Wednesday, Jan 20, 1993

Genentech Reports Fourth Quarter and Year End Results

South San Francisco, Calif. -- January 20, 1993 --

Genentech, Inc. today reported revenues for 1992 were $544.3 million, up six percent from $515.9 million in 1991. Fourth quarter revenues were $142 million, up 19 percent from $119.5 million in the fourth quarter of 1991.

Due to an anticipated increase in research and development expenses, Genentech profits for 1992 were $20.8 million (18 cents per share), compared to profits of $44.3 million (39 cents per share) in 1991. Profits for the fourth quarter were $6.2 million, compared to essentially break-even in the fourth quarter of 1991.

The decline in earnings for the full year despite increased revenues resulted primarily from continued large investment in research and development consistent with the company's aggressive product development goals of getting new products on the market as well as new indications for existing products. A major clinical project underway is the international 41,000 patient GUSTO trial (Global Utilization of Streptokinase and t-PA in Occluded Coronary Arteries), which is investigating the comparison of Activase (Alteplase, recombinant) t-PA and streptokinase in opening blocked coronary arteries early and keeping them open after a heart attack.

Genentech's research and development expenditures for 1992 were $278.6 million, up 26 percent from $221.3 million in 1991. The 1992 research and development expenses represent 51 percent of total revenues compared to 43 percent in 1991.

"Genentech's continued heavy investment in research and development is consistent with our fundamental business plan to insure introductions of significant new products to treat important unmet medical needs. It is made possible by our strong financial position," said G.Kirk Raab, Genentech's president and chief executive officer.

1992 Marketed Product Performance

Protropin® (somatrem for injection) human growth hormone sales continued to grow steadily in 1992, with net sales of $205.9 million, up 11 percent from $185.1 million in 1991. The company believes sales growth of human growth hormone to be due to an increased number of diagnosed growth hormone inadequate patients.

Net sales of Activase were $182.1 million for fiscal 1992, down seven percent from $196.5 million in 1991. The decline in Activase sales for the year ended 1992 in relation to 1991 is primarily due to the lack of bulk sales to Genentech's Japanese licensees. The North American market share has remained steady at about 50 percent for 1992

Sales for Actimmune® (interferon gamma-1b) were $2.9 million. Sales have remained modest due to the small number of patients who have chronic granulomatous disease, the drug's current indication.

Movement of Key Clinical Development Products in 1992

Chief among several clinical milestones met in 1992 was the completion of important Phase III clinical trials of Pulmozyme™ (rhDNase) for treating cystic fibrosis. The results of the 968-patient study demonstrated Pulmozyme improves lung function and reduces the rate of respiratory infection in patients with cystic fibrosis. No major adverse side effects were noted. Genentech expects to file for marketing approval in the U.S. and Canada by the end of the first quarter of 1993 and soon thereafter in Europe.

Additional significant progress was made in clinical trials during 1992:

  • Initiated Phase II trials of Pulmozyme for chronic bronchitis in the

  • Conducted Phase I trials for humanized HER2 monoclonal antibody in women with advanced breast and ovarian cancer

  • Conducted Phase I trials using the most common virus strain (MN) for gp120 AIDS vaccine as both an immunotherapeutic and a prophylactic

  • Began Phase I trials for Nerve Growth Factor (NGF) for treating peripheral neuropathy associated with cancer chemotherapy and diabetes

In addition, the company:

  • Moved Anti-lgE for treating allergic rhinitis and asthma from research into development

  • Moved Anti-CD 18 for treating inflammatory disease from research into development

  • Filed an NDA for second generation growth hormone, Nutropin? (somatropin for injection), for the Turner Syndrome indication

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 December 31,

1992 1991
Revenues
   Product sales $ 100,539 $ 91,785
   Royalties 23,115 14,005
   Contract and other 8,155 2,284
   Interest 10,191 11,445
      Total revenues 142,000 119,519
     
Costs and expenses
   Cost of sales 16,943 16,040
   Research and development 69,696 59,676
   Marketing, general and administrative 47,419 42,726
   Interest 1,410 967
      Total costs and expenses 135,468 119,409
     
Income before taxes 6,532 110
Income tax provision 327 2
     
Net income $ 6,205 $ 108
     
Net income per share $ 0.05 $ -
     
Weighted average number of shares used in
   computing per share amounts:
115,283 113,301
 
Year
Ended December 31,

1992 1991
Revenues
   Product sales $ 390,975 $ 383,260
   Royalties 91,682 63,384
   Contract and other 16,727 20,501
   Interest 44,881 48,779
      Total revenues 544,265 515,924
     
Costs and expenses
   Cost of sales 66,824 68,437
   Research and development 278,615 221,270
   Marketing, general and administrative 172,486 175,277
   Interest 4,406 4,771
      Total costs and expenses 522,331 469,755
     
Income before taxes 21,934 46,169
Income tax provision 1,097 1,847
     
Net income $ 20,837 $ 44,322
     
Net income per share $ 0.18 $ 0.39
     
Weighted average number of shares used in
   computing per share amounts:
113,992 112,548
 
December 31,
1992 1991
Selected balance sheet data
   Cash and short-term investments $ 391,895 $ 515,088
   Accounts receivable 93,909 69,042
   Inventories 65,315 56,174
   Total current assets 580,499 649,995
   Long-term marketable securities 255,031 196,303
   Property, plant and equipment, net 432,525 342,468
   Other long-term assets 37,076 42,666
   Total assets 1,305,131 1,231,432
   Total current liabilities 133,543 118,606
   Long-term debt 152,023 152,878
   Total liabilities 297,810 281,730
   Total stockholders' equity 1,007,321 949,702