Wednesday, Apr 19, 1989

Genentech Reports First Quarter Earnings and Increase in Activase Sales

South San Francisco, Calif. -- April 19, 1989 --

Genentech, Inc. reported earnings for the first quarter of $8.4 million or 9 cents per share, compared with $17.9 million or 18 cents per share for the same quarter last year. The biotechnology company said earnings were down primarily because of increased marketing and research and development expenses, although it did register significantly higher sales for its heart attack drug, Activase.

Net sales of Activase, or tissue plasminogen activator (t-PA), increased 25 percent over the first quarter last year, from $38.4 million to $48.1 million. Compared with the fourth quarter of 1988, net Activase sales increased 39 percent, from $34.7 million to $48.1 million.

"Our increased marketing expenditures are paying off," said Robert A. Swanson, chief executive officer. "Genentech is on target in meeting our goal of increasing Activase sales 20 to 25 percent this year. The trend of increased usage which we saw begin in late 1988 appears to be holding steady."

Total revenues for the quarter were $91.1 million, up 22 percent from $74.4 million last year. Net product sales were $73.0 million, up from $63.5 million a year ago. Net sales of Protropin, human growth hormone were $24.9 million, compared with $25.1 million in the same quarter last year. Protropin sales were down from $31.7 million in the fourth quarter, primarily because traditional heavy year-end stocking produced higher inventories at distributors and less sales in January and February. Sales in March were back to normal levels and are on target to meeting the 1989 goal of maintaining 75-80 percent of the market.

Genentech's marketing, general and administrative expenses increased from $18.8 million in the first quarter of 1988 to $29.0 million in the same period this year. Research and development expenses were also up, from $26.4 million to $37.8 million. In both areas, the expenses were similar to those of the fourth quarter of 1988 and reflect continuing marketing efforts to extend Activase sales and greater funding for additional research and development work.

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

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(in thousands, except per share amounts)

Three Months
Ended March 31,

1989 1988
Product sales $ 72,973 $ 63,521
Contract 14,285 7,922
Interest 3,844 2,981
Total revenues 91,102 74,424
Costs and expenses
Cost of sales 13,937 9,304
Research and development 37,719 26,381
Marketing, general and administrative 29,028 18,750
Interest 1,975 2,093
Total costs and expenses 82,659 56,528
Income before taxes 8,443 17,896
Income tax provision 1,013 2,685
Net income $ 7,430 $ 15,211
Net income per share $ 0.09 $ 0.18
Weighted average number of shares used in
computing per share amounts:
85,155 85,074
March 31,
1989 1988
Selected balance sheet data
Cash and short-term investments $ 158,080 $ 175,588
Accounts receivable 64,954 61,971
Inventories 60,298 73,327
Total assets 673,832 638,745
Total stockholders' equity 410,046 380,359