Genentech disappointed analysts twice this week. Once was with earnings that didn't quite meet expectations (though they were pretty solid, especially in this economy). The second time was with a big fat "no comment" on the potential deal with Roche. On the third quarter earnings conference call, CEO Art Levinson (photo) said, "We will not be discussing anything further on the call today regarding the Roche proposal."
That didn't stop Eric Schmidt of Cowen & Co. from calling Genentech out for a "lack of transparency" on the deal. CFO David Ebersman basically said he felt Schmidt's pain, but the lawyers want Genentech brass to keep its lips zipped.
It also didn't stop Schmidt from upgrading Genentech yesterday, saying that he still believes a deal is "inevitable." The only hurdle, analysts now think, is the gridlock in credit markets, which could be temporarily interfering with Roche's ability to close. Schmidt pegs the price at at least $90; as you know, Roche offered $89 per share for the chunk of Genentech it doesn't already own. DNA shares are trading well below that number now, perhaps because of credit fears.
Meanwhile, as the Wall Street Journal Health Blog points out, Genentech's quarterly numbers only emphasize its allure. Genentech is doing what every drugmaker wants to do: raking in millions on cancer treatments. Avastin sales jumped 18 percent to $704 million; Rituxan was up 15 percent to $655 million; Herceptin also grew by 15 percent to $368 million.
- check out the column at Seeking Alpha
- read the Health Blog post