Biotech Values

[DewDiligence]

DNA Reports 1Q07 Results

[Avastin has finally overtaken Rituxan to become DNA’s biggest-selling drug, justifying the huge pop in DNA’s share price in 2003, when the first clinical success for Avastin was reported. 1Q07 sales of the four biggest drugs were: Avastin: $533M, 34% YoY; Rituxan: $535M, +12 YoY; Herceptin: $311M, +7%, YoY; Lucentis: $211M (no prior-year sales). Please see the actual PR was financial tables. CC at 5:15 pm ET.]

http://biz.yahoo.com/bw/070411/20070411005997.html?.v=1

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Wednesday April 11, 4:05 pm ET

Total Revenues Increase 43 Percent Over Q1 2006

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Genentech, Inc. (NYSE:DNA - News) today announced financial results for the first quarter of 2007. Key results for the first quarter of 2007 include:

• U.S. product sales of $2,037 million, a 30 percent increase over U.S. product sales of $1,569 million in the first quarter of 2006.
• Operating revenues of $2,843 million, a 43 percent increase over operating revenues of $1,986 million in the first quarter of 2006.
• Non-GAAP net income increase of 61 percent to $792 million from $491 million in the first quarter of 2006(1); GAAP net income increase of 68 percent to $706 million from $421 million reported for the first quarter of 2006.
• Non-GAAP earnings per share increase of 61 percent to $0.74 per share from $0.46 per share in the first quarter of 2006(1); GAAP earnings per share increase of 69 percent to $0.66 per share from $0.39 per share reported for the first quarter of 2006.

The company continues to expect approximately 25 to 30 percent growth in non-GAAP earnings per share for the full year 2007(1), relative to 2006.

Product Sales

Product sales for the three months ended March 31, 2007 are provided in the following table (dollars in millions).
----------------------------------------------------------------------
Three months
Ended March 31,
--------------------------------------- ------------------- ----------
2007 2006 % Change
--------------------------------------- --------- --------- ----------
Net U.S. product sales
--------------------------------------- ------------------- ----------
Avastin(R)+ $533 $398 34%
--------------------------------------- --------- --------- ----------
Rituxan(R) 535 477 12
--------------------------------------- --------- --------- ----------
Herceptin(R) 311 290 7
--------------------------------------- --------- --------- ----------
LUCENTIS(R) 211 -- --
--------------------------------------- --------- --------- ----------
Xolair(R) 111 95 17
--------------------------------------- --------- --------- ----------
Tarceva(R) 102 93 10
--------------------------------------- --------- --------- ----------
Nutropin(R) Products 91 87 5
--------------------------------------- --------- --------- ----------
Thrombolytics 68 59 15
--------------------------------------- --------- --------- ----------
Pulmozyme(R) 52 49 6
--------------------------------------- --------- --------- ----------
Raptiva(R) 24 21 14
--------------------------------------- --------- --------- ----------

--------------------------------------- ------------------- ----------
Total U.S. product sales ++ 2,037 1,569 30
--------------------------------------- --------- --------- ----------

--------------------------------------- ------------------- ----------
Net product
sales to collaborators 292 75 289
--------------------------------------- --------- --------- ----------
Total product sales ++ $2,329 $1,644 42
----------------------------------------------------------------------

+ First quarter 2007 Avastin U.S. product sales include a net deferral
of approximately $3 million in conjunction with the company's Avastin
Patient Assistance Program which was launched in February 2007.
++ Amounts may not sum due to rounding.

Total Costs and Expenses

Information on costs and expenses for the three months ended March 31, 2007, is provided in the accompanying tables. Key cost and expense highlights include the following:

• Cost of sales (COS), on a non-GAAP basis, increased 44 percent to $376 million, from $262 million in the first quarter of 2006(2). Non-GAAP COS expenses as a percentage of product sales were 16 percent, comparable to 16 percent for the first quarter of 2006. On a GAAP basis, COS expenses, including employee stock-based compensation expense for the first time, increased 50 percent to $392 million, from $262 million in the first quarter of 2006. GAAP COS expenses for the first quarter of 2007 were 17 percent of product sales, compared to 16 percent in the first quarter of 2006.
• Research and development (R&D) expenses, on a non-GAAP basis, increased 68 percent to $572 million, from $341 million in the first quarter of 2006(2). Non-GAAP R&D expenses as a percentage of operating revenues were 20 percent, compared to 17 percent for the first quarter of 2006. On a GAAP basis, R&D expenses increased 63 percent to $610 million, from $374 million in the first quarter of 2006. GAAP R&D expenses for the first quarter of 2007 were 21 percent of operating revenues, compared to 19 percent in the first quarter of 2006.
• Marketing, general and administrative (MG&A) expenses, on a non-GAAP basis, increased 11 percent to $445 million, from $400 million in the first quarter of 2006(2). Non-GAAP MG&A expenses as a percentage of operating revenues were 16 percent, compared to 20 percent in the first quarter of 2006. On a GAAP basis, MG&A expenses increased 11 percent to $491 million, from $441 million in the first quarter of 2006. GAAP MG&A expenses for the first quarter of 2007 were 17 percent of operating revenues, compared to 22 percent in the first quarter of 2006.

Clinical Development

Genentech announced that it and its collaborator Biogen Idec, Inc. successfully submitted to the U.S. Food and Drug Administration (FDA) during the first quarter of 2007 a supplemental Biologics License Application (sBLA) seeking to expand the Rituxan® (Rituximab) label to include inhibition of progression of structural damage in patients with moderately-to-severely active rheumatoid arthritis who have had an inadequate response to previous treatment with one or more tumor necrosis factor (TNF) antagonist therapies. Genentech also completed enrollment in a Phase II/III trial of Rituxan in systemic lupus erythematosus, EXPLORER, and a Phase II study of Avastin® (bevacizumab) in glioblastoma multiforme. The company initiated enrollment in four Phase II Avastin studies in extensive small cell lung cancer, in metastatic melanoma, and in combination with sunitinib malate in both non-small cell lung cancer and metastatic breast cancer. Additionally, the company made Phase II "go" decisions for two of its apoptosis oncology molecules - Apomab and Apo2L/TRAIL. As previously announced, Genentech also made a "go" decision for a Phase III study of Omnitarg(TM) (pertuzumab), Herceptin® (Trastuzumab) and Taxotere versus Herceptin and Taxotere for patients with HER2-positive first-line metastatic breast cancer.

Webcast

Genentech will be offering a live webcast of a discussion by Genentech management of the earnings and other business results on Wednesday, April 11, 2007, 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 May 2, 2007. A telephonic audio replay of the webcast will be available beginning at 5:15 p.m. PT on April 11, 2007 through 5:15 p.m. PT on April 18, 2007. Access numbers for this replay are: 1-888-203-1112 (U.S./Canada) and 1-719-457-0820 (international); conference ID number is 8427457.

About Genentech

Founded more than 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.
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