Genentech Reports 1988 Financial Results

South San Francisco, Calif. -- January 25, 1989 -- Genentech, Inc. (NYSE: GNE) today reported revenues for the year ended December 31, 1988 of $334.8 million, up 45 percent from $230.5 in 1987. Net product sales in 1988 rose 86 percent to $262.5 million up from $141.4 million in 1987. Net sales of Activase (t-PA) increased to $151.4 million in 1988, up from $55.8 million in 1987. Protropin (growth hormone) had 1988 net sales of $111.1 million, compared with $85.6 million for the preceeding year.

"Activase is believed to be the largest selling of any pharmaceutical during its first 12 months on the market. We are working vigorously to further expand the market for Activase, with a goal to increase patient usage in 1989," said Robert A. Swanson, chief executive officer.

Genentech's net income for 1988 was $20.6 million, or 24 cents per share, compared with $42.2 million or 50 cents per share in 1987. The results include a special charge of $23.3 million recorded in the fourth quarter primarily as a reserve against certain quantities of Activase inventory which may be out of date before they are sold. After the applicable income tax benefit, the special charge amounts to 26 cents per share.

Revenues for the fourth quarter were $89.5 million, compared with $96.5 million in 1987. Fourth quarter net product sales were $66.4 million compared with $81.1 million in 1987, which included initial sales of Activase. After the special charge, the 1988 fourth quarter net loss was $15.4 million, or 18 cents per share, compared with net income of $27.2 million, or 32 cents per share, in 1987.

Genentech, Inc. 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 STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended December 31,

	1988		1987
Revenues
Product sales	$	66,351	$	81,096
Contract	20,410		12,127
Interest	2,750		3,254
Total revenues	89,511		96,477

Costs and expenses
Cost of sales	12,694		12,122
Special charge*	23,349		-
Research and development	37,389		28,864
Marketing, general and administrative	31,850		25,738
Interest	1,424		2,150
Total costs and expenses	106,706		68,874

Income (loss) before taxes	(17,195)		27,603
Income tax provision (benefit)	(1,773)		430

Net income (loss)	$	(15,422)	$	27,173

Net income (loss) per share:	$	(0.18)	$	0.32

Weighted average number of shares used in computing per share amounts:	83,761		84,801

	Year Ended December 31,

	1988		1987
Revenues
Product sales	$	262,476	$	141,416
Contract	60,283		77,273
Interest	12,081		11,854
Total revenues	334,840		230,543

Costs and expenses
Cost of sales	46,897		23,800
Special charge*	23,349		-
Research and development	132,682		96,509
Marketing, general and administrative	101,898		59,496
Interest	6,906		6,801
Total costs and expenses	311,732		186,606

Income before taxes	23,108		43,937
Income tax provision	2,543		1,707

Net income	$	20,565	$	42,230

Net income per share	$	0.24	$	0.50

Weighted average number of shares used in computing per share amounts:	84,459		84,418

	December 31,
	1988		1987
Selected balance sheet data
Cash and short-term investments	$	152,489	$	158,311
Accounts receivable	63,946		92,158
Inventories	63,382		58,037
Total assets	668,755		618,973
Total stockholders' equity	399,295		355,412

* The effect of the special charge on the fourth quarter and year ended December 31, 1988 was $0.26 per share, net of the applicable income tax benefit.