Wednesday, Oct 24, 2001

No Verdict Reached in Genentech, City of Hope Contract Dispute

Hung Jury Split 7-5 in Genentech's Favor

South San Francisco, Calif. -- October 24, 2001 --

Genentech, Inc. (NYSE: DNA) today announced that a Los Angeles County Superior Court jury was unable to reach a verdict, and consequently unable to find any liability for Genentech, in a contract dispute lawsuit brought by the City of Hope (COH) against Genentech relating to a 1976 agreement covering sponsored research performed by two COH scientists, Arthur Riggs and Keiichi Itakura.

"We are pleased that more jurors agreed with our position than with the City of Hope's position and were not persuaded by the claims being made by the City of Hope's lawyers," said Arthur D. Levinson, Ph.D., chairman and chief executive officer at Genentech. "We are steadfast in our belief that we have honored the 1976 agreement and compensated the City of Hope fairly for sales of products that were developed as a direct result of their work."

The 12-member jury voted 7-5 in Genentech's favor on the issue of whether Genentech breached the 1976 agreement. Under its long-held interpretation of the agreement, Genentech has paid COH more than $293 million in royalties. Those payments were on sales of products made using DNA produced by COH and that practice the patents that resulted from the sponsored research. At trial, COH claimed that the agreement required Genentech to pay it royalties on numerous other products.

COH accepted royalty payments from Genentech for over 20 years without raising any question or concern about them. At trial, COH sought hundreds of millions of dollars in royalties for products on which Genentech itself did not receive royalties.

COH also sought royalties on licensing income that was donated many years ago to the Genentech Foundation for Biomedical Sciences, a charitable organization set up to provide grants to high schools and universities for science education. COH filed the contract dispute suit against Genentech in 1999. The case was submitted to the jury on October 12, 2001 after a six-week trial in the Los Angeles County Superior Court. The jury deliberated for six days before announcing it was unable to reach a verdict.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Fifteen of the currently approved biotechnology products stem from or are based on Genentech science. Genentech manufactures and markets ten biotechnology products directly in the United States. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA.

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