Gilead Announces Second Quarter 1999 Financial Results

Foster City, CA -- July 29, 1999

Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the second quarter ended June 30, 1999. For this quarter, Gilead recorded revenues from net product sales of $1.5 million, contract revenues of $6.6 million and royalty revenues of $0.6 million, for total revenues of $8.7 million and net interest income of $3.3 million. This compares to 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 for the same quarter in 1998.

The net loss for the three months ended June 30, 1999 was $15.0 million, or $0.48 per share, compared to a net loss of $14.8 million, or $0.49 per share, for the same quarter in 1998. During the second quarter of 1999, Gilead recorded two milestone payments totaling $6.0 million from F. Hoffmann-La Roche associated with submissions for marketing clearance in the United States and European Union for Tamiflu™ (oseltamivir phosphate), which was formerly known as GS 4104, for the potential treatment of viral influenza.

For all periods, these reported results do not reflect the results of operations or the financial condition of NeXstar Pharmaceuticals, Inc. Gilead completed its acquisition of NeXstar today, July 29, 1999.

Net revenues from product sales were derived from sales 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 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 1999 were $18.2 million, compared to $18.3 million for the same period in 1998. Research and development expenses for the six-month periods ended June 30, 1999 and 1998 were $34.0 million and $37.2 million, respectively. These expenses decreased slightly in the 1999 periods relative to 1998 because of Gilead’s reduced level of involvement in the development of Tamiflu, offset in part by greater levels of expense in 1999 for the development programs for adefovir dipivoxil for hepatitis B and tenofovir disoproxil fumarate (PMPA oral prodrug) for HIV.

Gilead also reported its results of operations for the six months ended June 30, 1999. The Company recorded net revenues from product sales of $2.9 million and aggregate contract and royalty revenues of $10.7 million, for total revenues of $13.6 million and net interest income of $6.8 million. This compares to 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 the six months ended June 30, 1998. The net loss for the six months ended June 30, 1999 was $30.8 million, or $0.99 per share, compared to a net loss of $22.2 million, or $0.74 per share for the six months ended June 30, 1998.

As of June 30, 1999, the Company had cash, cash equivalents and short-term investments of $240.5 million, compared to $279.9 million on December 31, 1998.

Gilead Sciences, headquartered in Foster City, CA, 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, manufactures and commercializes proprietary therapeutics for challenging infectious diseases (viral, fungal and bacterial infections) and cancer. Gilead maintains research, development or manufacturing facilities in Foster City, CA, Boulder, CO, San Dimas, CA, and Cambridge, UK, and sales and marketing organizations in the U.S., Europe and Australia. Gilead common stock is traded on The Nasdaq Stock Market under the symbol GILD.

CONTACT:
Mark Perry
Senior Vice President and
Chief Financial Officer
(650) 522-5772

Susan Hubbard
Investor Relations
(650) 522-5715

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

                                   
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three months ended Six Months ended
June 30, June 30,
1999       1998 1999 1998
Revenues
      Product sales, net $ 1,461 $ 1,598 $ 2,906 $ 3,393
      Contract revenue 6,573 4,682 9,514 16,089
      Royalty revenue 646 756 1,197 1,114
      Total Revenues 8,680 7,036 13,617 20,596
Costs and expenses
      Cost of sales 53 114 187 344
      Research and development 18,240 18,330 34,026 37,260
      Selling, general and administrative 8,684 8,443 17,051 15,186
      Total costs and expenses 26,977 26,887 51,264 52,790
Loss from operations (18,297) (19,851) (37,647) (32,194)
Interest income, net 3,262 5,007 6,825 9,965
Net loss $(15,035) $(14,844) $(30,822) $(22,229)
Basic and diluted loss per common share $ (0.48) $ (0.49) $ (1.00) $ (0.74)
Common shares used in the calculation of basic and diluted loss per share 31,051 30,295 30,958 30,199
CONDENSED CONSOLIDATED BALANCE SHEETS(1)
(in thousands)
June 30,       December 31,
1999       1998
(unaudited)       (Note 2)
Assets
      Cash, cash equivalents and
short-term investments
$ 240,534 $ 279,939
      Other current assets 14,915 8,371
      Total current assets 255,449 288,310
      Property and equipment, net 12,460 10,182
      Other assets 4,211 4,368
$ 272,120 $ 302,860
Liabilities and stockholders' equity
      Current liabilities $ 27,018 $ 31,750
      Long-term obligations 207 563
      Stockholders' equity 244,895 270,547
$ 272,120 $ 302,860
Note: Derived from audited financial statements

1999 Second Quarter Highlights

Gilead Sciences is an independent biopharmaceutical company that seeks to provide accelerated solutions for patients and the people who care for them. During the second quarter of 1999, the Company received revenues from the U.S. marketing of VISTIDE® (cidofovir injection) for the treatment of CMV retinitis as well as from royalties on product sales in the European Union, and from collaborative agreements with its pharmaceutical partners.

Total Revenues $ 8.7 mm
Net Product Sales $ 1.5 mm
Total Expenses $ 27.0 mm
Net Loss $ 15.0 mm
Net Loss per Share $ 0.48 per share
Cash and Equivalents $ 240.5 mm

Gilead Sciences and NeXstar Special Stockholders Meetings Scheduled – In June, Gilead and NeXstar Pharmaceuticals announced that each companys' special meeting of stockholders to vote on matters related to the proposed merger of Gilead Sciences and NeXstar Pharmaceuticals had been scheduled for July 29, 1999. This announcement followed declaration by the Securities and Exchange Commission of the effectiveness of the registration statement relating to the issuance of Gilead shares to NeXstar stockholders and notification from The Federal Trade Commission of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. At the closing scheduled for July 29, Gilead will acquire NeXstar in an all-stock, tax-free transaction accounted for as a pooling of interests, creating a biopharmaceutical company with worldwide presence focused on infectious disease and oncology.

Adefovir Dipivoxil New Drug Application (NDA) for the Treatment of HIV Submitted – In June, Gilead announced the submission of a NDA to the U.S. Food and Drug Administration (FDA) for adefovir dipivoxil 60 mg, an investigational, once-daily oral nucleotide reverse transcriptase inhibitor (RTI) intended for the treatment of HIV-infected patients with clinical, immunologic or virologic progression despite prior RTI therapy. Adefovir dipivoxil is designated as a “fast track” product by the FDA and is expected to receive a six-month review.

Tamiflu™ (oseltamivir phosphate) NDA for the Treatment of Influenza Submitted - In April, Gilead Sciences and Hoffmann-La Roche announced that Roche submitted a NDA to the FDA for approval to market oseltamivir phosphate (formerly known as GS 4104), the only influenza neuraminidase inhibitor in pill form. The compound, which will be marketed by Roche under the tradename Tamiflu, was discovered and co-developed by Gilead. Data included in the NDA demonstrate that Tamiflu significantly lessened the severity and duration of flu symptoms as well as reduced secondary flu complications, such as bronchitis and sinusitis. The FDA granted Tamiflu priority status, and a six-month review is expected.

HIV Expanded Access Program Extended to International Sites – In May, Gilead began extending the U.S. expanded access program for the investigational anti-HIV drug adefovir dipivoxil 60 mg to Europe, Canada and Australia. Designed for people with advanced HIV infection who have limited treatment options, the program recently started enrolling patients in France and will begin enrollment in additional European countries, Canada and Australia as regulatory approvals are obtained. To date, more than 8,500 patients infected with HIV have been enrolled in the U.S. expanded access program for adefovir dipivoxil.

Adefovir Dipivoxil Shows Activity Against Lamivudine-Resistant Hepatitis B Virus – In April, preliminary data were presented demonstrating the antiviral activity of adefovir dipivoxil in three patients with chronic hepatitis B infection who had failed antiviral therapy with lamivudine due to the development of resistance mutations. Presented at the 34th Annual Meeting of the European Association for the Study of the Liver in Naples, Italy, these data support earlier laboratory results indicating that adefovir dipivoxil remains active against lamivudine-resistant HBV.

Upcoming Milestones

Adefovir dipivoxil (HIV) File Marketing Authorisation Application with European Medicines Evaluation Agency; FDA Advisory Committee Meeting.
Adefovir dipivoxil (HBV) Begin additional Phase III studies; execute partner agreement.
Tenofovir DF (HIV) Complete Phase II study; initiate Phase III clinical program.
Tamiflu (Influenza) Receive first marketing clearances.

SAFE HARBOR DISCLAIMER: The Upcoming Milestones listed above contain “forward-looking” information (within the meaning of the Private Securities Litigation Reform Act of 1995) that involves substantial risk and uncertainty. Actual results may differ materially based on a variety of factors, particularly those relating to the development, approval and marketing of pharmaceutical products as described in the “Risk Factors” section of Gilead’s SEC reports, including the report on Form 10-K for the year ended December 31, 1998.

Printed July 29, 1999