#2 Genentech
1 DNA Way
South San Francisco, CA 94080
Tel: (650) 225-1000
Fax: (650) 225-6000
www.gene.com
| Headcount | 9,563 | |
| Year Established | 1976 | |
| Biopharma Revenues | $5,488 | +46% |
| Total Revenues | $6,633 | +44% |
| Royalty Revenues | $935 | +46% |
| Net Income | $1,279 | +63% |
| R&D Budget | $1,262 | +33% |
| Drugs Approved/Launched |
|
| Drug | Indication |
| tarceva |
pancreatic cancer |
| avastin with 5-FU-based chemotherapy | second-line metastatic colorectal cancer |
| lucentis |
wet age-related macular degeneration |
| Drugs Pending Approval |
|
| Drug | Indication |
| herceptin |
adjuvant HER2+ breast cancer |
| avastin | first-line metastatic breast cancer, first-line non-squamous non-small cell lung cancer, relapsed metastatic colorectal cancer, second-line metastatic colorectal cancer in combination with intravenous 5-FU-based chemotherapy |
| rituxan | indolent frontline NHL, rheumatoid arthritis |
| Drugs in Phase IIb and Beyond | |
| Drug | Indication |
| avastin | breast, colon, NSCLC, rectal, breast, prostate, pancreatic and ovarian cancer, gastrointestinal stromal tumors |
| rituxan | relapsed chronic lymphocytic leukemia, ANCA-associated vasculitis, lupus nephritis, multiple sclerosis, lupus erythematosus |
| tarceva | adjuvant and first-line NSCLC |
| xolair |
pediatric asthma |
| Early Research Projects |
|
| Drug | Indication |
| apo2L/TRAIL | oncology |
| br3-fc |
rheumatoid arthritis |
| topical hedgehog antagonist |
basal cell carcinoma |
| trastuzumab-dm1 | her2+ metastatic breast cancer |
| anti-br3 |
chronic lymphocytic leukemia |
| Top Selling Drugs |
|||
| Drug | Indication |
Sales |
(+/-%) |
| rituxan | leukemia, lymphoma, rheumatoid arthritis |
$1,831 | +16% |
| avastin | colorectal cancer | $1,133 | +108% |
| herceptin | breast cancer | $747 | +56% |
| nutropin/protropin | growth hormone | $370 | +6% |
| xolair | asthma | $321 | +71% |
| tarceva | lung cancer | $275 | n/a |
| activase/TNKase | thrombolytics | $219 | +13% |
Account for 89% of total biopharma sales, same as in 2004.
PROFILE
If Genentech had huge success in 2005 as cancer drug Avastin doubled in sales to give the company its second billion-dollar seller. Breast cancer treatment Herceptin also posted significant gains in 2005, and was up more than 100% in 1Q2006 ($290 million), while lung cancer (and pancreatic cancer, after its November 2005 approval) drug Tarceva hit $275 million in its first full-year and nearly doubled its 1Q numbers in 2006 ($93 million).
In addition to the cancer franchise, the company's asthma drug Xolair (co-marketed with Novartis) brought in sales of $321 million in 2005, its second full year. Sales were up 46% in 1Q2006, to $95 million.
While Genentech's cancer drugs have had enormous success, another recent release has been struggling. Rapitva, which is marketed by Genentech, Xoma and Serono for the treatment of chronic plaque psoriasis, posted only $79 million in sales for Genentech (U.S. market). This was an increase of 51%, but the company admits that the boost was mainly due to a price increase instituted in April 2005. For 1Q2006, sales were up $4 million to $21 million. Genentech cited Amgen's Enbrel as a key competitor in the psoriasis field.
So they can't all be hits.
Meanwhile, the company's top seller, Rituxan, "only" posted 16% gains to $1.8 billion (U.S. sales only; European marketing is done by Genentech's owner, Roche). With Rituxan's recent approval to treat rheumatoid arthritis in patients who don't respond to anti-TNF therapies, expect Genentech's lead product to stay in the lead for a while more.
Curiously, Rituxan saw a small boost in sales ($9.6 million) in 2005 because of a "reorder to replace a shipment that was destroyed while in transit to a wholesaler." Having received my share of damaged packages from Amazon, I can only imagine the aggravation on the receiving end of that delivery.
With new indications comes new demand, so, to ensure Rituxan's supply, Genentech worked to get Lonza Biologic's Portsmouth, NH facility approved to manufacture Rituxan's bulk substance. In December, the companies announced a long-term manufacturing agreement for the facility. The company also boosted its manufacturing base with the June 2005 acquisition of Biogen Idec's Oceanside, CA facility.
Hitting .600
In 1999, the company announced its "5x5" goals, a series of targets to be hit by 2005. Genentech accomplished three out of five:
- 25% average annual earnings per share growth, non-GAAP: it reached 33% growth
- five new products or indications approved: seven were cleared
- five significant products in late-stage trials: the company says it has six products for 21 potential indications
The two 5x5 failures were:
- $500 million in new revenues from alliances or acquisitions: the company only brought in $300 million
- 25% net income as a percentage of operating revenues, non-GAAP: it reached 21%, which the company attributes to the success of Rituxan triggering a profit-sharing deal
A Sharp Stick in the Eye
Still, it's an awfully good track record for the #2 company on the Top Biopharma list. While much of Genentech's R&D is devoted to new indications for its oncology drugs, the company also found time to bring a non-cancer drug through its pipeline. In December 2005, the company submitted a BLA for Lucentis, a treatment for wet age-related macular degeneration. In February 2006, the FDA granted Lucentis priority review status, and the drug received approval in July 2006.
In January 2006, the company presented data indicating that Lucentis beat Visudyne in a head-to-head study. In the "if you can't beat ‘em, join ‘em" category, it turns out that Visudyne's marketer, Novartis, owns non-North American rights to Lucentis. Novartis filed for EMEA approval of Lucentis in March 2006. Novartis posted $484 million in Visudyne sales in 2005, and there are estimates of Lucentis in the billion-dollar range. Not bad for a drug that is administered by a needle to the eye.
It looks like Lucentis is the only new drug in Genentech's late pipeline. The only product currently in Phase II or beyond is Omnitarg, an ovarian cancer treatment under co-development with Roche.
Under ordinary circumstances, I'd be wary of a company that is mainly investigating new indications for its existing lineup. However, given the youth of Genentech's roster, and the potential for multiple oncology blockbusters, Genen-tech is in an awfully good position at present (provided GlaxoSmithKline's Tykerb doesn't put a hit on Herceptin's long-term prospects).
In a recent BusinessWeek interview, chief executive officer Arthur Levinson was asked what makes Genentech "scared and worried" (his words, from an earlier analyst meeting) about the future. He replied:
Competitors are targeting us now. They've seen our success and they're going after a lot of our markets, including Avastin. We continue to invest in the science. We're trying to stay ahead of the competition by investing in mechanism-of-action studies. By understanding more about how the drug works in principal, we believe we can engineer it to work 10 times better. I want to make sure we're respectful of the competition and we don't get slack. We can't make mistakes.
That last sentence sums up the philosophy of every company on this Top 10 list.
