Genentech Reports Third Quarter Results

October 14, 1993 --

-- Profit Growth Continues --

SOUTH SAN FRANCISCO, Calif., October 14, 1993 -- Genentech, Inc. (NYSE: GNE) announced today that earnings for the third quarter of 1993 increased to $15.5 million, or 13 cents per share, from $7.7 million, or 7 cents per share, in the third quarter of 1992. Revenues for the quarter increased to $165.4 million from $137.3 million in the third quarter of 1992. This increase results primarily from higher product sales and royalties.

"These are excellent third quarter results following strong first and second quarters," said Genentech President and Chief Executive Officer G. Kirk Raab. "They reflect the medical community's acceptance of the value of using Activase (Alteplase recombinant) t-PA to treat heart attack patients and they demonstrate a sustained new period of profit growth for Genentech in 1993. Also, considering the fact that in August an FDA advisory panel unanimously recommended approval for our next product, Pulmozyme (domase alfa) DNase for treating cystic fibrosis, we approach 1994 with continued expectations of growth."

Marketed Products

The GUSTO trial results announced on April 30 continue to affect Activase sales positively. In the third quarter of 1993, Activase net sales increased 29 percent to $63.5 million from $49.4 million in the same quarter of 1992, and increased 14 percent from $55.8 million in the second quarter of 1993.

As reported in an article on GUSTO in the September 2 issue of the New England Journal of Medicine, "the GUSTO trial provides evidence that accelerated t-PA combined with intravenous heparin is the best thrombolytic strategy to date for patients with acute myocardial infarction" (heart attack). Since the GUSTO results were announced, Activase has regained close to a two-thirds market share in the United States. This week Genentech filed an amendment to its Product License Application with the FDA to reflect the accelerated dosing regimen used in GUSTO.

Activase's growth potential lies not only in increasing market share, but also in increasing market size. The results of the 6,000-patient LATE trial, published in the September 25 issue of The Lancet, showed that heart attack victims who arrive at the hospital between six and 12 hours after the onset of symptoms can still significantly benefit from thrombolytic therapy with Activase. Although it remains crucial that heart attack patients seek treatment as early as possible, based on LATE's findings, many more heart attack patients each year may benefit from lifesaving Activase therapy.

Sales of Protropin® (somatrem for injection) human growth hormone increased 9 percent to $55.4 million from $51.0 million in the third quarter of 1992. This difference results from an increased number of patients diagnosed with growth hormone inadequacy.

Actimmune® (interferon gamma-1b) had modest sales of $0.8 million in the third quarter of 1993, reflecting the small market size for the approved indication, chronic granulomatous disease.

Expenses

Marketing, general and administrative expenses totaled $57.2 million in the third quarter of 1993 versus $41.5 million in the third quarter of 1992. The increase is due to timing of sales and marketing expenditures, various additional marketing expenditures and corporate expenses including litigation expenses.

Research and development expenses in the third quarter of 1993 totaled $72.3 million, compared with total R&D expenses of $69.6 million in the third quarter of 1992.

"Our intense investment in R&D continues to pay off," said Raab. "Not only was Pulmozyme unanimously recommended for U.S. marketing approval by an FDA advisory panel during the third quarter, but the drug also was approved for marketing in Sweden and Austria. These approvals begin to set the stage for commercialization of Pulmozyme that is synchronized with U.S. and Canadian approval." Genentech is currently manufacturing Pulmozyme in the new facility completed earlier this year for this purpose to ensure it will have adequate supply to meet market demand upon product launch.

Raab continued, "With the many promising products in various stages of development in our pipeline, and with the wealth of innovative projects progressing in research, I am confident our commitment to fully support focused R&D will contribute to Genentech's earnings growth well into the future."

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, Califomia 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 September 30,

	1993		1992
Revenues
Product sales	$	119,733	$	101,151
Royalties	33,314		23,301
Contract and other	2,607		1,404
Interest	9,732		11,445
Total revenues	165,386		137,301

Costs and expenses
Cost of sales	18,551		17,316
Research and development	72,302		69,636
Marketing, general and administrative	57,181		41,509
Interest	1,836		739
Total costs and expenses	149,870		129,200

Income before taxes	15,516		8,101
Income tax provision	-		405

Net income	$	15,516	$	7,696

Net income per share	$	0.13	$	0.07

Weighted average number of shares used in computing per share amounts:	117,566		114,533

	Nine Months Ended September 30,

	1993		1992
Revenues
Product sales	$	333,159	$	290,436
Royalties	86,708		68,567
Contract and other	37,391		8,572
Interest	30,962		34,690
Total revenues	488,220		402,265

Costs and expenses
Cost of sales	52,830		49,881
Research and development	230,468		208,919
Marketing, general and administrative	159,875		125,067
Interest	4,796		2,996
Total costs and expenses	447,969		386,863

Income before taxes	40,251		15,402
Income tax provision	-		770

Net income	$	40,251	$	14,632

Net income per share	$	0.34	$	0.13

Weighted average number of shares used in computing per share amounts:	116,700		113,561

	September 30,
	1993		1992
Selected balance sheet data
Cash and short-term investments	$	566,649	$	464,300
Accounts receivable	126,178		83,320
Inventories	73,180		58,744
Long-term marketable securities	132,474		213,142
Property, plant and equipment, net	450,241		414,616
Other long-term assets	62,701		36,366
Total assets	1,419,601		1,284,022
Total current liabilities	166,578		137,931
Long-term debt	151,435		152,209
Total liabilities	334,325		301,916
Total stockholders' equity	1,085,276		982,106