Gilead Announces Fourth Quarter and 1997 Year-end Financial Results

Foster City, CA -- January 29, 1998

Gilead Sciences, Inc. (NASDAQ:GILD) announced today its results of operations for the fourth quarter ended December 31, 1997. For this quarter, the Company reported revenues from net product sales of $2.4 million, revenues from collaborative agreements of $7.0 million and revenues from product royalties of $0.5 million, for total revenues of $9.9 million and net interest income of $4.8 million. This compares to revenues from net product sales of $3.7 million, revenues from collaborative agreements of $2.0 million and revenues from product royalties of $12,000, for total revenues of $5.8 million and net interest income of $4.1 million for the same quarter in 1996. The net loss for the three months ended December 31, 1997 was $12.4 million or $0.42 per share, compared to a net loss of $8.1 million or $0.28 per share for the same quarter in 1996.

The net revenues from product sales were derived from the sale of VISTIDE® (cidofovir injection), which Gilead markets independently in the United States for the treatment of cytomegalovirus (CMV) retinitis in patients with AIDS. The other revenues were received as a result of collaborations with corporate partners, including milestone payments, contract revenues for research and development projects and royalties on product sales of VISTIDE in the European Union, sold by Gilead's partner Pharmacia & Upjohn. Gilead also received royalties from Hoffmann-La Roche Inc. for co-promoting Roferon¨-A (Interferon alfa-2a, recombinant) in the United States for the treatment of hepatitis C virus infection.

The Company also announced its results of operations for the twelve months ended December 31, 1997. For the full year, the Company reported revenues from net product sales of $11.7 million, revenues from collaborative agreements of $27.4 million and revenues from product royalties of $0.9 million, for total revenues of $40.0 million and net interest income of $17.8 million. For the year ended December 31, 1996, Gilead reported revenues from net product sales of $8.5 million (derived from the sale of VISTIDE launched in June 1996), revenues from collaborative agreements of $24.9 million and revenues from product royalties of $33,000, for total revenues of $33.4 million and net interest income of $14.3 million. The net loss for the twelve months ended December 31, 1997 was $28.0 million or $0.95 per share, compared to a net loss of $21.7 million or $0.78 per share for the twelve months ended December 31, 1996.

During 1997, revenues from collaborative agreements included a one-time $10.0 million milestone payment from Pharmacia & Upjohn following the marketing authorization of VISTIDE in the European Union in April. In addition, Gilead received $6.0 million in milestone payments, plus reimbursement of research and development expenses, from its partner F. Hoffmann-La Roche Ltd. These payments are associated with the collaboration between Gilead and Roche to develop orally administered compounds for the treatment and prevention of viral influenza. Gilead and Roche are now testing the lead compound from this class, GS 4104, in Phase II/III human studies in the United States, Europe, Canada and Hong Kong.

As of December 31, 1997, the Company had cash, cash equivalents and short-term investments of $322.3 million compared to $296.0 million at December 31, 1996. This increase is primarily the result of cash received from corporate partners, including the $10.0 million cash milestone payment and a $40.0 million equity investment by Pharmacia & Upjohn upon the European approval of VISTIDE.

Gilead Sciences is an independent biopharmaceutical company that seeks to provide accelerated treatment solutions for patients and the people who care for them. The Company discovers, develops and commercializes proprietary therapeutics for important viral diseases, including a currently marketed product, VISTIDE (cidofovir injection), for the treatment of CMV retinitis, a sight-threatening viral infection in patients with AIDS. In addition, the Company is developing products to treat diseases caused by HIV, hepatitis B virus and influenza virus. Gilead common stock is traded on The Nasdaq Stock Market under the symbol GILD.

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

  Three months ended December 31, Year ended December 31,
  1997 1996 1997 1996
  (unaudited)
(note 1)
Revenues        
     Product sales, net $ 2,419 $ 3,722 $ 11,735 $ 8,477
     Contract revenues 6,975 2,047 27,413 24,910
     Royalty revenues 515 12 889 33
         
Total revenues 9,909 5,781 40,037 33,420
         
Costs and expenses        
     Cost of sales 172 362 1,167 910
     Research and development 20,036 10,873 59,162 41,881
     Selling, general and administrative 6,947 6,745 25,472 26,692
         
Total costs and expenses 27,155 17,980 85,801 69,483
         
Loss from operations (17,246) (12,199) (45,764) (36,063)
         
Interest income, net 4,822 4,117 17,771 14,331
         
Net loss $ (12,424) $ (8,082) $ (27,993) $ (21,732)
         
Basic and diluted loss per share $ (0.42) $ (0.28) $ (0.95) $ (0.78)
         
Common shares used in the
     calculation of basic and diluted
     loss per share
29,860 28,645 29,326 27,786

Note 1: Derived from audited financial statements at that date.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

 
December 31, 1997
December 31, 1996
 
(note 1)
(note 1)
Assets    
     Cash, cash equivalents and
          short-term investments
$ 322,298 $ $295,963
     Other current assets 17,960 4,290
          Total Current Assets 340,258 300,253
     Property and equipment, net 10,313 9,172
     Other assets 1,498 1,248
  $ 352,069 $ 310,673
     
Liabilities and stockholders' equity
     Current liabilities $ 33,391 $ 16,099
     Long-term obligations 1,331 2,914
     Stockholders' equity 317,347 291,660
  $ 352,069 $ 310,673

Note 1: Derived from audited financial statements at that date.