Monday, Jan 9, 1989

Genentech, Cal Bio Announce Neonatology Product Agreement

South San Francisco, Calif. -- January 9, 1989 --

Genentech, Inc. (NYSE:GNE) and California Biotechnology Inc. (NASDAQ:CBIO) today announced an agreement for the collaborative development of all therapeutic uses of human lung surfactant. Lung surfactant is currently being developed as a potential treatment for infant respiratory distress syndrome (IRDS), a leading cause of death in premature babies.

Surfactant is a mixture of lung-specific proteins and fats produced in late pregnancy, which enables an infant's lungs to remain expanded after exhaling. Premature babies, born with insufficient surfactant, risk lung collapse. Final preclinical evaluation is now in progress at Cal Bio. Research is also planned to investigate lung surfactant as a treatment for adult respiratory distress syndrome, a condition associated with traumatic injury to the respiratory system.

Under the agreement, Genentech will be responsible for lung surfactant's final development, clinical trials and regulatory activities. Genentech will have exclusive manufacturing and marketing rights in the United States, Canada and other non-European countries. Genentech will pay Cal Bio a royalty on sales in the U.S. and Canada for 12 years following U.S. product launch, and for the duration of the agreement for the remaining countries. From the eight year on, Cal Bio will share marketing rights in the U.S. and Canada, and manufacturing rights worldwide. After 12 years, product rights for the United States and Canada will revert to Cal Bio.

Cal Bio has previously licensed lung surfactant to Byk Gulden, a West German pharmaceutical company, for European marketing. Genentech and Cal Bio will also jointly investigate and develop use of the lung surfactant protein as a vehicle for pulmonary drug delivery. Additional terms were not disclosed.

"We are very pleased to be announcing this important agreement, the first of its kind between two biotechnology companies focusing in human therapeutics," said Robert A. Swanson, chief executive officer of Genentech, and Richard L. Casey, president and chief executive officer of Cal Bio. "We look forward to an active and productive collaboration and a long term partnership."

Genentech, Inc. is a leading biotechnology company focusing on the development, manufacture and marketing of pharmaceuticals produced by recombinant DNA technology.

California Biotechnology Inc. is a biopharmaceutical company engaged in the development of human therapeutics and protein drug delivery systems. These products are being commercially developed by the company or through collaborations with major pharmaceutical companies.

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