Tuesday, Apr 14, 1998
South San Francisco, Calif. -- April 14, 1998 --Genentech, Inc. (NYSE: GNE) announced today that earnings for the first quarter of 1998 increased 30 percent to $41.0 million, or 32 cents per share*, from $31.6 million, or 25 cents per share, in the first quarter of 1997. Revenues increased 3 percent to $264.7 million from $257.3 million in the same quarter of 1997. This revenue growth was driven primarily by sales of Rituxan® (Rituximab), indicated for the treatment of patients with relapsed or refractory low-grade or follicular, CD20-positive B-cell non-Hodgkin's lymphoma, and was offset partially by a decrease in sales of other products and in contract and other revenues.
"Our results for the quarter suggest that our Long-Range Plan for growth is working," said Arthur D. Levinson, Ph.D., Genentech's president and chief executive officer. "Besides improved financial results for the quarter, our progress with our marketed products and with those in our pipeline bodes well for continued growth. During the quarter, the U.S. Food and Drug Administration (FDA) approved a label extension for one of our products and an important manufacturing process for another, and it designated one of the oncology products in our pipeline as a Fast Track Product. We also made significant clinical progress with several of our pipeline projects."
* All earnings per share amounts in the text of this press release represent diluted earnings per share as defined under Statement of Financial Accounting Standards No. 128, "Earnings per Share."
Sales of marketed products increased 7 percent in the first quarter of 1998 to $164.7 million from $154.2 million in the first quarter of 1997
Sales of Rituxan in the first quarter of 1998 were $37.7 million. Genentech first recorded sales for Rituxan of $5.5 million in the fourth quarter of 1997. While Genentech is encouraged by these sales figures, not enough time has passed for these figures to be indicative of future sales, and the figures may reflect pent-up demand for the product. During the first quarter of 1998, Genentech received FDA approval for the large-scale (12,000-liter) manufacture of Rituxan. The Rituxan that Genentech manufactures will supplement the Rituxan manufactured by Genentech's partner IDEC Pharmaceuticals Corporation, ensuring adequate worldwide supply of the medicine.
Sales of Activase® (Alteplase, recombinant), a tissue plasminogen activator (t-PA), during the first quarter of 1998 decreased 26 percent to $55.7 million from $75.0 million in the first quarter of 1997. This decline results primarily from a decrease in market share compared to the prior year's first quarter. However, over the last quarter, Activase market share has declined only slightly. The sales dollar decline from the prior year's quarter also results, to a lesser extent, from a continued decline in the thrombolytic market due to mechanical reperfusion and from a temporary decrease in the available commercial market because of two large ongoing Phase III studies.
In March 1998, Genentech received two new patents related to variant forms of t-PA. Based on these patents, Genentech filed a patent infringement suit against Centocor, Inc. which alleges that Centocor's sale, offer for sale, use and importation of Retavase (Reteplase, recombinant), a t-PA, in the United States infringes these two new Genentech patents. Genentech is seeking a permanent injunction and damages.
Sales of Genentech's three growth hormone products, Protropin® (somatrem for injection), Nutropin® [somatropin (rDNA origin) for injection] and Nutropin AQ® [somatropin (rDNA origin) injection], decreased 9 percent to $50.9 million from $55.9 million in the first quarter of 1997. This decrease primarily reflects fluctuations in distributor ordering patterns.
Sales of Pulmozyme® (dornase alfa) Inhalation Solution decreased 13 percent to $19.5 million in the first quarter of 1998 compared to $22.3 million in the first quarter of 1997 due primarily to fluctuations in ordering patterns. In February 1998, Genentech received FDA approval for a label extension to Pulmozyme. With this revised labeling, Pulmozyme may now also be used to treat very young children with cystic fibrosis, ages three months to four years, adding to the product's previous approvals for patients five years of age and older.
Contract and other revenues decreased 30 percent in the first quarter of 1998 to $14.9 million from $21.4 million in the first quarter for 1997. This decrease primarily resulted from fluctuations in contract revenues from Roche.
Research and development (R&D) expenses decreased 20 percent in the first quarter of 1998 to $98.2 million from $122.7 million in the first quarter of 1997. For the quarter, Genentech invested approximately 37 percent of revenues into R&D, compared to 48 percent in the first quarter of 1997. This decrease is in line with the goal of Genentech's Long-Range Plan to decrease R&D spending as a percent of revenues as products progress through late-stage clinical trials and revenues increase.
Marketing, general and administrative (MG&A) expenses increased in the first quarter of 1998 to $74.9 million from $62.0 million in the first quarter of 1997, driven by the introduction of Rituxan and the resultant profit sharing, and by competitive conditions with other marketed products. Cost of sales also increased to $33.6 million in the first quarter of 1998 from $27.7 million in the first quarter of 1997 resulting primarily from the mix of marketed products, including the introduction of Rituxan.
Genentech's strong investment in R&D was coupled with significant progress in product development during the quarter. Besides the progress mentioned above, Genentech achieved the following during the quarter:
Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Eleven of the currently marketed biotechnology products stem from Genentech science, seven of which Genentech markets directly in the United States. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange and Pacific Exchange under the symbol GNE.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Ended March 31,
|Contract and other||14,865||21,409|
|Costs and expenses|
|Cost of sales||33,621||27,685|
|Research and development||98,202||122,743|
|Marketing, general and administrative||74,950||61,981|
|Total costs and expenses||207,732||213,397|
|Income before taxes||56,968||43,888|
|Income tax provision||15,951||12,289|
|Earnings per share|
|Weighted average shares used to
compute diluted earnings per share:
|Selected balance sheet data|
|Cash and short-term investments||$||885,081||$||660,606|
|Long-term marketable securities||487,867||505,479|
|Property, plant and equipment, net||688,363||617,895|
|Other long-term assets||165,000||153,187|
|Total current liabilities||273,374||248,464|
|Total stockholders' equity||2,111,918||1,859,815|
All earnings per share amounts were calculated in accordance with Statement of Financial Accounting Standards No. 128.