Kathee Littrell - Senior Director, Investor Relations Ian T. Clark - Executive Vice President, Commercial Operations Susan D. Desmond-Hellmann - President, Product Development David A. Ebersman - Chief Financial Officer, Executive Vice President

Christopher Raymond - Robert W. Baird Joel Sendek - Lazard Capital Markets Steven Harr - Morgan Stanley Katherine Kim - Banc of America Securities Eric Ende - Merrill Lynch Mike King - Rodman & Renshaw Maged Shenouda - UBS Jason Kantor - RBC Capital Markets Shiv Kapoor - Ferris, Baker Watts May-Kin Ho - Goldman Sachs Mark Schoenebaum - Bear Stearns Eric Schmidt - Cowen & Company Geoffrey Porges - Sanford C. Bernstein William Tanner - Leerink Swann Jim Birchenough - Lehman Brothers

Good day, ladies and gentlemen. My name is Gerald and I will be your conference operator. At this time, I would like to welcome everyone to the Genentech Q1 2008 earnings conference call. (Operator Instructions) It is now my pleasure to introduce your host, Ms. Kathee Littrell, Vice President of Investor Relations. Ms. Littrell, you may begin.

Thank you, Gerald. Good afternoon, everyone and thank you for joining our Q1 2008 earnings call. We have posted an earnings call slide set on our website at www.gene.com. This call is being electronically recorded and it is copyrighted by Genentech. No reproductions, retransmissions, or copies of this conference call can be made without the written permission of Genentech. We’ll be making forward-looking statements and actual results may vary materially from the statements made. Please see the risk factors section of our Form 10-K that’s for the period ending December 31, 2007 that’s on file with the SEC for a discussion of the risk factors that could cause material variations from the forward-looking statements made during this call. We’ll be discussing financial information that includes non-GAAP financial measures in our call today. Unless otherwise noted, the financial figures in David Ebersman’s comments are non-GAAP numbers which exclude the effects of recurring charges related to the 1999 Roche redemption, litigation related and special -- similar special items, employee stock compensation expense, and accounting for our acquisition of Tanox. Please refer to our website at www.gene.com under the investor tab; click on the financials for the most directly comparable GAAP financial measures with a reconciliation to the non-GAAP financial measures discussed today. Today, I am joined by Ian Clark, our Executive Vice President of Commercial Operations; Sue Hellmann, our President of Product Development; and David Ebersman, our Executive Vice President and Chief Financial Officer. Now I’ll turn the call over to Ian. Ian T. Clark: Thank you, Kathee and good afternoon to everybody. U.S. sales in Q1 2008 were $2.20 billion, up 8% from Q1 last year. Moving to the products and starting with oncology and as usual, Avastin first; Avastin U.S. sales were $600 million in Q108, an increase of 13% over Q1 of the prior year. The year-over-year growth resulted from increased sales in metastatic non-small cell lung cancer and metastatic breast cancer. Given the approval of Avastin for breast cancer, we deferred approximately $1 million in Avastin product sales revenue this quarter in conjunction with the Avastin patient assistance program. This reverses the pattern of recent quarters where we derived benefit by recognizing previously deferred revenue. On February 22nd, the FDA granted Avastin accelerated approval for the use in combination with paclitaxel in HER2-negative metastatic breast cancer patients who have not previously received chemotherapy. Our sales force launched promotional efforts on the first business day following approval. Our Q1 market research was conducted prior to February 22nd and so does not reflect the impact of these commercial efforts. Based on this mid-quarter market research, overall penetration of Avastin in the first line metastatic HER2-negative chemotherapy treated breast cancer patients was in line with the adoption of 25% reported in Q4 of last year. The majority of Avastin use in breast cancer is at the 10 mgs/kg two weekly approved dose. Based on initial feedback from the field, the launch efforts appear to be going well. We see considerable opportunity for Avastin in breast cancer -- the keys to success will be clarifying Avastin’s role in the fragmented first line setting and addressing physicians’ questions regarding both duration and dose. Also with the approval of Avastin for breast cancer, additional patients will become eligible for the Avastin patient assistance program and as such, we anticipate increased inquiries and enrolment into the program. Turning now to first line metastatic lung cancer, as stated previously approximately 50% to 60% of first line patients are eligible for Avastin. We estimate the penetration into this Avastin eligible population was stable at approximately 60%. Data from Q1 confirmed that a percentage of lung cancer patients receiving the higher 15 mgs/kg two weekly, three weekly dose of Avastin has stabilized. It is approximately 70%. As noted previously, we still await presentations of the data from the AVAIL and the AVADO studies which we anticipate later this year and that may have an impact on physician dosing behavior in both breast and lung cancer indications. Penetration in first and second line remains in line with our prior quarters at approximately 70% and 40% respectively. Moving on to Herceptin, U.S. sales of Herceptin were $339 million in Q1, a 9% increase over the same quarter last year. The overall penetration in HER2-positive adjuvant breast cancer was approximately 80% in Q108, a slight increase over the same quarter last year. Despite competition, Herceptin’s penetration in the first line metastatic setting also remains stable at approximately 70%. The pattern of use continues to be limited primarily to later line to metastatic disease. Next is Tarceva; U.S. net sales of Tarceva were $111 million in Q1, a 9% increase compared to the same quarter last year. Our tracking data suggests that second line lung cancer penetration and duration have increased of Tarceva compared to Q107. In first line pancreatic cancer, Tarceva penetration was also increased compared to Q1 of last year. Now on to Rituxan, total U.S. sales reached $605 million in the quarter, a 13% increase over the same quarter last year. Recall though that in Q107, sales were a little soft due in part to the impact of Q4 inventory, which was at the upper end of the target inventory range. In hematology, sales growth resulted from increased use of Rituxan following first line therapy in indolent non-Hodgkin's lymphoma. Growth also resulted from increased adoption of Rituxan following first line therapy in aggressive NHL and from adoption in first line and post-first line CLL, all unapproved uses. Rituxan’s overall adoption in other areas of NHL and CLL remain stable. Moving to our immunology portfolio and continuing with Rituxan, this time with NRA. Q1 performance for Rituxan NRA remains on track as the moving annual average share in the anti-TNF IR patient segment grew to approximately 13%, up from the 7% we saw in Q1 of ’07. With January’s FDA approval of these [inaudible] of joint damage, we are now able to promote Rituxan’s unique Anti-TNF IR x-ray data. Initial physician response to our efforts has been encouraging and we expect this will help grow share in the Anti-TNF IR segment, especially in patients who have had only one Anti-TNF. On to Xolair, U.S. sales of Xolair were $117 million in the quarter, a 5% increase over the same quarter last year. We believe that the flattening of sales growth over the last three quarters is due to the impact of the FDA black-box warning from June 2007, followed by recommendations on patient monitoring made by the allergist specialty society’s joint task force on Xolair in September 2007. Commercial efforts remain focused on promoting Xolair’s position in the most recent NHLBI asthma management guidelines. Completing immunology, U.S. sales of Raptiva were $26 million in the quarter, an 8% increase over the prior year. Now on to our tissue growth and repair products and starting with Lucentis; at $198 million, Q1 sales were down 6% over the same quarter of 2007. The latest market research indicates that new patient share is now in the low 40s, compared with approximately 50% in Q407. We believe the main factors affecting the decline in new patient share were the continued unapproved use of Avastin and the reimbursement concerns from retinal specialists. Lucentis did receive a permanent J code classification from CMS in January ’08, which we believe will help address some of these reimbursement concerns. Commercial efforts will be focused on addressing the new patient share decline; however, this remains a tough market. Finally, on to our other tissue growth and repair products, U.S. sales of Nutropin were $84 million in the quarter, up 8%. For our Thrombolytics products, U.S. sales were 67 in the quarter, a decrease of 1% and -- I said Nutropin was up. It was down 8%. And finally Pulmozyme U.S. sales were $57 million in the quarter, a 10% increase over the same quarter last year. In summary, we had a solid quarter and look forward to the growth prospects ahead. Now I’ll turn the call over to Sue. Susan D. Desmond-Hellmann: Thanks, Ian. Our first quarter accomplishments in product development were extensive, and they included three label expansions for new indications: the accelerated approval of Avastin as treatment for first line metastatic breast cancer; expansion of the Rituxan label to include a slowing of joint damage claims for rheumatoid arthritis patients with an inadequate response to TNF antagonist therapy; and approval of the Herceptin HERA one-year sBLA that expands the edge of an indication to include no negative patients and a three-week dosing schedule. Also positive top line data from three Phase III studies conducted with collaborators. Xolair and pediatric asthma study, AVADO trial that evaluated Avastin as treatment for metastatic breast cancer, and the SERENE trial, evaluating Rituxan in biologic naïve RA patients. Also, achievement of first patient in to several Phase III studies, including Avastin in high risk carcinoid cancer, ECOG 1105 study investigating a Herceptin containing regimen plus or minus Avastin in HER2-positive metastatic breast cancer, the CLEOPATRA study investigating the combination of Herceptin plus Pertuzumab in first line HER2-positive metastatic breast cancer and the second generation Anti-CD20 as treatment of lupus nephritis. In addition, we initiated Phase I or II studies with Apomab, Anti-CD40, OX40 Ligand and Anti-oxidized LDL. Now I’ll take a few minutes to discuss some of the notable activities in the development organization. We continue our effort with the FDA to gain full approval of Avastin in first line metastatic breast cancer. By mid-2009, we plan to submit a supplemental BLA based on data from AVADO and RIBBON-1. A 10-month review period will follow this submission. We expect the FDA will use the additional data to further define the degree of clinical benefit achieved with this treatment and potentially to amend the label as needed. RIBBON-1 data is expected in the second half of this year. The primary objective is to determine the benefit of adding Avastin to standard chemotherapy as measured by progression-free survival in a parallel manner, first testing the addition of Avastin to taxane or anthracycline therapy compared to the chemotherapies alone, or the addition of Avastin to [delota] therapy compared to [delota] alone. The AVADO study has been submitted as a late breaker presentation at ASCO. As you know, the trial met its primary endpoint of prolonging progression free survival in patients with first line metastatic breast cancer when Avastin is used in combination with docetaxel. In the second half of this year, we plan to submit a supplemental BLA to the FDA seeking an accelerated approval for Avastin in relapsed glioblastoma multiforme. The submission will be based on evidence of clinically meaningful and durable tumor responses and the consistent secondary outcomes we observed in the Phase II study. At the time of submission, we expect to have a plan in place to conduct a Phase III global confirmatory trial in first line GBM. Our early development oncology program continues to grow. We initiated enrolment in the Phase II Apomab and Rituxan combination study in relapsed indolent non-Hodgkin’s lymphoma. This study adds to our growing Phase II program investigating proapoptotic molecules. That program includes the Phase II Apo2Ligand/TRAIL study in combination with Rituxan, also in the indolent relapsed NHL setting. The data from our systemic hedgehog inhibitor Phase I study has been accepted as a late breaking presentation at AACR. We’ve been encouraged by the data from this program and have now expanded the program to include an additional tumor type. The Phase II study in colorectal cancer is expected to begin enrolling patients soon and we are preparing to initiate two more Phase II studies later this year, on in advanced basal cell carcinoma and a second in an advanced epithelial tumor. Now turning to immunology and tissue growth and repair, starting with Xolair. The Novartis Phase III study evaluating Xolair in patients six to 11 years of age with moderate to severe persistent inadequately controlled allergic asthma met its primary endpoint, demonstrating a statistically significant reduction in exacerbations in Xolair treated patients compared to placebo treated patients with no new safety signals reported. We are pleased that Xolair provided benefit to these patients who despite receiving standard of care treatment continue to have an adequately controlled allergic asthma. We will work with our collaborator Novartis to evaluate the complete study results, including feedback from FDA to determine appropriate next steps. We plan to present the data at the European respiratory society in October of this year. This is a very busy time for the Rituxan immunology program. The team is preparing to submit an sBLA to the FDA for the use of Rituxan in rheumatoid arthritis patients who have had an inadequate response to disease modifying antirheumatic therapies, or DMARD, such as methotrexate, in the second half of 2008. This submission will include the data from the Phase III SERENE trial. In 2009, we anticipate results from the IMAGE study evaluating whether Rituxan has an effect on the progression of structural joint damage in RA patients through our methotrexate naïve. The outcome of this study is of particular interest since successful treatment of early RA patients has been shown to have a better long-term benefit. In Q2, we also look forward to the results from the Systemic Lupus Erythematosus, or SLE, and PPMS, or Primary Progressive MS, studies. Both of these studies have a high clinical efficacy hurdle that must be crossed to meet the primary endpoint. These trials should provide important information regarding first the role of B-cells in these diseases, given that their path of physiology is poorly understood. Secondly, the efficacy and safety of Rituxan in these important new indications, and finally exploratory data regarding the heterogeneity and subgroups within each of these diseases. The data may also be useful in understanding the long-term effects of anti-CD20 therapy and provide clinically relevant information about the effects of B-cell depletion in autoimmune disease. We don’t know the results of these studies yet but we expect to know the results of the PPMS study within the week and the SLE data within the next few weeks. Our second generation Anti-CD20 program is ongoing and will most likely benefit from insights provided by the data emerging over the course of this year. The Phase III Lupus Nephritis study called BELONG began enrolling patients in Q1. Now turning to our Lucentis program, which is moving along well. Twelve-month data from the initial cohort of SAILOR was presented at the Angiogenesis meeting in February. In this study, patients were randomized to receive either 0.3 or 0.5 milligrams of Lucentis over a 12-month period. Retreatment was based on a drop in visual acuity and/or OCT results. The average number of treatments over the 12-month period was approximately 4.6 doses, including the three initial loading doses. Visual acuity increased over the first three injections and then decreased over the remaining 12 months when the time between doses increased. On average, 12-month visual acuity was somewhat better than at baseline, although these result do leave open the question of whether more frequent dosing is associated with better visual acuity as we observed in the MARINA and ANCHOR trials. The safety results were encouraging, in that at 12 months there was not a statistically significant imbalance of strokes or other adverse events between the two dose arms. The RVO and DME studies are moving along well with the support of the clinical community. Enrolment in both of these programs is on track. We’ll be making a series of go/no-go decisions in the course of 2008 for our early development oncology and immunology program. We plan to make a Phase III go/no-go decision for our Trastuzumab DM1 molecule, which is under investigation as treatment for HER2-positive metastatic breast cancer, and a Phase II go/no-go decision for MetMAb as cancer therapy, anti-IL13 in asthma, and Anti-Interferon Alpha for systemic lupus. Now I’d like to address for a moment a factor that must be taken into consideration when addressing the potential of our pipeline -- the challenging regulatory environment. FDA has been understaffed for some time and is now required to implement the new legislative requirements of the FDA Amendments Act. This work is on top of other important innovative regulatory initiatives that are already under way, such as critical path. Through the years, Genentech has focused on two guiding principals when we interact and negotiate with regulators. First, do what’s right for patients and second, follow the [signs]. As we navigate through today’s regulatory environment, we will continue to use these principals to maximize our ability to supply new medicines for patients with unmet needs. We currently have a clear agreement with the FDA regarding the strategies for our three 2008 sBLA submissions -- Avastin in first line renal cell cancer, Avastin for relapsed glioblastoma multiforme, and Rituxan for RA patients who inadequately responded to DMARD. Finally, I’ll wrap up by highlighting some of the upcoming data we anticipate and AACR and ASCO this year. At AACR, Genentech data will be presented on Apomab, the IAP antagonist, MetMAb, Pertuzumab, Trastuzumab DM1, and our systemic hedgehog antagonist molecule. And at ASCO, we are looking forward to many presentations on Genentech products, including data from the Phase III Avastin metastatic breast cancer AVADO data that was submitted as a late breaker presentation, safety results from the Avastin adjuvant colon NSABP C-08 study, the Avastin Phase II glioblastoma study, the Avastin metastatic breast cancer E2100 independent review facility progression free survival data, Phase II data investigating Pertuzumab plus Herceptin in metastatic breast cancer, Apo2Ligand/TRAIL in non-small cell lung cancer and lymphoma, and Trastuzumab DM1 as treatment for advanced HER2-positive breast cancer. If you want a more thorough review of all the upcoming events in 2008, you can take a look at the webcast slide. Now I’ll turn the call over to David. David A. Ebersman: Thank you, Sue and good afternoon, everyone. I’ll start now with the remaining revenue components of the income statement. Sales to collaborators were $174 million this quarter, a 40% decrease over Q1 2007 as the quarterly timing of sales of Herceptin and Avastin to Roche looks different in 2008 relative to 2007. For the full year 2008, we continue to forecast sales to collaborators to increase by approximately 10% to 15%, with the usual quarter to quarter fluctuations due to the timing of the production and order plan. Royalty revenues were $612 million this quarter, a 46% increase over Q1 2007. The increase was primarily due to growth in ex-U.S. sales of our products by Roche and Novartis, but the increase was also influenced by foreign exchange related benefits of the weak dollar and by some one-time items that benefited the Q1 reported number. As we’ve discussed, royalties are difficult to forecast because of the number of products involved, ongoing licensing and intellectual property issues, and the volatility of foreign exchange rates. For 2008, we now forecast royalties to grow by approximately 15% to 25% relative to 2007. Contract revenues were $68 million this quarter, a 28% decrease over Q1 2007. Contract revenue in Q1 last year included a non-recurring milestone payment for European approval of Lucentis. We continue to forecast contract revenues to grow by approximately 5% in 2008 relative to 2007, though this forecast may continue to evolve based on changing development plans, as well as other items. Total operating revenues were approximately $3.1 billion this quarter, an 8% increase over Q1 2007. Turning now to the expense line items, non-GAAP cost of sales was $367 million, or 15% of net product sales this quarter. Our cost of sales percentage in Q1 2008 was similar to Q1 2007, as the positive effect of a favorable product mix in Q108 was offset by items, including an approximately $18 million charge from the voluntary severance program discussed last month at our investor meeting. For 2008, we continue to forecast cost of sales to be approximately 16%, barring any unexpected manufacturing or inventory issues. Non-GAAP R&D expenses were $575 million this quarter, essentially flat compared to Q1 2007. Higher R&D spend on our pipeline was offset by a decrease of approximately $110 million in in-licensing expenses in Q108 relative to Q107. You’ll remember that Q107 was a very busy quarter for us for in-licensing. R&D was 19% of operating revenues this quarter compared to 20% in Q1 2007, and for 2008 we continue to expect R&D expense to be approximately 20% of revenues. Non-GAAP MG&A expenses were $471 million this quarter, a 6% increase over Q1 2007. MG&A as a percentage of operating revenues was 15% this quarter compared to 16% in Q1 2007 and for the full year 2008 we continue to forecast MG&A as a percent of revenues to be approximately 16%. Collaboration profit sharing expenses were $279 million this quarter, an increase of 11% over Q1 2007. Non-GAAP pretax operating margin as a percent of total revenues was 45% this quarter, an increase from 42% in Q1 2007. For 2008, we continue to forecast an operating margin of about 41% to 42%. Other income net was $56 million this quarter, flat compared to Q1 2007, with higher cash balances offset by lower yield. In 2008, we now forecast other income net to decrease by more than 20% relative to 2007. This is a significant reduction from our prior forecasts due to continuing lowering of interest rates and our decision to be even more conservative with our cash portfolio due to the volatility of the credit markets. Thus far in 2008, we have not had any major write-downs on our investment portfolio and we are not forecasting to have any through the year, but we believe a conservative posture is appropriate for us at this time. On taxes, our non-GAAP tax rate was 37% this quarter, flat compared to Q1 2007, and we continue to forecast our tax rate for the full year 2008 to be about 36% to 37%, assuming that the R&D tax credit is extended later this year. Non-GAAP net income this quarter was $895 million, or $0.84 per share, a 13% increase in net income and a 14% increase in EPS over Q1 last year. Employee stock-based compensation expense this quarter was approximately $110 million on a pretax basis, or $72 million after taxes, which is approximately $0.07 per share. Now turning to some cash metrics, cash from operations in the quarter was approximately $1 billion and cash used for capital expenditures was approximately $200 million, so our free cash flow for Q1 was approximately $800 million, up from about $600 million in Q1 2007. For 2008, we continue to forecast capital expenditures to stay relatively flat compared to 2007 at approximately $900 million. In Q108, we did not spend additional cash for share repurchases. However, we did receive 4.2 million shares from a $300 million prepaid share repurchase arrangement we entered into and funded in Q4 2007. These shares were purchased at a price of about $72 per share and enabled us to maintain Roche’s ownership about a half percentage point above their contractual minimum percentage. Finally, our unrestricted cash and investments portfolio totaled approximately $7.1 billion as of March 31, 2008, compared to $4.9 billion as of March 31, 2007. Let me close by noting that we are pleased with our Q1 results and believe that they position us well towards another year of solid growth in 2008. Clearly many uncertainties remain that make forecasting 2008 results difficult but our current financial forecast for full year 2008 non-GAAP EPS continues to be in the range of $3.35 to $3.45 per share. Q2 could be an important quarter for us in terms of new clinical data from the late stage pipeline that will impact how we think about 2009 and 2010, so we will try to maintain reasonable flexibility in the 2008 plan as we process information from high risk but potentially high return trials, such as Rituxan for Lupus and for PPMS. As always, we will continue to focus our attention on creating and delivering a pipeline of novel molecules that have the potential to make a big difference in the lives of the patients we serve. Now I’ll turn the call back over to Kathee.

Thank you, David, and we’re now ready for questions. I would like to ask the audience that while as per our usual practice, please limit your questions to one per person so that as many of you as possible can get your questions answered. And Operator, will you now please queue up the questions?

(Operator Instructions) Your first question comes from Christopher Raymond of Robert Baird. Christopher Raymond - Robert W. Baird: Thanks for taking the question. Maybe just a little, if you can walk through, Ian, remind us the process under accelerate review that allows you to have the full marketing sort of complement that you have. I know there is a timeline where DDMAC will allow you to have marketing literature but can you describe when that rolls out and also what sort of materials, tools, you know, maybe talking points the reps have right now in terms of explaining that there is a breast label for Avastin and the extent of it and et cetera. Thanks. Ian T. Clark: Chris, it’s a good question. It is, albeit appropriate and legal you are, somewhat stuck with one hand tied behind your back. Essentially all the reps have to start off with is the label, [inaudible] the label. We don’t expect them to have the full complement of marketing material until around late May, early June. So it is a little bit of a difficult period from a promotional point of view. Christopher Raymond - Robert W. Baird: And so what is -- so right now all it is is the label, you just bring in the label and explain it basically? Ian T. Clark: Yes. Christopher Raymond - Robert W. Baird: Great. Thanks.

Your next question comes from Joel Sendek of Lazard Capital Markets. Joel Sendek - Lazard Capital Markets: Thanks. I have a question on Herceptin DM1 and what data we might see at ASCO. In slide -- on slide 36, it says the Phase I study. Will we see any of the Phase II, of the hundred patients that are in Phase II right now? Susan D. Desmond-Hellmann: We expect currently that at ASCO it will just be the Phase I study, although as you know from our prior discussions of the Phase I study, we are reporting on safety and activity given the patient population but it will be limited to Phase I for ASCO. Joel Sendek - Lazard Capital Markets: Okay. Thank you.

Your next question comes from Steven Harr of Morgan Stanley. Steven Harr - Morgan Stanley: Ian, I was hoping you could just spend a couple of minutes or a couple of seconds here describing what is going on in the Avastin marketplace. We are now three straight quarters without any growth and you have several different levers that could have been leading to growth and more penetration and longer duration. You have off label use as well as the metastatic breast cancer approval coming relatively late in the quarter but still coming. What’s the dynamic going on in that marketplace and when do you expect to see some reacceleration of this drug? Ian T. Clark: Let me try and take you through what I think is going on or what the dynamics are. I think there are two broad components of growth, potential upside in lung cancer and clearly breast cancer. Lung cancer, we are seeing gradual progression. It’s clearly not exponential take-off. We do have some challenges around people’s perception of eligibility. There seems to be some confusion in the market around whether or not all squamous cell tumors are centralized tumors. Squamous cell is a [contragugation]; centralized lesions are not, and we are working our way through that. There is -- there are certainly concerns around the use of Avastin in slightly lower [performance status] patients and we are working through that. We are hoping that maybe the registry might help a little bit there. So I think there will be growth in lung but I think it will be gradual. Avastin in breast cancer, I think there were a subset of physicians who after the negative ODAC became a little worried about where that might lead, most particularly from a reimbursement point of view. As I said in my prepared remarks, since we’ve had the label all of the signs are very good. But clearly we’ve only had the label for a matter of four or five weeks within the quarter. And then that market isn’t straightforward. As I said in my remarks in New York, it’s a fragmented market. As Chris asked me, we are not in a full promotional mode yet. We will be later in the year and we are one month in. Nevertheless, I think it is a major opportunity and I remain optimistic that we’ll see good growth as we go throughout the remainder of this year.

Your next question comes from Katherine Kim with Banc of America Securities. Katherine Kim - Banc of America Securities: My question has to do with Rituxan. Can you just talk about -- can you break out the number in terms of oncology use and also the RA use? And then if there was any off-label usage? Ian T. Clark: It’s difficult for us to track the usage in the two different broad areas, oncology and immunology, and so we’ve developed a pattern where we only break the sales out on an annual basis. It’s really hard to do it accurately on a quarterly basis. We reported that last year the immunology sales were in the range of $240 million to $260 million out of the total of -- I think it was 2285, but I may be wrong on that one. In terms of off-label usage, clearly within the hematology CLL space, we have some areas where we see off-label usage. In terms of immunology, there is limited off-label usage, A because there is limited data and B, there isn’t much room for reimbursement. I think there are some suggestions that occasionally Lupus patients are put on Rituxan but it is not a significant part of the sales from our perspective. Katherine Kim - Banc of America Securities: Thank you.

Your next question comes from Samuel Kim with BMO Capital. Samuel, your line is open. That question has been withdrawn. Your next question comes from Eric Ende with Merrill Lynch. Eric Ende - Merrill Lynch: I’m going to be honest, you guys sounded a little hedgy on the Rituxan and Lupus data. I was wondering if you guys plan to file the first generation Rituxan data for Lupus, or are you really more focused on second generation? You started talking about how you expect to get a lot of information and how you could use that for second generation, so can you guys elaborate on that a little bit? Susan D. Desmond-Hellmann: I’d be happy to. I’m sorry that I sounded hedgy. That wasn’t my intention. The bottom line is this is a huge unmet need, so I would describe how we are feeling about it as excited because of the possibility of doing something for an unmet need, excited about the case series. But you and I both know that in the absence of randomized control data, that’s -- it should be seen as speculative what happens in patient stories or case [series] in Lupus. The first data we’ll see is in SLE. It is not our expectation that we will be able to file the EXPLORE data unless it is really dramatically positive and dramatically positive is the combination of safety and efficacy. So I wouldn’t completely rule that out but that’s not our going-in expectation. I’m talking Rituxan in SLE, so we do have the second trial that we’ll get in 2009 in Lupus Nephritis. Again, we haven’t given any sense of expectation on waiting to file for the second generation. If we have safety and efficacy with Rituxan for Lupus, I expect we will file that data with FDA. Whether that is one trial or two trials I think remains to be seen. When we talk about looking at the data carefully, I think it relates to the fact that we know like the rest of the world as the lack of confidence in homogeneity amongst SLE patients and that is one of the reasons that’s been cited for prior negative clinical trials, so we’ll do two things. First of all, if this data is very, very suggestive of patient benefits, we’ll want to talk to FDA right away about what they need for an approval. But in addition, this data can inform our program in second generation Anti-CD20 to maximize our opportunities to help subsets of patients or do anything that we need to to amend those trials or further influence those future trials to have the best benefit in patients. But my caution is only because of the field of study of SLE and the prior experiences that everybody’s had. I think this is a good program with the right end points, but it’s a tough study program. Eric Ende - Merrill Lynch: All right. That was very helpful. Thanks.

Your next question comes from Mike King with Rodman & Renshaw. Mike King - Rodman & Renshaw: Thanks for taking the question, and I guess further to that, can you talk about what the strategy would be for both EXPLORE and PPMS? I mean, if the studies are positive or not, would you publish them in advance of any registration? Susan D. Desmond-Hellmann: Well, I think we would -- absolutely they would be presented at a medical meeting. They would be published. Given the fact that I’m not an expert at these, I can tell you given the literature, people publish handfuls of patient data in both these indications and so I would expect that they will be published and micro-dissected both at medical meetings and in the literature. But we intent for MS and for systemic Lupus to seek labels. We think that it is to the patient’s great benefit to have safety and efficacy in the labels and we think, as Ian already mentioned, that reimbursement is an issue in these chronic immune indications. So it is -- we are seeking these indications specifically for labeling. Mike King - Rodman & Renshaw: Right, understood but I guess the question is whether you can seek compendia listing in SLE prior to approval with the combination of the EXPLORE and the LUNAR trial. Ian T. Clark: To my fairly certain knowledge, there really isn’t a sort of -- there’s no sort of non-oncology equivalent of compendia listing. That’s pretty unique to that marketplace and there really is no way of getting a reimbursement for any of these indications, hence the lack of off-label usage as well. Mike King - Rodman & Renshaw: Okay. Thanks very much.

Your next question comes from Maged Shenouda with UBS. Maged Shenouda - UBS: Thanks for taking my question. Just a follow-up on the SLE and PPMS trials; can you quantify the clinical benefit that we should be looking for for a success in these trials? Susan D. Desmond-Hellmann: Well, we’ve talked before and specifically at our analyst meeting about how we [fit] those trials. The SLE study is based on the BILAG end points, so we haven’t given the power calculation but we definitely have based the calculation on our best understanding of the BILAG. In PPMS, the endpoint is the treatment failure rate and again, there’s literature on the treatment failure and how that is measured on the disability score. But neither of these trials have we shared our exact [power] calculations or the magnitude of the difference. Maged Shenouda - UBS: Okay, that’s what I was trying to get at. Okay, thank you.

Your next question comes from Jason Kantor with RBC Capital Markets. Jason Kantor - RBC Capital Markets: These two Rituxan studies that you are waiting on data very near-term here, it’s been your method in the past to just say you hit the endpoint or you didn’t hit the endpoint, but you kind of preface this by saying there is going to be a lot of richness to the data set. Are you inclined to release more information in a press release than you typically would for these trials or are we just going to get a yes-no answer in the coming weeks? Susan D. Desmond-Hellmann: Well, as is always the case, we want to give the benefit to our primary investigators in these trials to discuss the data at medical meetings and so I would expect top line data without further discussion from any of these trials. Jason Kantor - RBC Capital Markets: And if I could, for the Trastuzumab DM1, you said you wouldn’t have the Phase II data at ASCO but you want to make a Phase III go/no-go. Are we going to see that data then at San Antonio breast cancer and do you need to see the full Phase II data to make that call? Susan D. Desmond-Hellmann: Yes and no. Yes, we will likely have some data in San Antonio and no, we don’t need to see the full data to make the call. Jason Kantor - RBC Capital Markets: Thank you.

Your next question comes from Shiv Kapoor with FBW. Shiv Kapoor - Ferris, Baker Watts: Thanks. There are some new molecules that you have now in Phase II studies. You’ve talked about TDM1. I would like to ask you on the proapoptotic agents and the hedgehog antagonist, how would you make Phase III go/no-go decisions on these? Would you have to wait to see the Phase II data before a decision or can you just discuss how you make those decisions? Susan D. Desmond-Hellmann: The most important -- to just generalize, the most important question is do we expect or observe single agent activity, or are we relying on randomized control data, sort of chemo plus the new agent. In general with the proapoptotic agents, we are looking at randomized Phase II trials, so I would expect that we would want to observe the outcome measure in those randomized trials with both Apomab and the Apo2Ligand/TRAIL program. With both TDM1 and the hedgehog antagonist, there is an opportunity to observe tumor shrinkage and that allows us to make more rapid decisions, just as a general rule of thumb. We also of course integrate any bio-marker data or scientific hypothesis testing data that we expect in these targeted therapies and safety. So we put all that together but in general, randomized data for the proapoptotic and a little better opportunity for a response rate in the other two programs.

Your next question comes from May-Kin Ho of Goldman Sachs. May-Kin Ho - Goldman Sachs: At ASCO, there will be a lot of presentations in the lung cancer area, including antibodies such as the FLEX study as well as small molecules, [Aventure], Zactima. How are you thinking about these different molecules? Susan D. Desmond-Hellmann: Is that a question for Ian or for Sue? May-Kin Ho - Goldman Sachs: Either one. Ian T. Clark: Good question. Susan D. Desmond-Hellmann: May-Kin, you can’t see but Ian is pointing at me. I guess the -- I would separate your question to first line or second line. How about we start there? So in first line non-small cell lung cancer, I feel really good about the Avastin data that we have and in terms of the competition, I would note two recent negative trials. So I think if anything, there’s slightly lowered competition. Now, we do expect to see anti-EGFR antibody therapy in first line non-small lung cancer at ASCO that’s top line data is said to be positive, so I am looking forward to seeing those data and how they may or may not benchmark versus our Avastin data. But in front line non-small cell lung cancer, I think the Avastin data has held up over this couple of years as very strong and have really set the bar for what so far efficacy looks like in non-small cell lung cancer. In second and third line, I think things are a little bit more crowded and I’m -- personally one of the things I’m excited about is our opportunity to combine Tarceva and Avastin with data that we’ll get later this year on that combination in second line lung cancer. So I’ll let Ian comment more about [Valenca] and some of the others in that area. Ian T. Clark: I think Sue has covered most. The other comment I would make is that a lot of these products aren’t direct competition to Avastin. They are not in-class competition. But it’s quite possible in some of the cases, cost apart, that there might be an inclination to use Avastin with them, particularly with [Oleptin], thinking that might have a slightly better side effect profile in first line. Clearly there won’t be a study with Avastin but I think there might be an inclination to try and combine the two, so you get the efficacy of the Avastin and the profile from [Oleptin]. But at the moment, I don’t think we see anything that is a direct and immediate threat to the sales that we have, but clearly the market is getting more crowded. May-Kin Ho - Goldman Sachs: Thank you.

Your next question comes from Mark Schoenebaum of Bear Stearns. Mark Schoenebaum - Bear Stearns: If Art is still there, yes, I’m still coming to work at Bear Stearns. I just had a question about ASCO, please. I was wondering, Sue, if you could tell us -- you mentioned that there is going to be safety update in the adjuvant trial. How much information can we really expect from that safety update? And then maybe if you could comment on this issue of K-ras non-mutants? There’s been some speculation on Wall Street that some of the anti-EGFR, some of your Rituxan data, they may slice it by non-K-ras mutants in the first line colorectal cancer setting. I was wondering if you could enlighten us as to the data that Avastin has shown in that sub population. Susan D. Desmond-Hellmann: Let me answer your question about the safety abstract to start with. I would encourage you to look at what the cooperative groups have done in the past. It’s not unusual for cooperative groups to present safety data in long adjuvant therapy trials as they update ASCO. So my expectation would be that they will present safety data by arm, which is not unusual in these cases. The most important adverse event in COA, that’s why we wanted you to know that we expect that to be presented. It’s always challenging in adjuvant trials because, as was the case with Herceptin, we know that the side effect profile and the safety before we know efficacy and that’s one of the most challenging parts about doing adjuvant trials. So while this is not unusual, it is challenging because you won’t be able to balance efficacy at that point because we don’t know efficacy yet. So I think it will be important to see whether or not Avastin is well-tolerated in this setting but not that revelatory in general. In terms of your K-ras question, I would prefer not to answer that off the top of my head. I know we started to look at the K-ras question because the anti-EGFRs have found it, as led by Vectibix in their approval in Europe, to be more and more important. When we first looked at the Avastin data in colon cancer, we did subset analysis all over the place and Avastin added benefit in every subset we tested in those data. But I think we’ve gone back and had a limited number of samples, so if you follow-up with Kathee I’ll see if we can get you what we do know about K-ras and Avastin in colon. Mark Schoenebaum - Bear Stearns: Okay, that’s fair. Thanks a lot. I appreciate it.

Your next question comes from Eric Schmidt with Cowen & Company. Eric Schmidt - Cowen & Company: I guess one presentation it doesn’t sound like we are going to be seeing at ASCO is the AVAIL overall survival data, and I know that’s not your trial, Sue, but I was just kind of wondering if you had any insights into why those data, which I guess by my time it would seem to be mature, on when it will be presented? Susan D. Desmond-Hellmann: We don’t know the AVAIL survival data yet. It is a Roche trial, as you mentioned, so since we don’t know, my understanding is they are too late for ASCO. So I would encourage you to follow-up with Roche in terms of the timing of when they will be able to present those but we don’t know the survival data yet for AVAIL. Eric Schmidt - Cowen & Company: Thanks.

Your next question comes from the line of Geoffrey Porges with Sanford Bernstein. Geoffrey Porges - Sanford C. Bernstein: Just a question for David -- on the royalties, could you just tell us how much the currency and one-time items added there to the underlying run-rate? David A. Ebersman: Sure. There were several items in the Q1 number that really most appropriately belonged in Q4, and they add up to about $35 million. Let me explain that a little bit. When we report our royalties each quarter, we are basing the numbers on the estimates that we have for sales at that time and then subsequently to the date we report, we get the actual checks and we get the actual numbers and there’s often true-ups or true-downs that occur from that. The one that’s particularly unusual this quarter -- I hope this isn’t too complex or that I’m -- or better yet, that I’m unable to -- I hope I’m not unable to explain it. We have one agreement which is a very sizable one, one of our biggest products that we receive royalties on where the actual foreign exchange rate is not calculated based on the end of the quarter where we received the revenues, or where -- that the royalties were based on. It’s calculated by the exchange rate 90 days after. So we had one interesting dynamic that comprises a big piece of that $35 million, which was that product. We estimated what the royalties would be in the fourth quarter based on the sales and the exchange rate, and then the exchange rate proceeded to change in our favor over the next 90 days, so the actual check we got for the fourth quarter sales is much larger than we had forecast in the fourth quarter when we took that extra benefit in the first quarter. So that’s sort of an unusual deal. We don’t have any others like that where the exchange rate is not tied to the quarter where the sales occur and it could create a little bit of clunkiness in the trend. But the $35 million is what I would take out of the number if you want a better reflection of what the first quarter driven number was, with the caveat of course that 60 and 90 days from now, we’ll get more information about what the actual first quarter numbers were and some of our first quarter estimates could have been wrong in either direction. Geoffrey Porges - Sanford C. Bernstein: So Dave, does that 35 include all the effects of currency as well, or is that -- that’s just taking out the one-timers? David A. Ebersman: That’s just the one-timers. Geoffrey Porges - Sanford C. Bernstein: Okay. Thanks very much.

Your next question comes from William Tanner of Leerink Swann. William Tanner - Leerink Swann: Sue, it was interesting, a comment you made about a challenging regulatory environment and you called out I guess the sBLAs that the company will submit in 2008 on slide 37, suggesting that there is a pretty good agreement with the FDA as to what is going to be required. So is the interpretation of your comments or is an interpretation of your comments that as we look at other trials and notwithstanding the timing as to when the data reads out that you might be -- that we should be contemplating more of a right-ward push in terms of actual approvals and launches? Susan D. Desmond-Hellmann: No, I wouldn’t interpret it that way. I would interpret it as bottom line, two things; one is we learned a lot from our experience with E2100 and the Avastin and breast cancer approvals about making sure that FDA and we were in sync about what they expected, particularly from cooperative group trials. But we have already gone back and looked at trials and looked at our programs to make certain that FDA and we are on the same page, especially as it relates to cooperative group trials, especially as it relates to progression free survival, but as a general matter. So I think that the two key messages, one that we’ve learned from set-backs that we’ve had in the past and I would say secondly that we’ve tried to be more proactive in anticipating what is going to be even harder for FDA in the future, specifically the new FDA Amendments Act just piled on more work for them. So we need to give a little bit longer timeline for pre-meeting timing, et cetera, et cetera, so we’ve adjusted accordingly. I can’t predict everything but I think we’ve done a decent job, so that as we sit here today I am more worried about enrolment rates in a highly competitive clinical trials area than specifically regulatory issues on the time line front.

Operator, this will be our last question.

Your final question comes from Jim Birchenough of Lehman Brothers. Jim Birchenough - Lehman Brothers: Just a question on BILAG scores and one, just wondering, Sue, if you’ve got agreement with the FDA on how you are looking at this endpoint, it seems like the assessment of endpoints and Lupus is in some flux, so I just want to make sure that there’s no other way FDA may be asking for you to look at this data. And separately, how you avoid having BILAG in the label or as a requirement for payers, because it seems like a cumbersome instrument for clinicians to use and is there any way you can get away having an approval and reimbursement tied to BILAG? Susan D. Desmond-Hellmann: Ian may want to comment on the reimbursement front, but let me just start by clearly telling you that we reviewed in detail the BILAG and the end points in the EXPLORE trial with FDA, so that is agreed upon by thought leaders, Genentech, and FDA. So that we definitely covered. I will just say that in immunology, specifically rheumatoid arthritis, composite end points are business as usual, ACRs and the like. So while the BILAG is a complex scoring system, it is a clinical trial scoring system. In terms of having Lupus and the kind of criteria one uses to delineate Lupus that needs medication or needs more aggressive therapy, I think that it is more likely people would use clinical parameters than specifically a BILAG score. Ian T. Clark: I think I’d be inclined to agree, Jim. Clearly it’s not going to be any reimbursement consequent [inaudible] part of the label. It’s something that the insurance companies might choose to layer on afterwards. I think this would be hard. I think you are also dealing with a disease here where there is no indicator product at all, so making the one product, should it be indicated, very hard to get would seem to be a little unlikely. I think it’s a good question but I think at the moment, we wouldn’t see that to be a likely hurdle. Jim Birchenough - Lehman Brothers: Thanks for taking the question.

All right. We want to thank you very much for joining us on the call today. Sue and I will -- Sue Morris and myself will be back in the office and you can give us a call. Thank you very much.

Ladies and gentlemen, this does conclude today’s teleconference. You may now all disconnect.