UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Genentech, Inc.
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1 11/15/2006 © 2006, Genentech Genentech: An Overview David Ebersman, Executive Vice President and Chief Financial Officer, Genentech November 15, 2006 |
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2 11/15/2006 © 2006, Genentech Meeting Agenda 1) Introduction to Genentech David Ebersman 2) Transition Planning/Process Ashraf Hanna 3) Employee Related Information Brian Muma 4) Next steps David Ebersman 5) Q&A All |
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3 11/15/2006 © 2006, Genentech Founding of Genentech • Genentech was founded in 1976 by venture capitalist Robert A. Swanson and biochemist Dr. Herbert W. Boyer. In the early 1970s, Boyer and geneticist Stanley Cohen pioneered a new scientific field called recombinant DNA technology • After hearing about the breakthrough, Swanson placed a call to Boyer and requested a short meeting. Swanson's enthusiasm for the technology and his faith in its commercial viability were contagious, and the meeting extended from 10 minutes to three hours. By its conclusion, Genentech was born • Though they faced skepticism from both the academic and business communities, they forged ahead with their idea. Within a few short years, they successfully demonstrated the viability of using recombinant DNA technology to develop products with practical applications The First Biotech Company |
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4 11/15/2006 © 2006, Genentech Genentech’s Mission • Our mission is to be the leading biotechnology company, using human genetic information to discover, develop, manufacture and commercialize biotherapeutics that address 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 |
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5 11/15/2006 © 2006, Genentech In 1998 we licensed U.S. marketing and development rights to interferon gamma,
including Actimmune, to Connetics Corporation. Thereafter, Connetics
sublicensed, then later assigned, all of its rights to InterMune Pharmaceuticals, Inc. Protropin manufacturing was discontinued at the end of 2002.
Nutropin Depot commercialization was discontinued in June 2004. Developing Therapies For Unmet Medical Needs |
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6 11/15/2006 © 2006, Genentech Genentech: A Closer Look • More than 10,000 employees • $6.6 billion in total operating revenues (2005) • World leader in biotech manufacturing, with more FDA-approved manufacturing capacity for the production of biotech medicines than any other company • Headquarters in South San Francisco; sites in Vacaville and Oceanside, California, Oregon and Kentucky • Leading provider of anti-tumor therapeutics in the United States • Broad and robust pipeline of more than 40 projects with a focus on oncology, immunology and disorders of tissue growth and repair • 10 FDA Approvals since the beginning of 2004; two pending |
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7 11/15/2006 © 2006, Genentech At Our Core, We are a Science Company Founders Research Center • Single largest biotechnology research facility in the world • 500,000+ square feet of research space Scientific Leadership • Ranked as the “top employer and most admired company in biotech and pharma” by Science Magazine for all five years that Science has conducted survey • Focus on novel pathways involved in complex diseases • More than 700 scientists with expertise in molecular biology, protein chemistry, bioinformatics and physiology • Peer-reviewed publications encouraged • Secured approximately 6,100 current, non-expired patents worldwide, with 5,400 patent applications pending worldwide • Discretionary research time allowed • More than 75 Postdoctoral Fellows |
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8 11/15/2006 © 2006, Genentech Manufacturing • Genentech is a world leader in biotech manufacturing, with more FDA-approved manufacturing capacity for the production of biotech medicines than any other company • Four facilities: South San Francisco, CA; Vacaville, CA and Oceanside, CA and Porriño, Spain • We believe we have the right plans in place to meet the growing demand for our products: • Oceanside facility purchased from Biogen Idec in 2005 • Option to purchase facility in Singapore • Working with Lonza, Wyeth and Novartis • Process yield improvements for Rituxan and Avastin • New capacity coming online for bulk and filling/packaging |
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9 11/15/2006 © 2006, Genentech Why Are We Interested in Tanox? • Genentech and Tanox have been collaborating since 1996 and received FDA approval of Xolair for allergic asthma in 2003 • Our belief in Xolair and IgE inhibition as an important way to treat patients, and as an area of great potential growth • We expect to grow the Xolair market by increasing patients treated, adding new indications, formulations and second generation molecules • We are interested in several programs in the Tanox pipeline as they are well aligned with our current pipeline in that they investigate novel targets in
diseases that would allow us to potentially expand therapeutic options for
patients: • Anti-IL13 Mab for asthma • Anti-Factor-D Mab for Dry AMD • Anti-CD4 for HIV |
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10 11/15/2006 © 2006, Genentech Transition Planning and Process Ashraf Hanna, Vice President of Alliance Management and Pipeline Planning Support |
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11 11/15/2006 © 2006, Genentech Tanox History and Milestones Tse Wen & Nancy Chang found Tanox Project partnered with Novartis and later Genentech Pipeline growth Settlement of issues w/ GNE and Novartis IgE patented Largest IPO in biotech history Acquisition by Genentech 1986 1994 1996 2000 2004 2006 Xolair launch |
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12 11/15/2006 © 2006, Genentech Key Items to be Addressed • Which R&D programs does Genentech want to take forward? (e.g. Should we
develop the anti-CD4 program or partner with a company with more HIV
expertise? ) • Plan: Complete detailed review of each project in research development so that
Genentech’s internal committee can make final decisions. • What resources are required to integrate Tanox effectively if/when transaction
closes? • Plan: Complete detailed analysis and then GNE’s Portfolio Planning Committee (PPC) and Executive Committee (EC) will decide • What will be the status of the Houston, San Diego and Shanghai sites? • Plan: The EC and transition team members will review current operations and then
make a decision. Timeframes for the decisions TBD, but will be
communicated once a date is known |
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13 11/15/2006 © 2006, Genentech Transition Process Will Be Organized Around Four Areas EC / Legal EC Product Portfolio Committee Research Review Committee EC / PROP Executive Team Decision maker Feb. 28, 2007 Feb. 28, 2007 Jan. 31, 2007 Feb 28, 2007 3.Recommend -ation Feb 10, 2007 Feb. 10, 2007 Jan. 31, 2007 Jan 31, 2007 2. Evaluation Number of contracts; Rights and obligations of each Number of employees by functional area Number and value of R&D programs Number, location, and capability of facility 1. Assessment Contracts HR Change management R&D Programs Facilities/ Property Process Summary |
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14 11/15/2006 © 2006, Genentech Genentech Transition Team Ashraf Hanna, Team Leader Mark Asbury Leigh Morgan Charles Calderaro Sean Bohen Andy Chan Neil Cohen Contracts R&D HR Facilities/ Property Communi cation Ray Sanchez- Pescadore, Project Manager Brian Muma |
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15 11/15/2006 © 2006, Genentech What Does This Mean For You? • We encourage continued focus on your current efforts to bring important new medicines to patients, as this is in everyone’s best interest • While we fully expect the deal to go through, we aren’t there yet • Your current management continues to run the company until close • Once the GNE and Tanox transition teams are up and running, more detailed information will be available on next steps, key milestones, etc. • Most importantly, we recognize that this is an uncertain time for Tanox employees. Consistent with our values, our intent is to treat Tanox
employees with the same respect & integrity that we treat our own
employees |
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16 11/15/2006 © 2006, Genentech Potential Paths Forward for Tanox Employees • Severance package • Outplacement counseling services • Retention bonus (details to be determined) • Severance package • Outplacement counseling services • Same benefits/compensation package as any Genentech employee • Relocation support (if necessary/applicable) Not offered transition or permanent position Tech Transfer Transition team Retained by Genentech |
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17 11/15/2006 © 2006, Genentech Employee Related Information Brian Muma, Senior Director of Compensation Benefits and Services |
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18 11/15/2006 © 2006, Genentech What Does This Mean For You? • 100% accelerated vesting of all outstanding unvested options paid out in cash
upon close (equal to the difference between $20 and the stock option exercise
price less applicable withholding taxes) • Payout of full 401k balance including accelerated vesting on unvested balance
that can be paid in lump sum, less taxes, or rolled over to a qualified plan like
an IRA • Employees encouraged to apply for existing open GNE positions for which they qualify -- however, we cannot hire prior to close • No decision made yet whether to maintain R&D presence in Houston, Shanghai, and/or manufacturing presence in San Diego |
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19 11/15/2006 © 2006, Genentech Severance Details -- What is known • The program will include a base severance for employees who will not be retained that takes into consideration both level and tenure, with maximum severance pay of 8 months salary for any employee • Associate Director and above will be eligible for 5 months salary, plus COBRA benefits for 5 months paid for by Genentech • Employees below Associate Director will receive 3 months salary, plus COBRA benefits for 3 months paid for by Genentech • In addition to minimum severance based on level, the program will provide an additional 2 weeks salary for every year of work • Partial years are pro-rated |
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20 11/15/2006 © 2006, Genentech Next Steps David Ebersman |
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21 11/15/2006 © 2006, Genentech Decisions Yet to be Determined • Future plans for Tanox’s pipeline • Future plans for Tanox’s sites • Future status of employees • Who will be retained • How/when decisions will be made after close; however, our intent is for decisions to be made as quickly and with as much transparency as possible • Where retained employees will be located • Details of post-close integration and timeline |
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22 11/15/2006 © 2006, Genentech Next Steps Today: • Small functional meetings with Genentech and Tanox management This week: • Visit to San Diego facility by Genentech management Next few months: • Additional site visits to establish post-close integration plans • Deal not closed until at least Q1’07; Tanox remains an independent company until the deal closes. It is important to stay focused and keep
moving projects forward during this time: • Tanox shareholder vote • Hart-Scott-Rodino submission and review • Review of deal by Federal Trade Commission • Transition team established |
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23 11/15/2006 © 2006, Genentech Thank You Thank You |
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24 11/15/2006 © 2006, Genentech Q&A Session |
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, our expectations regarding the closing of the acquisition and the integration of the operations of Tanox, our belief that we have the right plans in place to meet future demand for our products, our belief regarding the future growth and profitability of Xolair and anti-IgE inhibition products, our future product development plans (including anti-IL 13 Mab for asthma, anti-Factor D Mab for dry AMD and anti-CD4 for HIV), our expectations regarding the timing of our evaluations and decisions for transition plans, and the timing of and actual severance payment amounts for Tanox employees. Actual results could differ materially. Among other things, the transaction and its timing could be affected or prevented by failure of certain closing conditions to occur, including FTC or other regulatory actions or delays; integration of the Tanox business (including the timing of our decisions regarding such integration) could be affected by failures in our due diligence review of the Tanox business and failure to retain certain key employees; growth and profitability of our asthma and anti-IgE business (including Xolair) could be affected by adverse market conditions, increased competition, delay or failure of clinical programs, and safety or manufacturing issues; future development plans may be affected by changes in our corporate strategy, increased competition, regulatory actions or delays, unsuccessful clinical trials or third party intellectual property rights; Xolair clinical trials 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; achieving sales revenue consistent with internal forecasts, unexpected expenses such as litigation or legal settlement expenses, changes in tax rules, adverse market conditions, increased competition, regulatory actions or delays; and the severance described in this presentation will be subject to other terms and conditions set forth in the severance plan established by Genentech (including the execution of a release by each eligible employee). Please refer to Genentech’s periodic reports filed with the Securities and Exchange Commission. Such reports contain and identify important factors that could cause actual results to differ materially from those contained in our forward-looking statements. All such risk factors, including those found in our most recent Form 10-Q, are incorporated by reference into this transcript. We undertake no obligation to update or revise any forward-looking statements in the future.