Genentech Reports Second Quarter Results

Revenues Increase by 5 Percent

South San Francisco, Calif. -- July 16, 1992 -- Genentech, Inc. (NYSE: GNE) announced today that revenues for the second quarter of 1992 increased 5 percent to $136.0 million, from $129.5 million in the same quarter of the previous year. Despite higher revenues, earnings decreased to $3.4 million, or 3 cents per share, from $11.4 million, or 10 cents per share, in the second quarter of 1991.

"Our decrease in earnings stems primarily from our continued aggressive investment in research and development," said G. Kirk Raab, president and chief executive officer. R&D expenditures in the second quarter of 1992 were $73.3 million, up from $52.9 million in the same quarter of the year previous.

Protropin® human growth hormone sales increased 8 percent to $50.4 million from $46.6 million in the second quarter of 1991. The overall market for human growth hormone has continued to grow due to the increasing size of patients being treated at correspondingly larger doses, and to more patients being diagnosed as growth hormone inadequate.

North American Activase® t-PA sales increased slightly to $44.6 million, from $44.5 million in the second quarter of 1991. Based on second quarter 1992 and previous quarters' sales figures, Activase's market share appears to have stabilized following publication of the controversial ISIS-3 results in the first quarter of 1992. Genentech continues to await the results of the international, 40,000-patient GUSTO trial, which is investigating the value of Activase in opening arteries faster than other therapies after a heart attack.

Total Activase sales declined from $50.4 million in the second quarter of 1991 to $44.6 million in the second quarter of 1992 because there were no bulk sales to Genentech's Japanese licensees in the second quarter of this year.

Consistent with the small number of patients with chronic granulomatous disease, second quarter 1992 sales for Actimmune® interferon gamma were $0.8 million. This condition, which Actimmune is approved to treat, is a very rare inherited disorder of the immune system.

"Our targeted R&D approach has led to important progress in the second quarter of 1992," said Raab. Progress made in the quarter includes: clinical investigators reported positive results of Phase II trials using DNase to treat cystic fibrosis; a humanized version of the HER2 antibody for treating breast cancer entered the clinic; the company's nerve growth factor also entered the clinic, making it the first recombinant nerve growth factor to be tested in humans; and Genentech identified a new candidate for its development pipeline -- a monoclonal antibody to a receptor called CD18 being studied for treatment of inflammatory disorders.

"It is through progressive steps like these that we will continue to achieve our aggressive product goals," said Raab. "Our primary goals are to have three new products, and new indications for existing products, on the market by 1996; and to identify one or two new development candidates each year so we can gain additional new product approvals by the turn of the century."

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant medical needs. The company has headquarters in South San Francisco, California and is traded on the New York and Pacific Stock exchanges under the symbol GNE.

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

	Three Months Ended June 30,

	1992		1991
Revenues
Product sales	$	95,760	$	97,345
Royalties	23,514		16,411
Contract and other	5,320		3,841
Interest	11,356		11,858
Total revenues	135,950		129,455

Costs and expenses
Cost of sales	16,199		19,017
Research and development	73,296		52,901
Marketing, general and administrative	41,899		44,582
Interest	989		1,221
Total costs and expenses	132,383		117,721

Income before taxes	3,567		11,734
Income tax provision	168		380

Net income	$	3,399	$	11,354

Net income per share	$	0.03	$	0.10

Weighted average number of shares used in computing per share amounts:	113,190		112,523

	Six Months Ended June 30,

	1992		1991
Revenues
Product sales	$	189,285	$	196,084
Royalties	45,266		30,403
Contract and other	7,168		8,860
Interest	23,245		25,340
Total revenues	264,964		261,407

Costs and expenses
Cost of sales	32,565		35,775
Research and development	139,283		101,711
Marketing, general and administrative	83,558		89,258
Interest	2,257		2,647
Total costs and expenses	257,663		229,391

Income before taxes	7,301		32,016
Income tax provision	365		1,292

Net income	$	6,936	$	30,724

Net income per share	$	0.06	$	0.27

Weighted average number of shares used in computing per share amounts:	113,076		112,229

	June 30,
	1992		1991
Selected balance sheet data
Cash and short-term investments	$	502,285	$	550,005
Accounts receivable	82,108		75,824
Inventories	53,412		49,234
Long-term marketable securities	189,605		142,949
Property, plant and equipment, net	382,057		313,498
Other long-term assets	33,980		53,528
Total assets	1,255,861		1,191,789
Total current liabilities	124,585		98,279
Long-term debt	152,392		153,213
Total liabilities	288,901		262,220
Total stockholders' equity	966,960		929,569