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David: BioTech Industry Dave: Amgen Christine: Genentech Karen: Protein Design Labs. BioTech. 2000 TV AD. 2004 TV AD. Definition. Sector: HealthCare Industry: Biotechnology & Drugs

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biotech

David: BioTech Industry

Dave: Amgen

Christine: Genentech

Karen: Protein Design Labs

BioTech

definition
Definition

Sector: HealthCare

Industry: Biotechnology & Drugs

Definition: engaged in the discovery, development, and commercialization of biotechnology based drugs and products (therapeutic proteins, recombinant DNA vaccines, gene therapies, and devices).

industry positioning
Industry Positioning

Amgen, Genentech

Size

Protein Design Labs

Business Function

the market
The Market

Cancer

  • about 1 in 3 lifetime risk; 38% of women and 43% of men
  • 23 million suffering worldwide.
  • Estimated $280 billion spent on treatment drugs for cancer annually.

Diabetes

  • 16 million Americans with 10.3 million diagnosed and 8.1 million women (NWHIC); 65 per 1000 - NHIS95; 8 million - perhaps 16 million if include not-yet-diagnosed.
  • 165 million cases worldwide (2003)
  • $150 billion in direct and indirect costs in America

Heart Disease

  • 25 million adults in the US
  • Heart disease and stroke cost US almost $260 billion annually.
recent biotech timeline
Recent BioTech Timeline

4000–2000 B.C.

Biotechnology first used to leaven bread and ferment beer, using yeast (Egypt).

1990

  • Chy-Max™, an artificially produced form of the chymosin enzyme for cheese-making, is introduced. It is the first product of recombinant DNA technology in the U.S. food supply.
  • The first experimental gene therapy treatment is performed successfully on a 4-year-old girl suffering from an immune disorder.

1993 FDA approves bovine somatotropin (BST) for increased milk production in dairy cows.

1994 First FDA approval for a whole food produced through biotechnology: FLAVRSAVR™tomato.

1997First animal cloned from an adult cell: a sheep named Dolly in Scotland.

1998 A rough draft of the human genome map is produced, showing the locations of more than 30,000 genes.

1999 Biotechnology-based biopesticide approved for sale in the United States.

2001 Chinese National Hybrid researchers report developing a "super rice" that could produce double the yield of normal rice.

2002 The draft version of the complete map of the human genome is published.

2003

  • GloFish, the first biotech pet, hits the North American market. Specially bred to detect water pollutants, the fish glows red under black light thanks to the addition of a natural fluorescence gene.
  • The U.K. approves its first commercial biotech crop in eight years. The crop is a biotech herbicide-resistant corn used for cattle feed.
  • Japanese researchers develop a biotech coffee bean that is naturally decaffeinated.

2004 The FDA approves the first anti-angiogenic drug for cancer, Avastin (bevacizumab).

industry facts
Industry Facts
  • Biotechnology is responsible for hundreds of medical diagnostic tests that keep the blood supply safe from the AIDS virus and detect other conditions early enough to be successfully treated. Home pregnancy tests are also biotechnology diagnostic products.
  • Consumers already are enjoying biotechnology foods such as papaya, soybeans and corn.
  • Environmental biotechnology products make it possible to clean up hazardous waste more efficiently.
  • Industrial biotechnology applications have led to cleaner processes that produce less waste and use less energy and water in such industrial sectors as chemicals, pulp and paper, textiles, food, energy, and metals and minerals.
  • DNA fingerprinting, a biotech process, has dramatically improved criminal investigation and forensic medicine, as well as afforded significant advances in anthropology and wildlife management.
  • There are 1,473 biotechnology companies in the United States, of which 314 are publicly held.
  • Market capitalization: $311 billion as of mid-March 2004.
  • Revenues: increasing from $8 billion in 1992 to $39.2 billion in 2003.
  • Employed: 198,300 peopleas of Dec. 31, 2003.
  • R & D: spent $17.9 billion on research and development in 2003.
  • The top eight biotech companies spent an average of $104,000 per employee on R&D in 2003.
  • Regulated: by the U.S. Food and Drug Administration (FDA), the Environmental Protection Agency (EPA) and the Department of Agriculture (USDA).
  • There are more than 370 biotech drug products and vaccines currently in clinical trials targeting more than 200 diseases, including various cancers, Alzheimer's disease, heart disease, diabetes, multiple sclerosis, AIDS and arthritis.
6 key investment guidelines
6 Key Investment Guidelines
  • Product Pipeline

Look for companies with at least two drugs in clinical trials

  • Collaborations

Collaborative agreements with various pharmaceutical companies for research or marketing and link up with a corporate or academia partner => lower risk

  • Management

Proven track record of taking a drug through the regulatory hurdles and/or to the marketplace

  • Cash

Company’s burning of cash in ongoing research and development or "burn rate" is a critical measure of a company’s longevity

  • Market

Aimed at markets for a new drug that is both large and under-serviced.

  • Technology

Look to see if the research and development can do what it needs to do and supposedly solve a medical problem or problems.

slide17
FDA

Food andDrug Administration

  • Sets health and safety standards
  • Drugs, food , medical devices, cosmetics products, and biologics
  • Also monitor for proper production standards
  • Ensure labeling is truthful and informative.
pre clinical tests
Pre Clinical Tests

Tests on

  • Isolated tissues
  • Cell Cultures
  • Animals

To see the potential effects on humans

  • The beginning of the drug approval process
  • Company decides whether to pursue human testing
the ind filing
The IND Filing
  • Exemption from marketing application in order to transport the drug
  • Before testing on humans can begin, the company must file an Investigational New Drug (IND) application
  • FDA has 30 days to review the IND application
  • At this time patents are usually applied for, patents last generally for 20 years
  • The goal of the IND application is to provide pre-clinical data of sufficient quality to justify the testing of the drug in humans
  • About 85% of all IND applications move on to begin clinical trials
patent
Patent
  • Biotech inventions are subject to the same rules as all other inventions
  • Generally last 20 years
  • What can be patented
    • Product
    • Method
    • Use
  • Examples
    • DNA and RNA sequences
    • proteins, enzymes, antibiotics
    • antibodies, antigens
    • micro-organisms, cell lines, hybrids
phase i
Phase I
  • Ranging from 1 to 3 years
  • Begins to analysis the drugs safety profile
  • How the drug is absorbed, metabolized and excreted
  • Improves Chances of making it to market by 30%
  • Sample in this phase is small (less than 100 patients)
  • Healthy volunteers => safety and dosage
phase ii
Phase II
  • Ranging about 2 years
  • Consists of small, well-controlled experiments to evaluate the drug's safety and assess side effects
  • Making it through phase two increase your chances of being approves by 60%
  • Sample size of 100 – 300 patients who suffer from the disease
  • This phase establishes the optimal dosage of the drug
phase iii
PhaseIII
  • Ranging between 3 and 4 years
  • Verifies the drug is effective in its intended use
  • Assessment of long term effects
  • Continues to build the safety profile of the drug and record possible side effects and adverse reactions resulting from long-term use
  • Sample size of at least 1000 patients
  • At this point the drug has a 70% chance of FDA approval.

Processing of the NDA New Drug Application

  • This can take be done in as little as 6 month or as long as 2 years
  • Drugs are subject to ongoing review, making sure no adverse side effects appear from the drug.
phase iv
Phase IV
  • Observational studies in an ongoing evaluation of the drug's safety during routine use
  • Monitor any usage of the drug for conditions other than the approved medical indication
key points
Key Points
  • The clinical trial process is costly as well as time-consuming
  • $350 - $500 million to bring a drug through all phases of the clinical trial process
  • Consider companies that already have:
    • one or more successful products on the market
    • a large pipeline of candidate drugs
    • plenty of cash to fund the development of their new drug candidates
porter s competitive force
Porter’s Competitive Force

LOW

MID

LOW

LOW-MID

LOW-MID

critical challenges
Critical Challenges

Political & Legal:

  • Product liability
  • Pressure from governments worldwide to contain drug prices.

Social:

  • Ethical concerns over controversial aspects of its research.
the future
The Future

Toward profitability by the end of the decade.

  • rebounded in dramatic fashion in 2003 and 2004 from a stock market decline
  • moving new, first-in-class medicines through clinical trials and onto the market.
  • we predict the industry should achieve the first net income in its 30-year history in 2008.

From potential to performance.

  • real products—life-saving medicines awaiting approval by the U.S. Food and Drug Administration (FDA), or in late-stage clinical trials.
  • The biotech industry has moved from technology-driven to product-driven, from potential to performance. With a robust pipeline of products, the industry is on track year-after-year to set new standards of medical care and revenue growth.
  • Biotech has achieved a critical mass of products. Companies are judged by higher sales, first-in-class approvals, and ground-breaking successes in Phase II and Phase III trials. Emerging technologies are valued for their contributions in creating products in the near-term.
the future1
The Future

The future is bright.

  • biotech industry has reached a critical mass of products on the market and in late-stage clinical trials, driving its performance to a higher level of stability and predictability. Biotech is an industry of fundamentally sound companies creating essential products for improving the health and quality of life of everyone on the planet. With its recent resurgence, the industry’s best days are still to come.
it starts with a f lash of insight a potentially life changing discovery
It starts with a f lash of insight—

a potentially life-changing discovery.

business profile
Business Profile
  • Pioneers of the development of innovative products based on advances in recombinant DNA and molecular biology
  • Human Therapeutics
    • Oncology (supportive cancer care)
    • Inflammation (rheumatoid arthritis)
    • Hematology & nephrology (anemia, kidneys)
    • Neurology (brain, nervous system)
    • Metabolic Disorders (autoimmune diseases, viruses)
mission statement
Mission Statement

Mission Statement: “At Amgen, our mission is to serve patients. As a science-based, patient-focused organization, we will follow the science wherever it may lead, to discover and develop innovative therapies to treat grievous illness.”

organizational values
Organizational Values

Be Science BasedCompete Intensely and WinWork in Teams

Create Value for Patients, Staff and Stockholders

Trust and Respect Each OtherEnsure Quality

Collaborate, Communicate and Be AccountableBe Ethical

company strategy
Company Strategy
  • Principal products marketed to clinics hospitals and pharmacies, big 4 products are also marketed outside the US. Outside the US products marketed mostly to wholesalers or hospitals depending on distribution practice in that country.
  • Research facilities in US, clinical development staff in Europe Canada Australia and Japan
  • Also utilize R&D collaborations and licensed certain product and technology rights to enhance R&D efforts
  • Manufacturing facilities in US Puerto Rico and Netherlands, also have 3rd party contract manufacturers.
  • Overall,a big time industry leader that focuses on research and utilizes strategic alliances and acquisitions
some quick facts
Some Quick Facts
  • Headquarters: Thousand Oaks, California
  • Stock Information:
  • Nasdaq: AMGN
  • Number of Staff Members: Nearly 13,000 (as of year-end 2003)
  • Chairman and CEO: Kevin W. Sharer
history of amgen
History of Amgen
  • 1980 - Company founded, financed by venture capitalists Bill Bowes, Frank Johnson, Sam Wohlsteader, and Raymond Baddour
  • 1983 - IPO of 2,350,000 shares @ $18         
    • erythroprotein first cloned- later becomes drug epogen 
  • 1987 - Co’s name changed to Amgen, becomes a Delaware corporation
  • 1989 - Immunex clones TNF receptor, later patented and named -ENBREL®Amgen receives first U.S. patent for recombinant G-CSF (NEUPOGEN®)FDA approves EPOGEN® for the treatment of anemia in patients with end-stage renal diseaseEPOGEN® named "Product of the Year" by Fortune magazineAmgen added to the NASDAQ 100 Index 
history
History
  • 1991 - FDA approves NEUPOGEN® to decrease the incidence of infection associated with chemotherapy-induced neutropenia in patients with non-myeloid cancers receiving myelosuppressive therapy
  • 1996 - FDA approves EPOGEN® for reduction of allogeneic blood transfusion in surgery patientsAmgen reaches sales of more than $2 billion
  • 1998 - FDA approves ENBREL® to treat patients with rheumatoid arthritis whose disease has failed to respond to prior disease-modifying medicines 
  • 2000 - Kevin W. Sharer named Chief Executive OfficerAmgen acquires Kinetix Pharmaceuticals 
history1
History
  • 2001 - FDA approves Kineret® to treat the signs and symptoms in patients with moderately to severely active rheumatoid arthritis whose disease has failed to respond to one or more disease-modifying medicinesKevin W. Sharer becomes Chairman of the Board of DirectorsFDA approves Aranesp® to treat anemia associated with chronic renal failure, including patients on dialysis and not on dialysis
  • 2002 - FDA approves ENBREL® to treat the signs and symptoms of active arthritis in patients with psoriatic arthritisFDA approves Neulasta® to decrease the incidence of infection in patients with non-myeloid cancers receiving myelosuppressive chemotherapyAmgen completes Immunex acquisition
  • 2004 - FDA approves Sensipar® (cinacalcet HCl) for the treatment of secondary hyperparathyroidism in chronic kidney disease patients on dialysis and for the treatment of elevated calcium levels (hypercalcemia) in patients with parathyroid carcinoma
executives
Executives

Kevin Sharer 56, CEO, has been a director since 1992 chairman of board since 2000, was COO and president from 92 to 2000, previously worked at MCI and GE – corporate guy, not a doctor

Dr. Hassan Dayem 58, Senior VP and CIO since 2002, previously with Merck

Dennis M. Fenton 53, Became Executive VP in 2000, has been w/ Amgen since 1988 and has o occupied various executive roles

Brian McNarnee 48, HR VP since 2001, previously with Dell Computer co

George Morrow 52, VP sales and marketing since 2001, previously with Glaxo

Richard Nanula 44, CFO since 2001 previously with broadband sports co.

Dr. Roger

Perlmutter 52, VP of R&D, previously held a senior position in R&D with Merck

David J. Scott 52, Senior VP General Counsel, since 2004, previously with Meditronic Inc.

value drivers
Value Drivers
  • Biologics are very hard to copy, this reduces the success of generic firms that try to copy Amgen’s products
  • However, biogenerics have been popping up in Asia and Europe and experts say that the only reason they haven’t caught on in North America is that there is a lack of approval process
value drivers1
Value Drivers
  • Extensive R&D efforts mean lots of products in pipeline – lots of potential revenue
  • Amgen’s products are used for common medical problems (complications of chemotherapy, anemia, CKD, etc..) and must be administered regularly, this means they have a large customer base that uses a lot of their products
  • Their patients also usually live relatively long lives – Amgen’s products are for quality of life rather than staying alive
products
Products
  • EPOGEN: is a drug that helps correct anemia in chronic kidney disease patients on dialysis. It works just like the erythropoietin that healthy kidneys make and signals bone marrow to make more red blood cells
  • NEUPOGEN: A low white blood cell count - also known as "neutropenia" (new-tro-pee-nee-uh) - can put some patients at risk for severe infections and interruptions in cancer treatment. Neupogen treats this condition by aiding the body’s production of white blood cells this prevents infections and enables chemotherapy patients to stick to their chemotherapy schedules
  • NEULASTA: Effects similar to Neupogen, encourages the body’s production of white blood cells and enables chemotherapy patients to adhere to their regimen
products1
Products
  • ARANESP: Used to treat anemia caused by chemotherapy or chronic kidney disease (CKD) where patients would be on dialysis. It works by increasing the number of red blood cells in the body, by stimulating red blood cell production in the bone marrow. This gives patients more energy, as people with low red blood cell counts often feel tired and sluggish.
  • ENBREL: Used to treat various forms of arthritis and psoriasis. One of what are known as “biologic medicines” it imitates the proteins that are naturally produced in patients’ bodies and helps regulate the bodies’ TNF balance. TNF stands for tumor necrosis factor and is one of the chemical messengers in the body that regulates the inflammatory process. Basically people with arthritis or psoriasis have too much of this protein and this causes their bodies’ immune system to mistakenly attack healthy cells causing inflammation.
pipeline highlights
Pipeline Highlights
  • Kineret - also indicated for the treatment of rheumatoid arthritis, was shown to relieve pain in a small pilot clinical study in the treatment of osteoarthritis (OA). Amgen announced that it plans to initiate a Phase 2 clinical study with Kineret in OA in 2004.
  • AMG 108 - an antibody that prevents joint deterioration in patients with Osteoarthritis- Currently in Phase 1
  • AMG 714 - currently in Phase 2, this drug is used to treat inflammatory and autoimmune disorders – anticipated as a treatment for Rheumatoid arthritis
  • AMG 162 – Will be used as a therapy for restoring bone mass in patients with bone loss
threats
Threats
  • Must obtain regulatory approval
  • Face substantial competition, to discover, develop, acquire or commercialize products before others.
  • Dependent on third parties for a significant portion of supply and fill and finish of many products.
  • Side affects may be discovered prompting reduced sales, or re-labeling of products to warn of new side-effects.
  • Patents may run out – or be interpreted incorrectly
growth
Growth
  • Amgen anticipates continued strong growth in product sales through 2005 as the company’s newest therapeutics gather momentum
  • The company indicated that has almost 40 development programs
  • They intend to expand their lines through approval of new products, and the continued investment in new product development.
  • Amgen will continue to use significant amounts of cash for the company’s capital expenditure requirements, as well as for its share repurchase program.
  • Its strong cash flow will also be used to fund potential product candidates in-licensing opportunities
common stock repurchase program
Common Stock Repurchase Program
  • As part of previous $5 billion stock repurchase program :
  • First Quarter 2004 – 10 million shares repurchased @ $55.53
  • Second Quarter 2004 – 18 million shares repurchased @ $59.98
  • Third Quarter 2004 – 24 million shares repurchased @ $59.25
  • New 5 billion stock repurchase program announced
  • However, these stock repurchases didn’t coincide much with downturns in the stockprice
stock option info
Stock Option Info
  • Equity compensation for directors: 5000 stock options each year
  • 20000 share inaugural grant for new directors
  •  In January 2003 Amgen awarded each non-employee director 16,000
  • All employee stock options have an exercise price equal to their market value at the date of issue
  • In 2004 Stock based pay was equal to 28% of Net Income
awards and recognition
Awards and Recognition
  • Barron's: Amgen was listed second in Barron's 2003 ranking of the 500 largest U.S. and Canadian companies who have performed best for investors.
  • Amgen has been named by FORTUNE magazine as one of the "100 Best Companies To Work For." For 2005, the sixth year the company has been named to the list, Amgen ranked number 33.
  • Forbes magazine names Amgen “Company of the Year” and Kevin Sharer “CEO of the Year”
  • Fortune: Amgen ranked 246th on the Fortune 500 list in 2004 and 27th among California companies.
  • Fortune: Top Performing Companies and Industries - in 2003, Amgen ranked in the following categories:              #27 in Fastest Growing Companies - Growth in Revenue (1 year)              #19 in Biggest Companies by Market Share              #9 Best Investments - Total Return to Shareholders (
important news
Important News
  • April 2004- FDA approves Enbrel for treatment of adult patients w/ chronic psoriasis – weekly usage
  • September 2004- European Commision approves Aranesp for usage every 3 weeks for chemotherapy patients and patients with CKD
  • August 2004 – Acquired Tularik, a company engaged in drug discovery related to cell signaling and the control of gene expression, for 1.5 billion incurred a charge of 554 million for writing off in process R&D
  • FDA Approves Kepivance for Severe Oral Mucositis in Cancer Patients Undergoing Bone Marrow Transplant; Pivotal Phase 3 Study Published in This Week's New England Journal of Medicine
  • Approval from EU for drug Sensipar, this drug is also used to treat CKD for people on dialysis and people with elevated calcium levels
  • February 2005- Amgen decides to halt phase 2 research into GDNF for Parkinson’s Disease due to risk to patients
  • Phase 3 study on drug, Neulasta, shows first cycle administration significantly lowers incidence of Neutropenia, fever and hospitalization
pros and cons
Products difficult to copy

Very good cash flow numbers

Strong balance sheet

Annual Revenue growth

Large customer base and volume of sales

Ambitious stock repurchase program

No dividends

Small capital gains

Investors must have faith that Amgen will continue to grow

Generics will eventually pop up

Current Earnings could still be diminished if new side effects discovered

Declining profit margin

Pros and Cons
slide90

Genentech

IN BUSINESS FOR LIFE

Founders Research Center

quick facts
Quick Facts
  • Genentech Inc is the world 2nd largest biotechnology company
  • Headquarters: South San Francisco, California
  • Workforce: 7646 as of year-end 2004
  • Ticker Symbol: DNA
  • Traded on: New York Stock Exchange (NYSE)
  • Shares Outstanding: 1.5 B
history2
History

1976 Robert Swanson and Dr. Herbert Boyer who pioneered

the recombinant DNA technology, founded

Genentech on April 7th.

Robert Swanson Dr. Herbert Boyer (venture capitalist) (biochemist)

1980 Genentech went public and raised $35 million with an

offering that leapt from $35 a share to a high of $88 after

less than an hour on the market. The stocks traded on

NASDAQ under symbol GENE.

1988 Genentech stock begins trading on the NYSE under the

symbol GNE

history3
History

1990 Genentech and Roche Holding Ltd. Of Basel, Switzerland

completed a $2.1 billion merger.

1999 Genentech returned to the NYSE with a public reoffering of 22M

shares by Roche, in what is considered the largest public offering

in the history of the U.S. health care industry. The stock closed the

first day of trading at $127, over 31 percent above the public offering

price of $97. This was also the first introduction of Genentech's new

NYSE trading symbol, DNA.

1999 Roche conducted a secondary offering of 20 M Genentech

shares on October 20. The shares were priced at $143.50 per

share, making it the largest secondary offering in U.S. history.

business profile1
Business Profile
  • Genentech discovers, manufactures, and commercializes biotherapeutics for significant unmet medial needs
  • A considerable number of the currently approved biotechnology products originated form or are based on Genentech science
  • It manufactures and commercializes multiple biotechnology products directly in the U.S., and receives royalties form companies that are licensed to market products base on its technology
  • The Company's product development efforts, including those of its collaborative partners, cover a range of medical conditions.
mission and values
Mission and Values

“Our mission is to be the leading biotechnology company that discovers, develops, manufactures and market human pharmaceuticals for significant unmet medical needs. We commit ourselves to high standards of integrity in contributing to the best interests of patients, the medical profession, our employees and our communities, and to seeking significant returns to our stockholders, based on the continual pursuit of scientific and operational excellence.”

growth strategy
Growth Strategy

The 5X5 goals that outlined in 1999 and hopes to achieve by the end of 2005:

1.25 percent average annual non-GAAP EPS growth

EPS growth for 1999 through 2004 has been 29 percent.

2. 25 percent non GAAP net income as a percentage of operating revenues

For 2004, its non GAPP net income as a percentage of operating revenues was 19 percent. Given the success of Rituxan® (Rituximab) and the associated profit split, this financial productivity goal remains a significant challenge that will be difficult to meet.

3. 5 new products/indications approved

With the nine approvals of Nutropin Depot® [somatropin (rDNA origin) for injectable suspension], TNKase™ (Tenecteplase), Cathflo Activase® (Alteplase), Nutropin AQ Pen®, Xolair® (Omalizumab), RAPTIVA® (efalizumab), Avastin™ (bevacizumab), Tarceva™ (erlotinib), and Cathflo Activase for catheter clearance in pediatric patients, it has exceeded its 5X5 goal of five new products or indications approved by 2005.

4. 5 significant products in late-stage clinical trials

Its development pipeline has over 30 projects, with several projects in early stage and a steady flow of projects advancing in the pipeline.

5. $500 million in new revenues from strategic alliances or acquisitions

It has entered into more than 50 significant agreements and in-licensing arrangements since 1999, which position itself well for future growth prospects.

executive officers
Executive Officers
  • Arthur D. Levinson, Ph.D. (joined in 1980)

Chairman and Chief Executive Officer

  • Susan Desmond-Hellmann, M.D., M.P.H. (joined in 1995)

President, Product Development

  • Myrtle S. Potter. (joined in 2001)

Executive VP, Commercial Operations

  • Stephen G. Juelsgaard, J.D. (joined 1985)

Executive VP

  • David A. Ebersman, Ph.D. (joined in 1994)

Senior Vice President, Finance

  • Richard H. Scheller, PhD (joined 2001)

Executive VP, Research

  • Patrick Y.Yang, Ph.D. (joined 2003)

Senior VP, Product Operations

  • Robert L. Garnick, Ph.D. (joined 1984)

Senior VP, Regulatory, Quality and Compliance

products2
Products
  • Genentech concentrate much of its substantial scientific
  • resources and expertise in the following disease areas:

1. Oncology

  • cancer treatment

2. Immunology

  • immune disorder

3. Vascular Medicine

  • heart disease

4. Specialty

Biotherapeutics

  • other areas
products3
Products
  • Oncology
  • Herceptin® Anti-HER2 antibodyFor metastatic breast cancer in HER2 overexpressed tumors
  • Rituxan® Anti-CD20 antibodyFor relapsed or refractory low-grade or follicular, CD20 positive, B-cell non-Hodgkin's lymphoma
  • Avastin™ Anti-VEGF antibodyFor use in combination with intravenous 5-Fluorouracil-based chemotherapy as a treatment for first-line metastatic colorectal cancer
  • Tarceva™ Small molecule HER1/EGFR inhibitorFor use as an oral tablet for the treatment of patients with locally advanced or metastatic non-small cell lung cancer after failure of at least one prior chemotherapy regimen
  • Immunology
  • RAPTIVA® Anti-CD11a antibodyFor chronic moderate-to-severe plaque psoriasis in adults age 18 or older
  • Xolair® For Subcutaneous Use Anti-IgE antibodyFor moderate-to-severe persistent asthma in adults and adolescents
products4
Products
  • Vascular Medicine
  • Activase®
  • A tissue-plasminogen activator For acute myocardial infarction, acute ischemic stroke and acute
  • massive pulmonary embolism
  • Cathflo® Activase®
  • Thrombolytic agent For the restoration of function to central venous access devices as
  • assessed by the ability to withdraw blood
  • TNKase™
  • Single-bolus thrombolytic agent For the treatment of acute myocardial infarction (AMI)
  • Specialty Biotherapeutics
  • Nutropin®
  • Growth hormone For GHD in children and adults; growth failure associated with
  • CRI prior to kidney transplantation; short stature associated with
  • Turner syndrome
slide101

Products

  • Nutropin AQ®

Liquid formulation growth hormone

For GHD in children and adults; growth failure associated with chronic renal insufficiency (CRI) prior to kidney transplantation; short stature associated with Turner syndrome

  • Nutropin AQ Pen® for use with Nutropin AQ Pen® Cartridge

Liquid formulation growth hormoneFor GHD in children and adults; growth failure associated with chronic renal insufficiency (CRI) prior to kidney transplantation; short stature associated with Turner syndrome

  • Pulmozyme®

Inhalation SolutionFor management of cystic fibrosis (including patients under age 5)

product development pipeline
Product Development Pipeline

*Preparing for Phase **Preparing for FDA Filing

product development pipeline1
Product Development Pipeline

*Preparing for Phase **Preparing for FDA Filing

revenues breakdown in 2004
RevenuesBreakdown in 2004

$ In mils

$ 3748.9

641.1

231.2

Total revenues $ 4621.2

royalty revenue
Royalty Revenue

The significant licensed products, representing approximately 94% of

Genentech’s royalty revenues in 2004:

costs breakdown in 2004
Costs Breakdown in 2004

$ in Mils

Total Costs $ 3484.3 M

income statement analysis
Income Statement Analysis
  • Revenues: 4.62B (40%↑ )
  • Revenues Per Share: 4.282
  • Net Income: 784.82M (39.5%↑ )
  • Diluted EPS: 0.73 (37.7%↑ )
balance sheet analysis
Balance Sheet Analysis
  • Total Cash: 1.67B
  • Total Cash Per Share: 1.59
  • Total Debt: 412.25M
  • Total Debt/Equity: 0.061
  • Current Ratio: 2.753
  • Book Value Per Share: 6.477
cash flow statement analysis
Cash Flow Statement Analysis
  • Cashflow from operation: 1.20B
  • Capital Expenditures: 649.86M
  • Free Cashflow: 545.98M
earning per shares 5 year trend
Earning per Shares – 5 Year Trend

-0.071 0.143 0.061 0.53 0.73

stock options
Stock Options

Shares Outstanding: 1.5 B

stock options1
Stock Options

Below is the information regarding net income and earning per share has

been determined as if it had accounted for its employee stock options and

employee stock plan under the fair value method prescribed by FAS 123.

recent news
Recent News
  • On Mar 14, 2005 Genentech announced that the preliminary Phase III clinical data had shown that Avastin was able to significantly extend the lives of lung cancer patients when used in combination with two other leading chemotherapy drugs paclitaxel and carboplantin.
  • Genentech exercised its option under an agreement with Rinat to co-develop and commercialize RI 624 on a worldwide basis.
  • On Jan 10, 2005, it announced today that it has been named by FORTUNE magazine as one of the "100 Best Companies To Work For" for the seventh consecutive year. This year Genentech is number four on the list.
  • On Nov 19, 2004 (FDA) has approved, after priority review, Tarceva(TM) (erlotinib) for the treatment of patients with locally advanced or metastatic non-small cell lung cancer (reached sales of $13 million for the year since its launch, 13.3% of 2004 total product sales)
recommendation1
Recommendation
  • CONS
  • No dividends
  • Increased in
  • competition in certain
  • of its therapeutic markets
  • A loss market share in
  • in the thrombolytic and
  • growth hormone market

PROS

  • Strong financial performance
  • Performance above

industry’s average

  • Launched four products in a 16-month period, while also growing all of the products in its portfolio in 2004
pdl background
PDL Background
  • Location: Fremont CA
  • Workforce: 549 employees
    • 157 in R&D, 126 in clinical
  • NASDAQ symbol: PDLI
  • Index member: S&P 400 MidCap
  • New commercial-scale manufacturing plant slated for completion in 2007
  • Protein Design Labs, Inc. is a leader in the development of humanized monoclonal antibodies to treat various disease conditions
key executives
Key Executives

Max Link, Ph.D. 63

Chairman (joined in 1993)

Mark McDade, M.B.A. 48 $1.13M

Chief Executive Officer (joined in 2002)

Glen Y. Sato 44 Senior Vice President and Chief Financial Officer (joined in 1999)

Douglas O. Ebersole 48 $481KSenior Vice President Legal and Licensing and Secretary (joined 1992)

Steven E. Benner, M.D. 44 $773KSenior Vice President and Chief Medical Officer (joined in 1995)

pdl mission and value
PDL Mission and Value
  • Mission statement:
    • to be a premier biotechnology company that creates, develops, manufactures and markets humanized antibodies to alleviate serious human diseases. Building on our core technologies, we will discover a new generation of therapeutics.
  • Value statement:
    • our values define PDL - who we are and what we aspire to be. Our values are our deeply held beliefs. They guide our behavior and help us make decisions. They build the framework for our daily interactions with one another, as coworkers and members of the biotechnology community.
pdl strategies
PDL Strategies
  • To complete the transition from a company dependent on technology licensing activities, humanization services and royalties as the primary source of revenues to a commercial enterprise that markets innovative products to address serious unmet medical needs.
  • To initiate at least one pivotal clinical trial by 2005
  • To launch their first proprietary drug product into the North American market by the end of 2007
pdl core technology
PDL Core Technology
  • humanizing monoclonal antibodies
  • uses structural information from promising mouse antibodies to capture the benefits of such antibodies without their limitations.
  • discovers and develops humanized monoclonal antibodies for the treatment of disease, particularly inflammatory bowel disease and cancer.
pdl products
PDL Products

Therapeutics:

  • Autoimmune
  • Inflammatory condition
  • Asthma and cancer

Seven marketed drugs licensed under PDL:

Mylotarg®

pdl product pipeline
PDL Product Pipeline

Pre-Clinical

I

I / II

II

III

Marketed

Nuvion®

(visilizumab/anti-CD3)

Severe refractory ulcerative colitis

*

Prevention of renal allograft rejection following kidney transplantation

Zenapax®

(daclizumab/anti-CD25)

*

*

Moderate to severe persistent asthma

HuZAF™ (fontolizumab/ anti-gamma Interferon)

Moderate to severe Crohn’s disease

Solid tumors

M200 (Anti-α5β1 integrin)

F200

(Anti-α5β1 integrin Fab)

AMD

* Marketed as Zenapax® by Roche in kidney transplantation

stock history
Stock History
  • Last dividend: Sept 9, 2001
  • Last Stock Split: 2:1 Oct 10, 2001
  • Fiscal Year: Dec 31
  • 6 Stock Option Plans
    • 1991 Stock Option Plan
    • Outside Directors Stock Option Plan
    • 1999 Nonstatutory Stock Option Plan
    • 1999 Stock Option Plan
    • 2002 Outside Directors Plan
    • 1993 Employee Stock Purchase Plan
financial snapshot1
Financial Snapshot
  • Current price: 17.24
  • 52 week range: 13.79 – 27.58
  • Outstanding stock: 95.51 M
  • Beta: 1.12
  • Market Capitalization : 1.37B
  • No dividend
recent news1
Recent News
  • PDL has committed to provide ESP Pharma with short term funding
  • PDL will receive royalties on Tysabri because the drug was developed using its patented technology
  • announced that it has closed its previously announced private placement under Rule 144A in an aggregate principal amount of $250 million of its convertible senior notes due 2012.
recommendations
Pros

PDL is a slow growing company.

May hit a homerun, yet not within this next couple years

Cons

Poor financial performance

Underperform Biotech Index

Recommendations

HOLD!