1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1995
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
------------------------
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GENENTECH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GENENTECH, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $.02 par value
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
61,868,803
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
1/50th of 1% of the sum of (A) the product of (x) $48.1875 (average of the high
and low sales price of the Redeemable Common Stock on the New York
Stock Exchange on May 26, 1995 as reported in published financial
sources) multiplied by (y) 57,198,521 (the number of outstanding
shares of Redeemable Common Stock on May 26, 1995 (assuming the
exercise of all warrants and stock options, whether or not currently
exercisable)) and (B) the product of (x) $47.1875 (the average of the
high and low sales price of the Common Stock into which the Redeemable
Common Stock was converted automatically after June 30, 1995 on the
New York Stock Exchange on August 31, 1995) multiplied by (y)
4,670,282 (the incremental number of outstanding shares for which a
fee was not paid in connection with the initial filing of this
Schedule 14A, which number assumes the exercise of all warrants and
stock options, whether or not currently exercisable).
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$2,976,632,664
- --------------------------------------------------------------------------------
(5) Total fee paid:
$595,327
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$551,251* $75,993**
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
*Schedule 14A filed June 2, 1995 **Form S-4, No. 33-59949, Filed
September 8, 1995
- --------------------------------------------------------------------------------
(3) Filing Party:
Genentech, Inc.
- --------------------------------------------------------------------------------
(4) Date Filed:
See (2) above.
- --------------------------------------------------------------------------------
2
CAPTION FOR COVER:
On May 1, 1995, Genentech announced that it agreed with Roche, subject to
approval by non-Roche stockholders, to extend the two companies' governance
arrangement for four years. The proposed new agreement will allow Genentech to
continue its focus on bringing important new therapeutics to market.
August 29, 1995
Dear Stockholders:
Three significant developments occurred during or shortly after the second
quarter of 1995. As Chairman of the Board of Directors, I will update you on
those developments in this report.
The first development is an agreement, subject to the approval of non-Roche
stockholders, announced May 1 with Roche Holding Inc. It effectively extends for
four years Roche's option to purchase the outstanding redeemable common stock of
Genentech at a predetermined price that escalates quarterly up to $82.00 per
share in the quarter ending June 30, 1999. This agreement also stipulates that
if Roche does not consummate the purchase as of June 30, 1999, Genentech
stockholders will have an option to "put" (cause the purchase of) some or all of
their shares at the stockholder's discretion at $60.00 per share within a 30-day
period commencing July 1, 1999. The agreement also provides that Roche may
increase its Genentech ownership up to 79.9 percent through purchases on the
open market. Roche will receive an option to market various Genentech products
outside the United States in exchange for significant development funding and
royalties to Genentech.
The second development is an agreement in principle to settle stockholder
lawsuits that were filed regarding the proposed Roche extension. Announced July
10, 1995, the settlement agreement was reached in return for changes to the
terms of the proposed transaction between Genentech and Roche, including an
increase in the call prices of the proposed agreement by 50 cents per share. The
new redemption price begins at $63.00 per share in the fourth quarter of 1995
and increases quarterly to a final redemption price of $82.50 in the quarter
ending June 30, 1999. The put price remains at $60.00.
The increase in call prices and the overall settlement are subject to
approval of the Delaware Chancery Court and the proposed transaction must be
approved by a majority of non-Roche stockholders by October 31, 1995. After
reviewing the new terms of the proposed merger transaction, the non-Roche
directors unanimously concluded that the transaction with Roche is fair and in
the best interest of Genentech stockholders and should continue to be
recommended for Genentech stockholder approval.
The third development is the Board's appointment of Arthur D. Levinson,
Ph.D., to the position of president and chief executive officer and his election
to the Board. The Board made the appointment on July 7, 1995 after requesting
and accepting the resignation of G. Kirk Raab the same day.
As a member of Genentech's team for 15 years, most recently as senior vice
president and a member of the operations committee, Dr. Levinson not only knows
Genentech's culture, he is a significant driving force of it. Under his
leadership, Genentech's product pipeline has become one of the richest in the
biotechnology industry. With this promotion, he moves from providing leadership
and management to more than 700 of the industry's most productive scientists to
take the helm of the entire organization. The entire Board shares my confidence
in Art's leadership, and he has the enthusiastic support of Genentech's people.
With the full power of Genentech's strong management team behind Art, I believe
the company will fully capitalize on the promise of its pipeline. I am as
excited as I have ever been about Genentech's future and the company's ability
to solve significant medical problems while building a profitable, fast-growing
organization of which we can all be proud.
ROBERT A. SWANSON
CHAIRMAN OF THE BOARD
3
August 29, 1995
Dear Stockholders:
I take on the leadership of Genentech with the fundamentals of a strong business
already in place, as the results of the second quarter of 1995 demonstrate.
During the quarter, earnings increased 11 percent to $37.2 million, or 31 cents
per share, from $33.4 million, or 28 cents per share in the second quarter of
1994. The recent quarter's earnings reflect a special charge of $8.0 million --
which, after taxes, equals 5 cents per share -- in connection with expenses
related to our proposed merger transaction with Roche. Revenues increased 20
percent to $233.0 million, from $194.9 million in the same quarter of 1994. This
increase results primarily from continued growth in sales of Pulmozyme(R)
(dornase alfa) as well as increased royalty revenues.
Sales of Activase(R) (Alteplase, recombinant) t-PA increased to $74.1
million from $73.5 million in the second quarter of 1994. During the quarter,
the Food and Drug Administration cleared for marketing the accelerated infusion
of Activase for the management of heart attacks. This clearance allowed revised
product labeling that incorporates data from the worldwide GUSTO trial, which
showed the new regimen was superior compared to another clot-dissolving agent in
that significantly fewer patients died. Since the new labeling was approved, the
product's market share has climbed from 70 to 75 percent.
Sales of Genentech's growth hormone products Protropin(R) (somotrem for
injection) and Nutropin(R) (somotropin [rDNA origin] for injection) decreased to
$55.9 million from $59.5 million in the second quarter of 1994. This decrease
results from the impact of pricing programs for distribution channels and the
managed care sector.
Recently, three companies received FDA approval of their growth hormone
products. As a result of our assertion of certain of our patents, a court has
temporarily prohibited two of these products from entering the market; future
court decisions will determine whether these competitive products will be
permanently enjoined from the market.
Pulmozyme sales worldwide increased 62 percent to $30.3 million from $18.7
million in the second quarter of 1994, reflecting regulatory approval of the
product in additional European countries and continuing acceptance of the
product by cystic fibrosis patients and their physicians.
We or our R&D collaborators have recently reached three clinical
milestones: One represents important progress for a promising cancer therapy;
two demonstrate the inherent risk of pharmaceutical development:
- - IDEC Pharmaceuticals began a pivotal Phase III trial of IDEC-C2B8 in patients
with certain non-Hodgkins B-cell lymphomas. IDEC and Genentech are collaborating
to develop treatments for non-Hodgkin's B-cell lymphomas and other indications
for IDEC-C2B8.
- - We have stopped enrollment in our Phase III trial investigating Pulmozyme for
chronic obstructive pulmonary disease based on a recommendation of the trial's
independent Data and Safety Monitoring Board following an interim analysis that
showed a lack of benefit. These findings do not change treatment recommendations
for patients with cystic fibrosis, for which Pulmozyme has a proven record of
safety and efficacy.
- - Scios Nova announced that a preliminary analysis of its Phase III clinical
study of Auriculin(R) (anaritide) for the treatment of acute renal (kidney)
failure (ARF) revealed that although Auriculin reduced the need for dialysis in
a prospectively defined subgroup, it did not in the broad patient population,
nor did it reduce mortality. We are collaborating with Scios Nova to develop
pharmaceuticals for the treatment of ARF and to determine the next appropriate
steps for Auriculin.
Despite these reminders that not all potential products can make it to
market, Genentech's future remains bright. Our key marketed products are strong
and our pipeline holds many important opportunities. I believe the proposed new
agreement with Roche provides Genentech the opportunity for increasing
stockholder value while maintaining the company's culture and autonomous
operations. As we focus on our promising future, I'm excited to have the
opportunity to guide Genentech in achieving its tremendous potential.
ARTHUR D. LEVINSON, Ph.D.
President and Chief Executive Officer
4
SELECTED FINANCIAL INFORMATION
(thousands, expect per share amounts)
(unaudited)
THREE MONTHS ENDED JUNE 30 SIX MONTH ENDED JUNE 30
1995 1994 1995 1994
Revenues
Product sales $ 161,236 $ 152,574 $ 323,303 $ 300,372
Royalties 49,424 26,099 96,573 59,778
Contract and other 7,861 6,842 24,083 14,369
Interest 14,532 9,407 28,061 19,273
Total revenues 233,053 194,922 472,020 393,792
Costs and expenses
Cost of sales 24,312 24,565 51,062 46,696
Research & development 87,167 73,008 182,126 147,384
Marketing, general &
administrative 67,814 60,817 132,137 120,928
Special charge (merger related) 8,000 _ 8,000 _
Interest 2,039 1,754 3,910 3,532
Total costs and expenses 189,332 160,144 377,235 318,540
Income before taxes 43,721 34,778 94,785 75,252
Income tax provision 6,558 1,391 14,218 3,010
Net income $ 37,163 $ 33,387 $ 80,567 $ 72,242
Net income per share $ .31 $ .28 $ .67 $ .61
Weighted average number
of shares used in computing
per share amounts 120,899 119,041 120,696 118,924
June 30 Dec. 31
1995 1994
Current assets $ 1,077,571 $ 997,116
Marketable securities, long-term 241,228 201,726
Property, plant and equipment, net 483,731 485,293
Other assets 88,299 60,989
Total assets $ 1,890,829 $ 1,745,124
Current liabilities $228,435 $ 220,499
Long-term debt 175,503 150,358
Other long-term liabilities 22,708 25,483
Stockholders' equity 1,464,183 1,348,784
Total liabilities and stockholder's equity $ 1,890,829 $ 1,745,124
5
BACK PANEL COPY:
Corporate Headquarters:
Genentech, Inc.
460 Point San Bruno Boulevard
South San Francisco, California 94080-4990
(415) 225-1000
Activase, Nutropin, Protropin and Pulmozyme
are registered trademarks of Genentech, Inc.
Auriculin is a registered trademark of Scios Nova Inc.
FRONT COVER COPY:
"The proposed new agreement
provides Genentech the
opportunity for increasing
stockholder value while maintaining
the company's culture
and autonomous operations."
ARTHUR D. LEVINSON, Ph.D.
President and Chief Executive Officer
VISION STATEMENT:
Our vision is to be the world's leading biotechnology company using human
genetic information to discover, develop, manufacture and market pharmaceuticals
that address significant unmet medical needs. We commit ourselves to the
highest standards of behavior in contributing to the best interests of patients
and the medical profession, and we endeavor to make our products available to
all patients who need them, regardless of their ability to pay.