Tuesday, Apr 11, 2006
South San Francisco, Calif. -- April 11, 2006 --Genentech, Inc. (NYSE: DNA) today announced financial results for the first quarter of 2006. Revenue results for the first quarter of 2006 include:
With the adoption of Statement of Financial Accounting Standards No. 123R as of January 1, 2006, Genentech is reporting employee stock-based compensation expense in its GAAP results for the first time. GAAP results for the first quarter of 2006 are detailed in the accompanying tables. Key operating results for the first quarter of 2006 include:
A reconciliation2 between non-GAAP and GAAP earnings per share for the first quarters of 2006 and 2005 is provided in the following table:
|Non-GAAP Diluted EPS||Employee Stock Compensation Expense||Roche Redemption and Special Items||Reported GAAP Diluted EPS|
The company announced it expects approximately 45 to 55 percent growth in non-GAAP earnings per share for the full year 2006.2 The increase relative to previously communicated 2006 expectations is due primarily to revised internal forecasts for product sales and royalty revenue.
For the first quarter of 2006, we recorded operating revenues of nearly $2 billion, roughly equivalent to our annual revenues for 2001, said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. We continue our focus on developing novel, breakthrough therapies that will make an important difference to patients. We submitted yesterday an sBLA for Avastin in combination with platinum-based chemotherapy to treat patients with first-line non-squamous non-small cell lung cancer, and we are hopeful that this potential therapy will provide a new option to patients who suffer from this difficult-to-treat type of lung cancer.
For the three months ended March 31, 2006:
Royalties and Contract Revenues
Total Costs and Expenses
Genentech's unrestricted cash and investments portfolio totaled approximately $4 billion as of March 31, 2006.
The company announced that in the first quarter of 2006 it began enrollment in a Phase III study of Avastin in second-line metastatic breast cancer in combination with several chemotherapy regimens; a Phase II study of Avastin in patients with non-squamous non-small cell lung cancer who have previously treated brain metastases; a Phase III study of Rituxan in class III/IV lupus nephritis; a Phase III radiographic study of Rituxan in methotrexate-naive rheumatoid arthritis patients; and a Phase III controlled retreatment study of Rituxan in rheumatoid arthritis patients who have had an inadequate response to one or more tumor necrosis factor antagonist therapies.
Genentech will be offering a live webcast of a discussion by Genentech management of the earnings and other business results on Tuesday, April 11, 2006, 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 be available via the website until 5:00 p.m. PT on April 25, 2006. A telephonic audio replay of the webcast will be available beginning at 5:15 p.m. PT on April 11, 2006 through 5:15 p.m. PT on April 18, 2006. Access numbers for this replay are: 1-800-642-1687 (U.S./Canada) and 1-706-645-9291 (international); conference ID number is 6677663.
Founded 30 years ago, 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 and licenses several additional products to other companies. The company has headquarters in South San Francisco, California and is listed on the New York Stock Exchange under the symbol DNA. For additional information about the company, please visit http://www.gene.com.
For information on Genentech's latest business and product development events please refer to http://www.gene.com/gene/news/press-releases/index.jsp.
This press release contains forward-looking statements regarding Avastin as a potential therapy and Genentech's growth in non-GAAP earnings per share (EPS) in 2006. Such statements are predictions and involve risks and uncertainties such that actual results may differ materially. Among other things, Avastin's potential as a therapy could be affected by unexpected safety, efficacy or manufacturing issues, FDA actions or delays, failure to obtain FDA approval, competition, pricing, reimbursement, the ability to supply product, product withdrawals; and growth in non-GAAP EPS could be affected by all of the foregoing and by a number of other factors, including new product approvals and launches, achieving sales revenue consistent with internal forecasts, costs of sales, employee stock-based compensation expenses, unanticipated expenses such as litigation or legal settlement expenses or equity securities writedowns, R&D expenses, fluctuations in contract revenues and royalties, and fluctuations in tax and interest rates. Please also refer to Genentech's periodic reports filed with the Securities and Exchange Commission. Genentech disclaims, and does not undertake, any obligation to update or revise any forward-looking statement in this press release.
1 The company adopted SFAS No. 123R on a modified prospective basis beginning January 1, 2006, and, therefore, no employee stock-based compensation expense has been recognized in GAAP-reported amounts in any prior period. Based on the pro forma application of SFAS No. 123 for the calculation of employee stock-based compensation expense prior to January 1, 2006 (as previously disclosed in Genentech's financial statement footnotes), pro forma employee stock-based compensation expense in the first quarter of 2005 was $40 million, net of tax, (or $0.05 per diluted share), and the resulting pro forma GAAP diluted earnings per share was $0.22.
2 Genentech's non-GAAP net income and non-GAAP earnings per share exclude the after-tax impacts of recurring charges related to the 1999 redemption of Genentech's stock by Roche Holdings, Inc., litigation-related special items, and employee stock-based compensation expense associated with Genentech's adoption of SFAS No. 123R on January 1, 2006. The differences in non-GAAP and GAAP numbers are reconciled in the accompanying tables and on http://www.gene.com.