GENENTECH REPORTS 1999 YEAR-END RESULTS; 1999 Revenues Driven by 45 Percent Increase in Product Sales

Business Wire, Jan 20, 2000

Business Editors &Biotech Writers

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Jan. 20, 2000

Genentech, Inc. (NYSE: DNA) announced today the highest yearly earnings and product sales in its history, exclusive of special charges, primarily redemption-related and legal settlements, and recurring charges related to the redemption. The redemption-related charges are due to the redemption of Genentech's Special Common Stock in June and related accounting treatment(1) resulting from Roche's exercise of its option and the subsequent reoffering of Genentech shares. As a result of such charges, the company recorded a net loss for 1999.

For 1999, including the three months ended December 31, 1999:

-- Net income for 1999 increased 36 percent to $246.7 million, or 93 cents per share, from $181.9 million in 1998, or 70 cents per share(2), exclusive of special charges, primarily redemption-related and legal settlements, and recurring charges related to the redemption. Excluding these charges, net income for the fourth quarter of 1999 increased to $48.1 million, or 18 cents per share, from $37.1 million, or 14 cents per share, in the fourth quarter of 1998.

-- Due primarily to the charges resulting from the redemption of Genentech's Special Common Stock and related accounting treatment and legal settlements, the company recorded a net loss for 1999 of $1,144.5 million as compared to net income of $181.9 million in 1998. The company also recorded a fourth quarter net loss of $172.9 million as compared to a net income of $37.1 million in the fourth quarter of 1998.

-- Total revenues for 1999 were $1,421.4 million as compared to $1,150.9 million in 1998. This increase is primarily due to product sales for 1999, which increased 45 percent to $1,039.1 million from $717.8 million in 1998, driven by Herceptin(R) (Trastuzumab) anti-HER2 antibody and Rituxan(R) (Rituximab) antibody sales.

&uot;In addition to our strong revenues for the year, Genentech made significant progress in moving projects through its pipeline, including the approval of Nutropin Depot, a filing for approval for TNKase and the announcement of positive results from Phase III clinical trials of anti-IgE,&uot; said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. &uot;The year was also marked by two impressive stock offerings, strong performance of Genentech's stock and a record-setting first full year of sales for Herceptin.&uot;

Nutropin Depot(tm) (somatropin (rDNA origin) for injectable suspension), the first long-acting dosage form of recombinant human growth hormone, received U.S. Food and Drug Administration (FDA) approval in December for use in pediatric growth hormone deficiency.

Following a July 30, 1999 submission, Genentech was notified that the FDA accepted for review a Biologics License Application for TNKase(tm) (Tenecteplase) for treating heart attack patients. Boehringer Ingelheim International GmbH filed with the European Regulatory Authority for approval of Tenecteplase for the same indication.

With Novartis Pharma AG and Tanox, Inc., Genentech announced positive results from Phase III clinical trials of anti-IgE in patients with allergic asthma and seasonal allergic rhinitis. The companies intend to file a Biologics License Application in the United States and registration in Europe by mid-year 2000.

Product Sales

Herceptin sales for 1999, the first full year on the market, were $188.4 million. Genentech first recorded sales for Herceptin of $30.5 million in the fourth quarter of 1998. In 1999, Herceptin surpassed Rituxan as having the highest first-year sales of any anti-cancer product in the United States. Since launch, an increase of physician acceptance of Herceptin has contributed to a positive sales trend and successful penetration into the breast cancer market.

Rituxan sales increased to $279.4 million in 1999 from $162.6 million in 1998. This sales increase is due primarily to increased market penetration for the treatment of non-Hodgkin's lymphoma. With partners IDEC Pharmaceuticals Corporation and Roche, Genentech continues to explore other uses of Rituxan as a single agent as well as in combination with other traditional therapies through clinical trials.

Activase(R) (Alteplase, recombinant) sales increased to $236.0 million in 1999 from $213.0 million in 1998 as a consequence of the drug's increased use in peripheral blood vessel occlusions offset by a decline in the overall size of the acute myocardial infarction market due to mechanical reperfusion and continued competition.

Sales of Genentech's three growth hormone products, Protropin(R) (somatrem for injection), Nutropin(R) (somatropin (rDNA origin) for injection) and Nutropin AQ(R) (somatropin (rDNA origin) injection), increased to $221.2 million in 1999 from $214.0 million in 1998. This change is primarily due to fluctuations in customer ordering patterns.

Sales of Pulmozyme increased to $111.4 million in 1999 compared to $93.8 million in 1998. This increase is due primarily to increased market penetration in the early and mild patient populations for the treatment of cystic fibrosis.