Thursday, Jul 16, 1992

Genentech Reports Second Quarter Results

Revenues Increase by 5 Percent

South San Francisco, Calif. -- July 16, 1992 --

Genentech, Inc. (NYSE: GNE) announced today that revenues for the second quarter of 1992 increased 5 percent to $136.0 million, from $129.5 million in the same quarter of the previous year. Despite higher revenues, earnings decreased to $3.4 million, or 3 cents per share, from $11.4 million, or 10 cents per share, in the second quarter of 1991.

"Our decrease in earnings stems primarily from our continued aggressive investment in research and development," said G. Kirk Raab, president and chief executive officer. R&D expenditures in the second quarter of 1992 were $73.3 million, up from $52.9 million in the same quarter of the year previous.

Protropin® human growth hormone sales increased 8 percent to $50.4 million from $46.6 million in the second quarter of 1991. The overall market for human growth hormone has continued to grow due to the increasing size of patients being treated at correspondingly larger doses, and to more patients being diagnosed as growth hormone inadequate.

North American Activase® t-PA sales increased slightly to $44.6 million, from $44.5 million in the second quarter of 1991. Based on second quarter 1992 and previous quarters' sales figures, Activase's market share appears to have stabilized following publication of the controversial ISIS-3 results in the first quarter of 1992. Genentech continues to await the results of the international, 40,000-patient GUSTO trial, which is investigating the value of Activase in opening arteries faster than other therapies after a heart attack.

Total Activase sales declined from $50.4 million in the second quarter of 1991 to $44.6 million in the second quarter of 1992 because there were no bulk sales to Genentech's Japanese licensees in the second quarter of this year.

Consistent with the small number of patients with chronic granulomatous disease, second quarter 1992 sales for Actimmune® interferon gamma were $0.8 million. This condition, which Actimmune is approved to treat, is a very rare inherited disorder of the immune system.

"Our targeted R&D approach has led to important progress in the second quarter of 1992," said Raab. Progress made in the quarter includes: clinical investigators reported positive results of Phase II trials using DNase to treat cystic fibrosis; a humanized version of the HER2 antibody for treating breast cancer entered the clinic; the company's nerve growth factor also entered the clinic, making it the first recombinant nerve growth factor to be tested in humans; and Genentech identified a new candidate for its development pipeline -- a monoclonal antibody to a receptor called CD18 being studied for treatment of inflammatory disorders.

"It is through progressive steps like these that we will continue to achieve our aggressive product goals," said Raab. "Our primary goals are to have three new products, and new indications for existing products, on the market by 1996; and to identify one or two new development candidates each year so we can gain additional new product approvals by the turn of the century."

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant medical needs. The company has headquarters in South San Francisco, California and is traded on the New York and Pacific Stock exchanges under the symbol GNE.

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GENENTECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months
Ended June 30,

1992 1991
Revenues
   Product sales $ 95,760 $ 97,345
   Royalties 23,514 16,411
   Contract and other 5,320 3,841
   Interest 11,356 11,858
      Total revenues 135,950 129,455
     
Costs and expenses
   Cost of sales 16,199 19,017
   Research and development 73,296 52,901
   Marketing, general and administrative 41,899 44,582
   Interest 989 1,221
      Total costs and expenses 132,383 117,721
     
Income before taxes 3,567 11,734
Income tax provision 168 380
     
Net income $ 3,399 $ 11,354
     
Net income per share $ 0.03 $ 0.10
     
Weighted average number of shares used in
   computing per share amounts:
113,190 112,523
 
Six Months
Ended June 30,

1992 1991
Revenues
   Product sales $ 189,285 $ 196,084
   Royalties 45,266 30,403
   Contract and other 7,168 8,860
   Interest 23,245 25,340
      Total revenues 264,964 261,407
     
Costs and expenses
   Cost of sales 32,565 35,775
   Research and development 139,283 101,711
   Marketing, general and administrative 83,558 89,258
   Interest 2,257 2,647
      Total costs and expenses 257,663 229,391
     
Income before taxes 7,301 32,016
Income tax provision 365 1,292
     
Net income $ 6,936 $ 30,724
     
Net income per share $ 0.06 $ 0.27
     
Weighted average number of shares used in
   computing per share amounts:
113,076 112,229
 
June 30,
1992 1991
Selected balance sheet data
   Cash and short-term investments $ 502,285 $ 550,005
   Accounts receivable 82,108 75,824
   Inventories 53,412 49,234
   Long-term marketable securities 189,605 142,949
   Property, plant and equipment, net 382,057 313,498
   Other long-term assets 33,980 53,528
   Total assets 1,255,861 1,191,789
   Total current liabilities 124,585 98,279
   Long-term debt 152,392 153,213
   Total liabilities 288,901 262,220
   Total stockholders' equity 966,960 929,569