Friday, Apr 9, 1999

Genentech Discussing Settlement with U.S. Government

South San Francisco, Calif. -- April 9, 1999 --

Genentech, Inc. (NYSE: GNE) is currently in negotiations with the U.S. Attorney for the Northern District of California aimed at resolving the government's investigation into Genentech's promotion of human growth hormone during the late 1980's and early 1990's.

Genentech is discussing with the U.S. Attorney a potential settlement in which Genentech would pay a criminal fine and restitution in the amount of $50 million. This potential settlement, which is still under discussion and is not concluded, would resolve charges that the company promoted its human growth hormone from 1985-1994 for uses which had not been approved by the U.S. Food and Drug Administration (FDA). Any agreement reached would be subject to court approval.

Any settlement amount would be recorded as a special charge to Genentech's first-quarter earnings. A settlement of $50 million, if finalized, would not be expected to have any ongoing financial impact, nor be expected to affect Genentech's long-term corporate strategy.

"This is an old issue and one on which we took corrective action back in 1994," said Arthur D. Levinson, Ph.D., Genentech's president and chief executive officer. "The reason we are pursuing a settlement is because we believe that it is better for the company, our shareholders and the patients we serve to achieve closure on the issue rather than risk the cost and distraction of protracted litigation. Nothing in the investigation involved issues relating to the quality of care provided to patients. We are committed to no less than the highest standards of integrity in all aspects of our business."

In 1994, Genentech took a number of actions to address the FDA's concerns regarding the promotion of its human growth hormone products. These steps included conducting training programs for employees and a campaign to educate physicians about the approved indications for human growth hormone, which included extensive follow-up.

Genentech began its commitment to the understanding and treatment of human growth and development more than 15 years ago by pioneering the development of Protropin®, the first recombinant growth hormone product, as well as the company's first marketed product. Since then, the company has expanded its family of growth hormone products to include Nutropin® and Nutropin AQ®. Protropin is indicated for growth hormone deficiency in children, and Nutropin and Nutropin AQ are indicated for growth hormone deficiency in children and adults, growth failure associated with chronic renal insufficiency and short stature associated with Turner syndrome.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Twelve of the currently marketed biotechnology products stem from Genentech science. Genentech markets seven 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 and the Pacific Exchange under the symbol GNE.

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