>>Genentech Announces Full Year and Fourth Quarter 2006 Results
PR Newswire - January 10, 2007 16:06
Full-Year Non-GAAP EPS Increases 74 Percent; GAAP EPS Increases 67 Percent Quarterly U.S. Product Sales Surpass $2 Billion
SOUTH SAN FRANCISCO, Calif., Jan 10, 2007 /PRNewswire-FirstCall via COMTEX/ -- Genentech, Inc. (NYSE: DNA) today announced financial results for the full year and fourth quarter 2006. Revenue and key operating results for the full year 2006 included:
-- U.S. product sales of $7,169 million, a 39 percent increase over
U.S. product sales of $5,162 million in 2005;
-- Operating revenues of $9,284 million, a 40 percent increase over
operating revenues of $6,633 million in 2005;
-- Non-GAAP net income of $2,390 million, a 72 percent increase over net
income of $1,387 million in 2005; GAAP net income of $2,113 million, a
65 percent increase over net income of $1,279 million in 2005;(1)(2)
-- Non-GAAP earnings of $2.23 per share, a 74 percent increase over
earnings of $1.28 per share in 2005; GAAP earnings of $1.97 per share,
a 67 percent increase over earnings of $1.18 per share in 2005. (1)(2)
"In 2006, we received eight FDA approvals, including Lucentis, a significant new therapy for patients with wet age-related macular degeneration," said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. "We remain committed to scientific excellence and continue to focus our R&D projects in areas of unmet medical need. We are pleased with the progress we made building our pipeline in 2006, including adding seven new molecular entities to the development pipeline, entering into agreements for eight significant new strategic collaborations, and receiving positive data from four important Phase II clinical trials in oncology and immunology."
Revenue and key operating results for the fourth quarter of 2006 included:
-- U.S. product sales of $2,053 million, a 38 percent increase over
product sales of $1,493 million in the fourth quarter of 2005;
-- Operating revenues of $2,714 million, a 43 percent increase over
operating revenues of $1,893 million in the fourth quarter of 2005;
-- Non-GAAP net income of $659 million, an 82 percent increase over net
income of $363 million in the fourth quarter of 2005; GAAP net income
of $594 million, a 75 percent increase over net income of $339 million
in the fourth quarter of 2005 (1)(2);
-- Non-GAAP earnings of $0.61 per share, a 79 percent increase over
earnings of $0.34 per share in the fourth quarter of 2005; GAAP
earnings of $0.55 per share, a 77 percent increase over earnings of
$0.31 per share in the fourth quarter of 2005. (1)(2)
Reconciliations between non-GAAP and GAAP earnings per share for the full years 2006 and 2005 and the fourth quarters of 2006 and 2005 are provided in the following table:
Employee Roche
Stock-Based Redemption Reported
Non-GAAP Compensation and Special GAAP Diluted
Diluted EPS Expense Items EPS
FY 2006 $2.23 ($0.17) ($0.09) $1.97
FY 2005 $1.28 --- (1) ($0.10) $1.18(1)
Q4 2006 $0.61 ($0.04) ($0.02) $0.55
Q4 2005 $0.34 --- (1) ($0.02) $0.31 (1)
NOTE: Amounts may not sum due to rounding.
The company announced it expects approximately 25 to 30 percent growth in non-GAAP earnings per share for the full year 2007, relative to 2006(2).
Product Sales
Product sales for 2006, including the three months ended December 31, 2006, are provided in the following table (dollars in millions):
Three Months Year
Ended December 31, Ended December 31,
2006 2005 % Change 2006 2005 % Change
Net U.S. product
sales
Rituxan(R) $560 $484 16% $2,071 $1,832 13%
Avastin(R) * 490 359 36 1,746 1,133 54
Herceptin(R) 322 250 29 1,234 747 65
Tarceva(R) 107 84 27 402 275 46
Nutropin(R)
products 101 95 6 378 370 2
Xolair(R) 117 93 26 425 320 33
Thrombolytics 62 58 7 243 218 11
Pulmozyme(R) 53 49 8 199 186 7
Raptiva(R) 24 20 20 90 79 14
LUCENTIS(R) 217 - - 380 - -
Total U.S.
product sales** 2,053 1,493 38 7,169 5,162 39
Net product
sales to
collaborators 191 83 130 471 326 44
Total product
sales** $2,244 $1,577 42 $7,640 $5,488 39
*Fourth quarter 2006 Avastin results include a deferral of approximately $9 million in Avastin product sales in conjunction with the company's announced program to cap the annual per patient cost of therapy for Avastin for eligible patients. The company expects to launch the program during the first quarter of 2007. Because the program will apply retrospectively to patients currently on Avastin for all approved indications, a portion of fourth quarter 2006 Avastin product sales have been deferred to address our estimated free drug commitment to those patients.
** Amounts may not sum due to rounding.
Total Costs and Expenses
Information on costs and expenses for 2006, including the three months ended December 31, 2006, is provided in the accompanying tables. Key cost and expense highlights include the following:
-- Cost of sales in 2006 as a percentage of product sales was 15 percent,
compared to 18 percent in 2005.
-- Research and development (R&D) expenses in 2006, on a non-GAAP basis,
increased 29 percent to $1,633 million, from $1,262 million in 2005.
Non-GAAP R&D expenses as a percentage of operating revenues were 18
percent, compared to 19 percent in 2005. On a GAAP basis, R&D expenses
in 2006 increased 40 percent to $1,773 million, including employee
stock-based compensation expense of $140 million, from $1,262 million
in 2005. GAAP R&D expenses in 2006 were 19 percent of operating
revenues, comparable to 19 percent in 2005.
-- Marketing, general and administrative (MG&A) expenses in 2006, on a
non-GAAP basis, increased 29 percent to $1,845 million, from $1,435
million in 2005. Non-GAAP MG&A expenses as a percentage of operating
revenues were 20 percent, compared to 22 percent in 2005. On a GAAP
basis, MG&A expenses increased 40 percent to $2,014 million, including
employee stock-based compensation expense of $169 million, from $1,435
million in 2005. GAAP MG&A expenses in 2006 were 22 percent of
operating revenues, comparable to 22 percent in 2005.
-- Genentech's non-GAAP and GAAP income tax rates for 2006 were 38
percent, compared to 37 percent in 2005. Genentech's fourth quarter
2006 non-GAAP and GAAP income tax rates were approximately 40 percent
and 39 percent, respectively. The 2006 annual and fourth quarter income
tax rates were negatively impacted by the fourth quarter issuance of an
Internal Revenue Service final regulation that required the company to
reverse R&D tax credit benefits that had been recognized in prior
years.
Clinical Development
Genentech announced that in the fourth quarter of 2006 it enrolled the first patient in the Phase III study of humanized anti-CD20 for patients with rheumatoid arthritis (RA) who inadequately responded to methotrexate; and completed enrollment in two Rituxan(R) (Rituximab) immunology trials, SERENE, for RA patients who inadequately responded to methotrexate, and SUNRISE, a controlled re-treatment study for patients with RA who have had an inadequate response to previous treatment with one or more tumor necrosis factor (TNF) antagonist therapies. The company also submitted in the fourth quarter of 2006 a supplemental Biologics License Application (sBLA) for the use of Herceptin(R) (Trastuzumab) in node-negative patients with administration once every three weeks, based on the one-year adjuvant HERA (HERceptin Adjuvant) trial conducted internationally by Roche and the Breast International Group (BIG).
Other Company Events
The company announced that on January 9, 2007 the U.S. Supreme Court issued a decision against Genentech in MedImmune v. Genentech. The issue before the Court was a procedural one and the decision has no effect on the validity or enforceability of Genentech's Cabilly patent. The Court decided that the U.S. Constitution does not require a patent licensee, such as MedImmune, to breach or terminate its license agreement before it can sue a patentee, such as Genentech, under the patent laws. The decision allows MedImmune to go forward with its claims against Genentech in the lower courts, but does not address the merits of those claims. Genentech intends to defend itself vigorously as the case proceeds in the lower courts.
Webcast
Genentech will be offering a live webcast of a discussion by Genentech management of the earnings and other business results on Wednesday, January 10, 2007, at 2:15 p.m. Pacific Time (PT). The live webcast may be accessed on Genentech's Website at gene.com . This webcast will be available via the Website until 5:00 p.m. PT on January 24, 2007. A telephonic audio replay of the webcast will be available beginning at 5:15 p.m. PT on January 10, 2007 through 5:15 p.m. PT on January 17, 2007. Access numbers for this replay are: 1-888-203-1112 (U.S./Canada) and 1-719-457-0820 (international); conference ID number is 6237984.<<
'07 guidance in per cent. Grrr. Arithmetic in next post.
Cheers, Tuck |
