Tuesday, Jul 21, 1987

Genentech Reports Second Quarter Results

South San Francisco, Calif. -- July 21, 1987 --

Genentech, Inc. (NASDAQ:GENE) reported revenues of $47.5 million for the second quarter of 1987, compared to $32.6 million for the same period last year.

Net income for the quarter ended June 30, 1987 was $5.3 million or 6 cents per share, after the effect of extraordinary item related to a tax loss carryforward, compared to $2.8 million or 4 cents per share for the second quarter of 1986.

Six month revenues for 1987 were $86.1 million, compared to $61.7 million for the same period last year. Six month net income was $9.8 million or 12 cents per share, after an extraordinary tax credit, compared to $4.6 million or 7 cents per share.

Protropin® sales increased to $20.0 million for the quarter, a 21% increase over sales for the first quarter of 1987 and 111% over 1986 sales for the same quarter.

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 and revenues.

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 STATEMENTS OF OPERATIONS

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

Three Months
Ended June 30,

1987 1986
Revenues
   Product sales $ 20,008 $ 9,461
   Contract 23,978 21,373
   Interest 3,518 1,815
      Total revenues 47,504 32,649
     
Costs and expenses
   Research and development 22,578 20,615
   Marketing, general and administrative 16,765 8,674
   Interest 2,203 -
      Total costs and expenses 41,546 29,289
     
Income before taxes and extraordinary item 5,958 3,360
Income tax provision 263 537
     
Income before extraordinary item 5,695 2,823
     
Extraordinary item--tax benefit of operating loss carrying forward (424) -
     
Net income $ 5,271 $ 2,823
     
Income per share:    
   Income before extraordinary item $ 0.07 $ 0.04
   Extraordinary item (0.01) -
      Net income $ 0.06 $ 0.04
     
Weighted average number of shares used in
   computing per share amounts:
85,223 70,741
 
Six Months
Ended June 30,

1987 1986
Revenues
   Product sales $ 36,518 $ 16,772
   Contract 44,413 41,120
   Interest 5,179 3,799
      Total revenues 86,110 61,691
     
Costs and expenses
   Research and development 44,413 38,012
   Marketing, general and administrative 28,528 18,099
   Interest 2,527 -
      Total costs and expenses 75,468 56,111
     
Income before taxes and extraordinary item 10,642 5,580
Income tax provision 1,716 1,004
     
Income before extraordinary item 8,926 4,576
     
Extraordinary item--tax benefit of operating loss carrying forward 889 -
     
Net income $ 9,815 $ 4,576
     
Income per share:    
   Income before extraordinary item $ 0.11 $ 0.07
   Extraordinary item 0.01 -
      Net income $ 0.12 $ 0.07
     
Weighted average number of shares used in
   computing per share amounts:
83,893 70,050

All share and per share amounts reflect the January 1987 two-for-one stock split.