Monday, Nov 2, 1987

Genentech Reports Third Quarter Results

South San Francisco, Calif. -- November 2, 1987 --

Genentech, Inc. (NASDAQ:GENE) reported revenues of $48.0 million for the third quarter of 1987, compared to $35.5 million for the same period last year.

Net income for the quarter ended September 30, 1987 was $5.2 million or 6 cents per share, after the effect of extraordinary item related to a tax loss carryforward, compared to $3.7 million or 5 cents per share for the third quarter of 1986.

Nine month revenues for 1987 were $134.1 million, compared to $97.2 million for the same period last year. Nine months net income was $15.1 million or 18 cents per share, after an extraordinary tax credit, compared to $8.2 million or 12 cents per share for the same period in 1986.

Protropin® sales increased to $23.8 million for the quarter, a 19% increase over sales for the second quarter of 1987 and 92% 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 for 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.

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 September 30,

1987 1986
Revenues
   Product sales $ 23,802 $ 12,372
   Contract 20,733 21,937
   Interest 3,421 1,240
      Total revenues 47,956 35,549
     
Costs and expenses
   Research and development 23,232 20,794
   Marketing, general and administrative 16,908 10,289
   Interest 2,124 -
      Total costs and expenses 42,264 31,083
     
Income before taxes and extraordinary item 5,692 4,466
Income tax provision 783 804
     
Income before extraordinary item 4,909 3,662
     
Extraordinary item--tax benefit of operating loss carrying forward 333 -
     
Net income $ 5,242 $ 3,662
     
Income per share:    
   Income before extraordinary item $ 0.06 $ 0.05
   Extraordinary item - -
      Net income $ 0.06 $ 0.05
     
Weighted average number of shares used in
   computing per share amounts:
85,082 70,818
 
Nine Months
Ended September 30,

1987 1986
Revenues
   Product sales $ 60,320 $ 29,144
   Contract 65,146 63,057
   Interest 8,600 5,039
      Total revenues 134,066 97,240
     
Costs and expenses
   Research and development 67,645 58,806
   Marketing, general and administrative 45,436 28,388
   Interest 4,651 -
      Total costs and expenses 117,732 87,194
     
Income before taxes and extraordinary item 16,334 10,046
Income tax provision 2,499 1,808
     
Income before extraordinary item 13,835 8,238
     
Extraordinary item--tax benefit of operating loss carrying forward 1,222 -
     
Net income $ 15,057 $ 8,238
     
Income per share:    
   Income before extraordinary item $ 0.17 $ 0.12
   Extraordinary item 0.01 -
      Net income $ 0.18 $ 0.12
     
Weighted average number of shares used in
   computing per share amounts:
84,290 70,338

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