Gilead Announces Second Quarter 1998 Financial Results

Foster City, CA -- July 30, 1998

Gilead Sciences, Inc. (NASDAQ:GILD) announced today its results of operations for the second quarter ended June 30, 1998. For this quarter, the Company reported revenues from net product sales of $1.6 million, contract revenues of $4.7 million and royalty revenues of $0.8 million, for total revenues of $7.0 million and net interest income of $5.0 million. This compares to revenues from net product sales of $3.9 million and contract revenues of $15.8 million, for total revenues of $19.7 million and net interest income of $4.2 million for the same quarter in 1997.

The net loss for the three months ended June 30, 1998 was $14.8 million, or $0.49 per share, compared to net income of $2.7 million, or $0.09 per share, for the same quarter in 1997. Gilead was profitable during the second quarter of 1997, due primarily to a $10 million milestone payment from Pharmacia & Upjohn following the marketing authorization for VISTIDEĀ® (cidofovir injection) in the European Union. During the second quarter of 1997, Gilead also received a $3 million milestone payment from F. Hoffmann-La Roche associated with the development of GS 4104 for the treatment and prevention of viral influenza.

Net revenues from product sales were derived from sales of VISTIDE, which Gilead markets independently in the United States for the treatment of cytomegalovirus (CMV) retinitis in patients with AIDS. The decline in VISTIDE-related revenues reflects a continuing decline in the incidence of CMV retinitis as a result of more effective human immunodeficiency virus (HIV) therapies. The other revenues result from collaborations with corporate partners, including contract revenues for research and development projects, and royalties on product sales of VISTIDE in the European Union by Gilead's partner Pharmacia & Upjohn.

Research and development expenses for the second quarter of 1998 were $18.3 million, compared to $14.7 million for the same period in 1997. This increase was due primarily to expenses associated with the advancement of four therapeutic candidates into later stages of clinical development.

Gilead also reported its results of operations for the six months ended June 30, 1998. The Company reported net revenues from product sales of $3.4 million and aggregate contract and royalty revenues of $17.2 million, for total revenues of $20.6 million and net interest income of $10.0 million for this period. This compares to revenues from product sales of $7.0 million and aggregate contract and royalty revenues of $18.2 million, for total revenues of $25.2 million and net interest income of $8.2 million for the six months ended June 30, 1997. The net loss for the six months ended June 30, 1998 was $22.2 million, or $0.74 per share, compared to a net loss of $5.2 million, or $0.18 per share for the six months ended June 30, 1997.

As of June 30, 1998, the Company had cash, cash equivalents and short-term investments of $312.6 million, compared to $322.3 million on December 31, 1997.

Gilead Sciences is an independent biopharmaceutical company that seeks to provide accelerated 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 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.

For more information, call the Gilead Corporate Communications Department at 1-800/GILEAD-5 (1-800/445-3235).

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
3 months ended, June 30 6 months ended, June 30
1998 1997 1998 1997
Revenues:
Product sales, net $ 1,598 $ 3,956 $ 3,393 $ 6,990
Contract revenues 4,682 15,761 16,089 18,091
Royalty revenues 756 9 1,114 110
Total revenues 7,036 19,726 20,596 25,191
Costs and expenses:
Cost of sales 114 328 344 815
Research and development 18,330 14,696 37,260 25,522
Selling, general and administrative 8,443 6,146 15,186 12,292
Total costs and expenses 26,887 21,170 52,790 38,629
Income (loss) from operations (19,851) (1,444) (32,194) (13,438)
Interest income, net 5,007 4,155 9,965 8,201
Net income (loss) $(14,844) $ 2,711 $(22,229) $ (5,237)
Basic and diluted income (loss) per share $ (0.49) $ 0.09 $ (0.74) $ (0.18)
Common shares used in the calculation of basic income (loss) per share 30,295 29,107 30,199 29,018
Common shares used in the calculation of diluted income (loss) per share 30,295 31,057 30,199 29,018
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
June 30, 1998 December 31, 1997
Assets
Cash, cash equivalents and short-term investments $312,641 $322,298
Other current assets 9,151 17,960
Total current assets 321,792 340,258
Property and equipment, net 10,052 10,313
Other assets 1,461 1,498
$333,305 $352,069
Liabilities and stockholders' equity
Current liabilities $ 31,917 $ 33,391
Long-term obligations 935 1,331
Stockholders' equity 300,453 317,347
$333,305 $352,069

Note: Derived from audited financial statements at that date.

CONTACT: Gilead Sciences, Inc.
Lana Lauher, 650/573-4858