Gilead Sciences Announces Record Fourth Quarter and Full Year 2008 Financial Results

- Full Year Total Revenues of $5.34 Billion, Up 26 Percent over 2007 -

- Full Year Product Sales of $5.08 Billion, Up 36 Percent over 2007 -

- Fourth Quarter EPS of $0.60 per Share -

- Fourth Quarter Non-GAAP EPS of $0.63 per Share -

FOSTER CITY, Calif.--(BUSINESS WIRE)--Jan. 27, 2009--Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of operations for the fourth quarter and full year of 2008. Total revenues for the fourth quarter of 2008 were $1.43 billion, up 30 percent compared to total revenues of $1.09 billion for the fourth quarter of 2007. Full year 2008 total revenues were $5.34 billion, up 26 percent compared to full year total revenues of $4.23 billion for 2007. Net income for the fourth quarter of 2008 was $568.2 million, or $0.60 per diluted share, including after-tax stock-based compensation expense of $30.3 million. Non-GAAP net income for the fourth quarter of 2008, which excludes after-tax stock-based compensation expense, was $598.5 million, or $0.63 per diluted share, compared to non-GAAP net income for the fourth quarter of 2007, which excludes after-tax stock-based compensation expense of $25.1 million, of $426.8 million, or $0.44 per diluted share. As more fully described under the discussion of "Income Taxes," we recorded certain income tax benefits in the fourth quarter of 2008 that had the effect of increasing earnings by $0.04 per diluted share.

Product Sales

Product sales increased 35 percent to a record $1.39 billion for the fourth quarter of 2008, compared to $1.03 billion in the fourth quarter of 2007. For 2008, product sales increased 36 percent to $5.08 billion when compared to 2007. This was driven primarily by Gilead's antiviral franchise, including the strong growth in sales of Atripla(R) (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg), as well as the continued growth in sales of Truvada(R) (emtricitabine and tenofovir disoproxil fumarate).

Antiviral Franchise

Antiviral product sales increased 35 percent to $1.27 billion in the fourth quarter of 2008 from $941.1 million for the same period in 2007. For 2008, antiviral product sales increased 36 percent to $4.67 billion when compared to 2007. The increases were driven primarily by the sales volume growth of Atripla and Truvada, as well as a favorable foreign currency exchange impact.

    --  Truvada

Truvada sales increased 25 percent to $562.1 million for the fourth quarter of 2008 from $448.8 million in the fourth quarter of 2007. For 2008, Truvada sales increased 33 percent to $2.11 billion from $1.59 billion in 2007. The increase in Truvada sales in the fourth quarter and full year of 2008 compared to the same periods of 2007 was driven primarily by sales volume growth in the United States and Europe and a favorable foreign currency exchange impact.

    --  Atripla

Atripla sales increased 79 percent to $465.5 million for the fourth quarter of 2008 from $259.7 million in the fourth quarter of 2007. For 2008, Atripla sales increased 74 percent to $1.57 billion from $903.4 million in 2007. The increase in Atripla sales in the fourth quarter and full year of 2008 compared to the same periods of 2007 was driven primarily by the continued uptake in the United States, as well as launches of the product in most European countries.

    --  Other Antiviral Products

Other antiviral product sales, including Viread(R) (tenofovir disoproxil fumarate), Hepsera(R) (adefovir dipivoxil) and Emtriva(R) (emtricitabine), increased five percent to $245.3 million for the fourth quarter of 2008 from $232.5 million in the fourth quarter of 2007. For 2008, these other antiviral product sales increased five percent to $993.3 million from $947.4 million in 2007.

AmBisome

Sales of AmBisome(R) (amphotericin B) liposome for injection for severe fungal infections increased 12 percent to $76.0 million for the fourth quarter of 2008 from $67.8 million for the fourth quarter of 2007. For 2008, AmBisome sales increased by 10 percent to $289.7 million from $262.6 million in 2007. The increase in sales of AmBisome in the fourth quarter of 2008 compared to the same period of 2007 was driven primarily by sales volume growth in certain European markets. The increase in sales of AmBisome for the full year of 2008 compared to the same period of 2007 was driven primarily by a favorable foreign currency exchange impact and sales volume growth in certain European markets.

Letairis

Sales of Letairis(R) (ambrisentan) for the treatment of pulmonary arterial hypertension increased two-fold to $36.2 million for the fourth quarter of 2008 from $14.8 million for the fourth quarter of 2007. For 2008, Letairis sales increased five-fold to $112.9 million from $21.0 million in 2007. The increase in sales of Letairis in the fourth quarter and full year of 2008 compared to the same periods of 2007 was driven primarily by sales volume growth in the United States as Letairis was launched in June 2007.

Royalty, Contract and Other Revenues

For the fourth quarter of 2008, royalty, contract and other revenues resulting primarily from collaborations with corporate partners were $40.4 million, a decrease of 41 percent from $68.8 million in the fourth quarter of 2007. The decrease during the fourth quarter was driven primarily by lower Tamiflu(R) (oseltamivir phosphate) royalties from F. Hoffmann-La Roche Ltd (Roche) of $16.0 million in the fourth quarter of 2008, compared to Tamiflu royalties of $46.1 million in the fourth quarter of 2007. For 2008, royalty, contract and other revenues were $251.0 million, a decrease of 49 percent from $496.9 million in 2007. The decrease during 2008 compared to 2007 was driven primarily by Tamiflu royalties from Roche of $155.5 million in 2008, compared to Tamiflu royalties of $414.5 million in 2007. The decrease in Tamiflu royalties in the fourth quarter and full year of 2008 compared to the same periods of 2007 was due primarily to decreased Roche sales related to pandemic planning initiatives worldwide.

Research and Development

Research and development (R&D) expenses in the fourth quarter of 2008 were $201.9 million compared to $184.6 million for the same quarter in 2007. Non-GAAP R&D expenses, which exclude stock-based compensation expense, for the fourth quarter of 2008 were $185.3 million, compared to $168.7 million for the same quarter in 2007. For 2008, R&D expenses were $721.8 million compared to $591.0 million for 2007. Non-GAAP R&D expenses, which exclude stock-based compensation expense, for 2008 were $655.2 million, compared to $518.9 million for 2007. Non-GAAP R&D expenses for the fourth quarter and full year of 2008 were higher primarily as a result of increased clinical study activity as well as higher headcount related to the growth in Gilead's business, partially offset by a net decrease in payments incurred related to its collaborations.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses in the fourth quarter of 2008 were $193.7 million compared to $180.0 million for the same quarter in 2007. Non-GAAP SG&A expenses, which exclude stock-based compensation expense, for the fourth quarter of 2008 were $174.7 million, compared to $165.4 million for the same quarter in 2007. For 2008, SG&A expenses were $797.3 million compared to $705.7 million for 2007. Non-GAAP SG&A expenses, which exclude stock-based compensation expense, for 2008 were $720.8 million, compared to $604.4 million for 2007. Non-GAAP SG&A expenses for the fourth quarter were higher primarily as a result of increased compensation and benefits as well as infrastructure and technology costs to support the continued growth in Gilead's business. For the full year of 2008, non-GAAP SG&A expenses were higher compared to 2007 primarily as a result of increased compensation and benefits and infrastructure and technology costs, as well as increased marketing and promotional expenses to support Gilead's expanding commercial activities.

Income Taxes

The full year 2008 effective tax rate was 26.5 percent compared to 28.9 percent for 2007. The decrease in the 2008 effective tax rate was driven primarily by various fourth quarter 2008 items, including the resolution of certain tax audits with taxing authorities and the extension of the federal research and development tax credit. As a result of these items, the fourth quarter 2008 tax rate was 22.1 percent. The income tax benefits recorded in the fourth quarter of 2008 had the effect of increasing GAAP and non-GAAP earnings by $0.04 per diluted share.

Net Foreign Currency Exchange Impact

The net foreign currency exchange impact on fourth quarter 2008 revenues and pre-tax earnings, which includes revenues and expenses generated from outside the United States, was a favorable $4.6 million and $12.6 million, respectively, compared to the same period in 2007. The impact on full year 2008 revenues and pre-tax earnings was a favorable $148.2 million and $92.6 million, respectively, compared to 2007.

Cash, Cash Equivalents and Marketable Securities

As of December 31, 2008, Gilead had cash, cash equivalents and marketable securities of $3.24 billion compared to $2.72 billion as of December 31, 2007. For the year, Gilead generated $2.20 billion of operating cash flows including $646.1 million in the fourth quarter.

Corporate Highlights

In October 2008, Gilead entered into an agreement to repurchase $750.0 million of its common stock under an accelerated share repurchase program. Gilead repurchased these shares under the $3.0 billion share repurchase program announced in October 2007. In 2008, Gilead repurchased and retired 39.2 million shares of its common stock for an aggregate purchase price of $1.97 billion. As of December 31, 2008, the remaining authorized amount of stock repurchases that may be made under this stock repurchase program which expires in December 2010 was $998.1 million.

Product and Pipeline Highlights

Antiviral Franchise

In November 2008, Gilead announced two-year (96-week) data from two Phase III pivotal clinical trials, Studies 102 and 103, evaluating the safety and efficacy of once-daily Viread among adult patients with chronic hepatitis B. These data were presented during oral sessions at the annual meeting of the American Association for the Study of Liver Diseases in San Francisco.

In December 2008, Gilead announced the publication of the detailed one year (48-week) data from Studies 102 and 103 in the December 4, 2008 issue of The New England Journal of Medicine.

Cardiovascular Franchise

In October 2008, Gilead announced results of a two-year (104-week), open-label, uncontrolled, extension study (ARIES-E) of Letairis in patients with pulmonary arterial hypertension (WHO Group 1). Data from this study were presented at the annual meeting of the American College of Chest Physicians in Philadelphia.

Conference Call

At 4:30 p.m. Eastern Time today, Gilead will host a conference call and a simultaneous webcast to discuss the results of its fourth quarter and full year of 2008. During this call/webcast, Gilead's management will discuss the Company's fourth quarter and full year of 2008 results and provide a general business update. The webcast will be available live via the internet by accessing Gilead's website at www.gilead.com. To access the webcast, please connect to the Company's website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast. Alternatively, please call 1-800-901-5247 (U.S.) or 1-617-786-4501 (international) and dial the participant passcode 74401137 to access the call.

A replay of the webcast will be archived on the Company's website for one year, and a phone replay will be available approximately two hours following the call through January 31, 2009. To access the phone replay, please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international) and dial the participant passcode 89437661.

About Gilead

Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. Gilead's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Australia.

Non-GAAP Financial Information

Non-GAAP net income and net income per diluted share for the three months ended December 31, 2008 and 2007, and the year ended December 31, 2007, are presented excluding the after-tax impact of stock-based compensation expense and adjusted for the application of APB 25 in computing non-GAAP dilutive securities. Non-GAAP net income and net income per diluted share for the year ended December 31, 2008 are presented excluding the after-tax impact of the purchased in-process research and development expense incurred in connection with the acquisition of Navitas Assets, LLC's assets related to its cicletanine business and the after-tax impact of stock-based compensation expense, and adjusted for the application of APB 25 in computing non-GAAP dilutive securities. Non-GAAP R&D expenses and SG&A expenses for the fourth quarter and full year of 2008 and 2007 are presented excluding the impact of stock-based compensation expense. Management believes this non-GAAP information is useful for investors, taken in conjunction with Gilead's GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the Company's operating results as reported under United States generally accepted accounting principles.

Forward-looking Statements

Statements included in this press release that are not historical in nature are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: Gilead's ability to sustain growth in revenues for its antiviral and cardiovascular franchises; unpredictable variability of Tamiflu royalties and the strong relationship between this royalty revenue and global pandemic planning and supply; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current products; Gilead's ability to successfully commercialize any products that receive regulatory approvals; Gilead's ability to successfully develop its respiratory and cardiovascular franchises; initiating and completing clinical trials may take longer or cost more than expected; fluctuations in the foreign exchange rate of the U.S. dollar that may reduce or eliminate the favorable foreign currency exchange impact on Gilead's future revenues and pre-tax earnings; our ability to consummate additional purchases under our share repurchase program due to changes in our stock price, corporate or other market conditions; and other risks identified from time to time in Gilead's reports filed with the U.S. Securities and Exchange Commission. In addition, Gilead makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Gilead bases its estimates on historical experience and on various other market-specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "might," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words to be uncertain and forward-looking.

Gilead directs readers to its Annual Report on Form 10-K for the year ended December 31, 2007, its Quarterly Reports on Form 10-Q for the first, second and third quarters of 2008 and its subsequent Current Reports on Form 8-K. Gilead claims the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements.

Truvada, Viread, Hepsera, AmBisome and Letairis are registered trademarks of Gilead Sciences, Inc.

Atripla is a registered trademark of Bristol-Myers Squibb & Gilead Sciences, LLC.

Tamiflu is a registered trademark of F. Hoffmann-La Roche Ltd.

For more information on Gilead Sciences, Inc., please visit www.gilead.com or call the Gilead Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235).


GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)

                      Three Months Ended            Year Ended

                      December 31,                  December 31,

                        2008           2007           2008           2007

Revenues:

    Product sales     $ 1,387,772    $ 1,025,895    $ 5,084,796    $ 3,733,109

    Royalty,
    contract and        40,433         68,828         250,954        496,936
    other revenues

Total revenues          1,428,205      1,094,723      5,335,750      4,230,045

Costs and expenses:

    Cost of goods       321,531        215,542        1,127,246      768,771
    sold (1)

    Research and        201,863        184,648        721,768        591,026
    development (1)

    Selling, general
    and                 193,665        180,048        797,344        705,741
    administrative
    (1)

    Purchased
    in-process          -              -              10,851         -
    research and
    development (2)

Total costs and         717,059        580,238        2,657,209      2,065,538
expenses

Income from             711,146        514,485        2,678,541      2,164,507
operations

Interest and other      19,038         29,528         59,401         109,823
income, net

Interest expense        (2,871    )    (2,857    )    (12,101   )    (13,100   )

Minority interest       2,369          2,076          8,564          9,108

Income before
provision for income    729,682        543,232        2,734,405      2,270,338
taxes

Provision for income    161,488        141,590        723,251        655,040
taxes (1)

Net income            $ 568,194      $ 401,642      $ 2,011,154    $ 1,615,298

Net income per share  $ 0.62         $ 0.43         $ 2.18         $ 1.74
- basic

Net income per share  $ 0.60         $ 0.41         $ 2.10         $ 1.68
- diluted

Shares used in per
share calculation -     911,168        930,981        920,693        929,133
basic

Shares used in per
share calculation -     942,837        969,274        958,825        964,356
diluted

Notes:

    The following is the stock-based compensation expense included in the
(1) respective captions of the condensed consolidated statements of income
    above:

                      Three Months Ended            Year Ended

                      December 31,                  December 31,

                        2008           2007           2008           2007

Stock-based
compensation
expense:

    Cost of goods     $ 3,178        $ 2,874        $ 10,312       $ 11,224
    sold

    Research and        16,578         15,953         66,523         72,082
    development

    Selling, general
    and                 19,003         14,616         76,529         101,299
    administrative

Income tax effect       (8,451    )    (8,322    )    (40,565   )    (53,261   )

       Total
       stock-based
       compensation   $ 30,308       $ 25,121       $ 112,799      $ 131,344
       expense, net
       of tax

    For the year ended December 31, 2008, Gilead incurred $10.9 million of
(2) purchased in-process research and development expense as a result of the
    acquisition of all of Navitas Assets, LLC's assets related to its
    cicletanine business.




GILEAD SCIENCES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(unaudited)

(in thousands, except per share amounts)

Below is a reconciliation of Gilead's GAAP net income and diluted per share
amounts as reported in the attached press release. Non-GAAP net income and net
income per diluted share for three months ended December 31, 2008 and 2007, and
the year ended December 31, 2007, are presented excluding the after-tax impact
of stock-based compensation expense and adjusted for the application of APB 25
in computing non-GAAP dilutive securities. Non-GAAP net income and net income
per diluted share for the year ended December 31, 2008 are presented excluding
the after-tax impact of the purchased in-process research and development
expense incurred in connection with the acquisition of Navitas Assets, LLC's
assets related to its cicletanine business and the after-tax impact of
stock-based compensation expense, and adjusted for the application of APB 25 in
computing non-GAAP dilutive securities. Management believes this non-GAAP
information is useful for investors, taken in conjunction with Gilead's GAAP
financial statements, because management uses such information internally for
its operating, budgeting and financial planning purposes. Non-GAAP information
is not prepared under a comprehensive set of accounting rules and should only be
used to supplement an understanding of the Company's operating results as
reported under GAAP.

                                  Three Months Ended    Year Ended

                                  December 31,          December 31,

                                  2008       2007       2008         2007

Net income (GAAP)                 $ 568,194  $ 401,642  $ 2,011,154  $ 1,615,298

Stock-based compensation            30,308     25,121     112,799      131,344
expense, net of tax

Purchased in-process research
and development expense, net of     -          -          7,769        -
tax

Net income (Non-GAAP)             $ 598,502  $ 426,763  $ 2,131,722  $ 1,746,642

Shares used in per share            942,837    969,274    958,825      964,356
calculation - diluted (GAAP)

Dilutive securities                 683        2,227      1,686        2,123

Shares used in per share            943,520    971,501    960,511      966,479
calculation - diluted (Non-GAAP)

Net income per share - diluted    $ 0.60     $ 0.41     $ 2.10       $ 1.68
(GAAP)

Net income per share - diluted    $ 0.63     $ 0.44     $ 2.22       $ 1.81
(Non-GAAP)




GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

                                                  December 31,  December 31,

                                                  2008          2007

                                                  (unaudited)   (Note 1)

Cash, cash equivalents and marketable securities  $ 3,239,639   $ 2,722,422

Accounts receivable, net                            1,023,397     795,127

Inventories                                         927,868       599,966

Property, plant and equipment, net                  528,799       447,696

Other assets                                        1,298,871     1,269,505

      Total assets                                $ 7,018,574   $ 5,834,716

Current liabilities                               $ 1,220,992   $ 736,275

Long-term liabilities and minority interest         1,645,095     1,638,451

Stockholders' equity                                4,152,487     3,459,990

      Total liabilities and stockholders' equity  $ 7,018,574   $ 5,834,716

Note:

(1)   Derived from audited consolidated financial statements at that date.




GILEAD SCIENCES, INC.

PRODUCT SALES SUMMARY

(unaudited)

(in thousands)

                            Three Months Ended        Year Ended

                            December 31,              December 31,

                            2008         2007         2008         2007

                                         (Note 1)                  (Note 1)

Antiviral products:

    Truvada - U.S.          $ 255,101    $ 209,984    $ 992,100    $ 789,709

    Truvada - Europe          270,055      210,650      986,648      711,650

    Truvada - Other           36,896       28,213       127,939      87,870
    International

                              562,052      448,847      2,106,687    1,589,229

    Atripla - U.S.            351,914      258,303      1,317,168    900,009

    Atripla - Europe          103,027      276          225,754      276

    Atripla - Other           10,573       1,134        29,533       3,096
    International

                              465,514      259,713      1,572,455    903,381

    Viread - U.S.             69,303       62,757       254,216      257,598

    Viread - Europe           66,588       60,109       259,897      260,001

    Viread - Other            25,990       25,620       107,074      95,570
    International

                              161,881      148,486      621,187      613,169

    Hepsera - U.S.            28,804       28,832       131,404      123,479

    Hepsera - Europe          42,681       42,736       191,112      162,490

    Hepsera - Other           4,934        5,364        18,507       16,753
    International

                              76,419       76,932       341,023      302,722

    Emtriva - U.S.            3,859        3,230        15,804       13,443

    Emtriva - Europe          2,382        2,261        9,819        11,275

    Emtriva - Other           728          1,614        5,457        6,775
    International

                              6,969        7,105        31,080       31,493

Total Antiviral products -    708,981      563,106      2,710,692    2,084,238
U.S.

Total Antiviral products -    484,733      316,032      1,673,230    1,145,692
Europe

Total Antiviral products -    79,121       61,945       288,510      210,064
Other International

                              1,272,835    941,083      4,672,432    3,439,994

AmBisome                      75,971       67,807       289,651      262,571

Letairis                      36,176       14,754       112,855      21,020

Other products                2,790        2,251        9,858        9,524

                              114,937      84,812       412,364      293,115

Total product sales         $ 1,387,772  $ 1,025,895  $ 5,084,796  $ 3,733,109

(1) Certain prior period amounts have been reclassified to conform to current
    period presentation.




    CONTACT: Gilead Sciences, Inc.
             Investors
             Robin Washington, 650-522-5688
             Susan Hubbard, 650-522-5715
             Media
             Amy Flood, 650-522-5643

    Source: Gilead Sciences, Inc.