Genentech Reports 1998 Second Quarter Results; Net Income Increased 70 Percent on 15 Percent Revenues Increase as Genentech Seeks Approval for Its Second Oncology Product.SOUTH SAN FRANCISCO South San Francisco, city (1990 pop. 54,312), San Mateo co., W Calif.; inc. 1908. South San Francisco has several industrial parks; its manufactures include medical supplies and equipment, foods, paint, paper products, consumer goods, and clothing. , Calif.--(BW HealthWire)--July 14, 1998-- Genentech, Inc. (NYSE NYSE See: New York Stock Exchange :GNE GNE Gateway Network Element (data communications) GNE Game Neverending (MMORPG) GNE Gross National Expenditure GNE Game Networking Engine GNE Graphical Network Editor (Nortel) ) announced today that net income for the second quarter of 1998 increased 70 percent to $40.4 million, or 31 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. (a) from $23.8 million, or 19 cents per share(a), in the second quarter of 1997. This increase in net income stemmed primarily from an increase in revenues. Revenues increased 15 percent to $268.0 million, from $233.5 million in the same quarter of 1997. This increase resulted primarily from an increase in product sales driven by Rituxan(tm) (Rituximab) sales. "Our financial results for the quarter are in line with the goals for initial earnings increases of our Long-Range Plan (LRP LRP Lipoprotein Receptor-Related Protein LRP Low Density Lipoprotein Receptor-Related Protein LRP Loan Repayment Program LRP Linux Router Project LRP Livestock Risk Protection LRP Laparoscopic Radical Prostatectomy Lrp Leucine-responsive Regulatory Protein ) for growth and show again that this plan is working," said Arthur D. Levinson Arthur D. Levinson (born March 31, 1950 in Seattle, Washington, United States) is President and Chief Executive Officer of Genentech. He has held these positions since July 1995, and was named chairman of the board of directors in 1999. , Ph.D., Genentech's president and chief executive officer. "Our progress with the products in our pipeline and with our business relationships also validate the soundness of our LRP. I'm particularly excited about the progress made with our leading pipeline project, Herceptin(R) (Trastuzumab). During the quarter we filed under Fast Track review for regulatory approval to market Herceptin for the treatment of women with metastatic Metastatic The term used to describe a secondary cancer, or one that has spread from one area of the body to another. Mentioned in: Coagulation Disorders metastatic pertaining to or of the nature of a metastasis. breast cancer who overexpress the HER2 proto-oncogene. This filing was based on positive results that were announced in May based on comprehensive Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA trials testing Herceptin alone or in combination with chemotherapy." Marketed Products Product sales in the second quarter of 1998 increased 22 percent to $176.3 million from $145.0 million in the second quarter of 1997. Sales of Rituxan in the second quarter of 1998 were $34.8 million. Rituxan is currently approved for marketing in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. as a single-agent therapy for the treatment of relapsed or refractory refractory Material that is not deformed or damaged by high temperatures, used to make crucibles, incinerators, insulation, and furnaces, particularly metallurgical furnaces. low-grade or follicular fol·lic·u·lar adj. 1. Relating to, having, or resembling a follicle or follicles. 2. Affecting or growing out of a follicle or follicles. , CD20-positive B-cell non-Hodgkin's lymphoma non-Hodg·kin's lymphoma n. Any of various malignant lymphomas characterized by the absence of Reed-Sternberg cells. Non-Hodgkin's lymphoma . Genentech first recorded sales for Rituxan of $5.5 million in the fourth quarter of 1997 and recorded sales for this product of $37.7 million in the first quarter of 1998. Genentech and its partner IDEC IDEC Instituto Brasileiro de Defesa do Consumidor (Portugese: Brazilian Consumer Protection Agency) IDEC Information Design & End-User Computing IDEC Interior Design Educators Council, Inc. Pharmaceuticals Corporation expected this pattern of sales as initial pent up demand reflected in sales for the fourth quarter of 1997 and the first quarter of 1998 is being replaced in subsequent quarters by demand from increased use. During the quarter, Genentech and IDEC's partner Roche received approval from the European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community to market Rituximab under the tradename MabThera for marketing in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . MabThera was approved for treating non-Hodgkin's lymphoma patients who have had two or more relapses or are resistant to chemotherapy. Roche holds marketing rights for MabThera outside of the United States and Japan. Genentech will receive royalties and a mark-up on product supplied to Roche. Also during the quarter, Genentech and its partner IDEC announced encouraging results of a Phase II pilot study combining Rituxan (the U.S. tradename for Rituximab) with standard chemotherapy in patients with previously untreated intermediate- or high-grade non-Hodgkin's lymphoma. The full results of this small Phase II study were presented in May at the annual meeting of the American Society of Clinical Oncology American Society of Clinical Oncology, or ASCO, is an organization that represents all clinical oncologists. Every year, ASCO holds a large symposium where physicians and researchers meet to convey and discuss research and ideas. (ASCO ASCO American Society of Clinical Oncology ASCO Association of Schools and Colleges of Optometry (since 1941; Rockville, Maryland) ASCO Australian Standard Classification of Occupations ASCO Automatic Switch Company ) in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . Sales of Activase(R) (Alteplase, recombinant), a tissue plasminogen activator tissue plasminogen activator n. Abbr. TPA 1. An enzyme that catalyzes the conversion of plasminogen to plasmin, used to dissolve blood clots rapidly and selectively, especially in the treatment of heart attacks. 2. (t-PA), declined 21 percent to $54.1 million from $68.3 million in the second quarter of 1997. This decline resulted primarily from a decrease in market share compared to the prior year's second quarter. The sales dollar decline from the prior year's second quarter also resulted, to a lesser extent, from a decline in the thrombolytic thrombolytic /throm·bo·lyt·ic/ (throm?bo-lit´ik) dissolving or splitting up a thrombus, or an agent that so acts. thrombolytic 1. dissolving or splitting up a thrombus. 2. an agent that dissolves or splits up a thrombus. market size due to mechanical reperfusion re·per·fu·sion n. The restoration of blood flow to an organ or tissue that has had its blood supply cut off, as after a heart attack. and from a temporary decrease in the available commercial market because of two large ongoing Phase III studies that involve thrombolytic therapy Thrombolytic Therapy Definition Thrombolytic therapy is the use of drugs that dissolve blood clots. Purpose When a blood clot forms in a blood vessel, it may cut off or severely reduce blood flow to parts of the body that are served by . Patients in these studies did not receive commercial product, as they may have if they were not participating in a study. While Activase market share and the thrombolytic market size declined from the second quarter of 1997, during 1998 they have both remained constant. Effective June 1998, a large healthcare alliance enterprise, Premier, Inc. entered a sole-source corporate partnership agreement with Genentech. The agreement, which is part of Premier's commitment program, includes Activase. As part of the agreement, Premier will work closely with Genentech to enhance community awareness by implementing educational programs related to cardiac arrest cardiac arrest n. Abbr. CA A sudden cessation of cardiac function, resulting in loss of effective circulation. Cardiac arrest A condition in which the heart stops functioning. and stroke. Shortly following the close of the second quarter, Genentech partner Boehringer Ingelheim GmbH announced preliminary findings from the European Cooperative Acute Stroke Study II (ECASS ECASS Cardiology An international, double blinded, randomized trial–European Cooperative Acute Stroke Study which evaluated effects of thrombolytics in Pts with stroke. See Thrombolytic therapy, tPA. II) in stroke patients presenting within 0 to 6 hours of symptom onset. While this study showed an unexpected low overall mortality compared to previous stroke clinical trials, it failed to show a statistically significant clinical benefit in stroke patients treated with Actilyse (the European tradename for Alteplase, recombinant) compared to placebo. Genentech's Activase (the U.S. tradename for Alteplase, recombinant) is approved for the treatment of acute ischemic stroke Noun 1. ischemic stroke - the most common kind of stroke; caused by an interruption in the flow of blood to the brain (as from a clot blocking a blood vessel) ischaemic stroke within 3 hours of symptom onset. Sales of Genentech's three growth hormone growth hormone or somatotropin (sōmăt'ətrō`pən), glycoprotein hormone released by the anterior pituitary gland that is necessary for normal skeletal growth in humans (see protein). products, Protropin(R) (somatrem for injection), Nutropin(R) (somatropin (rDNA origin) for injection) and Nutropin AQ(R) (somatropin (rDNA origin) injection) increased 12 percent to $62.3 million from $55.6 million in the second quarter of 1997. This increase resulted from fluctuations in ordering patterns by distributors and treatment of new adult patients with growth hormone deficiency growth hormone deficiency Hypopituitarism Endocrinology A condition which affects 1:4000 children; ♂:♀, 3-4:1 Etiology 70% of GHD is idiopathic and attributed to a prenatal insult, possibly due to hypothalamic dysfunction, given that GHD children following regulatory approval of Nutropin and Nutropin AQ for this indication in December 1997. Genentech's new agreement with Premier mentioned above also extends an existing contract between Premier and Genentech covering Genentech's three growth hormone products. Pulmozyme(R) (dornase alfa dornase alfa /dor·nase al·fa/ (dor´naz al´fah) recombinant human deoxyribonuclease I (DNase I) used to reduce the viscosity of sputum in cystic fibrosis. dor·nase al·fa n. , recombinant) Inhalation Solution sales increased 19 percent to $24.1 million from $20.2 million in the second quarter of 1997. This increase in sales resulted from fluctuations in wholesalers' purchase patterns and new Pulmozyme patients in all age groups, including very young patients following the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. approval for a label change to Pulmozyme in February 1998. This label change allows Pulmozyme to be used to treat very young children with cystic fibrosis cystic fibrosis (sĭs`tĭk fībrō`sĭs), inherited disorder of the exocrine glands (see gland), affecting children and young people; median survival is 25 years in females and 30 years in males. , ages three months to four years. During the quarter, Genentech licensed U.S. marketing and development rights to interferon gamma interferon gamma IFN-γ A 21-25 kD glycoprotein lymphokine encoded on chromosome 12q and produced by activated T and NK cells; IFN-γ is antiviral, regulates class II MHC antigen expression, Fc receptors and immunoglobulin production and class switching, , including Actimmune(R) (Interferon gamma-1b interferon gamma-1b Actimmune Pharmacologic class: Biological response modifier Therapeutic class: Antineoplastic Pregnancy risk category C Action), to Connetics Corporation for the management of serious infections associated with chronic granulomatous disease Chronic Granulomatous Disease DefinitionChronic granulomatous disease (CGD) is an inherited disorder in which white blood cells lose their ability to destroy certain bacteria and fungi. (CGD CGD Chronic granulomatous disease, see there ) and the potential treatment of various other diseases. Following a transition period, Genentech will no longer sell Actimmune for CGD. Actimmune sales for the second quarter of 1998 were about $1.0 million. Expenses R&D expenses in the second quarter of 1998 decreased 16 percent to $92.9 million compared to $110.9 million in the second quarter of 1997. For the second quarter of 1998, Genentech invested 35 percent of revenues into R&D, compared to 47 percent in the prior year's second quarter. This decrease is in line with the goal of Genentech's Long-Range Plan to decrease R&D spending as a percent of revenues as products progress through late-stage clinical trials and revenues increase. Marketing, general and administrative (MG&A) expenses increased 28 percent in the second quarter of 1998 to $80.6 million from $63.0 million in the second quarter of 1997, driven by the introduction of Rituxan and the resultant profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of with IDEC and by competitive conditions with other marketed products. Cost of sales increased 45 percent to $37.2 million in the second quarter of 1998 from $25.6 million in the second quarter of 1997, resulting primarily from the mix of marketed products, including the introduction of Rituxan. R&D, Business Development and Intellectual Property Progress As listed below, Genentech's strong investment in R&D was coupled with significant progress in product development during the quarter. Genentech also continued to invest in business development with two new business relationships entered into during the quarter, in addition to the Connetics agreement mentioned above. In addition, Genentech successfully resolved two legal cases related to the protection of its intellectual property: -0-
-- Genentech completed submission of a Biologics License Application
(BLA) to the U.S. Food and Drug Administration (FDA) seeking
approval under Fast Track review to market Herceptin, Genentech's
antibody to a growth factor receptor known as HER2, for the
treatment of women with metastatic breast cancer who have tumors
that overexpress HER2.
-- At the annual meeting of the American Society of Clinical
Oncologists (ASCO) Genentech announced encouraging Phase III
investigational clinical trial results for Herceptin for
this indication.
-- Genentech partner DAKO A/S submitted a Pre-Market Approval
application (PMA) to the FDA seeking approval to market a
diagnostic kit to screen breast cancer patients for
overexpression of HER2 to determine whether Herceptin
treatment might be appropriate.
-- Entered into an agreement with Roche providing Roche exclusive
marketing rights outside of the United States for Herceptin. The
agreement provides for Roche to pay a $40 million up-front fee
(to be recorded in the third quarter of 1998) and cash milestones
tied to product development activities, to share global
development costs and to make royalty payments on
product sales.
-- The AIDS Clinical Trials Group (ACTG), which is part of the
Division of AIDS (DAIDS) within the National Institute of Allergy
and Infectious Disease (NIAID), completed a Phase II trial of
Genentech's recombinant human nerve growth factor (rhNGF) for the
treatment of HIV-associated neuropathy. Positive preliminary
results of that study were presented in June at the Neuroscience
of HIV Infection meeting in Chicago.
-- Genentech began Phase II clinical trials of vascular endothelial
growth factor (VEGF) for the treatment of coronary artery
disease.
-- Genentech signed a research license and option agreement with
Abgenix, Inc. that allows Genentech to use Abgenix' XenoMouse(tm)
technology to generate fully human antibodies to specific
targets.
-- Genentech settled litigation on Novo Nordisk A/S and Genentech
patents relating to human growth hormone and insulin, ending more
than four years of U.S. legal battles as well as potential
disputes in jurisdictions around the world. Under the agreement,
Novo Nordisk and Genentech will cross-license worldwide certain
patents relating to human growth hormone. At the end of August
1998, Novo Nordisk will receive a worldwide license under
Genentech patents relating to insulin and Genentech expects to
receive certain future payments.
-- Genentech signed multi-party agreements with Schering-Plough
Corporation, Biogen, Inc. and Roche settling a 1996 lawsuit that
Biogen filed against Roche and Genentech related to a disputed
alpha interferon invention. As a result of the settlement, the
U.S. Patent Office is expected to issue a patent to
Genentech/Roche for the disputed alpha interferon claim.
Genentech expects to receive certain future payments.
Genentech, Inc. is a leading biotechnology company that
discovers, develops, manufactures and markets human pharmaceuticals
for significant unmet medical needs. Eleven of the currently marketed
biotechnology products stem from Genentech science. Genentech markets
six biotechnology products in the United States. The company has
headquarters in South San Francisco, California and is traded on the
New York Stock Exchange and Pacific Exchange under the symbol GNE.
GENENTECH, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
Three Months Six Months
Ended June 30 Ended June 30
-----------------------------------------
1998 1997 1998 1997
-------- -------- -------- --------
Revenues:
Product sales $176,263 $145,018 $340,982 $299,231
Royalties 57,388 55,379 121,881 120,691
Contract and other 14,056 16,659 28,921 38,068
Interest 20,305 16,437 40,928 32,788
-------- -------- -------- --------
Total revenues 268,012 233,493 532,712 490,778
Costs and expenses:
Cost of sales 37,150 25,567 70,771 53,252
Research and development 92,949 110,890 191,151 233,633
Marketing, general
and administrative 80,643 63,073 155,593 125,054
Interest 1,195 916 2,154 1,904
-------- -------- -------- --------
Total costs and
expenses 211,937 200,446 419,669 413,843
Income before taxes 56,075 33,047 113,043 76,935
Income tax provision 15,701 9,253 31,652 21,542
-------- -------- -------- --------
Net income $ 40,374 $ 23,794 $ 81,391 $ 55,393
======== ======== ======== ========
Earnings per share
Basic $ 0.32 $ 0.19 $ 0.65 $ 0.45
======== ======== ======== ========
Diluted $ 0.31 $ 0.19 $ 0.63 $ 0.44
======== ======== ======== ========
Weighted average
shares used to compute
diluted earnings per
share 129,775 126,425 129,291 125,842
======== ======== ======== ========
Selected balance sheet data:
Cash and short-term
investments $921,313 $684,303
Accounts receivable 180,086 209,622
Inventories 116,840 99,667
Long-term marketable
securities 466,963 472,586
Property, plant
and equipment, net 693,375 633,942
Other long-term assets 174,240 183,682
Total assets 2,606,695 2,331,282
Total current liabilities 267,241 248,952
Long-term debt 150,000 150,000
Total liabilities 447,676 424,472
Total stockholders' equity 2,159,019 1,906,810
(a) All earnings per share amounts in the text of this press release
represent diluted earnings per share as defined under Statement
of Financial Accounting Standards No. 128, "Earnings per Share."
CONTACT: Genentech, Inc. Paul Laland (Media Contact), 650/225-2742 Susan Bentley (Investor Contact), 650/225-1034 http://www.gene.com *T --30--azs/sf* CONTACT: Genentech, Inc. Paul Laland (Media Contact), 650/225-2742 Susan Bentley (Investor Contact), 650/225-1034 http://www.gene.com |
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