Genentech Provides Updates At Annual Investment Meeting
South San Francisco, Calif. -- March 17, 2006 -- Genentech, Inc. (NYSE: DNA) today provided an overview of its business goals for 2006 and beyond,including an update of its Horizon 2010 strategic plan, at its investment community meeting in New York. In addition, the company provided investors with an overview of recent developments, including highlights from its research, development, commercial, and manufacturing efforts.
“Our success over the past several years has transformed our business, leading to additional opportunities for growth,” said Chairman and Chief Executive Officer Arthur D. Levinson, Ph. D. “We remain focused on understanding the basic scientific mechanisms of disease, so that we are better able to select the right targets quickly, develop those targets in the clinic, and deliver novel therapies that could change the course of some of the deadliest diseases.”
Horizon 2010 Goals
The company provided an update of its long-term business objectives. The company’s revised Horizon 2010 goals include:
* To bring at least 20 new molecules into clinical development.
* To bring at least 15 major new products or indications onto the market.
* To become the number one U.S. oncology company in sales.
* To achieve an average compound annual non-GAAP earnings per share1 growth rate of 25 percent.
* To achieve cumulative free cash flow2 of $12 billion.
Other Business Updates
The company made the following additional announcements today:
* The company expects approximately 40 to 50 percent growth in non-GAAP earnings per share for the full year 2006.3
* The company announced that the anti-CD20 humanized monoclonal antibody (ocrelizumab) Phase I/II ACTION study in rheumatoid arthritis met its primary endpoint of safety in all doses studied and also met its secondary endpoint of clinical activity at all dose levels studied. The most common side effects in ocrelizumab-treated patients included mild to moderate adverse events of nausea, chills or headache around the first infusion. The serious adverse events observed in patients treated with ocrelizumab were similar to those seen in patients receiving placebo. There were no serious infusion related events in patients treated with ocrelizumab. The rates of infection-related adverse events were similar between placebo and active groups. Further analyses of the data are ongoing and will be submitted for presentation at a future medical meeting.
* The company announced its decision to acquire land in Hillsboro, Oregon for the construction and development of a biotherapeutic fill/finish manufacturing facility, which is expected to be licensed and operational in 2010.
* In February 2006, Genentech purchased from Biogen Idec the NICO clinical manufacturing facility in Oceanside, California, which will add approximately 5,500 liters of capacity to be used for clinical manufacturing of new molecular entities.
* Genentech also announced that the U.S. Food and Drug Administration approved in January 2006 the production of Xolair® (Omalizumab) bulk drug substance at Novartis’ production facility in Huningue, France.
Genentech will be offering an archived webcast of the investment community meeting on its website at http://www.gene.com. The webcast will be archived and available for replay until 8:00 p.m. Eastern Time on March 31, 2006.
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.
1 Non-GAAP earnings per share estimates for this period exclude the after-tax effects of recurring charges related to the 1999 Roche redemption of our common stock, ongoing special charges related to the City of Hope litigation, stock compensation expense,and any potential special charges related to existing or future litigation or its resolution, or changes in accounting principles, all of which could be significant.
2 Free cash flow, a non-GAAP measure, will be computed by Genentech based on operating cash flow less gross capital expenditures. Operating cash flow is derived from the “net cash provided by operating activities” line in the cash flow statement and excludes the after-tax effects of non-operational items related to our investment portfolio, asset dispositions, litigation costs, debt service costs, and any other potential non-operational items which could affect this line, any of which could be significant.
3 Genentech’s forecasted 2006 non-GAAP earnings per share exclude the after tax-effects of recurring charges related to the 1999 Roche redemption of our common stock estimated to be $105 million on a pretax basis in 2006, special charges related to the City of Hope litigation estimated to be $54 million on a pretax basis in 2006,stock compensation expense associated with Genentech’s adoption of SFAS No. 123R on January 1,2006,expected to be in the range of $0.15 to $0.17 per share for 2006 and any other potential special items related to existing or future litigation or its resolution, or changes in accounting principles, all of which could be significant.
This press release contains forward-looking statements regarding growth in non-GAAP earnings per share and cumulative free cash flow; adding 20 new molecules into clinical development and 15 major new products or indications onto the market by 2010; becoming the number one U.S. oncology company in sales; licensure, development and operation of manufacturing facilities; and charges related to the 1999 Roche redemption of Genentech’s stock, the City of Hope litigation and stock compensation. Such statements are predictions and involve risks and uncertainties and actual results may differ materially. Among other things, adding molecules into clinical development, adding products or indications into the market, and the licensure, development and operation of manufacturing facilities could be affected by a number of factors, including unexpected safety, efficacy or manufacturing issues,additional time requirements for data analysis, and FDA actions or delays including failure to obtain FDA approval; becoming a leader in oncology sales could be affected by all of the foregoing and by a number of other factors, including competition,pricing, reimbursement,the ability to supply product, product withdrawals and new product approvals and launches; charges related to the 1999 Roche redemption of Genentech’s stock, the City of Hope litigation and stock compensation could be affected by a number of factors, including a re-valuation of certain intangible assets, greater than expected litigation-related costs, the number of options granted to employees, Genentech’s stock price and certain valuation assumptions concerning Genentech stock; and growth in non-GAAP EPS and cumulative free cash flow, could be affected by all of the foregoing and by a number of other factors, including achieving sales revenue consistent with internal forecasts, unanticipated expenses such as litigation or legal settlement expenses or equity securities writedowns, costs of sales, R&D expenses, fluctuations in contract revenues and royalties, and fluctuations in tax and interest rates. Please also refer to Genentech’s periodic reports filed with the Securities and Exchange Commission. Genentech disclaims, and does not undertake, any obligation to update or revise any forward-looking statements in this press release.
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