Biotech Values

[DewDiligence]

DNA Reports 1Q08 Results

[Surprisingly, Rituxan edged out Avastin for the #1 position, $605M vs $600M; each was +13% Y-o-Y. Herceptin sold $339M, +9% Y-o-Y, as the fast growth in 2007 from approval in the adjuvant setting has plateaued. Lucentis $198M, -6% Y-o-Y, continues to be beset by competition from off-label Avastin. All four drugs were flat or nearly flat vs 4Q07. Please see actual PR for full financial tables.]

http://biz.yahoo.com/bw/080410/20080410006187.html

>>
Thursday April 10, 4:03 pm ET

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Genentech, Inc. (NYSE: DNA ) today announced financial results for the first quarter of 2008. Key results for the first quarter of 2008 include:

• U.S. product sales of $2,205 million, an 8 percent increase from U.S. product sales of $2,037 million in the first quarter of 2007.
• Non-GAAP operating revenues of $3,059 million1, an 8 percent increase from operating revenues of $2,843 million in the first quarter of 2007; GAAP operating revenues of $3,063 million.
• Non-GAAP net income of $895 million, a 13 percent increase from $792 million in the first quarter of 20071; GAAP net income of $790 million, a 12 percent increase from $706 million in the first quarter of 2007.
• Non-GAAP earnings per share of $0.84, a 14 percent increase from $0.74 per share in the first quarter of 20071; GAAP earnings per share of $0.74, a 12 percent increase from $0.66 per share in the first quarter of 2007.

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

Non-GAAP Diluted EPS Employee Stock-Based Compensation Expense Net Charges related to Redemption, Acquisition and Special Items Reported GAAP Diluted EPS
Q1 2008 $0.84 ($0.07) ($0.03) $0.74
Q1 2007 $0.74 ($0.06) ($0.02) $0.66

The company continues to forecast full-year 2008 non-GAAP earnings to be in the range of $3.35 to $3.45 per share.1

Product Sales and Royalty Revenues

Information on product sales for the three months ended March 31, 2008 and 2007, are provided in the following tables (dollars in millions):

Three Months

Ended March 31,
2008 2007 % Change
Rituxan® $605 $535 13 %
Avastin®+ 600 533 13
Herceptin® 339 311 9
Lucentis® 198 211 (6 )
Xolair® 117 111 5
Tarceva® 111 102 9
Nutropin® Products 84 91 (8 )
Thrombolytics 67 68 (1 )
Pulmozyme® 57 52 10
Raptiva® 26 24 8
Total U.S. product sales ++ $2,205 $2,037 8

Net product sales to collaborators 174 292 (40 )
Total product sales ++ $2,379 $2,329 2

+ First quarter 2008 Avastin U.S. product sales results include a net deferral of approximately $1 million in conjunction with the company’s Avastin Patient Assistance Program. First quarter 2007 Avastin U.S. product sales results included a net deferral of approximately $3 million.
++ Amounts may not sum due to rounding.

The company also reported that non-GAAP royalty revenues were $612 million1 in the first quarter of 2008, a 46 percent increase from the first quarter of 2007. The increase was primarily due to growth in ex-U.S. sales of products by collaborators Roche and Novartis, in addition to foreign exchange related benefits of the weak dollar.

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 ended March 31, 2008 and 2007, are provided in the following tables (dollars in millions):

Three Months

Ended March 31,
2008 2007 % Change
non-GAAP2
COS $367 $376 (2)%
R&D 575 572 1
MG&A 471 445 6
GAAP
COS 389 392 (1)
R&D 617 610 1
MG&A 517 491 5

Note: Genentech's first quarter 2008 non-GAAP reported COS, R&D and MG&A expenses exclude the effects of employee stock-based compensation expense of $22 million, $42 million, and $46 million, respectively. First quarter 2007 non-GAAP reported COS, R&D and MG&A expenses exclude the effects of employee stock-based compensation expense of $16 million, $38 million, and $46 million, respectively.

Three Months Ended

March 31,
2008 2007
non-GAAP2
COS as a % of product sales 15% 16%
R&D as a % of operating revenues 19% 20%
MG&A as a % of operating revenues 15% 16%
GAAP
COS as a % of product sales 16% 17%
R&D as a % of operating revenues 20% 21%
MG&A as a % of operating revenues 17% 17%

Clinical Development

Genentech expects to submit the supplemental Biologics License Application to the U.S. Food and Drug Administration (FDA) for accelerated approval of Avastin® (bevacizumab) for the treatment of relapsed glioblastoma multiforme in the second half of 2008. Data will be presented at the 2008 annual meeting of the American Society of Clinical Oncology (ASCO).

Genentech announced that the Phase III study sponsored by its collaborator Novartis evaluating Xolair® (Omalizumab) for subcutaneous use in patients 6 to 11 years of age with moderate-to-severe, persistent, inadequately controlled allergic asthma met its primary endpoint, demonstrating a statistically significant reduction in exacerbations in Xolair-treated patients compared with placebo-treated patients with no new safety signals reported. The companies will evaluate the complete study results and feedback from the FDA to determine appropriate next steps. The data will be presented at a medical conference later this year.

Webcast

Genentech will be offering a live webcast of a discussion by Genentech management of its financial and other business results on Thursday, April 10, 2008, at 1:45 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 1, 2008. A telephonic audio replay of the webcast will be available beginning at 4:45 p.m. PT on April 10, 2008 through 4:45 p.m. PT on April 17, 2008. Access numbers for this replay are: 1-800-642-1687 (U.S./Canada) and 1-706-645-9291 (international); conference ID number is 39992140.
<<