* Genentech provides EPS, revenue forecasts through 2018
* Says Avastin sales could reach $10 bln by 2015
* Shares off 3 pct
(Adds CFO, analyst comments, updates shares)
By Bill Berkrot
NEW YORK, March 2 Genentech Inc provided
earnings and revenue growth projections for every year through
2018 and said its cancer drug Avastin could reach $10 billion
in annual sales by 2015, as it aimed to demonstrate that the
company is worth far more than Roche is willing to pay for it.
Genentech DNA.N Chief Executive Arthur Levinson opened an
annual meeting with analysts and investors at a New York hotel
on Monday by telling investors that Roche's offer of $86.50 per
share does not "adequately reflect the value and future
potential of Genentech's business."
Swiss drugmaker Roche Holding AG ROG.VX is attempting to
acquire the 44 percent of Genentech it does not already own for
about $42 billion.
"I don't think there's any risk that the tender won't be
rejected," said Cowen & Co analyst Eric Schmidt.
Chief Financial Officer David Ebersman drew applause from
investors when he put up a slide of Roche's development
pipeline thoroughly dominated by Genentech programs.
The acquisition would give Roche full control of
Genentech's medicines and pipeline. It currently holds rights
to sell the drugs outside the United States.
The CFO outlined several areas in which Genentech disagrees
with Roche's valuation of the company, including projected tax
rates, future pricing, Avastin's potential and competition.
The world's second-largest biotechnology company pushed up
the date of the meeting to make its case ahead of the initial
March 12 expiration date of Roche's tender offer, and gave best
case projections of its future potential.
Levinson declined to state what he thought a fair price for
the remainder of the company might be. "But it ain't $86.50, I
can tell you that," he told Reuters.
But with a late winter snowstorm as a backdrop, Genentech
provided an avalanche of information about its research, future
product prospects, wealth of patents and financial picture
intended to demonstrate the inadequacy of the Roche offer.
"We view the meeting as a cogent argument that Genentech
investors should hold their shares for what we believe will be
a raised bid from Roche," said Geoff Meacham, an analyst for
The company forecast 2009 earnings, excluding items, of
$3.85 per share, growing to $12.86 per share by 2018. Genentech
expects U.S. sales this year of $10.7 billion, rising to $22.1
billion by 2018.
Genentech in January forecast a 2009 earnings range of
$3.55 per share to $3.90 per share.
Susan Desmond-Hellman, product development chief, said
Genentech has 25 new molecular entities in development; and
Avastin, the company's most important growth driver, could be
approved for 20 additional uses by 2015.
She said she is "cautiously optimistic" about the outcome
of a key trial of Avastin in colon cancer patients who have
undergone surgery. That information is due next month.
Analysts believe positive results from that study, which
could lead to Avastin's expanded use in earlier stage colon
cancer patients, would likely drive Genentech's share price
well beyond Roche's current offer.
The company expects a steady drumbeat of Avastin data over
the next few years, including a trio of studies in breast
cancer following surgery. The drug is being studied in several
cancers and is awaiting a U.S. approval decision for use in
Commercial operations chief Ian Clark said Avastin alone
has the potential for $10 billion in annual sales by 2015
should all of its clinical programs prove successful.
The company outlined an aggressive program against
Alzheimer's disease, potential new uses for its eye disease
drug Lucentis and other newer cancer treatments showing early
promise. Lucentis sales could reach $2.1 billion by 2018, Clark
Genentech shares were down 3.4 percent to $82.66 in
afternoon trading on the New York Stock Exchange -- slightly
less of a decline than the broader markets.
"The stock held up pretty well over the past couple of
weeks when the market was in freefall, so 3 percent isn't a
particularly significant move these days," Schmidt said.
(Additional reporting by Toni Clarke in Boston; Editing by
Derek Caney, Gerald E. McCormick)