Tuesday, Oct 24, 1989

Genentech Third Quarter Profits Higher

South San Francisco, Calif. -- October 24, 1989 --

Genentech, Inc. today reported third quarter earnings of $11.4 million, or 13 cents per share, up 115 percent from $5.3 million, or 6 cents per share for the same period last year. Genentech said profits were higher primarily because net product sales this quarter were $76.0 million, compared with $57.5 million for the same quarter last year.

Total revenues for the quarter were $100.0 million, up 23 percent from $81.6 million for the same quarter last year. Net sales of Protropin®, human growth hormone, were $32.4 million, compared with $28.4 million in the same quarter last year. Net sales of Genentech's heart attack drug, Activase®, tissue plasminogen activator (t-PA), were $43.6 million, compared with $29.1 million for the same quarter in 1988. Activase®, t-PA, sales for the third quarter were lower than the previous quarter.

"We continue to be on target for meeting our goal of increasing sales 20-25 percent this year," said Robert A. Swanson, chief executive officer. Net sales of Activase®, t-PA, for the first nine months of this year were $139.7 million, up 20 percent from $116.7 million for the same period last year.

Genentech's research and development expenses increased from $36.1 million in the third quarter of 1988 to $38.5 million in the same period this year due to increased clinical trial expenditures. Since June, three new products have begun Phase I human clinical trials. Those products are Argatroban, a blood-clot inhibiting agent; CD4-IgG, a second generation potential AIDS therapeutic; and insulin-like growth factor (IGF-1), which will be studied for treatment of nutritional disorders.

Marketing, general and administrative expenses also were up, from $27.1 million to $32.0 million, mainly due to increasing the size of the sales force this year.

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

# # #

GENENTECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months
Ended September 30,

1989 1988
Revenues
   Product sales $ 76,011 $ 57,519
   Contract 19,388 21,026
   Interest 4,648 3,074
      Total revenues 100,047 81,619
     
Costs and expenses
   Cost of sales 14,591 11,477
   Research and development 38,505 36,065
   Marketing, general and administrative 32,074 27,118
   Interest 1,879 1,525
      Total costs and expenses 87,049 76,185
     
Income before taxes 12,998 5,434
Income tax provision 1,583 132
     
Net income $ 11,415 $ 5,302
     
Net income per share $ 0.13 $ 0.06
     
Weighted average number of shares used in
   computing per share amounts:
86,711 84,268
 
Nine Months
Ended September 30,

1989 1988
Revenues
   Product sales $ 228,082 $ 196,125
   Contract 48,524 39,873
   Interest 12,431 9,331
      Total revenues 289,037 245,329
     
Costs and expenses
   Cost of sales 43,170 34,203
   Research and development 114,517 95,293
   Marketing, general and administrative 93,222 70,048
   Interest 5,808 5,482
      Total costs and expenses 256,717 205,026
     
Income before taxes 32,320 40,303
Income tax provision 3,879 4,316
     
Net income $ 28,441 $ 35,987
     
Net income per share $ 0.33 $ 0.42
     
Weighted average number of shares used in
   computing per share amounts:
85,708 84,692
 
September 30,
1989 1988
Selected balance sheet data
   Cash and short-term investments $ 205,445 $ 151,003
   Accounts receivable 59,289 76,847
   Inventories 53,116 82,694
   Total assets 718,379 683,799
   Total stockholders' equity 448,742 412,263