Genentech Reports Second Quarter Earnings

South San Francisco, Calif. -- July 18, 1989 -- Genentech, Inc. reported earnings for the second quarter of $9.6 million or 11 cents per share, compared with $15.5 million or 18 cents per share for the same quarter last year. The biotechnology company said earnings were lower primarily because of continued higher levels of spending for new product development and marketing.

Net sales of Genentech's heart attack drug, Activase®, or tissue plasminogen activator (t-PA), were $48.0 million compared with $49.2 million for the same quarter in 1988. The 1989 figure primarily reflects actual usage. It does not include the substantial stocking assistance programs that were successfully implemented during the second quarter of 1988 to ensure that small community hospitals as well as large hospitals had Activase available for heart attack victims. Activase sales in the first quarter of this year were $48.1 million, which was up substantially from the third and fourth quarters of last year.

"We are encouraged that sales of Activase remain on target thus far for meeting our 1989 goal of increasing sales 20 to 25 percent," said Robert A. Swanson, chief executive officer. "We believe sales levels for the first half of this year indicate increased actual usages levels over the same period for last year."

Total revenues for the quarter were $97.9 million, up 9 percent from $89.3 million last year. Net product sales were $79.1 million, up from $75.1 million a year ago. Net sales of Protropin®, human growth hormone, were $31.1 million, compared with $25.9 million in the same quarter last year.

Genentech's research and development expenses increased from $32.8 million in the second quarter of 1988 to $38.3 million in the same period this year. Marketing, general and administrative expenses also were up, from $24.2 million to $32.1 million. In both areas, expenses continued at levels similar to those which began in the second half of 1988.

Genentech, Inc. is a biotechnology company focusing on the development, manufacture and marketing of pharmaceutical products 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 June 30,

	1989		1988
Revenues
Product sales	$	79,098	$	75,085
Contract	14,851		10,925
Interest	3,939		3,276
Total revenues	97,888		89,286

Costs and expenses
Cost of sales	14,642		13,422
Research and development	38,293		32,847
Marketing, general and administrative	32,120		24,180
Interest	1,954		1,864
Total costs and expenses	87,009		72,313

Income before taxes	10,879		16,973
Income tax provision	1,283		1,499

Net income	$	9,596	$	15,474

Net income per share	$	0.11	$	0.18

Weighted average number of shares used in computing per share amounts:	85,259		84,732

	Six Months Ended June 30,

	1989		1988
Revenues
Product sales	$	152,071	$	138,606
Contract	29,136		18,847
Interest	7,783		6,257
Total revenues	188,990		163,710

Costs and expenses
Cost of sales	28,579		22,726
Research and development	76,012		59,228
Marketing, general and administrative	61,148		42,930
Interest	3,929		3,957
Total costs and expenses	169,668		128,841

Income before taxes	19,322		34,869
Income tax provision	2,296		4,184

Net income	$	17,026	$	30,685

Net income per share	$	0.20	$	0.36

Weighted average number of shares used in computing per share amounts:	85,207		84,903

	June 30,
	1989		1988
Selected balance sheet data
Cash and short-term investments	$	163,392	$	166,836
Accounts receivable	72,766		72,150
Inventories	56,360		79,654
Total assets	689,102		668,171
Total stockholders' equity	424,752		401,880