[News Release from Genentech, Inc.]

GENENTECH AND XOMA ANNOUNCE RESULTS OF PHASE II STUDY OF RAPTIVA™ IN PSORIATIC ARTHRITIS PATIENTS

SOUTH SAN FRANCISCO, CA and BERKELEY, CA – March 21, 2004 - Genentech, Inc. (NYSE: DNA) and XOMA Ltd. (Nasdaq: XOMA) today announced preliminary results of a randomized, placebo-controlled Phase II study with RAPTIVA(tm) (efalizumab) in 107 patients with psoriatic arthritis.  The study did not reach statistical significance at 12 weeks (84 days) for the primary endpoint, ACR 20 response.   An ACR 20 response indicates at least a 20 percent improvement in an individual’s signs and symptoms of arthritis.

After 12 weeks of therapy, 28 percent of patients receiving RAPTIVA(tm) achieved an ACR 20 response compared to 19 percent of patients receiving placebo.  In the subgroup of patients with moderate-to-severe plaque psoriasis, Psoriasis Area and Severity Index (PASI) scores for patients receiving RAPTIVA were similar to the statistically significant results demonstrated in Phase III clinical studies in psoriasis. There was no worsening in the signs and symptoms of psoriatic arthritis with RAPTIVA treatment.  Treatment with RAPTIVA was well tolerated. There were no adverse events of arthritis on therapy or during the four-week follow-up period after discontinuation of therapy.

"While the treatment effect of RAPTIVA did not show a significant benefit in  psoriatic arthritis, the effect on the skin manifestations of chronic moderate-to-severe plaque psoriasis was consistent with data from our existing clinical trial database.  This observation demonstrates that while psoriatic arthritis is associated with the skin disease psoriasis, these are distinct diseases," said Hal Barron, M.D., F.A.C.C., Genentech’s senior vice president of Development and chief medical officer.

Genentech and XOMA plan to present these data at an upcoming medical meeting.

About Psoriatic Arthritis

Psoriatic arthritis is an inflammatory disease that affects joints, ligaments, tendons and, less frequently, the spine. Although psoriatic arthritis is associated with and occurs in a subset of patients with psoriasis, they are considered distinct diseases, which may have different pathophysiologies. According to the American College of Rheumatology, nonsteroidal anti-inflammatory drugs (NSAIDS) are the initial treatment for arthritis symptoms in patients with psoriatic arthritis.

About RAPTIVA(tm)

As a targeted T-cell modulator, RAPTIVA is designed to reversibly block the activity of T-cells without destroying them.  T-cells play a key role in the development of psoriasis.  In October 2003, RAPTIVA was approved by the U.S. Food and Drug Administration for the treatment of chronic moderate-to-severe plaque psoriasis in adults age 18 or older who are candidates for systemic therapy or phototherapy. 

In clinical trials of RAPTIVA in patients with psoriasis, common adverse events that occurred at least two percent more frequently in RAPTIVA patients than in placebo included headache, infection (mostly upper respiratory infections), chills, nausea, pain, myalgia (muscle pain), flu syndrome, fever, back pain, and acne.  Five of these events (headache, chills, fever, nausea and myalgia) were predominantly acute adverse events and were principally seen following the first two injections of RAPTIVA.  For the third and subsequent doses, the incidence of acute adverse events was similar between the RAPTIVA and placebo groups. Less than one percent of patients were discontinued from treatment due to acute adverse events.

RAPTIVA is an immunosuppressive agent and has the potential to increase the risk of infection and reactivate latent, chronic infections.  Many immunosuppressive agents have the potential to increase the risk of malignancy. The role of RAPTIVA in the development of malignancies is not known.  Serious adverse events occurring in clinical studies with RAPTIVA, which were infrequent and similar to placebo, include serious infections (0.4 percent in RAPTIVA vs. 0.1 percent in placebo), malignancy (the overall incidence of malignancies of any kind was 1.8 per 100 patient-years for RAPTIVA-treated patients compared with 1.6 per 100 patient-years for placebo-treated patients), thrombocytopenia (0.3 percent), and worsening of psoriasis, typically upon discontinuation (0.7 percent).

RAPTIVA was developed in the U.S. through a partnership between Genentech and XOMA for the treatment of moderate-to-severe plaque psoriasis.  Genentech and Serono have an agreement through which Serono receives an exclusive license to market RAPTIVA outside of the U.S., Japan and certain other Asian countries. On March 16, 2004, Serono announced approval for RAPTIVA in Switzerland for adult patients with moderate-to-severe plaque psoriasis. 

Serono announced in February 2003 that it had submitted a Marketing Authorization Application (MAA) to the European Agency for the Evaluation of Medicinal Products (EMEA) for European Union Approval of RAPTIVA in psoriasis.  Serono anticipates a final decision during the second half of 2004. 

About Genentech

Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs.  Seventeen of the currently approved biotechnology products originated from or are based on Genentech science.  Genentech manufactures and commercializes 13 biotechnology products in the United States.  The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA.  For additional information about the company, please visit http://www.gene.com.

About XOMA

XOMA is a biopharmaceutical company focused on developing and manufacturing antibody and other protein-based biopharmaceuticals for disease targets that include cancer, immunological and inflammatory disorders, and infectious diseases.  XOMA's proprietary and collaborative product development programs include:  RAPTIVA for moderate to severe plaque psoriasis (marketed), psoriatic arthritis (Phase II) and other indications in collaboration with Genentech, Inc.; MLN 2222, a recombinant protein for reducing the incidence of post-operative events in coronary artery bypass graft surgery patients with Millennium Pharmaceuticals, Inc. (Phase I); a TPO mimetic antibody to treat chemotherapy-induced thrombocytopenia in collaboration with Alexion Pharmaceuticals, Inc. (preclinical) and a multiple antibody product candidate program for the treatment of cancer in collaboration with Chiron Corporation (preclinical).  XOMA’s proprietary bactericidal/permeability-increasing protein (BPI)-derived programs include XMP.629, a topical formulation of a BPI-derived compound for acne (Phase II), and NEUPREX in a Phase I/II study to limit complications following pediatric cardiopulmonary bypass surgery. For more information about XOMA's product pipeline and antibody product development capabilities and technologies, please visit XOMA's website at http://www.xoma.com.

Regarding XOMA:

Statements contained herein related to product development and collaborative arrangements, or that otherwise relate to future periods, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market.  These risks, including those related to safety and efficacy of the products being studied; action, inaction or delay by the U.S. Food and Drug Administration, European regulators or their advisory bodies; analysis and interpretation of scientific data by these entities and others; changes in the status of existing collaborative relationships; the ability of collaborators and other partners to meet their obligations; and market demand for products, are described in more detail in XOMA's most recent annual report on Form 10-K and in other SEC filings.

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