Wednesday, Apr 7, 2004
South San Francisco, Calif. -- April 7, 2004 --Genentech, Inc. (NYSE: DNA) today announced total product sales of $763.7 million for the first quarter of 2004, a 28 percent increase over product sales in the first quarter of 2003. Sales for Avastin (bevacizumab) were $38.1 million in the first quarter of 2004. Avastin, the first U.S. Food and Drug Administration (FDA) approved therapy designed to inhibit angiogenesis, received FDA approval on February 26, 2004 and Genentech shipped product the same day. Operating revenues increased by 30 percent from the first quarter of 2003 to $975.1 million.
"Genentech is starting out the year with good quarterly performance, led by strong product sales. We have created a solid foundation for growth in the immediate future and into the next decade, which is key to our Horizon 2010 strategic plan," said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer.
"We are on track with our strategy of investing in new product launches while strengthening our pipeline through increased R&D investments, thereby continuing to create improved shareholder value," said Louis J. Lavigne, Jr., Genentech's executive vice president and chief financial officer. "The first quarter 2004 non-GAAP EPS of $0.38 represents an increase of 41 percent from our fourth quarter 2003 non-GAAP EPS of $0.27. With three products in launch mode coupled with an increase in our tax rate, the nine percent increase in non-GAAP EPS for the first quarter of 2004 compared to the first quarter of 2003 is consistent with our expectations."
Note: First quarter GAAP EPS of $0.33 represents an increase of 38 percent from fourth quarter GAAP 2003 EPS of $0.24. 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, and litigation-related special items. The differences in non-GAAP and GAAP numbers are reconciled in the tables below.
For the three months ended March 31, 2004:
"We have successfully launched three products in just nine months, while continuing the growth of our sales of existing products like Rituxan and Herceptin. We are particularly proud of launching Avastin within hours of FDA approval on a Thursday so that physicians were able to use Avastin to treat patients for colorectal cancer the following Monday," said Myrtle Potter, president of Commercial Operations. "Sales of Rituxan remain strong, although we did observe impacts from lower inventory levels at distributors, as well as from initial caution among some physicians due to their adjustments to the new reimbursement methodology under the Medicare regulations."
"With the strong performance of Avastin, we now feel that for 2004 a non-GAAP earnings per share increase in the range of 20 to 25 percent year-over-year is possible. Were revenues to increase further we would consider additional investment in the R&D and Commercial areas," said Lavigne.
For the three months ended March 31, 2004:
Royalties grew to $154.1 million compared to $113.3 million in first quarter of 2003. The increase is primarily due to higher sales by various licensees.
Contract revenues increased to $57.3 million compared to $37.9 million in the first quarter of 2003. 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 the first quarter of 2004 in comparison to costs and expenses in the first quarter of 2003.
Genentech will be offering a live webcast of a discussion by Genentech management of the earnings and other business results on Wednesday, April 7, 2004, at 2:15 p.m. Pacific Time (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 April 21, 2004. An audio replay of the webcast will be available beginning at 5:15 p.m. PT on April 7, 2004 through 5:15 p.m. PT on April 14, 2004. Access numbers for this replay are: 1-800-642-1687 (U.S./Canada) and 1-706-645-9291 (international); Conference ID number is 5846158.
Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. Eighteen of the currently approved biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes 13 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.
Marketed and Pipeline Product Events
Avastin: On February 26, 2004, Genentech announced that the FDA approved Avastin to be used in combination with intravenous 5-Fluorouracil-based chemotherapy as a treatment for patients with first-line or previously untreated metastatic cancer of the colon or rectum. Avastin is the first FDA-approved therapy designed to inhibit angiogenesis, the process by which new blood vessels develop, which is necessary to support tumor growth and metastasis.
Hedgehog Inhibitor: In collaboration with Curis, Genentech added to its product pipeline a new small molecule, an inhibitor of the Hedgehog signaling pathway, which is under development for basal cell carcinoma.
RAPTIVA: In March, Genentech and XOMA Ltd. announced preliminary results of a randomized, placebo-controlled Phase II study with RAPTIVA in 107 patients with psoriatic arthritis. Results showed a primary endpoint of ACR20 at 12 weeks (84 days) of 28 percent versus 19 percent for RAPTIVA versus placebo, which did not reach statistical significance.
Genentech provided an overview of its long-range strategy to create sustainable, long-term growth in stockholder value at its annual investment community meeting in New York on March 12, 2004. The strategy, called Horizon 2010, builds upon the company's existing 5x5 plan and sets goals to guide Genentech's vision to become a leader in revolutionizing the treatment of patients with cancer, immunological diseases and angiogenic disorders.
Genentech, Novartis Pharma AG and Tanox, Inc. announced that they settled all litigation among them and finalized the detailed terms of their three-party collaboration, begun in 1996, to develop and commercialize certain anti-IgE antibodies, including Xolair and TNX-901.
Genentech announced that the U.S. Court of Appeals for the Federal Circuit unanimously affirmed the 2002 judgment of a U.S. District Court that found in favor of Genentech that all claims of Chiron Corporation's U.S. Patent No. 6,054,561 asserted against Genentech are invalid.
Construction has begun on a site expansion at Genentech's existing Vacaville biotechnology manufacturing facility. The approximately $600 million investment will help the company meet its long-term production capacity needs. Combined with the current 427,000 square foot facility, the Vacaville site will be the largest biotechnology manufacturing facility in the world.
Genentech announced its board of directors conditionally approved a two-for-one split of the company's common stock in the form of a stock dividend. This stock split will be effected only if stockholders approve an increase in Genentech's authorized common stock at the Annual Meeting of Stockholders, to be held on April 16, 2004. The record and distribution dates will be determined by the Board after the stockholder's meeting if the increase in Genentech's authorized common stock is approved.
In March, Genentech promoted Susan D. Hellmann, M.D., M.P.H., to president of Product Development, and Myrtle Potter to president of Commercial Operations. Also, David Ebersman, senior vice president of Product Operations, was named to Genentech's Executive Committee; Hal Barron was named chief medical officer, in addition to his role as senior vice president of Development; and Joseph McCracken, vice president of Business Development, was given the additional responsibilities for a newly created function, Strategic Pipeline Development. Todd Pierce was promoted to vice president, Corporate Information Technology, and will chair the company's Information Technology Strategy Council.
Safe Harbor Statement:
The statements made in this press release relating to Genentech's short-term and long-term growth, including EPS growth, are forward-looking and actual results could differ materially. Among other things, Genentech's future growth could be impacted by a number of factors, including FDA actions or delays or failure to receive FDA approval, competition, pricing, reimbursement rates, 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. Genentech has no intention, and disclaims any obligation and does not undertake to update or revise the forward-looking statements discussed above in this press release.