Genentech Reports Second Quarter Results

Earnings Increased As Product Sales Grew

South San Francisco, Calif. -- July 14, 1993 -- Genentech, Inc. (NYSE: GNE) announced today that earnings for the second quarter of 1993 increased to $10.4 million, or 9 cents per share, from $3.4 million, or 3 cents per share, in the second quarter of 1992. Revenues for the quarter increased 25 percent to $169.8 million, from $136.0 million in the same quarter of 1992. This increase is due primarily to higher product sales and contract revenues, including $18.2 million in fixed license fees payable through 1996 from Schering Corporation and its Affiliates for a world-wide license to certain Genentech patented technology and processes used to produce Schering's recombinant alpha interferon. This amount was essentially offset by non-recurring expense charges.

"Our financial results for the quarter are excellent," said G. Kirk Raab, Genentech's president and chief executive officer. "They particularly reflect the increasing Activase® (Alteplase recombinant) t-PA sales following the April announcement of the GUSTO clinical trial results."

Marketed Products

The release of the GUSTO trial results on April 30 has had a positive impact on Activase sales in the second quarter of 1993. Activase sales increased 25 percent to $55.8 million from $44.6 million in the same quarter of 1992 and 14 percent from $49.2 million in the first quarter of 1993. The 40,000-patient GUSTO trial showed a significant life-saving advantage to using Activase over competitive thrombolytic regimens studied for treating heart attack.

"I expect Activase's growth to continue," said Raab, "as physicians recognize the significant impact on public health Activase offers by allowing more heart attack patients' lives to be saved each year."

Sales of Protropin® (somatrem for injection) human growth hormone increased 7 percent to $53.7 million from $50.4 million in the second quarter of 1992. This increase results from an increased number of patients diagnosed with growth hormone inadequacy.

Actimmune® (interferon gamma-1b) sales increased to $1.3 million from $0.8 million in the second quarter of 1992. This increase is due primarily to sales of interferon gamma to licensee Boehringer Ingelheim GmbH in Europe.

Expenses

Genentech's strong commitment to research and development (R&D) continues. R&D expenses in the second quarter of 1993 totaled $83.9 million, including a charge of $13.7 million to end an R&D arrangement with Boehringer Ingelheim GmbH concerning the Research Institute of Molecular Pathology in Vienna. This compares with total R&D expenses of $73.3 million in the second quarter of 1992.

Marketing, general and administrative expenses totaled $56.2 million in the second quarter of 1993 versus $41.9 million in the second quarter of 1992. The increase includes a non-recurring $5.0 million charge for certain corporate expenses, and in addition includes increases in marketing and litigation expenses.

Product Development Progress

During the quarter, two significant events marked Genentech's broad pipeline of products in development.

First, in line with its goal to select one new product to move from research into development each year, Genentech has identified a second-generation t-PA molecule to test in human clinical trials. Animal studies have shown this molecule to break down clots more specifically and to stay in the blood stream longer than natural t-PA. As a result, it may require a smaller dose that would be easier to administer, and it may be more effective and show fewer side effects.

"If this molecule performs as well in the clinic as it does in the laboratory, it could advance the treatment of heart attack even further than Activase already has," said Raab. "A large portion of the money we earn on Activase and our other products goes back into projects like this to significantly enhance care for serious medical conditions."

Second, the FDA told the company it plans to review Pulmozyme® (dornase alfa) DNase for treating cystic fibrosis at an August 9 meeting of its Pulmonary-Allergy Drugs Advisory Committee. "The FDA's decision to hold this meeting so soon after we filed for regulatory approval is a prime example of the leadership they are taking in bringing this important treatment to cystic fibrosis patients," said Raab. Approximately 53,000 people in the United States, Canada and Europe have cystic fibrosis, 30,000 of them in the United States, some portion of whom may be eligible for treatment. Genentech also has regulatory applications for Pulmozyme under review in Canada and Europe.

In addition, this week Genentech submitted to the FDA an application for regulatory approval to market its Nutropin® (somatropin for injection), a new form of human growth hormone, for treating short stature associated with chronic renal insufficiency in children. Chronic renal insufficiency is a kidney disorder that causes a variety of medical problems, including short stature. Approximately 2,000 children in the United States may be eligible for treatment with Nutropin for this condition.

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,

	1993		1992
Revenues
Product sales	$	110,768	$	95,760
Royalties	24,052		23,514
Contract and other	24,255		5,320
Interest	10,762		11,356
Total revenues	169,837		135,950

Costs and expenses
Cost of sales	17,680		16,199
Research and development	83,944		73,296
Marketing, general and administrative	56,191		41,899
Interest	1,621		989
Total costs and expenses	159,436		132,383

Income before taxes	10,401		3,567
Income tax provision	-		168

Net income	$	10,401	$	3,399

Net income per share	$	0.09	$	0.03

Weighted average number of shares used in computing per share amounts:	116,707		113,190

	Six Months Ended June 30,

	1993		1992
Revenues
Product sales	$	213,426	$	189,285
Royalties	53,394		45,266
Contract and other	34,784		7,168
Interest	21,230		23,245
Total revenues	322,834		264,964

Costs and expenses
Cost of sales	34,279		32,565
Research and development	158,166		139,283
Marketing, general and administrative	102,694		83,558
Interest	2,960		2,257
Total costs and expenses	298,099		257,663

Income before taxes	24,735		7,301
Income tax provision	-		365

Net income	$	24,735	$	6,936

Net income per share	$	0.21	$	0.06

Weighted average number of shares used in computing per share amounts:	116,267		113,076

	June 30,
	1993		1992
Selected balance sheet data
Cash and short-term investments	$	514,258	$	502,285
Accounts receivable	113,978		82,108
Inventories	70,899		53,412
Long-term marketable securities	144,384		189,605
Property, plant and equipment, net	456,975		382,057
Other long-term assets	61,371		33,980
Total assets	1,372,771		1,255,861
Total current liabilities	149,023		124,585
Long-term debt	151,636		152,392
Total liabilities	313,467		288,901
Total stockholders' equity	1,059,304		966,960