Genentech Reports Second Quarter Results

South San Francisco, Calif. -- July 23, 1986 -- Genentech, Inc. reported revenues of $32.6 million for the second quarter of 1986, compared to $21.4 million for the same period last year.

Net income for the quarter ended June 30, 1986, was $2.8 million or 8 cents per share, compared to $1.1 million or 3 cents per share for the second quarter of 1985.

As in the past, significant quarter-to-quarter income and revenue fluctuations may occur, due to variations in the timing of revenues for licensing and research benchmarks. These fluctuations have no impact on the company's long-term growth, which will come from growing product sales revenues.

The second quarter marked a substantial increase in sales of Protropin® growth hormone to $9.5 million, the commencement of clinical trials combining two Genentech anti-cancer products, and announcement of progress in the development of an AIDS vaccine.

In May, Phase I clinical trials of the combination of gamma interferon and tumor necrosis factor began at M.D. Anderson Hospital and Tumor Institute in Houston, Texas. These are the first human clinical trials of the combination of these two agents in cancer patients.

At the International Conference on Acquired Immune Deficiency Syndrome held in Paris in June, Genentech scientists disclosed an important step toward the development of an AIDS vaccine. Their presentation, which was published in the July 11 issue of Science, detailed the production via recombinant DNA technology of a specific glycoprotein which, when inoculated into test animals, generates antibodies that for the first time have been shown to protect cultured human cells from infection by the AIDS virus.

Genentech is a leading biotechnology company, focusing on the development, manufacture and marketing of pharmaceuticals produced by recombinant DNA technology.

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GENENTECH, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended June 30,

	1986		1985
Revenues
Product sales	$	9,461	$	-
Contract	21,373		18,806
Interest	1,815		2,606
Total revenues	32,649		21,412

Costs and expenses
Research and development	20,615		16,997
Marketing, general and administrative	8,674		3,151
Total costs and expenses	29,289		20,148

Income before taxes	3,360		1,264
Income tax provision	537		163

Net income	$	2,823	$	1,101

Net income per share	$	0.08	$	0.03*

Weighted average number of shares used in computing per share amounts:	35,370		32,671*

	Six Months Ended June 30,

	1986		1985
Revenues
Product sales	$	16,772	$	-
Contract	41,120		37,817
Interest	3,799		3,759
Total revenues	61,691		41,576

Costs and expenses
Research and development	38,012		32,113
Marketing, general and administrative	18,099		7,318
Total costs and expenses	56,111		39,431

Income before taxes	5,580		2,145
Income tax provision	1,004		329

Net income	$	4,576	$	1,816

Net income per share	$	0.13	$	0.06*

Weighted average number of shares used in computing per share amounts:	35,025		31,217

* All share and per share amounts reflect the February 1986 two-for-one stock split.