Genentech Inc. reported
third-quarter earnings late Tuesday. Thanks to its cancer drugs, the news was generally good for the biotech giant. But conference call participants interested in deal news weren't satisfied because Genentech management refused to comment on the progress of the proposed takeover by Roche AG, Genentech's majority owner, which has moved to buy out the 44% it doesn't own for $89 a share.
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Last we heard back in August, before the credit markets froze, Genentech was holding out for more, and analysts agreed. Various prognostications put the price tag anywhere from the mid-$90s to $120 a share.
Tuesday afternoon shed no light on the subject. CEO Art Levinson said at the outset, "We will not be discussing anything further on the call today related to the Roche proposal."
However, he claimed that in the 12 weeks since Roche's bid, employee turnover is no different than the 12 weeks prior to the bid. For that, Genentech can thank its special "retention program" -- extra cash for its employees instead of stock options. The company doled out $44 million in the third quarter alone, with an expected impact of 8 cents per share for the year. (It's still a blip compared to the firm's $8.6 billion in cash and
investments.)
Analysts on the call fell in line with Genentech's ban on Roche-related questions, though Eric Schmidt of Cowen & Co. LLC at least
registered a complaint:
"I will ask you to explain your policy or defend your policy of not taking any such questions. I know from following Genentech now for many years that transparency has been one of the tenants of your investor relations policy, and I think a lot of us on the call are a little bit frustrated with the lack of transparency that this process is being conducted under."
CFO David Ebersman said he regretted the frustration but replied that executives were advised not to answer any questions related to the Roche proposal.
- Alex Lash
