Wednesday, Jan 14, 2004
South San Francisco, Calif. -- January 14, 2004 --Genentech, Inc. (NYSE: DNA) today announced a 30 percent increase in non-GAAP earnings per share to $1.20 per share and a 28 percent increase in revenues driven by a 21 percent increase in product sales for 2003. GAAP earnings per share in 2003 increased to $1.06 per share after the cumulative effect of an accounting change.
"The success that we are seeing from 2003 is a result of many years of effort. We view success over the long term and continue to focus on great science and execution," said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. "We successfully launched two new products, RAPTIVA and Xolair, and received Priority Review from the U.S. Food and Drug Administration for the Biologic License Application for Avastin. With the approval of RAPTIVA, we have exceeded our 5X5 goal of five product approvals by the end of 2005."
Note: Genentech's non-GAAP earnings per share and non-GAAP net income exclude recurring charges related to the 1999 Roche redemption of Genentech's stock, litigation-related special items and the cumulative effect of the change in an accounting principle related to a synthetic lease. The differences in non-GAAP and GAAP numbers are reconciled in the tables below.
For 2003, including the three months ended December 31, 2003:
Royalties in 2003 increased to $500.9 million compared to $365.6 million in 2002. The increase is primarily due to higher sales by various licensees.
Contract revenues in 2003 increased to $177.9 million compared to $54.5 million in 2002. The increase is primarily due to higher revenues from product opt-ins and reimbursement on development efforts from ongoing collaborations.
Total Costs and Expenses
Costs and expenses increased as anticipated in 2003 as compared to 2002.
"Our 2003 results are indicative of the overall strength of our strategy of managing our business to build both short- and long-term value," said Louis J. Lavigne, Jr., Genentech's executive vice president and chief financial officer. "We exceeded our EPS performance targets, while at the same time making significant investments in our new product launches and increasing our R&D investments for future growth potential."
Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. Seventeen of the currently approved biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes 12 biotechnology products 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 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, January 14, 2004 at 2:15 p.m. 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 5:00 p.m. PT on January 28, 2004. An audio replay of the webcast will be available beginning at 5:15 p.m. PT on January 14, 2004, through 5:15 p.m. PT on January 21, 2004. Access numbers for this replay are: 1-800-642-1687 (US/Canada) and 1-706-645-9291 (international); conference identification number is 4512259.
Marketed and Pipeline Product Events
Avastin (bevacizumab): On December 1, 2003, Genentech announced that the Biologics License Application (BLA) for Avastin was accepted by the U.S. Food and Drug Administration (FDA). As part of the Avastin BLA filing, Genentech requested and was granted Priority Review designation from the FDA. Based on the Priority Review designation, the FDA has six months from the submission date, or by the end of March 2004, to take action on the BLA filing. The final portion of the BLA was submitted on September 29, 2003, under the FDA's Fast Track designation, as a treatment for first-line metastatic colorectal cancer in combination with chemotherapy. In late November, Genentech and Roche announced that a Phase II study of Avastin plus 5FU/Leucovorin chemotherapy in 209 previously untreated metastatic colorectal cancer patients showed a 29 percent improvement in median survival, the primary endpoint, which did not achieve statistical significance. The study also showed a 67 percent prolongation in median progression-free survival, which was highly statistically significant, in patients treated with Avastin plus 5FU/Leucovorin compared to 5FU/Leucovorin alone.
Rituxan® (Rituximab): There were over 250 abstracts on Rituxan presented at the 45th Annual American Society of Hematology (ASH) meeting in early December, including positive results of the first Phase III trial with Rituxan in previously untreated (front-line) patients with indolent non-Hodgkin's lymphoma (NHL) and initial results of a Phase II study suggesting that Rituxan maintenance therapy prolongs remission in indolent NHL. At ASH, Genentech and Biogen Idec were informed that a large, Phase III study evaluating Rituxan in combination with chemotherapy as a front-line treatment for aggressive lymphoma had met its pre-specified primary efficacy endpoint early. Also presented were promising results of a Phase III study of Rituxan as a front-line and maintenance therapy in the treatment of newly diagnosed, diffuse, large, B-cell, or aggressive NHL. Earlier in the quarter, Genentech, Biogen Idec and Roche announced that they had been informed that an Eastern Cooperative Oncology Group (ECOG) Phase III study (E1496) evaluating Rituxan maintenance therapy had met its pre-specified primary efficacy endpoint early.
Herceptin® (Trastuzumab): At the 26th Annual San Antonio Breast Cancer Symposium in early December, Genentech and Roche announced updated results from a clinical study evaluating Herceptin in combination with Taxotere® (docetaxel) as a first-line treatment for HER2 (human epidermal growth factor receptor-2) positive metastatic breast cancer patients. The multi-center, randomized Phase II trial results suggest that adding Herceptin to docetaxel resulted in an increase in median survival of 51 percent, or 9.4 months (27.7 months for patients treated with Herceptin and docetaxel compared to 18.3 months for patients treated with docetaxel alone).
RAPTIVA (efalizumab): On October 27, 2003, Genentech and XOMA Ltd. announced that RAPTIVA was approved by the FDA for the treatment of chronic moderate-to-severe plaque psoriasis in adults age 18 or older who are candidates for systemic therapy or phototherapy. RAPTIVA was launched on November 17, and on November 19, Genentech and XOMA announced results of a study published in the November 20 issue of the New England Journal of Medicine in which patients with moderate-to-severe plaque psoriasis receiving 12 weeks of treatment with RAPTIVA experienced a significant reduction in the signs and symptoms associated with psoriasis. In addition, most patients who received extended treatment to 24 weeks continued to benefit.
Rituxan for Rheumatoid Arthritis (RA): In October, Genentech, Biogen Idec and Roche announced positive follow-up results from a Phase II study showing that a single, short course of treatment (two infusions during the first 15 days of treatment) with Rituxan, alone or in combination with either methotrexate (MTX) or cyclophosphamide (CTX), improved symptoms in patients with moderate-to-severe RA for up to 48 weeks compared to MTX alone.
Nutropin® [somatropin (rDNA origin) for injection]: On December 19, 2003, Genentech submitted a supplemental New Drug Application (sNDA) to the FDA for the additional indication of Nutropin for the long-term treatment of idiopathic short stature (ISS), also called non-growth hormone-deficient short stature, defined by a height score of less than -2.25 standard deviations below the mean for normal height and associated with growth rates unlikely to permit attainment of adult height in the normal range, in pediatric patients whose epiphyses are not closed and for whom diagnostic evaluation excludes other causes associated with short stature that should be observed or treated by other means. In the fourth quarter, the study of Nutropin Depot in patients with adult growth hormone deficiency met its primary endpoint. Data has been submitted to the Endocrine Society for presentation in 2004. Discussions are underway between Genentech and Alkermes on a potential filing of these data to the FDA.
TNKase (Tenecteplase): In November, Boehringer Ingelheim and Genentech announced that they plan to test the single-bolus thrombolytic TNKase/Metalyse® in combination with percutaneous coronary intervention (PCI), also known as primary angioplasty, as a potential treatment regimen for acute myocardial infarction (AMI).
Genentech announced it was named by FORTUNE Magazine as one of the "100 Best Companies To Work For" for the sixth consecutive year. Genentech moved up the list to number 15 from number 80 in 2002.
Genentech and Lonza Group Ltd. announced in December that the companies have entered into a long-term manufacturing agreement under which Lonza Biologics will manufacture commercial quantities of Rituxan for Genentech at Lonza's production facility in Portsmouth, New Hampshire.
Genentech was named by Science magazine as "the top employer and most admired company in the biotechnology and pharmaceutical industries" for the second year in a row. The honor was the result of a survey sponsored by Science magazine and conducted by Hughes Research Worldwide of Rockville, Maryland, involving readers of Science who work in the pharmaceutical, biotechnology, and biopharmaceutical industries in the United States and Western Europe.
Genentech announced that its Board of Directors authorized the repurchase of up to $1 billion of its common stock through December 31, 2004.
The statements made in this press release relating to Genentech's future growth potential are forward-looking and actual results could differ materially. Among other things, Genentech's future growth potential could be impacted by a number of factors, including FDA actions or delays or failure to receive FDA approval, competition, pricing, reimbursement, 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.
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