Watch List Presentations

1. Watch List Presentations April 17, 2008 David Light, Phil Rosen, Tim Tyson

3. Company Overview • Leading Biotechnology firm • Discover, develop, and manufacture medicines for patients with unmet medical needs • 3 Main Areas of Focus • Oncology • Immunology • Tissue Growth and Repair

4. 2007 Product Sales Herceptin 15% Rituxan 27% Avastin 27% • 3 Blockbuster Drugs • 38% Average Growth in Product Sales past 5 years http://www.gene.com/gene/ir/financials/annual-reports/2007/financials/marketedproducts.html, Accessed 15 Apr 08

5. Q1 2008 Revenue 2008 Q1 % Change 2007 Q1

6. Avastin • Approved to treat Lung, Colon, and Breast Cancer • Blocks blood vessels from forming in tumors • 31% sales growth from ’06 to ‘07 http://www.gene.com/gene/ir/financials/annual-reports/2007/financials/marketedproducts.html, Accessed 15 Apr 08

7. Rituxan • Approved to treat non-Hodgkin’s Lymphoma, Leukemia, and some autoimmune diseases • Depletes B cells in diseases characterized by having too many B cells or dysfunctional B cells • 10% sales growth from ‘06 to ‘07 http://www.gene.com/gene/ir/financials/annual-reports/2007/financials/marketedproducts.html, Accessed 15 Apr 08

8. Herceptin • Approved to treat various forms of breast cancer • Significant sales growth when new uses are discovered, but otherwise steady growth http://www.gene.com/gene/ir/financials/annual-reports/2007/financials/marketedproducts.html, Accessed 15 Apr 08

9. Pipeline • Many extended uses of Avastin, Herceptin, and Rituxan • Majority already undergoing Phase III clinical trials

10. Management • CEO/Chairman: Arthur Levinson, PH.D. • Started in the company as a senior scientist • President Product Development: Susan Desmond-Hellmann, M.D. • Joined the company as a clinical scientist • Executive VP/CFO: David Ebersman • Started as a business development analyst with the company • Executive VP of Research: Richard Scheller, PH.D. • Prior to joining DNA he was a professor of Molecular and Cellular Physiology and of Biological Sciences at Stanford

11. Management’s 2010 Goals • Bring at least 20 new molecules into clinical development • Bring at least 15 major new products or indications onto the market • Achieve a compund annual non-GAAP earnings per share growth rate of 25% • Achieve cumulative free cash flow of $12 billion • Become the number one U.S. oncology company in sales

12. Roche • Majority owner of Genentech • Holding company that helps market Genentech’s products internationally

13. Recent News and Developments • On February 22, 2008, the FDA granted accelerated approval for Avastin in combination with paclitaxel chemotherapy for the first-line treatment of advanced HER2-negative breast cancer.

14. Valuation

15. Valuation • Current Price: $74.18 • DCF Valuation: $114.83 • Intrinsic Value: 103.35 – 126.31 • WACC: 8.25% • Beta: .75, L/T Growth: 4%

16. Valuation

17. Recommendation • Add Genentech to the RCMP Watch List • Increasing uses of big 3 drugs • Strong Drug Pipeline (Many Phase III Trials) • Strong earnings growth • Strong balance sheet (minimal debt, surplus cash) • Not greatly threatened by generic competition • Warrants further review in Fall 2008