Genentech Announces Full Year and Fourth Quarter 2008 Results

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Jan 15, 2009 - Genentech, Inc. (NYSE:DNA) today announced financial results for the full year and fourth quarter of 2008. Key results for the full year 2008 include:

 

  • U.S. product sales of $9,503 million, an 11 percent increase from $8,540 million in 2007.
  • Non-GAAP operating revenue of $13,403 million, a 14 percent increase from $11,718 million in 20071; GAAP operating revenue of $13,418 million, a 14 percent increase from $11,724 million in 2007.
  • Non-GAAP net income of $3,643 million, a 16 percent increase from $3,142 million in 20071; GAAP net income of $3,427 million, a 24 percent increase from $2,769 million in 2007.
  • Non-GAAP earnings per share of $3.42, a 16 percent increase from $2.94 in 20071; GAAP earnings per share of $3.21, a 24 percent increase from $2.59 in 2007.

“We are pleased that 2008 was another year of solid financial growth for Genentech. In addition, our late-stage and early-stage development efforts progressed well across our focus areas with four sBLA filings submitted for serious diseases in oncology and immunology, and Phase I clinical trials initiated for eight new molecular entities, including in neuroscience,” said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. “In 2009, we have the potential to receive four FDA approvals and we anticipate filing more than ten regulatory applications for new indications."

The company announced it is currently forecasting full-year 2009 non-GAAP earnings to be in the range of $3.55 to $3.90 per share1, recognizing that there are a large number of business uncertainties that make it a difficult year to forecast.

Other Financial Results

Key results for the fourth quarter of 2008 include:

 

  • U.S. product sales of $2,495 million, a 13 percent increase from $2,199 million in the fourth quarter of 2007.
  • Non-GAAP operating revenue of $3,703 million, a 25 percent increase from $2,966 million in the fourth quarter of 20071; GAAP operating revenue of $3,707 million, a 25 percent increase from $2,970 million in the fourth quarter of 2007.
  • Non-GAAP net income of $1,014 million, a 38 percent increase from $737 million in the fourth quarter of 20071; GAAP net income of $931 million, a 47 percent increase from $632 million in the fourth quarter of 2007.
  • Non-GAAP earnings per share of $0.95, a 38 percent increase from $0.69 in the fourth quarter of 20071; GAAP earnings per share of $0.87, a 47 percent increase from $0.59 in the fourth quarter of 2007.

Reconciliations between non-GAAP and GAAP earnings per share for the full years 2008 and 2007 and the fourth quarters of 2008 and 2007 are provided in the following table:

    Non-GAAP Diluted EPS1   Employee Stock-Based Compensation Expense   Net Charges related to Redemption, Tanox Acquisition and Special Items2   In-process Research and Development Expense Related to Tanox Acquisition    

 

 

Non-Cash Gain on Tanox Acquisition

 

  Reported GAAP Diluted EPS1
FY 2008   $3.42   ($0.25)   $0.04   -   -   $3.21
FY 2007   $2.94   ($0.24)   ($0.10)   ($0.07)   $0.07   $2.59
Q4 2008   $0.95   ($0.05)   ($0.03)   -   -   $0.87
Q4 2007   $0.69   ($0.07)   ($0.03)   -   -   $0.59
Note: Amounts may not sum due to rounding.

 

Product Sales and Total Operating Revenue

Information on product sales and total operating revenue for the three months and years ended December 31, 2008 and 2007, are provided in the following table (dollars in millions):

    Three Months Ended December 31,

 

          Year Ended
December 31,

 

   
    2008

 

  2007

 

  % Change

 

      2008

 

  2007

 

  % Change

 

Avastin® i   $731   $603   21%       $2,686   $2,296   17%
Rituxan®   677   596   14       2,587   2,285   13
Herceptin®   336   327   3       1,382   1,287   7
Lucentis®   236   197   20       875   815   7
Xolair®   135   120   13       517   472   10
Tarceva®   118   112   5       457   417   10
Nutropin® Products   90   93   (3)       358   371   (4)
Thrombolytics   74   66   12       275   268   3
Pulmozyme®   72   58   24       257   223   15
Raptiva®   25   28   (11)       108   107   1
                             
Total U.S. product sales ii   $2,495   $2,199   13%       $9,503   $8,540   11%
                             
Net product sales to collaborators

 

  486

 

  150

 

  224

 

      1,028

 

  903

 

  14

 

Total product sales ii   $2,981   $2,349   27%       $10,531   $9,443   12%
                             
                             
Non-GAAP royalty revenue iii   603   554   9       2,524   1,978   28
Contract revenue   119   63   89       348   297   17
                             
Non-GAAP total operating revenue 1   $3,703   $2,966   25%       $13,403   $11,718   14%
i Fourth-quarter and full-year 2008 Avastin U.S. product sales results include net deferrals of approximately $2 million and $5 million, respectively, in conjunction with the company's Avastin Patient Assistance Program launched in February 2007.
ii Amounts may not sum due to rounding.
iii GAAP royalty revenue of $607 million in the fourth quarter of 2008 increased 9 percent from $558 million in the fourth quarter of 2007; GAAP royalty revenue of $2,539 for the full year 2008 increased 28 percent from $1,984 million in 2007.
Total Costs and Expenses

Information on costs and expenses including cost of sales (COS), research and development (R&D) and marketing, general and administrative (MG&A) expenses for the three months and years ended December 31, 2008 and 2007, are provided in the following tables (dollars in millions)3:

    Three Months Ended December 31,

 

          Year Ended
December 31,

 

   
    2008

 

  2007

 

  % Change

 

      2008

 

  2007

 

  % Change

 

non-GAAP 3

 

                           
COS   $483   $322   50%       $1,662   $1,500   11%
R&D   724   579   25       2,648   2,293   15
MG&A   675   650   4       2,211   2,077   6
GAAP

 

                           
COS   503   344   46       1,744   1,571   11
R&D   757   618   22       2,800   2,446   14
MG&A   718   692   4       2,405   2,256   7
    Three Months Ended December 31,

 

      Year Ended December 31,

 

    2008

 

  2007

 

      2008

 

  2007

 

non-GAAP 3

 

                   
COS as a % of product sales   16%   14%       16%   16%
R&D as a % of operating revenues   20%   20%       20%   20%
MG&A as a % of operating revenues   18%   22%       16%   18%
GAAP

 

                   
COS as a % of product sales   17%   15%       17%   17%
R&D as a % of operating revenues   20%   21%       21%   21%
MG&A as a % of operating revenues   19%   23%       18%   19%
Clinical Development

In the fourth quarter of 2008, Genentech completed enrollment in three Phase III Lucentis® (ranibizumab injection) trials, including for the treatment of retinal vein occlusion (BRAVO and CRUISE studies) and diabetic macular edema (RISE study).

In December of 2008, Genentech submitted a supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration (FDA) for Xolair ® (Omalizumab) to extend its current asthma indication to the pediatric setting for children 6 and older.

The company also received dates for Prescription Drug User Fee Act (PDUFA) reviews of its two sBLA submissions for Avastin® (bevacizumab) in relapsed glioblastoma (May 5, 2009) and Avastin in combination with interferon alfa-2a therapy for patients with first-line metastatic renal cell carcinoma (August 1, 2009).

Webcast

Members of Genentech's management team will be participating in a conference call to discuss the company's financial and other business results on Thursday, January 15, 2009, at 1:45 p.m. Pacific Time (PT). Live audio of the conference call will be broadcast simultaneously over the internet and may be accessed on Genentech's web site at http://www.gene.com. The webcast and any corresponding materials will be archived and available for replay until 5:00 p.m. PT on February 5, 2009.

A telephonic audio replay of the webcast will be available beginning at 4:45 p.m. PT on January 15, 2009 through 4:45 p.m. PT on January 22, 2009. Access numbers for this replay are: 1-800-642-1687 (U.S./Canada) and 1-706-645-9291 (international); conference ID number is 75928763.

About Genentech

Founded more than 30 years ago, Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes medicines to treat patients with significant unmet medical needs. 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.

About Genentech's Commitment to Patient Access

Genentech is committed to patients having access to our therapies. Through its Genentech Access Solutions program, the company provides patients and healthcare providers with coverage and reimbursement support, patient assistance and informational resources. Patient assistance support is for those eligible patients in the United States who do not have insurance coverage or who cannot afford their out-of-pocket co-pay costs. Since 1985, when its first product was approved, Genentech has donated approximately $1.3 billion in free medicine to uninsured patients through the Genentech® Access to Care Foundation (GATCF) and other

Posted: January 2009


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