Gilead Announces Fourth Quarter and 1998 Year-End Financial Results

Foster City, CA -- January 27, 1999

Gilead Sciences, Inc. (NASDAQ:GILD) announced today its results of operations for the fourth quarter ended December 31, 1998. For the quarter, the Company reported revenues from net product sales of $1.2 million, revenues from collaborative agreements of $6.9 million and revenues from product royalties of $0.8 million, for total revenues of $8.9 million and net interest income of $4.2 million. This compares to 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 for the same quarter in 1997. The net loss for the three months ended December 31, 1998 was $16.3 million or $0.53 per share, compared to a net loss of $12.4 million or $0.42 per share for the same quarter in 1997.

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 contract revenue from the sale of Gilead's antisense patent estate, research and development funding and royalties on product sales of VISTIDE in the European Union, 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 co-promotion agreement with Roche concluded at the end of 1998.

During the fourth quarter of 1998, Gilead recorded $6.0 million in contract revenue from Isis Pharmaceuticals for the sale of Gilead's antisense patent estate. Of this amount, Gilead received $2.0 million in December 1998, and the remainder is payable in three installments over the next three years.

Research and development expenses for the fourth quarter of 1998 were $21.3 million, compared to $20.0 million for the same period in 1997.

The Company also announced its results of operations for the year ended December 31, 1998. For the full year, the Company reported revenues from net product sales of $6.1 million, revenues from collaborative agreements of $24.2 million and revenues from product royalties of $2.3 million, for total revenues of $32.6 million and net interest income of $18.3 million. For the year ended December 31, 1997, Gilead 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, 1998, research and development expenses were $75.3 million, compared with $59.2 million for the year ended December 31, 1997. This increase was due primarily to expenses associated with the advancement of four therapeutic candidates into later stages of clinical development. The net loss for the twelve months ended December 31, 1998 was $56.1 million or $1.85 per share, compared to a net loss of $28.0 million or $0.95 per share for the twelve months ended December 31, 1997.

As of December 31, 1998, the Company had cash, cash equivalents and short-term investments of $279.9 million compared to $322.3 million at December 31, 1997.

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,
  1998 1997 1998 1997
  (unaudited)
(note 1)
Revenues        
     Product sales, net $ 1,237 $ 2,419 $ 6,074 $ 11,735
     Contract revenues 6,898 6,975 24,198 27,413
     Royalty revenues 801 515 2,298 889
         
Total revenues 8,936 9,909 32,570 40,037
         
Costs and expenses        
     Cost of sales 130 172 594 1,167
     Research and development 21,320 20,036 75,298 59,162
     Selling, general and
     administrative
7,943 6,947 31,003 25,472
         
Total costs and expenses 29,393 27,155 106,895 85,801
         
Loss from operations (20,457) (17,246) (74,325) (45,764)
         
Interest income, net 4,167 4,822 18,250 17,771
         
Net loss $(16,290) $(12,424) $(56,075) $(27,933)
         
Basic and diluted loss per share $ (0.53) $ (0.42) $ (1.85) $ (0.95)
         
Common shares used in the
calculation of basic and diluted
loss per share
30,571 29,860 30,363 29,326

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

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

 
December 31,
1998
   
December 31,
1997
 
(note 1)
(note 1)
Assets    
     Cash, cash equivalents and
          short-term investments
$ 279,939 $ 322,298
     Other current assets 8,371 17,960
          Total Current Assets 288,310 340,258
     Property and equipment, net 10,182 10,313
     Other assets 4,368 1,498
  $ 302,860 $ 352,069
     
Liabilities and stockholders' equity
     Current liabilities $ 31,750 $ 33,391
     Long-term obligations 563 1,331
     Stockholders' equity 270,547 317,347
  $ 302,860 $ 352,069

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