Thursday, Jan 21, 1988

Genentech Reports Significant Increase in 1987 Financial Results

South San Francisco, Calif. -- January 21, 1988 --

Genentech, Inc. (NASDAQ:GENE) reported revenues for the year ended December 31, 1987 of $230.5 million, up 72 percent from $134.0 million in 1986. Net income was $42.0 million in 1987, or 50 cents per share, compared with a net loss of $353.0 million or $5.10 per share in 1986. Product sales in 1987 rose 225 percent to $141.4 million compared with $43.6 million in 1986.

Fourth quarter revenues were $96.5 million in 1987, compared with $36.7 million in 1986. Fourth quarter net income was $27.2 million or 32 cents per share, compared with a 1986 net loss of $358.4 million or $5.38 per share. Product sales for the quarter in 1987 were $81.1 million compared to $141.4 in 1986. This increase was due to the company's fourth quarter market launch of Activase® a tissue plasminogen activator used to dissolve, and increasing sales of Protropin® human growth hormone.

Robert A. Swanson, chief executive officer said,"With the approval of Activase and the benefits it delivers for an improved quality of life for millions of Americans, the promise of biotechnology is now a reality."

The company's purchase, in the fourth quarter of 1986, of the assets of its first two research and development partnerships, was accounted for as a one-time non-cash charge of $361.6 million, after taxes, resulting in a net loss for the quarter and full year of the 1986 tax provision. As a result, income after taxes and exclusive of the charge for purchase of in-process research and development for 1986 which had been reported previously as $12.8 million and $.18 per share has been restated to $8.7 million and $.12 per share.

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.
SUMMARY OF OPERATIONS

(in thousands, except per share amounts)

Quarter
Ended December 31,
Year
Ended December 31,

1987 1986 1987 1986
Total revenues $ 96,477 $ 36,714 $ 230,543 $ 133,954
Net income (loss) $ 27,173 $ (358,407)1,2 $ 42,240 $ (352,983)1,2
Per share $ 0.32 $ (5.38)2 $ 0.50 $ (5.10)2
Weighted average shares used
in computing per share amounts:
84,801 66,667 84,801 69,268

  1. Includes the after tax charge for the purchase of in-process research and development totaling $361.6 million.

  2. The 1986 tax provision and related balance sheet accounts have been restated to reflect the early adoption of SFAS No. 96 "Accounting for Income Taxes." As a result, income after taxes and excluding of the charge for purchase of in-process research and development for the year of 1986 which had been reported previously as $12.8 million and $.18 per share has been restated to $8.7 million and $.12 per share.

Quarter
Ended December 31,
Year
Ended December 31,

1987 1986 1987 1986
Selected financial data:
Product sales $ 81,096 $ 14,419 $ 141,416 $ 43,563
Research and development expense 28,864 21,028 96,509 79,834
Income (loss) before taxes 27,603 (360,654) 43,937 (350,608)
Cash and short-term investments 158,311 84,281
Total assets 618,973 375,958
Total liabilities 263,561 83,3422
Total shareholders' equity 355,412 292,6162