GILEAD s c E N C E S

4,000,000 Shares

Common Stock

All of the 4,000,000 shares of Common Stock offered hereby are being issued and sold by Gilead Sciences, Inc. ("Gilead" or the "Company"). On February 15, 1996, the last sale price of the Company's Common Stock, as reported on the Nasdaq National Market, was $37.875 per share. See "Price Range of Common Stock." The Common Stock is traded on the Nasdaq National Market under the symbol «GILD."

The Common Stock ofiered hereby involves a high degree of risk. See "Risk Factors" beginning on page 5.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURI'flES COMMISSION NOR HAS

THE COMMI SSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY

REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Underwriting Discounts and Proceeds to

l'rir.e to Public Commissions C..ompany(l )

Per Share .................. ... . . . . . . $37.75 $1.55 $36.20

Total (2) ••••••••••• ••• 0 ••••••••• ' ••• $151,000,000 $6,.200,000 $144,800,000

(1) Before deducting expenses payable by the Company, estimated at $400,000.

(2) The Company has granted the Underwriters a 30-day option to purchase up to an additional600,000 shares of Common Stock solely to cover over-allotments, if any. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company will be $173,650,000, $7,130,000 and $166,520,000, respectively.

The Common Stock is offered by the Underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that delivery of such shares will he made through the offices of Robertson, Stephens & Company LLC ("Robertson, Stephens & Company"), San Francisco, California, on or about February 22, 1996.

Robertson, Stephens & Company

Hambrecht & Quist J.P. Morgan & Co.

Pacific Growth Equities, Inc.

The date of this Prospectus is February 16, 1996

SUMMARY

The follotoing sumrrUJry is qualified in its entiretJJ by the more detailed information, including "Risk Factors" and Consolidated Financial Statements and NCJte$ thereto, appearing elsewhere in this Prospectus or incorporated herein by reference.

The Company

Gilead Sciences, Inc. is a leader in the discovery and development of a new class of human tliempeutics based on nucleotides, the building blocks of DNA and RNA. The Company's research and development efforts encompass three interrelated programs: small molecule 'antivirals, cardiovascular therapeutics and genetic code blockers for eancer and other diseases. Gilead has also discovered and is developing non-nucleotide product candidates that expand the Company's technology platforms. Gilead has multiple product candidates in clinical trials for viral diseases, including cytomegalovirus ("CMV"), herpes simplex virus ("HSV"), human papillomavirus ("HPV"), human immunodeficiency virus ("HIV") and hepatitis B virus ("HBV").

In October 1995, Gilead submitted a new drug application ("ND.K') to the U.S. Food and Drug Administmtion ("FD.A) for VIS TIDE® (cidofovir intmvenous) for the systemic treatment of CMV retinitis in patients with AIDS. In December . 1995, the Company made an equivalent submission with the European Medicines Evaluation Agency ("EMEA'), seekin.g approval to market VISTIDE in the European Community under the EME.As centralized procedure. CMV retinitis is an infection of the retina that commonly occurs in patients with AIDS and, if untreated, can lead to blindness. The Company is in the process of building its own sales force of approximately 25 people to market VISTIDE directly in the U.S., and is evaluating its altemaUves for commercializing VISTIDE in Europe and the rest of the world. There can be no assumnce that VISTIDE will receive marketing approval in any country or that the Company will be successful in commercializing VISTIDE. Gilead has also developed a formulation qf cidofovir for direct injection into the eye, a method that the Company believes may prove useful as an adjunct to systemic therapy. Gilead recently commenced a Phase I/11 clinical trial with this intraocular formulation for the treatment of CMV retinitis.

Gilead is also conducting clinical trials of small molecule product candidates intended to treat the following viral diseases:

Herpes Simplex Virus. Gilead is evaluating a topical gel formulation of cidofovir in a Phase I/II clinical trial for the treatment of patients with AIDS who have HSV infections that are clinically unresponsive to acyclovir, the most widely used treatment for HSV. The Company is also conducting an additional Phase III I clinical trial of topical cidofovir in Canada for the potential treatment of recurrent genital herpes in patients with normal immune systems.

Human Papillomavirn.s. Topical cidofovir gel is also being evaluated in a Phase I/Il clinical trial in patients with HlV infection for the potential treatment of genital warts associated with HPV.

Human Immunodeftciency Virus. Gilead is evaluating GS 840, an oral tablet administered once per day, in Phase I/II clinical trials for the potential treatment of HIV.

HepatiUs B Virus. GS 840 is also in a Phase I/11 clinical trial in the United Kingdom to evaluate its potential for the treatment of chronic HBV infection.

In addition, a collaborative partner of Gilead, American Home Products (':u!p''), recently commenced a Phase I clinical trial of topical ophthalmic cidofovir, an eyedrop formulation, for the potential treatment of certain viruses that can cause external infections of the eye.

The Company's antiviral research has generated a number of additional lead compounds having preclinical activity against influenza virus, HBV, Epstein-Barr virus ("EBV"), varicella-zoster virus ("VZV"}, CMV and HIV. One of these compounds, GS 930, a derivative of cidofovir, has a broad spectrum of antiviral activity in vitro, exhibits comparable activity to cidofovir and is tolerated at substantially higher doses in animal models. The Company initiated Phase 1 clinical trials to evaluate oral and intmvenous forms of GS 930 in February 1996.

Gilead is evaluating three lead compounds in its cardiovascular program with activity in animal models of thrombosis and/or stroke. In the Company's genetic code blocker program, the Company is conducting research on oligonucleotide analogues that may block the activity of disease-causing genes, with a particular emphasis on cancer. This research is the subject of a collahomtion with Glaxo Wellcome Inc. ("Glaxo") that concluded in January 1996. The Company is in negotiations with Glaxo regarding a multi-year extension of this collaboration.

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As part of its business strategy, Gilead intends to establish collaborations with pharmaceutical companies to assist in the clinical development and commercialization of certain of its product candidates, and to provide support for its research programs. The Company is currently in discussions with several pharmaceutical companies regarding potential collabora­tions, although no negotiations regarding the specific terms of any such collaboration are currently underway other than with Glaxo. There can be no assurance that any such collaboration will be established, or if established will be on terms favorable to the Company.

The Company was incorporated in Delaware in 1987. The Company's principal executive offices are located at 353 Lakeside Drive, Foster City, California 94404 and its telephone number is (415) 574-3000.

The Offering

Common Stock Offered by the Company ........... . Common Stock Outstanding Mter the Offering ... .. .. .

4,000,000 shares 27,769,878 shares (1)

Use of Proceeds .... ....... ................. . For clinical development and manufacturing; marketing, sales and administration; research and preclinical develop­ment; and other general corporate purposes.

Nasdaq National Market Symbol ............ .... . . GILD

Summary Consolidated Fmancial Data (in thousands, except per share data)

Consolidated Statement of Operations Data: Total revenues ......................... ..... ...... .. ..... .. .. . Total operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss .... ........................ .. ...................... . Net loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common shares used in the calculation of net loss per share . . . . . . . . . . . . . . .

Consolidated Balance Sheet Data:

Nine Months Ended

December 31, 1995 (2)

$ 2,699 34,706

(27,415) $ (1.29)

21,274

Years Ended March 31,

1995 1994

$ 4,922 40,029

(31,274) $ (1.65)

18,971

$ 4,085 33,685 (25,712)

$ (1.37) 18,779

December 31, 1995 Actual As Adjusted (3)

Cash and cash equivalents and short-term investments . . . . . . • . . . . . ............. . $155,659 157,217

3,482 (112,754) 151,499

$300,059 301,617

3,482 (112,754) 295,899

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . ......................... . Noncurrent portion of equipment flnancing obligations and long-term debt ........... . Accumulated deficit ..................... . ............................ . Total stockholders' equity .......... . ........ .. ....... . .............. . .. .

(1) Based on shares outstanding as of December 31, 1995. Excludes outstanding options to purchase 4,143,968 shares at December 31, 1995, at a weighted average price of $10.55, of which options to purchase 1,670, 781 shares were immediate! y exercisable.

(2) In October 1995, the Company changed its fiscal year end from March 31 to December 31, effective with the nine months ended December 31, 1995.

(3) Adjusted to reflect the sale by the Company of 4,000,000 shares of Common Stock offered hereby at the public offering price of $37.75 per share and the receipt of the estimated net proceeds therefrom. See "Use of Proceeds."

This Prospectu.s contains fonvarrUooking statements which involve risks and uncertainties. The Company's actual results may differ significantly fr<rm the results discussed in the forward-looking statements. Factors that m:ght cause such a diffemnce include, but are not limited to, those discussed in "Risk Factors ...

Except as otherwise indicated, the information contained in this Prospectus assumes no exercise of the Underwriters' over-allotment option.

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USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,000,000 shares of Common Stock offered hereby are estimated to be approrimately $144,400,000 ($166,120,000 if the Underwriters' over-allotmep.t option is exercised in full), based on the public offering price of $37.75 per share, less underwriting discounts and commissions and estimated expenses payable by the Company.

After this offering, the Company will have cash and cash equivalents and short-term 'investments of approximately $300 million, based on cash and cash equivalents and short-term investments as of D ecember 31, 1995. The Company believes that these funds, together with possible future product revenues, will be adequate to sati~fy its capital needs for the foreseeable future. Companies in the biotechnology industry generally expend significant capital resources in product research and development The Company expects that additional equity or debt fmancings may be required to fund its operations.

Through December 31, 1997, the Company expects to expend approximately $70 million for clinical development and manufacturing, $45 million for marketing, sales and administration and $25 million for research and preclinical development. These expenditures will be funded from the proceeds of this offering, as well as from the Company's existing cash balances. The Company may also use a portion of its available cash to acquire technologies or products complementary to its business, particularly products that could be sold effectively by the sales force it is in the process of building. However, the Company is not currently in any negotiations with respect to any such acquisitions. The Company will also make expenditures for other general corporate purposes. Pending application as described above, the Company intends to invest the net proceeds of this offering in short-term, investment-grade, interest-bearing securities.

The amounts and timing of the Company's actual expenditures for the purposes described above will depend upon a number of factors, including the progress of the Company's research and development, the scope and results of preclinical studies and clinical trials, the cost, timing and outcomes of regulatory reviews, the rate of technological advances, determinations as to the commercial potential of the Company's products under development, the commercial performance of any of the Company's products that receive marketing approval, administrative and legal expenses, the status of competitive products, the establishment of manufacturing capacity or third-party manufacturing arrangements, the establishment of marketing and sales capabilities, the establishment of collaborative arrangements with other companies and the availability of other financing.

DIVIDEND POLICY

The Company has not paid any dividends since its in<..-eption and does not anticipate paying any dividends on its Common Stock in the foreseeable future.

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BUSINESS

The Company

Gilead Sciences, Inc. is a leader in the discovery and development of a new class of human therapeutics based on nucleotides, tt1e building blocks of DNA and RNA. The Company's research and development efforts encompass three interrelated programs: small molecule antivirals, cardiovascular therapeutics and genetic code blockers for cancer and other diseases. Gilead has also discovered and is developing non-nucleotide product candidates that expand the Company's technology platforms. Gilead has multiple product candidates in clinical trials for viral diseases, including CMV, HSV, HPV, HIV and HBV.

Overview of Nucleotides

Nucleotides exist in every human cell and are the building blocks of the nucleic acids DNA and RNA. Nucleic acids perform a number of functions within the cell, including the production of proteins. Nucleic acids also bind selectively to proteins to regulate certain activities of the cell.

Natural nucleotides are coupled to one another in a specific manner to form DNA or RNA strands. The specific sequences of nucleotides that compose each strand of DNA contain the genetic codes for the different proteins produced by the cell. Proteins perform most of the normal physiologic functions of humans, viruses and other organisms. However, when the production or activity of proteins becomes aberrant, numerous diseases, such as vascular disease, inflammatory disease or cancer, can result. Diseases may also result from a foreign organism, such as a virus, which directs a cell to produce proteins necessary for the virus to infect other cells.

Protein production begins in the nucleus of a cell with transcription, a process in which a segment of DNA, called a gene, is copied (transcribed) into a "messenger" molecule. This molecule, which is also composed of nucleotides, is called messenger RNA ("mRNA:'). The mRNA moves from the nucleus into the cell's cytoplasm, where it is translated into a protein.

DNA usually exists as two strands, bound together in a specific, complementary manner. The precise ordering of nucleotides along the DNA strand determines the structure and activity of the proteins encoded by the DNA. In addition, the ordering of nuoleotides within single stranded DNA and RNA determines the three dimensional structure of these nucleic acids. This stniCture governs the manner and extent to which these molecules bind to particular proteins.

Natural nucleotides are a versatile class of compounds that can be chemically modified to inhibit the production or activity of disease-causing proteins. Natural nucleotides have three molecular components: a sugar, a phosphate group and a base. Every nucleotide in DNA has the same sugar and phosphate group but a different base. The base is either adenine, cytosine, guanine or thymine ('1\., C, G or T'). Each of these components can be chemically modified to form a nucleotide analogue. The specific mechanism of action of a nucleotide analogue designed to be a therapeutic compound depends on a number of factors, including the number of nucleotides in the compound, the specific ordering and structure of the nucleotides, and the chemical modifications to the nucleotides and to the linkages that couple them together. A single nucleotide is called a mononucleotide, and several nucleotides linked together are called an oligonucleotide.

The Company believes that the precise interaction of nucleotides in binding to DNA, RNA and proteins provides the chemical basis for the development of potential therapeutic products with high specificity and potency.

Gilead's Product Development Programs

Gilead's product development efforts are conducted by a research team with the multidisciplinary skills that the Company believes are critical for the discovery and development of nucleotide-based therapeutics. Gilead has focused its research and development efforts on potential therapeutic products derived from three interrelated nucleotide-based programs: small molecule antivirals, cardiovascular therapeutics and genetic code blockers. Each of these programs is directed toward the development of nucleotide analogues or other com­p01mds that, through different mechanisms of action, inhibit the production or activity of disease-causing proteins.

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• Small Mokcule Antivirals. Gilead has an extensive library of proprietary nucleotide compounds, and is developing small molecule nucleotide analogues in preclinical studies and clinical trials for the potential treatment of a variety of viral infections. The Company has multiple small molecule product candidates in clinical trials for viral diseases, including CMV, HIV, HPV, HSV and HBV. Gilead's most advanced product candidate is VISTIDE® (cidofovir intravenous), for which the Company filed an NDA with the FDA in October 1995 for the systemic treatment of CMV retinitis, followed by an equivalent filing in Europe in December 1995. '

• Cardiol)(l8cular Therapeutics. Gilead's cardiovascular program includes a thrombin inhibitor, GS 522, and two new classes of product candidates, Protein C Activator and A3 Receptor Regulators, which have the potential to address a variety of cardiovascular conditions.

• Genetic Code Blockers. The Company is conducting research on oligonucleotide analogues that are designed to act inside the cell to block or regulate the production of disease-causing proteins. COO.e blocker research has been the subject of a long-tenn collaborative relationship with Glaxo that concluded in January 1996. The Company is in negotiations with Glaxo regarding a multi-year extension of the collaboration.

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The following table ~'tlmmarizes Gilead's products in researoh or development. This table is qualified in its entirety by reference to the more detailed descriptions elsewhere in this Prospectus.

Worldwide Product Candidate 1hrget Indications Development Status (1) ~ts

Small Molecule Antivirat'J VISTIDE (cidofovir CMV Retinitis NDA submitted in Gilead intravenous) the U.S.; equivalent

submission in Europe Cidofovir Intraocular CMV Retinitis Phase 1/Il

I Gilead

Cidofovir Topical Gel HSV - Genital Herpes Phase I/II Gilead Cidofovir Topical Gel HPV - Genital Warts Phase I/II Gilead GS 840 Oral HIV -AIDS Phase I/II · Gilead GS 840 Oral HBV Phase I!1I Gilead Cidofovir Topical Vrral Keratoconjunctivitis Phase I AHP/Storz

Ophthalmic GS 930 IV /Oral CMV Retinitis Phase I Gilead Protease Inhibitors HIV -AIDS Preclinical Gilead PMPA IV/Oral HIV -AIDS Preclinical Gilead GS 4070 IV /Oral Influenza Preclinical Gilead GS 930 IV /Oral HSV, HPY, EBV, VZV Preclinical Gilead

Cardiovascular Therapeutics GS 522 and Derivatives Anticoagulation for Preclinical Gilead

Cardiopulmonary Bypass Surgery, Thrombolytic Adjunct

Protein C Activator Angioplasty, Thrombolysis Preclinical Gilead A3 Receptor Regulators Stroke Preclinical Gilead/NIH

Genetic Code Blockers Antisense and 'lliple Helix Cancer, Viral I nfections, Research Gilead & Glaxo Compounds Cardiovascular Disease

(1) "NDA' indicates that a new drug application has been filed with the FDA for approval to market a product for the target indication.

"Phase 11/III" clinical trials indicates that the compoWld is being tested in humans for safety and efficacy in an expanded patient population at geographically dispersed clinical sites .

.. Phase III!" clinical trials indicates that the compoWld is being tested in humans for safety and preliminary indications of biological activity in a limited patient population.

"Phase I" clinical bials indicates that the compound is being tested in humans for preliminary safety and pharmacologic pro.flle in a limited patient population.

"Preclinical" indicates that Gilead is '-'onducting efficacy, pharmacology and/or toxicology testing of a lead compound in animal models or biochemical or cell culture assays.

•·Research" includes the development of assay systems, discovery of prototype compounds and evaluation and refinement of prototype compounds in in vitro testing. See"- Government Regulation."

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Small Molecule At1tivi,.als Gilead is developing small molecule nucleotide analogues that are intended to treat viral infections by

selectively interfering with proteins essential for viral replication. Numerous disease processes, particularly viral infections, require precise interactions between intracellular proteins and the nucleic acids DNA and fi.NA. For example, certain viral proteins must cleave RNA or other proteins within a cell in order for the virus to replicate and infect other cells. Similarly, many viruses depend upon certain proteins known as enzymes to synthesize their own DNA. This dependence of the virus upon specific interactions between proteins and nudeic acids provides opportunities for the development of therapeutic products that disrupt these crucial interactions. Published preclinical and clinical studies have demonstrated that small molecule nucleotide analogues can selectively interrupt these interactions.

Th be effective as a therapeutic and to have sustained effect, a nucleotide analogue must penetrate the cell, where viral activity occurs, and be stable within the cell by resisting intracellular degradation. Gilead has developed proprietary chemical modifications and expertise that permit it to enhance the ability of nucleotides to penetrate cells and resist degradation.

The Company believes that small molecule nucleotide analogues, if successfully developed, offer several potential advantages as therapeutics. First, these molecules may have long duration of action, permitting less frequent and therefore more convenient dosing. Second, because certain nucleotides can be active in both infected and uninfected cells, these molecules may provide prophylactic protection of uninfected cells. Third, when compared to existing antiviral drugs, viruses may be less likely to develop resistance to these analogues. In addition, these analogues may be active against viral strains that have developed resistance to existing antiviral drugs. Fm.ally, the low molecular weight of these analogues, or prodrug derivatives of them, may permit their development into drugs swlable for oral administration.

Cidofovir

Cidofovir (also known as GS 504 or HPMPC) is a mononucleotide analogue that has demonstrated activity in preclinical studies and clinical trials against several viruses in the herpes virus family. Cidofovir is the Company's compound in the most advanced state of development. VISTIDE is the brand name of the Company's intravenous form of cidofovir for treatment of CMV retinitis. Gilead is currently conducting clinical trials of cidofovir in different formulations for the potential treatment of infections caused by CMY, HSV and HPV. In addition. a collaborative partner of Gilead, American Home Products, recently commenced clinicaJ trials of topical ophthalmic cidofovir, an eyedrop formulation, for the potential treatment of certain viruses that can cause external infections of the eye. There can be no assurance that the Company will be successful in developing or commercializing any therapeutic products based on c,W9fovir.

Cytomegalovirus. CMV is the most common viral opportunistic infection in patients with AIDS. CMV is a systemic infection that may infect several sites in the body, including the retina, gastrointestinal tract, lungs, liver and central nervous system. Retinitis is the most frequent manifestation of CMV infection, occurring in approximately 15% to 40% of patients with AIDS. There were an estimated 190,000 patients with AIDS in the United States in 1995. '

Two drugs are commercially available to treat CMV and its related conditions. Intravenous ganciclovir is the most widely used treatment for CMV retinitis. Although ganciclovir is effective in delaying the progression of CMV retinitis, it has a number of therapeutic limitations. These limitations include the necessity of daily intravenous administration usually requiring the surgical placement of a catheter, the frequent inability to use ganciclovir and AZT (the most widely used AIDS treatment) concomitantly due to bone marrow toxicity, the development of ganciclovir-resistant strains of CMV in some patients with AIDS and a limited duration of efficacy. An oral formulation of ganciclovir is approved for maintenance therapy of CMV retinitis; however, induction therapy on intravenous ganciclovir is still required and oral ganciclovir requires frequent daily dosing due to its low oral bioavailability. Oral ganciclovir was recently approved for prophylaxis of CMV retinitis in patients with AIDS. Intravenous foscamet has also been approved for the treatment of CMV retinitis in patients with AIDS. Although foscamet can be administered in conjunction with AZT, its therapeutic limitations include

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the requirement of daily intravenous administration and a side-effect profile that includes renal toxicity and seizures. A number of other companies are developing other systemic and local therapies, including intraocular implants and intravitreous injections, for the potential treatment of CMV retinitis.

Gilead is developing VISTIDE to address certain of the limitations of currently available therapies in treating CMV retinitis. In October 1995, Gilead submitted an NDA to the FDA for VISTIDE for the systemic treabnent of CMV retinitis in patients with AIDS. In December 1995, the Company made an equivalent submission with the EMEA, seeking approval to market VISTIDE in the European Community under the EMEKs centralized procedure for human pharmaceutical products. These regulatory submissions include pivotal efficacy and safety data from two controlled, nmdomized clinical studies conducted in a broad spectrum of AIDS patients with CMV retinitis. One study evaluated VISTIDE in patients with newly diagnosed, previously untreated disease. The regulatory submissions also include an interim analysis of data from a second study in which patients had relapsing disease that bad progressed despite extensive prior treabnent with approved systemic agents. Tune to CMV retinitis progression in these studies was assessed by full-field, bilateral retinal photographs analyzed by ophthalmologists unaware of the patient's treatment assignment There can be no assurance that VISTIDE will receive marketing approval in any country on a timely basis, or at all.

Gilead's clinical trials demonstrate that VISTIDE has a statistically significant effect in delaying the progression of CMV retinitis lesions in patients with AIDS. In addition, these studies provide evidence of the potential for simplified CMV therapy resulting from a more convenient dosing regimen, The VISTIDE protocol requires administration by intravenous infusion only once per week for the first two weeks of therapy, and then once every other week until retinitis progression or intolerance to the therapy. Renal toxicity is the primary dose-limiting toxicity with VISTIDE administration. The protocol also requires laboratory monitoring of urinary protein and creatinine levels, as well as hydration an~ oral probenecid administration on the day of treatment, in order to mitigate the potential for toxicity,

In September 1995, Gilead initiated a program to provide qualified patients with broader access to VISTIDE through a treatment investigational new drug application ("Treatment IND"). The Treabnent IND regulations, adopted by the FDA in 1987, are designed to provide patients suffering from serious or immediately life-threatening diseases access to promising investigational drugs prior to marketing approval, if no comparable or satisfactory alternative therapies exist. The Treatment IND makes VISTIDE more widely available to patients with CMV retinitis who have failed or are intolerant to either or both of the approved therapies, ganciclovir and foscamet Although the Treatment IND regulations permit the sponsor to charge for the drug in order to recover development costs, Gilead is providing VISTIDE free of charge under this program. Through February 14, 1996, 200 patients had enrolled in the VISTJDE Treatment IND. which is available in the United States and Canada. The Company's cun;ent intention is to continue the 'Ireatroent IND until the FDA takes final action on the VISTIDE NDA. The Company is also evaluating similar programs to provide broader access to VISTIDE to patients with CMV retinitis in certain European countries.

Gilead has also developed an intraocular formulation of cidofovir for local administration by direct injection into the eye, a method that may prove useful as an adjunct to systemic therapy. In August 1995, Gilead commenced a Phase l!ll clinical trial of intraocular cidofovir at multiple centers in the U.S. This randomized clinical trial is designed to determine the safety, tolerance and efficacy of various dose levels, and is expected to enroll up to 90 patients with relapsing CMV retinitis.

Other Viruses. Gilead has entered into a license agreement with AHP, whose ophthalmologic subsidiary, Storz Instrument Company, is developing an eyedrop formulation of cidofovir for the potential treatment of certain viruses that cause external eye infections, including adenovirus, which is the leading cause of viral conjunctivitis, or "pink eye." The license to AHP is limited to topical ophthalmic use for external viral eye disease, and excludes any treatment requiring injection and any treatment for other eye diseases such as CMV retinitis. In December 1995, AHP commenced a Phase I clinical trial of topical ophthalmic cidofovir, designed to detennine the safety and pharmacokinetics of the compound. See"- Collaborative Relationships."

Gilead is also developing GS 930, a derivative of cidofovir, which in preclinical testing exhibited compara­ble activity to cidofovir and was tolerated at substantially higher doses. Preclinical tests indicate that GS 930 has the potential to be a broad-spectrum antiviral, with activity against CMV. HSV. HPV. EBV (the cause of

22

mononucleosis) and VZV (the cause of chicken pox and shingles). Gilead initiated Phase I clinical trials in February 1996 to determine the safety and pharmacologic profile of oral and intravenous forms of the compound

Herpes Simplex Virus. The Company is developing cidofovir topical gel for the potential treatment of lesions caused by HSV: This product candidate has the same active ingredient as VISTIDE, but in a gel formulation for direct topical appUcation. Genital herpes simplex virus infection is a common sexually transmit· ted disease, affiicting an estimated 26 to 30 million people in the United States and Europe. Once a person is infected, the virus may remain in the body indefinitely, evading attempts by the immune system to destroy it In a recurrent outbreak, the virus reactivates from its latent state spontaneously or in response to a variety of unpredictable and unavoidable stimuU, including hormonal changes, stress and exposure to sunUght. Outbreaks of HSV in the genital area are characterized by painful, highly contagious lesions on the skin and rnucous membranes. There is no effective cure for herpes simplex virus infection, although acyclovir is widely used in intravenous, oral and topical formulations as a treatment In its topical formulation, acyclovir is used to reduce the duration and severity of the symptoms but has limitations in the treatment of recurrent episodes. In animal models, cidofovir topical gel wd.S shown to be more potent than acyclovir as both a systemic and topical treatment against HSV infections. However, animal model studies do not necessarily predict effectiveness in humans.

Gilead recently completed a multicenter, Phase I!II cUnical trial in 30 patients with AIDS to evaluate the treatment of HSV lesions in patients that are clinically unresponsive to treatment with acyclovir. In this trial, cidofovir topical gel demonstrated a statistically significant treatment effect in the healing of these lesions. In May 1995, the Company began an additional Phase I/II clinical study of cidofovir topical gel in immunocom­petent patients with recurrent genital HSV infection. This study is a randomized, double-bUnd, placebo­controlled clinical trial being conducted in a patient group with normal immune systems at multiple clinical centers in Canada.

Human Papillomavirus. The Company is also developing the same formulation of cidofovir topical gel for the potential treatment of HPY. Human papillomavirus is a cause of genital warts and has been associated With increased rates of cervical and anogenital cancers. Some HPV types are found in 85% to 90% of cervical canc.-ers, and laboratory experiments have demonstrated that if specific HPV genes in the infected cells are turned off, the cancer stops growing. Cidofovir topical gel has demonstrated activity against rabbit papillomavirus, a model for HPV: In this model, cidofovir topical gel eliminated warts within eight weeks after initiation of treatment, which was a more effective outcome than was achieved with standard therapy. However, animal studies do not necessarily predict effectiveness in humans.

The Company is conducting a multicenter Phase l/II cUnical trial of cidofovir topical gel for the potential treatment of HPV-associated genital warts in patients with HIV infection, in a trial designed to enroll60 patients at three dose levels. In addition, Gilead plans to initiate Phase I!II clinical trials in patients with normal immune systems.

The Company has an exclusive, worldwide Ucense to patent rights and related technology for cidofovir from the Institute of Organic Chemistry and Biochemistry of the Academy of Sciences of the Czech Republic and the REGA Stichting Research Institute in Belgium (collectively, "IOCBIREG.K} See "- Collaborative Relationships."

GS 840

GS 840 (also known as bis-POM PMEA) is a mononucleotide analogue developed as an oral prodrug ofGS 393 (also known as PMEA), the Company's ftrst HIV therapeutic candidate. A prodrug is a modified version of a parent compound designed to enhance delivery characteristics. GS 393 has demonstrated preclinical activity against HIV and HBV, and clinical activity against surrogate markers ofHtv. The Company is developing GS 840 in Phase 1/II clinical trials as a potential oral treatment for HIV and HBV.

Human Immunodeficiency Virus. HIV is the causative agent of AlDS. HIV infects an estimated 14 milUon people worldwide. There were an estimated 190,000 patients with AIDS in the United States in 1995.

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Several products have been approved for the treatment of HIV; however, limitations associated with these products include toxic side effects and frequent development of viral strains resistant to the drugs. '11le first generation of approved HIV drugs are nucleoside compounds, which are rapidly cleared, requiring frequent dosing, Several protease inhibitors are in various stages of clinical development or have recently been approved for marketing by the FDA.

In January 1996, the Company announced results from a twelve-week Phase I/II clinical trial of CS 840 in · HIV-infected patients, indicating it was generally.well tolerated and associated with a statistically significant anti-HIV activity (as measured by surrogate markers). GS 840 is also being evaluated in combination with AZT, in a trial being conducted by the National Cancer Institute, which began in March 1995.

Gilead is also evaluating in preclinical studies several other compounds with pdtential in the treatment of HIY. In November 1995, Gilead and researchers from the University of Washington and the National Institutes of Health reported that PMPA, a nucleotide analogue with structural similarities toGS 840, provided complete protection against infection with simian immunodeficiency virus in primates treated either before or shortly after exposure to the virus. The results of this research were published in Science in November 1995. Gilead is also developing and evaluating protease inhibitor compounds with comparable activity to protease inhibitors under development by other companies, when evaluated in vitro. '11lese programs are under evaluation for potential clinical development, although there can be no assurance that clinical bials will commence for either of these programs, or that if commenced, that safety or efficacy can be demonstrated in humans.

(

Hepatitis B Virus. Gilead is also developing GS 840 for the potential treatment. o£ HBV. Approximately 280 million people worldwide were chronically infected with HBV in 1993. HBV can lead to cirrhosis and cancer of the liver. A vaccine is available that can prevent the transmission ofHBV; hqweyer, it has no activity in those already infected With the virus. Alpha interferon is approved for the treatment ofHBV, is administered by injection and is not always successful in controlling the virus. In Aprill995, the Company began a Phase I/11 placebo-controlled clinical trial of GS 840 at multiple centers in the United Kingdom for the potential treatment of chmnic HBV infection. ·

The Company has an exclusive, worldwide license to patent rights and related technology for GS 393, which is the parent compound of GS 840, from IOCB/REGA. See "- Collaborative Relationships."

Other Anttvirals The Company has an extensive library of proprietary nucleotide compounds and, using stmcture-based

drug design techniques, has synthesized other small molecule lead compounds having antiviral activity. Gilead has in preclinical assessment a number of these compounds that have the potential to address several viral targets, including influenza virus, HBV, EBV, VZV, CMV and HIV.

Caroiovascular Therapeutics . Cardiovascular diseases, including stroke, are the number one cause of morbidity an.d.mortality in the U.S.

Each yeru; there are approximately 1.5 million myocardial infarctions, 500,000 cases ef stroke, 330,000 arterial blockages requiring angioplasty and 400,000 coronary arterial bypass surgeries. Gilead's cardiovascular thera­peutics program is focused on the development of novel therapeutics based on a detailed understanding of the mediators of cardiovascular disease. Gilead's technological approaches to cardiovascular therapeutics include combinatorial chemistry, recombinant protein mutagenesis, structural chemistry and medicinal chemistry.

GS 522 and Derivatives

The Company identified GS 522 through a combinatorial approach designed to identify highly specific inhibitors of thrombin. Thrombin is a naturally occurring protein in the bloodstream that pl~ys a central role in coagulation and thrombosis. Because thrombin generates the .fibrin mesh of blood clots and activates platelet aggregation, the Company believes that it is an attractive target for anticoagulant and antithromhotic therapy. Coagulation and thrombosis are complex: processes within arteries or veins that can lead to occlusion of these vessels and serious related diseases and disorders. The Company believes that the process of coagulation and thrombosis can be controlled in certain settings through the administration of a nucleotide-based drug, which could selectively bind to thrombin in the bloodstream and inhibit its activity.

24

approJCimately 3.7% of the Company's outstanding Common Stock. The agreement provided for Gilead to conduct research over a period of five years with the goal of identifying code blocker compounds with potential application in the diagnosis, prevention or treatment of canctn:

In June 1992, Gilead and Glaxo entered into a new collaborative research agreement expanding the resources and scope of the collahoration. For the remainder of the original flve-year research term, each party was obligated to increase its commitment of scientiflc personnel and other resources, and bear its own expenses, with the goal of performing research and development on code blocker compounds for all diagnostic and therapeutic applications, not restricted to cancer. The 1992 agreement provided for fixed annual research payments from Glaxo to Gilead. The agreement also provided each party with a worldwide license to the other party's patent rights to r.esearch, develop, manufacture and sell products based on code blocker technology for all applications. After the· research term, each party retains the right to independently develop and commercial­ize code blocker compounds, with such rights becoming exclusive with respect to a particular compound once a party commences clinical trials for the compound.

The collaboration concluded in January 1996. The Company is in negotiations with Glax.o regarding a multi-year extension of the collaboration; however, the Company cannot predict whether it will enter into an extension of the collaboration with Glaxo, enter into a relationship with a third party regarding this program or pursue the program independently. If additional third-party funding is not obtained for the code blocker program, Gilead may decide to scale back this program. Under the terms of the existing agreement with Glax:o, the Company's ability to enter into a collaborative relationship with a third party relating to this code blocker program is limited for a six-month period . .. Agreements u.-'ith IOCB!REGA

In 1991 and 1992, the C6mpany entered into agreements with IOCB!REGA regarding a class of nucleotide compounds, including cidofovir and GS 393, the parent compound of GS 840. Under these agreements, Gilead received from IOCB/REGA an exclusive license to manufacture, use and sell the compounds covered by issued United States patents and patent applications plus foreign counterparts throughout the world, subject to an obligation to pay royalties on product sales to IOCB/REGA. IOCB!REGA may terminate the licenses under these agreements with respect to any particular product, in specified countries, if the Company does not make any sales of such product in such countries within 12 months after regulatory approval. In October 1993, the Company amended its agreements with IOCB!REGA to, among other things, increase the level of sponsored research. Under one of these agreements, the Company has an option to receive an exclusive license to any new developments by IOCB!REGA dwing the term of this agreement. Such agreement may be terminated by either party on six months notice, beginning in October 1996.

Agreement with American Home Prodtlcts In August 1994, the Company entered into a license and supply agreement with American Cyanamid

Company, now a par:t of American Home Products, pursuant to which the Storz Instrument Company subsidiary of AHP will develop imd have the right to market an eyedrop formulation of cidofovir for the potential treatment of topical ophthalmic viruses. The field of the exclusive, worldwide license to AHP is limited to topical ophthalmic use for external viral eye disease, and specifically excludes any treatment requiring injection, and any treatment for other eye diseases such as CMV retinitis. In December 1995, AHP commenced a Phase I clinical trial of topical ophthalmic cidofovir. Gilead is entitled to receive a fee each year until AHP files an NDA under the agreement. In addition, AHP is obligated to make a series of payments based on the achievement of clinical milestones in.different countries during the term of the agreement. Gilead is responsible for supplying bulk cidofovir to AHP, and AHP is obligated to make royalty payments to Gilead based on net sales. Beginning in August 1996, AHP may terminate this agreement on three months notice.

Academic mul ConsW.ting Relationships To supplement its research and development efforts, the Company collaborates with and has licensed

certain patents and patent applications from a number of universities and medical research institutions.

27

Human Resources As of December 31, 1995, Gilead employed 207 people full-time, of whom 62 hold Ph;D. or M.D. degrees

and 28 hold other advanced degrees. Approximately 145 employees are engaged in research and development activities and 62 are employed in finance, sales and marketing, corporate development, legal and general administrative activities. Gilead believes that it maintains good relations with its employees.

Scientific Advisory Board

The Company's Scientific Advisory Board is composed of individuals with expertise in fields related to the Company's programs. This Board hoids fonnal meetings with scientists from the Company at least once a year. In some cases, individual members of this Board consult and meet informally with the Company on a more frequent basis. Each of the members of this Board has a consulting agreement with the Company.

The members of Gilead's Scientific Advisory Board are as follows:

DanielL &arnoff, M.D., has been a member of Gilead's Scientific Advisory Board since January 1990. He headed G. D. Searle & Co.'s research and development from 1979 through 1985, and previously was Professor of Medicine and Pharmacology at the University of Kansas. Dr. Azamo:ff is a member of the Institute of Medicine of the National Academy of Sciences.

jacqueline K. Barton, Ph.D., has been a member of Gilead's Scientific Advisory Board since January 1989. She is a Professor of Chemistry at the California Institute of Technology ("Cit Thch"), a member of the American Academy of Arts and Sciences and a recipient of a MacArthur Foundation Fellowship.

Peter B. Deroan, Ph.D., has been a member of Gilead's Scientific Advisory Board since September 1987. He is Bren Professor of Chemistry at Cal Tech and a member of the National Academy of Sciences and the American Academy of Arts and Sciences.

Miclwel ]. Gait, Ph.D., bas been a member of Gilead's Scientific Advisory Board since July 1989. He is a Senior Staff Scientist with the Medical Research Council in Cambridge, England.

Ralph E Hir.schrnann, Ph. D., has been a member of Gilead's Scientific Advisory Board since October 1989. He is a Research Professor of Chemistry at the University of Pennsylvania. Previously, Dr. Hirschmann was employed by Merck & Co., most recently as Senior Vice President of Basic Research and Chemistry. Dr. Hirschmann is a member of the American Academy of Arts and Sciences.

Lawrence L.-K. Leung, M.D., has been a member of Gilead's Scientific Advisory Board since Septem­ber 1994. He is Chief of the Division of .Hematology at the Stanford University Medical School. Dr. Leung was previously Director of Cardiovascular Biology and Medicine at Gilead.

Douglas A Melton, Ph.D., has been a member of Gilead's Scientific Advisory Board since November 1987, He is a Professor of Biochemistry and Molecular Biology at Harvard University.

Jack W. Szostak, Ph.D., has been a member of Gilead's Scientific Advisory .Board since January 1991. He is a Professor of Genetics in the Department of Molecular Biology at the Harvard Medical School.

Business Advisory Board The members of Gilead's Business Advisory Board are as follows:

Joseph A CaUfano, Jr. has been a member of Gilead's Business Advisory Board since September 1988. He is the Chainnan and President of the Center on Addiction and Substance Abuse. Formerly, he was the managing partner of the law firm of Dewey, Ballantine, Bushby, Palmer & Wood. Mr. Califano served as Secretary of Health, Education and Welfare from 1977 to 1979. He serves as a director of Chrysler Corporation, Prtm.erica Corporation and American Data Processing, Inc.

34

Thomas D Kiley has been a member of Gilead's Business Advisory Board since January 1990. He is an attorney and independent consultant specializing in intellectual property and co:rporate strategy in the biotech­nology industry. Mr. Kiley formerly served as Vice Pre..<;ident and General Counsel and as Vice President for Corporate Development at Genentech, Inc.

john E. Robson has been a member of Gilead's Business Advisory Board since November 1993. He is a Senior Advisor with Robertson, Stephens & Company, one of the Representatives for this offering. See "Undenvriting." Formerly, he was Deputy Secretary of the United States Treasury, and President and Chief Executive Officer of G. D. Searle & Co. Mr. Robson has also served as Chairman of the Civil Aeronautics Board, Undersecretary of the United States Department ofTransportation and Dean of the Emory University School of Business Administration.

35

MANAGEMENT

Executive Officers and Directors

Information with respect to the executive officers and directors of the Company as of January 15, !H96 is set forth below:

Name Age

Michael L. Riordan, M.D. 38

John C. Martin, Ph.D. 44 Michael F. Bigham 38

Mark L. Perry. J.D. 40

Etienne F. Davignon 63

James M. Denny (1X2) 63

Gordon E. Moore, Ph.D. (1)(2) 67

H. DuBose Montgomery (1)(2) 46

Donald H. Rumsfeld (1)(2) 63

Benne C. Schmidt (l) 83

George P. Shultz, Ph.D. (2) 75

(1) Member of the Compensation Committee (2) Member of the Audit Committee

Position

Chairman, President and Member of the Board. of Directors

Chief Operating Officer

Executive Vice President for Operations and Cl!llef Financial Officer

Vice President, General Counsel and Secretary

Member of the Board of Directors

Member of the Board of Directors

Member of the Board of Directors

Member of the Board of Dn·ect01·s

Member of the Board of Directors

Member of the Board of Directors

Member of the Board of Directors

Dr. Riordan founded Gilead in June 1987, has been Gilead's President and Chief Executive Officer since its inception and has served as Chairman of the Board since July 1993. From 1986 to 1987, he was employed as a venture capitalist at Menlo Ventures, a venture capital finn and a stockholder of the Company. Dr. Riordan received his M.D. from the Johns Hopkins University School of Medicine and his M.B.A. from the Harvard University Graduate School of Business Administration.

Dr. Martin joined Gilead in October 1990 as Vice President for Research and Development, and was appointed Chief Operating Officer in October 1995. From 1984 to 1990 he was employed at Brist01l-Myers Squibb Company, a pharmaceutical company, where he was Director of Antiviral Chemistry. Dr. Martin was employed at Syntex Corporation, a pharmaceutical company, from 1978 to 1984. Dr. Martin is the co-inventor of ganciclovir, a pharmaceutical now used for the treatment of cytomegalovirus infection. In 1990, he received the Isbell Award of the American Chemical Society for his applications of carbohydrate chemistry to the design of medicinally active nucleosides and nuc1eotides. Dr. Martin received his Ph.D. in organic chemistry from the University of Chicago.

Mr. Bigham has served as Executive Vice President for Operations since 1994 and as Chief Financial! Officer since April1989. He served as Vice President of Corporate Development from July 1988 until April19H2. Prior to joining Gilead, he was Co-head of Healthcare Investment Banking for Hambrecht & Quist Incorporated, an investment banking firm, where be worked from 1984 to 1988. Mr. Bigham received his M.B.A. firom the Stanford University Graduate School of Business. He is a Certified Public Accountant.

Mr. Perry joined the Company in July 1994 as its Vice President and General Counsel He has served as Secretary since May 1994. From 1981 to 1994, Mr. Peny was with Cooley Godward Castro Huddleson ~(Tatum in San Francisco and Palo Alto, California. Cooley Godward serves as the Company's primary outside counsel. Mr. Perry was an associate with Cooley Godward from 1981 to 1987, and a partner from 1987 to 1994. Mlr. Perry received his J.D. from the University of California, Davis and is a member of the California bar.

Mr. Davignon joined Gilead's Board of Directors in September 1990. He has served as the Chairman of Societe Generale de Belgique, a diversified financial and industrial company, since 1985. Mr. Davignon served

36

as the European Community's Commissioner for Industry and International Markets from 1977 to 1981, and as the EC's Vice President for Research, Industry and Energy Policies from 1981 to 1984. Mr. Davignon is a director of Fiat S.A., Compagnie Financiere de Suez, Minorco S.A. and a number of other European compax;1ies.

Mr. Denny joined Gilead's Board of Directors in January 1996. Mr. Denny is a Managing Director of William Blair Capital Partners V, a private equity fund. Mr. Denny is a retired Vice Chai~n of Sears, Roebuck & Co. As Vice Chairman, he had responsibility for Allstate Insurance Corporation, Coldwell Banker Real Estate Group and the corporate financial organization. Previously, he served as Executive Vice President and Chief Financial and Planning Officer of G.D. Searle & Co., as well as Chairman of Pearle Health Services, Inc., a Searle-affiliated company. He is a director of Allstate Corporation, GATX Corporation and General Binding Corp. and is Vice Chairman of Northwestern Memorial Hospital.

Dr. Moore joined Gilead's Board of Directors in January 1996, and served as a member of the Compa1uy's Business Advisory Board since July 1991. Dr. Moore is a co-founder and Chairman oflntel Corporation, where he previously served as President and Chief Executive Officer; He also served as Director of Research and Development for the Fairchild Semiconductor Division of Fairchild Camera and Instrument Corporation. Dr. Moore is a director of Varian Associates and 'fransamerica Corporation and is Chairman of the Board ofTrusltees at the California Institute of Technology. He received the National Medal of Technology in 1990.

Mr. Montgomety has been a Director of the Company since August 1987 and served as Chairman of the Board from August 1987 to July 1993. He was a founder and has served as a general partner ofMen1o Ventures, a group of venture capital funds, since 1976. He holds a B.S. and M.S. from the Massachusetts Institute of Technology ("MIT'') and an M.B.A. from the Harvard University Graduate School of Business Administration, and served as a Trustee of MIT. Mr. Montgomery is a director of Matrix Pharmaceutical, Inc. and sev•eral privately-held companies.

Mr. Rumsfeld became a Director of Gilead in July 1988. He served as the Chainnan and ChiefExecuttive Officer of General Instrument Corporation, a diversified electronics company, from 1990 to 1993, and was Clb.ief Executive Officer of C .D. Searle & Co., a pharmaceutical company, from 1977 to 1985. Prior to joining Genoeral Instrument Corporation, Mr. Rumsfeld served as an advisor on international relations, public policy and national security to a number of private sector organizations. Mr. Rumsfeld formerly served as Presidential Envoy to the Middle East, United States Secretary of Defense, White House Chief of Staff, United States Ambassado;r to NATO and a U.S. Congressman. In addition to serving on the Board of Gilead, Mr. Rumsfeld is a director of Allstate Corporation, Amylin Pharmaceuticals, Inc., the Kellogg Company, Metricom, Inc., Sears, Roebuclk & Co. and the Tribune Company. He is also Chairman of the Board of Trustees of the RAND Corporation, a non­profit public policy research institute.

Mr. Schmidt joined Gilead's Board of Directors in November 1988. Since 1946, he has served as a partner of the venture capital firm of J. H. Whitney & Co. Mr. Schmidt was the Managing Partner of J.H. Whitney & Co. from 1960 to 1992 and is currently s·enior Partner of the firm. Mr. Schmidt was Chairman of Memorial Sloan­Kettering Cancer Center from 1982 to 1990, and is presently Honorary Co-Chairman. Mr. Schmidt served as Chairman of the President's Cancer Panel from 1971 to 1980. He is a senior member of the Institute of Medic:ine of the National Academy of Sciences and a Trustee of the General Motors Cancer Research Foundatiion. Mr. Schmidt is also Chairman of the Board of Directors of Genetics Institute, Inc., a public biotechnoloogy company in which he was a founding investor, Chairman of the Board of Directors of Vertex Pharmaceuticals Incorporated, Chairman-Emeritus ofFreeport-McMoRan Copper & Gold Inc. and Director-Emeritus of Fiee­port-McMoRan Inc. and McMoRan Oil & Gas Co. Mr. Schmidt is also a director of a number of privately-held companies. Mr. Schmidt was an officer and director ofVitarine Pl1armaceuticals, Inc., which filed a voluntary petition for bankruptcy "vith the United States Bankruptcy Court for the 7th District of New York in May 19191.

Dr. Shultz joined Gilead's Board of Directors in January 1996. Dr. Shultz currently serves as Distinguished Fellow at the Hoover Institution and as a director of the Bechtel Group, Inc., AirTouch Communications and Gulfstream Aerospace Corporation. Dr. Shultz served as U.S. Secretary of State from 1982 to 1989 and earlier served as Secretary of Labor, Director of the Office of Management and Budget and Secretary of the 'fteasury.

37

Previously, he served as Dean of the Graduate School of Business at the U Diversity of Chicago and as President of the Bechtel Group, Inc. In 1989, Dr. Shultz was awarded the Medal of Freedom, the nation's highest civilian honor.

The Board of Directors has a Compensation Committee, which makes recommendations conc{~ming salaries and ·incentive compensation for employees of and consultants to the Company, and an Audit Comnrrittee, which reviews the results and scope of the audit and other services provided by the Company's independent auditors.

The Company currently has authorized eight directors. All directors hold office until the next annual meeting of stockholders of the Company and until their successors have been duly elected and quali6ed. Each non-employee director receives $1,000 for attendance at each Board of Directors meeting. All directo1rs are reimbursed for certain expenses in connection with attendance at Board and committee meetings. Executive officers serve at the discretion of the Board of Directors. There are no family relationships among any of the officers or directors.

All of Gilead's non-employee directors ar-e entitled to receive non-discretionary annual stock option :grants under the Company's 1995 Non-Employee Directors' Stock Option Plan. Each option granted pursuant Ito this Plan has an excerc:ise price equal to fair market value on the date of grant, and is subject to five-year vesting in equal quar-terly installments. The Plan provides for initial grants of options to purchase 25,000 shar-es fo1r each non-employee director (45,000 shares for the Chair of the Board in the event a non-employee director serves as Chair), plus annual grants of options to purchase 5,000 shares (9,000 shares for a non-employee Chair of the Board). In addition, each member of a standing committee of the Board is entitled to an initial grant of an additional 1,000 shares (3,000 shares for the Chair of the committee), plus additional annual grants of 1,000 shares (3,000 shares for the Chair of the committee).

. .....

38

No dealer, sales representative or any other person has been authorized in connection with the offering made hereby to give any information or to make any representation other than those con­tained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the Com­pany or any of the Underwriters. 'rhis Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any of the securities other than the registered securities to which it relates or an offer to, or a solicitation of, any person or by any­one in any jurisdiction in which it is unlawful to make such offer or solicitation. Neither the deliv­ery of this Prospectus nor any offer or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company or that the information contained herein is correct as of any date subse­quent to the date hereof.

TABLE OF CONTENTS Page

Available Information . . . . . . . . . . . . . . . . 2 Incorporation of Certain Documents by

Reference . . . . . . . . . . . . . . . . . . . . . . . 2 Summary............. .. .. .. . . .. . . 3 Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 11 Dividend Policy . . . . . . . . . . . . . . . . . . . . 11 Price Range of Common Stock . . . . . . . . . 12 Capitalization . . . . . . . . . . . . . . . . . . . . . . 13 Dilution . . . . . . . . . . . . . . . . . . . . . . . . . 14 Selected Consolidated Financial Data . . . . . 15 Management's Discussion and Analysis of

Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 16

Business . . . . . . . . . . . . . . . . . . . . . . . . . 18 Management . . . . . . . . . . . . . . . . . . . . . . 36 Underwriting . . . . . . . . . . . . . . . . . . . . . . . 39 Legal Matters . . . . . . . . . . . . . . . . . . . . . 40 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Additional Information . . . . . . . . . . . . . . . 40 Index to Consolidated Financial Statements F-1

GILEAI> s c E N C E S

4,000,000 Shares

Common Stock

PROSPECTUS

Robertson, Stephens & Com1pany

Hambrecht & Quist

J.P. Morgan & Co.

Pacific Growth Equities, btc.

February 16, 1996