Genentech, Inc. has entered into an agreement with Lonza Group, Ltd. for the sale of Genentech’s manufacturing facility in Porrino, Spain for $150 million. The company has also entered into a supply agreement for the manufacture of certain products at Lonza’s facility that is currently under construction in Singapore. Genentech will also have the right to exercise an exclusive option to purchase the Singapore facility.

Under the terms of the agreement, Lonza will acquire Genentech’s FDA-licensed Porrino facility, which has 40,000 liters of biologic manufacturing capacity and is currently dedicated to the production of Genentech’s Avastin. Lonza plans to retain the facility’s 310 employees and will continue to produce Avastin for Genentech under the terms of a supply agreement.

Genentech plans to purchase Avastin and other oncology products from Lonza’s planned 80,000-liter Singapore facility. FDA licensure for producing Avastin at Lonza’s Singapore plant is expected in 2010. The terms of the option to purchase the facility allow Genentech to acquire the facility during the period from 2007 to 2012 for $290 million, plus an additional $70 million in milestone payments if certain performance milestones are met.

“We believe that this transaction provides Genentech with benefits that enhance our manufacturing organization and strengthen our strategic relationship with Lonza,” said Patrick Y. Yang, Ph.D., executive vice president of Genentech’s Product Operations. “We are pleased that the FDA-licensed Porrino facility and its highly-skilled employees will continue to supply product to our patients with new Lonza ownership, and we expect that our agreements, including an option to acquire Lonza’s 80,000-liter facility in Singapore, will provide Genentech with flexibility, capacity and cost effectiveness to significantly improve our manufacturing capability.”

The transaction is subject to various closing conditions. The companies anticipate closing the transaction before the end of 2006.