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Executives:

Kathee Littrell, Senior Director of IR

Art Levinson, Chairman, President, CEO

Ian Clark, SVP Commercial Operations

Sue Hellman, President, Product Development

David Ebersman, EVP, CFO

Analysts:

Joel Sendek, Lazard

Craig Parker, Lehman Brothers

Steve Harr, Morgan Stanley

Mark Augustine, Credit Suisse First Boston

Ian Somaiya, Thomas Weisel Partners

May-Kin Ho, Goldman Sachs

Eric Schmidt, SG Cowen

Jason Kantor, RBC Capital Markets

Bill Tanner, Leerink Swann

Geoffrey Porges, Sanford Bernstein

Mike King, Rodman & Renshaw

Gene Mack, HSBC

Bret Holley, CIBC World Markets

Ron Ellis, Prudential

Presentation

Operator

Good afternoon. My name is Derrick and I will be your conference facilitator. At this time, I would like to welcome everyone to the Genentech fourth quarter and year-end 2005 earnings results conference call. Operator Instructions Thank you. I will now like to turn the conference over to Ms. Kathee Littrell, Senior Director of Investor Relations. Please go ahead, ma'am.

Kathee Littrell, Senior Director of IR

Thank you very much. Good afternoon, everyone. And thank you for joining our Q4 year-end 2005 earnings call. Today, we are pleased to announce that we are pleased to announce that we have posted an earnings call slide set on our Web site, www.gene.com. And that will follow along with our earnings script. This call is being electronically recorded and it is copyrighted by Genentech. No reproduction, retransmissions or copies of this conference call can be made without the written permission of Genentech.

We will be making forward-looking statements and the actual results may vary materially from the statements made. Please see the forward-looking information section of the form 10-Q for the period ending September 30, 2005, on file with the Securities and Exchange Commission, for a discussion of the risk factors that could cause material variations from the forward-looking statements made during this conference call.

We will be discussing financial information that includes non-GAAP financial measures, in our call today. Please refer to our Web site at www.gene.com, under the investor tab, click 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 Dr. Art Levinson, Chairman of the Board and Chief Executive Officer, Ian Clark, Executive Vice President of Commercial Operations, Sue Hellmann, President of Product Development, and David Ebersman, Executive Vice President and Chief Financial Officer. Now, I will turn the call over to Art for opening comments.

Art Levinson, Chairman, President, CEO

Thank you, Cathy. Good afternoon. 2005 was a transforming year for Genentech with strong top and bottom line growth, including a 46% increase in product sales, a 55% increase in non-GAAP net income, and a 54% increase in non-GAAP earnings per share growth compared to 2004. Total operating revenues exceeded 6.6 billion, representing a doubling of our total operating revenues in the two years since 2003.

I would like to now summarize our five by five goals. 2005 was the final year for our five by five plan to describe our strategic goals for the years from 1999 to 2005. The final results were as follows: One, we had average annual non-GAAP EPS growth of 33% for the years 1999 through 2005, using 1998 as the base year, exceeding our goal of 25% average annual non-GAAP EPS growth. Two, we had seven new products and multiple new indications approved during the five by five period, exceeding our goal of having five new products for indications approved. Three, we end the five by five period with six products for 21 potential indications, in our late stage development pipeline, exceeding our goal of five late stage products in clinical development. Four, we achieved over $300 million in 2005 revenues, associated with the strategic alliances, missing our goal of $500 million. And five. We had non-GAAP net income to total operating revenues of 21%, missing our goal of 25%, primarily due to the success of Rituxan and the associated profit split.

We communicated our horizon 2010 goals to you in 2004. Following the many successes in our business in 2005, we are re-evaluating these goals and we will review these with you at our March 2006, investor meeting. In the commercial area, total U.S. product sales were $5.2 billion, including Avastin sales of $1.1 billion during 2005. We are very pleased with the successful launch of Avastin and with its future potential. On the R&D front, in 2005, we announced positive results from eight Phase III clinical trials, most of which stem from research efforts originating internally. We believe that our current late stage pipeline positions us well for short and medium term growth driven by Avastin, Rituxan, Herceptin, Tarceva, Xolair and Lucentis.

To sustain growth beyond 2010, it is critical for us to maintain a continuous stream of innovative new products and indications moving from research into development. And one of the important business priorities is to strengthen the pipeline in all stages with attention directed toward having multiple projects in early stage development, plus a steady flow of projects advancing into later stages of the pipeline. We believe we have a rigorous and effective approach to select R&D projects for development, and are committed to maintaining our high standards as the Company grows.

In 2005, the development organization entered three new molecular entities into the development pipeline, and initiated work on multiple new indications for existing products. We currently have 11 new molecular entities in the early development pipeline and approximately 10 projects in late stage developmental research. In the product operations organization, we continue to increase capacity to meet growing product demand. We have established aggressive goals and time lines for capacity enhancement, and are pleased to report that 2005 was a successful year for manufacturing and we are on track relative to our goals. Please see the Web site slide number seven for 2005 accomplishments and anticipated 2006 milestones for manufacturing.

While we are pleased with our progress in 2005, manufacturing remains a key risk for the business over the next few years. In order to maintain adequate supply, we will need to continue to implement all our prior capacity expansions projects, achieve licensure on schedule, successfully adhere to an aggressive production plan that will utilize nearly 100% of our capacity in the near term, and maintain a state of regulatory compliance at all our production sites. And we are focused on these challenges.

I would like to now say a few words about patient access to Genentech therapies. We are committed to delivering novel therapies that address significant unmet medical needs of patients. We take scientific and financial risks to be an innovator and to develop first-in-class therapies. For the last few years we have supported patients who are uninsured through the Genentech Access To Care Foundation. In 2005, we provided over 18,000 patients with more than $200 million of free product.

To further attest to therapies for various diseases, in the fourth quarter of 2005, we donated approximately $21 million to various independent third party public charities that offer co-pay assistance to eligible patients. We believe that this donation will help eligible patients access necessary and novel therapies that their physicians have prescribed or administered.

In the intellectual property we currently have approximately 5500 current, non-expired patents worldwide and an equal number of patent applications pending worldwide. On July 7, 2005, the U.S. Patent and Trademark Office ordered a reexamination of the 415 Cabilly patent in response to a request by a third party. On September 13, 2005, the patent office issued an initial non-final office action rejecting all claims to the 415 Cabilly patent. We filed our response to the office action on November 25 and we are awaiting a reply from the patent office.

Earlier this month, we became aware that a second request for reexamination of the 415 Cabilly patent was filed by another third party, on December 23, 2005. The U.S. patent and trademark office has not yet decided whether they will grant the second request for reexamination. We remain confident in the strength of our intellectual property, and we look forward to the outcome of ongoing 415 Cabilly patent reexamination process.

A few words now about our culture. Our success is built on our ability to recruit and retain highly qualified and talented people in all areas of the Company. As of December 31, 2005, we have over 9,500 employees, an approximate 25% increase over 2004, and we anticipate another approximately 15% growth in 2006. We are working hard across the Company to make sure that we successfully hire, train, and integrate new employees into the Genentech culture, and environment. In hiring new employees, we continually stress the importance of hiring the right people, and not just filling a position.

We remain focused on working to protect and nurture our culture. Our efforts to integrate employees into our culture have gone well, and we are pleased to have been named by Science Magazine as "the top employer and most admired biotech company in biotechnology and pharmaceutical industries" in 2005 for the fourth year in a row. Additionally, we were honored to learn just yesterday that Fortune Magazine has named Genentech as the Number One Company on the 2006 list of the 100 Best Companies To Work For. We have earned a place on the fortune list for eight consecutive years. And for each of the past three years, Genentech has been the biotech or pharmaceutical company to appear in the top 20 positions.

Looking to the future, we are ever mindful of the many challenges and risks that we face in the business, including one, product pricing and reimbursement concerns; two, enhancing the early stage pipeline; three, meeting manufacturing capacity demands; four, successfully scaling our culture; and five, meeting the high expectations that are being set for us. While we are aware of these challenge, we are looking forward to the future, and the opportunities in front of us. We believe in our approach to running the business, and we are focused on continuing to create shareholder value, by doing excellent science, planning for the long-term, executing successfully against our goals, and being passionately committed to our patients and our employees.

We believe the scientific opportunities today are as exciting as they have ever been, and that if we continue to invest wisely and appropriately, in R&D going forward, we will be able to continue to deliver innovative therapies for important unmet medical needs. Lastly, we know that our 2005 performance increases the bar for us for 2006. We are committed to doing the right things for the business, to produce short-derm growth while not jeopardizing our potential for long term growth.

And now I would like to turn the call over to Ian Clark.

Ian Clark, SVP. Commercial Operations

Thank you, Art, and good afternoon to everybody. Net U.S. sales for the products reached 1.493 billion in Q4, a 47% increase versus the $1.018 billion we saw in the same quarter last year. A very strong final quarter. Dale will provide information on approved and unapproved usage, I want to remind you Genentech policies only allow us to promote products for on-label use.

Beginning with oncology products and first of all Avastin. Avastin U.S. sales in Q4 were 359 million, an increase of 89% over the 191 million during the second quarter last year. In Q3 '05, growth for the quarter was driven both by increased usage in the metastatic colorectal cancer setting where Avastin was approved in the first line setting and in other tumor types which are all unapproved uses of Avastin. Total U.S. sales of Avastin for 2005 were 1.13 billion. Avastin achieved these sales more rapidly than any other oncology therapeutic. Over 35,000 patients were being treated with Avastin since its launch in February '04.

Moving on to specific fourth quarter results in metastatic colorectal cancer, both in the first line and relapse settings, adoption held steady in Q4 relative to the prior quarter. And in Q3, the duration of treatment continued to increase and was the primary driver of growth in this setting. Commercial focus on colon cancer in 2006, we continue to educate on the importance of treatment progression, and to prepare for a potential launch in the relapse metastatic colorectal cancer setting. Other tumor types, the use of Avastin outside of colorectal cancer, mainly in lung and breast cancers, contributed significantly to product growth for the final quarter. However we believe that the current use is modest relative to the potential post-approve opportunity. Commercial focus on the tumor types in 2006 will be to prepare for and execute potential launches for front line lung and breast cancer.

Moving on to Herceptin, in Q4 U.S. sales of Herceptin were 250 million, a 98% increase compared to the 126 million due to the second quarter last year. Total U.S. sales of Herceptin in 2005 were 747 million, an increase of 56% compared to last year. Herceptin sales with metastatic breast cancer continue to be strong with increased first-line penetration and treatment duration relative to last year. We continue to see use of Herceptin in the asthma setting, unapproved use as a result of the very strong results presented by the Glaxo in 2005.

Next, Rituxan. U.S. sales of Rituxan reached 484 million, up 13% of 429 million in the same quarter last year. Total U.S. sales for Rituxan in 2005, were 1.83 billion, an increase of 16% over last year. Rituxan's over adoption rate in the combined marks NHL and CLL, including the unapproved use, was 82% in Q4, compared to 75% in the second quarter last year. We are pleased to report that the U.S. PDI compendia was updated in October and now includes Rituxan for front line CLL as an accepted indication. We would expect the most payers who have changed their coverage will do so shortly.

The front line use of patients with intermediate grade or aggressive grade was granted for review by the FDA and the given the FDA action date of February 10, we're preparing for a potential launch in Q1 of this year. We continue to cooperate with the U.S. Attorney's Office in their investigation of Rituxan's promotional practices. We are committed to ethical practices and are confident in our strict standards with this regard.

This month, Genentech was served with a lawsuit by a former employee of Genentech related to the promotion of Rituxan and we are in the process of evaluating this lawsuit. And now Tarceva. Fourth quarter U.S. sales of Tarceva increased 15% to 84 million, compared with 73 million last quarter. Total U.S. sales for Tarceva in 2005 were 275 million. Our sales total patient share of the oral regional pharm reached 97% in Q4, up from the 82% last quarter as measured by Varispan. Tarceva's penetration in the second line, non-small cell lung cancer remains steady at approximately 30%, while penetration in the third line grew to 55%, up from 47% in the prior quarter. On November 2, the FDA approved Tarceva in combination with gemcitabine for the treatment of advanced inoperable, or metastatic pancreatic cancer in the first line setting, and the top sales force was fully tried to the second indication on the day of the approval.

Now turning to our etiology products and Xolair. In Q4, U.S. sales of Xolair was 93 million, a 55% increase compared to the 60 million in the second quarter last year. U.S. sales for the full year 2005 were 321 million, completing a strong year with an increase of 71%. On October 27, 2005, we received approval in the E.U., and also in U.K. and Germany shortly afterward. And the rest of Europe within the next 18 months.

Next, Raptiva. In Q4, U.S. sales of 20 million, representing a 24% increase, versus the same quarter last year. And Raptiva's 2005 full year sales were 79 million, a 51% increase over last year. Next, a few words on Rituxan for rheumatoid arthritis. On October 28, the FDA granted prior to review or FTLA the use of Rituxan in anti-TNS responders patients are RA. The update provided an action date of February 28, 2006. We have a fully stocked marketing team in place and are finalizing the hiring of our staff.

And Rituxan for RA will have a dedicated Genentech sales force in collaboration with the Visudyne sales force. We will be talking a subset of approximately 3,800 prescribed rheumatology. There are significant hurdles to reliably measuring a portion of Rituxan sales attributable to immunology and we expect training to remain challenging well past launch. Further, we believe the sales of Rituxan immunology to date have been minimal.

Lastly, we update you on growth and repair. Our legacy products, sales of the biolytics products were 58 million in Q4 and 290 million in 2005, up 12% over the past full year. U.S. sales of 65 million in Q4 and 371 million for 2005, a 6% increase over prior year. And finally, U.S. sales of Pulmozyme were 49 million in Q4, 187 for 2005, and 19% up on the prior year.

In conclusion, 2005 was a great year for the commercial organization, total U.S. sales were $5.16 billion, that's an increase of 45% compared to last year, and all nine products contributed to our strong growth. Now, I will turn the call over to Sue.

Sue Hellman, President, Product Development

Thanks, Ian. As Art mentioned, 2005 has been a remarkable year for product development. The Web site slides that Cathy referred for product development are numbers 15 to 26. Slides 16, 17, and 25 provide the major milestones and major alliance arrangements for your reference.

I will start with next steps for the Avastin program. We are on track to submit two sBLA's for Avastin during quarter 2 2006, one on first-line non-squamous non-small cell lung cancer based on data from ECOG 4599, and a second in first-line metastatic breast cancer based on ECOG 2100. The Quadra-approved databases for both these trials were received during late 2005 and the teams are working closely with the FDA to complete the submission.

Now the strategy for ECOG 2100. ECOG 2100 was designed and powered to assess progression free survival, the primary end point of the trial. Most front line breast cancer trials use progression free survival because of the very large trials necessary to demonstrate a statistically significant increase in survival and because of the confounding effects of subsequent treatments in the disease with a relatively low survival. As is the recent approval of Sorafenib, we expect that a statiistically significant and clinically important increase in progression-free survival, and increase in response rate and a trend in survival noted in 2100 will be adequate for approval.

Now, I will discuss some of the newer ongoing clinical trials of Avastin. CALGB90206, a Phase III trial in cases of renal cell carcinoma, is an event-driven study. Our model indicates the results from interim analyses may be available in 2006. This study is our first to investigate the use of Avastin in combination with alpha interferon and it is our first Phase III study in renal cell cancer. We have been encouraged by previous results of Avastin renal cell carcinoma studies. Dr. Yang states two studies on a biweekly 10 milligram-per-kilogram Avastin monotherapy resulted in significant prolongation of the time to disease progression compared to placebo.

The Phase III pancreatic and prostate cancer studies continue to enroll well and the GOG218 Phase III study in first line ovarian cancer is open for enrollment. We are committed to investigating Avastin in the Azumet setting across three tumor types: Colorectal cancer, breast cancer and lung cancer. The Phase III as in colorectal studies continue to enroll briskly and AZATCOA has crossed the halfway point of recruitment and ECOG 2104, our Phase II study examining Avastin in her 2 negative breast cancer began enrollment in Q4 2005. We are in discussions with cooperative groups to design Phase III breast cancer and non-small cell lung cancer studies. We will provide you with ongoing updates regarding these studies as our plans develop.

On the combination therapy front, we completed in a moment in a Phase II nonsmall lung cell cancers investigating Taxotere or lymphom, plus or minus Avastin, versus Avastin and Tarceva, and anticipate results in the second half of 2006. We are also expanding this program to evaluate Avastin in combination with multiple chemotherapeutic agents. We initiated a Phase IIIb trial, ATLAS, to explore administration of the chemotherapeutic for the choice, followed by randomization to Avastin and Tarceva versus Avastin and an oral placebo, in first line nonsquamous, non-small cell lung cancer. Additionally, we initiated Ribbon One, a Phase III study of chemotherapeutic of choice, plus or minus Avastin in first line metastatic breast cancer and plan to initiate Ribbon Two during Q1 2006. Ribbon Two is a Phase III trial that will investigate a chemotherapeutic of choice plus or minus Avastin in second line metastatic breast cancer.

Now let me turn to Herceptin. We are on track to submit the sBLA for Herceptin in the treatment of agilent breast cancer in Q1 2006. The filing will be based on data from the NTTCG and NASCG trials. We are encouraged by the BCIG results that as of the evidence, the use of Herceptin in the Agilent setting may prevent the occurrence of metastatic disease in women who are her 2 positive and that novel regiments may present options to patients and physicians concerned about cardiovascular events.

We are awaiting the event-driven analysis of the two-year data, from the her-A Agilent study investigating whether extending the duration of Herceptin therapy to two years as compared to one year could improve outcomes. This analysis is currently planned for 2008, or beyond. Turning to Rituxan and heemen, we anticipate filing another sBLA in the first half of 2006 for Rituxan and first line therapy, either induction or maintenance, in non-Hodgkins lymphoma, based on study M39021 and ECOG 1496. Rituxan for immunology, we and our collaborators Roche are in the process of initiating a global multi-study program investigating Rituxan in RA patients who have inadequately responded to chemotherapy. We began enrollment in the Phase III 500 patient Rituxan inadequate responder trial and are land planning to initiate a Phase III x-ray study and Phase III controlled re-treatment study in the first quarter of 2006.

We continue to build our broad-based development program in immunology by examining the safety and efficacy of Rituxan in additional auto-immune indications. The Explorer study, a phase 2-3 study examining Rituxan in lupus is continuing to enroll and we plan to enroll our first patient in the Phase III Lumenis trial in Q1 this year. We completed enrollment in the Olympus Phase III study in primary progressive MS which has 96-loop primary end point. The Herman study in relapsing remitting MS is now a smaller proof of concept study. We anticipate enrollment in this trial will complete in Q1 2006 with results in the first half 2007.

We anticipate a Phase III go/no go decision in the first half of 2006 for our Cuban anti-CD molecule. The BRCS Phase III study completed enrollment in Q3 2005, and we will make a go/no go decision for a Phase II study this year. Now turning to Lucentis. And data results from Anchors will be presented at the macular meeting in January 14 in New York. We will conduct an analyst meeting and web cast following this presentation at 6 p.m. Eastern Time January 14, at the Millennium Broadway hotel.

We submitted to the FDA on December 30, 2005 and requested a priority review. We plan to submit the two-year data from Marathon on or before the 120-day safety update. If we receive priority review, there may not be sufficient time for the FDA to review this amendment. In this case we plan on resubmitting the two-year MARINA data along with the peer data as a supplemental BLA in Q3 2006. And we anticipate to have peer data results in Q2 2006. We are working with several cooperative groups and academic institutions to explore the use of Lucenten in other areas.

Turning to our Phase II study of Xolair, we discontinued enrollment in the Phase II Xolair study due to severe hypersensitivity reactions which occurred in two individuals during the oral food challenge screening process of the trial. This decision was based on a recommendation from the study's independent data monitoring committee, and was not related to the safety of Xolair, since neither of the patients had received Xolair. Along with our collaborators, we remain committed to determining whether or not Xolair may provide protection for patients at first threatening reactions to peanut ingestions. The Company will be working closely with leading food allergy experts and patient advocates to help determine a path forward and discuss alternative plans with the FDA early this year.

Now, on to early development. We continue to strengthen our early development pipeline. We now have seven new molecular entities in our oncology early development clinical portfolio. Three new molecular entities in our immunology early clinical development portfolio, and one NME in our tissue growth and repair early clinical development portfolio. We and our collaborator AmGen plan to initiate a Phase Ib trial in Q1 2006.

In 2006, we and our collaborator will make a go/no go decision for Phase II after evaluating the Phase I topical hedgehog antagonist study in patients with Basal cell carcinoma of the skin. The information contained in our one-time growth factor for the Phase I study conducted by our collaborator did not support proceeding to Phase II studies in postoperative and cancer pain. Bernot does plan to continue development of the drug in osteoarthritis but Genentech will not be moving forward in further development of the anti--NGF antibody. The milestones of the first quarter of 2006 and our current development pipelines are included in the Web site slide.

Now let me turn the call over to David.

David Ebersman, EVP, CFO

Thank you, Sue. I will start by covering the remaining financial results for the quarter, and for the full year, 2005. As Kathee noted earlier, my comments on expense and income items for 2005 are on a non-GAAP basis, which exclude recurring charges related to the 1999 redemption by Roche and all litigation-related special items. Turning now to the revenue components of the income statement, adding to the U.S. product sales information already noted by Ian, sales to collaborators were $83 million this quarter, a 72% increase over Q4 of last year, including sales of $47 million of Rituxan, and $14 million of Avastin.

For the full-year 2005, sales to collaborators reached 326 million, a 65% increase over last year. In the future we do not plan to take time on the call to discuss product specific results for sales to collaborators but we will continue to make this data available on the IR Web site. Royalty revenues were $265 million this quarter, a 46% increase over Q4 of last year, and 935 million for the year, a 46% increase over 2004. Roche royalties represented 59% of Q4, and 53% of 2005 overall royalties.

Contract revenues were $51 million this quarter, a 25% decrease, from Q4 of last year. Primarily due to lower contract revenues from Roche. For the full-year 2005, contract revenues were 210 million, a 9% decline from last year. We will continue to see variability in this line due to the many factors that can impact these revenues. Total operating revenues were nearly $1.9 billion this quarter, and over 6.6 billion for the year. A 44% increase in both the quarter and the full-year 2005, as compared to 2004.

Turning now to our expense line items, cost of sales was $245 million, or 16% of net product sales this quarter, a decrease from 19% of net sales in Q4 of last year, mostly due to manufacturing cost efficiencies, and a favorable cost of sales mix. For the year, cost of sales was $1 billion or 18% of net product sales, which was a comparable percentage relative to 2004.

R&D expenses were $412 million this quarter, and 1.26 billion for the year, a 33% increase over both Q4 and the full year 2004 spending. The higher level of R&D expenses this quarter as compared to the previous quarters of this year reflects increase in licensing expenses which are often higher in Q4, as well as higher internal R&D spends. R&D was 22% of operating revenues this quarter, a decrease from 24% in Q4 of last year, and for the full-year 2005, R&D was 19% of revenues as compared to 21% for the full-year 2004.

MG&A expenses were $429 million this quarter, a 43% increase over Q4 of last year, and 1.44 billion for the year 2005, a 32% increase over 2004, given primarily by higher marketing and sales expenses. Q4 MG&A expense included $34 million in charitable donations, of which $21 million was donated to various independent public charities that provide co-pay assistance as Art mentioned earlier and $13 million was donated to the Genentech Foundation which primarily funds health science education. We expect that periodically, we will make additional donations to these foundations in the future, and we will include expected expenses for these programs in the MG&A guidance that we provide.

Separate from the foundations, M & S spending was also higher this quarter, reflecting the ramp-up of prelaunch activities for Rituxan Rheumatoid Arthritis and for Lucentis and Avastin. MG&A as a percentage of operating revenues was 23% this quarter, which was comparable to Q4 of last year. For the full year 2005, MG&A was 22% of revenues as compared to 24% for 2004. Collaboration profit sharing expenses were $228 million this quarter, an increase of 34% over Q4 of last year, and 823 million for the full year 2005. A 39% increase over 2004, due to higher sales of Rituxan, Tarceva, and Xolair.

Non-GAAP pre-tax operating margin as a percentage of total revenues was 31% this quarter, and 32% for the year. An increase from 25% in Q4 of last year, and 29% in 2004. Other income net was $21 million this quarter, a 3% decrease from Q4 of last year. For 2005, other income net was 91 million, a 10% increase over last year, driven by higher investment income net of interest expense due to debt service costs. On taxes, our non-GAAP tax rate was 39% this quarter, and nearly 37% for the year, an increase from 36% in both the fourth quarter and the full-year 2006. And the increase was driven primarily by higher pre-tax income and reduced benefits from R&D tax credits.

Non-GAAP net income this quarter was $363 million, or $0.34 per share, a 61% increase in net income and 62% increase in earnings per share over Q4 of last year. For the full year 2005, net income was 1.39 billion, or $1.28 per share, a 55% increase in net income and a 54% increase in EPS over 2004. Weighted average shares outstanding being diluted EPS were 1.08 billion in Q4, compared to 1.071 billion in Q4 of last year. The increase over Q4 of last year were primarily due to option exercises which modestly outpaced our share repurchases over the past 12 months. Weighted average shares outstanding for 2005 was 1.081 billion, that increase from 1.079 billion last year. We repurchased approximately 10.3 million shares in the fourth quarter, at a cost of approximately $926 million, and for the year 2005, we repurchased 24.1 million shares at a cost of approximately $2 billion. At the end of Q4, Roche's ownership percentage was 55.7%, fractionally higher than their minimum percentage.

Our unrestricted cash and investments portfolio totaled approximately $3.9 billion, at December 31, 2005, as compared to $2.8 billion at December 31, 2004. Cash generated from operations contributed over $1.7 billion this year, and cash provided by financing activities, included the inflow of $2 billion from our July, 2005 debt offering. These cash inflows were partially offset by outflows from investing activities including $1.4 billion of capital expenditures.

With the major investments being the purchase of the oceanside manufacturing facility, further investment in our CCB2 manufacturing facility in Vacaville and the buyout of a synthetic lease obligation in south San Francisco. We also used $425 million to repay our lease obligation on our existing Vacaville CCP1 facility and used $560 million for net share repurchases. The net number for share repurchases is different than the gross number I provided earlier in that the net number also includes the in flows to the Company from option exercises and the tax benefits from option exercises.

Now, turning to our non-GAAP expectations for 2006, let me start with a few words on stock option expensing. On January 1, 2006, we will adopt the FASB stock option expensing rule. First thing to note is we do not plan to apply FASB 123-R retrospectively, so the GAAP income statement for 2006 and beyond which not be completely comparable to 2005 and prior years. Second thing to note is we expect EPS impact from stock option expenses from 2006 will be in the range of $0.15 to $0.17 per share. Our current plan is to communicate our financial results both with and without stock option expensing, so that you can have that information both ways. Third point, is that in our GAAP reporting, stock option expense will be allocated and reported in each operating expense line. In other words, cost of sales, R&D, and MG&A will all reflect charges associated with stock option expensing. The non-GAAP guidance I will be providing in a moment in terms of expense percentages for the cost of sales R&D and MG&A lines and also in terms of our EPS growth expectations for the year 2006, will exclude the impact of stock option expensing.

My last general point is that 2006 is a challenging year in terms of forecasting our financial performance for a number of reasons. The most important because Avastin sales are an important driver of our performance and it is difficult to precisely forecast what Avastin usage will be in the months before and after, months before and after FDA approval for major new indications. The disclosure we're providing don't today regarding our 2006 expectations aligns with our current internal planning assumptions for the year and is neither conservative nor aggressive in our view.

Recognize that our forecast may evolve over the year as we get new information across the business, and in particular as we see 2006 data on Avastin sales and we also recognize that during 2006 we may choose to make incremental investments in the business above and beyond our current plans, if we see opportunities to add long-term shareholder value. Now, looking forward to 2006, following our past practice we will not provide guidance on U.S. product sales. On sales to collaborators, we expect these sales to be flat as compared to 2005 levels, which were $326 million. On royalties, we expect the growth rate to be about 20% over 2005 levels, of $935 million. On contract revenues, we expect this line to be relatively flat, compared to 2005. We expect cost of sales as a percentage of net product sales to decline to 15 to 16% of sales, recognizing that there is always the potential for an increase in cost of sales, if we have any unplanned manufacturing or inventory issues.

On R&D, we expect absolute dollar spending to increase over 2005 levels, as we invest in our late stage pipeline, and continue to add new programs in the early stage pipeline. And we expect R&D as a percentage of operating revenues for 2006 to be 18 to 19%. MG&A absolute dollar spending is also expected to rise, primarily in support of anticipated product launches including Avastin, Rituxan, Rheumatoid Arthritis and Lucentis which we're committed to executing successfully. In addition, we expect to increase spend on our corporate infrastructure groups to support the growth of the business and on nonoperating royalty expenses. Overall, we expect MG&A as a percentage of operating revenues for 2006 to be 21 to 22%.

Collaboration profit sharing expenses are expected to increase in 2006 consistent with our expectations for higher Raptiva, Rituxan and Xolair product sales. On operating margin, we expect this metric to increase from 34 to 35% in 2006 as compared to 32% in 2005. On other income net, we expect net interest income to be 20 to 25% higher than 2005, although this may vary with interest rates. As in the past years, we may use biotech stock gains to offset a portion of inlicensing expenses in 2006, which would increase other income net, or we may also realize biotech stock gains as a consequence of market transactions. For example, Amgen's acquisition of Apgenics would lead to a sizeable gain for us as a shareholder of Apgenics, that we will recognize on this line.

Our 2006 non-GAAP tax rate is expected to be approximately 37%. And we expect weighted shares outstanding for 2006 to be flat as compared to 2005. For 2006, we expect capital expenditures to be approximately $1.5 billion, driven primarily by manufacturing expansion, and in particular, ramp-up of CCB2 activity and for projects related to existing facilities and increases in office space and land purchases. We also plan to continue to repurchase shares in 2006 to offset dilution from option exercises and to maintain Roche's ownership percentage above 55.7%. The cash outflows associated with share repurchases are hard to predict, since they're dependent on the stock price and option exercise patterns but it is probably a reasonable planning assumption that the net share repurchase costs will be higher than the 2005 number which was $560 million.

With this assumption, we expect to end 2006 with a modest decrease in our cash position relative to year-end 2005. All in, recognizing that there are always potential factors in our business that can change, the bottom line for 2006 is that we're expecting year-over-year non-GAAP EPS growth of approximately 35 to 45%.

Now I'll turn the call back over to Kathee.

Kathee Littrell, Senior Director of IR

Thank you very much, David. 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. Operator, please queue up the questions.

Questions and Answers

Operator

Operator Instructions We will pause for just a moment to compile the Q&A roster. Your first question comes from Joel Sendek with Lazard.

Q - Joel Sendek

Thanks. A question on Avastin. I'm wondering, your philosophical viewpoint on how you set and measure sales objectives for Avastin in advance of the approval of the drug in lung and breast cancer?

A - Ian Clark

Our objectives from a philosophical point of view?

Q - Joel Sendek

Well, I guess how do you figure out what your objectives will be for sales given the fact that you don't have the approval? I mean it must be difficult and we are in a difficult situation of having to predict them.

A - Ian Clark

Let me try. Let me try to get it. We obviously have sales that are on label usage. We have good tracking of that to put together a solid number. We then put in place market research based studies to look at adoption in the nonlabeled, or unlabeled setting, and we try and translate that, what is inevitably, we're always a sound base of research into a level sales using a number of assumptions around duration, dose, et cetera. It is far from an exact science. We do our best to measure it. And I expect you have a similar challenge with that period of time. And it gets a lot easier once we get to the onlabel stage.

Q - Joel Sendek

Okay. Thanks.

Operator

Your next question comes from Craig Parker with Lehman Brothers.

Q - Craig Parker

Hi. Good afternoon. I have a question about the humanized anti-CD20 program. Is it, I guess from your slides fair to assume, that there won't be any development in hematology, and I guess the second part of that question, the process yield improvements for Rituxan, would those basically offset your potential economic improvements in that product, if you had gone after hematology? I guess that is a backwards way of asking are there roughly 8 percentage points improvement in the gross margin with those yield improvements?

A - Sue Hellman

Let me talk about the first question, because I'm still trying to do the math on your second question. In the U.S., our development plans are limited to the immunology indications at this point. There is an ex-U.S. mold trial that is going on, that Roche is sponsoring, for the anti-CB20 humanized molecule, so when we do reach key milestones for go/no go decisions we still have an open opportunity to go for immunology or for both indications and we haven't made that final decision yet.

A - David Ebersman

Craig, this is David. To your question on the process improvements, I wouldn't draw the conclusion that you drew. First of all, we haven't given any sense of the economic benefit, and how it would translate to cost of sales from the improved protection process. But secondly, for the humanized antibody and for anything that is still in development, we haven't even locked down the process yet. So when we learn how to improve one process, we try to apply that process to every other process that we do, so I think it is just premature to even try to speculate about what the cost of sales numbers would look like for something that is still in Phase II.

Q - Craig Parker

Fair enough. I guess I was alluding to the amended contract that would have the collaborative payment go from 38 to 30% of that $350 million objective for the DD20 product.

A - David Ebersman

Yes, we do know that math, yes.

Q - Craig Parker

Yes. Thank you.

Operator

Your next question comes from Steve Harr with Morgan Stanley.

Q - Steve Harr

I was hoping you could maybe give us a little granularity on how much Avastin use was in breast and lung cancer, and then following up on that, has that lung cancer changed at all since you have Compendia listing? And then finally, what do you think it will take to really accelerate penetration in the marketplace? Is this the marketplace telling you something about marketplace, or is this a marketplace just merely waiting for easier reimbursement?

A - Ian Clark

Okay. Thanks. You want to talk about the total sales, still today, the majority of the total sales are in the colorectal cancer setting and even a portion of the growth is coming from there and I did mention the fact that the duration is going up, which is good news, the right thing to do for patients and indications for all of our indications. Would he have seen increasing adoption in lung and breast. We still have some use in the renal count setting that is occupying a larger slice of the growth. I didn't quantify it for you, and I decline to do so. In terms of where we're going and where our challenges are, I think we see oncology dividing itself in three groups. There are some who will adopt these drugs, Herceptin almost immediately when they see the data to patients who they believe is very deserving, and that is obviously a relatively small minority. You then have a subset who are understandably concerned about reimbursement and you mentioned the compendia listing and we have seen some consequence to that. Having said that it often takes a couple of months after the initial compendium listing for people to be confident that the reimbursement will take place, and we see some strengthening to the end of the year and we don't have compendia listing for breast, and we'll see what happens there. And there's quite a significant majority, in the current reimbursement environment, wait for the label, and that's what we said they will do and they obviously are going to do. So I think you are going to see steps of growth, different customers slice, and the compendia being fairly critical. That said, there will come be a point that the compendia listing ends up being so late that it may get very close to label or we won't have that step in the process.

Operator

Your next question comes from Mark Augustine with Credit Suisse First Boston.

Q - Mark Augustine

Thanks. With respect to Rituxan and rheumatoid arthritis, can you remind us in your filings what the number of rheumatoid arthritis patient exposures is and when you anticipate seeing completion of the duration of response study? Thank you.

A - Sue Hellman

This is Sue. Let me look up the answer to those two questions because I don't know off the top of my head. Why don't we go to the next question and we will come back to that.

Q - Mark Augustine

Thanks.

Operator

Your next question comes from Ian Somaiya with Thomas Weisel Partners.

Q - Ian Somaiya

Thanks. I just wanted to follow-up on Ian's remarks regarding duration of therapy. I was hoping you could expand on that, what type of increase have you seen in colorectal cancer and what portion of the 5,000 patients are currently in treatment?

A - Ian Clark

Okay. Duration, we have not quantified the duration. The reason we do not is that we think it is an evolving feature. And it would almost have to be when a drug is new. You will have a portion of the patient does less well with the drug at the early stage and ones who may well still be on it have not finished their treatment process. And we have not quantified it. We have said that there have been very different reasons why people have different reasons people have given us for not going the progression, whether it is holidays, or stopping when the chemo stops and integration has increased enough to be significant to sales growth. I'm not sure what the 5,000 patients you're referring to actually are.

Q - Ian Somaiya

You mentioned that there were 5,000 patients since the launch of the drug that have been treated with Avastin. I was just curious how many are still on therapy.

A - Ian Clark

The number was 55,000 I couldn't quantify what?

Q - Ian Somaiya

Okay. Maybe just a follow-up then on what you're doing to extend the usage of Avastin: Just the duration.

A - Ian Clark

In terms of duration, I think it is, I will ask Sue to add to this as well, what we're asking, if you think about it, the problem signed, and the fact that the drug is sure to get its benefits being used to progression. In the use of the colorectal study. That was 10 months and more. And there is an antibody that is different than chemotherapy and that's the way it should be used. So follow the results of the study. And it that is the approach.

A - Sue Hellman

I completely agree with Ian that in terms of what we promote today on label, the study results that were generated were generated by treating patients and a quarter of the patients in our colon trial were treated beyond progression. So that is part of the label use for colon. In our Phase III ES4 program, we are looking at the use specifically of treatment in multiple lines of Avastin in colorectal cancer, more than an observational mode but to answer some key questions in that area, and in the breast and lung setting, both exploring Avastin in combination with multiple different chemotherapy types which will help physicians understand the safety and potential efficacy in those settings, but also following for example in lung cancer a question of continued Avastin and placebo or Avastin alone and I think these kind of trials will help physicians understand the duration of use.

Q - Ian Somaiya

Thank you.

Operator

Your next question.

A - Sue Hellman

Let me come back to, I'm sorry, Operator before you go to the next question, to the question that was asked about the rheumatoid arthritis filing. There is about 500 patients with rheumatoid arthritis in that, in the trial in patients who were factored in anti-TNF alpha agents and as a reminder we do have over 300,000 patients treated with lymphoma and always go back to the safety database that was originally derived, although it is not completely on point for rheumatoid arthritis but 500 patients approximately in that trial. We don't have time lines yet for the re-treatment study, because we haven't yet initiated that trial and I will be able to give you input on both the initiation timing and our expected finishing of that trial when we have started, as we typically do.

Operator

Your next question comes from May-Kin Ho with Goldman Sachs.

Q - May-Kin Ho

Hi, I have a question for Art. You mentioned earlier that you are going to review the 2006-2010 goals that have you given us. Obviously since you have stated that goal, have you had a number of positive trials that increased the potential of the products by several billion dollars, and previously the goal was about 20% average EPS growth for '06 to '10 so can you, I know that you can't tell us exactly what you're thinking, but can you at least describe some of the parameters that you are thinking about in terms of giving us guidance?

A - Art Levinson

Thanks for the question. As you well know, every five to seven years or so, we try to take a longer-term look at the business, and see how we should manage toward, it and it is a set of goals that we take very seriously, and we're really quite refractory to changing them based on any one particular given result, be it positive or negative, but as you pointed out, 2005 was really and almost all respects a remarkable year for us, so even though in 2004, we started defining our 2010 program, we started realizing that in the aggregate, we really needed to set some more aggressive goals for 2010. So we are in the process now internally of finalizing our thoughts on that, and I would just say that when you join us in March in New York at our analyst meeting, I have every expectation then we will be in a position to detail our revised 2010 goals at that time.

Q - May-Kin Ho

Thank you.

Operator

Your next question comes from Eric Schmidt with SG Cowen.

Q - Eric Schmidt

Good afternoon. Two questions for Ian. One I was hoping that you might be able to at least try and quantify the penetration rate of Herceptin into the Her 2 plus setting. And two, it looks like Rituxan had a pretty significant uptick on a quarter over quarter basis, and you mentioned that wasn't necessarily in auto-immune disease. I'm wondering what might explain that trend.

A - Ian Clark

Okay. I'm sorry, I can't give you a number, I think what I can say about Herceptin, though, is that the drug has been on the market or has been on the market for seven or eight years by the time the data became public and it was pretty solid and predictable trend line and you've seen a significant shift from that trend line and I think it is fair to say that most of that shift has come from Agilent use. The data was phenomenal and it was followed up pretty closely by the compendia listing. So I think it is not too difficult to do the math in terms of how much the Agilent use affected the sales. In terms of Rituxan, it was a strong last quarter, you're right. No offense that that was some sort of unusual request as a consequence of immunology use or a little bit of background use as I mentioned before. It is no one thing. We seem to have done well across the board. Adoption seems to have moved up across many of the indications but no one particular driver. And inventory is pretty much where we expected as well. So solid overall performance. Nothing.

Q - Eric Schmidt

Thank you.

Operator

Your next question comes from Jason Kantor with RBC Capital Markets.

Q - Jason Kantor

Hi, thanks for taking my question. You had previously mentioned that you were, that there were perhaps several potential interim analyses of the renal cell Phase III trial in 2005, and it seems now that you're talking about analyses sometime in 2006. Can you tell us what is going on there? And give us some more granularity as to timing of expecting that data?

A - Sue Hellman

This is Sue. We realized in the past on our Avastin trials that specifically in lung and breast that it was useful for the outside world to know when we do have interim analyses planned, so we have made it a point internally to let you know when we expect potential interim analysis, we have made a decision though not it to give a point estimate on the exact date of those, because we don't think that will necessarily be helpful and just as a reminder, these are event-driven, so it is somewhat difficult to pin them down. As I mentioned in my comments, though, what we do see is based on the events that are occurring right now, and based on our expectation for the study, our team thinks that it could happen in 2006, but I don't feel comfortable pinning that down further than saying we do expect an interim this year and it may be that the final interim in this study based on event rates.

Q - Jason Kantor

Does that mean that there was, the number of events were never reached for an '05 look? Or that they were reached and there wasn't enough statistical power still to make any on conclusions about that data in as?

A - Sue Hellman

I couldn't say on that because the data safety monitoring board is independent of Genentech and those are, all of those details are within their charter that we don't tend to share publicly.

Q - Jason Kantor

So you can't say if the thing that you thought would happen in '05 ever occurred?

A - Sue Hellman

No.

Q - Jason Kantor

The analysis never occurred?

A - Sue Hellman

No, I'm not comfortable getting to that level of detail on what we look at for the data safety monitoring board.

Q - Jason Kantor

All right. Thank you.

Operator

Your next question comes from Bill Tanner with Leerink Swann.

Q - Bill Tanner

Thanks. Some questions on Rituxan. It sounds like most likely you would get an approval, or if you did get an approval, it would not be for re-treatment and so I guess there is the Phase III trial that you plan to initiate. Are there any data to suggest that re-treatment is possible, if it is not possible, how does that I guess affect the commercial attractiveness of the drug for the indication, and then I guess on the go/no go with the second generation, is this all pretty much purely contingent on the outcome of Rituxan with the agency?

A - Sue Hellman

So the answer to your first question is that we have filed in the patients who are anti-TNF refractory with the Phase III data. It is a priority review. It is for an unmet need. And we won't expect to have the formal re-treatment studies in that filing. There are patients who have been re-treated and we do have follow-on information regarding re-treatment, some of which has been published and presented so, re-treatment information is available. What we're planning on doing going forward is having more formal re-treatment studies so that we can give people more information about the frequency of retreatment and the experience in retreatment. So that's what you should expect going forward, and Ian can comment in terms of any additional thinking commercially on that. We have a hurdle rate for the second generation anti-CD20 in rheumatoid arthritis based on our expectations on the target product profile, on what we need in a next generation molecule, and so the go/no go decision will be based on that pre-specified target that we have for the product.

A - Ian Clark

And maybe if I can add to that, like all product launches the good and the bad, the good news is that the data was great, and in addition you do understand, and are excited by a different method of action, that they're somewhat concerned that we haven't got randomized retreatment data an the gap, and that it is one that we have to fill, but it will be a hurdle in the early months and maybe years of the product's life.

Q - Bill Tanner

And I guess just with respect to the demart patients who have inadequately responded demarts, what is the process then of what the treatment post-Rituxan would be, assuming that these patients might fail that treatment?

A - Sue Hellman

The Phase III trial itself doesn't prescribe the treatment, but as I mentioned, we have a separate study that will be a formal look at that re-treatment of patients with rheumatoid arthritis, with Rituxan.

Q - Bill Tanner

Okay. Thanks.

Operator

Your next question comes from Geoffrey Porges with Sanford Bernstein.

Q - Geoffrey Porges

Thanks for taking the question. Ian, just a follow-up question on reimbursement, specifically for the unlabeled indications currently. Given that you have compendium listing, you could give us a sense of in any way quantify the percentage of plans, both the Medicare and the private plan that covering, Agilent, Herceptin, Avastin and lung, and then what if any coverage you're getting for Avastin and breast, and then finally related to, that are you getting reimbursed for the higher dose of Avastin in second line colorectal cancer? Thanks.

A - Ian Clark

Okay. Let me start. When we typically see the reimbursement of following a compendium listing, it takes them a little while to get the drug listed, and they always, do and the reimbursement tends to be good at around a sort of 90-day mark after that listing took place. And I wouldn't expect the item to go along different than that. We sort of went through that time period in December. In terms of private insurer, some choose to follow, some don't, and in fact, you may recall, in fact a couple of private insurers chose to announce that they reimburse for lung and breast, right at the get-go. So have you a whole spectrum. Some perceive the compendia, some follow it. Some wait for the label. And it was a long question so I forget the last one. What was the final question you had?

Q - Geoffrey Porges

The last question was about the reimbursement for the higher dose of Avastin in second line colorectal cancer.

A - Ian Clark

And you also talked about breast. Breast as you know is reimbursed, no compendia listing, so a little too early to tell because there isn't a great deal of usage there. In terms of the higher doses, it is interesting that the data we've got suggests that quite a lot of refractory use of Avastin in colorectal is actually at the lower dose. Interestingly. I haven't heard any issues with reimbursement of the higher dose though.

Q - Geoffrey Porges

Thanks. That's very helpful.

A - Kathee Littrell

Operator, we are going to take about three more questions.

Operator

Your next question comes from Mike King with Rodman & Renshaw.

Q - Mike King

Thanks for taking my question. Can you guys hear me?

A - Ian Clark

Fine.

Q - Mike King

Thanks. Just a question to follow up on Rituxan regarding positioning to physicians with regard to inadequate response. Let's say you've got someone who is eligible for treatment, two doses of Rituxan and then no response, the concern that we've heard in our discussions with physicians is they are unsure what to do with those patients, in that situation. So I'm just wondering what you're doing from a medical affairs perspective to give the docs guidance. Thank you.

A - Sue Hellman

Mike, that is a good question. We've had a lot of discussion since we've heard that feedback from physicians in terms of patients who are nonresponders typically. We're having discussions internally but we like for our plans on next step to be consistent with any potential post marketing commitments given the anticipated timing that we will hear back from the FDA at the end of February so what would be useful if we can answer the key physician questions and any questions that we have from the FDA concurrently so we're in the finalization of the post marketing or phase IV program for Rituxan in this particular patient population.

Operator

Your next question comes from Gene Mack with HSBC.

Q - Gene Mack

Thanks for taking the question. I was wondering, is there any update on, I think I remember you saying last quarter that you were going to revisit the renal cell compendia listing/ There any update on that? And then also, I know that, given where the duration of treatment was, for colorectal cancer, at the beginning of '05, and maybe where it is now, when do you think you might be comfortable at where it sort of peaks out?

A - Ian Clark

Ian here. It is not so much the peak. It is more getting to a point where I think we might well, it is getting to the point where we think we've got a representative balance of patients in the short or longer duration. The longer we think it may not be until the end of '06. We can answer that and I think the compendium listing that you said we might revisit might well be the refractory colorectal one in which we are doing so, although it is possible that will be superceded by the license. And the answer is we haven't heard anything back. The time lines are a little bit difficult to predict at the moment. Going back to the early part of the year, we seem to be waiting longer than we have seen in the past on average, which was typically six months, and then we turn around and got the listings for Herceptin Agilent in lung in only three months so we haven't heard back and we just made some phone calls and haven't heard anything.

Q - Gene Mack

Okay. Thank you.

Operator

Your next question comes from Bret Holley with CIBC World Markets.

Q - Bret Holley

Yes, I've got a question on the reexamination of the Cabilly pattern, the second request for reexamination, how does that affect the time lines, and what kind of pass-forward can we see in that situation?

A - David Ebersman

Well, we don't even know if the patent office is going to accept the second request for reexamination. So it would be pretty early for us to give a lot of detail on the time lines. As far as we know the time lines that we were proceeding down with the reexamination we talked about before still are consistent with what we told you. We submitted our response and they're reviewing it.

Q - Bret Holley

And when might we hear a response, I mean typically, in these kinds of situations?

A - David Ebersman

I really don't know how long it will take them to review our response. They may come back with a decision, they may come back with questions, they may come back with further nonfinal actions. We're at the part that is the unpredictable part now, I would say.

Q - Bret Holley

Thanks.

Kathee Littrell

And this is the last question, operator.

Operator

Your final question comes from Ron Ellis with Prudential.

Q - Ron Ellis

Thanks for taking one more question. Ian, could you just go through the penetration rates for the different lines of colorectal cancer and Sue, one question for you, from the E2100 study, when do you think we will see the final analysis of that? And any different marketing to the positions if it doesn't have a final survival benefit?

A - Sue Hellman

I will answer the second question first and then Ian can tell you about penetration. In terms of E2100, I would expect that that, we will hear about the latest update at ASCO this year, that would be the next available medical meeting but I don't know for sure if that will happen, but that would be reasonable. In terms of the outcome of the study, I think it is important to look at the magnitude of the difference, the impact of Avastin on progression-free survival and survival. And if you look at that, with the two presentations that happened in 2005, both at ASCO and in San Antonio, the magnitude of the difference has really remained remarkably similar and frankly remarkably similar to the magnitude that we saw in colon cancer and me from a clinical trial survival we have seen a similar effect on progression free survival and survival, and the difference in the P values of the confidence levels is related to the sample size and I mentioned the other thing that is important in breast cancer patients can go in a wide variety of therapies when you're looking at survival in the first line setting. So our position on this is that the data is very strong and the commitment we made to FDA in terms of the hurdle rate for what would be approvable and I'll just speak as an oncologist myself, I won't speak for other oncologists I think very impressive in terms of new therapy for breast cancer.

Q - Ron Ellis

Thank you.

A - Ian Clark

And going right through the facts, with a stable competitor last quarter which I mentioned has been stable for several quarters and to see whether or not they are actually settling into place, it may change when we, when I think we get the label to come on. First line penetration with the 56%, compared to last quarter, there I think we probably have some upside. There are some parts where oncology is stilt thinking about whether they should adopt the drug and that's why I mentioned from 56 to 57.

Kathee Littrell

Okay. Thank you very much you all for joining us today. Sue Morris and I will be back in the offices in about 10 minutes, so feel free to give either of us a call if you have any other questions. Thank you very much.

Operator

This concludes the Genentech fourth quarter and year-end 2005 earnings results conference call. You may now disconnect.

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Source: Genentech Inc. Q4 2005 Earnings Conference Call Transcript (DNA)
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