Wednesday, Apr 9, 2003
South San Francisco, Calif. -- April 9, 2003 --Genentech, Inc. (NYSE: DNA) today announced a 59 percent increase in non-GAAP (formerly pro forma) earnings per share driven by a 26 percent increase in product sales. Genentech's non-GAAP earnings per share and non-GAAP net income exclude certain charges related to the 1999 Roche redemption of Genentech's stock and certain litigation-related special charges. These charges are itemized in the reconciliation tables below.
For the three months ended March 31, 2003:
"We continue to deliver solid and consistent performance and are making significant progress with our product pipeline, building momentum for future growth," said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer.
"We saw solid sales in the first quarter of 2003 across our broad product portfolio compared to the same period last year," said Myrtle S. Potter, Genentech's executive vice president of Commercial Operations and chief operating officer.
For the first quarter of 2003:
Contract revenues increased 291 percent to $37.9 million compared to $9.7 million in the first quarter of 2002. The increase in the first quarter of 2003 is primarily due to higher revenues from a contract partner based upon a milestone achievement, new licensing arrangements, and higher revenues from on-going collaborations.
Total Costs and Expenses
Costs and expenses increased as anticipated in the first quarter of 2003 as compared to the first quarter of 2002. "Our solid product sales compared to the same period last year and effective management of expenses in anticipation of increased spending later this year for potential product launches resulted in strong earnings for the quarter," said Louis J. Lavigne, Jr., Genentech's executive vice president and chief financial officer. "In addition, we were incrementally helped by a lower tax rate and an increase in contract revenues, neither of which we expect to see in subsequent quarters."
For the first quarter of 2003:
At its annual investment community meeting in New York on March 14, 2003, Genentech told investors that revenues could grow to more than $3 billion and non-GAAP EPS could increase by a minimum of 20 percent for the full year ending December 31, 2003. Non-GAAP EPS expectations for 2003 do not include amounts for ongoing litigation special charges related to the City of Hope judgment or recurring charges related to the 1999 Roche redemption of Genentech's stock. Current special charges for the City of Hope judgment are approximately $13 million per quarter and recurring charges related to the Roche redemption are expected to be approximately $154 million in 2003.
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. For press releases and additional information about the company, please visit http://www.gene.com.
Genentech will be offering a live webcast of a discussion by Genentech management of the earnings and other business results on Wednesday, April 9, 2003 at 2:15pm PT. The live webcast may be accessed on Genentech's website at http://www.gene.com. This webcast will also be available after the call via the website until close of business April 16, 2003. An audio replay of the webcast will be available beginning at 5:15pm PT on April 9, 2003 until 5:15pm PT on April 16, 2003. Access numbers for this replay are: 1-800-642-1687 (domestic) and 1-706-645-9291 (international); conference identification number is 9425223.
Marketed and Pipeline Product Events
Genentech made the "go" decision in the first quarter of 2003 to conduct Phase II studies with Tarceva (erlotinib) in glioblastoma multiforme. In addition, Genentech's partner OSI Pharmaceuticals, Inc. completed enrollment in the Tarceva Phase III studies in second- and third-line non-small cell lung cancer and pancreatic cancer.
Enrollment began this quarter in a Phase II 2C4 trial in HER2-negative breast cancer (being conducted by Roche ex-U.S.). In addition, Genentech plans to initiate other 2C4 Phase II clinical trials for ovarian and prostate cancer in the second quarter of 2003.
Genentech, Novartis Pharmaceuticals and Tanox, Inc. announced that the U.S. Food and Drug Administration's (FDA) Pulmonary-Allergy Drugs Advisory Committee will review the companies' Biologics License Application (BLA) for Xolair (Omalizumab) for the treatment of moderate-to-severe allergic asthma in adolescents and adults on May 15, 2003.
In late March, Genentech and XOMA Ltd. announced positive results from a randomized Phase III clinical trial with Raptiva (efalizumab) that studied efficacy and safety in the treatment of adults with moderate-to-severe plaque psoriasis, as well as preliminary results from an open-label, multicenter Raptiva study that suggested continued benefit with long-term treatment. Both studies were presented at the 61st annual American Academy of Dermatology meeting in San Francisco. In addition, the FDA accepted the BLA filed in late 2002 for Raptiva, and XOMA began Phase II clinical studies in Raptiva for psoriatic arthritis.
Genentech and Serono S.A. expanded their Raptiva agreement to provide Serono with the exclusive license to develop and market Raptiva in an additional 15 Asian countries. With this expanded agreement, Serono now has the rights to develop and market Raptiva worldwide outside the United States and Japan. Serono also submitted its application to the European Union for approval of Raptiva for treatment of adults with moderate-to-severe psoriasis.
Genentech began enrollment in the Phase III rhuFab V2 clinical trial for age-related macular degeneration (AMD) [minimally classic and occult; wet form of AMD].
Genentech filed an Investigational New Drug (IND) application with the FDA for Anti-Tissue Factor in acute coronary syndromes.
Genentech plans to initiate a small clinical study using recombinant vascular endothelial growth factor to treat non-healing ulcers in patients with diabetes mellitus. The company anticipates filing an IND in the second quarter and initiating the study in the third quarter of 2003.
The Beaufour Ipsen Group, which signed an agreement with Genentech in September 2002 to market Nutropin AQ® [somatropin (rDNA origin) injection] and Nutropin AQ Pen Cartridge in Europe and the rest of the world, excluding North America and Japan, obtained European marketing approval in February 2003 for Nutropin AQ.
Genentech signed a licensing agreement with Ceregene, Inc., outlicensing exclusive worldwide rights to genes for neurological gene therapies.
Genentech signed a collaboration agreement with TolerRx, Inc. to develop and commercialize TRX1, TolerRx's lead product.
Genentech appointed Ian Clark to senior vice president and general manager, BioOncology, and Philippa Norman to vice president, Global Supply Chain.
The statements made in this press release relating to the expected time frames to initiate Phase II clinical trials for 2C4 and a clinical study using recombinant vascular endothelial growth factor and the corresponding IND filing, and Genentech's expected growth in revenues and non-GAAP earnings are forward-looking and actual results could differ materially. Among other things, the timing of the initiation of clinical trials and the IND filing could be delayed by recruitment of investigators and study site initiation, patient enrollment or discussions with the FDA; and growth in revenues and non-GAAP earnings could be impacted by additional clinical studies required for a potential product, FDA actions or delays or failure to receive FDA approval for a potential product, competition, pricing, the ability to supply product, product withdrawals, new product approvals and launches, the inability to achieve sales revenue consistent with internal forecasts, unanticipated expenses such as litigation or legal settlement expenses or equity securities write downs, costs of sales, R&D expenses, fluctuations in contract revenues and royalties, and fluctuations in tax and interest rates.
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