Thursday, Jan 5, 1995

Genentech and Lilly Reach Settlement

South San Francisco, Calif. -- January 5, 1995 --

Genentech, Inc. (NYSE:GNE) and Eli Lilly and Company (NYSE:LLY) announced today that they have signed a final agreement settling all pending patent infringement, breach of contract, and related claims between the two companies, ending a long-standing dispute regarding recombinant human growth hormone.

Under the terms of the Agreement, Lilly has agreed to pay Genentech approximately $145 million in addition to future payments contingent on the sale of certain products. The arrangement provides for an initial payment to Genentech of $25 million and the remaining amount in 16 quarterly payments of approximately $7.5 million beginning in March 1995, subject to possible future offsets. These payments will have no impact on Lilly's operating results, as the specified payments have been previously reserved in Lilly's financial statements.

Each company agreed to dismiss its pending action against the other for infringement of patented technology useful in the production of human growth hormone products. Genentech and Lilly exchanged immunities from suit, licenses, or options to certain patented technology useful in the production of a number of recombinant products. The Companies also agreed to amendments to their 1978 Insulin Agreement relating to the manufacture and sale of recombinant human insulin.

Additionally, Genentech further agreed to dismiss its pending action against Centocor, Inc. for infringement of Genentech's Cabilly patent and to grant Centocor a non-exclusive royalty bearing license under Genentech's patents for ReoPro (7E3 antibody) product. Lilly will be similarly licensed to manufacture and market Centocor's ReoPro product.

Other terms of the Agreement are confidential.

Genentech, Inc. is a leading international 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.

Eli Lilly and Company is a global research-based pharmaceutical corporation headquartered in Indianapolis, Indiana, that is working with its customers worldwide to help ensure that diseases are prevented, managed, and cured with maximum benefit and minimum cost to patients and society. The company focuses its research efforts on five disease categories: central-nervous-system and related diseases; endocrine diseases, including diabetes and osteoporosis; infectious diseases; cancer; and cardiovascular diseases.

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