Wednesday, Jul 23, 1986

Genentech Reports Second Quarter Results

South San Francisco, Calif. -- July 23, 1986 --

Genentech, Inc. reported revenues of $32.6 million for the second quarter of 1986, compared to $21.4 million for the same period last year.

Net income for the quarter ended June 30, 1986, was $2.8 million or 8 cents per share, compared to $1.1 million or 3 cents per share for the second quarter of 1985.

As in the past, significant quarter-to-quarter income and revenue fluctuations may occur, due to variations in the timing of revenues for licensing and research benchmarks. These fluctuations have no impact on the company's long-term growth, which will come from growing product sales revenues.

The second quarter marked a substantial increase in sales of Protropin® growth hormone to $9.5 million, the commencement of clinical trials combining two Genentech anti-cancer products, and announcement of progress in the development of an AIDS vaccine.

In May, Phase I clinical trials of the combination of gamma interferon and tumor necrosis factor began at M.D. Anderson Hospital and Tumor Institute in Houston, Texas. These are the first human clinical trials of the combination of these two agents in cancer patients.

At the International Conference on Acquired Immune Deficiency Syndrome held in Paris in June, Genentech scientists disclosed an important step toward the development of an AIDS vaccine. Their presentation, which was published in the July 11 issue of Science, detailed the production via recombinant DNA technology of a specific glycoprotein which, when inoculated into test animals, generates antibodies that for the first time have been shown to protect cultured human cells from infection by the AIDS virus.

Genentech 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.
CONDENSED CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)
(unaudited)

Three Months
Ended June 30,

1986 1985
Revenues
   Product sales $ 9,461 $ -
   Contract 21,373 18,806
   Interest 1,815 2,606
      Total revenues 32,649 21,412
     
Costs and expenses
   Research and development 20,615 16,997
   Marketing, general and administrative 8,674 3,151
      Total costs and expenses 29,289 20,148
     
Income before taxes 3,360 1,264
Income tax provision 537 163
     
Net income $ 2,823 $ 1,101
     
Net income per share $ 0.08 $ 0.03*
     
Weighted average number of shares used in
   computing per share amounts:
35,370 32,671*
 
Six Months
Ended June 30,

1986 1985
Revenues
   Product sales $ 16,772 $ -
   Contract 41,120 37,817
   Interest 3,799 3,759
      Total revenues 61,691 41,576
     
Costs and expenses
   Research and development 38,012 32,113
   Marketing, general and administrative 18,099 7,318
      Total costs and expenses 56,111 39,431
     
Income before taxes 5,580 2,145
Income tax provision 1,004 329
     
Net income $ 4,576 $ 1,816
     
Net income per share $ 0.13 $ 0.06*
     
Weighted average number of shares used in
   computing per share amounts:
35,025 31,217

* All share and per share amounts reflect the February 1986 two-for-one stock split.