think the importance will shine around the actual earnings report.  Unless there is some major guidance surprise, we don’t even think the focus will be there on that data.  Today ultimately boils down to the status of its merger.

Unless there is some major surprise, we won’t even care aboutGenentech’s net earnings nor about its individual product sales.Frankly, we feel today is going to be 100% on the chances of its mergerclosing or whether or not there is a chance it is called off.  Justlast week at BioHealthInvestor.com, we showed some anecdotal data that put thismonster acquisition by Roche as potentially being at-risk.  Originallythis one was believed to secure a higher buyout price, butnow we question whether or not the financing is really there to do thisdeal.

For those wanting individual data, we have prepared some of our usualdata.  Here is the table showing last quarter’s "by Brand" franchisesales in the US:

Product            2008   2007  Change
Rituxan®         $651    $582    12%
Avastin®+       $650    $564    15%
Herceptin®     $338    $329    3%
Lucentis®       $216    $209    3%
Xolair®             $129    $120    8%
Tarceva®         $119    $102    17%
Nutropin Pdts  $89      $94      -5%
Thrombolytics  $68      $67      1%
Pulmozyme®   $63      $55      15%
Raptiva®          $28       $27       4%
Total U.S.     $2,351   $2,149    9%

As far as guidance, First Call shows $0.90 EPS and $3.49 billion in revenues for its fiscal-Q4. 
Because of the hopes of a higher merger price, the average price target still roughly $100.00 per share.

The chart is currently of little use other than establishing somesupport trends.  This went into the low-$70’s last week at the worstpart of the market and the gap up above last Thursday’s high has so farnot held.  It looks like solid support if things were normal would bein a range of $75.00 to $77.00, but we are not holding the notion thatanything is normal right now.

Jon C. Ogg
October 14, 2008