ALZA announces 1994 financial results.

PALO ALTO, Calif.--(BUSINESS WIRE)--Jan. 25, 1995--ALZA Corp. Wednesday announced net income of $58.1 million or 71 cents per common share for the year ended Dec. 31, 1994, compared with net income of $45.6 million or 57 cents per common share for the year ended Dec. 31, 1993.

Net income for the quarter ended Dec. 31, 1994 was $15.2 million or 19 cents per share compared with a net loss of $9.9 million or 13 cents per share in the fourth quarter of 1993.

The results for 1993 included approximately $6.6 million (8 cents per share) of benefits related to the adoption of Statement of Accounting Standards No. 109, a $3.8 million (5 cents per share) fourth-quarter extraordinary charge relating to the redemption of ALZA's 7.5% zero coupon convertible subordinated debentures, and fourth-quarter pretax charges and allowances of $28.1 million (23 cents per share on an after-tax basis) relating primarily to manufacturing activities.

The company has decided to maintain the reserve it established after a suit was filed in 1991 by Ciba-Geigy Corp. alleging that the manufacture and sale of the Nicoderm transdermal nicotine product in the United States by ALZA and Marion Merrell Dow infringe a patent that is exclusively licensed to Ciba-Geigy. In October 1994 the U.S. District Court in New Jersey granted a summary judgement motion, brought by ALZA and Marion Merrell Dow, declaring that patent invalid.

At the time the summary judgment motion was granted, ALZA indicated that a reversal of this reserve could result in additional net income of approximately 4 cents to 5 cents per share. Ciba-Geigy has since filed an appeal of the court's decision. Due to the continuation of the litigation, ALZA will maintain the reserve.

"The Court's decision in October granting summary judgment fully supports ALZA's belief that Ciba-Geigy's claims are without merit," said Dr. Ernest Mario, ALZA's co-chairman and chief executive officer. "We believe the court's decision will be upheld on appeal. ALZA's decision to keep the reserve in place does not in any way reflect a change in our belief in the strength of our position."

Royalties and fees for 1994 increased by nine percent to $123.7 million. Royalties and fees for 1994 reflect a reduction of approximately $8 million to reserve for a potential adjustment in royalty income on sales of Procardia XL for the period from November 1993 through December 1994. As was reported earlier, the U.S. Patent Office issued to Bayer AG in November 1993 a composition of matter patent relating to nifedipine crystals in sustained-release formulations of nifedipine. If the issued claims of the patent appropriately cover the nifedipine formulation in Procardia XL, royalties otherwise payable by Pfizer to ALZA on U.S. sales of Procardia XL could be reduced by up to 11%.

Product development revenue for 1994 increased by $21.9 million to $68.7 million due to activities undertaken on behalf of Therapeutic Discovery Corp. (TDC). Research and product development expenses for 1994 increased by $22.9 million to $76.1 million.

Net sales increased to $68.5 million in 1994. Because the fourth-quarter 1993 manufacturing write-off increased costs of products shipped for 1993 by approximately $22 million, costs of products shipped for 1994 were lower than in 1993.

General, administrative and marketing expenses for 1994 increased from $21.4 million to $33.4 million primarily due to the formation of ALZA's field sales force and associated marketing activities.

Interest and other revenue of $17.8 million for 1994 was $2.7 million lower than in 1993; the 1993 results included approximately $5 million in gains realized on long-term investments liquidated to fund ALZA's $250 million contribution to TDC. Interest expense for 1994 was comparable to 1993.

Tax expense for 1994 reflected a 38% effective rate compared with a 35% rate for 1993. The number of weighted average common and common equivalent shares increased by three percent in 1994 due to the exercise of $15 warrants prior to their expiration in December 1993.

ALZA Corp. is a leading drug delivery company that develops, manufactures and markets a broad range of therapeutic systems that improve the medical and economic value of drugs. ALZA's therapeutic systems provide rate-controlled administration of medication.

(Summary Financial Information follows) -0-

                              ALZA Corp.
                    Summary Financial Information
                            (unaudited)
             (in thousands, except per share figures)

                                Quarter                 Year
                              Ended Dec. 31,        Ended Dec. 31,
                             1994       1993       1994       1993

Revenues:
  Royalties and fees       $34,563    $26,433    $123,748   $113,318
  Product development       19,407     13,396      68,715     46,783
  Net sales                 16,649      6,774      68,511     53,630
  Interest & other           4,589      2,786      17,782     20,451
   Total revenues           75,208     49,389     278,756    234,182
Costs and expenses:
  Research & product
   development              21,080     14,323      76,099     53,153
  Costs of products
   shipped                  15,886     33,514      56,638     74,450
  G & A and marketing        8,764      6,617      33,350     21,422
  Interest                   5,439      4,346      19,379     19,204
   Total costs and
    expenses                51,169     58,800     185,466    168,229
Income (loss) before income
 taxes, extraordinary item,
 and cumulative effect of
 accounting change          24,039     (9,411)     93,290     65,953
Income taxes (credit)        8,794     (3,294)     35,170     23,084
Income (loss) before
 extraordinary item and
 cumulative effect of
 accounting change          15,245     (6,117)     58,120     42,869
Extraordinary item - debt
 refinancing, net of
 income taxes                   --     (3,830)         --     (3,830)
Cumulative effect of
 change in accounting
 for income taxes               --         --          --      6,573
Net income (loss)          $15,245    $(9,947)    $58,120    $45,612

Per common & common
 equivalent share:
 Income (loss) before
  extraordinary item and
  cumulative effect of
  accounting change       19 cents   (8 cents)   71 cents  54 cents
 Extraordinary item -
  debt refinancing              --   (5 cents)         --  (5 cents)
 Cumulative effect of
  change in accounting
  for income taxes              --         --          --   8 cents
 Net income (loss)        19 cents  (13 cents)   71 cents  57 cents
Weighted average common
 & common equivalent
 shares                     82,170     78,631(a)   82,286    79,859

(a) Represents only weighted average common shares due to loss
reported for the quarter.

CONTACT: ALZA Corp., Palo Alto

Michael A. Boennighausen, 415/494-5222