Thursday, Oct 14, 1993

Genentech Reports Third Quarter Results

-- Profit Growth Continues --

 

SOUTH SAN FRANCISCO, Calif., October 14, 1993 -- Genentech, Inc. (NYSE: GNE) announced today that earnings for the third quarter of 1993 increased to $15.5 million, or 13 cents per share, from $7.7 million, or 7 cents per share, in the third quarter of 1992. Revenues for the quarter increased to $165.4 million from $137.3 million in the third quarter of 1992. This increase results primarily from higher product sales and royalties.

"These are excellent third quarter results following strong first and second quarters," said Genentech President and Chief Executive Officer G. Kirk Raab. "They reflect the medical community's acceptance of the value of using Activase (Alteplase recombinant) t-PA to treat heart attack patients and they demonstrate a sustained new period of profit growth for Genentech in 1993. Also, considering the fact that in August an FDA advisory panel unanimously recommended approval for our next product, Pulmozyme (domase alfa) DNase for treating cystic fibrosis, we approach 1994 with continued expectations of growth."

Marketed Products

The GUSTO trial results announced on April 30 continue to affect Activase sales positively. In the third quarter of 1993, Activase net sales increased 29 percent to $63.5 million from $49.4 million in the same quarter of 1992, and increased 14 percent from $55.8 million in the second quarter of 1993.

As reported in an article on GUSTO in the September 2 issue of the New England Journal of Medicine, "the GUSTO trial provides evidence that accelerated t-PA combined with intravenous heparin is the best thrombolytic strategy to date for patients with acute myocardial infarction" (heart attack). Since the GUSTO results were announced, Activase has regained close to a two-thirds market share in the United States. This week Genentech filed an amendment to its Product License Application with the FDA to reflect the accelerated dosing regimen used in GUSTO.

Activase's growth potential lies not only in increasing market share, but also in increasing market size. The results of the 6,000-patient LATE trial, published in the September 25 issue of The Lancet, showed that heart attack victims who arrive at the hospital between six and 12 hours after the onset of symptoms can still significantly benefit from thrombolytic therapy with Activase. Although it remains crucial that heart attack patients seek treatment as early as possible, based on LATE's findings, many more heart attack patients each year may benefit from lifesaving Activase therapy.

Sales of Protropin® (somatrem for injection) human growth hormone increased 9 percent to $55.4 million from $51.0 million in the third quarter of 1992. This difference results from an increased number of patients diagnosed with growth hormone inadequacy.

Actimmune® (interferon gamma-1b) had modest sales of $0.8 million in the third quarter of 1993, reflecting the small market size for the approved indication, chronic granulomatous disease.

Expenses

Marketing, general and administrative expenses totaled $57.2 million in the third quarter of 1993 versus $41.5 million in the third quarter of 1992. The increase is due to timing of sales and marketing expenditures, various additional marketing expenditures and corporate expenses including litigation expenses.

Research and development expenses in the third quarter of 1993 totaled $72.3 million, compared with total R&D expenses of $69.6 million in the third quarter of 1992.

"Our intense investment in R&D continues to pay off," said Raab. "Not only was Pulmozyme unanimously recommended for U.S. marketing approval by an FDA advisory panel during the third quarter, but the drug also was approved for marketing in Sweden and Austria. These approvals begin to set the stage for commercialization of Pulmozyme that is synchronized with U.S. and Canadian approval." Genentech is currently manufacturing Pulmozyme in the new facility completed earlier this year for this purpose to ensure it will have adequate supply to meet market demand upon product launch.

Raab continued, "With the many promising products in various stages of development in our pipeline, and with the wealth of innovative projects progressing in research, I am confident our commitment to fully support focused R&D will contribute to Genentech's earnings growth well into the future."

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant medical needs. The company has headquarters in South San Francisco, Califomia and is traded on the New York and Pacific Stock exchanges under the symbol GNE.

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GENENTECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)
(unaudited)

Three Months
Ended September 30,

1993 1992
Revenues
   Product sales $ 119,733 $ 101,151
   Royalties 33,314 23,301
   Contract and other 2,607 1,404
   Interest 9,732 11,445
      Total revenues 165,386 137,301
     
Costs and expenses
   Cost of sales 18,551 17,316
   Research and development 72,302 69,636
   Marketing, general and administrative 57,181 41,509
   Interest 1,836 739
      Total costs and expenses 149,870 129,200
     
Income before taxes 15,516 8,101
Income tax provision - 405
     
Net income $ 15,516 $ 7,696
     
Net income per share $ 0.13 $ 0.07
     
Weighted average number of shares used in
   computing per share amounts:
117,566 114,533
 
Nine Months
Ended September 30,

1993 1992
Revenues
   Product sales $ 333,159 $ 290,436
   Royalties 86,708 68,567
   Contract and other 37,391 8,572
   Interest 30,962 34,690
      Total revenues 488,220 402,265
     
Costs and expenses
   Cost of sales 52,830 49,881
   Research and development 230,468 208,919
   Marketing, general and administrative 159,875 125,067
   Interest 4,796 2,996
      Total costs and expenses 447,969 386,863
     
Income before taxes 40,251 15,402
Income tax provision - 770
     
Net income $ 40,251 $ 14,632
     
Net income per share $ 0.34 $ 0.13
     
Weighted average number of shares used in
   computing per share amounts:
116,700 113,561
 
September 30,
1993 1992
Selected balance sheet data
   Cash and short-term investments $ 566,649 $ 464,300
   Accounts receivable 126,178 83,320
   Inventories 73,180 58,744
   Long-term marketable securities 132,474 213,142
   Property, plant and equipment, net 450,241 414,616
   Other long-term assets 62,701 36,366
   Total assets 1,419,601 1,284,022
   Total current liabilities 166,578 137,931
   Long-term debt 151,435 152,209
   Total liabilities 334,325 301,916
   Total stockholders' equity 1,085,276 982,106