Gilead Sciences Announces Third Quarter 2002 Financial Results

-Increase in Viread Sales Push Total Product Revenues to $120 Million-
   -Company Turns Cash Flow Positive for First Nine Months of 2002-

Gilead reached a significant financial milestone during the third quarter, achieving positive operating cash flow for both the quarter and the first nine months of 2002. Operating cash flow for the quarter was $44.7 million, driven by higher earnings and improved working capital performance, compared with a decrease in cash from operations of $31.1 million for the same period last year.

Net revenues from product sales totaled $120.2 million, up 169 percent from the third quarter 2001. This growth was primarily driven by higher revenues from Viread(R) (tenofovir disoproxil fumarate) and AmBisome(R) (amphotericin B) liposome for injection. Sales of Viread were $68.9 million in the third quarter of 2002, or 57 percent of product sales, up from $44.7 million in the second quarter of 2002. AmBisome sales for the third quarter of 2002 were $48.6 million, an increase of 18 percent compared to the third quarter of 2001. Excluding the impact of foreign currencies relative to the U.S. dollar, AmBisome sales grew 11 percent for the third quarter of 2002 over the comparable quarter of 2001.

"With product revenues in excess of $120 million, our third quarter financial performance demonstrates our ability to continue to deliver novel therapeutics like Hepsera(TM) (adefovir dipivoxil) for chronic HBV to the market while continuing to increase our product sales of Viread and AmBisome," said John C. Martin, Ph.D., President and Chief Executive Officer of Gilead Sciences.

For the third quarter of 2002, royalty and contract revenues resulting from collaborations with corporate partners totaled $13.8 million. These revenues primarily include royalties on sales of AmBisome in the United States by Gilead's co-promotion partner Fujisawa Healthcare and contract revenue recognized for the licensing of a portion of the SELEX(TM) (Systemic Evolution of Ligands through EXponential Enrichment) process patent estate to Archemix Corporation in October 2001.

Research and development expenses for the third quarter of 2002 were $35.3 million, compared to $45.7 million for the same quarter in 2001. The lower expenses during the third quarter of 2002 is primarily attributable to the decrease in expenses associated with the Viread clinical program and the divestiture of Gilead's oncology portfolio to OSI Pharmaceuticals in December 2001.

Selling, general and administrative expenses for the three months ended September 30, 2002 were $42.3 million, compared to $32.0 million for the same quarter of 2001. The significant increase in expenses is primarily due to Gilead's increased global marketing efforts and the expansion of Gilead's U.S. and European sales forces to support the commercial launches of Viread and Hepsera.

Gilead also reported its results of operations for the nine months ended September 30, 2002. The company recorded net revenues from product sales of $284.7 million and aggregate contract and royalty revenues of $37.1 million. Sales of Viread for the nine months ended September 30, 2002 were $140.8 million, or 49 percent of product sales. AmBisome sales for the nine months ended September 30, 2002 were $136.0 million, a 12 percent increase over the nine months ended September 30, 2001. Excluding the impact of foreign currencies relative to the U.S. dollar, AmBisome sales grew 9 percent for the nine months ended September 30, 2002 over the comparable period of 2001. Net revenues of $321.8 million in the nine months ended September 30, 2002 compare to net revenues of $159.4 million in the first nine months of 2001. Net revenues for the first nine months of 2001 included product sales of $131.3 million and aggregate contract and royalty revenues of $28.1 million.

Net income for the nine months ended September 30, 2002 was $36.6 million, or $0.18 per diluted share. This compares to a net loss of $79.3 million, or $0.41 per share for the nine months ended September 30, 2001.

Research and development expenses for the nine months ended September 30, 2002 and 2001 were $99.7 million and $141.0 million, respectively. The substantially lower expenses during the first nine months of 2002 was attributable in part to the recognition in the first quarter 2001 of $10.6 million of a $13.0 million up-front payment to Cubist Pharmaceuticals related to the European licensing agreement for daptomycin signed in January 2001 and subsequently terminated in September 2002. In addition, Gilead's expenses have decreased compared to the first nine months in 2001 due to a decrease in expenses associated with the Viread clinical program and the divestiture of Gilead's oncology portfolio to OSI Pharmaceuticals in December 2001.

Selling, general and administrative expenses for the nine months ended September 30, 2002 were $123.7 million compared to $83.7 million for the same period in 2001. The significant increase in expenses is primarily due to Gilead's increased global marketing efforts and the expansion of Gilead's U.S. and European sales forces to support the commercial launches of Viread and Hepsera.

    Corporate Highlights

    Products and Pipeline Highlights

    Viread(R) (tenofovir disoproxil fumarate) for HIV

In July, Gilead took part in the 14th International AIDS Conference in Barcelona, Spain. During this meeting, 18 Viread-related abstracts were presented. Highlights from the conference included:

-- Forty-eight week data from a Phase III clinical trial (Study 903) comparing Viread to stavudine (d4T) when used in combination with lamivudine (3TC) and efavirenz in treatment-naive HIV patients. Preliminary results from this study were previously announced on May 7.

-- Genotypic and phenotypic analyses from a 48-week Phase II trial (Study 902) and a 48-week Phase III trial (Study 907) of Viread.

On September 27, at the 42nd Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) in San Diego, California, the company presented new data from Study 903 regarding Viread's positive effects on serum lipid profiles and mitochondrial DNA content through 48 weeks compared to stavudine.

    Hepsera(TM) (adefovir dipivoxil) for Chronic Hepatitis B

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                  Taylor Rafferty, London
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                  or
                  Taylor Rafferty, New York
                  Andrew Saunders, 212/889-4350

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