Monday, Apr 22, 1996

Genentech and XOMA Agree to Develop Jointly Anti-CD11a

Genentech to buy 1.5 million shares of XOMA stock as part of agreement in which XOMA will develop anti-CD11a through Phase II

South San Francisco and Berkeley, Calif. -- April 22, 1996 --

Genentech, Inc. (NYSE:GNE) and XOMA Corporation (Nasdaq: XOMA) today announced a collaborative agreement to develop jointly Genentech's anti-CD11a monoclonal antibody product for treatment of psoriasis and for organ transplant rejection.

Genentech has purchased 1.5 million shares of XOMA common stock at approximately $6 per share and will fund XOMA's development costs for anti-CD11a through 1998 via a series of convertible subordinated loans. XOMA is expected to realize in excess of $20 million in funding from the arrangement.

Under the terms of the agreement, XOMA will scale-up and develop anti-CD11a and bring it through Phase II clinical trials. After completion of Phase II trials, Genentech will determine the product's future development strategy. Upon meeting certain milestones, XOMA will have an option to participate in development through U.S. approval, after which they will have earned the right to co-promote and share in the profits in the United States and receive royalties on sales elsewhere.

"Genentech's pipeline of high-promise products is demanding the full attention of our clinical development resources," said Genentech President and CEO Arthur D. Levinson, Ph.D. "Therefore, I'm delighted with this partnership with XOMA, which brings XOMA's impressive GMP scale-up and clinical development capabilities to bear on the anti-CD11a project while reserving Genentech's own resources for the many other products currently in development."

"We see this as a significant opportunity to gain additional value from XOMA's manufacturing and clinical infrastructure and expertise," said John L. Castello, XOMA Chairman, President and CEO. "We can profit from our considerable experience in developing recombinant pharmaceuticals and bring a new product into our pipeline. This transaction is an endorsement of our management experience and development capabilities by what is universally regarded as one of the premier biopharmaceuticals companies in the world," said Castello.

Anti-CD11a is a humanized monoclonal antibody that inhibits cells in the immune system called T-cells from attacking other cells or tissues by preventing activation of these T-cells. The product will be developed as a treatment for organ transplant rejection and for certain inflammatory disorders, such as psoriasis.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Ten of the currently marketed biotechnology products stem from Genentech research, five of which Genentech markets directly. The company has headquarters in South San Francisco and is traded on the New York and Pacific Stock Exchanges under the symbol GNE.

XOMA Corporation is a biopharmaceutical company developing products for the treatment of infections and immunologic disorders. The company is focused primarily on the accelerated development of products derived from a human host-defense protein, BPI (bacterial/permeability-increasing protein). Neuprex™, XOMA's first BPI-derived product, currently is in clinical trials for four different indications.

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