Wednesday, Oct 6, 2004
South San Francisco, Calif. -- October 6, 2004 --Genentech, Inc. (NYSE: DNA) today announced total product sales of $1.0 billion for the third quarter of 2004, a 54 percent increase over product sales of $654.9 million in the third quarter of 2003. Operating revenues increased by 47 percent from the third quarter of 2003 to $1.2 billion.
"We are very pleased with the strong results of the quarter, and, for the first time in our company history, we achieved $1 billion in quarterly product sales," said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. "Our focus on science and sound execution of our strategy have allowed us to make substantial year-over-year increases in revenues and net income and stay on course with our corporate goals."
"We have maintained consistently strong performance across our product portfolio, and we are pleased with the sales of Avastin, which reached $183.0 million for the quarter. Xolair has also performed well, with sales of $53.9 million for the quarter and sales of $152.9 million in the first 12 months since its launch," said Myrtle Potter, president of Commercial Operations. "We are actively preparing for our next milestone with the anticipated launch of Tarceva, which is pending FDA approval."
For the three months ended September 30, 2004:
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 third quarter 2003 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 and on www.gene.com. All share and per share amounts reflect the May 2004 two-for-one split of Genentech common stock.
"Our current expectation for our 2004 non-GAAP EPS has now been increased and ranges between $0.80 and $0.83, compared to our prior range of $0.75 to $0.80 as provided during our second quarter earnings announcement," said Louis J. Lavigne, Jr., Genentech's executive vice president and chief financial officer.
For the three months ended September 30, 2004:
Royalties grew to $153.9 million compared to $116.5 million in the third quarter of 2003. The increase is primarily due to increased sales by licensees.
Contract revenues decreased slightly to $43.2 million compared to $45.6 million in the third quarter of 2003.
Total Costs and Expenses
Costs and expenses increased in the third quarter of 2004 in comparison to costs and expenses in the third 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, October 6, 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 October 20, 2004. An audio replay of the webcast will be available beginning at 5:15 p.m. PT on October 6, 2004 through 5:15 p.m. PT on October 13, 2004. Access numbers for this replay are: 1-800-642-1687 (U.S./Canada) and 1-706-645-9291 (international); conference ID number is 128648.
Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. A considerable number of the currently approved biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes multiple biotechnology products directly in the United States and licenses several additional products to other companies. 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: The National Surgical Adjuvant Breast and Bowel Project (NSABP) initiated the first adjuvant study with Avastin in colorectal cancer, evaluating Avastin plus chemotherapy in patients with high-risk, surgically treated disease.
Tarceva (erlotinib HCI): In August, Genentech and OSI Pharmaceuticals, Inc. announced that OSI completed the submission of a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) for Tarceva as a monotherapy for the treatment of patients with advanced non-small cell lung cancer (NSCLC) for whom chemotherapy has failed. In September, the FDA accepted the NDA filing and granted priority review status. We anticipate FDA action by January 30, 2005.
In August, Roche submitted a Marketing Authorization Application to the European Health Authorities for Tarceva as a monotherapy for the treatment of patients with advanced NSCLC for whom chemotherapy has failed.
In September, Genentech, OSI Pharmaceuticals and Roche announced that preliminary results from a randomized Phase III clinical study of the investigational drug Tarceva in combination with gemcitabine chemotherapy for patients with locally advanced or metastatic pancreatic cancer indicated a 23.5 percent improvement in overall survival when compared to patients receiving gemcitabine plus placebo. Median and one-year survival in the Tarceva plus gemcitabine arm were 6.4 months and 24.0 percent respectively, compared to 5.9 months and 17.0 percent in the gemcitabine plus placebo arm.
Other Clinical Trial Developments: The Rituxan Phase III trial known as REFLEX completed enrollment during the third quarter of 2004. Enrollment was opened during the third quarter of 2004 for both the Phase I APO2L/Trail study in cancer and the Phase II study combining Avastin and Tarceva in NSCLC.
Immunology and Specialty Biotherapeutics
RAPTIVA: In late July, Genentech and XOMA Ltd. announced preliminary 30-month (120 weeks) results from an open-label study evaluating the safety and efficacy of long-term continuous treatment with RAPTIVA in adults with moderate-to-severe chronic plaque psoriasis. The study results were presented as a poster at the American Academy of Dermatology ACADEMY 2004 meeting in New York. The results of this study suggest that continuous, weekly dosing of RAPTIVA provided sustained clinical benefit over 2-1/2 years.
On September 23, Serono S.A. announced that it received European Commission Marketing Authorization for RAPTIVA for people with moderate-to-severe chronic plaque psoriasis for whom other systemic treatments or phototherapy have been inadequate or inappropriate.
Lucentis: The Phase III study, known as ANCHOR, which evaluates Lucentis for age-related macular degeneration, completed enrollment in the third quarter of 2004.
In August, Genentech announced that the FDA approved the supplemental Biologics License Application (sBLA) for the manufacturing of Avastin bulk drug substance at the company's Vacaville, Calif. facility. Avastin bulk drug substance will also continue to be manufactured at the company's South San Francisco facility.
In late September, Genentech and Wyeth Pharmaceuticals, a division of Wyeth, announced that the companies entered into a manufacturing agreement for Herceptin. Under the agreement, Wyeth Pharmaceuticals will manufacture Herceptin bulk drug substance for Genentech at Wyeth's production facility in Andover, Massachusetts.
On September 28, Genentech announced that its Board of Directors authorized the extension of its current stock repurchase program for the repurchase of up to an additional $1 billion of its common stock through December 31, 2005. The Board also amended the current repurchase plan by increasing the maximum number of shares that can be repurchased to 50 million from 25 million shares.
On October 4, Genentech announced it received a subpoena from the assistant U.S. Attorney's Office for the Eastern District of Pennsylvania, requesting documents related to the promotion of Rituxan, a prescription treatment for relapsed or refractory, low-grade or follicular, CD20 positive, B-cell non-Hodgkin's lymphoma.
The statements made in this press release relating to the potential launch of Tarceva and 2004 non-GAAP earnings per share (EPS) are forward-looking and actual results could differ materially. Among other things, the potential launch of Tarceva could be impacted by a number of factors, including manufacturing issues, discussions with the FDA, the need for additional clinical studies, FDA actions or delays, or the failure to receive FDA approval; and 2004 non-GAAP EPS could be impacted by all of the foregoing and by competition, pricing, new product approvals and launches, government reimbursement rates, the ability to supply product, product withdrawals, 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 disclaims any obligation and does not undertake to update or revise the forward-looking statements discussed in this press release.
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