SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended: December 31, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 1-9813
GENENTECH, INC.
A Delaware Corporation 94-2347624
(I.R.S. employer identification number)
460 Point San Bruno Boulevard (415) 225-1000
South San Francisco, California 94080-4990 (telephone number)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class Name of Each Exchange on Which Registered
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Redeemable Common Stock, New York Stock Exchange
$.02 par value Pacific Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The approximate aggregate market value of voting stock held by nonaffiliates
of the registrant is $1,938,520,599 as of March 13, 1995. (A)
Number of shares of Common Stock outstanding as of March 13, 1995: 67,133,409
Number of shares of Redeemable Common Stock outstanding as of March 13, 1995:
50,427,615
Documents incorporated by reference:
PARTS INCORPORATED
DOCUMENT BY REFERENCE
(1) Annual Report to stockholders for the year ended II
December 31, 1994 (specified portions)
(2) Definitive Proxy Statement with respect to the 1995 III
Annual Meeting of Stockholders filed by Genentech, Inc.
(SEC file No. 1-9813) with the Securities and Exchange
Commission (hereinafter referred to as "Proxy Statement")
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(A) Excludes 79,457,425 shares of Common Stock and Redeemable Common Stock
held by Directors, Officers and stockholders whose ownership exceeds five
percent of either the Common Stock or Redeemable Common Stock outstanding at
March 13, 1995. Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or
indirect, to direct or cause the direction of the management or policies of
the registrant, or that such person is controlled by or under common control
with the registrant
PART I
ITEM 1. BUSINESS
Genentech, Inc. (the "Company") is an international biotechnology company that
discovers, develops, manufactures and markets human pharmaceuticals for
significant unmet medical needs. Genentech was organized in April 1976 as a
California corporation and was reincorporated in Delaware in January 1987.
The science of biotechnology product discovery and development is at the core
of the Company's business and has led to ten of the approved pharmaceutical
products of biotechnology. In September 1990, Roche Holdings, Inc. (Roche)
acquired approximately 60% of the Company's voting stock in a merger
transaction (Merger). The common stock Roche acquired in the Merger and
redeemable common stock subsequently purchased on the open market represented
approximately 65% of the outstanding equity of the Company as of March 13,
1995. Roche has the option to purchase all shares of outstanding redeemable
common stock at $58.75 per share in the first calendar quarter of 1995,
increasing to $60.00 per share on April 1, 1995. The redemption right expires
on June 30, 1995. For the period of July 1, 1995 until June 30, 1996, Roche
may submit a bid to purchase the remaining shares of the Company. The bid
must not be for less than $60.00 per share and is subject to the approval of
the Board of Directors and, subsequently, the non-Roche shareholders.
Independent of its right to have the Company redeem the redeemable common
stock, Roche is permitted to acquire additional shares of the Company's stock
through open market or privately negotiated purchases, provided that Roche's
aggregate holdings do not exceed 75% of the Company's stock outstanding on a
fully diluted basis. As used in this report, except where the context
otherwise indicates, the "Company" means Genentech, Inc. and its subsidiaries,
including subsidiary operations in Europe, Canada and Japan.
Products
Genentech has five products that it has developed and currently manufactures
and markets in the United States: Activase, registered trademark, (Alteplase,
recombinant) recombinant tissue plasminogen activator; Protropin, registered
trademark, (somatrem for injection) recombinant growth hormone; Nutropin,
registered trademark, [somatropin (rDNA origin) for injection] human growth
hormone; Pulmozyme, registered trademark, (dornase alfa) inhalation solution;
and Actimmune, registered trademark, (Interferon gamma-1b) recombinant
interferon gamma. Genentech also markets Activase, Protropin and Pulmozyme in
Canada.
Activase: Tissue plasminogen activator (t-PA) is an enzyme that is produced
naturally by the body to dissolve blood clots. However, when a blood clot
obstructs blood flow in the coronary artery and causes a heart attack, the
body is unable to produce enough t-PA to dissolve the clot rapidly enough to
prevent damage to the heart. Through recombinant DNA technology, Genentech
produces Activase, a recombinant form of t-PA, in sufficient quantity for
therapeutic use. The United States Food and Drug Administration (FDA)
approved Activase for marketing in the United States in 1987 for the treatment
of acute myocardial infarction (AMI or heart attack) and in 1990 for use in
the treatment of acute pulmonary embolism (blood clots in the lungs). Phase
III clinical trials are currently underway to evaluate Activase for ischemic
stroke (stroke caused by blood clots in the arteries to the brain). Phase I
studies are being performed to evaluate a second generation of t-PA which is
anticipated to be easier to administer, work faster, cause less unwanted
bleeding and require smaller doses than Activase.
In exchange for royalty payments, Genentech has licensed marketing rights to
recombinant t-PA in Japan to Kyowa Hakko Kogyo, Ltd. (Kyowa) and Mitsubishi
Kasei Corporation (Mitsubishi). Kyowa and Mitsubishi are marketing forms of
recombinant t-PA under the trademarks Activacin, registered trademark, and
GRTPA, registered trademark, respectively. In a number of countries outside
of the United States, Canada and Japan, Genentech has licensed t-PA marketing
rights to Boehringer Ingelheim International GmbH (Boehringer). Boehringer
markets recombinant t-PA under the trademark Actilyse, registered trademark.
Prior to February 1995 t-PA was marketed in Canada by Genentech under the
Activase trademark and by Boehringer under the trademark Lysatec. In February
1995, Genentech purchased all t-PA Canadian marketing rights from Boehringer.
Protropin: Human growth hormone is a naturally occurring human protein
produced in the pituitary gland. It regulates metabolism and is responsible
for growth in children. A recombinant growth hormone product developed by
Genentech, Protropin was approved by the FDA in 1985 for marketing in the
United States for the treatment of growth hormone inadequacy in children.
In exchange for royalty payments, Genentech has licensed rights to recombinant
growth hormone outside the United States and Canada to Pharmacia AB (formerly
Kabivitrum AB), which manufactures and markets recombinant growth hormone
under the trademarks Somatonorm, registered trademark, and Genotropin,
registered trademark. Under the terms of the agreement with Pharmacia,
Genentech will have the right to begin selling growth hormone in certain
European countries in late 1995, and Pharmacia will have the right in late
1995 to begin selling their own growth hormone in the United States and Canada
provided they have received regulatory approval.
Nutropin: Nutropin is a human growth hormone similar to Protropin; however,
it does not have the additional amino acid, methionine, found in the Protropin
chemical structure. It was approved by the FDA in March 1994 for marketing
for the treatment of growth hormone inadequacy in children. Nutropin was
approved in November 1993 and launched in January 1994 for marketing in the
United States for the treatment of growth hormone inadequacy in children due
to chronic renal insufficiency (CRI); CRI causes irreversible damage to the
kidneys and a variety of medical problems, including growth hormone
inadequacy. The condition affects an estimated 3,000 children in the United
States. Nutropin has been designated an Orphan Drug for treatment of growth
hormone inadequacy in children with CRI in the United States. The Company is
awaiting regulatory approvals to market a liquid formulation of Nutropin,
aimed at providing improved convenience in administration. Phase III clinical
trials are underway to evaluate Nutropin as a treatment for children with
short stature associated with Turner Syndrome (a genetic disorder). Phase II
clinical trials are currently underway with Nutropin to treat growth hormone
inadequacy in adults.
Pulmozyme: Pulmozyme is marketed in the United States, Canada and Europe for
the management of cystic fibrosis, for which it has Orphan Drug designation in
the United States. There are an estimated 53,000 patients with cystic
fibrosis worldwide, a significant portion of whom are expected to be
candidates for treatment.
In 1992, the Company entered into a collaboration with F. Hoffmann-LaRoche,
Ltd. (HLR) to codevelop and copromote Pulmozyme in Europe. In connection with
this collaboration and the Company's efforts to expand its markets, Genentech
Europe Limited (GEL), a Bermuda company, was established. GEL and affiliates
are currently copromoting Pulmozyme in the United Kingdom, Ireland, Germany
and the Netherlands. Presently, HLR is responsible for promoting the drug for
cystic fibrosis in the remaining western European countries in the
collaboration. In addition to sharing profits related to Pulmozyme sales from
all Western European collaborative countries with HLR, the Company has
received and will continue to receive milestone payments and technical support
from HLR. Also, as part of the agreement with HLR, and in return for
royalties on product sales, the Company has granted HLR an exclusive license
to distribute Pulmozyme in countries outside of Western Europe, the United
States and Canada.
Phase III international trials are ongoing to study the use of Pulmozyme to
treat Chronic Obstructive Pulmonary Disease (COPD), a clinical syndrome of
airway inflammation, infection and obstruction that leads to lung destruction.
Actimmune: Actimmune is approved in the United States for the treatment of
chronic granulomatous disease (CGD), a rare, inherited disorder of the immune
system which affects an estimated 250 to 400 Americans. Actimmune received
designation by the FDA in 1990 as an Orphan Drug for the treatment of CGD in
the United States. Phase III clinical trials are ongoing to investigate the
use of Actimmune to treat renal cell carcinoma, a cancer of the kidneys.
Depending on clinical trial results, the Company hopes to expand the market
potential of Actimmune over time by obtaining new approvals for indications
with larger populations, but such expansion is not assured. Additionally, the
Company receives royalty payments from Boehringer from the sale of interferon
gamma in certain countries outside of the United States, Canada and Japan.
Licensed Products:
In addition to the royalties mentioned above, the Company also receives
royalties on the following human health care products:
Product Trademark Company
____________________________ ____________ ______________________________
Recombinant human insulin Humulin Eli Lilly and Company (Lilly)
Recombinant interferon alpha Roferon-A Hoffmann-La Roche, Inc.
Hepatitis B vaccine Recombivax Merck and Company, Inc.
Hepatitis B vaccine Engerix-B Smith-Kline Beecham
Pharmaceuticals (SKB)
Factor VIII Kogenate Miles, Inc.
Bovine growth hormone Posilac Monsanto Corporation
In December 1994, the Company and Lilly reached an agreement regarding all
patent infringement and breach of contract actions then pending between the
two parties. Under the terms of the settlement, Lilly agreed to pay the
Company up to $145 million ($25 million initially and 16 quarterly payments of
$7.5 million), subject to certain restrictions, and the Company granted Lilly
licenses, options to licenses, or immunities from suit for certain of the
Company's patents. Future payments are required from Lilly on sales of these
products. See "Item 3 Legal Proceedings" for further information.
Products in Development: As part of Genentech's program of research and
development, a number of other products are in various stages of development.
Product development efforts cover a wide range of disorders or medical
conditions, including cancer, respiratory disorders, cardiovascular diseases,
endocrine disorders, inflammatory and immune problems, AIDS and neurological
disorders.
In addition to the new indications for existing products discussed above,
below is a summary of products in clinical development:
Product Description
-------------------------------- ------------------------------------------------
Phase III
Anti-HER2 Humanized Monoclonal A humanized monoclonal antibody targeted against
Antibody a protein receptor, which may be useful in the
treatment of severe breast cancer.
Auriculin (registered trademark) A hormone that occurs naturally in the heart
Anaritide which may be useful in treating acute renal
failure (a collaboration between the Company
and Scios Nova Inc.)
Phase II
Anti-IgE Humanized Monoclonal A humanized IgE monoclonal antibody designed to
Antibody interfere early in the process that leads to
symptoms of allergy such as allergic rhinitis
and asthma.
Nerve Growth Factor Nerve growth factor may aid the treatment of
peripheral neuropathy.
IGF-I IGF-I is being studied to determine if it can
improve blood glucose control in type II diabetics.
gp120 A protein on the surface of HIV-1, it is being
studied as a prophylactic vaccine.
IDEC-C2B8 A monoclonal antibody which may be useful
in the treatment of non-Hodgkin's B-cell
lymphomas (a collaboration between the
Company and IDEC Pharmaceuticals Corporation).
</TABLE
Preclinical development products include an anti-VEGF humanized monoclonal
antibody to treat cancer and diabetic retinopathies, a ras farnesyltransferase
inhibitor for pancreatic and colon cancers, thrombopoietin for
thrombocytopenia related to cancer treatment, and an oral IIb/IIIa antagonist
for cardiovascular indications.
In cases where a product does not fit with Genentech's marketing strategy, the
Company may license the product to another company. These contract partners
are chosen for their ability to both fund and perform advanced product
development and to facilitate effective entry into major markets. Genentech
has agreed to negotiate in good faith with Roche for a period of at least
three months, but no more than six months, with a view towards reaching a
mutually beneficial licensing or marketing arrangement, prior to entering into
any material licensing or marketing agreement with a third party for any
products, processes, inventions or developments made by Genentech or its
subsidiaries. In the past Genentech has licensed the foreign rights to some of
its products to major foreign pharmaceutical companies and actively
coordinated development and clinical programs with these partners. In some
cases Genentech has retained manufacturing rights to the licensed products.
The Company has retained United States and European marketing rights for most
of its products currently under development. These European marketing rights
represent a significant expansion opportunity for the Company.
In December 1994, the Company entered into a collaboration with Scios Nova
Inc. (Scios Nova) for the United States and Canadian development of Scios
Nova's Auriculin for the treatment of acute renal failure, which is currently
in Phase III clinical trials. Under the terms of the collaboration, both
companies will copromote Auriculin in the United States and Canada, sharing
profits from its commercialization. The Company received exclusive rights to
all markets outside the United States and Canada subject to a royalty
obligation to Scios Nova. In connection with the collaboration, Genentech
purchased Scios Nova non-voting preferred stock, which is convertible into
shares of Scios Nova common stock, for $20 million. The Company established a
line of credit for $30 million that Scios Nova may draw down at Scios Nova's
discretion through 2002. This commitment is supported through December 31,
1997, by a bank letter of credit under which Scios Nova may draw up to $30
million directly from the bank, with immediate repayment of the funds due to
the bank by the Company. Amounts drawn by Scios Nova under the bank letter of
credit or directly from the Company are repayable in the form of cash or Scios
Nova common stock (at the market price prevailing on the date of repayment) at
Scios Nova's option any time through December 30, 2002. Interest on amounts
borrowed by Scios Nova accrue to the Company at the prime rate of interest. At
December 31, 1994, no amounts were drawn. In addition, the Company agreed to
pay up to $50 million in benchmark payments, conditional on achieving certain
predetermined commercialization goals.
In March 1995, Genentech entered into a collaboration with IDEC
Pharmaceuticals Corporation (IDEC) to develop IDEC's anti-CD20 monoclonal
antibody, IDEC-C2B8, for the treatment of non-Hodgkin's B-cell lymphomas, for
which Phase III clinical trials have begun. Under the terms of the agreement,
Genentech and IDEC will copromote IDEC-C2B8 in the United Sates and Canada,
with IDEC receiving a share of the profits. Genentech will retain
commercialization rights throughout the rest of the world except certain
countries in Asia, where Genentech has certain option rights. IDEC will
receive royalties on sales outside the U.S. and Canada. In connection with
the collaboration, Genentech will provide $9 million in preferred equity
investments and licensing fees, up to $17.5 million in additional equity
funding prior to U.S. approval, and up to $30.5 million in milestone and
option payments.
Distribution
Genentech has a marketing department and a United States-based and Canada-
based pharmaceutical sales and distribution organization for its human
pharmaceuticals. Genentech's sales efforts are focused on specialist
physicians based at major medical centers in the United States and Canada.
Products are sold to distributors or directly to hospital pharmacies or
medical centers. The distribution network for Pulmozyme in Western Europe is
discussed in the "Products" section above. Genentech utilizes common
pharmaceutical company marketing techniques, including advertisements, direct
mail, and other methods.
Genentech's products are available at no charge to qualified patients under
Genentech's Uninsured Patient Programs in the United States. Genentech has
established the Genentech Endowment for Cystic Fibrosis so qualified cystic
fibrosis patients in the United States who need Pulmozyme can gain assistance
in obtaining it.
During 1994, Genentech provided certain marketing programs relating to
Activase. The Activase Stocking Assistance Program provided extended payment
terms, up to 195 days, to wholesalers on certain orders, subject to certain
restrictions on the timing and quantities of the orders. Additionally, a
comprehensive wastage replacement program exists for Activase which, subject
to specific conditions, provides customers the right to return Activase to
Genentech for replacement related to both patient related product wastage and
product expiry. Genentech maintains the right to renew, modify or discontinue
the above programs.
As discussed in Note 1 in the "Notes to Consolidated Financial Statements" in
the Company's 1994 Annual Report to Stockholders, the Company has certain
customers who provided over 10% of total revenues. Also discussed in Note 1
are revenues from foreign customers in 1994, 1993 and 1992.
Raw Materials
Raw materials and supplies required for the production of Genentech's
principal products are generally available in quantities adequate to meet the
Company's needs.
Proprietary Technology - Patents and Trade Secrets
Genentech has a policy of seeking patents on inventions arising from its
ongoing research and development activities. Patents issued or applied for
cover inventions ranging from basic recombinant DNA techniques to processes
relating to specific products and to the products themselves. The Company has
either been granted patents or has patent applications pending which relate to
a number of current and potential products, including products licensed to
others. Genentech considers that in the aggregate its patent applications,
patents and licenses under patents owned by third parties are of material
importance to its operations. Important legal issues remain to be resolved as
to the extent and scope of available patent protection for biotechnology
products and processes in the United States and other important markets
outside of the United States. Genentech expects that litigation will likely
be necessary to determine the validity and scope of certain of its proprietary
rights. Genentech is currently involved in a number of patent lawsuits, as
either a plaintiff or defendant, and administrative proceedings relating to
the scope of protection of its patents and those of others. These lawsuits
and proceedings may result in a significant commitment of Company resources in
the future. There can be no assurance that the patents Genentech obtains or
the unpatented proprietary technology it holds will afford Genentech
significant commercial protection.
Genentech has obtained licenses from various parties which it deems to be
necessary or desirable for the manufacture, use or sale of its products. These
licenses (both exclusive and non-exclusive) generally require Genentech to pay
royalties to the parties on product sales.
The Company's trademarks, ACTIVASE, PROTROPIN, NUTROPIN, PULMOZYME and
ACTIMMUNE in the aggregate are considered to be of material importance and are
registered in the United States Patent and Trademark Office and in other
countries throughout the world.
Royalty income recognized by the Company during 1994, 1993 and 1992 for patent
licenses, know-how and other related rights amounted to $126.0 million, $112.9
million and $91.7 million, respectively. In 1994, 1993 and 1992 the Company
incurred royalty expenses amounting to $50.5 million, $41.9 million and $35.9
million, respectively, under licenses from others.
Competition
Genentech faces competition, and believes significant long-term competition
can be expected, from large pharmaceutical and chemical companies as well as
biotechnology companies. This competition can be expected to become more
intense as commercial applications for biotechnology products increase. Some
competitors, primarily large pharmaceutical companies, have greater clinical,
regulatory and marketing resources and experience than Genentech. Many of
these companies have commercial arrangements with other companies in the
biotechnology industry to supplement their own basic research capabilities.
The introduction of new products or the development of new processes by
competitors or new information about existing products may result in price
reductions or product replacements, even for products protected by patents.
However, the Company believes its competitive position is enhanced by its
commitment to research leading to the discovery and development of new
products and manufacturing methods. Additionally, other factors which should
help the Company meet competition include ancillary services provided to
support its products, customer service and dissemination of technical
information to prescribers of its products and the health care community.
Over the longer term, the Company's (and its partners') ability to successfully
market current products, expand their usage and bring new products to the
marketplace will depend on many factors, including the effectiveness and safety
of the products, FDA and foreign regulatory agencies' approvals for new
indications, the degree of patent protection afforded to particular products,
Orphan Drug Act legislation, the possible future enactments of biotechnology
product protection in the United States as well as in Europe and Japan and the
possible enactment in the United States of health care reform legislation which
may include expanded coverage for prescription drugs and cost containment
measures. The Company believes it has strong patent protection or the
potential for strong patent protection for a number of its products that
generate royalty revenue or that it is developing; however, the courts will
determine the ultimate strength of the patent protection of the Company's
products and those on which the Company earns royalties. Loss of Orphan Drug
Act protection for the Company's products that are currently marketed or in
development, resulting from expiration of Orphan Drug status or amendment of
the Orphan Drug Act, could lead to increased competition for those products and
potentially lower future product revenues.
Activase: In 1990, the Company began co-sponsorship of a major comparative
mortality trial in AMI known as GUSTO (Global Utilization of Streptokinase and
Activase for occluded coronary arteries). The GUSTO trial results, as
reported in the "New England Journal of Medicine" in 1993, demonstrated that
the use of an accelerated administration of Activase with intravenous heparin
is a key to saving more lives following a heart attack than the use of
streptokinase. The GUSTO trial showed that among patients receiving treatment
using an accelerated dose of Activase, combined with the blood thinning agent
heparin, administered intravenously, heart attack patient mortality was
reduced by as much as 14% over other thrombolytic regimens studied in the
trial. The positive results from the GUSTO trial have helped increase
Activase's market share in 1994 to more than 70% in the United States for the
treatment of AMI. In June 1994, an FDA advisory committee unanimously agreed
that the accelerated infusion of Activase used in the GUSTO trial has a
clinically significant mortality benefit in the treatment of heart attacks and
recommended that the new dosing regimen be incorporated into the product's
labeling. Factors which may influence future Activase sales include: the
increase in market demand for thrombolytic therapies; the continued impact of
the GUSTO trial results; and physicians' personal experiences in the
administration of thrombolytic therapy.
Genentech is aware of other companies or combinations of companies actively
pursuing the development for the United States market of nonrecombinant or
recombinant t-PA or derivatives of that substance, and additional companies or
combinations of companies pursuing the development of other types of
potentially competitive thrombolytic agents. Genentech is conducting Phase I
clinical trials on a second generation of t-PA which, subject to the ultimate
outcome of the studies, could have a favorable impact on the Company's
competitive position. Although Genentech believes it will have a strong
patent position with respect to t-PA, its patents may not cover products with
similar functions which are not based on t-PA, and competitors have been and
may continue to be successful in developing effective thrombolytic agents
which are not covered by Genentech's patents.
Protropin and Nutropin: Protropin was approved in late 1985 and was
designated an Orphan Drug which provided seven years of market exclusivity for
its use in the treatment of growth hormone inadequacy in children. In 1987, a
product similar to Nutropin, produced by Lilly (and marketed under the
trademark Humatrope, registered trademark, human growth hormone), was approved
for treatment of growth hormone inadequacy in children and was designated an
Orphan Drug. Protropin was protected from some possible additional
competition until March 1994, by virtue of the designation of Lilly's
Humatrope as an Orphan Drug. While several potential competitors are
preparing to independently market a version of human growth hormone similar to
that currently sold by Lilly since Lilly's Orphan Drug exclusivity expired,
the Company is not aware of any third party efforts to market a version of
human growth hormone similar to Protropin.
Based on information currently available, Protropin and Nutropin have
approximately a 66% share of the United States market for treatment of
children with growth hormone inadequacy. Factors that may influence future
Protropin and Nutropin sales include: the number and market entry dates of new
competitive products and their effect on the Company's market share and
pricing; the availability of third party reimbursement for the costs of such
therapies; and the outcome of litigation involving the Company's patents for
growth hormone and related processes, including actions described below.
Pulmozyme: Sales of Pulmozyme for the management of cystic fibrosis in the
United States, Canada and some countries in Europe began in early 1994. As
approvals for marketing the product in other European countries are received,
the Company expects sales to grow. Other factors which may influence future
sales of Pulmozyme for the management of cystic fibrosis include: the number
and kinds of patients benefiting from such therapy; physicians' personal
experiences in the use and administration of the therapy; the availability of
third party reimbursement for the cost of such therapy; the development of
alternative therapies for the treatment and cure of cystic fibrosis; the
development of additional indications for using Pulmozyme; and the cost of
Pulmozyme therapy.
Actimmune: Actimmune received designation as an Orphan Drug by the FDA in
1990 for the treatment of CGD.
Government Regulation
The pharmaceutical industry is subject to stringent regulation with respect to
product safety and efficacy by various federal, state and local authorities.
Of particular significance are the FDA's requirements covering research and
development, testing, manufacturing, quality control, labeling and marketing
of drugs for human use. Regulations similar to the requirements of the FDA
with respect to the approval of new drugs are encountered in most foreign
countries where the Company's principal products are sold. A pharmaceutical
product cannot be marketed in the United States until it has been approved by
the FDA, and then can only be marketed for the indications and claims approved
by the FDA. As a result of these requirements, the length of time, the level
of expenditures and the laboratory and clinical information required for
approval of an NDA (New Drug Application), a PLA (Product License Application)
or an ELA (Establishment License Application) are substantial and can require
a number of years, although recently revised regulations are designed to
reduce somewhat the time for approval of new products.
Although it is difficult to predict the ultimate effect, if any, these matters
or any other pending or future legislation, regulations or government actions
may have on its business, the Company believes that the development of new and
improved products which address critical unmet medical needs through its
research should enable it to compete effectively within this environment.
Research and Development
A major portion of the Company's operating expenses to date have been related
to the research and development of products either on its own behalf or under
contracts. During 1994, 1993 and 1992 the Company's research and development
expenses were $314.3 million, $299.4 million and $278.6 million, respectively.
The Company has sponsored approximately 98%, 99% and 97% of its research and
development for the years 1994, 1993 and 1992, respectively. Prior to 1987,
licensees of the Company's products had provided significant funding of
research and development expenses. However, with the increase in product
sales, and as a result of the Merger, the Company has been able to fund most
of its own research and development.
The Company's research efforts have been the primary source of the Company's
products. The Company intends to maintain its strong commitment to research
as an essential component of its product development effort. In the future,
licensed technology developed by outside parties could become an additional
source of potential products.
Human Resources
As of December 31, 1994 Genentech had 2,738 employees in the United States,
Europe, Canada and Japan.
Environment
Genentech seeks to comply with all applicable statutory and administrative
requirements concerning environmental quality. The Company has made, and will
continue to make, the necessary expenditures for environmental compliance and
protection. Expenditures for compliance with environmental laws have not had
and are not expected to have a material effect on the Company's capital
expenditures, earnings or competitive position.
ITEM 2. PROPERTIES
Genentech's major facilities are located in a research and industrial park in
South San Francisco, California in both leased and owned properties. The
Company currently utilizes approximately 1.6 million square feet of its
facilities for research and development, manufacturing, marketing and
administrative activities. Approximately two-thirds of the square footage is
in owned property, a portion of which is subject to a $1.2 million mortgage,
and the remainder is leased. The Company has made and continues to make
improvements to these properties to accommodate its growth. In addition, the
Company owns approximately 16 acres adjacent to its current facilities that
may be used for future expansion. The Company expects to develop a new
manufacturing facility of approximately 0.4 million square feet in Vacaville,
California over the next three years under a leasing arrangement. The Company
also has leases for certain additional facilities in several locations in the
United States, Europe, Canada and Japan.
Genentech believes its facilities are in good operating condition and that the
real property owned or leased, combined with the new Vacaville site, are
adequate for all present and foreseeable future uses. Genentech believes any
additional facilities could be obtained or constructed with the Company's
capital resources.
ITEM 3. LEGAL PROCEEDINGS
The Company and its directors are defendants in two suits filed in California
in 1990 challenging their actions in connection with the Merger.
In December 1994, the Company and Eli Lilly and Company (Lilly) reached a
settlement regarding all patent infringement and breach of contract actions
then pending between the two parties regarding recombinant human growth
hormone (hGH) and recombinant human insulin. All of these actions had been
previously consolidated in the Federal District Court for the Southern
District of Indiana. Under the terms of the settlement Lilly agreed to pay the
Company up to $145 million ($25 million initially and 16 quarterly payments of
$7.5 million), subject to certain restrictions, and the Company granted Lilly
licenses, options to licenses, or immunities from suit for certain of the
Company's patents. Future payments are required from Lilly on sales of these
products. The Company will continue to pursue patent invalidity and non-
infringement claims against the Regents of the University of California (UC),
which has sued Genentech for infringing a patent owned by UC relating to hGH.
In a related matter, in December 1994, the Company also settled its patent
infringement action against Centocor, Inc. whereby the Company granted
Centocor a royalty bearing license to its Cabilly patent for Centocor's
monoclonal anti-IIb/IIIa antibody. The suit was orginally filed in the Federal
District Court for Northern California.
On September 21, 1993, the United States International Trade Commission (the
"ITC") voted in favor of instituting an investigation based on a recombinant
human growth hormone patent infringement complaint filed by Genentech against
Bio-Technology General Corporation and its affiliate ("BTG") and Novo Nordisk
A/S and certain of its affiliates ("Novo") (BTG and Novo are collectively
referred to as the "Competitors"). The complaint asked the ITC to impose a ban
on importation of hGH products for treatment of growth hormone inadequacy by
the Competitors in the United States. On November 29, 1994, the administrative
law judge of the ITC found, on an incomplete record, that BTG infringed two
Genentech process patents and Novo infringed one process patent covering hGH;
however, the judge recommended that the case be dismissed because Genentech
delayed in providing documents to the Competitors. Genentech did not initially
produce the documents because it believed that they were protected by the
attorney-client privilege. Genentech filed a petition for a review by the full
Commission of the judge's recommendation dismissing the complaint, but on
January 17, 1995 the Commission declined such review and agreed that the case
be dismissed. On March 16, 1995 the Company filed an appeal of the
Commission's decision in the United States Court of Appeals for the Federal
Circuit.
On December 1, 1994 the Company filed suit against the Competitors in the U.S.
District Court in Delaware seeking damages from the Competitors, and asking
for an injunction blocking the Competitors from marketing hGH in the United
States. On November 30, 1994, Novo brought suit against the Company in the
U.S. District Court for the Southern District New York, alleging that the
patents in the ITC action are invalid and not infringed by Novo. On January 6,
1995, BTG brought suit against the Company in the U.S. District Court from the
Southern District of New York seeking to prevent the Company from further
patent infringement action against BTG and alleging unfair competition,
antitrust and malicious prosecution claims.
On December 22, 1993, Tanox Biosystems, Inc. (Tanox) sued the Company, Roche
Holdings, Inc., Roche Holdings Ltd., and Hoffmann-LaRoche Inc. in the State
District Court of Harris County, Texas alleging, among other things, trade
secret misappropriation, breach of contract, breach of the duty of good faith
and fair dealing, and breach of confidential relationship relating to a 1989
confidentiality agreement and a materials transfer agreement between the
Company and Tanox. The suit seeks injuctive relief, unspecified punitive
damages, a royalty free sublicense to certain third party patents and legal
fees. On January 21, 1994, the Company filed suit against Tanox in the
Federal District Court for the Southern District of Texas, for infringing a
Genentech patent that covers antibody technology related to chimeric and
humanized immunoglobulin compositions, expression vectors and methods.
Genentech's suit encompasses all of Tanox's infringing activities, including
development efforts for antibodies to IgE, a protein central to allergic
reactions, and seeks injunctive relief, an accounting for damages, including
interest and costs, trebling of the damages due to the willful nature of
Tanox's infringement and legal fees. Genentech's suit also seeks a declaratory
judgement that it has not breached any agreement with Tanox. In April, 1994,
Tanox's suit and Genentech's suit were consolidated in the Federal District
Court for the Southern District of Texas. On February 1, 1995, Tanox filed
its First Amended Complaint that added additional defendants, additional
causes of action and specified an alleged monetary damage amount. On February
1, 1995, Genentech filed an Amended Complaint and added claims against Ciba-
Geigy, Ltd. (Tanox's exclusive licensee of its technology) for patent
infringement of the Genentech patent described above.
The Company is also a defendant or plaintiff in other patent infringement and
product liability cases. In addition, the FDA is investigating the Company's
promotional practices in connection with Activase, Protropin and Pulmozyme.
Based upon the nature of the claims made and the investigations completed to
date by the Company and its counsel, the Company believes the outcome of all
of the actions described above will not have a material effect on the
financial position, results of operations or cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
GENENTECH, INC.
EXECUTIVE OFFICERS
The executive officers of the Company and their respective ages and positions
with the Company are as follows:
Name Age Position
G. Kirk Raab 59 President and Chief Executive Officer
Richard B. Brewer 43 Senior Vice President
Louis J. Lavigne, Jr. 46 Senior Vice President and Chief Financial Officer
Arthur D. Levinson, Ph.D. 44 Senior Vice President
John P. McLaughlin 43 Senior Vice President and Secretary
Barry M. Sherman, M.D. 53 Senior Vice President and Chief Medical Officer
William D. Young 50 Senior Vice President
Gregory Baird 44 Vice President - Corporate Communications
David W. Beier 46 Vice President - Government Affairs
Robert Garnick, Ph.D. 45 Vice President - Quality
Marty Glick 45 Vice President and Treasurer
Bradford S. Goodwin 40 Vice President and Controller
Dennis J. Henner, Ph.D. 43 Vice President - Research Technology
Paul F. Hohenschuh 52 Vice President - Manufacturing
Edmon R. Jennings 47 Vice President - Sales and Marketing
Stephen G. Juelsgaard 46 Vice President, General Counsel and
Assistant Secretary
Kurt Kopp 46 Vice President and General Manager, Europe
Bryan Lawlis, Ph.D. 43 Vice President - Process Science
M. David MacFarlane, Ph.D. 54 Vice President - Regulatory Affairs
Polly Moore, Ph.D. 47 Vice President - Information Resources
Hugh D. Niall, M.D. 57 Vice President - Research Discovery
James P. Panek 41 Vice President - Engineering and Facilities
Eric J. Patzer, Ph.D. 45 Vice President - Development
Kim Popovits 36 Vice President - Sales
Stephen Raines, Ph.D. 57 Vice President - Intellectual Property and
Assistant Secretary
Larry Setren 43 Vice President - Human Resources
Nicholas J. Simon 40 Vice President - Business Development
<FN>
All officers are elected annually by the Board of Directors. There is no
family relationship among any of the officers or directors.
Business Experience
Mr. Raab was elected Chief Executive Officer in February 1990. He joined the
Company in February 1985 as President, Chief Operating Officer and Director.
Mr. Raab was President, Chief Operating Officer and Director of Abbott
Laboratories, a health care company, from July 1981 to January 1985.
Mr. Brewer was elected Senior Vice President in December 1992. Mr. Brewer has
held a number of other positions in the Marketing Department including Vice
President of Sales and Marketing. He joined the Company in April 1984 as
Product Manager for endocrine products.
Mr. Lavigne was elected Senior Vice President in July 1994. He was elected
Chief Financial Officer in August 1988 and elected Vice President in July
1986. Prior to that, he had been Controller since May 1983 and an officer of
the Company since February 1984. Mr. Lavigne joined the Company in July 1982
as Assistant Controller.
Dr. Levinson was elected Senior Vice President in December 1992. Dr. Levinson
has held a number of other positions, including Vice President of Research,
subsequent to joining the Company in May 1980 as a Senior Scientist.
Mr. McLaughlin has served as Senior Vice President and Secretary since July
1994. He was elected Senior Vice President, General Counsel and Secretary in
1993, and elected Vice President, General Counsel and Secretary in 1989. He
joined the Company as Vice President of Government Affairs in September 1987
from Royer, Shacknai & Mehle, a Washington, D.C. law firm, where he was a
partner. Mr. McLaughlin was Counsel to the House Energy and Commerce
Subcommittee on Health and the Environment and earlier served as counsel to
the House Subcommittee on Consumer Protection and Finance.
Dr. Sherman was elected Senior Vice President and Chief Medical Officer in
February 1995 and had served as Vice President of Medical Affairs since
February 1989. He joined the Company in 1985 as Director of Clinical
Research. Prior to joining the Company, he was Professor of Medicine,
Associate Chairman of the Department of Internal Medicine and Director of the
Clinical Research Center at the University of Iowa.
Mr. Young was elected Senior Vice President in August 1988. He was Vice
President of Manufacturing and Process Science from April 1983 until 1988.
Mr. Young joined the Company in September 1980 as Director of Manufacturing
from Eli Lilly and Company.
Mr. Baird joined the Company in February 1992 as Vice President of Corporate
Communications. Prior to joining Genentech, Mr. Baird was employed by G.D.
Searle & Co. for five years as Vice President of Corporate Communications.
Mr. Beier joined the Company in March 1989 as Vice President of Government
Affairs. Prior to joining Genentech, Mr. Beier spent 10 years as counsel to
the Committee on the Judiciary of the United States House of Representatives
where he was responsible for intellectual property and international trade
issues.
Dr. Garnick was elected Vice President of Quality in April 1994. He was
Senior Director of Quality Control from 1990 to 1994 and Director of Quality
Control from 1988 to 1990. Dr. Garnick joined the Company in August 1984 from
Armour Pharmaceutical.
Mr. Glick was elected Vice President in July 1991. He joined the Company in
June 1987 as Director of Tax and was elected Treasurer in July 1990. Before
joining Genentech, Mr. Glick was employed by Levi Strauss & Co. for seven
years, most recently as Director of Tax Planning.
Mr. Goodwin was promoted to Controller in June 1989 and elected Vice President
in July 1993. Prior to Mr. Goodwin's current position, he was the Director of
Financial Planning and Analysis, the Assistant Controller and the General
Auditor. Before joining Genentech in April 1987, Mr. Goodwin worked for Price
Waterhouse, an international public accounting firm, for 10 years, most
recently as Senior Audit Manager.
Dr. Henner was elected Vice President of Research Technology in July 1994.
From 1990 to 1994 he was Senior Director of Research Technology. Dr. Henner
joined the Company in 1981 as a Scientist in Research. Prior to joining
Genentech, Dr. Henner was at Scripps Clinic and Research Foundation.
Mr. Hohenschuh was elected Vice President of Manufacturing in September 1989
He was Vice President of Biochemical Manufacturing from July 1986 until 1989
and Senior Director of Biochemical Manufacturing from June 1985 to June 1986
Mr. Hohenschuh joined the Company in October 1982 as Director of Biochemical
Manufacturing.
Mr. Jennings was elected to Vice President of Sales and Marketing in January
1994 and had served as Vice President of Sales since December 1990. He joined
the Company in September 1985 as Western Area Sales Manager. Prior to joining
Genentech, Mr. Jennings was Western Region Sales Manager of Bristol-Myers'
Oncology Division. Mr. Jennings held various sales and management positions
during his twelve-year career with Bristol-Myers.
Mr. Juelsgaard was elected Vice President, General Counsel and Assistant
Secretary in July 1994, and was elected Vice President of Corporate Law in
February 1993. He joined the Company in 1985 as Corporate Counsel and
subsequently held the positions of Senior Corporate Counsel and Chief
Corporate Counsel.
Mr. Kopp joined the Company in January 1993 as Vice President and General
Manager, Europe. Mr. Kopp was employed by F. Hoffmann-La Roche, Ltd from 1980
until December 1992, most recently as Regional Director for Latin America.
Dr. Lawlis was elected Vice President of Process Science in July 1994. Dr.
Lawlis joined the Company in February 1981 as a Scientist in Biocatalysis;
most recently he was Senior Director of Process Science. Prior to joining
Genentech, Dr. Lawlis was a National Institutes of Health Post Doctoral Fellow
at Kansas State University.
Dr. MacFarlane joined the Company in August 1989 as Vice President of
Regulatory Affairs. Dr. MacFarlane was employed by Glaxo, Inc. from 1978
until he joined Genentech. At Glaxo, Dr. MacFarlane had served as Vice
President of Regulatory Affairs, Director of Regulatory Affairs, and Director
of Research and Professional Services.
Dr. Moore was elected Vice President of Information Resources in April 1994.
She was Senior Director of Information Resources from July 1992 to 1994 and
Director of Computer Resources from November 1987 to June 1992. Dr. Moore
joined Genentech in August 1982 as a Senior Systems Analyst in Scientific
Computing.
Dr. Niall was elected Vice President of Research Discovery in July 1991. He
joined the Company in 1985 as Director of Protein Chemistry and subsequently
held the positions of Director of Developmental Biology and Senior Director of
Research Discovery.
Mr. Panek was elected Vice President of Engineering and Facilities in July
1993. He joined the Company in 1982 and held a number of positions in the
manufacturing division before becoming Director of Engineering and Facilities
in 1988. Prior to joining Genentech, Mr. Panek was employed by Eli Lilly and
Company for six years.
Dr. Patzer was elected Vice President of Development in February 1993. He
joined the Company in 1981 as a Scientist and subsequently held the positions
of Senior Scientist, Director and Senior Director.
Ms. Popovits was elected Vice President of Sales in October 1994. She was
Director of Field Sales from January 1993 to 1994 and Regional Manager of the
Sales Department from October 1989 to December 1992. Ms. Popovits was at
Dupont Critical Care for six years prior to joining the Company in November
1987 as Division Manager in the Southeast region.
Dr. Raines was elected Vice President of Intellectual Property in March 1989
and Assistant Secretary in April 1989. He joined the Company as Vice
President of Patents in May 1988. Dr. Raines was employed by Warner-Lambert
Company from 1973 to 1988 holding numerous positions in the Legal Division and
ultimately acted as Counsel for the Intellectual Property Department.
Mr. Setren was elected Vice President of Human Resources in April 1989. He
joined the Company in February 1986 as Director of Human Resources. Before
joining Genentech, Mr. Setren was Vice President of Human Resources at the
Getz Corporation.
Mr. Simon was elected Vice President of Business Development in December 1994.
He was Senior Director of Business Development from December 1993 to 1994.
Mr. Simon joined Genentech as a Director in Business Development in December
1989 from Xoma Corporation.
Mr. Jennings is named as a defendant in a criminal proceeding pending in the
U.S. District Court for the District of Minnesota alleging conspiracy, mail
fraud and wire fraud in connection with prescribing Protropin.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The sections labeled "Common Stock and Redeemable Common Stock Information"
and Notes 9 and 11 of the Notes to Consolidated Financial Statements appearing
on pages 64, 54 through 55, and 56 through 58, respectively, of the Company's
1994 Annual Report to Stockholders are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The section labeled "11-Year Financial Summary" appearing on pages 62 and 63
of the Company's 1994 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The section labeled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing on pages 33 through 38 of the
Company's 1994 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes to Consolidated Financial
Statements appearing on pages 40 through 60, the Report of Ernst & Young LLP,
Independent Auditors, appearing on page 61 and the section entitled "Quarterly
Financial Data (unaudited)" appearing on page 61 of the Company's 1994 Annual
Report to Stockholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The sections labeled "Nominees" and "Section 16 Reporting" appearing in
the Company's Proxy Statement in connection with the 1995 Annual Meeting of
Stockholders on pages 3 through 5 and 11 are incorporated herein by reference.
(b) Information concerning the Company's Executive Officers is set forth in
Part I of the Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The sections labeled "Executive Compensation", "Compensation of Directors",
"Compensation of Executive Officers", "Summary of Compensation", "Stock Option
Grants and Exercises", "Employment Agreements", "Loans and Other Compensation"
and "Compensation Committee Interlocks and Insider Participation" appearing in
the Company's Proxy Statement in connection with the 1995 Annual Meeting of
Stockholders on pages 11 through 18 and 20 are incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The sections labeled "Merger with Roche Holdings, Inc.", "Principal
Stockholders of Genentech" and "Security Ownership of Management" appearing in
the Company's Proxy Statement in connection with the 1995 Annual Meeting of
Stockholders on pages 1 through 2 and 10 through 11 are incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section labeled "Certain Relationships and Related Transactions" appearing
in the Company's Proxy Statement in connection with the 1995 Annual Meeting of
Stockholders on pages 21 through 23 is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Index to Financial Statements
The following Financial Statements and supplementary data are included in
the Company's 1994 Annual Report to Stockholders and are incorporated herein
by reference pursuant to Item 8 of this Form 10-K.
Page(s) in
1994 Annual
Report to Stockholders
----------------------
Consolidated Statements of Income for each
of the three years in the period ended
December 31, 1994 40
Consolidated Statements of Cash Flows for each
of the three years in the period ended
December 31, 1994 41
Consolidated Balance Sheets at December 31,
1994 and 1993 42
Consolidated Statements of Stockholders' Equity
for each of the three years in the period ended
December 31, 1994 43
Notes to Consolidated Financial Statements 44-60
Report of Ernst & Young LLP, Independent Auditors 61
Quarterly Financial Data (unaudited) 61
2. Financial Statement Schedule
The following schedule is filed as part of this Form 10-K:
Schedule II- Valuation and Qualifying Accounts for each of the three years in
the period ended December 31, 1994.
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation.(2)
3.2 By-laws.(2)
3.3 Amended Certificate of Incorporation.(8)
3.4 Restated By-Laws.(9)
4.1 Indenture, dated March 27, 1988 ("Indenture") for U.S. $150,000,000
5% Convertible Subordinated Debentures due 2002.(3)
4.2 First Supplemental to Indenture, dated August 17, 1990.(9)
4.3 Rights Agreement, dated April 21, 1988, between the Company and The
First National Bank of Boston, as Rights Agent.(4)
10.1* 1984 Incentive Stock Option Plan.(2)
10.2* Restated 1984 Non-Qualified Stock Option Plan.(11)
10.3* Agreements dated February 12, 1985 and May 14, 1985 between the
Company and G. Kirk Raab.(1)
10.4 Patent License Agreement with Columbia University dated October 12,
1988.(3)
10.5 Amended and Restated Contract for the Sale and Distribution of
Protropin dated as of March 1, 1991.(10)
10.6* Agreement dated April 15, 1988 between the Company and G. Kirk
Raab.(5)
10.7* Restated Relocation Loan Program.(10)
10.8* Employment Agreement, dated October 25, 1989, between the Company
and G. Kirk Raab.(7)
10.9* Employment Agreement, dated October 25, 1989, between the Company
and William D. Young.(7)
10.10* Employment Agreement, dated October 25, 1989, between the Company
and Louis J. Lavigne, Jr.(7)
10.11* Employment Agreement, dated October 25, 1989, between the Company
and John P. McLaughlin.(7)
10.12 Agreement and Plan of Merger, dated as of February 2, 1990, among
the Company, Roche Holdings, Inc. and HLR (U.S.), Inc. with
exhibits.(6)
10.13* Restated 401(k) Plan.(11)
10.14* Agreements dated June 27, 1989 between the Company and G. Kirk
Raab.(7)
10.15* 1991 Employee Stock Plan, as amended.(12)
10.16* Amended 1990 Stock Option/Stock Incentive Plan.(11)
10.17* Amended Employment Agreement, dated July 31, 1990, between the
Company and G. Kirk Raab.(9)
10.18* Amended Employment Agreement, dated July 31, 1990, between the
Company and William D. Young.(9)
10.19* Amended Employment Agreement, dated July 31, 1990, between the
Company and Louis J. Lavigne, Jr.(9)
10.20* Amended Employment Agreement, dated July 31, 1990, between the
Company and John P. McLaughlin.(9)
10.21 Governance Agreement, dated September 7, 1990, between the Company
and Roche Holdings, Inc.(9)
10.22 Heads of Agreement, dated as of February 11, 1992, between the
Company and F. Hoffmann-LaRoche Ltd.(10)
10.23 Agreement dated June 6, 1991 between the Company and Grandview
Drive Joint Venture.(10)
10.24* Supplemental Plan.(10)
10.25* Agreements dated October 17, 1990 between the Company and G. Kirk
Raab.(10)
10.26* Agreement dated March 17, 1992 between the Company and Robert A.
Swanson.(10)
10.27* 1994 Stock Option Plan. (11)
13.1 1994 Annual Report to Stockholders.(12)
23.1 Consent of Ernst & Young LLP, Independent Auditors.(12)
27.1 Financial Data Schedule. (12)
28.1 Description of the Company's capital stock.(2)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended December 31,
1994.
--------------------
(1) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1985 and incorporated herein by reference.
(2) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1986 and incorporated herein by reference.
(3) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1988 and incorporated herein by reference.
(4) Filed as an exhibit to Form 8-K dated May 3, 1988 and incorporated
herein by reference.
(5) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1988 and incorporated herein by reference.
(6) Filed as an exhibit to Form 8-K dated February 15, 1990 and incorporated
herein by reference.
(7) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1989 and incorporated herein by reference.
(8) Filed as an exhibit to Form S-4 dated May 2, 1990 and incorporated
herein by reference.
(9) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference.
(10) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference.
(11) Filed as an exhibit to Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by reference.
(12) Filed with this document.
* As required by Item 14(a)(3) of Form 10-K, the Company identifies this
Exhibit as a management contract or compensatory plan or arrangement of the
Company. For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into registrant's Registration Statements
on Form S-8 Nos. 2-95744, 33-9292, 33-16671, 33-39631 and 33-60816:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and shall be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GENENTECH, INC.
Registrant
Date: March 30, 1995
By: /S/BRADFORD S. GOODWIN
----------------------------------
Bradford S. Goodwin
Vice President and Controller
(Principal Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Louis J. Lavigne, Jr., Senior Vice President
and Chief Financial Officer, and Bradford S. Goodwin, Vice President and
Controller, his attorney-in-fact, with the full power of substitution, for him
in any and all capacities, to sign any amendments to this report, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that said attorney-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
Chief Executive Officer:
/S/G. KIRK RAAB President, Chief Executive March 30, 1995
--------------------------- Officer and Director
G. Kirk Raab
Principal Financial Officer:
/S/LOUIS J. LAVIGNE, JR. Senior Vice President and March 30, 1995
--------------------------- Chief Financial Officer
Louis J. Lavigne, Jr.
Director:
/S/HERBERT W. BOYER Director March 30, 1995
---------------------------
Herbert W. Boyer
/S/JURGEN DREWS Director March 30, 1995
---------------------------
Jurgen Drews
/S/ARMIN M. KESSLER Director March 30, 1995
---------------------------
Armin M. Kessler
/S/LINDA F. LEVINSON Director March 30, 1995
---------------------------
Linda F. Levinson
/S/J. RICHARD MUNRO Director March 30, 1995
---------------------------
J. Richard Munro
/S/DONALD L. MURFIN Director March 30, 1995
---------------------------
Donald L. Murfin
/S/JOHN T. POTTS, JR. Director March 30, 1995
---------------------------
John T. Potts, Jr.
/S/C. THOMAS SMITH, JR. Director March 30, 1995
---------------------------
C. Thomas Smith, Jr.
/S/ROBERT A. SWANSON Director March 30, 1995
---------------------------
Robert A. Swanson
/S/DAVID S. TAPPAN, JR. Director March 30, 1995
---------------------------
David S. Tappan, Jr.
SCHEDULE II
GENENTECH, INC.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1994, 1993 and 1992
(in thousands)
Additions
Balance at Charged to Balance at
Beginning of Costs and End of
Period Expenses Deductions(1) Period
---------- ---------- ---------- ----------
Allowance for doubtful accounts
and returns:
Year Ended December 31, 1994: $ 3,572 $ 5,583 $ (4,733) $ 4,422
========== ========== ========== ==========
Year Ended December 31, 1993: $ 2,220 $ 4,003 $ (2,651) $ 3,572
========== ========== ========== ==========
Year Ended December 31, 1992: $ 3,780 $ 2,460 $ (4,020) $ 2,220
========== ========== ========== ==========
Inventory reserves:
Year Ended December 31, 1994: $ 2,606 $ 11,940 $ (1,538) $ 13,008
========== ========== ========== ==========
Year Ended December 31, 1993: $ 3,094 $ 1,194 $ (1,682) $ 2,606
========== ========== ========== ==========
Year Ended December 31, 1992: $ 3,395 $ 289 $ (590) $ 3,094
========== ========== ========== ==========
Reserve for non-marketable
equity securities:
Year Ended December 31, 1994: $ 3,875 $ 748 $ - $ 4,623
========== ========== ========== ==========
Year Ended December 31, 1993: $ 3,275 $ 600 $ - $ 3,875
========== ========== ========== ==========
Year Ended December 31, 1992: $ 1,000 $ 2,275 $ - $ 3,275
========== ========== ========== ==========
<FN>
(1) Represents amounts written off or returned against the allowance or reserves.
INDEX OF EXHIBITS FILED WITH FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
Exhibit No. Description
----------- -----------
10.15 1991 Employee Stock Plan, as amended.
13.1 1994 Annual Report to Stockholders
23.1 Consent of Ernst & Young LLP, Independent Auditors
27.1 Financial Data Schedule