Wednesday, Jan 25, 1989

Genentech Reports 1988 Financial Results

South San Francisco, Calif. -- January 25, 1989 --

Genentech, Inc. (NYSE: GNE) today reported revenues for the year ended December 31, 1988 of $334.8 million, up 45 percent from $230.5 in 1987. Net product sales in 1988 rose 86 percent to $262.5 million up from $141.4 million in 1987. Net sales of Activase (t-PA) increased to $151.4 million in 1988, up from $55.8 million in 1987. Protropin (growth hormone) had 1988 net sales of $111.1 million, compared with $85.6 million for the preceeding year.

"Activase is believed to be the largest selling of any pharmaceutical during its first 12 months on the market. We are working vigorously to further expand the market for Activase, with a goal to increase patient usage in 1989," said Robert A. Swanson, chief executive officer.

Genentech's net income for 1988 was $20.6 million, or 24 cents per share, compared with $42.2 million or 50 cents per share in 1987. The results include a special charge of $23.3 million recorded in the fourth quarter primarily as a reserve against certain quantities of Activase inventory which may be out of date before they are sold. After the applicable income tax benefit, the special charge amounts to 26 cents per share.

Revenues for the fourth quarter were $89.5 million, compared with $96.5 million in 1987. Fourth quarter net product sales were $66.4 million compared with $81.1 million in 1987, which included initial sales of Activase. After the special charge, the 1988 fourth quarter net loss was $15.4 million, or 18 cents per share, compared with net income of $27.2 million, or 32 cents per share, in 1987.

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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months
Ended December 31,

1988 1987
Revenues
   Product sales $ 66,351 $ 81,096
   Contract 20,410 12,127
   Interest 2,750 3,254
      Total revenues 89,511 96,477
     
Costs and expenses
   Cost of sales 12,694 12,122
   Special charge* 23,349 -
   Research and development 37,389 28,864
   Marketing, general and administrative 31,850 25,738
   Interest 1,424 2,150
      Total costs and expenses 106,706 68,874
     
Income (loss) before taxes (17,195) 27,603
Income tax provision (benefit) (1,773) 430
     
Net income (loss) $ (15,422) $ 27,173
     
Net income (loss) per share: $ (0.18) $ 0.32
     
Weighted average number of shares used in
   computing per share amounts:
83,761 84,801
 
Year
Ended December 31,

1988 1987
Revenues
   Product sales $ 262,476 $ 141,416
   Contract 60,283 77,273
   Interest 12,081 11,854
      Total revenues 334,840 230,543
     
Costs and expenses
   Cost of sales 46,897 23,800
   Special charge* 23,349 -
   Research and development 132,682 96,509
   Marketing, general and administrative 101,898 59,496
   Interest 6,906 6,801
      Total costs and expenses 311,732 186,606
     
Income before taxes 23,108 43,937
Income tax provision 2,543 1,707
     
Net income $ 20,565 $ 42,230
     
Net income per share $ 0.24 $ 0.50
     
Weighted average number of shares used in
   computing per share amounts:
84,459 84,418
 
December 31,
1988 1987
Selected balance sheet data
   Cash and short-term investments $ 152,489 $ 158,311
   Accounts receivable 63,946 92,158
   Inventories 63,382 58,037
   Total assets 668,755 618,973
   Total stockholders' equity 399,295 355,412

* The effect of the special charge on the fourth quarter and year ended December 31, 1988 was $0.26 per share, net of the applicable income tax benefit.