Friday, Mar 14, 2003
South San Francisco, Calif. -- March 14, 2003 --Genentech, Inc. (NYSE: DNA) today provided an overview of expectations for revenues and pro forma earnings per share (EPS) for 2003 and the 2003-2005 time period, as well as long-term pro forma EPS expectations for the 2005-2010 period, at its annual investment community meeting in New York. The company also provided more detailed financial expectations for the first quarter of 2003. In addition to financial expectations, the company provided investors with an overview of recent developments, including highlights from its extensive research, development and commercial efforts. Genentech's Chairman and Chief Executive Officer Arthur D. Levinson, Ph.D., and other senior executives presented at today's meeting.
"Genentech has the most extensive track record in successful biotech drug discovery, research, development and commercialization, and we expect that we will continue to lead the way in breakthrough technologies and products," said Levinson. "We are committed to delivering on our long-term growth strategy and anticipate a significant growth period ahead. We expect 2003 to be an especially exciting year for Genentech, with anticipated FDA licensing decisions on Xolair for allergic asthma and Raptiva for psoriasis, and data from two important Phase III oncology clinical trials."
"Genentech expects strong top-line and bottom-line growth for 2003 and sees that potential extending through the 2003-2005 time period," stated Louis J. Lavigne, Jr., executive vice president and chief financial officer.
The company told investors today that revenues could grow to more than $3 billion and pro forma EPS could increase by a minimum of 20 percent for the full year ending December 31, 2003. Lavigne also informed investors that pro forma EPS could increase by a minimum of 20 percent for the 2003-2005 time period and revenues could grow to more than $4 billion by 2005, dependent on sales growth and new product approvals. In addition, Levinson said Genentech anticipates double-digit pro forma EPS growth for the period 2005-2010.
Lavigne also gave financial expectations for the first quarter of 2003 with the caveat that two weeks still remain in the first quarter. Lavigne said the company expects first quarter results to exceed analysts? expectations due to stronger product sales, higher contract revenues and a lower tax rate than expected producing a significant increase in EPS over the first quarter of 2002. Lavigne added that the company expects strong product sales for the full year, with lower contract revenues, higher pre-launch expenses and a higher tax rate in the later quarters of 2003.
Focus on Growth
At the meeting, Genentech said it has made steady progress towards its 5X5 goals, five goals the company outlined in 1999 to achieve by the end of 2005. Levinson stated that the company's highest priority is to meet the 5X5 EPS growth target while ensuring that Genentech leaves 2005 with continued strong prospects for growth on a higher revenue base. The company stated that its average annual pro forma EPS growth rate from 1999 through 2002 was 27 percent. Genentech also outlined its strategic framework for long-range growth through 2010. The company said that its innovative research and development programs in the areas of oncology, immunology and vascular biology are expected to continue to drive growth.
Genentech told investors it is preparing for the potential of multiple product launches over the next few years. As of 2002, the company has secured the position as the leading U.S. anti-tumor oncology company. Rituxan® (Rituximab) is now the #1 anti-tumor product in the United States and #2 in the world in terms of sales for the treatment of non-Hodgkin's lymphoma. Herceptin® (Trastuzumab) is the #8 anti-tumor product in the United States and #9 worldwide in terms of sales and a leading therapy in the treatment of HER2-overexpressed metastatic breast cancer.
The company said its future sales growth would be dependent on increasing market penetration for labeled indications and developing new markets for its existing products, as well as commercializing potential new therapies in oncology, immunological disease, vascular medicine and other areas of high unmet need. "We are rigorous and strategic in our approach to commercializing our products," said Myrtle S. Potter, executive vice president, Commercial Operations and chief operating officer. "The real measure of our success lies in our ability to successfully launch innovative new products while continuing to maximize the value of all our products throughout their life cycles."
A major focus for the company in 2003 will be preparing for potential product launches in the asthma and psoriasis disease categories. If approved by the Food and Drug Administration (FDA) this year, Xolair (Omalizumab) could be launched in the second half of 2003 and would be the first product to block IgE, a root cause of uncontrolled moderate-to-severe allergic asthma. In addition, if approved by the FDA, Raptiva (Efalizumab) could be launched in late 2003 and could change the way psoriasis is treated and present a potentially safer, more convenient alternative to traditional therapies for the disease. Genentech emphasized the strength of its balanced, high-growth portfolio and said it would continue to seek in-licensing and co-development opportunities in order to add incremental value to its portfolio.
Expanding the Product Portfolio
Genentech also provided investors with an update on its robust and diverse product pipeline. Susan Desmond-Hellmann, M.D., M.P.H., executive vice president, Development and Product Operations, and chief medical officer, reported, "Genentech has a broad product pipeline, with approximately 20 projects in development and an extensive oncology development program. Genentech and its partners have ongoing clinical programs in eight of the top 10 cancer killers in the United States."
Genentech noted that 2003 will be an important year for its oncology pipeline, with results expected for several trials within its broad solid tumor development programs for Avastin (bevacizumab, rhuMAb-VEGF), Tarceva (erlotinib) and 2C4. Genentech has a broad development program based on the role of VEGF in tumor formation, with Cooperative Group/NCI trials ongoing in a variety of tumor types, and believes it will be well-positioned if anti-angiogenic approaches prove advantageous to patients. The company anticipates Avastin Phase III colorectal cancer data in mid-2003 and expects to initiate a Phase III program in Avastin in renal cell carcinoma in the first half of 2003.
With partners OSI Pharmaceuticals and Roche, the company anticipates Phase III data for Tarceva in front-line non-small cell lung cancer in the second half of 2003 and Phase III data from a study in pancreatic cancer in late 2003 or early 2004. Genentech also discussed the potential for use of Tarceva in patients with glioma and announced that Phase I data in that disease was submitted to the American Society of Clinical Oncology. Finally, the company outlined its broad program in solid tumors for 2C4 with partner Roche, and expects to initiate a Phase II program in multiple tumor types in the first half of 2003.
Genentech also discussed its emerging focus on immunology and vascular medicine, where the company is leveraging its VEGF expertise to address debilitating vascular diseases such as diabetic wound healing, bone growth in bone fractures and age-related macular degeneration (AMD). The company discussed the Phase III study design of rhuFab in the wet form of AMD and will launch a Phase III trial in the first quarter of 2003. Rituxan is showing early promise in rheumatoid arthritis (RA), as well as numerous other immunological diseases. "At Genentech, we are focusing on key unmet medical needs in immunology with the important potential new therapies Xolair and Raptiva pending approval, as well as significant new Phase II and Phase III trials of Rituxan in rheumatoid arthritis," said Hal Barron, M.D., vice president, Medical Affairs.
Genentech, along with partners IDEC Pharmaceuticals Corporation and Roche, expects to initiate a worldwide development program for Rituxan in RA in the first half of 2003. The company also presented additional analysis of Xolair data that confirms its safety and efficacy, reduction in asthma exacerbations and improved clinical outcomes. The company also noted that its partner XOMA Ltd. recently initiated a Phase II study of Raptiva in psoriatic arthritis, and Genentech anticipates preliminary Phase II RA results in the second half of 2003. Genentech expects FDA action on its Xolair application in mid-2003 and its Raptiva application in late 2003.
In addition, the company emphasized the increasing importance of diagnostics to create specifically targeted therapies to help get the right medicines to the right patients.
Keeping the Pipeline Full
Genentech also described some of the company's promising research programs. "Our goal is to remain one of the world's top biomedical research organizations and to keep our product pipeline filled with high-value therapeutic candidates," reported Richard H. Scheller, Ph.D., senior vice president, Research. Genentech's research organization is focused on cancer, immunology and vascular biology integrating efforts across research and development to improve therapeutic targets. Genentech reported that it is studying a variety of approaches to molecular oncology, including signaling pathways, anti-angiogenesis, apoptosis, tumor antigens and armed antibodies. The company also highlighted its research efforts in immunology, including cell-based depletion, modulation of pathogenic antibodies, tolerance induction, and regulation of cytokine function.
Genentech presently has a large number of candidates in late-stage research for development decisions in 2003 and 2004, and Scheller provided details on a few of the more advanced projects. Scheller also highlighted important new scientist hires and the expansion of Genentech?s Founders? Research Center, which is targeted for completion in late 2003, and will make the center the world?s largest single-site facility for biotechnology research.
Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. Fifteen of the currently approved biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes ten biotechnology products directly in the United States. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA.
The statements made in this press release relating to Genentech's growth in revenues and pro forma EPS for first quarter 2003, fiscal 2003 and for the periods from fiscal 2003 to 2005 and fiscal 2005 to 2010, the timing of FDA action and the potential approval and launch of multiple new products, including Xolair and Raptiva, the initiation of Phase III trials for rhuFab and for Avastin for renal cell carcinoma and Phase II trials for 2C4, the initiation of a worldwide development program for Rituxan in rheumatoid arthritis, and the timing of data availability from Phase I trials of 2C4, Phase III trials for Avastin in colorectal cancer, Phase III trials for Tarceva in non-small cell lung cancer and pancreatic cancer, and preliminary Phase II trials for Raptiva in rheumatoid arthritis are forward-looking and actual results could differ materially. Among other things, the initiation of clinical trials and a global development program and the timing of data availability from clinical trials could be impacted by the recruitment of investigators and study site initiation, the length of time to achieve study endpoints, safety, efficacy, manufacturing or patient enrollment issues, additional time requirements for data analysis or discussions with the FDA; potential product approvals and launch dates could be impacted by all of the foregoing and by additional clinical studies, FDA actions or delays or failure to receive FDA approval; and Genentech?s growth in revenues and pro forma EPS could be impacted by all of the foregoing and a number of other factors, including competition, pricing, the ability to supply product, product withdrawals, new product approvals and launches, achieving sales revenue consistent with internal forecasts, unanticipated expenses such as litigation or legal settlement expenses or equity securities writedowns, costs of sales, R&D expenses, fluctuations in contract revenues and royalties, and fluctuations in tax and interest rates.
An archive of the webcast of Genentech's annual investment community meeting in New York can be accessed on Genentech's website at www.gene.com starting at 8:00 p.m. Eastern Time. The archived webcast will be available for replay until 8:00 p.m. Eastern Time on March 21, 2003.