No one outside of Genentech Inc. knows what kind of internal mopping up the company's new president and CEO, Arthur Levinson, will have to do following the departure of G. Kirk Raab from those positions. But discussions with the South San Francisco company and with Wall Street analysts and senior pharmaceutical and biotech managers make it very clear that there is a gulf between the company's self-image and the impressions of the rest of the world.

Levinson thus will have a tough row to hoe on two fronts in his external dealings.

First, Levinson will have to deal with a widespread - though not universal - impression that his appointment to head the company, together with the terms of the proposed extension of Roche's buyout option, marks a decision on the part of majority owner Roche to turn GNE from a fully integrated biopharmaceutical company into an R&D affiliate of Roche (see BioCentury Extra May 2 for proposed terms of the option extension).

Price cap conundrum

In contrast to Raab, Levinson, formerly senior vice president of R&D, is a scientist with no marketing experience.

Second, and more difficult to change, will be the even more widely held belief that the true cap on the stock is $60, the price at which shareholders may put their shares back to the company in 1999. As long as the market holds to that assessment, it will be difficult for GNE to move its stock closer to the $82.50 call option held by Roche. And that, in turn, will diminish any incentive Roche might have to exercise the option.

In an interview with BioCentury, CFO Louis Lavigne Jr. was adamant that GNE hasn't become simply a Roche affiliate. "That is a misconception," he said. "We are not going to be a research boutique. We are a full-fledged organization. We have an excellent sales and marketing organization, and our emphasis isn't changing. That's not even a question internally. That's so far off the mark in terms of being a question, it's totally refutable. The fundamentals of the company haven't been changed by all of this. The fundamental objectives remain the same."