Genentech Earnings From Operations Rose 73% on Year in Fourth Quarter 

With Help From Rituxan and Herceptin Cancer Drugs

Wall Street Journal 19jan01

SOUTH SAN FRANCISCO, CA. --  Genentech Inc. said its fourth-quarter earnings from operations rose 73%, helped by the rising popularity of its cancer drugs.

The biotechnology concern said it swung to net income of $14.3 million, or three cents a diluted share, from a net loss of $172.9 million, or 34 cents a share, in the year-earlier period. Excluding several extraordinary items, including legal settlements and changes to accounting practices, Genentech's profit rose to $83.4 million, or 16 cents a share, from $48.1 million, or nine cents a share. On that basis, Genentech met the consensus estimate of analysts surveyed by First Call/Thomson Financial. Revenue rose 35% to $485.3 million from $358.5 million.

Genentech officials were particularly enthusiastic about the sales of its Rituxan and Herceptin cancer products, which accounted for more than half of its product sales in 2000. Rituxan sales benefited from its use for non-Hodgkin's lymphoma, while Herceptin is increasingly used for breast cancer, Genentech said.

For the year, including the extraordinary items, the company swung to a loss of $68.2 million, or 13 cents a share, from a profit of $319.7 million, or 60 cents a share, in 1999. Excluding those factors, its net rose 30% to $319.8 million, or 60 cents a share, from $246.7 million, or 47 cents a share. Revenue rose 22.5% to $1.74 billion from $1.42 billion.

Genentech announced its earnings after the stock markets closed. Genentech was down $2.56 at $60.69 at 4 p.m. Thursday in New York Stock Exchange composite trading.

Genentech COO: Rituxan 4Q Sales Were $138M, 16% Over 3Q

Beth M Mantz / Dow Jones Newswires 18jan01

NEW YORK -- Genentech Inc. (DNA) is "very much on course" to meet its five-year goals, entitled "5-By-5," Chief Financial Officer Louis Lavigne and Chief Operating Officer Myrtle Potter told Dow Jones Newswires in an interview Thursday.

Genentech's fourth quarter and 2000 financial results have placed the South San Francisco, Calif., biotechnology company on track to attain 25% revenue growth year-over-year; a 25% increase in earnings-per-share on average; net earnings equaling 25% of revenue; $500 million in incremental revenue from partnerships; and five product approvals.

The company posted fourth quarter earnings of 16 cents a share, excluding items and costs associated with Roche Holdings AG's (Z.ROC) redemption of common stock, on sales of $485.3 million. Analysts were expecting 16 cents a share for the quarter.

For the year, the company posted 47 cents a share, excluding these same items and costs, on revenue of $1.74 billion.

Genentech's executives said the company experienced a 30% increase in net income, 23% rise in product sales and a 28% rise in earnings-per-share in 2000.

"The 28% increase in EPS is in line with our corporate goal of 25% annually; and net income as a percent of revenues was 19% was coming in line with our goal of 25%," said Lavigne.

Genentech said the fourth quarter and the year's success was driven by sales of its oncology products: Herceptin for metastatic breast cancer and Rituxan for non-Hodgkin's lymphoma. Anticancer products comprised 56% of sales.

Potter said Rituxan generated $138 million in sales worldwide, a 16% increase over the third quarter sales of $117.9 million.

She attributed the rise to the GELA study data indicating the drug would be effective and useful as a first-line therapy in combination with chemotherapy drugs for treating more aggressive forms of non-Hodgkin's lymphoma. She also noted there was some slight overstocking by doctors of the treatment due to bad weather at the end of December, but she said such action is not uncommon.

Because of the accelerating demand in anticancer drugs seen over the past year, Genentech's Chief Operating Officer Potter anticipates cancer will remain the fastest growing component of the company's business in 2001.

Genentech has already announced its plans to boost the number of its oncology sales representatives by about 45% during the first quarter in order to make it the same size as its cardiovascular force. The company wanted to further penetrate the markets for Herceptin and Rituxan and be prepared for when OSI Pharmaceuticals Inc.'s (OSIP) cancer compound and its own pipeline cancer drugs, including anti-VEGF, are approved and ready for sale.

Besides the increase in sales representatives, Genentech expects to derive additional sales during 2001 as a result of an "important" publication on Herceptin in the New England Journal of Medicine during the first half of the year as well as results from studies adding Herceptin to chemotherapy to treat early-stage breast cancer, said Potter.

Genentech CFO Lavigne wouldn't comment during the interview on whether the company is comfortable with analysts' consensus earnings estimates of 17 cents for the first quarter and 78 cents for the year.

Idec Pharma: Idec/Genentech Venture 4Q Rituxan Sales $134M

Dow Jones Newswires 18jan01

SAN DIEGO  -- Idec Pharmaceuticals Corp. (IDPH) expects fourth quarter earnings of 37 cents a diluted share and full-year earnings of 91 cents a diluted share.

Adjusted for this week's 3-for-1 stock split, a First Call/Thomson Financial survey of 10 analysts produced a mean earnings estimate of 11 cents a share for the fourth quarter and 33 cents a share for the year.

Idec's outlook follows Genentech Inc.'s (DNA) fourth quarter earnings release, which announced that collaboration between the two companies resulted in U.S. sales of the Rituxan drug of $134 million for the fourth quarter and $424.3 million for the year.

In a press release Thursday, Idec said it will take a $9.3 million charge for the year for accounting changes.

Idec said fourth quarter net sales are up 86% from a year ago, while 2000 sales are up 62% from last year.

In the year-ago fourth quarter, Idec earned $7.7 million, or 15 cents a diluted share, on revenue of $32 million.

For the year ended Dec. 31, 1999, the company earned $43.2 million, or 86 cents a diluted share, on revenue of $118 million.

As a result of the accounting change, Idec will recognize $1.6 million in license fee revenue in the fourth quarter, and $6.5 million in license fee revenue for the year.

If the company had not been required to implement the accounting changes, earnings per share would have been 35 cents a share for the fourth quarter and 98 cents a diluted share for the year.

Idec's fourth quarter results will be released on Jan. 29.

Company Web site: http://www.idecpharm.com