GILEAD SCIENCES INC (Form: 10-Q, Received: 08/04/2014 17:19:28)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware	94-3047598
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California	94404
(Address of principal executive offices)	(Zip Code)

650-574-3000

Registrant’s Telephone Number, Including Area Code

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¬

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¬

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer ¬ Non-accelerated filer ¬ Smaller reporting company ¬

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¬ No ý

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of July 25, 2014 : 1,511,670,456

GILEAD SCIENCES, INC.

INDEX



PART I.	FINANCIAL INFORMATION		2

	Item 1.	Condensed Consolidated Financial Statements	2

		Condensed Consolidated Balance Sheets at June 30, 2014 (unaudited) and December 31, 2013	2

		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2014 and 2013 (unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2014 and 2013 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (unaudited)	5

		Notes to Condensed Consolidated Financial Statements (unaudited)	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION		36

	Item 1.	Legal Proceedings	36

	Item 1A.	Risk Factors	41

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

	Item 3.	Defaults Upon Senior Securities	58

	Item 4.	Mine Safety Disclosures	58

	Item 5.	Other Information	58

	Item 6.	Exhibits	59

SIGNATURES			66

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD ^® , GILEAD SCIENCES ^® , SOVALDI ^® , STRIBILD ^® , COMPLERA ^® , EVIPLERA ^® , TRUVADA ^® , VIREAD ^® , EMTRIVA ^® , TYBOST ^® , ZYDELIG ^® , HEPSERA ^® , VITEKTA ^® , LETAIRIS ^® , RANEXA ^® , CAYSTON ^® , AMBISOME ^® , VOLIBRIS ^® and RAPISCAN ^® . ATRIPLA ^® is a registered trademark belonging to Bristol-Myers Squibb & Gilead Sciences, LLC. LEXISCAN ^® is a registered trademark belonging to Astellas U.S. LLC. MACUGEN ^® is a registered trademark belonging to Eyetech, Inc. SUSTIVA ^® is a registered trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU ^® is a registered trademark belonging to Hoffmann-La Roche Inc. This report also includes other trademarks, service marks and trade names of other companies.


PART I.	FINANCIAL INFORMATION


ITEM I.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)



	June 30, 2014			December 31, 2013
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	8,730,522		$	2,112,806
Short-term marketable securities	68,546			18,756
Accounts receivable, net	3,436,711			2,100,286
Inventories	2,068,753			2,055,788
Deferred tax assets	386,580			330,530
Prepaid taxes	376,716			398,010
Prepaid expenses	232,151			165,652
Other current assets	199,360			91,925
Total current assets	15,499,339			7,273,753
Property, plant and equipment, net	1,380,776			1,166,181
Long-term portion of prepaid royalties	497,502			198,766
Long-term deferred tax assets	153,552			154,765
Long-term marketable securities	782,315			439,028
Intangible assets, net	11,508,319			11,900,106
Goodwill	1,171,561			1,169,023
Other long-term assets	212,800			195,163
Total assets	$	31,206,164		$	22,496,785

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,162,307		$	1,255,914
Accrued government rebates	1,606,555			983,490
Accrued compensation and employee benefits	220,093			243,540
Income taxes payable	97,302			10,855
Other accrued liabilities	1,443,377			1,023,938
Deferred revenues	126,284			110,640
Current portion of long-term debt and other obligations, net	1,572,079			2,697,044
Total current liabilities	6,227,997			6,325,421
Long-term debt, net	7,932,536			3,938,708
Long-term income taxes payable	338,238			162,412
Long-term deferred tax liabilities	67,980			83,286
Other long-term obligations	174,196			178,626
Commitments and contingencies
Equity component of currently redeemable convertible notes	35,875			63,831
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5,000 shares authorized; none outstanding	—			—
Common stock, par value $0.001 per share; shares authorized of 5,600,000; shares issued and outstanding of 1,526,043 and 1,534,414	1,526			1,534
Additional paid-in capital	5,930,987			5,386,735
Accumulated other comprehensive loss	(41,460		)	(124,446		)
Retained earnings	10,199,576			6,105,244
Total Gilead stockholders’ equity	16,090,629			11,369,067
Noncontrolling interest	338,713			375,434
Total stockholders’ equity	16,429,342			11,744,501
Total liabilities and stockholders’ equity	$	31,206,164		$	22,496,785

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Revenues:
Product sales	$	6,412,937		$	2,657,285		$	11,283,911		$	5,050,853
Royalty, contract and other revenues	122,006			110,109			249,988			248,176
Total revenues	6,534,943			2,767,394			11,533,899			5,299,029
Costs and expenses:
Cost of goods sold	924,709			684,663			1,737,914			1,319,111
Research and development	583,924			523,902			1,178,902			1,021,534
Selling, general and administrative	613,555			404,991			1,161,678			779,287
Total costs and expenses	2,122,188			1,613,556			4,078,494			3,119,932
Income from operations	4,412,755			1,153,838			7,455,405			2,179,097
Interest expense	(102,004		)	(78,008		)	(178,273		)	(159,795		)
Other income (expense), net	(3,645		)	(231		)	(21,557		)	(3,555		)
Income before provision for income taxes	4,307,106			1,075,599			7,255,575			2,015,747
Provision for income taxes	656,621			307,981			1,382,503			530,419
Net income	3,650,485			767,618			5,873,072			1,485,328
Net loss attributable to noncontrolling interest	5,108			4,987			9,931			9,463
Net income attributable to Gilead	$	3,655,593		$	772,605		$	5,883,003		$	1,494,791
Net income per share attributable to Gilead common stockholders—basic	$	2.39		$	0.51		$	3.83		$	0.98
Shares used in per share calculation—basic	1,532,723			1,526,945			1,534,614			1,524,174
Net income per share attributable to Gilead common stockholders—diluted	$	2.20		$	0.46		$	3.52		$	0.89
Shares used in per share calculation—diluted	1,664,415			1,694,577			1,672,435			1,683,269

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in thousands)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	3,650,485		$	767,618		$	5,873,072		$	1,485,328
Other comprehensive income:
Change in foreign currency translation gain (loss), net of tax	1,186			11,730			6,969			2,774
Available-for-sale securities:
Change in net unrealized gains (losses), net of tax impact of $1,096, $(1,144), $1,178 and $(128)	1,679			(2,019		)	1,826			(234		)
Reclassifications to net income, net of tax impact of $(110), $(32), $(224) and $(41)	(187		)	(58		)	(386		)	(75		)
Net change	1,492			(2,077		)	1,440			(309		)
Cash flow hedges:
Change in net unrealized gains (losses), net of tax impact of $(1,906), $1,730, $(174) and $3,579	31,621			5,022			32,886			79,082
Reclassifications to net income, net of tax impact of $(1,072), $(241), $(2,062) and $(252)	20,010			(5,110		)	41,691			(5,561		)
Net change	51,631			(88		)	74,577			73,521
Other comprehensive income	54,309			9,565			82,986			75,986
Comprehensive income	3,704,794			777,183			5,956,058			1,561,314
Comprehensive loss attributable to noncontrolling interest	5,108			4,987			9,931			9,463
Comprehensive income attributable to Gilead	$	3,709,902		$	782,170		$	5,965,989		$	1,570,777

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)



	Six Months Ended
	June 30,
	2014			2013
Operating Activities:
Net income	$	5,873,072		$	1,485,328
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	53,479			50,091
Amortization expense	454,468			97,412
Stock-based compensation expense	165,276			117,720
Excess tax benefits from stock-based compensation	(214,258		)	(89,151		)
Tax benefits from exercise and vesting of stock-based awards	215,826			89,025
Deferred income taxes	(53,543		)	9,974
Change in fair value of contingent consideration	7,966			17,442
Other	21,413			26,655
Changes in operating assets and liabilities:
Accounts receivable, net	(1,332,395		)	(181,266		)
Inventories	(20,863		)	(200,856		)
Prepaid expenses and other assets	(521,748		)	(153,801		)
Accounts payable	(89,945		)	64,831
Income taxes payable	297,670			42,321
Accrued liabilities	877,062			232,193
Deferred revenues	19,831			17,187
Net cash provided by operating activities	5,753,311			1,625,105

Investing Activities:
Purchases of marketable securities	(650,151		)	(199,357		)
Proceeds from sales of marketable securities	238,858			159,828
Proceeds from maturities of marketable securities	17,592			39,571
Acquisitions, net of cash acquired	—			(378,645		)
Capital expenditures	(254,487		)	(84,130		)
Net cash used in investing activities	(648,188		)	(462,733		)

Financing Activities:
Proceeds from debt financing, net of issuance costs	3,965,532			—
Proceeds from convertible note hedges	1,312,054			1,205,956
Purchases of convertible note hedges	(26,249		)	—
Proceeds from issuances of common stock	162,918			146,342
Repurchases of common stock	(1,650,296		)	(82,239		)
Repayments of debt and other long-term obligations	(2,438,882		)	(2,135,575		)
Excess tax benefits from stock-based compensation	214,258			89,151
Contributions from (distributions to) noncontrolling interest	(26,790		)	19,716
Net cash provided by (used in) financing activities	1,512,545			(756,649		)
Effect of exchange rate changes on cash	48			(7,241		)
Net change in cash and cash equivalents	6,617,716			398,482
Cash and cash equivalents at beginning of period	2,112,806			1,803,694
Cash and cash equivalents at end of period	$	8,730,522		$	2,202,176

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of Gilead Sciences, Inc. (Gilead, we or us) believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

The accompanying Condensed Consolidated Financial Statements include the accounts of Gilead, our wholly-owned subsidiaries and our joint ventures with Bristol-Myers Squibb Company (BMS), for which we are the primary beneficiary. We record a noncontrolling interest in our Condensed Consolidated Financial Statements to reflect BMS’s interest in the joint ventures. All intercompany transactions have been eliminated. The Condensed Consolidated Financial Statements include the results of companies acquired by us from the date of each acquisition for the applicable reporting periods.

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2013 , included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission.

Significant Accounting Policies, Estimates and Judgments

The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its significant accounting policies or estimates. We base our estimates on historical experience and on various market specific and other relevant assumptions that we believe 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.

Concentrations of Risk

We are subject to credit risk from our portfolio of cash equivalents and marketable securities. Under our investment policy, we limit amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. We are not exposed to any significant concentrations of credit risk from these financial instruments. The goals of our investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after-tax rate of return.

We are also subject to credit risk from our accounts receivable related to our product sales. The majority of our trade accounts receivable arises from product sales in the United States and Europe.

As of June 30, 2014 , our accounts receivable in Southern Europe, specifically Greece, Italy, Portugal and Spain, totaled approximately $652.4 million , of which $173.0 million were greater than 120 days past due and $53.6 million were greater than 365 days past due. To date, we have not experienced significant losses with respect to the collection of our accounts receivable. We believe that our allowance for doubtful accounts was adequate at June 30, 2014 .

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, jointly with the International Accounting Standards Board, issued a comprehensive new standard on revenue recognition from contracts with customers. The standard's core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying this new guidance to contracts within its scope, an entity will: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Additionally, this new guidance will require significantly expanded revenue recognition disclosures. This guidance will become effective for

us beginning in the first quarter of 2017. Early application is not permitted. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. We are currently evaluating the impact of our pending adoption of this standard on our Condensed Consolidated Financial Statements.


2.	FAIR VALUE MEASUREMENTS

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:


•	Level 1 inputs which include quoted prices in active markets for identical assets or liabilities;

•

Level 2 inputs which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. For our marketable securities, we review trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and

•

Level 3 inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Our Level 3 liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts receivable, foreign currency exchange contracts, accounts payable and short-term and long-term debt. Cash and cash equivalents, marketable securities and foreign currency exchange contracts that hedge accounts receivable and forecasted sales are reported at their respective fair values on our Condensed Consolidated Balance Sheets. Short-term and long-term debt are reported at their amortized cost on our Condensed Consolidated Balance Sheets. The remaining financial instruments are reported on our Condensed Consolidated Balances Sheets at amounts that approximate current fair values.

The fair values of our convertible senior notes and senior unsecured notes were determined using Level 2 inputs based on their quoted market values. The following table summarizes the carrying values and fair values of our convertible senior notes and senior unsecured notes (in thousands):



		June 30, 2014				December 31, 2013
Type of Borrowing	Description	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible Senior	May 2014 Notes	$	—	$	—	$	234,217	$	783,651
Convertible Senior	May 2016 Notes	822,139		3,084,363		1,113,043		3,871,516
Senior Unsecured	April 2021 Notes	994,210		1,099,010		993,781		1,075,480
Senior Unsecured	December 2014 Notes	749,868		756,195		749,710		762,637
Senior Unsecured	December 2016 Notes	699,441		734,146		699,326		740,705
Senior Unsecured	December 2021 Notes	1,247,861		1,375,563		1,247,716		1,336,738
Senior Unsecured	December 2041 Notes	997,923		1,171,090		997,885		1,118,660
Senior Unsecured	April 2019 Notes	499,189		500,985		—		—
Senior Unsecured	April 2024 Notes	1,747,271		1,798,843		—		—
Senior Unsecured	April 2044 Notes	1,746,641		1,853,028		—		—

The following table summarizes, for assets or liabilities recorded at fair value, the respective fair value and the classification by level of input within the fair value hierarchy previously defined (in thousands):



	June 30, 2014								December 31, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Debt securities:
Money market funds	$	5,892,347	$	—	$	—	$	5,892,347	$	1,490,964	$	—	$	—	$	1,490,964
Corporate debt securities	—		347,545		—		347,545		—		220,025		—		220,025
U.S. treasury securities	365,061		—		—		365,061		85,403		—		—		85,403
U.S. government agencies securities	—		41,668		—		41,668		—		93,350		—		93,350
Residential mortgage and asset-backed securities	—		87,358		—		87,358		—		46,941		—		46,941
Municipal debt securities	—		9,229		—		9,229		—		12,065		—		12,065
Total debt securities	6,257,408		485,800		—		6,743,208		1,576,367		372,381		—		1,948,748
Deferred compensation plan	49,827		—		—		49,827		44,461		—		—		44,461
Derivatives	—		22,874		—		22,874		—		13,879		—		13,879
	$	6,307,235	$	508,674	$	—	$	6,815,909	$	1,620,828	$	386,260	$	—	$	2,007,088

Liabilities:
Contingent consideration	$	—	$	—	$	271,726	$	271,726	$	—	$	—	$	263,760	$	263,760
Derivatives	—		40,472		—		40,472		—		99,057		—		99,057
Deferred compensation plan	49,827		—		—		49,827		44,461		—		—		44,461
	$	49,827	$	40,472	$	271,726	$	362,025	$	44,461	$	99,057	$	263,760	$	407,278

Level 2 Inputs

We estimate the fair values of our government agency securities, corporate debt, residential mortgage and asset-backed securities by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data and other observable inputs.

Substantially all of our foreign currency derivative contracts have maturities primarily over an 18-month time horizon and all are with counterparties that have a minimum credit rating of A- or equivalent by Standard & Poor's, Moody's Investors Service, Inc. or Fitch, Inc. We estimate the fair values of these contracts by taking into consideration valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency rates, London Interbank Offered Rates (LIBOR) and swap rates. These inputs, where applicable, are at commonly quoted intervals.

Level 3 Inputs

As of June 30, 2014 and December 31, 2013 , the only assets or liabilities that were measured using Level 3 inputs were contingent consideration liabilities. Our policy is to recognize transfers into or out of Level 3 classification as of the actual date of the event or change in circumstances that caused the transfer.

Contingent Consideration Liabilities

In connection with certain acquisitions, we may be required to pay future consideration that is contingent upon the achievement of specified development, regulatory approval or sales-based milestone events. We estimate the fair value of the contingent consideration liabilities on the acquisition date and each reporting period thereafter using a probability-weighted income approach, which reflects the probability and timing of future payments. This fair value measurement is based on significant Level 3 inputs such as the anticipated timelines and probability of achieving development, regulatory approval or sales-based milestone events and projected revenues. The resulting probability-weighted cash flows are discounted using credit-risk adjusted interest rates.

Each reporting period thereafter, we revalue these obligations by performing a review of the assumptions listed above and

record increases or decreases in the fair value of these contingent consideration obligations in research and development (R&D) expenses within our Condensed Consolidated Statements of Income until such time that the related product candidate receives marketing approval. In the absence of any significant changes in key assumptions, the quarterly determination of fair values of these contingent consideration obligations would primarily reflect the passage of time.

Significant judgment is employed in determining Level 3 inputs and fair value measurements as of the acquisition date and for each subsequent period. Updates to assumptions could have a significant impact on our results of operations in any given period and actual results may differ from estimates. For example, significant increases in the probability of achieving a milestone or projected revenues would result in a significantly higher fair value measurement while significant decreases in the estimated probability of achieving a milestone or projected revenues would result in a significantly lower fair value measurement. Significant increases in the discount rate or in the anticipated timelines would result in a significantly lower fair value measurement while significant decreases in the discount rate or anticipated timelines would result in a significantly higher fair value measurement.

The potential contingent consideration payments required upon achievement of development or regulatory approval-based milestones related to our CGI Pharmaceuticals, Inc. and Calistoga Pharmaceuticals, Inc. acquisitions range from no payment if none of the milestones are achieved to an estimated maximum of $254.0 million (undiscounted), of which we had accrued $225.3 million as of June 30, 2014 and $220.5 million as of December 31, 2013 . The remainder of the contingent consideration liabilities accrual as of June 30, 2014 and December 31, 2013 relates to potential future payments resulting from the acquisition of Arresto Biosciences, Inc. for royalty obligations on future sales once specified sales-based milestones are achieved.

The following table provides a rollforward of our contingent consideration liabilities, which are recorded as part of other accrued liabilities and other long-term obligations in our Condensed Consolidated Balance Sheets (in thousands):



Balance at December 31, 2013	$	263,760
Additions from new acquisitions	—
Net changes in valuation	7,966
Balance at June 30, 2014	$	271,726


3.	AVAILABLE-FOR-SALE SECURITIES

Estimated fair values of available-for-sale securities are generally based on prices obtained from commercial pricing services. The following table is a summary of available-for-sale debt securities recorded in cash and cash equivalents or marketable securities in our Condensed Consolidated Balance Sheets (in thousands):



	June 30, 2014									December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

Debt securities:
Money market funds	$	5,892,347	$	—	$	—		$	5,892,347	$	1,490,964	$	—	$	—		$	1,490,964
Corporate debt securities	346,815		875		(145		)	347,545		219,242		885		(102		)	220,025
U.S. treasury securities	364,724		359		(22		)	365,061		85,337		94		(28		)	85,403
U.S. government agencies securities	41,569		99		—			41,668		93,211		156		(17		)	93,350
Residential mortgage and asset-backed securities	87,256		127		(25		)	87,358		46,969		37		(65		)	46,941
Municipal debt securities	9,175		54		—			9,229		12,009		56		—			12,065
Total	$	6,741,886	$	1,514	$	(192	)	$	6,743,208	$	1,947,732	$	1,228	$	(212	)	$	1,948,748

The following table summarizes the classification of the available-for-sale debt securities on our Condensed Consolidated Balance Sheets (in thousands):



	June 30, 2014		December 31, 2013
Cash and cash equivalents	$	5,892,347	$	1,490,964
Short-term marketable securities	68,546		18,756
Long-term marketable securities	782,315		439,028
Total	$	6,743,208	$	1,948,748

Cash and cash equivalents in the table above exclude cash of $2.84 billion as of June 30, 2014 and $621.8 million as of December 31, 2013 .

The following table summarizes our portfolio of available-for-sale debt securities by contractual maturity (in thousands):



	June 30, 2014
	Amortized Cost		Fair Value
Less than one year	$	5,960,662	$	5,960,893
Greater than one year but less than five years	773,969		775,051
Greater than five years but less than ten years	2,449		2,458
Greater than ten years	4,806		4,806
Total	$	6,741,886	$	6,743,208

The following table summarizes the gross realized gains and losses related to sales of marketable securities (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Gross realized gains on sales	$	363		$	201		$	701		$	383
Gross realized losses on sales	$	(66	)	$	(111	)	$	(91	)	$	(267	)

The cost of securities sold was determined based on the specific identification method.

The following table summarizes our available-for-sale debt securities that were in a continuous unrealized loss position, but were not deemed to be other-than-temporarily impaired (in thousands):



	Less Than 12 Months					12 Months or Greater					Total
	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
June 30, 2014
Debt securities:
U.S. treasury securities	$	(22	)	$	42,128	$	—		$	—	$	(22	)	$	42,128
Corporate debt securities	(145		)	81,950		—			—		(145		)	81,950
Residential mortgage and asset-backed securities	(8		)	27,768		(17		)	909		(25		)	28,677
U.S. government agencies securities	—			—		—			—		—			—
Total	$	(175	)	$	151,846	$	(17	)	$	909	$	(192	)	$	152,755

December 31, 2013
Debt securities:
U.S. treasury securities	$	(28	)	$	24,562	$	—		$	—	$	(28	)	$	24,562
Corporate debt securities	(102		)	37,076		—			1,505		(102		)	38,581
Residential mortgage and asset-backed securities	(38		)	19,563		(27		)	6,731		(65		)	26,294
U.S. government agencies securities	(17		)	10,858		—			—		(17		)	10,858
Total	$	(185	)	$	92,059	$	(27	)	$	8,236	$	(212	)	$	100,295

We held a total of 64 securities as of June 30, 2014 and 40 securities as of December 31, 2013 that were in an unrealized loss position. Based on our review of these securities, we believe we had no other-than-temporary impairments on these securities as of June 30, 2014 and December 31, 2013 , because we do not intend to sell these securities and we believe it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost basis.


4.	DERIVATIVE FINANCIAL INSTRUMENTS

We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. In order to manage this risk, we may hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward or option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We also seek to limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrecognized gains on outstanding contracts (i.e. those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes.

We hedge our exposure to foreign currency exchange rate fluctuations for certain monetary assets and liabilities of our foreign subsidiaries that are denominated in a non-functional currency. The derivative instruments we use to hedge this exposure are not designated as hedges, and as a result, changes in their fair value are recorded in other income (expense), net on our Condensed Consolidated Statements of Income.

We hedge our exposure to foreign currency exchange rate fluctuations for forecasted product sales that are denominated in a non-functional currency. The derivative instruments we use to hedge this exposure are designated as cash flow hedges and have maturity dates of 18 months or less. Upon executing a hedging contract and quarterly thereafter, we assess prospective hedge effectiveness using a regression analysis which calculates the change in cash flow as a result of the hedge instrument. On a monthly basis, we assess retrospective hedge effectiveness using a dollar offset approach. We exclude time value from our effectiveness testing and recognize changes in the time value of the hedge in other income (expense), net. The effective component of our hedge is recorded as an unrealized gain or loss on the hedging instrument in accumulated other comprehensive income (OCI) within stockholders' equity. When the hedged forecasted transaction occurs, the hedge is de-

designated and the unrealized gains or losses are reclassified into product sales. The majority of gains and losses related to the hedged forecasted transactions reported in accumulated OCI at June 30, 2014 will be reclassified to product sales within 12 months.

The cash flow effects of our derivatives contracts for the six months ended June 30, 2014 and 2013 are included within net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.

We had notional amounts on foreign currency exchange contracts outstanding of $4.78 billion at June 30, 2014 and $4.28 billion at December 31, 2013 .

While all of our derivative contracts allow us the right to offset assets or liabilities, we have presented amounts on a gross basis. Under the International Swap Dealers Association, Inc. master agreements with the respective counterparties of the foreign currency exchange contracts, subject to applicable requirements, we are allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The following table summarizes the location and fair values of derivative instruments on our Condensed Consolidated Balance Sheets (in thousands):



	June 30, 2014
	Asset Derivatives			Liability Derivatives
	Classification	Fair Value		Classification	Fair Value
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	$	15,055	Other accrued liabilities	$	37,957
Foreign currency exchange contracts	Other long-term assets	7,812		Other long-term obligations	2,467
Total derivatives designated as hedges		22,867			40,424
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	7		Other accrued liabilities	48
Total derivatives not designated as hedges		7			48
Total derivatives		$	22,874		$	40,472



	December 31, 2013
	Asset Derivatives			Liability Derivatives
	Classification	Fair Value		Classification	Fair Value
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	$	12,647	Other accrued liabilities	$	85,541
Foreign currency exchange contracts	Other long-term assets	1,229		Other long-term obligations	13,299
Total derivatives designated as hedges		13,876			98,840
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	3		Other accrued liabilities	217
Total derivatives not designated as hedges		3			217
Total derivatives		$	13,879		$	99,057

The following table summarizes the effect of our foreign currency exchange contracts on our Condensed Consolidated Statements of Income (in thousands):



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014			2013		2014			2013
Derivatives designated as hedges:
Gains recognized in OCI (effective portion)	$	29,715		$	11,801	$	32,712		$	82,661
Gains (losses) reclassified from accumulated OCI into product sales (effective portion)	$	(18,938	)	$	5,351	$	(39,629	)	$	5,813
Gains (losses) recognized in other income (expense), net (ineffective portion and amounts excluded from effectiveness testing)	$	(3,983	)	$	1,908	$	(3,899	)	$	(224	)
Derivatives not designated as hedges:
Gains recognized in other income (expense), net	$	8,008		$	9,077	$	9,111		$	41,697

From time to time, we may discontinue cash flow hedges and as a result, record related amounts in other income (expense), net on our Condensed Consolidated Statements of Income. There were no material amounts recorded in other income (expense), net for the three and six months ended June 30, 2014 and 2013 as a result of the discontinuance of cash flow hedges.

As of June 30, 2014 and December 31, 2013 , we held one type of financial instrument, derivative contracts related to foreign currency exchange contracts. The following table summarizes the potential effect of offsetting derivatives by type of financial instrument on our Condensed Consolidated Balance Sheets (in thousands):



June 30, 2014
Offsetting of Derivative Assets/Liabilities
									Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
Description	Gross Amounts of Recognized Assets/Liabilities			Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Amounts of Assets/Liabilities Presented in the Condensed Consolidated Balance Sheet			Derivative Financial Instruments			Cash Collateral Received/Pledged		Net Amount (Legal Offset)
Derivative assets	$	22,874		$	—	$	22,874		$	(22,475	)	$	—	$	399
Derivative liabilities	$	(40,472	)	$	—	$	(40,472	)	$	22,475		$	—	$	(17,997	)



December 31, 2013
Offsetting of Derivative Assets/Liabilities
									Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
Description	Gross Amounts of Recognized Assets/Liabilities			Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Amounts of Assets/Liabilities Presented in the Condensed Consolidated Balance Sheet			Derivative Financial Instruments			Cash Collateral Received/Pledged		Net Amount (Legal Offset)
Derivative assets	$	13,879		$	—	$	13,879		$	(13,879	)	$	—	$	—
Derivative liabilities	$	(99,057	)	$	—	$	(99,057	)	$	13,879		$	—	$	(85,178	)


5.	INVENTORIES

Inventories are summarized as follows (in thousands):



	June 30, 2014		December 31, 2013
Raw materials	$	944,892	$	1,049,403
Work in process	563,883		412,945
Finished goods	559,978		593,440
Total	$	2,068,753	$	2,055,788

The joint ventures formed by Gilead and BMS (See Note 7, Collaborative Arrangements), which are included in our Condensed Consolidated Financial Statements, held efavirenz active pharmaceutical ingredient in inventory. This efavirenz

inventory was purchased from BMS at BMS's estimated net selling price of efavirenz and totaled $1.24 billion as of June 30, 2014 and $1.28 billion as of December 31, 2013 .


6.	INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The following table summarizes the carrying amount of our intangible assets (in thousands):



	June 30, 2014		December 31, 2013
Finite-lived intangible assets	$	10,926,729	$	11,325,751
Indefinite-lived intangible assets	581,590		574,355
Total intangible assets	$	11,508,319	$	11,900,106

Finite-Lived Intangible Assets

The following table summarizes our finite-lived intangible assets (in thousands):



	June 30, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible asset - sofosbuvir	$	10,720,000	$	407,826	$	10,720,000	$	58,261
Intangible asset - Ranexa	688,400		226,081		688,400		190,849
Other	305,795		153,559		305,795		139,334
Total	$	11,714,195	$	787,466	$	11,714,195	$	388,444

Upon U.S. Food and Drug Administration ( FDA) approval and commercial launch of Sovaldi in December 2013, we reclassified the in-process R&D related to sofosbuvir to finite-lived intangible assets. Amortization expense related to finite-lived intangible assets included primarily in cost of goods sold in our Condensed Consolidated Statements of Income totaled $199.5 million and $399.0 million for the three and six months ended June 30, 2014 and $21.5 million and $43.1 million for the three and six months ended June 30, 2013 . The weighted-average amortization period for all finite-lived intangible assets is approximately 15 years. As of June 30, 2014 , the estimated future amortization expense associated with our intangible assets for the remaining six months of 2014 and each of the five succeeding fiscal years is as follows (in thousands):



Fiscal Year	Amount
2014 (remaining six months)	$	399,022
2015	803,496
2016	811,428
2017	815,871
2018	827,980
2019	792,823
Total	$	4,450,620

Indefinite-Lived Intangible Assets

The following table summarizes our indefinite-lived intangible assets (in thousands):



	June 30, 2014		December 31, 2013
Indefinite-lived intangible asset - momelotinib (formerly CYT387)	$	308,155	$	362,700
Indefinite-lived intangible assets - other	266,200		266,200
	574,355		628,900
Foreign currency translation adjustment	7,235		(54,545		)
Total	$	581,590	$	574,355

Goodwill

The following table summarizes the changes in the carrying amount of goodwill (in thousands):



Balance at December 31, 2013	$	1,169,023
Foreign currency translation adjustment	2,538
Balance at June 30, 2014	$	1,171,561


7.	COLLABORATIVE ARRANGEMENTS

From time to time, as a result of entering into strategic collaborations, we may hold investments in non-public companies. We review our interests in investee companies for consolidation and/or disclosure based on applicable guidance. For variable interest entities (VIEs), we may be required to consolidate an entity if the contractual terms of the arrangement essentially provide us with control over the entity, even if we do not have a majority voting interest. We assess whether we are the primary beneficiary of a VIE based on our power to direct the activities of the VIE that most significantly impact the VIE's economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As of June 30, 2014 , we determined that certain of our investee companies are VIEs; however, other than with respect to our joint ventures with BMS, we are not the primary beneficiary and therefore do not consolidate these investees.

Bristol-Myers Squibb Company

North America

In 2004, we entered into a collaboration arrangement with BMS to develop and commercialize a single tablet regimen containing our Truvada and BMS's Sustiva (efavirenz) in the United States. This combination was approved for use in the United States in 2006 and is sold under the brand name Atripla. We and BMS structured this collaboration as a joint venture that operates as a limited liability company named Bristol-Myers Squibb & Gilead Sciences, LLC, which we consolidate. We and BMS granted royalty free sublicenses to the joint venture for the use of our respective company owned technologies and, in return, were granted a license by the joint venture to use any intellectual property that results from the collaboration. In 2006, we and BMS amended the joint venture's collaboration agreement to allow the joint venture to sell Atripla in Canada. The economic interests of the joint venture held by us and BMS (including share of revenues and out-of-pocket expenses) are based on the portion of the net selling price of Atripla attributable to efavirenz and Truvada. Since the net selling price for Truvada may change over time relative to the net selling price of efavirenz, both our and BMS's respective economic interests in the joint venture may vary annually.

We and BMS shared marketing and sales efforts. Starting in the second quarter of 2011, except for a limited number of activities that will be jointly managed, the parties no longer coordinate detailing and promotional activities in the United States, and the parties have begun to reduce their joint promotional efforts since we launched Complera in August 2011 and Stribild in August 2012. The parties will continue to collaborate on activities such as manufacturing, regulatory, compliance and pharmacovigilance. The daily operations of the joint venture are governed by four primary joint committees formed by both BMS and Gilead. We are responsible for accounting, financial reporting, tax reporting, manufacturing and product distribution for the joint venture. Both parties provide their respective bulk active pharmaceutical ingredients to the joint venture at their approximate market values. The agreement will continue until terminated by the mutual agreement of the parties. In addition, either party may terminate the other party's participation in the collaboration within 30 days after the launch of at least one generic version of such other party's single agent products (or the double agent products). The terminating party then has the right to continue to sell Atripla and become the continuing party, but will be obligated to pay the terminated party certain royalties for a three-year period following the effective date of the termination.

As of June 30, 2014 and December 31, 2013 , the joint venture held efavirenz active pharmaceutical ingredient which it purchased from BMS at BMS's estimated net selling price of efavirenz in the U.S. market. These amounts are included in inventories on our Condensed Consolidated Balance Sheets. As of June 30, 2014 , total assets held by the joint venture were $2.32 billion and consisted primarily of cash and cash equivalents of $214.7 million , accounts receivable of $278.1 million and inventories of $1.81 billion ; total liabilities were $1.44 billion and consisted primarily of accounts payable of $986.2 million and other accrued expenses of $446.8 million . As of December 31, 2013 , total assets held by the joint venture were $2.24 billion and consisted primarily of cash and cash equivalents of $245.7 million , accounts receivable of $275.3 million and inventories of $1.72 billion ; total liabilities were $1.26 billion and consisted primarily of accounts payable of $915.4 million and other accrued expenses of $341.2 million . These asset and liability amounts do not reflect the impact of intercompany eliminations that are included in our Condensed Consolidated Balance Sheets. Although we consolidate the joint venture, the legal structure of the joint venture limits the recourse that its creditors will have over our general credit or assets. Similarly, the assets held in the joint venture can be used only to settle obligations of the joint venture.

Europe

In 2007, Gilead Sciences Limited, our wholly-owned subsidiary in Ireland, and BMS entered into a collaboration agreement with BMS which sets forth the terms and conditions under which we and BMS commercialize and distribute Atripla in the European Union, Iceland, Liechtenstein, Norway and Switzerland (collectively, the European Territory). The parties formed a limited liability company which we consolidate, to manufacture Atripla for distribution in the European Territory using efavirenz that it purchases from BMS at BMS's estimated net selling price of efavirenz in the European Territory. We are responsible for manufacturing, product distribution, inventory management and warehousing. Through our local subsidiaries, we have primary responsibility for order fulfillment, collection of receivables, customer relations and handling of sales returns in all the territories where we and BMS promote Atripla. In general, the parties share revenues and out-of-pocket expenses in proportion to the net selling prices of the components of Atripla, Truvada and efavirenz.

Starting in 2012, except for a limited number of activities that will be jointly managed, the parties no longer coordinate detailing and promotional activities in the region. We are responsible for accounting, financial reporting and tax reporting for the collaboration. As of June 30, 2014 and December 31, 2013 , efavirenz purchased from BMS at BMS's estimated net selling price of efavirenz in the European Territory is included in inventories on our Condensed Consolidated Balance Sheets.

The parties also formed a limited liability company to hold the marketing authorization for Atripla in Europe. We have primary responsibility for regulatory activities. In the major market countries, both parties have agreed to independently continue to use commercially reasonable efforts to promote Atripla.

The agreement will terminate upon the expiration of the last-to-expire patent which affords market exclusivity to Atripla or one of its components in the European Territory. In addition, starting December 31, 2013, either party may terminate the agreement for any reason and such termination will be effective two calendar quarters after notice of termination. The non-terminating party has the right to continue to sell Atripla and become the continuing party, but will be obligated to pay the terminating party certain royalties for a three-year period following the effective date of the termination. In the event the continuing party decides not to sell Atripla, the effective date of the termination will be the date Atripla is withdrawn in each country or the date on which a third party assumes distribution of Atripla, whichever is earlier.


8.	DEBT AND CREDIT FACILITY

Financing Arrangements

The following table summarizes the carrying amount of our borrowings under various financing arrangements (in thousands):



Type of Borrowing	Description	Issue Date	Due Date	Interest Rate	June 30, 2014		December 31, 2013
Convertible Senior	May 2014 Notes	July 2010	May 2014	1.00%	$	—	$	234,217
Convertible Senior	May 2016 Notes	July 2010	May 2016	1.625%	822,139		1,113,043
Senior Unsecured	April 2021 Notes	March 2011	April 2021	4.50%	994,210		993,781
Senior Unsecured	December 2014 Notes	December 2011	December 2014	2.40%	749,868		749,710
Senior Unsecured	December 2016 Notes	December 2011	December 2016	3.05%	699,441		699,326
Senior Unsecured	December 2021 Notes	December 2011	December 2021	4.40%	1,247,861		1,247,716
Senior Unsecured	December 2041 Notes	December 2011	December 2041	5.65%	997,923		997,885
Senior Unsecured	April 2019 Notes	March 2014	April 2019	2.05%	499,189		—
Senior Unsecured	April 2024 Notes	March 2014	April 2024	3.70%	1,747,271		—
Senior Unsecured	April 2044 Notes	March 2014	April 2044	4.80%	1,746,641		—
Credit Facility	Five-Year Revolver	January 2012	January 2017	Variable	—		600,000
Total debt, net					9,504,543		6,635,678
Less current portion					1,572,007		2,696,970
Total long-term debt, net					$	7,932,536	$	3,938,708

Convertible Senior Notes

During the six months ended June 30, 2014 , our convertible senior notes due in May 2014 (May 2014 Notes) matured and a portion of our convertible senior notes due in May 2016 (May 2016 Notes) (together, the Notes) was converted. During the six months ended June 30, 2014 , we repaid $553.1 million of principal balance relating to the Notes. We also paid $1.29 billion in cash related to the conversion spread of the Notes, which represents the conversion value in excess of the principal amount, and received $1.29 billion in cash from the convertible note hedges related to the Notes.

As of June 30, 2014 , the May 2016 Notes were classified as current given that their conversion criteria had been met. As a result, the related unamortized discount of $35.9 million was classified as equity component of currently redeemable convertible notes on our Condensed Consolidated Balance Sheet.

There are 55.5 million shares of our common stock underlying our warrants expiring in 2014 (the 2014 Warrants). The 2014 Warrants have a strike price of $28.38 per share and expire during the 40 trading-day period commencing August 1, 2014 and ending on September 26, 2014. On July 29, 2014, we exercised our option to settle the warrants in cash. As a result, during the third quarter of 2014, we expect to pay cash to settle the warrants. Because the warrants could have been settled, at our option, in cash or shares of our common stock, and the related contracts met all of the applicable criteria for equity classification, the settlement will be recorded as a reduction of additional paid-in capital in our Condensed Consolidated Balance Sheet.

There are 55.1 million shares of our common stock underlying our warrants expiring in 2016 (the 2016 Warrants). The 2016 Warrants have a strike price of $30.05 per share and are exercisable only on their expiration date. If the market value of our common stock at the time of the exercise of the warrants exceeds their strike price, we will be required to net settle in cash or shares of our common stock, at our option, for the value of the warrants in excess of the warrant strike price.

April 2019, 2024 and 2044 Senior Unsecured Notes

In March 2014, we issued senior unsecured notes in a registered offering for a total aggregate principal amount of $4.00 billion . We issued senior unsecured notes due in April 2019 (April 2019 Notes) for $500.0 million that pay interest at a fixed annual rate of 2.05% , senior unsecured notes due in April 2024 (April 2024 Notes) for $1.75 billion that pay interest at a fixed annual rate of 3.70% and senior unsecured notes due in April 2044 (April 2044 Notes) for $1.75 billion that pay interest at a fixed annual rate of 4.80% . Debt issuance costs incurred in connection with the issuance of this debt totaled approximately $27.5 million and are being amortized to interest expense over the contractual term of each of the respective notes.

These notes may be redeemed at our option at any time or from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum, as determined by an independent investment banker, of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the Treasury Rate plus 10 basis points in the case of the April 2019 Notes, 15 basis points in the case of the April 2024 Notes and 20 basis points in the case of the April 2044 Notes plus, in each case, accrued and unpaid interest on the notes to be redeemed to the date of redemption.

At any time on or after the date that is three months prior to the maturity date of the April 2024 Notes, we may redeem the notes, in whole or in part, at 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to the date of redemption. At any time on or after the date that is six months prior to the maturity date of the April 2044 Notes, we may redeem the notes, in whole or in part, at 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to the date of redemption.

In the event of the occurrence of both a change in control and a downgrade in the rating of a series of notes below an investment grade rating by Standard & Poor's Ratings Services and Moody's Investors Service, Inc., the holders of such series of notes may require us to purchase all or a portion of their notes of such series at a price equal to 101% of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest.

Credit Facility

During the first quarter of 2014, we repaid the remaining balance of $600.0 million that was outstanding under the revolving credit facility credit agreement. There were no amounts outstanding under the revolving credit facility credit agreement as of June 30, 2014.

We are required to comply with certain covenants under the credit agreement and note indentures and as of June 30, 2014 , we believe we were in compliance with all such covenants.


9.	COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Litigation Related to Sofosbuvir

In January 2012, we acquired Pharmasset, Inc. (Pharmasset). Through the acquisition, we acquired sofosbuvir, a nucleotide analog that acts to inhibit the replication of the hepatitis C virus (HCV). In December 2013, we received FDA approval of sofosbuvir, now known commercially as Sovaldi. We have received a number of contractual and intellectual property claims regarding sofosbuvir. We have carefully considered these claims both prior to and following the acquisition and believe they are without merit.

Arbitration with F. Hoffman-La Roche Ltd and Hoffman-La Roche Inc. (collectively, Roche)

Gilead (as successor to Pharmasset) is a party to an October 29, 2004 collaboration agreement with Roche. The agreement granted Roche rights to develop PSI-6130, a cytidine analog, and its prodrugs, for the treatment of HCV infection. The collaborative research efforts under the agreement ended on December 31, 2006. Roche later asked Pharmasset to consider whether Roche may have contributed to the inventorship of sofosbuvir and whether Pharmasset has complied with the confidentiality provisions of the collaboration agreement. Pharmasset advised us that it carefully considered the issues raised by Roche and that it believed any such issues are without merit. We have also considered these issues and reached the same conclusion. In March 2013, Roche initiated an arbitration against us and Pharmasset, predecessor to Gilead Pharmasset LLC, regarding the collaboration agreement. In the arbitration demand, Roche asserts that it has an exclusive license to sofosbuvir pursuant to the collaboration agreement because sofosbuvir, a prodrug of a uridine monophosphate analog, is allegedly a prodrug of PSI-6130, a cytidine analog. Roche further claims that, because it has exclusive rights to sofosbuvir, it also has an exclusive license to a patent covering sofosbuvir, and that we will infringe that patent by selling and offering for sale products containing sofosbuvir. Gilead and Gilead Pharmasset LLC filed their response to Roche's arbitration demand in April 2013. The arbitration hearing was held in New York in June 2014. We expect a decision in the arbitration by the end of 2014.

Interference Proceedings and Litigation with Idenix Pharmaceuticals, Inc. (Idenix)

In February 2012, we received notice that the U.S. Patent and Trademark Office (USPTO) had declared Interference No. 105,871 (First Idenix Interference) between our U.S. Patent No. 7,429,572 and Idenix's pending U.S. Patent Application No. 12/131,868. An interference is an administrative proceeding before the USPTO designed to determine who was the first to invent the subject matter claimed by both parties. Our patent covers metabolites of sofosbuvir and RG7128, a prodrug of a cytidine nucleoside analog that Pharmasset licensed to Roche. Idenix is attempting to patent a class of compounds, including these metabolites. The purpose of the First Idenix Interference was to determine who was first to invent these compounds and therefore who is entitled to the patent claiming these compounds. In March 2013, the USPTO Patent Trials and Appeal Board (the Board) determined that Idenix is not entitled to the benefit of any of its early application filing dates because none of those patent applications, including the application that led to Idenix’s U.S. Patent No. 7,608,600 (the ‘600 patent), taught how to make the compounds in dispute. The Board also determined that because we are entitled to the filing date of our earliest application, we were first to file the patent application on the compounds in dispute, and we were therefore the “senior party” in the First Idenix Interference. On January 29, 2014, the Board determined that Pharmasset and not Idenix was the first to invent the compounds in dispute and accordingly Gilead prevailed. In its decision, the Board held that Idenix failed to prove that it was first to conceive of any of the compounds in dispute. Specifically, Idenix failed to prove that the Idenix inventors had identified the structure, a method of making and a use for any of the disputed compounds. The Board went on to conclude that Idenix failed to work diligently toward making and testing the compounds in dispute during the relevant time period. Idenix has appealed the Board’s decisions to the U.S. District Court for the District of Delaware. If either or both of the Board’s decisions are reversed on appeal and the court determines that Idenix is entitled to their patent claims, and it is determined that we have infringed those claims, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir and RG7128 in the United States. A decision by the District Court can be appealed by either party to the U.S. Court of Appeals for the Federal Circuit (CAFC).

We believe the claims in the Idenix application involved in the First Idenix Interference, and similar U.S. and foreign patents claiming the same compounds and metabolites, are invalid. As a result, we filed an Impeachment Action in the Federal Court of Canada to invalidate Idenix Canadian Patent No. 2,490,191 (the ‘191 patent), which is the Canadian patent that corresponds to the ‘600 patent and the Idenix patent application that is the subject of the First Idenix Interference. Idenix has now asserted that the commercialization of Sovaldi in Canada will infringe its ‘191 patent and that our Canadian Patent No. 2,527,657, corresponding to our U.S. Patent No. 7,429,572 in the First Idenix Interference, is invalid.

March 21, 2014, the Norwegian court found all claims in the Idenix Norwegian patent to be invalid and upheld the validity of all claims in the challenged Gilead patent. Additionally, the Norwegian court ordered Idenix to pay us over $2.0 million in attorney fees as the losing party to the litigation. On April 30, 2014, Idenix appealed the March 21, 2014 decision to the Norwegian Court of Appeal. Idenix’s obligation to pay our attorneys’ fees will be stayed during the pendency of the appeal.

In August 2013 and April 2014, Idenix filed two separate requests for invalidation with the Chinese Patent Office of our Chinese Patent CN ZL200480019148.4, which corresponds to our U.S. Patent No. 7,429,572 patent.

We filed a legal action in the Federal Court of Australia seeking to invalidate Idenix’s Australian patent corresponding to the ‘600 patent. In April 2013, Idenix asserted that the commercialization of sofosbuvir will infringe the Australian patent corresponding to the ‘600 patent.

On March 12, 2014, the European Patent Office (EPO) granted Idenix European Patent No. 1 523 489 (the ‘489 patent), which corresponds to the ‘600 patent. The same day that the ‘489 patent granted, we filed an opposition with the EPO seeking to revoke the ‘489 patent. Also on March 12, 2014, Idenix initiated infringement proceedings against us in the United Kingdom, Germany and France alleging that the commercialization of Sovaldi in those countries would infringe the respective national counterparts of the ‘489 patent. In the United Kingdom, the court has ordered an October 2014 trial date to determine the issues of infringement and validity of the Idenix United Kingdom patent. In Germany, the court in Düsseldorf has ordered a hearing date of December 2, 2014 to determine the issue of infringement of the Idenix German patent. We do not have a trial date for the French lawsuit.

Idenix has not been awarded patents corresponding to the ‘600 patent in Japan or China. In the event such patents issue, we expect to challenge them in proceedings similar to those we invoked in Europe, Canada, Norway and Australia. If the courts hearing these proceedings determine that Idenix is entitled to their patent claims and it is determined that we have infringed those claims, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir and RG7128 in that country.

In December 2013, after receiving our request to do so, the USPTO declared Interference No. 105,981 (Second Idenix Interference) between our pending U.S. Patent Application No. 11/854,218 and the ‘600 patent. The ‘600 patent includes claims directed to methods of treating HCV with nucleoside compounds similar to those which were involved in the First Idenix Interference. The Second Idenix Interference will determine who was first to invent the claimed methods of treating HCV. In the declaration of the Second Idenix Interference, the USPTO has initially designated Gilead as the junior party based upon the patent application filing dates appearing on the face of the ‘600 patent. We believe the Board’s determination in the First Idenix Interference that Idenix is not entitled to the benefit of any of its earlier application filing dates, including the filing date of the ‘600 patent, will be equally applicable to the Second Idenix Interference. If we are correct, the Board may conclude that Gilead is the senior party in the Second Idenix Interference, consistent with the determination in the First Idenix Interference. In light of the Board’s conclusion in the First Idenix Interference that the application that led to the ‘600 patent does not teach how to make the claimed compounds, it is possible that the Board will make the same determination in the Second Idenix Interference and eliminate the need for the Board to address who was the first to invent the claimed methods of treating HCV. However, if the Board does consider who was the first to invent the claimed methods of treating HCV and ultimately concludes that Gilead was first, the claims in the ‘600 patent may be revoked. If the Board determines that Idenix was first to invent and is entitled to these patent claims, and it is determined in other proceedings that we have infringed those claims, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir and RG7128. Any determination by the Board can be appealed by either party to U.S. federal court.

In December 2013, Idenix, Universita Degli Studi di Cagliari (UDSG), Centre National de la Recherche Scientifique and L’Université Montpellier II sued us in U.S. District Court for the District of Delaware alleging that the commercialization of sofosbuvir will infringe the ‘600 patent and that an interference exists between the ‘600 patent and our U.S. Patent No. 8,415,322. We believe that the claims in the ‘600 patent are invalid and that we have the sole right to commercialize sofosbuvir. However, if the court disagrees with our view and further determines that the ‘600 patent is infringed, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir. A decision by the District Court can be appealed by either party to the CAFC.

Also in December 2013, Idenix and UDSG sued us in the U.S. District Court for the District of Massachusetts alleging that the commercialization of sofosbuvir will infringe U.S. Patent Nos. 6,914,054 and 7,608,597. On June 30, 2014, the court in Massachusetts granted our request and transferred the Massachusetts litigation to the U.S. District Court for the District of Delaware. We believe that Idenix’s patents are invalid and would not be infringed by our commercialization of sofosbuvir and that we have the sole right to commercialize sofosbuvir. However, if the court disagrees with our view and determines that these patents are infringed, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir. A decision by the District Court can be appealed by either party to the CAFC. We have an expansive patent

portfolio covering NS5A inhibitors for the treatment of HCV. Following the disclosure of the structure of Idenix’s NS5A inhibitor, samatasvir (also known as IDX-719), we are evaluating the compound in light of the claims of our granted U.S. Patent No. 8,669,234.

On June 9, 2014, Merck and Idenix announced that the companies had entered into a definitive agreement under which Merck will acquire Idenix. While this merger does not change our view of the merits of Merck's and Idenix's claims, Merck has greater resources than Idenix and may therefore choose to fund the litigation at higher levels than Idenix.

Litigation with Merck & Co., Inc. (Merck)

In August 2013, Merck contacted us requesting that we pay royalties on the sales of sofosbuvir and obtain a license to U.S. Patent Nos. 7,105,499 and 8,481,712, which it co-owns with Isis Pharmaceuticals, Inc. We believe that Merck’s patents are invalid and would not be infringed by our commercialization of sofosbuvir and that we have the sole right to commercialize sofosbuvir. Accordingly, in August 2013, we filed a lawsuit in the U.S. District Court for the Northern District of California seeking declaratory judgment that the Merck patents are invalid and not infringed. Merck’s U.S. Patent Nos. 7,105,499 and 8,481,712 cover compounds which do not include, but may relate to, sofosbuvir. During patent prosecution, Merck amended its patent application in an attempt to cover compounds related to sofosbuvir and ultimately extract royalty payments for sofosbuvir’s commercialization, or to exclude it from the market. If the court determines that Merck’s patents are valid and that we have infringed those claims, we may be required to obtain a license from and pay royalties to Merck to commercialize sofosbuvir. Either party can appeal a decision by the District Court to the CAFC. The court has set a trial date of March 7, 2016 for this litigation. While this merger does not change our view of the merits of Merck's and Idenix's claims, Merck has greater resources than Idenix and may therefore choose to fund the litigation at higher levels than Idenix.

Litigation with AbbVie, Inc. (AbbVie)

AbbVie has obtained U.S. Patent Nos. 8,466,159, 8,492,386, 8,680,106 and 8,685,984, which purport to claim the use of a combination of ledipasvir/sofosbuvir (LDV/SOF) for the treatment of HCV. We own published and pending patent applications directed to the use of combinations for the treatment of HCV, and, specifically, to combinations of ledipasvir and sofosbuvir. Certain of those applications were filed before AbbVie’s patents. For this reason and others, we believe AbbVie’s patents are invalid.

Accordingly, in December 2013, we filed a lawsuit in the U.S. District Court for the District of Delaware seeking declaratory judgment that the AbbVie patents are invalid and unenforceable, as well as other relief. We believe that Abbott Laboratories, Inc. and AbbVie conspired to eliminate competition in the HCV market by falsely representing to the USPTO that they, and not Gilead, invented methods of treating HCV using a combination of LDV/SOF. In February and March 2014, AbbVie responded to our lawsuit by filing two lawsuits also in the U.S. District Court for the District of Delaware alleging that our fixed-dose combination of LDV/SOF will infringe its patents. We do not expect AbbVie’s patents to block or delay the commercialization of our combination products. If the court determines that AbbVie’s patents are valid and that we have infringed those claims, we may be required to obtain a license from and pay royalties to AbbVie to commercialize sofosbuvir combination products. Either party can appeal a decision by the District Court to the CAFC. We are aware that AbbVie is pursuing similar patents in Europe and other countries.

We cannot predict the ultimate outcome of contractual and intellectual property claims related to sofosbovir, and we may spend significant resources enforcing and defending these patents. If these parties successfully obtain valid and enforceable patents, and successfully prove infringement of those patents by sofosbuvir, we could be prevented from selling sofosbuvir unless we were able to obtain a license under such patents. Such a license may not be available on commercially reasonable terms or at all. Further, if any party is successful in establishing exclusive rights to sofosbuvir, our expected revenues and earnings from the sale of sofosbuvir would be adversely affected. A range of losses cannot be estimated at this time.

Litigation with Generic Manufacturers

As part of the approval process for some of our products, the FDA granted us a New Chemical Entity (NCE) exclusivity period during which other manufacturers' applications for approval of generic versions of our product will not be approved. Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (ANDA), the application form typically used by manufacturers seeking approval of a generic drug. We received notices that generic manufacturers have submitted ANDAs to manufacture a generic version of Atripla, Truvada, Viread, Emtriva, Ranexa and Tamiflu in the United States and Atripla, Truvada and Viread in Canada. Current legal proceedings of significance with some of our generic manufacturers include:

Natco

the court issued a ruling in favor of Gilead and Roche, that our patent is not invalid for the reasons stated in Natco’s notice letter. Natco has appealed this decision to the CAFC. In April 2014, the CAFC issued a decision which will allow Natco’s patent invalidity challenge to proceed if the case is remanded to the District Court of New Jersey for a full trial on the merits. On June 30, 2014, we filed a petition for rehearing en banc with the CAFC.

Teva

In August 2012, Teva Pharmaceuticals (Teva) filed an Impeachment Action in the Federal Court of Canada seeking invalidation of our two Canadian patents associated with Viread. In September 2013, a hearing on the consolidated requests for orders of prohibition in connection with all three of Teva’s abbreviated new drug submission (ANDS) filings to the Canadian Minister of Health (for Teva’s generic versions of Viread, Truvada, and Atripla) took place. In December 2013, the court issued our requested order prohibiting the Canadian Ministry of Health from issuing a Notice of Compliance for Teva’s generic versions of our Viread, Truvada, and Atripla products until expiry of our patent in July 2017. Teva appealed the decision of the court prohibiting the Minister of Heath from issuing the Notices of Compliance until expiry of our patent in July 2017. This decision did not rule on the validity of the patents and accordingly the only issue on appeal is whether the Minister of Health should be prohibited from issuing the Notices of Compliance for Teva’s products. Separately, the court will determine the validity of the patents in the pending Impeachment Action. A trial in the Impeachment Action is scheduled for March 2015. If Teva is successful in invalidating our patents, Teva may be able to launch generic versions of our Viread, Truvada and Atripla products in Canada prior to the expiry of our patents.

In April 2013, we and Teva reached an agreement to settle the ongoing patent litigation concerning the four patents that protect tenofovir disoproxil fumarate in our Atripla, Truvada and Viread products. Under the agreement, Teva will be allowed to launch a generic version of Viread on December 15, 2017. In April 2014, we and Teva entered an agreement to settle the ongoing patent litigation concerning the emtricitabine patents that protect Atripla and Truvada. The terms of the settlement agreement are confidential.

Lupin

In 2012, we filed lawsuits against Lupin Limited (Lupin) in U.S. District Court for the Southern District of New York for infringement of our emtricitabine and tenofovir disoproxil patents related to Viread and Truvada. In May 2014, Lupin amended its ANDAs to certify that it is no longer seeking approval to market generic versions of Truvada and Viread prior to the expiration of the four patents associated with tenofovir disoproxil fumarate in January 2018 (including pediatric exclusivity). As a result, in May 2014, the court granted Gilead and Lupin's Joint Motion for Order of Dismissal in our patent infringement lawsuit against Lupin for the tenofovir disoproxil fumarate patents. A trial relating to Lupin’s ANDA requesting permission to make a generic version of Truvada before the expiry of our patents covering emtricitabine is scheduled for December 2014.

In August 2013, we and Lupin reached an agreement to settle the patent litigation concerning certain patents that protect Ranexa. Under the agreement, Lupin would be allowed to launch a generic version of Ranexa on February 27, 2019.

We cannot predict the ultimate outcome of the foregoing actions and other litigation with generic manufacturers, and we may spend significant resources enforcing and defending these patents. If we are unsuccessful in these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated and the patent protection for Truvada, Viread, Emtriva and Tamiflu in the United States and Atripla, Truvada and Viread in Canada could be substantially shortened. Further, if all of the patents covering one or more products are invalidated, the FDA or Canadian Minister of Health could approve the requests to manufacture a generic version of such products in the United States or Canada, respectively, prior to the expiration date of those patents. The sale of generic versions of these products earlier than their patent expiration would have a significant negative effect on our revenues and results of operations.

Department of Justice Investigation

In June 2011, we received a subpoena from the U.S. Attorney's Office for the Northern District of California requesting documents related to the manufacture, and related quality and distribution practices, of Complera, Atripla, Truvada, Viread, Emtriva, Hepsera and Letairis. We cooperated with the government’s inquiry. On April 16, 2014, the United States Department of Justice informed us that, following an investigation, it declined to intervene in a False Claims Act lawsuit filed by two former employees. We have moved to dismiss the complaint.

Other Matters

We are a party to various legal actions that arose in the ordinary course of our business. We do not believe that these other legal actions will have a material adverse impact on our consolidated business, financial position or results of operations.


10.	STOCKHOLDERS’ EQUITY

Stock Repurchase Program

Under our stock repurchase program announced in January 2011 (2011 Program), we repurchased a total of $1.20 billion or 15.2 million shares of common stock during the three months ended June 30, 2014 , and a total of $1.65 billion or 20.9 million shares of common stock during the six months ended June 30, 2014 . As of June 30, 2014 , we had $1.70 billion remaining in our 2011 Program, which is expected to be completed by September 2014. In May 2014, our Board of Directors authorized a new stock repurchase program of up to $5.00 billion of our common stock.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated OCI (loss) by component, net of tax (in thousands):



	Foreign Currency Items			Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Cash Flow Hedges			Total
Balance at December 31, 2013	$	(45,860	)	$	11,907		$	(90,493	)	$	(124,446	)
Other comprehensive income before reclassifications	6,969			1,826			32,886			41,681
Amounts reclassified from accumulated other comprehensive income (loss)	—			(386		)	41,691			41,305
Net current period other comprehensive income	6,969			1,440			74,577			82,986
Balance at June 30, 2014	$	(38,891	)	$	13,347		$	(15,916	)	$	(41,460	)

Amounts reclassified for gains (losses) on cash flow hedges were recorded as part of product sales on our Condensed Consolidated Statements of Income. Amounts reclassified for unrealized gains (losses) on available-for-sale securities were recorded as part of other income (expense), net on our Condensed Consolidated Statements of Income.


11.	STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expense included in our Condensed Consolidated Statements of Income (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Cost of goods sold	$	2,565		$	2,632		$	5,207		$	4,473
Research and development expenses	36,633			24,646			70,983			51,521
Selling, general and administrative expenses	43,935			28,675			89,168			61,726
Stock-based compensation expense included in total costs and expenses	83,133			55,953			165,358			117,720
Income tax effect	(10,934		)	(15,574		)	(30,023		)	(31,961		)
Stock-based compensation expense, net of tax	$	72,199		$	40,379		$	135,335		$	85,759


12.	NET INCOME PER SHARE ATTRIBUTABLE TO GILEAD COMMON STOCKHOLDERS

Basic net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding during the period. Diluted net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding and other dilutive securities outstanding during the period. The potential dilutive shares of our common stock resulting from the assumed exercise of outstanding stock options, performance shares and the assumed exercise of warrants relating to the convertible senior notes due in May 2013 (May 2013 Notes), May 2014 Notes and May 2016 Notes (collectively, the Convertible Notes) are determined under the treasury stock method.

Because the principal amount of the Convertible Notes will be settled in cash, only the conversion spread relating to the Convertible Notes is included in our calculation of diluted net income per share attributable to Gilead common stockholders. Our common stock resulting from the assumed settlement of the conversion spread of the May 2016 Notes has a dilutive effect when the average market price of our common stock during the period exceeds the conversion price of $22.71 for the May

2016 Notes. Warrants relating to the May 2016 Notes have a dilutive effect when the average market price of our common stock during the period exceeds the warrants’ exercise price of $30.05 .

Our May 2013 Notes and May 2014 Notes matured and as a result, we have only included their impact for the period they were outstanding on our net income per share calculations for the periods shown. Our common stock resulting from the assumed settlement of the conversion spread of the May 2013 Notes and May 2014 Notes had a dilutive effect when the average market price of our common stock during the period exceeded the conversion price of $19.05 for the May 2013 Notes and $22.54 for the May 2014 Notes. Warrants related to our May 2013 Notes settled in August 2013 and as a result, we have only included their impact for the period they were outstanding on our net income per share calculation for the three and six months ended June 30, 2013 . The related warrants had a dilutive effect when the average market price of our common stock during the period exceeded the warrants’ exercise price of $26.95 . Warrants relating to the May 2014 Notes have a dilutive effect when the average market price of our common stock during the period exceeds the warrants’ exercise price of $28.38 .

We have excluded stock options to purchase approximately 1.1 million and 0.9 million weighted-average shares of our common stock that were outstanding during the three and six months ended June 30, 2014 , and approximately 1.0 million and 1.7 million weighted-average shares of our common stock that were outstanding during the three and six months ended June 30, 2013 . These shares were excluded in the computation of diluted net income per share attributable to Gilead common stockholders because their effect was antidilutive.

The following table is a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share attributable to Gilead common stockholders (in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerator:
Net income attributable to Gilead	$	3,655,593	$	772,605	$	5,883,003	$	1,494,791
Denominator:
Weighted-average shares of common stock outstanding used in the calculation of basic net income per share attributable to Gilead common stockholders	1,532,723		1,526,945		1,534,614		1,524,174
Effect of dilutive securities:
Stock options and equivalents	31,340		38,512		33,513		38,437
Conversion spread related to the May 2013 Notes	—		3,592		—		7,519
Conversion spread related to the May 2014 Notes	2,171		29,627		4,586		28,075
Conversion spread related to the May 2016 Notes	29,143		30,850		30,530		28,418
Warrants related to the Convertible Notes	69,038		65,051		69,192		56,646
Weighted-average shares of common stock outstanding used in the calculation of diluted net income per share attributable to Gilead common stockholders	1,664,415		1,694,577		1,672,435		1,683,269


13.	SEGMENT INFORMATION

We operate in one business segment, which primarily focuses on the discovery, development and commercialization of innovative medicines in areas of unmet medical need. All products are included in one segment, because the majority of our products have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment. Total product sales on an individual product basis are summarized in the following table (in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Antiviral products:
Sovaldi	$	3,480,326	$	—	$	5,754,675	$	—
Atripla	870,708		938,108		1,650,302		1,815,181
Truvada	806,610		807,779		1,566,310		1,508,021
Complera/Eviplera	299,464		188,683		550,197		336,872
Stribild	269,520		99,394		484,791		191,542
Viread	260,734		250,188		471,359		460,520
LDV/SOF	439		—		439		—
Other antiviral products	24,343		29,387		42,568		62,481
Total antiviral products	6,012,144		2,313,539		10,520,641		4,374,617
Letairis	144,716		128,257		267,601		246,364
Ranexa	121,956		106,597		233,574		202,883
AmBisome	94,794		75,137		186,887		160,412
Other products	39,327		33,755		75,208		66,577
Total product sales	$	6,412,937	$	2,657,285	$	11,283,911	$	5,050,853

The following table summarizes revenues from each of our customers who individually accounted for 10% or more of our total revenues (as a percentage of total revenues):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
AmerisourceBergen Corp.	27	%	11	%	27	%	11	%
McKesson Corp.	25	%	17	%	24	%	16	%
Cardinal Health, Inc.	12	%	18	%	13	%	19	%

The change in the percentage of total revenues was due primarily to sales of Sovaldi in the United States.


14.	INCOME TAXES

Our income tax rates of 15.2% and 19.1% for the three and six months ended June 30, 2014 , differed from the U.S. federal statutory rate of 35% due primarily to certain operating earnings from non-U.S. subsidiaries that are considered indefinitely reinvested and tax credits, partially offset by state taxes, our portion of the non-tax deductible pharmaceutical excise tax and amortization expense of the intangible asset related to sofosbuvir for which we receive no tax benefit. We do not provide for U.S. income t axes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries. The effective tax rate for the three months ended June 30, 2014 includes a cumulative catch up adjustment of 3.9 percentage points to the first quarter tax rate to reduce the year to date effective tax rate to 19.1% .

We file federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. For federal income tax purposes, the statute of limitations is open for 2010 and onwards. For certain acquired entities, the statute of limitations is open for all years from inception due to our utilization of their net operating losses and credits carried over from prior years. For California income tax purposes, the statute of limitations is open for 2008 and onwards.

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service (IRS) for the 2010, 2011 and 2012 tax years and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.

As of June 30, 2014 , we believe that it is reasonably possible that our unrecognized tax benefits will decrease by approximately $11.0 million in the next 12 months as we expect to have clarification from the IRS and other tax authorities regarding our uncertain tax positions. With respect to the remaining unrecognized tax benefits, we are currently unable to make a reasonable estimate as to the period of cash settlement, if any, with the respective tax authorities.

We record liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We do not believe any of our uncertain tax positions will have a material adverse effect on our Condensed Consolidated Financial Statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The forward-looking statements are contained principally in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends, operating cost and revenue trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions. We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified below under “Risk Factors.” Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in the section entitled “Risk Factors” under Part II, Item 1A below, in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2013 and our unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2014 and other disclosures (including the disclosures under “Part II. Item 1A. Risk Factors”) included in this Quarterly Report on Form 10-Q. Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles and are presented in U.S. dollars.

Management Overview

Gilead Sciences, Inc. (Gilead, we or us), incorporated in Delaware on June 22, 1987, is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. With each new discovery and investigational drug candidate, we strive to transform and simplify care for people with life-threatening illnesses around the world. Gilead's primary areas of focus include human immunodeficiency virus (HIV), liver diseases such as chronic hepatitis B virus (HBV) infection and chronic hepatitis C virus (HCV) infection, oncology and inflammation, and serious cardiovascular and respiratory conditions. Headquartered in Foster City, California, we have operations in North and South America, Europe and Asia-Pacific. We continue to add to our existing portfolio of products through our internal discovery and clinical development programs and through a product acquisition and in-licensing strategy.

Our portfolio of marketed products includes Sovaldi ^® , Stribild ^® , Complera ^® /Eviplera ^® , Atripla ^® , Truvada ^® , Viread ^® , Vitekta ^® , Tybost ^® , Zydelig ^® , Hepsera ^® , Emtriva ^® , Letairis ^® , Ranexa ^® , AmBisome ^® , Cayston ^® and Tamiflu ^® . We have U.S. and international commercial sales operations, with marketing subsidiaries in North and South America, Europe and Asia-Pacific. We also sell and distribute certain products through our corporate partners under royalty-paying collaborative agreements.

Business Highlights

During the second quarter of 2014 , we continued to advance our product pipeline across our therapeutic areas. Announcements made during the quarter include:

Antiviral Program


•	Submission of a New Drug Application (NDA) to Japan’s Pharmaceutical and Medical Devices Agency (PMDA) for approval of sofosbuvir (SOF), a once-daily nucleotide analog polymerase inhibitor for the treatment of chronic HCV infection. If approved, SOF would form the basis of the first all-oral, interferon-free treatment regimen for genotype 2 patients in Japan.


•	Positive results from a Phase 3 clinical trial in Japan evaluating the investigational once-daily fixed-dose combination of ledipasvir (LDV), our NS5A inhibitor, and SOF (LDV/SOF), with and without ribavirin (RBV), for the treatment of

genotype 1 chronic HCV infection. Based on these data, we plan to submit an NDA for the fixed-dose combination of LDV/SOF with the Japanese PMDA by the end of 2014.


•	U.S. Food and Drug Administration (FDA) acceptance of our refiling of two NDAs for cobicistat and elvitegravir. The FDA set target review dates under the Prescription Drug User Fee Act (PDUFA) of October 3, 2014 for cobicistat and October 4, 2014 for elvitegravir.


•	Presentations of data on SOF-based regimens in chronic HCV patients included:


◦	Positive data from two Phase 2 studies and a compassionate access study in which a regimen containing Sovaldi was administered for the treatment of chronic HCV infection in patients with advanced liver disease.


◦	Positive data from two Phase 2 studies, evaluating investigational all-oral regimens containing SOF for the treatment of chronic HCV infection.


◦	Positive results from an open-label clinical trial, evaluating Sovaldi for the retreatment of chronic HCV infection among patients who failed prior therapy.


•	Priority review granted by the FDA of the NDA for a once-daily fixed-dose combination of LDV/SOF for the treatment of chronic HCV genotype 1 infection in adults. The FDA set a target review date under PDUFA of October 10, 2014.

Oncology Program

•

Approval by the FDA of Zydelig (idelalisib) for the treatment of three B-cell blood cancers. Zydelig is indicated in combination with rituximab for patients with relapsed chronic lymphocytic leukemia (CLL) for whom rituximab alone would be considered appropriate therapy and as monotherapy for patients with relapsed follicular B-cell non-Hodgkin lymphoma and small lymphocytic lymphoma who have received at least two prior systemic therapies.


•	Updated interim results of a Phase 2 study evaluating GS-9973, our investigational oral inhibitor of spleen tyrosine kinase (Syk), for the treatment of patients with relapsed CLL. Based on these data, we plan to initiate new CLL study cohorts to include patients who have relapsed following treatment with other inhibitors of the B-cell receptor signaling pathway.

Financial Highlights

During the second quarter of 2014 , total revenues increased to $6.53 billion , compared to $2.77 billion in the second quarter of 2013 , driven primarily by the launch of Sovaldi. Sales of Sovaldi were $3.48 billion for the three months ended June 30, 2014 . Sovaldi was approved in the United States in December 2013 and in the European Union in January 2014. Since its launch, we estimate approximately 80,000 patients in the United States and Europe have begun treatment for HCV with Sovaldi.

Research and development (R&D) expenses increased 11% to $583.9 million for the second quarter of 2014 compared to the same period in 2013 due to increases in headcount and other costs to support expansion of our R&D activities. Selling, general and administrative (SG&A) expenses increased 51% to $613.6 million for the second quarter of 2014 compared to the same period in 2013 due to increases in headcount and other costs to support our business expansion related to Sovaldi and pre-launch activities for Zydelig and our fixed-dose combination of LDV/SOF.

Net income attributable to Gilead for the second quarter of 2014 increased to $3.66 billion or $2.20 per diluted share, compared to the same period in 2013 , due primarily to the launch of Sovaldi, partially offset by the increase in R&D and SG&A expenses.

As of June 30, 2014 , our cash, cash equivalents and marketable securities totaled $9.58 billion , an increase of $2.72 billion compared to March 31, 2014. During the second quarter of 2014 , we generated $4.19 billion of operating cash flows, which reflected strong accounts receivable collections in the quarter and included a larger than normal component related to first quarter sales given the launch of Sovaldi. We also repurchased $1.20 billion of common stock and repaid $309.7 million in debt, net of convertible note hedges.

As of June 30, 2014 , we had $1.70 billion remaining in our $5.00 billion stock repurchase program announced in January 2011 (2011 Program), which is expected to be completed by September 2014. In May 2014, our Board of Directors authorized an additional repurchase of up to $5.00 billion of our common stock.

Results of Operations

Total Revenues

Total revenues include product sales and royalty, contract and other revenues. Total revenues for the three months ended June 30, 2014 were $6.53 billion , compared to $2.77 billion for the same period in 2013 . Total revenues for the six months ended June 30, 2014 were $11.53 billion , compared to $5.30 billion for the same period in 2013 . Increases in total revenues for both periods were driven by growth in product sales resulting primarily from the launch of Sovaldi.

Product Sales

Total product sales were $6.41 billion for the three months ended June 30, 2014 , an increase of 141% compared to the same period in 2013 . Total product sales were $11.28 billion for the six months ended June 30, 2014 , an increase of 123% compared to the same period in 2013 . Increases in product sales for both periods were driven by increases in antiviral and cardiovascular product sales. Antiviral product sales, including Sovaldi, totaled $6.01 billion and $10.52 billion for the three and six months ended June 30, 2014, an increase of 160% and 140% , respectively, compared to the same periods in 2013 . Cardiovascular product sales, which include Letairis and Ranexa, totaled $266.7 million and $501.2 million for the three and six months ended June 30, 2014, an increase of 14% and 12% , respectively, compared to the same periods in 2013 . During the three and six months ended June 30, 2014, approximately 25% of our product sales were generated outside of the United States and as a result, we face exposure to adverse movements in foreign currency exchange rates, primarily in Euro. We used foreign currency exchange contracts to hedge a percentage of our foreign currency exposure. Foreign currency exchange, net of hedges, had a favorable impact of $37.8 million and $32.7 million on our product sales for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 .

Product sales in the United States increased by 195% to $4.82 billion and 178% to $8.45 billion for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 , due primarily to sales of Sovaldi, which launched in December 2013, and increases in sales of Stribild and Complera.

Product sales in Europe increased by 60% to $1.31 billion and 42% to $2.33 billion for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 , due primarily to sales of Sovaldi, which launched in January 2014, and increases in sales of Stribild and Eviplera. In light of the continued fiscal and debt crises experienced by several countries in the European Union, several governments have announced or implemented measures to manage healthcare expenditures. We continue to experience pricing pressure such as increases in the amount of discounts required on our products and delayed reimbursement which could negatively impact our future product sales and results of operations. Foreign currency exchange, net of hedges, had a favorable impact of $45.3 million and $44.0 million on our European product sales for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 .

The following table summarizes the period over period changes in our product sales:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except percentages)	2014		2013		Change		2014		2013		Change
Antiviral products:
Sovaldi	$	3,480,326	$	—	—		$	5,754,675	$	—	—
Atripla	870,708		938,108		(7	)%	1,650,302		1,815,181		(9	)%
Truvada	806,610		807,779		0	%	1,566,310		1,508,021		4	%
Complera/Eviplera	299,464		188,683		59	%	550,197		336,872		63	%
Stribild	269,520		99,394		171	%	484,791		191,542		153	%
Viread	260,734		250,188		4	%	471,359		460,520		2	%
LDV/SOF	439		—		—		439		—		—
Other antiviral products	24,343		29,387		(17	)%	42,568		62,481		(32	)%
Total antiviral products	6,012,144		2,313,539		160	%	10,520,641		4,374,617		140	%
Letairis	144,716		128,257		13	%	267,601		246,364		9	%
Ranexa	121,956		106,597		14	%	233,574		202,883		15	%
AmBisome	94,794		75,137		26	%	186,887		160,412		17	%
Other products	39,327		33,755		17	%	75,208		66,577		13	%
Total product sales	$	6,412,937	$	2,657,285	141	%	$	11,283,911	$	5,050,853	123	%

Antiviral Products

Antiviral product sales increased for the three and six months ended June 30, 2014 compared to the same periods in 2013 due primarily to the launch of Sovaldi, which was approved in the United States in December 2013 and in the European Union in January 2014, and increased sales of Stribild and Complera/Eviplera. The increase in the six months ended June 30, 2014 was partially offset by a decrease in wholesaler and sub-wholesaler inventories in the United States associated primarily with our HIV products. Following is additional discussion of our results by product:


•	Sovaldi

For the three and six months ended June 30, 2014 , sales of Sovaldi were $3.48 billion and $5.75 billion , respectively. Sovaldi sales accounted for 58% and 55% of our total antiviral product sales for the three and six months ended June 30, 2014 . Sovaldi sales in the United States were $3.03 billion and $5.13 billion for the three and six months ended June 30, 2014 . Sovaldi sales in Europe were $400.2 million and $563.9 million for the three and six months ended June 30, 2014 . Since its launch in December 2013, we estimate approximately 80,000 patients in the United States and Europe have begun treatment for HCV with Sovaldi. While Sovaldi has regulatory approval in the European Union, pricing and reimbursement is obtained on a country-by-country process, with some countries completing the process more quickly than others. We currently have approved reimbursement in Germany, Austria, Sweden, Finland, Norway and Denmark. We also sell Sovaldi in France under the Temporary Authorisations for Use Program.

While we believe the sales of Sovaldi for the three and six months ended June 30, 2014 are indicative of significant unmet medical need, current period results may not be indicative of future results. Future results are difficult to estimate as demand will depend on a number of factors. For example, we have submitted marketing applications for a once-daily fixed-dose combination of LDV/SOF for the treatment of HCV. Doctors may choose to wait to treat their genotype 1 HCV-infected patients until the approval of the fixed-dose combination of LDV/SOF or another competitor’s all-oral regimen. Also, pricing pressures could influence private and public payers' decisions to list Sovaldi on formulary or limit the types of patients for whom coverage will be provided, thus impacting future demand for Sovaldi. Product sales related to LDV/SOF in the table above for the three and six months ended June 30, 2014 represent early access sales in Europe as part of a compassionate use program, as the drug is not yet commercially approved. In the United States, the FDA has set a target review date under PDUFA of October 10, 2014 for the fixed-dose combination of LDV/SOF.


•	Atripla

Atripla sales accounted for 14% and 16% of our total antiviral product sales for the three and six months ended June 30, 2014 , respectively, and decreased by 7% and 9% compared to the same periods in 2013 , due primarily to declines in volume as doctors prescribed newer treatments such as Complera/Eviplera and Stribild to patients. The decline for the six months ended June 30, 2014 was also due to declines in wholesaler and sub-wholesaler inventories in the United States. The efavirenz component of Atripla, which has a gross margin of zero, comprised $318.4 million and $600.9 million of our Atripla sales for the three and six months ended June 30, 2014 . For the three and six months ended June 30, 2013 , the efavirenz component of Atripla comprised $352.1 million and $680.2 million of our Atripla sales.

A generic version of Bristol-Myers Squibb Company's Sustiva (efavirenz), a component of our Atripla, was made available in Canada and Europe during 2013 and will be made available in the United States in 2015. As a result, while we have observed some pricing pressure related to the Sustiva component of our Atripla sales, we have not yet observed any meaningful splitting of the Atripla single tablet regimen.


•	Truvada

Truvada sales accounted for 13% and 15% of our total antiviral product sales for the three and six months ended June 30, 2014 , respectively. Truvada sales remained relatively flat for the three months ended June 30, 2014 compared to the same period in 2013 and increased by 4% for the six months ended June 30, 2014 compared to the same period in 2013 , due primarily to an increase in the average net selling price during the first quarter of 2014.


•	Complera/Eviplera

Complera/Eviplera sales increased by 59% and 63% for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 , due primarily to increased sales volume in Europe and the United States. Complera/Eviplera was approved in the United States in August 2011 and in Europe in November 2011.


•	Stribild

Sales of Stribild increased by 171% and 153% for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 , due primarily to increased sales volume in the United States and Europe. Stribild was approved in the United States in August 2012 and in Europe in May 2013.

Cardiovascular Products

Cardiovascular product sales, which include Letairis and Ranexa, increased 14% and 12% during the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 . During the three and six months ended June 30, 2014 , sales of Letairis increased by 13% and 9% compared to the same periods in 2013 due primarily to increased sales volume. During the three and six months ended June 30, 2014 , sales of Ranexa increased by 14% and 15% compared to the same periods in 2013 due to an increase in the average net selling price during the first quarter of 2014 and increased sales volume.

Royalty, Contract and Other Revenues

The following table summarizes the period over period changes in our royalty, contract and other revenues:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except percentages)	2014		2013		Change		2014		2013		Change
Royalty, contract and other revenues	$	122,006	$	110,109	11	%	$	249,988	$	248,176	1	%

Royalty, contract and other revenues increased by 11% and 1% for the three and six months ended June 30, 2014 , respectively, compared to the same periods in 2013 , due primarily to higher royalty revenues from GlaxoSmithKline, Inc. and Japan Tobacco Inc. as well as seasonality in the royalty revenues from F. Hoffmann-La Roche Ltd for Tamiflu. The majority of our royalties are recognized in the quarter following the quarter in which the corresponding product sales occur.

Cost of Goods Sold and Product Gross Margin

The following table summarizes the period over period changes in our product sales, cost of goods sold and product gross margin:



	Three Months Ended								Six Months Ended
	June 30,								June 30,
(In thousands, except percentages)	2014			2013			Change		2014			2013			Change
Total product sales	$	6,412,937		$	2,657,285		141	%	$	11,283,911		$	5,050,853		123	%
Cost of goods sold	$	924,709		$	684,663		35	%	$	1,737,914		$	1,319,111		32	%
Product gross margin	86		%	74		%			85		%	74		%

Product gross margins were 86% and 85% for the three and six months ended June 30, 2014 , respectively, compared to 74% for the same periods in 2013 . The increases were driven primarily by sales of Sovaldi which impacted product mix, partially offset by amortization of the intangible asset related to sofosbuvir following the approval and commercial launch of Sovaldi.

Research and Development Expenses



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except percentages)	2014		2013		Change		2014		2013		Change
Research and development expenses	$	583,924	$	523,902	11	%	$	1,178,902	$	1,021,534	15	%

We do not track total R&D expenses by product candidate, therapeutic area or development phase. However, we manage our R&D expenses by identifying the R&D activities we anticipate will be performed during a given period and then prioritizing efforts based on scientific data, probability of successful development, market potential, available human and capital resources and other considerations. We continually review our R&D pipeline and the status of development and, as necessary, reallocate resources among the R&D portfolio that we believe will best support the future growth of our business.

R&D expenses summarized above consist primarily of clinical studies performed by contract research organizations, materials and supplies, licenses and fees, milestone payments under collaboration arrangements, personnel costs, including salaries, benefits and stock-based compensation and overhead allocations consisting of various support and facilities-related costs.

R&D expenses for the three months ended June 30, 2014 increased by $60.0 million or 11% compared to the same period in 2013 due primarily to an increase of $40.4 million in personnel and infrastructure expenses to support the progression of clinical study activity, primarily in oncology and HIV, geographic expansion and marketed product support.

R&D expenses for the six months ended June 30, 2014 increased by $157.4 million or 15% compared to the same period in 2013 due primarily to $84.7 million related to the progression of clinical study activity, primarily in oncology and HIV, and $82.9 million related to personnel and infrastructure expenses to support our ongoing clinical study activity, geographic expansion and marketed product support. We expect R&D expenses to increase through the second half of 2014 to support the expansion of our clinical studies in various therapeutic areas including HCV, HIV, inflammation and respiratory.

Selling, General and Administrative Expenses



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except percentages)	2014		2013		Change		2014		2013		Change
Selling, general and administrative expenses	$	613,555	$	404,991	51	%	$	1,161,678	$	779,287	49	%

SG&A expenses relate to sales and marketing, finance, human resources, legal and other administrative activities. Expenses are primarily comprised of facilities and overhead costs, outside marketing, advertising and legal expenses, and other general and administrative costs.

SG&A expenses for the three months ended June 30, 2014 increased by $208.6 million or 51% compared to the same period in 2013 due primarily to an increase in headcount related and other expenses of $130.4 million to support our ongoing growth, including the expansion of our business related to Sovaldi and the anticipated launches of Zydelig and our fixed-dose combination of LDV/SOF.

SG&A expenses for the six months ended June 30, 2014 increased by $382.4 million or 49% compared to the same period in 2013 due primarily to an increase in headcount related and other expenses of $244.0 million to support our ongoing growth, including the expansion of our business related to Sovaldi and the anticipated launches of Zydelig and our fixed-dose combination of LDV/SOF. We expect SG&A expenses to increase through the second half of 2014 from our continued investments in these areas.

Interest Expense

Interest expense for the three months ended June 30, 2014 was $102.0 million , an increase of $24.0 million compared to the same period in 2013 . Interest expense for the six months ended June 30, 2014 was $178.3 million , an increase of $18.5 million compared to the same period in 2013 . The increases for both periods were primarily a result of the March 2014 issuance of our senior unsecured notes due in April 2019 (April 2019 Notes), April 2024 (April 2024 Notes) and April 2044 (April 2044 Notes).

Other Income (Expense), Net

Other income (expense), net was not significant for the three and six months ended June 30, 2014 and 2013 .

Provision for Income Taxes

Our provision for income taxes was $656.6 million and $1.38 billion for the three and six months ended June 30, 2014 , respectively, compared to $308.0 million and $530.4 million for the same periods in 2013 , respectively. Our effective tax rates were 15.2% and 19.1% for the three and six months ended June 30, 2014 , respectively, compared to 28.6% and 26.3% for the same periods in 2013 , respectively. The effective tax rate for the three months ended June 30, 2014 includes a cumulative catch up adjustment of 3.9 percentage points to the first quarter tax rate to reduce the year to date effective tax rate to 19.1%. The effective tax rates for the three and six months ended June 30, 2014 were lower than the effective tax rates for the same periods in 2013 due primarily to higher earnings from non-U.S. subsidiaries that are considered indefinitely reinvested, offset by the expiration of the federal research tax credit as of December 31, 2013 and amortization expense of the intangible asset related to sofosbuvir for which we receive no tax benefit.

The effective tax rates for the three and six months ended June 30, 2014 differed from the U.S. federal statutory rate of 35% due primarily to certain operating earnings from non-U.S. subsidiaries that are considered indefinitely reinvested and tax credits, partially offset by state taxes, our portion of the non-tax deductible pharmaceutical excise tax and amortization expense of the intangible asset related to sofosbuvir for which we receive no tax benefit. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries.

Liquidity and Capital Resources

We believe that our existing capital resources, supplemented by our cash flows generated from operating activities will be adequate to satisfy our capital needs for the foreseeable future. The following table summarizes our cash, cash equivalents and marketable securities, our working capital and our cash flow activities as of the end of, and for each of, the periods presented:



(In thousands)	June 30, 2014		December 31, 2013
Cash, cash equivalents and marketable securities	$	9,581,383	$	2,570,590
Working capital	$	9,271,342	$	948,332



	Six Months Ended
	June 30,
(In thousands)	2014			2013
Cash provided by (used in):
Operating activities	$	5,753,311		$	1,625,105
Investing activities	$	(648,188	)	$	(462,733	)
Financing activities	$	1,512,545		$	(756,649	)

Cash, Cash Equivalents and Marketable Securities

As of June 30, 2014 , cash, cash equivalents and marketable securities totaled $9.58 billion , an increase of $7.01 billion or 273% from December 31, 2013 . During the six months ended June 30, 2014 , we generated $5.75 billion in cash flows from operations, received $3.97 billion from the issuance of senior unsecured notes in March 2014 and repaid $1.15 billion in debt, net of convertible note hedges. During the six months ended June 30, 2014 , we also repurchased $1.65 billion of common stock.

Of the total cash, cash equivalents and marketable securities at June 30, 2014 , approximately $3.76 billion was generated from operations in foreign jurisdictions and is intended for use in our foreign operations. We do not rely on unrepatriated earnings as a source of funds for our domestic business as we expect to have sufficient cash flow and borrowing capacity in the United States to fund our domestic operational and strategic needs.

Working Capital

Working capital was $9.27 billion at June 30, 2014 . The increase of $8.32 billion in working capital from December 31, 2013 was driven primarily by an increase in cash and cash equivalents due to the issuance of senior unsecured notes in March 2014, an increase in accounts receivable, net, driven by increased sales and a decrease in the current portion of long-term debt, net, related to the repayment of our bank debt and conversions of our convertible senior notes.

Cash Provided by Operating Activities

Cash provided by operating activities was $5.75 billion for the six months ended June 30, 2014 and consisted primarily of net income of $5.87 billion , adjusted for non-cash items such as $507.9 million of depreciation and amortization expenses. This was partially offset by $770.4 million of net cash outflow related to changes in operating assets and liabilities.

Cash provided by operating activities was $1.63 billion for the six months ended June 30, 2013 and consisted primarily of net income of $1.49 billion , adjusted for non-cash items such as $147.5 million of depreciation and amortization expenses and $117.7 million of stock-based compensation expenses. This was partially offset by $179.4 million of net cash outflow related to changes in operating assets and liabilities.

Cash Used in Investing Activities

Cash used in investing activities for the six months ended June 30, 2014 was $648.2 million , consisting primarily of $393.7 million in net purchases of marketable securities and $254.5 million in capital expenditures related to the expansion of our business.

Cash used in investing activities for the six months ended June 30, 2013 was $462.7 million , consisting primarily of $378.6 million used in our acquisition of YM BioSciences Inc., net of the cash acquired.

Cash Provided by (Used in) Financing Activities

Cash provided by financing activities for the six months ended June 30, 2014 was $1.51 billion , consisting primarily of $3.97 billion in net proceeds from the issuance of our April 2019 Notes, April 2024 Notes and April 2044 Notes, partially offset by $1.15 billion used to repay debt, net of convertible note hedges and $1.65 billion used to repurchase common stock under our stock repurchase program.

Cash used in financing activities for the six months ended June 30, 2013 was $756.6 million , driven primarily by $2.14 billion used to repay debt financing which included the maturity and conversions of our convertible senior notes, partially offset by net proceeds of $1.21 billion related to our convertible note hedges and proceeds of $146.3 million from issuances of common stock under our employee stock plans.

Long-Term Obligations

The following is a summary of our borrowings under various financing arrangements (in thousands):



Type of Borrowing	Description	Issue Date	Due Date	Interest Rate	June 30, 2014		December 31, 2013
Convertible Senior	May 2014 Notes	July 2010	May 2014	1.00%	$	—	$	234,217
Convertible Senior	May 2016 Notes	July 2010	May 2016	1.625%	822,139		1,113,043
Senior Unsecured	April 2021 Notes	March 2011	April 2021	4.50%	994,210		993,781
Senior Unsecured	December 2014 Notes	December 2011	December 2014	2.40%	749,868		749,710
Senior Unsecured	December 2016 Notes	December 2011	December 2016	3.05%	699,441		699,326
Senior Unsecured	December 2021 Notes	December 2011	December 2021	4.40%	1,247,861		1,247,716
Senior Unsecured	December 2041 Notes	December 2011	December 2041	5.65%	997,923		997,885
Senior Unsecured	April 2019 Notes	March 2014	April 2019	2.05%	499,189		—
Senior Unsecured	April 2024 Notes	March 2014	April 2024	3.70%	1,747,271		—
Senior Unsecured	April 2044 Notes	March 2014	April 2044	4.80%	1,746,641		—
Credit Facility	Five-Year Revolver	January 2012	January 2017	Variable	—		600,000
Total debt, net					9,504,543		6,635,678
Less current portion					1,572,007		2,696,970
Total long-term debt, net					$	7,932,536	$	3,938,708

Debt Financing

In March 2014, we issued senior unsecured notes in a registered offering for a total aggregate principal amount of $4.00 billion . We issued the April 2019 Notes for $500.0 million which pay interest at a fixed annual rate of 2.05% , the April 2024 Notes for $1.75 billion which pay interest at a fixed annual rate of 3.70% and the April 2044 Notes for $1.75 billion which pay interest at a fixed annual rate of 4.80% . We have begun using the net proceeds from this debt financing for general corporate purposes, which may include the repayment of debt and related payments, working capital and the repurchase of outstanding common stock under our authorized stock repurchase program.

Convertible Senior Notes

There are 55.5 million shares of our common stock underlying our warrants expiring in 2014 (the 2014 Warrants). The 2014 Warrants have a strike price of $28.38 per share and expire during the 40 trading-day period commencing August 1, 2014 and ending on September 26, 2014. On July 29, 2014, we exercised our option to settle the warrants in cash. As a result, during the third quarter of 2014, we expect to pay approximately $3.14 billion to $3.69 billion in cash to settle the warrants. Because the warrants could have been settled, at our option, in cash or shares of our common stock, and the related contracts met all of the applicable criteria for equity classification, the settlement will be recorded as a reduction of additional paid-in capital in our Condensed Consolidated Balance Sheet.

Credit Facilities

We are required to comply with certain covenants under the credit agreement and note indentures and as of June 30, 2014 , we believe we were in compliance with all such covenants.

Stock Repurchase Program

Under our 2011 Program, we repurchased a total of $1.20 billion or 15.2 million shares of common stock during the three months ended June 30, 2014 , and a total of $1.65 billion or 20.9 million shares of common stock during the six months ended June 30, 2014 . As of June 30, 2014 , we had $1.70 billion remaining in our 2011 Program, which is expected to be completed by September 2014. In May 2014, our Board of Directors authorized a new stock repurchase program of up to $5.00 billion of our common stock through open market and private block transactions pursuant to Rule 10b5-1 plans, privately negotiated transactions or other means. This new program expires three years after the completion of the 2011 Program. We intend to use the additional authorization to repurchase shares opportunistically and to offset the dilution created by shares issued under employee stock plans.

Critical Accounting Policies, Estimates and Judgments

There have been no material changes in our critical accounting policies, estimates and judgments during the six months ended June 30, 2014 compared to the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2013 .

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Recent Accounting Pronouncements


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the six months ended June 30, 2014 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2013 .

As of June 30, 2014 , our accounts receivable in Southern Europe, specifically Greece, Italy, Portugal and Spain, totaled approximately $652.4 million , of which $173.0 million were past due greater than 120 days and $53.6 million were past due greater than 365 days. To date, we have not experienced significant losses with respect to the collection of our accounts receivable. We believe that our allowance for doubtful accounts was adequate at June 30, 2014 . However, we will continue to monitor the European economic environment for collectability issues related to our outstanding receivables.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation as of June 30, 2014 was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures,” which are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at June 30, 2014 .

Changes in Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2014 , and has concluded that there was no change during such quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met and, as set forth above, our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.


PART II.	OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

Litigation Regarding Sofosbuvir

In January 2012, we acquired Pharmasset, Inc. (Pharmasset). Through the acquisition, we acquired sofosbuvir, a nucleotide analog that acts to inhibit the replication of the hepatitis C virus (HCV). In December 2013, we received U.S. Food and Drug Administration (FDA) approval of sofosbuvir, now known commercially as Sovaldi. We have received a number of contractual and intellectual property claims regarding sofosbuvir. We have carefully considered these claims both prior to and following the acquisition and believe they are without merit.

We own patents that claim sofosbuvir as a chemical entity and its metabolites. However, the existence of patents does not necessarily guarantee our right to practice the patented technology or commercialize the patented product. Third parties may have, or obtain rights to, patents that allegedly could be used to prevent or attempt to prevent us from commercializing sofosbuvir. For example, we are aware of patents and patent applications owned by other parties that may be alleged by such parties to cover the use of sofosbuvir. If these parties successfully obtain valid and enforceable patents, and successfully prove infringement of those patents by sofosbuvir, we could be prevented from selling sofosbuvir unless we were able to obtain a license under such patents. Such a license may not be available on commercially reasonable terms or at all. Further, if any party is successful in establishing exclusive rights to sofosbuvir, our expected revenues and earnings from the sale of sofosbuvir would be adversely affected.

Arbitration with F. Hoffman-La Roche Ltd and Hoffman-La Roche Inc. (collectively, Roche)

Interference Proceedings and Litigation with Idenix Pharmaceuticals, Inc. (Idenix)

We believe the claims in the Idenix application involved in the First Idenix Interference, and similar U.S. and foreign patents claiming the same compounds and metabolites, are invalid. As a result, we filed an Impeachment Action in the Federal Court of Canada to invalidate Idenix Canadian Patent No. 2,490,191 (the ‘191 patent), which is the Canadian patent that corresponds to the ‘600 patent and the Idenix patent application that was the subject of the First Idenix Interference. Idenix has now asserted that the commercialization of Sovaldi in Canada will infringe its ‘191 patent and that our Canadian Patent No. 2,527,657, corresponding to our U.S. Patent No. 7,429,572 in the First Idenix Interference, is invalid.

We filed a similar legal action in Norway in the Oslo District Court seeking to invalidate Idenix's corresponding Norwegian patent. In September 2013, Idenix filed an invalidation action in the Norwegian proceedings against our Norwegian Patent No. 333700 patent, which corresponds to our U.S. Patent No. 7,429,572 patent. The trial was held in November 2013. On March 21, 2014, the Norwegian court found all claims in the Idenix Norwegian patent to be invalid and upheld the validity of all claims in the challenged Gilead patent. Additionally, the Norwegian court ordered Idenix to pay us over $2.0 million in attorney fees as the losing party to the litigation. On April 30, 2014, Idenix appealed the March 21, 2014 decision to the Norwegian Court of Appeal. Idenix’s obligation to pay our attorneys’ fees will be stayed during the pendency of the appeal.

On March 12, 2014 the European Patent Office (EPO) granted Idenix European Patent No. 1 523 489 (the ‘489 patent), which corresponds to the ‘600 patent. The same day that the ‘489 patent granted, we filed an opposition with the EPO seeking to revoke the ‘489 patent. Also on March 12, 2014, Idenix initiated infringement proceedings against Gilead in the United Kingdom, Germany and France alleging that the commercialization of Sovaldi in those countries would infringe the respective national counterparts of the ‘489 patent. In the United Kingdom, the court has ordered an October 2014 trial date to determine the issues of infringement and validity of the Idenix United Kingdom patent. In Germany, the court in Düsseldorf has ordered a hearing date of December 2, 2014 to determine the issue of infringement of the Idenix German patent. We do not have a trial date for the French lawsuit.

In December 2013, after receiving our request to do so, the USPTO declared Interference No. 105,981 (Second Idenix Interference) between our pending U.S. Patent Application No. 11/854,218 and the ‘600 patent. The ‘600 patent includes claims directed to methods of treating HCV with nucleoside compounds similar to those which were involved in the First Idenix Interference. The Second Idenix Interference will determine who was first to invent the claimed methods of treating HCV. In the declaration of the Second Idenix Interference, the USPTO has initially designated Gilead as the junior party based upon the patent application filing dates appearing on the face of the ‘600 patent.We believe the Board’s determination in the First Idenix Interference that Idenix is not entitled to the benefit of any of its earlier application filing dates, including the filing date of the ‘600 patent, will be equally applicable to the Second Idenix Interference. If we are correct, the Board may conclude that Gilead is the senior party in the Second Idenix Interference, consistent with the determination in the First Idenix Interference. In light of the Board’s conclusion in the First Idenix Interference that the application that led to the ‘600 patent does not teach how to make the claimed compounds, it is possible that the Board will make the same determination in the Second Idenix Interference and eliminate the need for the Board to address who was the first to invent the claimed methods of treating HCV. However, if the Board does consider who was the first to invent the claimed methods of treating HCV and ultimately concludes that Gilead was first, the claims in the ‘600 patent may be revoked. If the Board determines that Idenix was first to invent and is entitled to these patent claims, and it is determined in other proceedings that we have infringed those claims, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir and RG7128. Any determination by the Board can be appealed by either party to U.S. federal court.

obtain a license from and pay royalties to Idenix to commercialize sofosbuvir. A decision by the District Court can be appealed by either party to the CAFC.

We have an expansive patent portfolio covering NS5A inhibitors for the treatment of HCV. Following the disclosure of the structure of Idenix’s NS5A inhibitor, samatasvir (also known as IDX-719), we are evaluating the compound in light of the claims of our granted U.S. Patent No. 8,669,234.

On June 9, 2014, Merck and Idenix announced that the companies had entered into a definitive agreement under which Merck will acquire Idenix.

Litigation with Merck & Co., Inc. (Merck)

In August 2013, Merck contacted us requesting that we pay royalties on the sales of sofosbuvir and obtain a license to U.S. Patent Nos. 7,105,499 and 8,481,712, which it co-owns with Isis Pharmaceuticals, Inc. We believe that Merck’s patents are invalid and would not be infringed by our commercialization of sofosbuvir and that we have the sole right to commercialize sofosbuvir. Accordingly, in August 2013, we filed a lawsuit in the U.S. District Court for the Northern District of California seeking declaratory judgment that the Merck patents are invalid and not infringed. Merck’s U.S. Patent Nos. 7,105,499 and 8,481,712 cover compounds which do not include, but may relate to, sofosbuvir. During patent prosecution, Merck amended its patent application in an attempt to cover compounds related to sofosbuvir and ultimately extract royalty payments for sofosbuvir’s commercialization, or to exclude it from the market. If the court determines that Merck’s patents are valid and that we have infringed those claims, we may be required to obtain a license from and pay royalties to Merck to commercialize sofosbuvir. Either party can appeal a decision by the District Court to the CAFC. The court has set a trial date of March 7, 2016 for this litigation. The court has set a trial date of March 7, 2016 for this litigation. While this merger does not change our view of the merits of Merck's and Idenix's claims, Merck has greater resources than Idenix and may therefore choose to fund the litigation at higher levels than Idenix.

Litigation with AbbVie, Inc. (AbbVie)

AbbVie has obtained U.S. Patent Nos. 8,466,159, 8,492,386, 8,680,106, and 8,685,984, which purport to claim the use of a combination of LDV/SOF for the treatment of HCV. We own published and pending patent applications directed to the use of combinations for the treatment of HCV, and, specifically, to combinations of ledipasvir and sofosbuvir. Certain of those applications were filed before AbbVie’s patents. For this reason and others, we believe AbbVie’s patents are invalid.

Litigation with Generic Manufacturers

Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (ANDA), the application form typically used by manufacturers seeking approval of a generic drug.

Tenofovir Disoproxil Fumarate, Emtricitabine and Fixed-Dose Combination of Emtricitabine, Tenofovir Disoproxil Fumarate and Efavirenz

In 2008 and 2009, we received notices that Teva Pharmaceuticals (Teva) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notices, Teva alleged that patents associated with emtricitabine and tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic fixed-dose combination of emtricitabine and tenofovir disoproxil fumarate. In April 2013, we and Teva reached an agreement to settle the ongoing patent litigation concerning the patents that protect tenofovir disoproxil fumarate in Atripla, Truvada and Viread. Under the agreement, Teva will be allowed to launch a generic version of Viread on December 15, 2017. On October 1, 2013, the court’s dismissal of the case pursuant to the settlement agreement between the parties became final. A trial in the lawsuit against Teva related to the U.S. patents protecting emtricitabine in Atripla and Truvada was held in October 2013. In April 2014, we and Teva entered into an agreement to settle the ongoing patent litigation concerning the emtricitabine patents that protect Atripla and Truvada.

In November 2011, we received notice that Teva submitted an abbreviated new drug submission (ANDS) to the Canadian Minister of Health requesting permission to manufacture and market a generic fixed-dose combination of emtricitabine and tenofovir disoproxil fumarate. In the notice, Teva alleges that three of the patents associated with Truvada are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In January 2012, we filed a lawsuit against Teva in the Federal Court of Canada seeking an order of prohibition against approval of this ANDS.

In December 2011, we received notice that Teva submitted an ANDS to the Canadian Minister of Health requesting permission to manufacture and market a generic fixed-dose combination of emtricitabine, tenofovir disoproxil fumarate and efavirenz. In the notice, Teva alleges that three of our patents associated with Atripla and two of Merck's patents associated with Atripla are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic fixed-dose combination of emtricitabine, tenofovir disoproxil fumarate and efavirenz. In February 2012, we filed a lawsuit against Teva in the Federal Court of Canada seeking an order of prohibition against approval of this ANDS. In August 2012, we received notice that Teva submitted an ANDS to the Canadian Minister of Health requesting permission to manufacture and market a generic version of Viread. In the notice, Teva alleges that two patents associated with tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Viread, Truvada, and Atripla. In September 2012, we filed a lawsuit against Teva in the Federal Court of Canada seeking an order of prohibition against approval of this ANDS. Also in August 2012, Teva filed an Impeachment Action in the Federal Court of Canada seeking invalidation of our two Canadian patents associated with Viread. We are currently defending that Impeachment Action. The requests for orders of prohibition in connection with all three of Teva’s ANDS filings (for Teva’s generic versions of Viread, Truvada and Atripla) were consolidated and a hearing on the consolidated requests for the orders of prohibition took place in September 2013. In December 2013, the court issued our requested order prohibiting the Canadian Ministry of Health from issuing a Notice of Compliance for Teva’s generic versions of our Viread, Truvada and Atripla products until expiry of our patent in July 2017. Teva appealed the decision of the court prohibiting the Minister of Heath from issuing the Notices of Compliance until expiry of our patent in July 2017. This decision did not rule on the validity of the patents and accordingly the only issue on appeal is whether the Minister of Health should be prohibited from issuing the Notices of Compliance for Teva’s products. Separately, the court will determine the validity of the patents in the pending Impeachment Action. A trial in the Impeachment Action is scheduled for March 2015. If Teva is successful in invalidating our patents, Teva may be able to launch generic versions of our Viread, Truvada and Atripla products in Canada prior to the expiry of our patents.

In July 2012, we received notice that Lupin Limited (Lupin) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Lupin alleges that four patents associated with emtricitabine and four patents associated with tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Lupin's manufacture, use or sale of a generic version of a fixed-dose combination of emtricitabine and tenofovir disoproxil fumarate. In August 2012, we filed two lawsuits against Lupin in U.S. District Court for the Southern District of New York for infringement of our patents. In October 2012, we received notice that Lupin submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Viread. In the notice, Lupin alleges that four patents associated with tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Lupin's manufacture, use or sale of a generic version of tenofovir disoproxil fumarate. In October 2012, we filed a lawsuit against Lupin in U.S. District Court for the Southern District of New York for infringement of our patents. In May 2014, Lupin amended its ANDAs to certify that it is no longer seeking approval to market generic versions of Truvada and Viread prior to the expiration of the four patents associated with tenofovir disoproxil fumarate in January 2018 (including pediatric exclusivity). As a result, on May

30, 2014, the NY District Court granted Gilead and Lupin's Joint Motion for Order of Dismissal in our patent infringement lawsuit against Lupin for the tenofovir disoproxil fumarate patents. The District Court has scheduled a trial in the second lawsuit concerning the emtricitabine patents for December 2014. Either party can appeal a decision by the District Court to the CAFC. If Lupin is successful in invalidating our patents, Lupin may be able to launch a generic version of our Truvada product in January 2018.

In July 2012, we received notice that Cipla Ltd. (Cipla) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Emtriva and a generic version of Viread. In the notice, Cipla alleges that two patents associated with emtricitabine are invalid, unenforceable and/or will not be infringed by Cipla's manufacture, use or sale of a generic version of emtricitabine and four patents associated with tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Cipla's manufacture, use or sale of a generic version of tenofovir disoproxil fumarate. In August 2012, we filed lawsuits against Cipla in U.S. District Court for the Southern District of New York for infringement of our patents. In July 2014, we and Cipla reached agreement to settle those lawsuits. Terms of the settlement are confidential.

Either party can appeal a decision by the District Court to the CAFC. If Lupin is successful in invalidating our patents, Lupin may be able to launch generic version of our Viread product prior to the expiry of our patents.

In April 2014, we received notice that Mylan Inc. (Mylan) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Mylan alleges that two of the patents associated with emtricitabine and one of our patents associated with the fixed-dose combination of emtricitabine with tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Mylan's manufacture, use or sale of a generic version of Truvada. In June 2014, we filed a lawsuit against Mylan in U.S. District Court for the Northern District of West Virginia for infringement of our patents.

In June 2014, we received notice that Mylan Inc. submitted petitions for Inter Partes Review (IPR) to the US Patent Trial and Appeal Board (the Board) alleging that four patents associated with tenofovir disoproxil fumarate are invalid. We are opposing Mylan’s petitions. We anticipate that the Board will issue an initiation decision by December 2014. If the Board initiates an IPR, we anticipate a final decision by December 2015. Either party can appeal a decision of the Board to the CAFC. If Mylan is successful in invalidating our patents, generic companies will be able to launch a generic version of our Viread product prior to the expiry of our patents.

Ranolazine

In June 2010, we received notice that Lupin submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of sustained release ranolazine. In the notice, Lupin alleged that ten of the patents associated with Ranexa are invalid, unenforceable and/or will not be infringed by Lupin's manufacture, use or sale of a generic version of Ranexa. In July 2010, we filed a lawsuit against Lupin in U.S. District Court for the District of New Jersey for infringement of certain Ranexa patents challenged by Lupin. The trial took place in April and May 2013. In August 2013, the parties reached agreement to settle the patent litigation prior to issuance of the court’s decision. Under the agreement, Lupin would be allowed to launch a generic version of Ranexa on February 27, 2019.

Tamiflu

In February 2011, we received notice that Natco Pharma Ltd. (Natco) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Tamiflu. In the notice, Natco alleges that one of the patents associated with oseltamivir phosphate is invalid, unenforceable and/or will not be infringed by Natco's manufacture, use or sale of a generic version of Tamiflu. In March 2011, we and Roche filed a lawsuit against Natco in U.S. District Court for the District of New Jersey for infringement of one of the patents associated with Tamiflu. In December 2012, the court issued a ruling in favor of Gilead and Roche, that our patent is not invalid for the reasons stated in Natco's notice letter. Natco has appealed this decision to the CAFC. A hearing on Natco’s appeal took place in January 2014. The court issued a decision on April 22, 2014 which will allow Natco’s patent invalidity challenge to proceed if the case is remanded to the District Court of New Jersey for a full trial on the merits. On June 30, 2014, we filed a petition for rehearing en banc with the CAFC.

Department of Justice Investigation

Other Matters

ITEM 1A. RISK FACTORS

In evaluating our business, you should carefully consider the following risks in addition to the other information in this Quarterly Report on Form 10-Q. A manifestation of any of the following risks could materially and adversely affect our business, results of operations and financial condition. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors and, therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.

A substantial portion of our revenues is derived from sales of Sovaldi for the treatment of hepatitis C virus infection (HCV) and our antiviral products, particularly our single tablet regimen human immunodeficiency virus (HIV) products, including Atripla, Stribild and Complera/Eviplera. If we are unable to maintain or continue increasing sales of these products, our results of operations may be adversely affected.

During the six months ended June 30, 2014, sales of Sovaldi for the treatment of HCV accounted for approximately 55% of our total antiviral products sales. Since this is the second full quarter following Sovaldi’s launch, we cannot be certain if these sales are indicative of future revenue. Demand for Sovaldi depends in part on the amount of patient coverage under private and public insurance programs in the United States and our ability to obtain and maintain government reimbursement in countries outside the United States. Further, pricing pressures could influence private and public payers' decisions to list Sovaldi on formulary or limit the types of patients for whom coverage will be provided, thus impacting the demand for Sovaldi. In addition, we have seen signs that some physicians have begun delaying treatment for some genotype 1 HCV-infected patients in anticipation of the approval and availability of our fixed-dose combination of ledipasvir/sofosbuvir (LDV/SOF) and another competitor’s all-oral regimen for the treatment of genotype 1 HCV-infected patients. If we are unable to maintain the current or expected future sales levels of Sovaldi or obtain approval for our HCV product candidates in the currently anticipated timelines, our results of operations and stock price could be negatively impacted.

We receive a substantial portion of our revenue from sales of our products for the treatment of HIV infection, particularly our single table regimen products, including Atripla, Stribild and Complera/Eviplera. During the six months ended June 30, 2014, sales of our HIV products accounted for more than 40% of our total antiviral products sales. Most of our HIV products contain tenofovir disoproxil fumarate and/or emtricitabine, which belong to the nucleoside class of antiviral therapeutics. If the treatment paradigm for HIV changes, causing nucleoside-based therapeutics to fall out of favor, or if we are unable to maintain or continue increasing our HIV product sales, our results of operations would likely suffer and we would likely need to scale back our operations, including our spending on research and development (R&D) efforts. We may not be able to sustain or increase the growth rate of sales of our HIV products, especially Atripla, Stribild and Complera/Eviplera, for any number of reasons including, but not limited to, the following:

•

As our HIV products are used over a longer period of time in many patients and in combination with other products, and additional studies are conducted, new issues with respect to safety, resistance and interactions with other drugs may arise, which could cause us to provide additional warnings or contraindications on our labels, narrow our approved indications or halt sales of a product, each of which could reduce our revenues.


•	As our HIV products mature, private insurers and government payers often reduce the amount they will reimburse patients for these products, which increases pressure on us to reduce prices.


•	A large part of the market for our HIV products consists of patients who are already taking other HIV drugs. If we are not successful in encouraging physicians to change patients' regimens to include our HIV products, the sales of our HIV products will be limited.

•

As generic HIV products are introduced into major markets, our ability to maintain pricing and market share may be affected. For example, generic versions of Sustiva (efavirenz), a component of our Atripla, are now available in Canada and Europe and we expect competition from generic efavirenz in the United States in 2015. We have observed some pricing pressure related to the Sustiva component of our Atripla sales. Tivicay (dolutegravir), an integrase inhibitor, launched in the fourth quarter of 2013 by ViiV Healthcare (ViiV) could adversely impact sales of our HIV products.

If we fail to commercialize new products or expand the indications for existing products, our prospects for future revenues may be adversely affected.

If we do not introduce new products to market or increase sales of our existing products, we will not be able to increase or maintain our total revenues and continue to expand our R&D efforts. Drug development is inherently risky and many product candidates fail during the drug development process. For example, in April 2013, we announced our decision to terminate our Phase 3 clinical trial of aztreonam for inhalation solution for the treatment of bronchiectasis.

In February 2014, we filed a new drug application (NDA) with the U.S. Food and Drug Administration (FDA) for approval of the fixed-dose combination of LDV/SOF for genotype 1 patients, who represent a majority of patients infected with HCV in the United States and Europe. If approved, LDV/SOF will likely only require genotype 1 HCV patients to take one pill, once per day for eight or 12 weeks without ribavirin (RBV) or pegylated interferon (peg-IFN). In February 2014, we filed our marketing application for approval of LDV/SOF in Europe and our application was validated by the European Medicines Agency (EMA) in March 2014. We have also filed marketing applications for approval of idelalisib for the treatment of patients with indolent non-Hodgkin’s lymphoma (iNHL) and chronic lymphocytic leukemia in Europe. In the first half of 2014, we also resubmitted our NDAs for elvitegravir and cobicistat, as standalone agents, for the treatment of HIV with the FDA. In June 2014, we submitted a NDA with Japan’s Pharmaceutical and Medical Devices Agency (PMDA) for approval of sofosbuvir for the treatment of HCV. These marking applications may not be approved by the FDA, EMA, the PMDA or other foreign regulatory authorities on a timely basis, or at all. Even if marketing approval is granted for these products, there may be significant limitations on their use. Further, we may be unable to file our marketing applications for new products.

Our inability to accurately estimate demand for our products, the uptake of new products or the timing of fluctuations in the inventories maintained by customers makes it difficult for us to accurately forecast sales and may cause our revenues and earnings to fluctuate, which could adversely affect our financial results and our stock price.

We are unable to accurately estimate demand for our products, including the uptake of new products, as demand is dependent on a number of factors. For example, our HCV products, Sovaldi and LDV/SOF, if approved, represent a significant change in the treatment paradigm for HCV-infected patients due to the shortened duration of treatment and the reduction or elimination of the need for peg-IFN injection and RBV. Because these products are in a new therapeutic area for us and patient demand is dependent on a number of factors, revenues from these products in 2014 and beyond are difficult for us and investors to estimate. Since Sovaldi was recently approved and it is not clear when, or if, LDV/SOF will ultimately be approved, demand for these products will depend in part on the amount of their coverage under private and public insurance programs in the United States and our ability to obtain and maintain government reimbursement in countries outside the United States. Pricing pressures could influence private and public payers' decisions to list Sovaldi on formulary or limit the types of patients for whom coverage will be provided, thus impacting the demand for Sovaldi. In addition, doctors may choose to wait to treat their genotype 1 HCV-infected patients until later in 2014 or 2015 when they anticipate the approval and availability of LDV/SOF and another competitor’s all-oral regimen for the treatment of genotype 1 HCV-infected patients. Also, because our HCV products represent a significant change in the treatment paradigm of HCV infection and are highly anticipated by the medical and patient community, sales levels or prescription growth rates early in the launch may not be indicative of future results. Because HCV-related revenues are difficult to predict, investors may have widely varying expectations that may be materially higher or lower than our actual revenues. To the extent Sovaldi revenues exceed or fall short of these expectations, our stock price may experience significant volatility.

In the quarter ended June 30, 2014, approximately 86% of our product sales in the United States were to three wholesalers, AmerisourceBergen Corp., McKesson Corp. and Cardinal Health, Inc. The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine end user demand and may not be completely effective in matching their inventory levels to actual end user demand. As a result, changes in inventory levels held by those wholesalers can cause our operating results to fluctuate unexpectedly if our sales to these wholesalers do not match end user demand. In addition, inventory is held at retail pharmacies and other non-wholesaler locations with whom we have no inventory management agreements and no control over buying patterns. Adverse changes in economic conditions or other factors may cause retail pharmacies to reduce their inventories of our products, which would reduce their orders from wholesalers and, consequently, the wholesalers' orders from us, even if end user demand has not changed. For example, during the fourth quarter of 2013, strong wholesaler and sub-wholesaler purchases resulted in inventory draw-down by wholesalers and sub-wholesalers in the first quarter of 2014. As inventory in the distribution channel fluctuates from quarter to quarter, we may continue to see fluctuations in our earnings and a mismatch between prescription demand for our products and our revenues.

In addition, the non-retail sector in the United States, which includes government institutions, including state AIDS Drug Assistance Programs (ADAPs), correctional facilities and large health maintenance organizations, tends to be even less consistent in terms of buying patterns and often causes quarter over quarter fluctuations that do not necessarily mirror patient demand. Federal and state budget pressures, including sequestration, as well as the annual grant cycles for federal and state ADAP funds, may cause ADAP purchasing patterns to not reflect patient demand. For example, in the first quarters of certain prior years, we observed large non-retail purchases by a number of state ADAPs that exceeded patient demand. We believe

such purchases were driven by the grant cycle for federal ADAP funds. We expect to continue to experience fluctuations in the purchasing patterns of our non-retail customers which may result in fluctuations in our product sales, revenues and earnings in the future. In light of the global economic downturn and budget crises faced by many European countries, we have observed variations in purchasing patterns induced by cost containment measures in Europe. We believe these measures have caused some government agencies and other purchasers to reduce inventory of our products in the distribution channels, which has decreased our revenues and caused fluctuations in our product sales and earnings. We may continue to see this trend in the future.

Our results of operations may be adversely affected by current and potential future healthcare reforms.

Legislative and regulatory changes to government prescription drug procurement and reimbursement programs occur relatively frequently in the United States and foreign jurisdictions. In March 2010, healthcare reform legislation was adopted in the United States, requiring us to further rebate or discount products reimbursed or paid for by various public payers, including Medicaid and other entities eligible to purchase discounted products through the 340B Drug Pricing Program under the Public Health Service Act, such as ADAPs. As a result of the 2010 legislation, the discounts, rebates and fees that impacted us include:


•	our minimum base rebate amount owed to Medicaid on products reimbursed by Medicaid increased by 8%, and the discounts or rebates we owe to ADAPs and other Public Health Service entities which reimburse or purchase our products also increased by 8%;


•	we are required to extend rebates to patients receiving our products through Medicaid managed care organizations;


•	we are required to provide a 50% discount on products sold to patients while they are in the Medicare Part D “donut hole;” and


•	we, along with other pharmaceutical manufacturers of branded drug products, are required to pay a portion of a new industry fee (also known as the pharmaceutical excise tax) of $3.0 billion for 2014, calculated based on select government sales during the 2012 calendar year as a percentage of total industry government sales.

The amount of the annual industry fee imposed on the pharmaceutical industry as a whole will be $3.0 billion in 2014 through 2016, increase to $4.0 billion in 2017, increase to a peak of $4.1 billion in 2018, and then decrease to $2.8 billion in 2019 and thereafter. We expect our portion of the pharmaceutical excise tax to increase as our revenues grow and as the amount of the annual industry fee increases through 2018 and drug patents expire on major drugs of other companies. We estimate our portion of the pharmaceutical excise tax to be approximately $150 - $170 million in 2014 compared to approximately $110 million in 2013 and approximately $85 million in 2012. The pharmaceutical excise tax is not tax deductible. Further, even though not addressed in the healthcare reform legislation, discussions continue at the federal level on legislation that would either allow or require the federal government to directly negotiate price concessions from pharmaceutical manufacturers or set minimum requirements for Medicare Part D pricing.

In addition, state Medicaid programs could request additional supplemental rebates on our products as a result of the increase in the federal base Medicaid rebate. Private insurers could also use the enactment of these increased rebates to exert pricing pressure on our products, and to the extent that private insurers or managed care programs follow Medicaid coverage and payment developments, the adverse effects may be magnified by private insurers adopting lower payment schedules.

Our existing products are subject to reimbursement from government agencies and other third parties. Pharmaceutical pricing and reimbursement pressures may reduce profitability.

Successful commercialization of our products depends, in part, on the availability of governmental and third-party payer reimbursement for the cost of such products and related treatments. Government health administration authorities, private health insurers and other organizations generally provide reimbursement. In the United States, the European Union and other significant or potentially significant markets for our products and product candidates, government authorities and third-party payers are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices.

A significant portion of our sales of the majority of our products are subject to significant discounts from list price and rebate obligations. In the United States, state ADAPs, which purchase a significant portion of our HIV products, rely on federal, supplemental federal and state funding to help fund purchases of our products. In recent years, we have experienced a shift in our payer mix as patients previously covered by private insurance move to public reimbursement programs that require rebates or discounts from us or as patients previously covered by one public reimbursement program move to another public reimbursement program that requires greater rebates or discounts from us. As a result of this shift, revenue growth may be lower than prescription growth. If federal and state funds are not available in amounts sufficient to support the number of patients that rely on ADAPs, sales of our HIV products could be negatively impacted which would reduce our revenues. For example, during the first quarter of 2011, the state budget crisis in Florida led to a temporary movement of patients who were

previously covered by Florida's ADAP into industry-supported patient assistance programs. In prior quarters, because of the insufficiency of federal and state funds and as many states reduced eligibility criteria, we saw an increase in the number of patients on state ADAP waitlists, and we may see similar increases in future periods as a result of any reduction in federal and state ADAP support resulting from the sequestration. Until these patients are enrolled in ADAP, they generally receive product from industry-supported patient assistance programs or are unable to access treatment. The increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our product sales and profitability. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.

In July 2014, we received a letter from the U.S. Senate Committee on Finance requesting information and supporting documentation from us related to Sovaldi and the pricing of Sovaldi in the United States. The letter raised concerns about our approach to pricing Sovaldi, its affordability and its impact on federal government spending and public health. We are cooperating with the inquiries. It is both costly and time-consuming for us to comply with these inquiries. We cannot predict the outcome. It is possible that the inquiries could result in negative publicity or other negative actions that could harm our reputation, reduce demand for Sovaldi or other sofosbuvir containing products and/or reduce coverage of Sovaldi or sofosbuvir containing products, including by federal health care programs such as Medicare and Medicaid. If any or all of these events occur, our business and stock price could be materially negatively affected.

In countries outside the United States, the success of our commercialized products, and any other product candidates we may develop, will depend largely on obtaining and maintaining government reimbursement, because in many countries patients are unlikely to use prescription drugs that are not reimbursed by their governments. In addition, negotiating prices with certain governmental authorities can delay commercialization by 12 months or more. Reimbursement policies may adversely affect our ability to sell our products on a profitable basis. In many international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference pricing, price cuts, rebates, revenue-related taxes, tenders and profit control, and they expect prices of prescription pharmaceuticals to decline over the life of the product or as volumes increase.

Recently, many countries in the European Union have increased the amount of discounts required on our products, and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the European Union. For example, in June 2010, Spain imposed an incremental discount on all branded drugs. As generic drugs come to market, we may face price decreases for our products in some countries in the European Union. Further, cost containment pressures in the European Union, especially in Southern Europe, could lead to delays in the treatment of patients and also delay pricing approval, which could negatively impact the commercialization of new products. With respect to Sovaldi, we have seen pricing pressure, which could delay pricing approval in some European countries.

Government agencies also issue regulations and guidelines directly applicable to us and to our products. In addition, from time to time, professional societies, practice management groups, private health/science foundations and organizations publish guidelines or recommendations directed to certain health care and patient communities. Such recommendations and guidelines may relate to such matters as product usage, dosage, route of administration, and use of related or competing therapies and can consequently result in increased or decreased usage of our products.

Approximately 25% of our product sales occur outside the United States, and currency fluctuations and hedging expenses may cause our earnings to fluctuate, which could adversely affect our stock price.

Because a significant percentage of our product sales are denominated in foreign currencies, primarily the Euro, we face exposure to adverse movements in foreign currency exchange rates. When the U.S. dollar strengthens against these foreign currencies, the relative value of sales made in the respective foreign currency decreases. Conversely, when the U.S. dollar weakens against these currencies, the relative value of such sales increases. Overall, we are a net receiver of foreign currencies and, therefore, benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to those foreign currencies in which we transact significant amounts of business.

We use foreign currency exchange forward and option contracts to hedge a percentage of our forecasted international sales, primarily those denominated in the Euro. We also hedge certain monetary assets and liabilities denominated in foreign currencies, which reduces but does not eliminate our exposure to currency fluctuations between the date a transaction is recorded and the date that cash is collected or paid. We cannot predict future fluctuations in the foreign currency exchange rate of the U.S. dollar. If the U.S. dollar appreciates significantly against certain currencies and our hedging program does not

sufficiently offset the effects of such appreciation, our results of operations will be adversely affected and our stock price may decline.

Additionally, the expenses that we recognize in relation to our hedging activities can also cause our earnings to fluctuate. The level of hedging expenses that we recognize in a particular period is impacted by the changes in interest rate spreads between the foreign currencies that we hedge and the U.S. dollar.

We face significant competition.

We face significant competition from large global pharmaceutical and biotechnology companies, specialized pharmaceutical firms and generic drug manufacturers.

Our HCV product, Sovaldi competes with Janssen R&D Ireland's Olysio (simeprevir) in the United States and to a lesser extent with direct-acting antivirals, Victrelis (boceprevir) marketed by Merck & Co., Inc. (Merck) and Incivek (telaprevir) marketed by Vertex Pharmaceuticals Incorporated.

Our HIV products compete primarily with products from a joint venture established by GlaxoSmithKline Inc.(GSK) and Pfizer Inc. (Pfizer), ViiV, which markets fixed-dose combination products that compete with Stribild, Complera/Eviplera, Atripla and Truvada. For example, lamivudine, marketed by this joint venture, is competitive with emtricitabine, the active pharmaceutical ingredient of Emtriva and a component of Complera/Eviplera, Atripla and Truvada. For Tybost, we compete with ritonavir marketed by AbbVie Inc. (AbbVie). In addition, Tivicay (dolutegravir), an integrase inhibitor, launched in the fourth quarter of 2013 by ViiV, could adversely impact sales of our HIV products.

We also face competition from generic HIV products. In May 2010, the compound patent covering Epivir (lamivudine) itself expired in the United States, and generic lamivudine is now available in the United States, Spain, Portugal and Italy. We expect that generic versions of lamivudine will be launched in other countries within the European Union. In May 2011, a generic version of Combivir (lamivudine and zidovudine) was approved and was recently launched in the United States. In addition, in late 2011, generic tenofovir also became available in Turkey, which resulted in an increase in the rebate for Viread in Turkey. Generic versions of Sustiva (efavirenz), a component of our Atripla, are now available in Canada and Europe and we expect competition from generic efavirenz to be in the United States in 2015. We have observed some pricing pressure related to the Sustiva component of our Atripla sales.

For Viread and Hepsera for treatment of chronic hepatitis B virus (HBV) infection, we compete primarily with products produced by GSK, Bristol-Myers Squibb Company (BMS) and Novartis Pharmaceuticals Corporation (Novartis) in the United States, the European Union and China.

For AmBisome, we compete primarily with products produced by Merck and Pfizer. In addition, we are aware of at least three lipid formulations that claim similarity to AmBisome becoming available outside of the United States, including the possible entry of such formulations and Taiwan. These formulations may reduce market demand for AmBisome. Furthermore, the manufacture of lipid formulations of amphotericin B is very complex and if any of these formulations are found to be unsafe, sales of AmBisome may be negatively impacted by association.

Letairis competes directly with products produced by Actelion Pharmaceuticals US, Inc. and indirectly with pulmonary arterial hypertension products from United Therapeutics Corporation and Pfizer.

Ranexa competes predominantly with generic compounds from three distinct classes of drugs, beta-blockers, calcium channel blockers and long-acting nitrates for the treatment of chronic angina in the United States.

Cayston competes with a product marketed by Novartis.

Tamiflu competes with products sold by GSK and generic competitors.

Zydelig competes with a product marketed by Pharmacyclics, Inc.

In addition, a number of companies are pursuing the development of technologies which are competitive with our existing products or research programs. These competing companies include specialized pharmaceutical firms and large pharmaceutical companies acting either independently or together with other pharmaceutical companies. Furthermore, academic institutions, government agencies and other public and private organizations conducting research may seek patent protection and may establish collaborative arrangements for competitive products or programs. If any of these competitors gain market share on our products, it could adversely affect our results of operations and stock price.

If significant safety issues arise for our marketed products or our product candidates, our future sales may be reduced, which would adversely affect our results of operations.

The data supporting the marketing approvals for our products and forming the basis for the safety warnings in our product labels were obtained in controlled clinical trials of limited duration and, in some cases, from post-approval use. As our products are used over longer periods of time by many patients with underlying health problems, taking numerous other medicines, we expect to continue to find new issues such as safety, resistance or drug interaction issues, which may require us to provide additional warnings or contraindications on our labels or narrow our approved indications, each of which could reduce the market acceptance of these products.

Our product Letairis, which was approved by the FDA in June 2007, is a member of a class of compounds called endothelin receptor antagonists which pose specific risks, including serious risks of birth defects. Because of these risks, Letairis is available only through the Letairis Education and Access Program (LEAP), a restricted distribution program intended to help physicians and patients learn about the risks associated with the product and assure appropriate use of the product. As the product is used by additional patients, we may discover new risks associated with Letairis which may result in changes to the distribution program and additional restrictions on the use of Letairis which may decrease demand for the product.

Regulatory authorities have been moving towards more active and transparent pharmacovigilance and are making greater amounts of stand-alone safety information and clinical trial data directly available to the public through websites and other means, e.g. periodic safety update report summaries, risk management plan summaries and various adverse event data. Safety information, without the appropriate context and expertise, may be misinterpreted and lead to misperception or legal action which may potentially cause our product sales or stock price to decline.

Further, if serious safety, resistance or drug interaction issues arise with our marketed products, sales of these products could be limited or halted by us or by regulatory authorities and our results of operations would be adversely affected.

Our operations depend on compliance with complex FDA and comparable international regulations. Failure to obtain broad approvals on a timely basis or to maintain compliance could delay or halt commercialization of our products.

The products we develop must be approved for marketing and sale by regulatory authorities and, once approved, are subject to extensive regulation by the FDA, the EMA and comparable regulatory agencies in other countries. We are continuing clinical trials for Sovaldi, Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost, Zydelig, Vitekta, Hepsera, Letairis, Ranexa, AmBisome and Cayston for currently approved and additional uses. We anticipate that we will file for marketing approval in additional countries and for additional indications and products over the next several years. These products may fail to receive such marketing approvals on a timely basis, or at all.

Further, our marketed products and how we manufacture and sell these products are subject to extensive regulation and review. Discovery of previously unknown problems with our marketed products or problems with our manufacturing or promotional activities may result in restrictions on our products, including withdrawal of the products from the market. If we fail to comply with applicable regulatory requirements, including those related to promotion and manufacturing, we could be subject to penalties including fines, suspensions of regulatory approvals, product recalls, seizure of products and criminal prosecution.

For example, under FDA rules, we are often required to conduct post-approval clinical studies to assess a known serious risk, signals of serious risk or to identify an unexpected serious risk and implement a Risk Evaluation and Mitigation Strategy for our products, which could include a medication guide, patient package insert, a communication plan to healthcare providers or other elements as the FDA deems are necessary to assure safe use of the drug, which could include imposing certain restrictions on the distribution or use of a product. Failure to comply with these or other requirements, if imposed on a sponsor by the FDA, could result in significant civil monetary penalties and our operating results may be adversely affected.

The results and anticipated timelines of our clinical trials are uncertain and may not support continued development of a product pipeline, which would adversely affect our prospects for future revenue growth.

We are required to demonstrate the safety and efficacy of products that we develop for each intended use through extensive preclinical studies and clinical trials. The results from preclinical and early clinical studies do not always accurately predict results in later, large-scale clinical trials. Even successfully completed large-scale clinical trials may not result in marketable products. If any of our product candidates fails to achieve its primary endpoint in clinical trials, if safety issues arise or if the results from our clinical trials are otherwise inadequate to support regulatory approval of our product candidates, commercialization of that product candidate could be delayed or halted. For example, in April 2013, we announced our decision to terminate our Phase 3 clinical trial of aztreonam for inhalation solution for the treatment of bronchiectasis. In addition, we may also face challenges in clinical trial protocol design. If the clinical trials for any of the product candidates in our pipeline are delayed or terminated, our prospects for future revenue growth would be adversely impacted. For example, we face numerous risks and uncertainties with our product candidates, including momelotnib for the treatment of myelofibrosis,

ranolazine for the treatment of incomplete revascularization post-percutaneous coronary intervention, our single tablet regimen of tenofovir alafenamide (TAF)/elvitegravir/cobicistat/emtricitabine, and TAF as a standalone agent, each currently in Phase 3 clinical trials, that could prevent completion of development of these product candidates. These risks include our ability to enroll patients in clinical trials, the possibility of unfavorable results of our clinical trials, the need to modify or delay our clinical trials or to perform additional trials and the risk of failing to obtain FDA and other regulatory body approvals. As a result, our product candidates may never be successfully commercialized. Further, we may make a strategic decision to discontinue development of our product candidates if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. If these programs and others in our pipeline cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted. In addition, clinical trials involving our commercial products could raise new safety issues for our existing products, which could in turn decrease our revenues and harm our business.

Due to our reliance on third-party contract research organizations to conduct our clinical trials, we are unable to directly control the timing, conduct, expense and quality of our clinical trials.

We extensively outsource our clinical trial activities and usually perform only a small portion of the start-up activities in-house. We rely on independent third-party contract research organizations (CROs) to perform most of our clinical studies, including document preparation, site identification, screening and preparation, pre-study visits, training, program management and bioanalytical analysis. Many important aspects of the services performed for us by the CROs are out of our direct control. If there is any dispute or disruption in our relationship with our CROs, our clinical trials may be delayed. Moreover, in our regulatory submissions, we rely on the quality and validity of the clinical work performed by third-party CROs. If any of our CROs' processes, methodologies or results were determined to be invalid or inadequate, our own clinical data and results and related regulatory approvals could be adversely impacted.

Expenses associated with clinical trials may cause our earnings to fluctuate, which could adversely affect our stock price.

The clinical trials required for regulatory approval of our products, as well as clinical trials we are required to conduct after approval, are very expensive. It is difficult to accurately predict or control the amount or timing of these expenses from quarter to quarter, and the FDA and/or other regulatory agencies may require more clinical testing than we originally anticipated. Uneven and unexpected spending on these programs, including on the clinical trials that will be necessary to advance our other product candidates, may cause our operating results to fluctuate from quarter to quarter and volatility in our stock price.

We depend on relationships with other companies for sales and marketing performance, development and commercialization of product candidates and revenues. Failure to maintain these relationships, poor performance by these companies or disputes with these companies could negatively impact our business.

We rely on a number of significant collaborative relationships with major pharmaceutical companies for our sales and marketing performance in certain territories. These include collaborations with BMS for Atripla in the United States, Europe and Canada; F. Hoffmann-La Roche Ltd. (together with Hoffmann-La Roche Inc., Roche) for Tamiflu worldwide; and GSK for ambrisentan in territories outside of the United States. In some countries, we rely on international distributors for sales of Truvada, Viread, Hepsera, Emtriva and AmBisome. Some of these relationships also involve the clinical development of these products by our partners. Reliance on collaborative relationships poses a number of risks, including the risk that:


•	we are unable to control the resources our corporate partners devote to our programs or products;


•	disputes may arise with respect to the ownership of rights to technology developed with our corporate partners;


•	disagreements with our corporate partners could cause delays in, or termination of, the research, development or commercialization of product candidates or result in litigation or arbitration;


•	contracts with our corporate partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform;


•	our corporate partners have considerable discretion in electing whether to pursue the development of any additional products and may pursue alternative technologies or products either on their own or in collaboration with our competitors;


•	our corporate partners with marketing rights may choose to pursue competing technologies or to devote fewer resources to the marketing of our products than they do to products of their own development; and


•	our distributors and our corporate partners may be unable to pay us, particularly in light of current economic conditions.

Given these risks, there is a great deal of uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development or commercialization of new products could be delayed or revenues from products could decline.

Under our April 2002 licensing agreement with GSK, we gave GSK the right to control clinical and regulatory development and commercialization of Hepsera in territories in Asia, Africa and Latin America. These include major markets for Hepsera, such as China, Japan, Taiwan and South Korea. In November 2009, we entered into an agreement with GSK that provided GSK with exclusive commercialization rights and registration responsibilities for Viread for the treatment of chronic HBV in China. In October 2010, we granted similar rights to GSK in Japan and Saudi Arabia. The success of Hepsera and Viread for the treatment of chronic HBV in these territories depends almost entirely on the efforts of GSK. In this regard, GSK promotes Epivir-HBV/Zeffix, a product that competes with Hepsera and Viread for the treatment of chronic HBV. Consequently, GSK's marketing strategy for Hepsera and Viread for the treatment of chronic HBV may be influenced by its promotion of Epivir-HBV/Zeffix. We receive royalties from GSK equal to a percentage of GSK's net sales of Hepsera and Viread for the treatment of chronic HBV as well as net sales of GSK's Epivir-HBV/Zeffix. If GSK fails to devote sufficient resources to, or does not succeed in developing or commercializing Hepsera or Viread for the treatment of chronic HBV in its territories, our potential revenues in these territories may be substantially reduced.

In addition, Cayston and Letairis are distributed through third-party specialty pharmacies, which are pharmacies specializing in the dispensing of medications for complex or chronic conditions that may require a high level of patient education and ongoing counseling. The use of specialty pharmacies requires significant coordination with our sales and marketing, medical affairs, regulatory affairs, legal and finance organizations and involves risks, including but not limited to risks that these specialty pharmacies will:


•	not provide us with accurate or timely information regarding their inventories, patient data or safety complaints;


•	not effectively sell or support Cayston or Letairis;


•	not devote the resources necessary to sell Cayston or Letairis in the volumes and within the time frames that we expect;


•	not be able to satisfy their financial obligations to us or others; or


•	cease operations.

We also rely on a third party to administer LEAP, the restricted distribution program designed to support Letairis. This third party provides information and education to prescribers and patients on the risks of Letairis, confirms insurance coverage and investigates alternative sources of reimbursement or assistance, ensures fulfillment of the risk management requirements mandated for Letairis by the FDA and coordinates and controls dispensing to patients through the third-party specialty pharmacies. Failure of this third party or the specialty pharmacies that distribute Letairis to perform as expected may result in regulatory action from the FDA or decreased Letairis sales, either of which would harm our business.

Further, Cayston may only be taken by patients using a specific inhalation device that delivers the drug to the lungs of patients. Our ongoing distribution of Cayston is entirely reliant upon the manufacturer of that device. For example, the manufacturer could encounter other issues with regulatory agencies related to the device or be unable to supply sufficient quantities of this device. In addition, the manufacturer may not be able to provide adequate warranty support for the device after it has been distributed to patients. With respect to distribution of the drug and device to patients, we are reliant on the capabilities of specialty pharmacies. For example, the distribution channel for drug and device is complicated and requires coordination. The reimbursement approval processes associated with both drug and device are similarly complex. If the device manufacturer is unable to obtain reimbursement approval or receives approval at a lower-than-expected price, sales of Cayston may be adversely affected. Any of the previously described issues may limit the sales of Cayston, which would adversely affect our financial results.

Our success will depend to a significant degree on our ability to defend our patents and other intellectual property rights both domestically and internationally. We may not be able to obtain effective patents to protect our technologies from use by competitors and patents of other companies could require us to stop using or pay for the use of required technology.

Patents and other proprietary rights are very important to our business. Our success will depend to a significant degree on our ability to:


•	obtain patents and licenses to patent rights;


•	preserve trade secrets;


•	defend against infringement and efforts to invalidate our patents; and


•	operate without infringing on the intellectual property of others.

If we have a properly drafted and enforceable patent, it can be more difficult for our competitors to use our technology to create competitive products and more difficult for our competitors to obtain a patent that prevents us from using technology we create. As part of our business strategy, we actively seek patent protection both in the United States and internationally and file additional patent applications, when appropriate, to cover improvements in our compounds, products and technology.

We have a number of U.S. and foreign patents, patent applications and rights to patents related to our compounds, products and technology, but we cannot be certain that issued patents will be enforceable or provide adequate protection or that pending patent applications will result in issued patents. Patent applications are confidential for a period of time before a patent is issued. As a result, we may not know if our competitors filed patent applications for technology covered by our pending applications or if we were the first to invent or first to file an application directed toward the technology that is the subject of our patent applications. Competitors may have filed patent applications or received patents and may obtain additional patents and proprietary rights that block or compete with our products. In addition, if competitors file patent applications covering our technology, we may have to participate in litigation, interference or other proceedings to determine the right to a patent. Litigation, interference or other proceedings are unpredictable and expensive, such that, even if we are ultimately successful, our results of operations may be adversely affected by such events.

Patents do not cover the ranolazine compound, the active ingredient of Ranexa. Instead, when it was discovered that only a sustained-release formulation of ranolazine would achieve therapeutic plasma levels, patents were obtained on those formulations and the characteristic plasma levels they achieve. Patents do not cover the active ingredients in AmBisome. In addition, we do not have patent filings in China or certain other Asian countries covering all forms of adefovir dipivoxil, the active ingredient in Hepsera. Asia is a major market for therapies for HBV, the indication for which Hepsera has been developed.

We may obtain patents for certain products many years before marketing approval is obtained for those products. Because patents have a limited life, which may begin to run prior to the commercial sale of the related product, the commercial value of the patent may be limited. However, we may be able to apply for patent term extensions or supplementary protection certificates in some countries.

Generic manufacturers have sought, and may continue to seek, FDA approval to market generic versions of our products through an abbreviated new drug application (ANDA), the application form typically used by manufacturers seeking approval of a generic drug. See a description of our ANDA litigation in "Legal Proceedings" beginning on page 36 and risk factor entitled "Litigation with generic manufacturers has reduced and may continue to reduce our earnings. If we are unsuccessful in all or some of these lawsuits, some or all of our claims in the patents may be narrowed or invalidated and generic versions of our products could be launched prior to our patent expiry." beginning on page 54.

Our success depends in large part on our ability to operate without infringing upon the patents or other proprietary rights of third parties.

If we infringe the valid patents of third parties, we may be prevented from commercializing products or may be required to obtain licenses from these third parties. We may not be able to obtain alternative technologies or any required license on reasonable terms or at all. If we fail to obtain these licenses or alternative technologies, we may be unable to develop or commercialize some or all of our products. For example, we are aware of patents that may relate to our operation of LEAP, our restricted distribution program designed to support Letairis and we are aware of patents and patent applications owned by other parties that may claim to cover the use of sofosbuvir. See a description of our litigation regarding sofosbuvir in the risk factor entitled "If any party is successful in establishing exclusive rights to sofosbuvir, our expected revenues and earnings from the sale of sofosbuvir could be adversely affected" beginning on page 50.

Furthermore, we also rely on unpatented trade secrets and improvements, unpatented internal know-how and technological innovation. In particular, a great deal of our liposomal manufacturing expertise, which is a key component of our liposomal technology, is not covered by patents but is instead protected as a trade secret. We protect these rights mainly through confidentiality agreements with our corporate partners, employees, consultants and vendors. These agreements provide that all confidential information developed or made known to an individual during the course of their relationship with us will be kept confidential and will not be used or disclosed to third parties except in specified circumstances. In the case of employees, the agreements provide that all inventions made by an individual while employed by us will be our exclusive property. We cannot be certain that these parties will comply with these confidentiality agreements, that we have adequate remedies for any breach or that our trade secrets will not otherwise become known or be independently discovered by our competitors. Under some of our R&D agreements, inventions become jointly owned by us and our corporate partner and in other cases become the exclusive property of one party. In certain circumstances, it can be difficult to determine who owns a particular invention and disputes could arise regarding those inventions. If our trade secrets or confidential information become known or independently

discovered by competitors or if we enter into disputes over ownership of inventions, our business and results of operations could be adversely affected.

If any party is successful in establishing exclusive rights to sofosbuvir, our expected revenues and earnings from the sale of sofosbuvir could be adversely affected.

Arbitration with F. Hoffman-La Roche Ltd and Hoffman-La Roche Inc. (collectively, Roche)

Interference Proceedings and Litigation with Idenix Pharmaceuticals, Inc. (Idenix)

now asserted that the commercialization of Sovaldi in Canada will infringe its ‘191 patent and that our Canadian Patent No. 2,527,657, corresponding to our U.S. Patent No. 7,429,572 in the First Idenix Interference, is invalid.

We filed a similar legal action in Norway in the Oslo District Court seeking to invalidate Idenix's corresponding Norwegian patent. In September 2013, Idenix filed an invalidation action in the Norwegian proceedings against our Norwegian Patent No. 333700 patent, which corresponds to our U.S. Patent No. 7,429,572. The trial was held in November 2013. On March 21, 2014, the Norwegian court found all claims in the Idenix Norwegian patent to be invalid and upheld the validity of all claims in the challenged Gilead patent. Additionally, the Norwegian court ordered Idenix to pay us over $2.0 million in attorney fees as the losing party to the litigation. On April 30, 2014, Idenix appealed the March 21, 2014 decision to the Norwegian Court of Appeal. Idenix’s obligation to pay our attorneys’ fees will be stayed during the pendency of the appeal.

In December 2013, after receiving Gilead’s request to do so, the USPTO declared Interference No. 105,981 (Second Idenix Interference) between our pending U.S. Patent Application No. 11/854,218 and the ‘600 patent. The ‘600 patent includes claims directed to methods of treating HCV with nucleoside compounds similar to those which were involved in the First Idenix Interference. The Second Idenix Interference will determine who was first to invent the claimed methods of treating HCV. In the declaration of the Second Idenix Interference, the USPTO has initially designated Gilead as the junior party based upon the patent application filing dates appearing on the face of the ‘600 patent. We believe the Board’s determination in the First Idenix Interference that Idenix is not entitled the benefit of any of its earlier application filing dates, including the filing date of the ‘600 patent, will be equally applicable to the Second Idenix Interference. If we are correct, the Board may conclude that Gilead is the senior party in the Second Idenix Interference, consistent with the determination in the First Idenix Interference. In light of the Board’s conclusion in the First Idenix Interference that the application that led to the ‘600 patent does not teach how to make the claimed compounds, it is possible that the Board will make the same determination in the Second Idenix Interference and eliminate the need for the Board to address who was the first to invent the claimed methods of treating HCV. However, if the Board does consider who was the first to invent the claimed methods of treating HCV and ultimately concludes that Gilead was first, the claims in the ‘600 patent may be revoked. If the Board determines that Idenix was first to invent and is entitled to these patent claims, and it is determined in other proceedings that we have infringed those claims, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir and RG7128. Any determination by the Board can be appealed by either party to U.S. federal court.

In December 2013, Idenix, Universita Degli Studi di Cagliari (UDSG), Centre National de la Recherche Scientifique and L’Université Montpellier II sued us in U.S. District Court for the District of Delaware alleging that the commercialization of sofosbuvir will infringe the ‘600 patent and that an interference exists between the ‘600 patent and our U.S. Patent No. 8,415,322 patent. We believe that the claims in the ‘600 patent are invalid and that we have the sole right to commercialize sofosbuvir. However, if the court disagrees with our view and further determines that the ‘600 patent is infringed, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir. A decision by the District Court can be appealed by either party to the CAFC.

Massachusetts granted our request and transferred the Massachusetts litigation to the U.S. District Court for the District of Delaware. We believe that Idenix’s patents are invalid and would not be infringed by our commercialization of sofosbuvir and that we have the sole right to commercialize sofosbuvir. However, if the court disagrees with our view and determines that these patents are infringed, we may be required to obtain a license from and pay royalties to Idenix to commercialize sofosbuvir. A decision by the District Court can be appealed by either party to the CAFC.

On June 9, 2014, Merck and Idenix announced that the companies had entered into a definitive agreement under which Merck will acquire Idenix. The court has set a trial date of March 7, 2016 for this litigation. While this merger does not change our view of the merits of Merck's and Idenix's claims, Merck has greater resources than Idenix and may therefore choose to fund the litigation at higher levels than Idenix.

Litigation with Merck & Co., Inc. (Merck)

Litigation with AbbVie

Manufacturing problems, including at our third-party manufacturers and corporate partners, could cause inventory shortages and delay product shipments and regulatory approvals, which may adversely affect our results of operations.

In order to generate revenue from our products, we must be able to produce sufficient quantities of our products to satisfy demand. Many of our products are the result of complex manufacturing processes. The manufacturing process for pharmaceutical products is also highly regulated and regulators may shut down manufacturing facilities that they believe do not comply with regulations.

Our products are either manufactured at our own facilities or by third-party manufacturers or corporate partners. We depend on third parties to perform manufacturing activities effectively and on a timely basis for the majority of our solid dose products. In addition, Roche, either by itself or through third parties, is responsible for manufacturing Tamiflu. We, our third-party manufacturers and our corporate partners are subject to current Good Manufacturing Practices (GMP), which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards as defined by the FDA and the EMA. Similar regulations are in effect in other countries.

Our third-party manufacturers and corporate partners are independent entities who are subject to their own unique operational and financial risks which are out of our control. If we or any of these third-party manufacturers or corporate partners fail to perform as required, this could impair our ability to deliver our products on a timely basis or receive royalties or cause delays in our clinical trials and applications for regulatory approval. Further, we may have to write-off the costs of manufacturing any batch that fails to pass quality inspection. To the extent these risks materialize and affect their performance obligations to us, our financial results may be adversely affected.

In addition, we, our third-party manufacturers and our corporate partners may only be able to produce some of our products at one or a limited number of facilities and, therefore, have limited manufacturing capacity for certain products. For example, in 2012, due to unexpected delays both in qualifying two new external sites and with expanding Cayston manufacturing in San Dimas, we were unable to supply enough Cayston to fulfill our projected demand. From February through September 2012, we suspended access for patients with new prescriptions for Cayston, subject to certain exceptions where specific medical need existed. As a result of our inability to manufacture sufficient Cayston to meet demand, the amount of revenues we received from the sale of Cayston was reduced.

Our manufacturing operations are subject to routine inspections by regulatory agencies. For example, in April 2013, the FDA conducted an inspection of our Foster City facility and issued Form 483 Inspectional Observations, which noted deficiencies in documentation and validation of certain quality testing procedures and methods. As a result of the observations, the FDA delivered Complete Response Letters notifying us that it was unable to approve our NDAs for elvitegravir and cobicistat as standalone agents. In mid-October 2013, the FDA completed its sofosbuvir pre-approval inspection of our Foster City facility. Following that inspection, the FDA issued additional Form 483 Inspectional Observations citing deficiencies related to testing and reconciliation of stability samples, testing protocols, testing of shipping samples, and procedures for calibrating test equipment. We recently completed and filed our responses to these observations with the FDA. If we are unable to remedy the deficiencies cited by the FDA in these inspections, our currently marketed products and the timing of regulatory approval of products in development could be adversely affected. Further, there is risk that regulatory agencies in other countries where marketing applications are pending will undertake similar additional reviews or apply a heightened standard of review, which could delay the regulatory approvals for products in those countries. If approval of any of our product candidates, including LDV/SOF or elvitegravir and cobicistat, as standalone agents, were delayed or if production of our marketed products was interrupted, our anticipated revenues and our stock price would be adversely affected.

We may not be able to obtain materials or supplies necessary to conduct clinical trials or to manufacture and sell our products, which would limit our ability to generate revenues.

We need access to certain supplies and products to conduct our clinical trials and to manufacture our products. In light of the global economic downturn, we have had increased difficulty in purchasing certain of the raw materials used in our manufacturing processes. If we are unable to purchase sufficient quantities of these materials or find suitable alternate materials in a timely manner, our development efforts for our product candidates may be delayed or our ability to manufacture our products would be limited, which would limit our ability to generate revenues.

Suppliers of key components and materials must be named in an NDA filed with the FDA, EMA or other regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required. Even after a manufacturer is qualified by the regulatory authority, the manufacturer must continue to expend time, money and effort in the area of production and quality control to ensure full compliance with GMP. Manufacturers are subject to regular, periodic inspections by the regulatory authorities following initial approval. If, as a result of these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing operations. If the manufacturing operations of any of the single suppliers for our products are suspended, we may be unable to generate sufficient quantities of commercial or clinical supplies of product to meet market demand, which would in turn decrease our revenues and harm our business. In addition, if delivery of material from our suppliers were interrupted for any reason, we may be unable to ship certain of our products for commercial supply or to supply our products in development for clinical trials. In addition, some of our products and the materials that we utilize in our operations are made at only one facility. For example, we manufacture certain drug product intermediates utilized in AmBisome exclusively at our facilities in San Dimas, California. In the event of a disaster, including an earthquake, equipment failure or other difficulty, we

may be unable to replace this manufacturing capacity in a timely manner and may be unable to manufacture AmBisome to meet market needs.

In addition, we depend on a single supplier for high-quality cholesterol and active pharmaceutical ingredient, which is used in the manufacture of AmBisome. We also rely on a single source for the active pharmaceutical ingredient of Letairis. Astellas US LLC, which markets Lexiscan in the United States, is responsible for the commercial manufacture and supply of product in the United States and is dependent on a single supplier for the active pharmaceutical ingredient of Lexiscan. Problems with any of the single suppliers we depend on may negatively impact our development and commercialization efforts.

A significant portion of the raw materials and intermediates used to manufacture our HIV products (Sovaldi, Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva and Tybost) are supplied by Chinese-based companies. As a result, an international trade dispute between China and the United States or any other actions by the Chinese government that would limit or prevent Chinese companies from supplying these materials would adversely affect our ability to manufacture and supply our HIV products to meet market needs and have a material and adverse effect on our operating results.

Litigation with generic manufacturers has reduced and may continue to reduce our earnings. If we are unsuccessful in all or some of these lawsuits, some or all of our claims in the patents may be narrowed or invalidated and generic versions of our products could be launched prior to our patent expiry.

As part of the approval process for some of our products, the FDA granted us a New Chemical Entity (NCE) exclusivity period during which other manufacturers' applications for approval of generic versions of our product will not be approved. Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (ANDA), the application form typically used by manufacturers seeking approval of a generic drug. Current legal proceedings of significance with some of our generic manufacturers include:

Natco

In March 2011, we and F. Hoffmann-La Roche Ltd. (Roche) filed a lawsuit against Natco Pharma Ltd. (Natco) in U.S. District Court for the District of New Jersey for infringement of one of the patents associated with Tamiflu. In December 2012, the court issued a ruling in favor of Gilead and Roche, that our patent is not invalid for the reasons stated in Natco’s notice letter. Natco has appealed this decision to the CAFC. In April 2014, the CAFC issued a decision which will allow Natco’s patent invalidity challenge to proceed if the case is remanded to the District Court of New Jersey for a full trial on the merits. On June 30, 2014, we filed a petition for rehearing en banc with the CAFC.

Teva

Lupin

expiration of the four patents associated with tenofovir disoproxil fumarate in January 2018 (including pediatric exclusivity). As a result, in May 2014, the court granted Gilead and Lupin's Joint Motion for Order of Dismissal in our patent infringement lawsuit against Lupin for the tenofovir disoproxil fumarate patents. A trial relating to Lupin’s ANDA requesting permission to make a generic version of Truvada before the expiry of our patents covering emtricitabine is scheduled for December 2014.

We face credit risks from our Southern European customers that may adversely affect our results of operations.

Our European product sales to government-owned or supported customers in Southern Europe, specifically Greece, Italy, Portugal and Spain have historically been and continue to be subject to significant payment delays due to government funding and reimbursement practices. This has resulted and may continue to result in days sales outstanding being significantly higher in these countries due to the average length of time that accounts receivable remain outstanding. As of June 30, 2014 , our accounts receivable in these countries totaled approximately $652.4 million , of which $173.0 million were past due greater than 120 days and $53.6 million were past due greater than 365 days as follows:



	June 30, 2014
(In thousands)	Greater than 120 days past due		Greater than 365 days past due
Portugal	$	74,001	$	26,033
Italy	43,195		26,548
Spain	46,597		428
Greece	9,245		639
Total	$	173,038	$	53,648

Historically, receivable balances with certain publicly-owned hospitals accumulate over a period of time and are then subsequently settled as large lump sum payments. This pattern is also experienced by other pharmaceutical companies that sell directly to hospitals. If significant changes were to occur in the reimbursement practices of these European governments or if government funding becomes unavailable, we may not be able to collect on amounts due to us from these customers and our results of operations would be adversely affected.

Our revenues and gross margin could be reduced by imports from countries where our products are available at lower prices.

Prices for our products are based on local market economics and competition and sometimes differ from country to country. Our sales in countries with relatively higher prices may be reduced if products can be imported into those or other countries from lower price markets. There have been cases in which other pharmaceutical products were sold at steeply discounted prices in the developing world and then re-exported to European countries where they could be re-sold at much higher prices. If this happens with our products, particularly Truvada and Viread, which we have agreed to make available at substantially reduced prices to more than 125 countries participating in our Gilead Access Program, or Atripla, which Merck distributes at substantially reduced prices to HIV infected patients in developing countries under our 2006 agreement, our revenues would be adversely affected. In addition, we have established partnerships with Indian generic manufacturers to distribute high-quality, low-cost generic versions of tenofovir disoproxil fumarate to 112 developing world countries, including India. We expanded these agreements to include rights to Stribild, Tybost and Vitekta. We also entered into collaborations with certain Indian generic manufacturers to produce and distribute generic emtricitabine in the developing world, including single tablet regimens containing emtricitabine and fixed-dose combinations of emtricitabine co-formulated with our other HIV medicines. If generic versions of our medications under these licenses are then re-exported to the United States, Europe or other markets outside of these 112 countries, our revenues would be adversely affected. We also also committed to making Sovaldi available in the developing world at discounted prices and recently entered into an agreement to make Sovaldi available in

Egypt, a country that has among the highest HCV prevalence in the world. If the discounted Sovaldi is re-exported from these developing countries into the United States or other higher price markets, our revenues could be adversely affected.

In addition, purchases of our products in countries where our selling prices are relatively low for resale in countries in which our selling prices are relatively high may adversely impact our revenues and gross margin and may cause our sales to fluctuate from quarter to quarter. For example, in the European Union, we are required to permit products purchased in one country to be sold in another country. Purchases of our products in countries where our selling prices are relatively low for resale in countries in which our selling prices are relatively high can affect the inventory level held by our wholesalers and can cause the relative sales levels in the various countries to fluctuate from quarter to quarter and not reflect the actual consumer demand in any given quarter. These quarterly fluctuations may impact our earnings, which could adversely affect our stock price and harm our business.

Expensive litigation and government investigations have reduced and may continue to reduce our earnings.

We are involved in a number of litigation, investigation and other dispute-related matters that require us to expend substantial internal and financial resources. We expect these matters will continue to require a high level of internal and financial resources for the foreseeable future. These matters have reduced and will continue to reduce our earnings. Please see a description of our Litigation Regarding Sofosbuvir, Litigation with Generic Manufacturers and the Department of Justice investigation; in "Legal Proceedings" beginning on page 36. The outcome of the lawsuits above, or any other lawsuits that may be brought against us, the investigation or any other investigations that may be initiated, are inherently uncertain, and adverse developments or outcomes can result in significant expenses, monetary damages, penalties or injunctive relief against us that could significantly reduce our earnings and cash flows and harm our business.

In some countries, we may be required to grant compulsory licenses for our products or our patents may not be enforced.

In a number of developing countries, government officials and other interested groups have suggested that pharmaceutical companies should make drugs for HCV or HIV infection available at low cost. Alternatively, governments in those developing countries could require that we grant compulsory licenses to allow competitors to manufacture and sell their own versions of our products, thereby reducing our product sales. For example, there is growing attention on the availability of HCV therapies and some activists are advocating for the increased availability of HCV therapies through means including compulsory licenses. In the past, certain offices of the government of Brazil have expressed concern over the affordability of our HIV products and declared that they were considering issuing compulsory licenses to permit the manufacture of otherwise patented products for HIV infection, including Viread. In addition, concerns over the cost and availability of Tamiflu related to a potential avian flu pandemic and H1N1 influenza generated international discussions over compulsory licensing of our Tamiflu patents. For example, the Canadian government considered allowing Canadian manufacturers to manufacture and export the active ingredient in Tamiflu to eligible developing and least developed countries under Canada's Access to Medicines Regime. Furthermore, Roche issued voluntary licenses to permit third-party manufacturing of Tamiflu. For example, Roche granted a sublicense to Shanghai Pharmaceutical (Group) Co., Ltd. for China and a sublicense to India's Hetero Drugs Limited for India and certain developing countries. If compulsory licenses permit generic manufacturing to override our product patents for Sovaldi, our HIV products or Tamiflu, or if we are required to grant compulsory licenses for these products, it could reduce our earnings and cash flows and harm our business.

In addition, certain countries do not permit enforcement of our patents, and third-party manufacturers are able to sell generic versions of our products in those countries. For example, in July 2009, the Brazilian patent authority rejected our patent application for tenofovir disoproxil fumarate, the active pharmaceutical ingredient in Viread. This was the highest level of appeal available to us within the Brazilian patent authority. Because we do not currently have a patent in Brazil, the Brazilian government now purchases its supply of tenofovir disoproxil fumarate from generic manufacturers. Sales of generic versions of our products could significantly reduce our sales and adversely affect our results of operations, particularly if generic versions of our products are imported into territories where we have existing commercial sales.

Changes in royalty revenue disproportionately affect our pre-tax income, earnings per share and gross margins.

A portion of our revenues is derived from royalty revenues recognized from collaboration agreements with third parties. Royalty revenues impact our pre-tax income, earnings per share and gross margins disproportionately more than their contributions to our revenues. Any increase or decrease to our royalty revenue could be material and could significantly impact our operating results. For example, Roche's Tamiflu sales have unpredictable variability due to their strong relationship with seasonal influenza and global pandemic planning efforts. During periods when our royalty revenue from Tamiflu increase, we will see a disproportionate increase in our pre-tax income, earnings per share and gross margins. Similarly, during periods when our royalty from Tamiflu decrease, we will see a disproportionate decrease in our pre-tax income, earnings per share and gross margins.

We may face significant liability resulting from our products that may not be covered by insurance and successful claims could materially reduce our earnings.

The testing, manufacturing, marketing and use of our commercial products, as well as product candidates in development, involve substantial risk of product liability claims. These claims may be made directly by consumers, healthcare providers, pharmaceutical companies or others. In recent years, coverage and availability of cost-effective product liability insurance has decreased, so we may be unable to maintain sufficient coverage for product liabilities that may arise. In addition, the cost to defend lawsuits or pay damages for product liability claims may exceed our coverage. If we are unable to maintain adequate coverage or if claims exceed our coverage, our financial condition and our ability to clinically test our product candidates and market our products will be adversely impacted. In addition, negative publicity associated with any claims, regardless of their merit, may decrease the future demand for our products and impair our financial condition.

Business disruptions from natural or man-made disasters may harm our future revenues.

Our worldwide operations could be subject to business interruptions stemming from natural or man-made disasters for which we may be self-insured. Our corporate headquarters and Fremont locations, which together house a majority of our R&D activities, and our San Dimas and Oceanside manufacturing facilities are located in California, a seismically active region. As we do not carry earthquake insurance and significant recovery time could be required to resume operations, our financial condition and operating results could be materially adversely affected in the event of a major earthquake.

Changes in our effective income tax rate could reduce our earnings.

Various factors may have favorable or unfavorable effects on our income tax rate. These factors include, but are not limited to, interpretations of existing tax laws, changes in tax laws and rates, our portion of the non-tax deductible pharmaceutical excise tax, the accounting for stock options and other share-based payments, mergers and acquisitions, changes in forecasted demand for our HCV products, the ability to manufacture product in our Cork, Ireland facility, the amortization of certain acquisition related intangibles for which we receive no tax benefit, expiration of the federal research tax credit, future levels of R&D spending, changes in accounting standards, changes in the mix of earnings in the various tax jurisdictions in which we operate, changes in overall levels of pre-tax earnings and resolution of federal, state and foreign income tax audits. The impact on our income tax provision resulting from the above mentioned factors may be significant and could have a negative impact on our net income.

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for the 2010, 2011 and 2012 tax years and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. Resolution of one or more of these exposures in any reporting period could have a material impact on the results of operations for that period.

If we fail to attract and retain highly qualified personnel, we may be unable to successfully develop new product candidates, conduct our clinical trials and commercialize our product candidates.

Our future success will depend in large part on our continued ability to attract and retain highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, governmental regulation and commercialization. We face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations. Competition for qualified personnel in the biopharmaceutical field is intense, and there is a limited pool of qualified potential employees to recruit. We may not be able to attract and retain quality personnel on acceptable terms. If we are unsuccessful in our recruitment and retention efforts, our business may be harmed.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

During the three months ended June 30, 2014 , we repurchased a total of $1.20 billion or 15.2 million shares of common stock under our January 2011 stock repurchase program (2011 Program). As of June 30, 2014 , we had repurchased $3.30 billion of our common stock under the 2011 Program and had $1.70 billion remaining in the program, which is expected to be completed by September 2014. In May 2014, our Board of Directors authorized a new stock repurchase program of up to $5.00 billion of our common stock.

The table below summarizes our stock repurchase activity for the three months ended June 30, 2014 (in thousands, except per share amounts):



	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	⁽¹⁾	Maximum Fair Value of Shares that May Yet Be Purchased Under the Program		⁽¹⁾
April 1 – April 30, 2014	3,010		$	71.95	2,982		$	2,683,121
May 1 – May 31, 2014	6,355		$	80.43	6,251		$	2,180,247
June 1 – June 30, 2014	5,975		$	81.16	5,943		$	1,697,894
Total	15,340	⁽²⁾	$	79.05	15,176	⁽²⁾


⁽¹⁾	In January 2011, we announced that our Board authorized a $5.00 billion stock repurchase program, which expires in September 2014.


⁽²⁾	The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced programs is due to the equivalent value in shares of common stock withheld by us from restricted stock awards in order to satisfy applicable tax withholding obligations.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

Not applicable.


ITEM 6.	EXHIBITS



Exhibit Footnote		Exhibit Number	Description of Document
(1)	1.1		Underwriting Agreement, dated March 4, 2014, among Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the several underwriters listed in Schedule 1 thereto

†(2)	2.1		Agreement and Plan of Merger among Registrant, Merger Sub and Pharmasset, Inc., dated as of November 21, 2011

*(3)	3.1		Restated Certificate of Incorporation of Registrant

*(4)	3.2		Amended and Restated Bylaws of Registrant, as amended and restated on May 7, 2014

	4.1		Reference is made to Exhibit 3.1, Exhibit 3.2 and Exhibit 3.3

*(5)	4.2		Indenture related to the Convertible Senior Notes due 2013 (2013 Notes), between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.625% Convertible Senior Note due 2013), dated April 25, 2006

*(6)	4.3		Indenture related to the Convertible Senior Notes due 2014 (2014 Notes), between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.00% Convertible Senior Note due 2014), dated July 30, 2010

*(6)	4.4		Indenture related to the Convertible Senior Notes due 2016 (2016 Notes), between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.625% Convertible Senior Note due 2016), dated July 30, 2010

*(7)	4.5		Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee

*(7)	4.6		First Supplemental Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including form of Senior Notes)

*(8)	4.7		Second Supplemental Indenture related to Senior Notes, dated as of December 13, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2014 Note, Form of 2016 Note, Form of 2021 Note, Form of 2041 Note)

(1)	4.8		Third Supplemental Indenture related to Senior Notes, dated as of March 7, 2014, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2019 Note, Form of 2024 Note, Form of 2044 Note)

*(9)	10.1		Confirmation of OTC Convertible Note Hedge related to 2013 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

*(9)	10.2		Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2013

*(10)	10.3		Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.

*(10)	10.4		Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(10)	10.5		Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.

*(10)	10.6		Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(10)	10.7		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

*(10)	10.8		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

*(10)	10.9		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

*(10)	10.10		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

*(11)	10.11		Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.




*(11)	10.12	Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.13	Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.14	Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.15	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

*(11)	10.16	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

*(11)	10.17	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

*(11)	10.18	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

*(11)	10.19	Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.20	Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.21	Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.22	Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.23	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.24	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.25	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.26	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(12)	10.27	5-Year Revolving Credit Facility Credit Agreement among Registrant and Gilead Biopharmaceutics Ireland Corporation, as Borrowers, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012

*(12)	10.28	Parent Guaranty Agreement (5-Year Revolving Credit Facility), dated as of January 12, 2012, by Registrant

*(13)	10.29	Gilead Sciences, Inc. 1991 Stock Option Plan, as amended through January 29, 2003

*(14)	10.30	Form of option agreements used under the 1991 Stock Option Plan

*(13)	10.31	Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan, as amended through January 30, 2002

*(15)	10.32	Form of option agreement used under the Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan

*(3)	10.33	Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended through May 8, 2013

*(16)	10.34	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants prior to February 2008)

*(17)	10.35	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants made February 2008 through April 2009)

*(18)	10.36	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in May 2009)



*(19)	10.37	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in February 2010)

*(20)	10.38	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for 2011 and subsequent year grants)

*(17)	10.39	Form of non-employee director stock option agreement used under 2004 Equity Incentive Plan (for grants prior to 2008)

*(17)	10.40	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for initial grants made in 2008)

*(17)	10.41	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2008 and through May 2012)

*(18)	10.42	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants commencing in May 2009 and through May 2012)

*(21)	10.43	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2013)

*(21)	10.44	Form of non-employee director option agreement (non-U.S.) used under 2004 Equity Incentive Plan (for annual grants made in May 2013)

*	10.45	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2014)

*(22)	10.46	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors in May 2012)

*(18)	10.47	Form of restricted stock award agreement used under 2004 Equity Incentive Plan (for annual grants to certain non-employee directors prior to May 2012)

*(21)	10.48	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2013)

*	10.49	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2014)

*(21)	10.50	Form of restricted stock unit issuance agreement (non-U.S.) used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2013)

*(18)	10.51	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2009)

*(19)	10.52	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2010)

*(20)	10.53	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2011)

*(23)	10.54	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2012)

*(24)	10.55	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for TSR Goals in 2013 and 2014)

*(24)	10.56	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for Revenue Goals in 2013 and 2014)

*(25)	10.57	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made prior to May 2009)

*(18)	10.58	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers commencing in May 2009)

*(26)	10.59	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in November 2009)

*(20)	10.60	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in 2011)

*(21)	10.61	Gilead Sciences, Inc. Employee Stock Purchase Plan, amended and restated through May 8, 2013



*(27)	10.62	Gilead Sciences, Inc. Deferred Compensation Plan-Basic Plan Document

*(26)	10.63	Gilead Sciences, Inc. Deferred Compensation Plan-Adoption Agreement

*(27)	10.64	Addendum to the Gilead Sciences, Inc. Deferred Compensation Plan

*(28)	10.65	Gilead Sciences, Inc. 2005 Deferred Compensation Plan, as amended and restated on October 23, 2008

*(23)	10.66	Gilead Sciences, Inc. Severance Plan, as amended on January 26, 2012

*(16)	10.67	Gilead Sciences, Inc. Corporate Bonus Plan

*(29)	10.68	Amended and Restated Gilead Sciences, Inc. Code Section 162(m) Bonus Plan

*(30)	10.69	2014 Base Salaries for the Named Executive Officers

*(31)	10.70	Offer Letter dated April 16, 2008 between Registrant and Robin Washington

*(14)	10.71	Form of Indemnity Agreement entered into between Registrant and its directors and executive officers

*(13)	10.72	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

*(19)	10.73	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised in September 2006)

(32)	10.74	Amended and Restated Collaboration Agreement by and among Registrant, Gilead Holdings, LLC, Bristol-Myers Squibb Company, E.R. Squibb & Sons, L.L.C., and Bristol-Myers Squibb & Gilead Sciences, LLC, dated September 28, 2006

(17)	10.75	Commercialization Agreement by and between Gilead Sciences Limited and Bristol-Myers Squibb Company, dated December 10, 2007

(33)	10.76	Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement), the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement) and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)

(34)	10.77	Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000 amending the 1991 License Agreement and the December 1992 License Agreement

(32)	10.78	Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006 amending the October 1992 License Agreement and the December 1992 License Agreement

+(35)	10.79	Seventh Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant dated July 1, 2013 amending the October 1992 License Agreement and the December 1992 License Agreement

(32)	10.80	Development and License Agreement among Registrant and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., dated September 27, 1996

(36)	10.81	First Amendment and Supplement dated November 15, 2005 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(37)	10.82	Second Amendment dated December 22, 2011 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

+(38)	10.83	Third Amendment dated October 5, 2012 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(39)	10.84	Exclusive License Agreement between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

(40)	10.85	Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

(40)	10.86	Amended and Restated License Agreement between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005

(41)	10.87	License Agreement between Japan Tobacco Inc. and Registrant, dated March 22, 2005



(42)	10.88	First Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 19, 2005

(42)	10.89	Second Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 17, 2010

(42)	10.90	Third Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(42)	10.91	Fourth Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(43)	10.92	Fifth Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated October 10, 2013

(44)	10.93	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Deutschland Holding GmbH dated October 8, 2001

+(45)	10.94	License Agreement between Registrant (as successor to Myogen, Inc.) and Glaxo Group Limited, dated March 3, 2006

(44)	10.95	License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated March 27, 1996

(46)	10.96	First Amendment to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated July 3, 1997

(46)	10.97	Amendment No. 2 to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated November 30, 1999

(47)	10.98	Amendment No. 4 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated June 20, 2006

(37)	10.99	Amendment No. 5 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated December 22, 2011

(48)	10.100	License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated July 16, 2009

(42)	10.101	Second Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated July 1, 2011

+	10.102	Third Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated June 18, 2014

(24)	10.103	Amended and Restated Second Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated February 7, 2013

(49)	10.104	Master Clinical and Commercial Supply Agreement between Gilead World Markets, Limited, Registrant and Patheon Inc., dated January 1, 2003

(36)	10.105	Restated and Amended Toll Manufacturing Agreement between Gilead Sciences Limited, Registrant and Takeda GmbH (formerly Nycomed GmbH and Altana Pharma Oranienburg GmbH), dated November 7, 2005

(50)	10.106	Purchase and Sale Agreement and Joint Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated July 18, 2012

(38)	10.107	Amendment No. 1, dated October 30, 2012, to the Purchase and Sale Agreement and Joint Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated July 18, 2012

	31.1	Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	31.2	Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	32.1**	Certifications of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)

	101***	The following materials from Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets (unaudited), (ii) Condensed Consolidated Statements of Income (unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited) and (v) Notes to Condensed Consolidated Financial Statements (unaudited).

(1) Filed as an exhibit to Registrant's Current Report on Form 8-K filed on March 7, 2014, and incorporated herein by reference.


(2)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on November 25, 2011, and incorporated herein by reference.


(3)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 7, 2014, and incorporated herein by reference.


(4)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 17, 2011, and incorporated herein by reference.


(5)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 25, 2006, and incorporated herein by reference.


(6)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on August 2, 2010, and incorporated herein by reference.


(7)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 1, 2011, and incorporated herein by reference.


(8)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on December 13, 2011, and incorporated herein by reference.


(9)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(10)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, and incorporated herein by reference.


(11)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, and incorporated herein by reference.


(12)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on January 17, 2012, and incorporated herein by reference.


(13)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-102912) filed on January 31, 2003, and incorporated herein by reference.


(14)	Filed as an exhibit to Registrant's Registration Statement on Form S-1 (No. 33-55680), as amended, and incorporated herein by reference.


(15)	Filed as an exhibit to Registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998, and incorporated herein by reference.


(16)	Filed as an exhibit to Registrant's Current Report on Form 8-K/A filed on February 22, 2006, and incorporated herein by reference.


(17)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.


(18)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.


(19)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.


(20)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and incorporated herein by reference.


(21)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and incorporated herein by reference


(22)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.


(23)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, and incorporated herein by reference.


(24)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, and incorporated herein by reference.


(25)	Filed as an exhibit to Registrant's Current Report on Form 8-K first filed on December 19, 2007, and incorporated herein by reference.


(26)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, and incorporated herein by reference.


(27)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, and incorporated herein by reference.


(28)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and incorporated herein by reference.


(29)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 13, 2013, and incorporated herein by reference.


(30)	Information is included in Registrant's Current Report on Form 8-K filed on January 29, 2014, and incorporated herein by reference.


(31)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference.


(32)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and incorporated herein by reference.


(33)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and incorporated herein by reference.


(34)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and incorporated herein by reference.


(35)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and incorporated herein by reference.


(36)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and incorporated herein by reference.


(37)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and incorporated herein by reference.


(38)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.


(39)	Filed as an exhibit to Triangle Pharmaceuticals, Inc.'s Quarterly Report on Form 10-Q/A filed on November 3, 1999, and incorporated herein by reference.


(40)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by reference.


(41)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated herein by reference.


(42)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.


(43)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and incorporated herein by reference.


(44)	Filed as an exhibit to Myogen, Inc.'s Registration Statement on Form S-1 (No. 333-108301), as amended, originally filed on August 28, 2003, and incorporated herein by reference.


(45)	Filed as an exhibit to Myogen, Inc.'s Quarterly Report on Form 10-Q filed on May 9, 2006, and incorporated herein by reference.


(46)	Filed as an exhibit to CV Therapeutics, Inc.'s Registration Statement on Form S-3 (No. 333-59318), as amended, originally filed on April 20, 2001, and incorporated herein by reference.


(47)	Filed as an exhibit to CV Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(48)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, and incorporated herein by reference.


(49)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and incorporated herein by reference.


(50)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference.

†

The Agreement and Plan of Merger (the Pharmasset Merger Agreement) contains representations and warranties of Registrant, Merger Sub and Pharmasset, Inc. made solely to each other as of specific dates. Those representations and warranties were made solely for purposes of the Pharmasset Merger Agreement and may be subject to important qualifications and limitations agreed to by Registrant, Merger Sub and Pharmasset, Inc. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a standard of materiality provided for in the Pharmasset Merger Agreement and have been used for the purpose of allocating risk among Registrant, Merger Sub and Pharmasset, Inc. rather than establishing matters as facts.


*	Management contract or compensatory plan or arrangement.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.


***	XBRL information is filed herewith.


+	Certain confidential portions of this Exhibit were omitted by means of marking such portions with an asterisk (the Mark). This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the Mark pursuant to Registrant's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		GILEAD SCIENCES, INC.
		(Registrant)

Date:	August 4, 2014	/s/ J OHN C. M ARTIN
		John C. Martin, Ph.D. Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	August 4, 2014	/s/ R OBIN L. W ASHINGTON
		Robin L. Washington Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit Index



Exhibit Footnote		Exhibit Number	Description of Document
(1)	1.1		Underwriting Agreement, dated March 4, 2014, among Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the several underwriters listed in Schedule 1 thereto

†(2)	2.1		Agreement and Plan of Merger among Registrant, Merger Sub and Pharmasset, Inc., dated as of November 21, 2011

*(3)	3.1		Restated Certificate of Incorporation of Registrant

*(4)	3.2		Amended and Restated Bylaws of Registrant, as amended and restated on May 7, 2014

	4.1		Reference is made to Exhibit 3.1, Exhibit 3.2 and Exhibit 3.3

*(5)	4.2		Indenture related to the Convertible Senior Notes due 2013 (2013 Notes), between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.625% Convertible Senior Note due 2013), dated April 25, 2006

*(6)	4.3		Indenture related to the Convertible Senior Notes due 2014 (2014 Notes), between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.00% Convertible Senior Note due 2014), dated July 30, 2010

*(6)	4.4		Indenture related to the Convertible Senior Notes due 2016 (2016 Notes), between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.625% Convertible Senior Note due 2016), dated July 30, 2010

*(7)	4.5		Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee

*(7)	4.6		First Supplemental Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including form of Senior Notes)

*(8)	4.7		Second Supplemental Indenture related to Senior Notes, dated as of December 13, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2014 Note, Form of 2016 Note, Form of 2021 Note, Form of 2041 Note)

(1)	4.8		Third Supplemental Indenture related to Senior Notes, dated as of March 7, 2014, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2019 Note, Form of 2024 Note, Form of 2044 Note)

*(9)	10.1		Confirmation of OTC Convertible Note Hedge related to 2013 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

*(9)	10.2		Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2013

*(10)	10.3		Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.

*(10)	10.4		Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(10)	10.5		Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.

*(10)	10.6		Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(10)	10.7		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

*(10)	10.8		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

*(10)	10.9		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

*(10)	10.10		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

*(11)	10.11		Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.




*(11)	10.12	Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.13	Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.14	Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.15	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

*(11)	10.16	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

*(11)	10.17	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

*(11)	10.18	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

*(11)	10.19	Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.20	Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.21	Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.22	Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.23	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.24	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(11)	10.25	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

*(11)	10.26	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

*(12)	10.27	5-Year Revolving Credit Facility Credit Agreement among Registrant and Gilead Biopharmaceutics Ireland Corporation, as Borrowers, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012

*(12)	10.28	Parent Guaranty Agreement (5-Year Revolving Credit Facility), dated as of January 12, 2012, by Registrant

*(13)	10.29	Gilead Sciences, Inc. 1991 Stock Option Plan, as amended through January 29, 2003

*(14)	10.30	Form of option agreements used under the 1991 Stock Option Plan

*(13)	10.31	Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan, as amended through January 30, 2002

*(15)	10.32	Form of option agreement used under the Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan

*(3)	10.33	Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended through May 8, 2013

*(16)	10.34	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants prior to February 2008)

*(17)	10.35	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants made February 2008 through April 2009)

*(18)	10.36	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in May 2009)



*(19)	10.37	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in February 2010)

*(20)	10.38	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for 2011 and subsequent year grants)

*(17)	10.39	Form of non-employee director stock option agreement used under 2004 Equity Incentive Plan (for grants prior to 2008)

*(17)	10.40	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for initial grants made in 2008)

*(17)	10.41	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2008 and through May 2012)

*(18)	10.42	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants commencing in May 2009 and through May 2012)

*(21)	10.43	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2013)

*(21)	10.44	Form of non-employee director option agreement (non-U.S.) used under 2004 Equity Incentive Plan (for annual grants made in May 2013)

*	10.45	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2014)

*(22)	10.46	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors in May 2012)

*(18)	10.47	Form of restricted stock award agreement used under 2004 Equity Incentive Plan (for annual grants to certain non-employee directors prior to May 2012)

*(21)	10.48	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2013)

*	10.49	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2014)

*(21)	10.50	Form of restricted stock unit issuance agreement (non-U.S.) used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2013)

*(18)	10.51	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2009)

*(19)	10.52	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2010)

*(20)	10.53	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2011)

*(23)	10.54	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2012)

*(24)	10.55	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for TSR Goals in 2013 and 2014)

*(24)	10.56	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for Revenue Goals in 2013 and 2014)

*(25)	10.57	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made prior to May 2009)

*(18)	10.58	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers commencing in May 2009)

*(26)	10.59	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in November 2009)

*(20)	10.60	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in 2011)

*(21)	10.61	Gilead Sciences, Inc. Employee Stock Purchase Plan, amended and restated through May 8, 2013



*(27)	10.62	Gilead Sciences, Inc. Deferred Compensation Plan-Basic Plan Document

*(26)	10.63	Gilead Sciences, Inc. Deferred Compensation Plan-Adoption Agreement

*(27)	10.64	Addendum to the Gilead Sciences, Inc. Deferred Compensation Plan

*(28)	10.65	Gilead Sciences, Inc. 2005 Deferred Compensation Plan, as amended and restated on October 23, 2008

*(23)	10.66	Gilead Sciences, Inc. Severance Plan, as amended on January 26, 2012

*(16)	10.67	Gilead Sciences, Inc. Corporate Bonus Plan

*(29)	10.68	Amended and Restated Gilead Sciences, Inc. Code Section 162(m) Bonus Plan

*(30)	10.69	2014 Base Salaries for the Named Executive Officers

*(31)	10.70	Offer Letter dated April 16, 2008 between Registrant and Robin Washington

*(14)	10.71	Form of Indemnity Agreement entered into between Registrant and its directors and executive officers

*(13)	10.72	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

*(19)	10.73	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised in September 2006)

(32)	10.74	Amended and Restated Collaboration Agreement by and among Registrant, Gilead Holdings, LLC, Bristol-Myers Squibb Company, E.R. Squibb & Sons, L.L.C., and Bristol-Myers Squibb & Gilead Sciences, LLC, dated September 28, 2006

(17)	10.75	Commercialization Agreement by and between Gilead Sciences Limited and Bristol-Myers Squibb Company, dated December 10, 2007

(33)	10.76	Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement), the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement) and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)

(34)	10.77	Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000 amending the 1991 License Agreement and the December 1992 License Agreement

(32)	10.78	Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006 amending the October 1992 License Agreement and the December 1992 License Agreement

+(35)	10.79	Seventh Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant dated July 1, 2013 amending the October 1992 License Agreement and the December 1992 License Agreement

(32)	10.80	Development and License Agreement among Registrant and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., dated September 27, 1996

(36)	10.81	First Amendment and Supplement dated November 15, 2005 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(37)	10.82	Second Amendment dated December 22, 2011 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

+(38)	10.83	Third Amendment dated October 5, 2012 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(39)	10.84	Exclusive License Agreement between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

(40)	10.85	Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

(40)	10.86	Amended and Restated License Agreement between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005

(41)	10.87	License Agreement between Japan Tobacco Inc. and Registrant, dated March 22, 2005



(42)	10.88	First Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 19, 2005

(42)	10.89	Second Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 17, 2010

(42)	10.90	Third Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(42)	10.91	Fourth Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(43)	10.92	Fifth Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated October 10, 2013

(44)	10.93	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Deutschland Holding GmbH dated October 8, 2001

+(45)	10.94	License Agreement between Registrant (as successor to Myogen, Inc.) and Glaxo Group Limited, dated March 3, 2006

(44)	10.95	License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated March 27, 1996

(46)	10.96	First Amendment to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated July 3, 1997

(46)	10.97	Amendment No. 2 to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated November 30, 1999

(47)	10.98	Amendment No. 4 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated June 20, 2006

(37)	10.99	Amendment No. 5 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated December 22, 2011

(48)	10.100	License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated July 16, 2009

(42)	10.101	Second Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated July 1, 2011

+	10.102	Third Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated June 18, 2014

(24)	10.103	Amended and Restated Second Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Janssen R&D Ireland (formerly Tibotec Pharmaceuticals), dated February 7, 2013

(49)	10.104	Master Clinical and Commercial Supply Agreement between Gilead World Markets, Limited, Registrant and Patheon Inc., dated January 1, 2003

(36)	10.105	Restated and Amended Toll Manufacturing Agreement between Gilead Sciences Limited, Registrant and Takeda GmbH (formerly Nycomed GmbH and Altana Pharma Oranienburg GmbH), dated November 7, 2005

(50)	10.106	Purchase and Sale Agreement and Joint Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated July 18, 2012

(38)	10.107	Amendment No. 1, dated October 30, 2012, to the Purchase and Sale Agreement and Joint Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated July 18, 2012

	31.1	Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	31.2	Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	32.1**	Certifications of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)

	101***	The following materials from Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets (unaudited), (ii) Condensed Consolidated Statements of Income (unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited) and (v) Notes to Condensed Consolidated Financial Statements (unaudited).

(1) Filed as an exhibit to Registrant's Current Report on Form 8-K filed on March 7, 2014, and incorporated herein by reference.


(2)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on November 25, 2011, and incorporated herein by reference.


(3)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 7, 2014, and incorporated herein by reference.


(4)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 17, 2011, and incorporated herein by reference.


(5)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 25, 2006, and incorporated herein by reference.


(6)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on August 2, 2010, and incorporated herein by reference.


(7)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 1, 2011, and incorporated herein by reference.


(8)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on December 13, 2011, and incorporated herein by reference.


(9)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(10)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, and incorporated herein by reference.


(11)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, and incorporated herein by reference.


(12)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on January 17, 2012, and incorporated herein by reference.


(13)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-102912) filed on January 31, 2003, and incorporated herein by reference.


(14)	Filed as an exhibit to Registrant's Registration Statement on Form S-1 (No. 33-55680), as amended, and incorporated herein by reference.


(15)	Filed as an exhibit to Registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998, and incorporated herein by reference.


(16)	Filed as an exhibit to Registrant's Current Report on Form 8-K/A filed on February 22, 2006, and incorporated herein by reference.


(17)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.


(18)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.


(19)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference.


(20)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and incorporated herein by reference.


(21)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and incorporated herein by reference


(22)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.


(23)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, and incorporated herein by reference.


(24)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, and incorporated herein by reference.


(25)	Filed as an exhibit to Registrant's Current Report on Form 8-K first filed on December 19, 2007, and incorporated herein by reference.


(26)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, and incorporated herein by reference.


(27)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, and incorporated herein by reference.


(28)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and incorporated herein by reference.


(29)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 13, 2013, and incorporated herein by reference.


(30)	Information is included in Registrant's Current Report on Form 8-K filed on January 29, 2014, and incorporated herein by reference.


(31)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference.


(32)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and incorporated herein by reference.


(33)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and incorporated herein by reference.


(34)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and incorporated herein by reference.


(35)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and incorporated herein by reference.


(36)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and incorporated herein by reference.


(37)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and incorporated herein by reference.


(38)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.


(39)	Filed as an exhibit to Triangle Pharmaceuticals, Inc.'s Quarterly Report on Form 10-Q/A filed on November 3, 1999, and incorporated herein by reference.


(40)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by reference.


(41)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated herein by reference.


(42)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.


(43)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and incorporated herein by reference.


(44)	Filed as an exhibit to Myogen, Inc.'s Registration Statement on Form S-1 (No. 333-108301), as amended, originally filed on August 28, 2003, and incorporated herein by reference.


(45)	Filed as an exhibit to Myogen, Inc.'s Quarterly Report on Form 10-Q filed on May 9, 2006, and incorporated herein by reference.


(46)	Filed as an exhibit to CV Therapeutics, Inc.'s Registration Statement on Form S-3 (No. 333-59318), as amended, originally filed on April 20, 2001, and incorporated herein by reference.


(47)	Filed as an exhibit to CV Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(48)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, and incorporated herein by reference.


(49)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and incorporated herein by reference.


(50)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference.

†


*	Management contract or compensatory plan or arrangement.


***	XBRL information is filed herewith.


+	Certain confidential portions of this Exhibit were omitted by means of marking such portions with an asterisk (the Mark). This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the Mark pursuant to Registrant's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit 10.45

NON-EMPLOYEE DIRECTOR AWARD

GILEAD SCIENCES, INC.

STOCK OPTION AGREEMENT

RECITALS

A. Optionee is to render valuable services to the Corporation as a non-employee Director and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee in his or her capacity as a non-employee Director.

B. All capitalized terms used in this Agreement shall have the meaning assigned to them in the attached Appendix A.

NOW, THEREFORE , the Corporation hereby grants an option to Optionee upon the following terms and conditions:

1. Grant of Option . The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase the Option Shares under the Plan. The number of Option Shares purchasable under the option, the applicable vesting schedule for the option, the Exercise Price per share and the remaining terms and conditions governing the option shall be as set forth in this Agreement.

AWARD SUMMARY



Optionee:	«FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»
Grant Date:	«OPTION_DATE»
Exercise Price:	«OPTION_PRICE» per share
Number of Option Shares:	«SHARES_GRANTED» shares of Common Stock
Expiration Date:	«EXPIRATION_DATE_PERIOD_1»*
Type of Option:	Non-Statutory Stock Option
Exercise Schedule:	The option will vest and become exercisable for the Option Shares in four (4) successive equal quarterly installments upon Optionee’s completion of each quarter of Continuous Service over the one (1) year period measured from the Grant Date; provided, however, that if the next regular annual stockholders meeting following the Grant Date occurs prior to the quarterly vesting date of the last installment, such last installment shall instead vest on the day immediately preceding such stockholders meeting provided Optionee remains in Continuous Service through such day.

* The option will in no event remain exercisable beyond the close of business on the last business day immediately prior to the Expiration Date.

2. Option Term . The term of the option shall commence on the Grant Date and continue to be in effect until the close of business on the last business day prior to the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6 below.

3. Limited Transferability . The following provisions shall govern the transferability of the option:

(a) The option may be assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s Immediate Family or to a trust established for the Optionee and/or one or more Immediate Family members, provided such assignment constitutes a gratuitous transfer by the Optionee for which no consideration is directly or indirectly received. The assigned portion may only be exercised by the person who acquires a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents to be executed by the Optionee and the assignee as the Corporation may deem appropriate.

(b) Optionee may also designate one or more persons as the beneficiary or beneficiaries of the option. Should Optionee die while holding the option, then the option shall, in accordance with such designation, be automatically transferred to such beneficiary or beneficiaries upon the Optionee’s death. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which the option may, pursuant to Paragraph 5 below, be exercised following Optionee’s death.

4. Dates of Exercise . The option shall become exercisable for the Option Shares in a series of installments over Optionee’s period of Continuous Service in accordance with the Exercise Schedule set forth in Paragraph 1 above. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until (i) the close of business on the last business day prior to the Expiration Date or (ii) the sooner termination of the option term under Paragraph 5 or 6 below.

5. Cessation of Service . The option term specified in Paragraph 2 above shall terminate (and the option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(a) Except as otherwise expressly provided in subparagraphs (b) through (d) of this Paragraph 5, should Optionee cease to remain in Continuous Service for any reason while the option is outstanding, then Optionee shall have until the close of business on the last business day prior to the expiration of the three-(3) year period measured from the date of such cessation of Continuous Service during which to exercise the option for any or all of the Option Shares for which the option is at the time of such cessation of Continuous Service vested and exercisable, but in no event shall the option be exercisable at any time after the close of business on the last business day prior to the Expiration Date.

(b) Should Optionee’s Continuous Service terminate by reason of his or her death while the option is outstanding, then the option may be exercised for any or all of the Option Shares at the time subject to the option by (i) the personal representative of Optionee’s estate, (ii) the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance following Optionee’s death, or (iii) the person or persons to whom the option is transferred during Optionee’s lifetime pursuant to a permitted transfer under Paragraph 3(a) above, as the case may be. However, if Optionee dies while holding the option and has a beneficiary designation in effect for the option at the time of his or her death, then the designated beneficiary or beneficiaries shall have the exclusive right to exercise the option following Optionee’s death. Any such right to exercise the option shall lapse, and the option shall cease to be outstanding, upon the close of business on the last business day prior to the earlier of (i) the expiration of the three-(3) year period measured from the date of Optionee’s death or (ii) the Expiration Date. Upon the expiration of such limited exercise period, the option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised.

(c) The applicable period of post-service exercisability in effect pursuant to the foregoing provisions of this Paragraph 5 shall automatically be extended by an additional period of time equal in duration to any interval within such post-service exercise period during which the exercise of the option or the immediate sale of the Option Shares acquired under the option cannot be effected in compliance with applicable federal, state and foreign securities laws, but in no event shall such an extension result in the continuation of the option beyond the close of business on the last business day prior to the Expiration Date.

(d) Should Optionee’s Continuous Service be terminated for Cause, or should Optionee engage in any other conduct, while in such service or following cessation of Continuous Service, that is materially detrimental to the business or affairs of the Corporation (or any Related Entity), as determined in the sole discretion of the Administrator, then the option shall terminate immediately and cease to be outstanding.

(e) For purposes of the foregoing provisions of this Paragraph 5, Optionee shall not be deemed to cease Continuous Service if Optionee continues to serve the Corporation as a Director Emeritus immediately following his or her cessation of service as a Board member without an intervening break in Continuous Service.

(f) During the limited period of post-service exercisability provided under this Paragraph 5, the option may not be exercised in the aggregate for more than the number of Option Shares for which the option is at the time vested and exercisable. Except to the extent (if any) specifically authorized by the Administrator pursuant to an express written agreement with Optionee, the option shall not vest or become exercisable for any additional Option Shares, whether pursuant to the exercise/vesting schedule set forth in Paragraph 1 above or the special vesting acceleration provisions of Paragraph 6 below, following Optionee’s cessation of Continuous Service. Upon the expiration of such limited exercise period or (if earlier) upon the close of business on the last business day prior to the Expiration Date, the option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised.

6. Change in Control .

(a) Should Optionee remain in Continuous Service until the effective date of a Change in Control, then the option, to the extent outstanding at the time but not otherwise fully exercisable, shall automatically accelerate so that the option shall, immediately prior to the effective date of such Change in Control, become exercisable for all of the Option Shares at the time subject to the option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock.

(b) Immediately following the consummation of a Change in Control transaction, the option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

(c) If the option is assumed in connection with a Change in Control or otherwise continued in effect, then the option shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities into which the shares of Common Stock subject to the option would have been converted in consummation of such Change in Control had those shares actually been outstanding at the time. Appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the option but subject to the Administrator’s approval, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control, provided such common stock is readily tradable on an established U.S. securities exchange or market.

(d) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7. Adjustment in Option Shares . Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction, or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of the outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable and proportional adjustments shall be made by the Administrator to (i) the total number and/or class of securities subject to the option and (ii) the Exercise Price. The adjustments shall be made in such manner as the Administrator deems appropriate in order to reflect such change, and those adjustments shall be final, binding and conclusive upon Optionee and any other person or persons having an interest in the option. In the event of any Change in Control transaction, the adjustment provisions of Paragraph 6(c) above shall be controlling.

8. Stockholder Rights . The holder of the option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares.

9. Manner of Exercising Option .

(a) In order to exercise the option with respect to all or any portion of the Option Shares for which the option is at the time vested and exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i) Execute and deliver to the Corporation a Notice of Exercise as to the Option Shares for which the option is exercised or comply with such other procedures as the Corporation may establish for notifying the Corporation, directly or through a brokerage firm authorized by the Corporation to effect option exercises, of the exercise of the option for one or more Option Shares. The applicable Notice of Exercise may be obtained upon request through stockplanservices@gilead.com.

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to the Corporation; or

(B) through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (i) to a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in accordance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of all or a sufficient portion of the purchased shares so that such brokerage firm can remit to the Corporation, on the settlement date, sufficient funds out of the resulting sale proceeds to cover the aggregate Exercise Price payable for all the purchased shares plus all applicable Withholding Taxes and (ii) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date.

Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise (or other notification procedure) delivered to the Corporation in connection with the option exercise.

(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise the option.

(iv) Make appropriate arrangements with the Corporation (or Related Entity employing or retaining Optionee) for the satisfaction of all applicable Withholding Taxes.

(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising the option) a certificate for the purchased Option Shares (either in paper or electronic form), with the appropriate legends affixed thereto.

10. Compliance with Laws and Regulations .

(a) The exercise of the option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all Applicable Laws relating thereto.

(b) The sale of Shares issued under the Plan also must comply with all Applicable Laws relating thereto, including U.S. securities laws that impose restrictions on insider trading, which may affect Optionee’s ability to sell Shares acquired under the option. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Corporation. Optionee is solely responsible for ensuring compliance with all Applicable Laws and should consult a legal advisor in this regard.

(c) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to the option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.

11. Successors and Assigns . Except to the extent otherwise provided in Paragraphs 3 and 6 above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and, if the Administrator permits Optionee to designate beneficiaries of the option, all designated beneficiaries.

12. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the most current address then indicated for Optionee on the Corporation’s records or shall be delivered electronically to Optionee through the Corporation’s electronic mail system. All notices shall be deemed effective upon personal delivery or electronic delivery as specified above or upon deposit in the U.S. or local country mail, postage prepaid and properly addressed to the party to be notified.

13. Construction . This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the option.

14. Governing Law and Venue .

(a) The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

(b) For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the option and this Agreement, the parties hereby submit to and consent

to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Mateo County, California, or the federal courts for the Northern District of California, and no other courts where the grant of the option is made and/or to be performed.

15. Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

16. Waiver . Optionee acknowledges that a waiver by the Corporation of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of this Agreement.

17. Excess Shares . If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then the option shall be void with respect to those excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan. In no event shall the option be exercisable with respect to any of the excess Option Shares unless and until such stockholder approval is obtained.

18. No Advice Regarding Grant . The Corporation is not providing any tax, legal or financial advice, nor is the Corporation making any recommendations regarding Optionee’s participation in the Plan or Optionee’s acquisition or sale of the Option Shares. Optionee is hereby advised to consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

19. No Impairment of Rights . This Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Corporation or its stockholders to remove Optionee from the Board at any time in accordance with the provisions of Applicable Law.

20. Plan Prospectus . The official prospectus for the Plan is attached if the option is the first option made to Optionee under the Plan. Optionee may obtain an additional printed copy of the prospectus by contacting Stock Plan Services through the internet at stockplanservices@gilead.com.

21. Electronic Delivery . The Corporation may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery.

22. Optionee Acceptance . Optionee must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall the option be exercised in the absence of such acceptance.

23. Appendices B and C . Notwithstanding any provision of this Agreement to the contrary, if Optionee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the option and any Option Shares acquired under the Plan shall be subject to the additional terms and conditions set forth in Appendix B to this Agreement and to any special terms and provisions as set forth in Appendix C for Optionee’s country, if any. Moreover, if Optionee relocates to one of the countries included in Appendix C, the special terms and conditions for such country will apply to Optionee, to the extent the Corporation determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. Appendices B and C constitute part of this Agreement.

24. Imposition of Other Requirements . The Corporation reserves the right to impose other requirements on Optionee’s participation in the Plan, on the option and on any shares of Common Stock acquired under the Plan, to the extent the Corporation determines it is necessary or advisable for legal or administrative

reasons, and to require Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.



GILEAD SCIENCES, INC.
By:
Title:	SVP Human Resources



OPTIONEE

By:

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board (or any subcommittee thereof) acting in its capacity as administrator of the Plan.

B. Agreement shall mean this Stock Option Agreement.

C. Applicable Laws shall mean the legal requirements related to the Plan and the option under applicable provisions of the federal securities laws, state corporate and state securities laws, the Code, the rules of any applicable Stock Exchange on which the Common Stock is listed for trading, and the rules of any non-U.S. jurisdiction applicable to options granted to residents therein.

D. Board shall mean the Corporation’s Board of Directors.

E. Cause shall mean the termination of Optionee’s Continuous Service as a result of Optionee’s (i) performance of any act, or failure to perform any act, in bad faith and to the detriment of the Corporation; (ii) dishonesty, intentional misconduct, material breach of any fiduciary duty owed to the Corporation; (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person; or (iv) reasons that are comparable to “cause” under labor laws in the jurisdiction where Optionee is providing service or the terms of Optionee’s service agreement, if any.

F. Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

(i) a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction;

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve - (12) month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (a) have been Board members continuously since the beginning of such period or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) above who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation’s incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly, and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to the formation of such entity.

G. Code shall mean the U.S. Internal Revenue Code of 1986, as amended.

H. Common Stock shall mean shares of the Corporation’s common stock.

I. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however, that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include (i) a former Board member during his or her period of service as Director Emeritus immediately following his or her cessation of service as a Board member, without an intervening break in Continuous Service, or (ii) an individual serving as a member of the board of directors of a Related Entity.

J. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Optionee shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Optionee no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Optionee is performing such services ceases to remain a Related Entity of the Corporation, even though Optionee may subsequently continue to perform services for that entity. The Administrator shall have the exclusive discretion to determine when Optionee ceases Continuous Service for purposes of the option.

K. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

L. Director shall mean a member of the Board or a Director Emeritus.

M. Domestic Partner shall mean a person who meets and continues to meet all of the criteria detailed in the Gilead Sciences Affidavit of Domestic Partnership when the Domestic Partnership has been internally registered with the Corporation by filing with the Corporation an original, properly completed, notarized Gilead Sciences Affidavit of Domestic Partnership.

N. Employee shall mean an individual who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

O. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

P. Exercise Price shall mean the exercise price per Option Share as specified in Paragraph 1 of the Agreement.

Q. Exercise Schedule shall mean the schedule set forth in Paragraph 1 of the Agreement, pursuant to which the option is to vest and become exercisable for the Option Shares in four (4) successive equal quarterly installments upon Optionee’s completion of each quarter of Continuous Service over the one (1) year period measured from the Grant Date.

R. Expiration Date shall mean the date specified in Paragraph 1 of the Agreement for measuring the maximum term for which the option may remain outstanding.

S. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported) on that date, as quoted on the Stock Exchange that is at the time serving as the primary trading market for the Common Stock; provided, however, that if there no reported closing price or closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

T. Grant Date shall mean the date of grant of the option as specified in Paragraph 1 of the Agreement.

U. Immediate Family shall mean, with respect to Optionee, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law including adoptive relationships, Domestic Partner, a trust in which such persons (or person) have more than fifty percent (50%) of the beneficial interest, a foundation in which such persons (or person) control the management of such entity’s assets, or any other entity in which such persons (or person) own more than fifty percent (50%) of the voting interests.

V. 1934 Act shall mean the U.S. Securities Exchange Act of 1934, as amended from time to time.

W. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

X. Notice of Exercise shall mean the notice of option exercise in the form prescribed by the Corporation.

Y. Option Shares shall mean the number of shares of Common Stock subject to the option as specified in Paragraph 1 of the Agreement.

Z. Optionee shall mean the person to whom the option is granted pursuant to the Agreement.

AA. Parent shall mean a “parent corporation,” whether now or hereafter established, as defined in Section 424(e) of the Code.

BB. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended from time to time.

CC. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Optionee provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least twenty percent (20%) of the total outstanding voting power of

the outstanding securities of another corporation or entity in such chain and there is a legitimate non-tax business purpose for making the option grant to Optionee.

DD. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

EE. Subsidiary shall mean a “subsidiary corporation,” whether now or hereafter established, as defined in Section 424(f) of the Code.

FF. Withholding Taxes shall mean any or all U.S. federal, state, local and/or foreign income taxes and Optionee’s portion of the U.S. federal, state, local and/or foreign employment taxes (including social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items), in each case, required to be withheld by the Corporation and/or any Related Entity in connection with any taxable event relating to the option or Optionee’s participation in the Plan.

APPENDIX B

TERMS AND CONDITIONS FOR NON-U.S. OPTIONEES

The provisions in this Appendix B apply to Optionees that reside in a country outside the United States or who are otherwise subject to the laws of a country other than the United States and supplement, amend or replace the provisions in the Agreement, as applicable:

1. Transferability . The following replaces Paragraph 3 of the Agreement in its entirety:

The option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee.

2. Acknowledgment of Nature of Plan and Option . In accepting the option, Optionee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Corporation, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Corporation at any time, to the extent permitted by the Plan;

(b) the option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(c) all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Corporation;

(d) Optionee’s participation in the Plan is voluntary;

(e) the option and the Option Shares are for future services only and should not be considered as compensation for past services for the Corporation (or any Related Entity);

(f) the option and Optionee’s participation in the Plan will not be interpreted to form an employment relationship with the Corporation (or any Related Entity);

(g) the future value of the Option Shares is unknown, indeterminable and cannot be predicted with any certainty;

(h) if the Option Shares do not increase in value, the option will have no value;

(i) if Optionee exercises his or her option and obtains Option Shares, the value of those Option Shares may increase or decrease in value, even below the Exercise Price;

(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the option resulting from termination of Optionee’s Continuous Service by the Corporation (for any reason whatsoever, whether or not later found to be invalid or in breach of labor laws in the jurisdiction where Optionee is providing service or the terms of Optionee’s service agreement, if any), and in consideration of the grant of the option to which Optionee is otherwise not entitled, Optionee irrevocably agrees never to institute any claim against the Corporation (or any Related Entity), waives his or her ability, if any, to bring any such claim, and releases the Corporation (or any Related Entity) from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Optionee shall be deemed irrevocably

to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(k) unless otherwise provided in the Plan or by the Corporation in its discretion, the option and the benefits evidenced by this Agreement do not create any entitlement to have the option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Corporation; and

(l) neither the Corporation nor any Related Entity shall be liable for any exchange rate fluctuation between Optionee’s local currency and the United States Dollar that may affect the value of the option or of any amounts due to Optionee pursuant to the exercise of the option or the subsequent sale of any Option Shares acquired upon exercise.

3. Data Privacy .

(a) Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal data as described in this Agreement and any other option grant materials (“Data”) by and among, as applicable, the Corporation and any Related Entity for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan.

(b) Optionee understands that the Corporation and any Related Entity may hold certain personal information about Optionee, including, but not limited to, Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Corporation, details of all options or any other entitlement to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

(c) Optionee understands that Data may be transferred to E*Trade Financial Services, Inc. or such other stock plan service provider as may be selected by the Corporation in the future, which is assisting the Corporation with the implementation, administration and management of the Plan. Optionee understands that the recipients of the Data may be located in the United States, or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Optionee’s country. Optionee understands that Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting Optionee’s local human resources representative. Optionee authorizes the Corporation, E*Trade Financial Services, Inc. and any other possible recipients which may assist the Corporation (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands that Data will be held only as long as is necessary to implement, administer and manage Optionee’s participation in the Plan. Optionee understands that Optionee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Optionee’s local human resources representative. Further, Optionee understands that Optionee is providing the consents herein on a purely voluntary basis. If Optionee does not consent, or if Optionee later seeks to revoke his or her consent, Optionee’s service status with the Corporation or Related Entity will not be adversely affected; the only adverse consequence of refusing or withdrawing Optionee’s consent is that the Corporation would not be able to grant Optionee options or other equity awards or administer or maintain such awards. Therefore, Optionee understands that refusing or withdrawing Optionee’s consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of Optionee’s refusal to consent or withdrawal of consent, Optionee understands that Optionee may contact Optionee’s local human resources representative .

4. Withholding Taxes .

(a) Regardless of any action the Corporation and/or any Related Entity take with respect to any or all Withholding Taxes, Optionee acknowledges that the ultimate liability for all Withholding Taxes legally due by Optionee is and remains Optionee’s responsibility and may exceed the amount actually withheld by the Corporation or any Related Entity. Optionee further acknowledges that the Corporation and/or any Related Entity (i) make no representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of the option, including the grant, vesting or exercise of the options, the subsequent sale of any Option Shares and the receipt of any dividends; and (ii) do not commit to, and are under no obligation to, structure the terms of the grant or any aspect of the option to reduce or eliminate Optionee’s liability for Withholding Taxes or achieve any particular tax result. Further, if Optionee has become subject to Withholding Taxes in more than one jurisdiction, Optionee acknowledges that the Corporation and/or any Related Entity may be required to withhold or account for Withholding Taxes in more than one jurisdiction.

(b) Prior to any relevant taxable or tax withholding event, as applicable, Optionee shall pay or make arrangements satisfactory to the Corporation to satisfy all Withholding Taxes, including (without limitation) Optionee’s delivery of a check payable to the order of the Corporation in the amount of such Withholding Taxes or a wire transfer from Optionee of sufficient funds to the Corporation to cover the amount of such Withholding Taxes. In this regard, Optionee authorizes the Corporation, or its agents, at their discretion, to satisfy the obligations with regard to all Withholding Taxes by one or a combination of the following:

i. withholding from any cash compensation or other remuneration paid to Optionee by the Corporation; or

ii. withholding from the proceeds of the sale by the Optionee of all or a portion of the Option Shares effected in a manner similar to the sale and remittance procedure described in Paragraph 9(a)(ii)(B) of this Agreement.

The Corporation may refuse to issue or deliver the purchased Option Shares or the proceeds of the sale of shares, if Optionee fails to comply with Optionee’s obligations in connection with the Withholding Taxes.

5. Insider Trading Restrictions/Market Abuse Laws . Depending on Optionee’s country of residence, Optionee may be subject to insider trading restrictions and/or market abuse laws, which may affect Optionee’s ability to acquire or sell Option Shares or rights to Option Shares ( e.g. , the option) under the Plan during such times as Optionee is considered to have “inside information” regarding the Corporation (as defined by the laws in Optionee’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Corporation. Optionee is solely responsible for ensuring compliance with any applicable restrictions and should consult a legal advisor in this regard.

6. Language . If Optionee has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Appendix C

Country-Specific Provisions

Terms and Conditions

This Appendix C includes special terms and conditions that govern the options granted to Optionee if Optionee resides in the countries listed herein. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Agreement (of which this Appendix C is a part) and the Plan.

Notifications

This Appendix C may also include information regarding exchange controls and certain other issues of which Optionee should be aware with respect to Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of April 2014. Such laws are often complex and change frequently. As a result, the Corporation strongly recommends that Optionee not rely on the information noted herein as the only source of information relating to the consequences of Optionee’s participation in the Plan because the information may be out of date at the time Optionee exercises the options or sells shares of Common Stock he or she acquires under the Plan.

In addition, the information is general in nature and may not apply to Optionee’s particular situation, and the Corporation is not in a position to assure Optionee of any particular result. Accordingly, Optionee is strongly advised to seek appropriate professional advice as to how the relevant laws in Optionee’s country apply to his or her specific situation.

If Optionee is a citizen or resident of another country, relocated to another country after the Grant Date, or is considered a resident of another country for local law purposes, the information contained in this Appendix C may not be applicable to him or her.

Belgium

Notifications

Foreign Asset/Account Reporting Notification . If Optionee is a Belgian resident, Optionee is required to report any security (e.g., Option Shares acquired under the Plan), bank or brokerage accounts held outside of Belgium on Optionee’s annual tax return.

Malta

Terms and Conditions

Securities Law Warning . Optionee acknowledges, understands and agrees that the option, the Agreement, the Plan and all other materials Optionee may receive regarding his or her participation in the Plan do not constitute advertising or an offering of securities in Malta and are deemed accepted by Optionee only upon receipt of Optionee’s electronic or written acceptance in the United States. The issuance of the shares of Common Stock under the Plan has not and will not be registered in Malta and, therefore, the shares described in any Plan documents may not be offered or placed in public circulation in Malta.

Optionee further acknowledges, understands and agrees that in no event will shares of Common Stock acquired upon exercise of the option be delivered to Optionee in Malta; all shares acquired upon exercise of the Option will be maintained on Optionee’s behalf in the United States.

Exhibit 10.49

NON-EMPLOYEE DIRECTOR AWARD

GILEAD SCIENCES, INC.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of providing incentives to attract, retain and motivate eligible Employees, Directors and Consultants.

B. Participant is to render valuable services to the Corporation as a non-employee Director, and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Common Stock to Participant thereunder.

C. All capitalized terms used in this Agreement shall have the meaning assigned to them herein and in the attached Appendix A.

NOW, THEREFORE , the Corporation hereby awards Restricted Stock Units to Participant upon the following terms and conditions:

1. Grant of Restricted Stock Units . The Corporation hereby awards to Participant, as of the Award Date indicated below, Restricted Stock Units under the Plan. Each Restricted Stock Unit that vests hereunder will entitle Participant to receive one share of Common Stock on the specified issuance date for that unit. The number of Shares subject to the awarded Restricted Stock Units, the applicable vesting schedule for those Shares, the date or dates on which those vested Shares shall become issuable to Participant and the remaining terms and conditions governing the Award shall be as set forth in this Agreement.

AWARD SUMMARY



Participant:	____________________________________
Award Date:	______________________, 20___
Number of Shares Subject to Award:	______________ Shares
Vesting Schedule:	The Shares shall vest upon the earlier of (i) Participant’s completion of one (1) year of Continuous Service measured from the Award Date or (ii) the day immediately preceding the next regular annual stockholders meeting following the Award Date provided Participant remains in Continuous Service through such day (the earlier of (i) or (ii), the “ Normal Vesting Date ”). However, the Shares may be subject to accelerated vesting in accordance with the provisions of Paragraph 5 of this Agreement.
Issuance Schedule:	Unless Participant has made a timely Deferral Election with respect to the Award prior to the start of the calendar year in which the Award Date occurs, the Shares in which Participant vests on the Normal Vesting Date shall become issuable immediately upon vesting, and will be issued no later than the later of (i) the close of the calendar year in which the Normal Vesting Date occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the Normal Vesting Date. However, if Participant has made a timely Deferral Election, then the Shares in which Participant vests on the Normal Vesting Date shall be issued in accordance with the terms and provisions of such Deferral Election, including the applicable distribution event and method of distribution. In the event of a Change in Control, the distribution provisions of Paragraph 5 shall apply.

2. Limited Transferability . Prior to actual receipt of the Shares which vest hereunder, Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws of inheritance or to Participant’s designated beneficiary or beneficiaries of the Award. Participant may also direct the Corporation to re-issue the stock certificates (which may be in electronic form) for any Shares which in fact vest and become issuable under the Award during his or her lifetime to one or more designated members of Participant’s Immediate Family or a trust established for Participant and/or the members of his or her Immediate Family. However, the actual issuance of such Shares pursuant to the foregoing provisions of this Paragraph 2 shall be subject to the issuance and distribution provisions of any Deferral Election in effect for the Award.

3. Cessation of Service . Except as otherwise provided in Paragraph 5 below, should Participant cease Continuous Service for any reason prior to the Normal Vesting Date, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced accordingly. Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units. However, for purposes of this Agreement, Participant shall not be deemed to cease Continuous Service if Participant continues to serve the Corporation as a Director Emeritus immediately following his or her cessation of service as a Board member without an intervening break in Continuous Service.

4. Stockholder Rights and Dividend Equivalents .

(a) The holder of the Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the Shares subject to the Award until Participant becomes the record holder of those Shares upon their actual issuance following the Corporation’s collection of the applicable Withholding Taxes.

(b) Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary and whether payable in cash, securities (other than Common Stock) or other property, be declared and paid on the outstanding Common Stock while one or more Shares remain subject to the Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the Shares at the time subject to the Award had they been issued and outstanding and entitled to that dividend or distribution. As the Shares subsequently vest hereunder, the phantom dividend equivalents so credited to those Shares in the book account shall vest and those vested dividend equivalents shall be distributed to Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution or in such other form as the Administrator deems appropriate under the circumstances) concurrently with the issuance of the vested Shares to which those phantom dividend equivalents relate, whether those vested Shares are to be issued in accordance with the Issuance Schedule or distribution provisions set forth in this Agreement or the distribution provisions set forth in Participant’s Deferral Election (if any). Each such distribution shall be subject to the Corporation’s collection of all applicable Withholding Taxes.

(c) Should Participant cease Continuous Service without vesting in one or more of the Shares subject to the Award (including any Shares which do not otherwise vest at that time after taking into account any applicable vesting acceleration provisions set forth in Paragraph 5 of this Agreement), then the phantom dividend equivalents credited to those unvested Shares shall be cancelled, and Participant shall thereupon cease to have any further right or entitlement to those cancelled amounts.

5. Change in Control .

(a) Should Participant remain in Continuous Service until the effective date of a Change in Control, then the Restricted Stock Units at the time subject to the Award will vest immediately prior to the closing of the Change in Control. The Shares subject to those vested units shall be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control, and such consideration per Share shall be distributed to Participant at the same time as such

shareholder payments, but such distribution to Participant shall in all events be completed no later than the later of (i) the close of the calendar year in which such Change in Control is effected or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the effective date of that Change in Control. However, if Participant has made a timely Deferral Election with respect to the Award, then the consideration payable per Share in consummation of the Change in Control shall be distributed to Participant in accordance with the distribution provisions of that Deferral Election, and those provisions shall supersede anything to the contrary in this Paragraph 5. Each such issuance shall be subject to the Corporation’s collection of all applicable Withholding Taxes.

(b) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

6. Adjustment in Shares . Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of the outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Administrator to the total number and/or class of securities issuable pursuant to the Award in order to reflect such change. In making such adjustments, the Administrator shall take into account any amounts to be credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and the determination of the Administrator shall be final, binding and conclusive. In the event of a Change in Control, the provisions of Paragraph 5 shall be controlling.

7. Issuance of Shares or Other Amounts .

(a) On each date on which one or more Shares are to be issued in accordance with the express provisions of this Agreement or, if the Administrator permits Participant to file a Deferral Election and Participant files a Deferral Election, the distribution provisions of Participant’s Deferral Election, which shall have priority over the terms of this Agreement, the Corporation shall issue to or on behalf of Participant a stock certificate (which may be in electronic form) for those Shares and shall concurrently distribute to Participant any phantom dividend equivalents with respect to those Shares, subject in each instance to the Corporation’s collection of the applicable Withholding Taxes. Unless otherwise permitted by the Administrator, only non-employee Directors in the United States may file a Deferral Election.

(b) Except as otherwise provided in Paragraph 5, the settlement of all Restricted Stock Units which vest under the Award shall be made solely in Shares. In no event, however, shall any fractional Shares be issued. Accordingly, the total number of Shares to be issued at the time the Award vests shall, to the extent necessary, be rounded down to the next whole Share in order to avoid the issuance of a fractional Share.

8. Compliance with Laws and Regulations .

(a) The issuance of Shares pursuant to the Award shall be subject to compliance by the Corporation and Participant with all Applicable Laws relating thereto.

(b) The sale of the Shares issued under the Plan must comply with all Applicable Laws relating thereto, including U.S. securities laws that impose restrictions on insider trading, which may affect Participant’s ability to sell Shares acquired pursuant to the Award. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Corporation. Participant is solely responsible for ensuring compliance with all Applicable Laws and should consult a legal advisor in this regard.

9. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most current

address then indicated for Participant on the Corporation’s records or shall be delivered electronically to Participant through the Corporation’s electronic mail system. All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. or local country mail, postage prepaid and properly addressed to the party to be notified.

10. Successors and Assigns . Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, the legal representatives, heirs and legatees of Participant’s estate and, if the Administrator permits Participant to designate beneficiaries of the Award, all designated beneficiaries.

11. Construction . This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

12. Governing Law and Venue .

(a) The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

(b) For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the Award and this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Mateo County, California, or the federal courts for the Northern District of California, and no other courts where the grant of the Restricted Stock Units is made and/or to be performed.

13. Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

14. Waiver . Participant acknowledges that a waiver by the Corporation of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of this Agreement.

15. Code Section 409A. If Participant is a U.S. taxpayer, the following provisions apply to Participant’s Award:

(a) It is the intention of the parties that in the absence of a timely-made Deferral Election with respect to the Award, the provisions of this Agreement shall, to the maximum extent permissible, comply with the requirements of the short-term deferral exception to Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4). Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of Code Section 409A applicable to such short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply to such exception.

(b) However, if Participant makes a timely Deferral Election with respect to the Award, then this Agreement will create a deferred compensation arrangement subject to the requirements of Code Section 409. In that event, the terms and provisions of this Agreement shall be applied and interpreted in a manner that complies with all applicable requirements of Code Section 409A and the Treasure Regulations thereunder. Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the applicable requirements or limitations of Code Section 409A, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.

16. No Advice Regarding Grant . The Corporation is not providing any tax, legal or financial advice, nor is the Corporation making any recommendations regarding Participant’s participation in the Plan or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

17. No Impairment of Rights . This Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Corporation or its stockholders to remove Participant from the Board at any time in accordance with the provisions of applicable law.

18. Plan Prospectus . The official prospectus for the Plan is attached if the Award is the first Restricted Stock Unit award made to Participant under the Plan. Participant may obtain an additional printed copy of the prospectus by contacting Stock Plan Services through the internet at stockplanservices@gilead.com.

19. Electronic Delivery and Acceptance . The Corporation may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery.

20. Participant Acceptance . Participant must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall any Shares be issued under this Agreement in the absence of such acceptance.

21. Appendices B and C . Notwithstanding any provision of this Agreement to the contrary, if Participant resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the Award and any Shares acquired under the Plan shall be subject to the additional terms and conditions set forth in Appendix B to this Agreement and to any special terms and provisions as set forth in Appendix C for Participant’s country, if any. Moreover, if Participant relocates to one of the countries included in Appendix C, the special terms and conditions for such country will apply to Participant, to the extent the Corporation determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. Appendices B and C constitute part of this Agreement.

22. Imposition of Other Requirements . The Corporation reserves the right to impose other requirements on Participant’s participation in the Plan, on the Award and on any Shares acquired under the Plan, to the extent the Corporation determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.



GILEAD SCIENCES, INC.

By:
Title:	SVP Human Resources



PARTICIPANT

By:

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board in its capacity as administrator of the Plan.

B. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

C. Applicable Laws shall mean the legal requirements related to the Plan and the Award under applicable provisions of the federal securities laws, state corporate and securities laws, the Code, the rules of any applicable Stock Exchange on which the Common Stock is listed for trading, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.

D. Award shall mean the award of Restricted Stock Units made to Participant pursuant to the terms of this Agreement.

E. Award Date shall mean the date the Restricted Stock Units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

F. Board shall mean the Corporation’s Board of Directors.

G. Cause shall mean the termination of Participant’s Continuous Service as a result of his or her (i) performance of any act, or failure to perform any act, in bad faith and to the detriment of the Corporation; (ii) dishonesty, intentional misconduct, material breach of any fiduciary duty owed to the Corporation; (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person; or (iv) reasons that are comparable to “cause” under labor laws in the jurisdiction where Participant is providing service or the terms of Participant’s service agreement, if any.

H. Change in Control shall mean a change in ownership or control of the Corporation effected through the consummation of any of the following transactions:

(ii) a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction;

(iii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

(iv) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction

involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

(v) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation’s incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to the formation of such entity.

I. Code shall mean the U.S. Internal Revenue Code of 1986, as amended.

J. Common Stock or Shares shall mean shares of the Corporation’s common stock.

K. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however , that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include (i) a former Board member during his or her period of service as Director Emeritus immediately following his or her cessation of service as a Board member, without an intervening break in Continuous Service, or (ii) an individual serving as a member of the board of directors of a Related Entity.

L. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Participant shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Participant is performing such services ceases to remain a Related Entity of the Corporation, even though Participant may subsequently continue to perform services for that entity. The Administrator shall have the exclusive discretion to determine when Participant ceases Continuous Service for purposes of the Award.

M. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

N. Deferral Election shall mean an election filed by Participant with the Corporation prior to the start of the calendar year in which the Award Date occurs pursuant to which Participant elects, in accordance with the applicable requirements of Code Section 409A, to defer the issuance of the Shares that vest under this Agreement or the distribution of the consideration payable per Share in a Change in Control transaction to one or more designated issuance or distribution dates or events beyond the vesting date for those Shares.

O. Director shall mean a member of the Board or a Director Emeritus.

P. Domestic Partner shall mean a person who meets and continues to meet all of the criteria detailed in the Gilead Sciences Affidavit of Domestic Partnership when the Domestic Partnership has been internally registered with the Corporation by filing with the Corporation an original, properly completed, notarized Gilead Sciences Affidavit of Domestic Partnership.

Q. Employee shall mean any person who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the Corporation or Related Entity as to both the work to be performed and the manner and method of performance.

R. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported) on that date, as quoted on the Stock Exchange that is at the time serving as the primary trading market for the Common Stock; provided, however , that if there is no reported closing price or closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

S. Immediate Family shall mean, with respect to Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law including adoptive relationships, Domestic Partner, a trust in which such persons (or person) have more than fifty percent (50%) of the beneficial interest, a foundation in which such persons (or person) control the management of the entity’s assets, or any other entity in which such persons (or person) own more than fifty percent (50%) of the voting interests.

T. 1934 Act shall mean the U.S. Securities Exchange Act of 1934, as amended from time to time.

U. Normal Vesting Date shall mean the date (as set forth in Paragraph 1 of the Agreement) on which the Restricted Stock Units and the underlying Shares vest.

V. Parent shall mean a “parent corporation,” whether now existing or hereafter established, as defined in Section 424(e) of the Code.

W. Participant shall mean the person to whom the Award is made pursuant to the Agreement.

X. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended and restated from time to time.

Y. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Participant provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least twenty percent (20%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain and there is a legitimate non-tax business purpose for making the Award to Participant.

Z. Restricted Stock Unit shall mean the Award in the form of a contractual right to receive Shares under this Agreement which will entitle Participant to receive one actual share of Common Stock per Restricted Stock Unit upon the satisfaction of the Continuous Service vesting requirements applicable to such Award.

AA. Share Withholding Method shall mean an automatic Share withholding procedure pursuant to which the Corporation will withhold, immediately as the Shares are issued under the Award, a portion of those Shares with a Fair Market Value (measured as of the issuance date) equal to the amount of the applicable Withholding Taxes.

BB. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

CC. Subsidiary shall mean a “subsidiary corporation,” whether now existing or hereafter established, as defined in Section 424(f) of the Code.

DD. Withholding Taxes shall mean any and all U.S. federal, state, local and/or foreign income taxes and Participant’s portion of the federal, state, local and/or foreign employment taxes (including social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items), in each case, required to be withheld by the Corporation and/or any Related Entity in connection with any taxable event attributable to the Award or Participant’s participation in the Plan.

APPENDIX B

TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS

The provisions in this Appendix B apply to Participants that reside in a country outside the United States or who are otherwise subject to the laws of a country other than the United States and supplement, amend or replace the provisions in the Agreement, as applicable:

1. Transferability. The following replaces Paragraph 2 of the Agreement in its entirety:

Prior to actual receipt of the Shares which vest hereunder, Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws of inheritance.

2. Acknowledgment of Nature of Plan and Award . In accepting the Award, Participant acknowledges, understands and agrees that:

(b) the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;

(c) all decisions with respect to future Awards or other grants, if any, will be at the sole discretion of the Corporation;

(d) Participant’s participation in the Plan is voluntary;

(e) the Award and the Shares subject to the Award are for future services and should not be considered as compensation for, or relating in any way to, past services for the Corporation (or any Related Entity);

(f) the Award and Participant’s participation in the Plan will not be interpreted to form an employment relationship with the Corporation (or any Related Entity);

(g) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with any certainty;

(h) no claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from termination of Participant’s Continuous Service by the Corporation (for any reason whatsoever, whether or not later found to be invalid or in breach of the terms of Participant’s service agreement, if any), and in consideration of the grant of the Restricted Stock Units to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Corporation (or any Related Entity), waives his or her ability, if any, to bring any such claim, and releases the Corporation (or any Related Entity) from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(i) unless otherwise provided for in the Plan or by the Corporation in its discretion, the grant of Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to or assumed by another company nor to be exchanged, cashed out or substituted for in connection with any corporation transaction affecting the shares of the Corporation; and

(j) neither the Corporation nor any Related Entity shall be liable for any exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.

3. Data Privacy .

(a) Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other grant materials (“Data”) by and among, as applicable, the Corporation and any Related Entity for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

(b) Participant understands that the Corporation and any Related Entity may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Corporation, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

(c) Participant understands that Data may be transferred to E*Trade Financial Services, Inc. or such other stock plan service provider as may be selected by the Corporation in the future, which is assisting the Corporation with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the United States, or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that Participant may request a list with the names and addresses of any potential recipients of the Data by contacting Participant’s local human resources representative. Participant authorizes the Corporation, E*Trade Financial Services, Inc. and any other possible recipients which may assist the Corporation (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing Participant’s participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Participant’s local human resources representative. Further, Participant understands that Participant is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later revokes his or her consent, Participant’s service status with the Corporation or Related Entity will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Corporation would not be able to grant Participant Restricted Stock Units or other equity awards or administer or maintain such awards. Participant understands, however, that refusing or withdrawing Participant’s consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that Participant may contact Participant’s local human resources representative .

4. Responsibility for Taxes .

(a) Regardless of any action the Corporation and/or any Related Entity take with respect to any or all Withholding Taxes related to Participant’s participation in the Plan and legally applicable to Participant, Participant acknowledges that the ultimate liability for all Withholding Taxes is and remains Participant’s responsibility and may exceed the amount actually withheld by the Corporation or any Related Entity. Participant further acknowledges that the Corporation and/or any Related Entity (i) make no representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of the Award, including the grant, vesting or settlement of the Award, the issuance of Shares upon settlement of the Award, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or phantom dividend equivalents; and (ii) do not commit to, and are under no obligation to, structure the terms of the grant or any aspect of the Award to reduce or eliminate

Participant’s liability for Withholding Taxes or achieve any particular tax result. Further, if Participant has become subject to Withholding Taxes in more than one jurisdiction, Participant acknowledges that the Corporation and/or any Related Entity may be required to withhold or account for Withholding Taxes in more than one jurisdiction.

(b) Unless Participant elects to remit to the Corporation the amount of Withholding Taxes due in connection with the Award by submitting the election form to the Corporation within 45 days prior to the Normal Vesting Date, the Corporation shall collect, and Participant authorizes the Corporation to collect, the Withholding Taxes with respect to the issued Shares through an automatic Share Withholding Method pursuant to which the Corporation will withhold, immediately as the Shares are issued under the Award, a portion of those Shares with a Fair Market Value (measured as of the issuance date) equal to the amount of such Withholding Taxes. Participant shall be notified (in writing or through the Corporation’s electronic mail system) in the event the Corporation no longer intends to utilize the Share Withholding Method.

(c) Should any Shares become issuable under the Award at a time when the Share Withholding Method is no longer utilized, then the Withholding Taxes shall be collected from Participant through either of the following alternatives:

• Participant’s delivery of his or her separate check payable to the Corporation in the amount of such Withholding Taxes or a wire transfer from Participant of sufficient funds to the Corporation to cover the amount of such Withholding Taxes, or

• the use of the proceeds from a next-day sale of the Shares issued or issuable to Participant, provided and only if (i) such a sale is permissible under the Corporation’s trading policies governing the sale of Common Stock, (ii) Participant makes an irrevocable commitment, on or before the issuance date for those Shares, to effect such sale of the Shares and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002.

(d) If the Share Withholding Method is to be utilized for the collection of Withholding Taxes, then the Corporation shall withhold the number of otherwise issuable Shares necessary to satisfy the applicable Withholding Taxes based on the applicable minimum withholding amount or other applicable withholding rate. Participant shall have no right to the Common Stock equivalent of any Shares withheld to satisfy the applicable Withholding Taxes. Participant may seek a refund from the applicable tax authorities for any over-withheld amount. If the obligation for Withholding Taxes is satisfied by using the Share Withholding Method, for tax purposes, Participant will be deemed to have been issued the full number of Shares subject to the vested Award, notwithstanding that a number of the Shares are withheld solely for the purpose of paying the Withholding Taxes due as a result of Participant’s participation in the Plan. Participant shall pay to the Corporation and/or any Related Entity any amount of Withholding Taxes that the Corporation and/or any Related Entity may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Corporation may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participant fails to comply with Participant’s obligations in connection with the Withholding Taxes.

(e) Notwithstanding the above, the Corporation shall collect the Withholding Taxes with respect to the distributed phantom dividend equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld.

5. Insider Trading Restrictions/Market Abuse Laws . Depending on Participant’s country of residence, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect Participant’s ability to acquire or sell Shares or rights to Shares ( e.g. , the Award) under the Plan during such times as Participant is considered to have “inside information” regarding the Corporation (as defined by the laws in Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Corporation. Participant is solely responsible for ensuring compliance with any applicable restrictions and should consult a legal advisor in this regard.

6. Language . If Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Appendix C

Country-Specific Provisions

Terms and Conditions

This Appendix C includes special terms and conditions that govern the Restricted Stock Units granted to Participant if Participant resides in the countries listed herein. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Agreement (of which this Appendix C is a part) and the Plan.

Notifications

This Appendix C may also include information regarding exchange controls and certain other issues of which Participant should be aware with respect to Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of April 2014. Such laws are often complex and change frequently. As a result, the Corporation strongly recommends that Participant not rely on the information noted herein as the only source of information relating to the consequences of Participant’s participation in the Plan because the information may be out of date at the time Participant vests in the Restricted Stock Units or sells Shares he or she acquires under the Plan.

In addition, the information is general in nature and may not apply to Participant’s particular situation, and the Corporation is not in a position to assure Participant of any particular result. Accordingly, Participant is strongly advised to seek appropriate professional advice as to how the relevant laws in Participant’s country apply to his or her specific situation.

If Participant is a citizen or resident of another country, relocated to another country after the Award Date, or is considered a resident of another country for local law purposes, the information contained in this Appendix C may not be applicable to him or her.

Belgium

Notifications

Foreign Asset/Account Reporting Notification . If Participant is a Belgian resident, Participant is required to report any security (e.g., Shares acquired under the Plan), bank or brokerage accounts held outside of Belgium on Participant’s annual tax return.

Malta

Terms and Conditions

Securities Law Warning . Participant acknowledges, understands and agrees that the Award, the Agreement, the Plan and all other materials Participant may receive regarding his or her participation in the Plan do not constitute advertising or an offering of securities in Malta and are deemed accepted by Participant only upon receipt of Participant’s electronic or written acceptance in the United States. The issuance of the Shares under the Plan has not and will not be registered in Malta and, therefore, the Shares described in any Plan documents may not be offered or placed in public circulation in Malta.

Participant further acknowledges, understands and agrees that in no event will Shares acquired upon vesting or settlement of the Award be delivered to Participant in Malta; all Shares acquired upon vesting or settlement of the Award will be maintained on Participant’s behalf in the United States.

Exhibit 10.102

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

THIRD AMENDMENT TO THE

LICENSE AND COLLABORATION AGREEMENT

This Third Amendment to the License and Collaboration Agreement (this “ Third Amendment ”) is made as of June 18, 2014 (the “ Third Amendment Effective Date ”), by and among Gilead Sciences, Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal place of business at 333 Lakeside Drive, Foster City, California 94404 (“ Gilead Parent ”), Gilead Sciences Limited, a corporation existing under the laws of Ireland and wholly-owned subsidiary of Gilead Parent having its principal place of business at IDA Business & Technology Park, Carrigtohill, Co. Cork, Ireland (“ Gilead Sub ” and, collectively with Gilead Parent, “ Gilead ”) and Janssen R&D Ireland (formerly known as Tibotec Pharmaceuticals), a company organized and existing under the laws of Ireland, having its principal place of business at Eastgate Village, Eastgate, Little Island, County Cork, Ireland (“ Janssen ”). Each of Gilead and Janssen is sometimes referred to individually herein as a “ Party ” and collectively as the “ Parties .”

WHEREAS, Gilead and Janssen previously entered into that certain License and Collaboration Agreement, dated as of July 16, 2009 (as amended from time to time, the “ Agreement ”);

WHEREAS, Gilead and Janssen previously entered into that certain First Amendment to the Agreement, dated as of September 14, 2010 (the “ First Amendment ”);

WHEREAS, Gilead and Janssen previously entered into that certain original Second Amendment to the Agreement, dated as of July 1, 2011 (the “ Original Second Amendment ”);

WHEREAS, Gilead and Janssen previously entered into that certain Amended and Restated Second Amendment to the Agreement, dated as of February 7, 2013 (the “ A&R Second Amendment ”);

WHEREAS, Gilead and Janssen desire to amend the Agreement to modify the revenue share calculation for the United States for Triggering Sales on and after July 1, 2013 and for Limited Region A Revenue Share Exceptions (defined herein), Region B and Region C for Triggering Sales on and after January 1, 2014; and

WHEREAS, Gilead and Janssen further desire to amend certain other provisions of the Agreement as provided in this Amendment .

NOW THEREFORE, in consideration of the premises and the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

SECTION 1. Additional Definitions . The following new definitions shall be inserted into the Agreement:

“ Canada Co-Detailing LOA ” shall mean that certain Letter Agreement, dated as of November 30, 2011, by and between Gilead Sciences Canada, Inc. and Janssen Inc., setting forth principles for Detailing by Janssen, Inc. in Canada, as such agreement is amended from time to time.

“ Co-Detailing LOA’s ” shall mean, collectively, the Canada Co-Detailing LOA, the International Co-Detailing LOA and the U.S. Co-Detailing LOA.

“ Commercialization Election ” shall mean an election by either Party, as provided under Section 6.9(a), to engage in Commercialization Activities for the Combination Product (either by the Party making the election or through a Third Party Distributor) in a Non-Assigned Country.

“ Data Sharing LOA ” shall mean, collectively, (a) that certain Letter Agreement, dated as of March 21, 2011, by and between Tibotec Pharmaceuticals, Gilead Sciences, Inc., and Gilead Sciences Limited, and (b) that certain Letter Agreement, dated as of November 21, 2011, by and between Tibotec Pharmaceuticals, Gilead Sciences, Inc., and Gilead Sciences Limited, both (a) and (b), [*], as such agreement is amended from time to time.

“ International Co-Detailing LOA ” shall mean that certain Amended and Restated Letter Agreement, dated as of November 4, 2013, by and between Janssen R&D Ireland and Gilead Sciences, Inc., which sets forth Detailing principles for the Co-Detailing Territory (defined therein), as such agreement is amended from time to time.

“ Limited Region A Revenue Share Exceptions ” shall mean [*].

“ NCP Exclusion LOA ” shall mean that certain Letter Agreement, dated as of May 1, 2014, by and between Janssen R&D Ireland and Gilead Sciences, Inc., which sets forth certain inclusions and exclusions to the Net Component Price for certain countries.

“ Revaluation Pre-Conversion Invoice ” shall mean the invoice or credit note for revaluation of Pre-Conversion Invoices in accordance with Annex DD.

“ Revenue Share Effective Date ” shall mean the commencement date for application of the modifications to the calculation of the parties’ respective revenue shares made under this Third Amendment, which date shall be: (a) in the case of Triggering Sales in the United States, July 1, 2013 and (b) in the case of Triggering Sales in Region B, Region C, and the Limited Region A Revenue Share Exceptions, January 1, 2014.

“ Revenue Share Effective Period ” shall mean the period beginning on the Revenue Share Effective Date for the United States and ending on the last day of the month prior to the month when data described in Annex X, [*] is made available to the Parties. For example,

if data described in Annex X relevant for the United States, which indicates that [*] immediately prior to when such data was made available.

“ Second Amendment Effective Date ” shall mean July 1, 2011.

“ Tender Rules and Procedures Agreement ” shall mean that certain agreement, dated as of November 25, 2011, by and between Tibotec Pharmaceuticals and Gilead Sciences, Inc., developed pursuant to Section 7.4(a)(ii)(D) of this Agreement.

“ Third Amendment ” shall mean that certain amendment to the Agreement dated as of the Third Amendment Effective Date.

“ Third Amendment Effective Date ” shall mean June 18, 2014.

“ US Co-Detailing LOA ” shall mean that certain Letter Agreement, dated as of August 16, 2011, by and between Gilead Sciences, Inc. and Janssen Products, LP, acting through its Janssen Therapeutics Division, setting forth Detailing responsibilities for Janssen Therapeutics Division in the United States, as such agreement is amended from time to time.

SECTION 2. Expanded Existing Region Definition . The definition of “Expanded Existing Region” is hereby replaced in its entirety with the following:

“ Expanded Existing Region ” shall mean the Existing Region, Russia and Mexico.

SECTION 3. Limited Region A Definition . The definition of “Limited Region A” is hereby replaced in its entirety with the following:

“ Limited Region A ” shall mean Region A, excluding Russia and Mexico.

SECTION 4. Final TMC278 Invoice Definition . The definition of “Final TMC278 Invoice” is hereby replaced in its entirety with the following:

“ Final TMC278 Invoice ” shall mean the invoice or credit note issued to Gilead or its designated Affiliate in accordance with this Agreement at the end of the applicable Calendar Year for the [*] as set forth in Annex N.

SECTION 5. Ancillary Agreement . The definition of “Ancillary Agreement” is hereby replaced in its entirety with the following:

“ Ancillary Agreements ” shall mean, collectively, any Janssen Distributor Agreement, the SDEA, the Quality Agreement(s) (provided that the Quality Agreement(s) shall be deemed to be Ancillary Agreements solely for the purpose of Sections 15 and 4.3(c)), the TMC278 Supply Agreement, the Co-Detailing LOA’s, the Data Sharing LOA, the NCP Exclusion LOA, the Tender Rules and Procedures Agreement, and any other agreement that is now or in the future designated in writing to be an Ancillary Agreement by the Parties.

SECTION 6. Access Territory .

The definition of “Access Territory” in the Agreement, and Section 2.6 and Annex D of the Agreement are hereby deleted in their entirety.

SECTION 7. Actual Annual Yield Rate Definition .

The definition of “Actual Annual Yield Rate” in the Agreement is hereby deleted in its entirety.

SECTION 8. Aided Physician Awareness Definition .

The definition of “Aided Physician Awareness” in the Agreement is hereby deleted in its entirety.

SECTION 9. MA Holder . The second sentence of Section 4.4(a) of the Agreement is hereby replaced in its entirety with the following:

Notwithstanding the foregoing, the Parties have agreed that Janssen, or its designated Affiliate or Third Party Distributor, will hold the marketing authorization with respect to the Combination Product in the Janssen Countries for which Annex AA specifies Janssen as the holder of the marketing authorization, or as otherwise provided by the mutual written agreement of the Parties.

SECTION 10. Pre-Approval Order Fulfillment in Janssen Countries . Section 6.1 is hereby amended by inserting the following as Sub-Section 6.1(e):

Pre-Approval Order Fulfillment in Janssen Countries . Notwithstanding anything in this Section 6.1 to the contrary, in any country where Janssen is the Selling Party and Approval of the Combination Product has not yet been obtained, subject to the Parties’ mutual agreement in accordance with this Section 6.1(e), Gilead shall have the right to fulfill orders for the Territory Combination Product from such country made by certain Customers (including tenders and other government purchases) using Territory Combination Product with an appropriate label suitable for importation into such country. For the first such order in a given country, the Parties shall negotiate in good faith to agree in writing on all material terms therefor (the “ Initial Pre-Approval Order Agreement ”). For all subsequent orders in such country (whether or not such orders are placed by the same Customer as concerns the Initial Pre-Approval Order Agreement in such country) that are placed prior to the time that Approval of the Combination Product in such country is obtained and prior to delivery by Janssen of a Non-Commercialization Notice for such country pursuant to Section 6.9(a) (after which Section 6.9 shall apply), Gilead shall promptly notify Janssen’s Alliance Manager of such orders. Gilead may fulfill such orders for the Territory Combination Product according to the terms of the Initial Pre-Approval Order Agreement; provided, however, [*]. Notwithstanding the foregoing, Gilead shall set the price of all orders that it is permitted to fill under this Section 6.1(e) in its sole discretion and, unless the Parties agree otherwise as provided by this Section 6.1(e), revenue shall be shared from all such orders in accordance with Annex N, including [*] set forth therein; provided that for all such orders in a Janssen Country in Region A, upon the request of Gilead, [*] which shall be used to determine the

Parties’ respective revenue shares from such orders in accordance with Section C of Annex N in the same manner as if such country were a Gilead Country. For the avoidance of doubt, however, Janssen shall remain the Selling Party for such country and Gilead shall not have any liability hereunder for a failure to fill such an order.

SECTION 11. Specific Commercialization Obligations .


(a)	Section 6.2(b)(ii) is hereby replaced in its entirety with the following:

Reserved


(b)	The second sentence of Section 6.2(b)(iii) is hereby replaced in its entirety with the following:

Gilead shall [*] that may impact the ability of Gilead to fulfill such obligation.

(c) Section 6.2(b)(iv) is hereby amended by replacing the words “subsections (i) through (iii)” with “subsections (i) and (iii)”.

(d) Section 6.2(b)(v)(A) is hereby amended by inserting the word “and” at the end of such Section.

(e) Section 6.2(b)(v)(B) is hereby deleted in its entirety.

SECTION 12. Detailing in the Co-Detailing Territory . Section 6.2 is hereby amended by inserting the following as Sub-Section 6.2(d):

The Parties acknowledge and agree that the Parties (or their Affiliates) currently have (or may in the future have) certain additional rights and obligations with respect to the Detailing of the Combination Product, as set forth in the Co-Detailing LOA’s for the applicable countries in each Co-Detailing LOA, or as may be set forth from time to time by other separate written agreements between the Parties.

SECTION 13. Marketing Materials .

(a) Local Promotional Materials . The first sentence of Section 6.7(b) is hereby replaced in its entirety with the following:

Except as otherwise provided in the Co-Detailing LOA’s, all advertising and promotional materials, if any, to be used in connection with the marketing and promotion, including Detailing, of the Territory Combination Product in a given country in the Territory (such advertising and promotional materials for each such country, the “ Local Promotional Materials ”) shall be developed by the Party using such materials at its cost and expense and shall be (i) consistent with the Key Selling Messages (if any), (ii) consistent with the Product Label and Insert for the Combination Product approved by the applicable Regulatory Authority, (iii) consistent with Applicable Law, and (iv) in the case of Janssen, consistent

with the branding guidance provided by Gilead from time to time, with deviation solely to the extent required by Applicable Law.

(b) Regulatory Approval for Promotional Materials . Section 6.7(c) is hereby replaced in its entirety with the following:

For clarity, in any interactions with a Regulatory Authority with respect to the Local Promotional Materials, the allocation of the Parties’ rights and responsibilities shall be as set forth in Section 4.4, except as otherwise provided in the Co-Detailing LOA’s, or in any other written agreement between the Parties.

SECTION 14. Abandonment of Countries . Section 6.9 is hereby replaced in its entirety with the following:

(a) Abandonment of Countries . Without limiting the obligations of the Selling Party pursuant to Sections 6.2 and 6.6 (and without limiting any rights or remedies the non-Selling Party may have in connection with a failure of the Selling Party to comply with such obligations), in the event the Selling Party determines, in its sole discretion, to abandon all Commercialization Activities (or not to file for Approval in the Field) for the Combination Product in a country in the Territory, the Selling Party shall promptly notify the other Party of such determination in writing, which notice shall include a reasonable description (including, supporting data, if applicable) of the justifications for such determination (each, a “ Non-Commercialization Notice ”). Upon such notification, such country shall be deemed a “ Non-Assigned Country ” and neither Party shall be deemed the Selling Party with respect to such country. This right to abandon all Commercialization Activities (or not to file for Approval of the Combination Product in the Field) shall not apply to any Major Market. Thereafter, the non-Selling Party shall have the right, but not the obligation, to make a Commercialization Election with respect to such country by delivery of written notice to the other Party within [*] after receipt of the applicable Non-Commercialization Notice or thereafter as described below. For any Commercialization Election under this Section 6.9(a) by Janssen, Gilead shall have the right to consent to any designation of Janssen as the Selling Party, such consent not to be unreasonably withheld (unless the country requested by Janssen is a Designated Country, in which case, Gilead may withhold its consent in its sole discretion); and provided, however, that if such Designated Country is in the European Union and the Combination Product has been launched in such country, then the Parties shall discuss in good faith the conditions under which Janssen (or its Affiliates) might assume responsibility for Commercialization Activities in such country. Subject to such consent right, in the event a Party makes the Commercialization Election for a country, then for purposes of this Agreement (and any Ancillary Agreement), such Party shall thereafter be deemed to be the Selling Party with respect to such country, such country shall no longer be deemed a Non-Assigned Country and shall be deemed a Gilead Country or a Janssen Country, as applicable, and in each case, to the extent applicable, the Parties shall work together in good faith to effectuate the transfer of responsibilities in connection with the foregoing to the other Party or a Third Party Distributor. For any Non-Assigned Country, the original non-Selling Party shall have the exclusive right to make the Commercialization

Election within the [*] period specified above in this Section 6.9(a). If the original non-Selling Party does not provide notice of such Commercialization Election during such [*] period or provides written notice to the other Party that it does not wish to make the Commercialization Election in such country, then either Party shall have the right, but not the obligation, to make the Commercialization Election for such Non-Assigned Country; provided, however, that, in this case, if the original non-Selling Party for such country provides such Commercialization Election notice, then the original Selling Party shall, for [*] following its receipt of such notice, have the first right to make the Commercialization Election and be deemed the Selling Party, and otherwise the original non-Selling Party shall become the Selling Party under this Agreement. For purposes of this Section 6.9(a), the original Selling Party is indicated in the second column of Annex AA and the original non-Selling Party shall be the Party that is not indicated to be the original Selling Party.

(b) Order Fulfillment in Non-Assigned Countries . If Janssen delivers a Non-Commercialization Notice for a country for which it is the Selling Party as provided in Section 6.9(a), for the period that such country is a Non-Assigned Country, Gilead shall have the right to fulfill orders for the Territory Combination Product from such country made by certain Customers (including tenders and other government purchases) using Territory Combination Product with an appropriate label suitable for importation into such country and at a price set by Gilead. Unless the Parties agree otherwise, revenue shall be shared from all orders under this Section 6.9(b) in accordance with Annex N, including the true-up provisions set forth therein; provided that for all such orders in a Janssen Country in Region A, upon the request of Gilead, Janssen shall convey to the Discount Committee the [*] which shall be used to determine the Parties’ respective revenue shares from such orders in accordance with Section C of Annex N in the same manner as if such country were a Gilead Country. For the avoidance of doubt, however, Gilead shall not have any liability hereunder for a failure to fill such an order.

SECTION 15. Price Approval Countries .


(a)	Minimum Target Price . The last sentence of Section 7.3(c)(i) is hereby replaced in its entirety with the following:

At Launch and thereafter, unless modified as below, the Country Price for the Territory Combination Product shall be the Approved Price for Price Approval Countries.


(b)	Base Price Setting . Section 7.4(a)(i) is hereby amended by inserting the following sentence at the end of such Section:

If the Approved Price for the Territory Combination Product is different than the Base Price in a Price Approval Country, then notwithstanding the other provisions of this Section 7.4(a)(i), the Selling Party shall sell at such Approved Price, unless a discount is permitted pursuant to this Agreement or an Ancillary Agreement. For purposes of a Price Approval Country, a Discounted Price shall mean any price that is lower than the Approved Price for the Territory Combination Product. For purposes of Annex R, for Price Approval Countries, references to the “Base Price” shall be references to the “Approved Price”.

SECTION 16. Financial Records and Audit . The first sentence of Section 12.2(b) is hereby replaced in its entirety with the following:

Unless otherwise agreed by the Parties in writing, the Parties shall engage an Independent Accounting Expert to confirm, for each Calendar Year during the term of this Agreement, the accuracy of (i) any calculation by the Discount Committee, (ii) any pricing or discounting information provided to the Discount Committee or to either Party by the other Party pursuant to Section 7.4 or Annex R, (iii) any information of a Party or its Affiliates that is required to determine that the DCPs provided by such Party comply with the terms of this Agreement (including, for any Calendar Quarter up to and including the [*]), (iv) the calculation of the TCP Final Supply Price for Major Market Combination Product Delivered for the Janssen Countries [*]), (v) the calculation of the Limited Region A TMC278 Annual True Up for Territory Combination Product with respect to the applicable Gilead Countries in the Limited Region A and the component calculations thereof, including the determination of the [*] for such Gilead Countries, (vi) the calculation of the [*], (vii) the calculation of the Post-Conversion Supply Price for the Gilead Countries in all Regions and (viii) the calculation of the TCP Actual Supply Price for the Janssen Countries in Region B and Region C; provided, however , that the foregoing shall not permit either Party to audit any Third Party Component Distributor, such audit being permitted solely as and to the extent provided in Section 12.2(c).

SECTION 17. Audit; Independent Accounting Expert .

(a) Consequences of Inaccurate DCPs and Component Prices . Section 12.2(e)(i) is hereby replaced in its entirety with the following:

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN THE CASE OF THE EXPANDED EXISTING REGION, OTHER THAN THE UNITED STATES WITH RESPECT TO THE NET SELLING PRICE OF THE STAND-ALONE PRODUCTS DURING THE REVENUE SHARE EFFECTIVE PERIOD, (A) NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER PARTY FOR DAMAGES AND (B) NO ADJUSTMENTS SHALL BE MADE PURSUANT TO SECTION 12.2(i), IN EITHER CASE DUE TO THE PROVISION OF INACCURATE PRICING OR DISCOUNT INFORMATION TO THE DISCOUNT COMMITTEE (OR, FOR ANY CALENDAR QUARTER UP TO AND INCLUDING THE [*]), EXCEPT TO THE EXTENT THAT SUCH BREACH OR LACK OF COMPLIANCE AROSE FROM THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF SUCH PARTY OR ITS AFFILIATES.

(b) Consequences of Inaccurate DCPs and Component Prices . Section 12.2(e)(ii) is hereby replaced in its entirety with the following:

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN THE CASE OF LIMITED REGION A (EXCLUDING THE LIMITED REGION A REVENUE SHARE EXCEPTIONS ON AND AFTER THE REVENUE SHARE EFFECTIVE DATE THEREFOR) AND, PRIOR TO THE REVENUE SHARE EFFECTIVE DATE

THEREFOR, REGION B AND REGION C, (A) THE SELLING PARTY SHALL HAVE NO LIABILITY TO THE NON-SELLING PARTY FOR DAMAGES AND (B) [*].

The following shall apply to the Expanded Existing Region, excluding the United States during the Revenue Share Effective Period: Except as otherwise provided in Section 12.2(e), in the event that the Independent Accounting Expert determines, pursuant to this Section 12.2, that any Party provided any inaccurate information, the Parties shall coordinate to recalculate any amounts due hereunder or under any Ancillary Agreement based on the corrected data, as provided by the Independent Accounting Expert, and to make any payments that may be required to ensure that costs and expenses and revenues are shared in accordance with such recalculations (and the other applicable terms of this Agreement or such Ancillary Agreement); provided, however, that if either Party provided inaccurate pricing or discount information to the Discount Committee (or, for any Calendar Quarter up to and including the [*] due to its or any of its Affiliates’ gross negligence or intentional misconduct, and such inaccurate information (or non-compliant DCP) resulted in a higher selling price for the Combination Product than would have been permitted hereunder had the proper information (or DCP) been provided, then with respect to any Triggering Sales of Combination Product that were sold at a higher price that reflected such inaccurate price information of such Party (or non-compliant DCP), the Parties’ respective revenue shares shall be adjusted as follows: the Selling Party shall determine, for the Units of Combination Product sold in such Triggering Sales (the “ At-Issue Units ”), (a) [*]).

(d) Adjustments . Section 12.2(i)(ii) is hereby replaced in its entirety with the following:

The following shall apply to the United States during the Revenue Share Effective Period, Limited Region A, Region B and Region C: Except as otherwise provided in Section 12.2(e), in the event that it is determined, pursuant to this Section 12.2, that any Party provided any inaccurate information, including that with regards to the Net Selling Price of the Party’s Stand-Alone Product in the United States, the Parties shall coordinate to recalculate any amounts due hereunder or under any Ancillary Agreement based on the corrected data, as has been determined pursuant to this Section 12.2, and to make any payments that may be required to ensure that costs and expenses and revenues are shared in accordance with such recalculations (and the other applicable terms of this Agreement or such Ancillary Agreement).

SECTION 18. Medicaid .

(a) Revenue Share . Section 7.4(a)(ii)(C)(6) of the Agreement is hereby replaced in its entirety with the following:

Revenue Share . For the avoidance of doubt, each Party’s share of revenues from Medicaid Sales to a Customer that is a Medicaid entity shall be determined in accordance with Section A of Annex N.

(b) Rebates to Medicaid Customers . Section 7.4(a)(ii)(C)(4) of the Agreement is hereby replaced in its entirety with the following:

Rebates to Medicaid Customers . Gilead shall provide to Customers that are Medicaid entities any required Medicaid discounts for the Combination Product.

[*]

SECTION 19. Modified Pricing . Section 7.4(f) of the Agreement is hereby replaced in its entirety with the following:

(f) Shared Revenue Reduction Events .

With respect to Triggering Sales for which the Parties’ respective shares of revenue hereunder is based on the Parties’ respective DCPs (i.e., the Expanded Existing Region, but excluding the United States during the Revenue Share Effective Period), this clause (f) shall apply: In the event and to the extent that (i) any Mandatory Reduction occurs as contemplated by Section 7.3(c)(iv), or (ii) a government purchaser imposes a purchase price for the Territory Combination Product that is lower than the Base Price with respect to such purchaser pursuant to Section 7.4(e) (each, a “ Revenue Reduction Event ”), then each Party’s DCP for Territory Combination Product sales affected by the Revenue Reduction Event shall be [*]

SECTION 20. Annex G. Calculation of Net Sales and Net Selling Prices . The third sentence in Paragraph 1 of Annex G is hereby replaced in its entirety with the following:

Any of the deductions listed above that involves a payment by such Party shall not be taken as a deduction prior to the date accrued in accordance with GAAP.

SECTION 21. Annex EE. Letter Agreement Regarding Marketing Authorization for Combination Product .

Annex EE of the Agreement is hereby deleted in its entirety.

SECTION 22. Annexes A-1, A-2, F, L, M, N, P, Q, V, Y, AA, BB, CC and DD . Each of Annexes A-1, A-2, F, L, M, N, P, Q, V, Y, AA, BB, CC and DD are hereby replaced in their entirety with the attached Exhibits A-1, A-2, F, L, M, N, P, Q, V, Y, AA, BB, CC and DD, respectively.

SECTION 23. Definitions . All capitalized terms used, but not defined, in this Third Amendment shall have their respective meanings set forth in the Agreement.

SECTION 24. Construction . The principles set forth in Section 20.12 of the Agreement shall apply to this Third Amendment.

SECTION 25. Effective Date; Incorporation of Terms; Continuing Effect . Except to the extent otherwise expressly provided in this Third Amendment, this Third Amendment shall be deemed effective for all purposes as of the Third Amendment Effective Date. The amendment set forth in this Third Amendment shall be deemed to be incorporated in, and made a part of, the Agreement, and the Agreement and this Third Amendment shall be read, taken and construed as one and the same agreement (including with respect to the provisions set forth in Section 20 (General Provisions) of the Agreement which shall, as applicable, be deemed to apply to this Third Amendment (including with respect to the governing law)). Except as otherwise expressly amended by this Third Amendment, the Agreement shall remain in full force and effect in accordance with its terms and conditions.

SECTION 26. Entire Agreement . The Agreement, as expressly amended by this Third Amendment, shall constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of the Agreement, except that the Parties agree that no letter agreements between the Parties relating to the Agreement are intended to be superseded except (a) the letter dated July 23, 2013 relating to certain revenue sharing issues and (b) the letter agreement dated February 7, 2013 relating to the holder of the marketing authorization for Territory Combination Product, both of which are hereby superseded.

SECTION 27. Counterparts . This Third Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument.

[ Remainder of page intentionally left blank ]

IN WITNESS WHEREOF, the parties, intending to be bound, have caused this Third Amendment to be executed on their behalf by their duly authorized agent as of the day and year first above written.



JANSSEN R&D IRELAND
By:	/s/ Margaret Dulea Name: Margaret Dunlea Title: Managing Director
Date:	June 18, 2014

Signature Page to the Third Amendment



GILEAD SCIENCES, INC.
By:	/s/ John F. Milligan Name: John F. Milligan, Ph.D. Title: President and Chief Operating Officer
Date:	June 18, 2014
GILEAD SCIENCES LIMITED
By: Date:	/s/ John F. Milligan Name: John F. Milligan, Ph.D. Title: Director June 18, 2014

Signature Page to the Third Amendment

Exhibit A-1

Annex A-1: Gilead Licensed Trademarks

Janssen Countries



COUNTRY	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]

Annex A-1 Page 1



[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]

Annex A-1 Page 2

[*]



[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]
[*]	[*]	[*]	[*]	[*]	[*]

*A European Union trademark registration is fully enforceable in all 28 member countries of the European Union, that is, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden and United Kingdom

Annex A-1 Page 3

Exhibit A-2

Annex A-2: Janssen Licensed Trademarks

Gilead Countries



	EDURANT
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]

Annex A-2 Page 1



	EDURANT
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]

Annex A-2 Page 2



	EDURANT
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]

Annex A-2 Page 3

Exhibit F

Annex F: Required Minimum Details

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”).

Required Minimum Details

1. Minimum Details . For each Major Market, for each applicable Detailing Year, through the Calendar Quarter that includes the last day of the Launch Period, Gilead shall perform the number of Details of the Combination Product in such Major Market as set forth below (which amounts shall be prorated for any partial Detailing Year):

i. United States [*]

ii. France [*]

iii. Germany [*]

iv. Italy [*]

v. Spain [*]

vi. United Kingdom [*]

The Minimum Details obligations set forth in this Section for the following countries shall apply retroactively to periods prior to the Third Amendment Effective Date: (a) for [*], the Minimum Details obligation of [*] shall apply retroactively beginning with the first Calendar Quarter of 2014; prior to that, a Minimum Details obligation of [*] applied retroactively beginning with the fourth Calendar Quarter of 2012; and (b) for [*], the Minimum Details obligation shall apply retroactively beginning with the first Calendar Quarter of 2012.

2. Records and Reports . Gilead shall require its sales representatives who Detail the Combination Product to keep records of their Detailing efforts in accordance with industry standards for the applicable Major Market and sufficient to determine whether or not the required number of Details are achieved and that the requirements of Section 6.2(b)(iii) are satisfied. Within thirty (30) days after the end of each Detailing Year, Gilead shall provide Janssen with a written report stating the number of Details for each Major Market.

3. Audit . Notwithstanding any provision of Section 12 to the contrary, with reasonable advance notice and not more often than once each Calendar Year for each Major Market, Janssen may audit Gilead’s records in order to verify (a) the number of Details in each Calendar Quarter of a Detailing Year made by Gilead in a Major Market applicable to meeting the requirements of this Annex F and (b) whether or not the other requirements of Section 6.2(b)(iii) are satisfied. Any such audit shall be conducted during normal business hours at Gilead’s facilities by a reputable independent Third Party selected by Janssen and reasonably acceptable to Gilead (the “Auditor”). Such Auditor shall sign a confidentiality agreement in a form reasonably satisfactory to Gilead, and shall not disclose to Janssen or any other person any information, except the number of Details made by Gilead per Major Market for each applicable quarter of a Detailing

Annex F Page 1

Year determined by such audit, and the Auditor’s findings as to whether or not the other requirements of Section 6.2(b)(iii) are satisfied. Such audit shall be at Janssen’s expense, unless the Auditor determines (absent manifest error on the part of the Auditor) that Gilead incorrectly over-reported (i) the number of Details made by Gilead for a particular Major Market and Detailing Year and did not meet the number of Details required for such Major Market and Detailing Year, and/or (ii) meeting the requirements of Section 6.2(b)(iii), in either of which cases Gilead shall be responsible for reimbursing Janssen for the fees and expenses charged by the Auditor in connection with such audit that are applicable to such Major Market and Detailing Year.

Annex F Page 2

CONFIDENTIAL

Exhibit L

Annex L: Annual Adjustments to Account for Actual Yield

Section 1 of this Annex L shall apply retroactively to the Effective Date. Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”).


1.	At the end of each Calendar Year, Gilead shall determine the [*]. Gilead shall use reasonable efforts to provide such determinations to Janssen by February 15 after the end of the applicable Calendar Year and shall provide such determinations no later than March 1 after the end of such Calendar Year.

For each Calendar Year, no later than thirty (30) days after the applicable notification is provided pursuant to Paragraph 1 of this Annex L, (a) Gilead shall adjust its balance sheet ( e.g. , inventory of Supplied TMC278 and accounts payable) and (b) Janssen shall adjust its balance sheet ( e.g. , accounts receivable and deferred revenue), in each case (a) and (b), to reflect the Quantity Differential moved into or out of Gilead’s inventory multiplied by the Pre-Conversion Supply Price for the Calendar Year then-ended.


3.	For clarification, there shall be no Post-Conversion Invoice issued and no Additional Supply Price paid by Gilead with respect to Combination Product sold in the Janssen Countries.

Annex L Page 1

CONFIDENTIAL

Exhibit M

Annex M: Payment Terms for TMC278 Invoices

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”). The payment terms for each of the Regions, for the applicable Party are as follow:

A. Gilead Countries in the Expanded Existing Region

For the avoidance of doubt, references to the Region in this Section A are deemed to mean the Gilead Countries in the Expanded Existing Region.

A.1. Determination of the Annual Forecast Payment Term

No later than November 15th of each Calendar Year (in conjunction with the establishment of the Pre-Conversion Supply Price), Gilead shall propose, for the upcoming Calendar Year with respect to the Gilead Countries of the Region a payment term for the payment of TMC278 Invoices (the “ Annual Forecast Payment Term ”) in the Region. Gilead shall provide Janssen with a basis for its proposed payment term, which shall reflect [*]

Annex M Page 1

CONFIDENTIAL

B. Limited Region A Gilead Countries, Excluding Limited Region A Revenue Share Exceptions


i.	The term “Region” as used in this Section B shall refer to the Gilead Countries in Limited Region A, excluding Limited Region A Revenue Share Exceptions on and after the Revenue Share Effective Date therefor. [*]

An example of the calculation of the payment term with respect to the Gilead Countries in the Region is included below:

Annex M Page 2

CONFIDENTIAL

[*]

Annex M Page 3

CONFIDENTIAL

C. Region B and Region C Gilead Countries and Limited Region A Revenue Share Exceptions

The term “Region” as used in this Section C shall refer, on and after the Revenue Share Effective Date therefor, to the Gilead Countries in both Region B and Region C and the Limited Region A Revenue Share Exceptions, collectively. [*]

D. Region A Janssen Countries and, Prior to the Revenue Share Effective Date, Region B and Region C Janssen Countries

The term “Region” as used in this Section D shall collectively refer to the Janssen Countries in Region A and, prior to the Revenue Share Effective Date therefor, the Janssen Countries in both Region B and Region C. [*]

Such Pre-Conversion Invoice due date shall be [*]

For the avoidance of doubt, there shall be no Post-Conversion Invoices issued and no Additional Supply Price paid by Gilead with respect to Combination Product sold, in accordance with the terms of this Agreement, in the Region A Janssen Countries and, prior to the Revenue Share Effective Date, the Region B and Region C Janssen Countries.

E. Region B and Region C Janssen Countries (on and after the Revenue Share Effective Date therefor)

The term “Region” as used in this Section E shall collectively refer to, on and after the Revenue Share Effective Date therefor, the Janssen Countries in both Region B and Region C. [*]

For the avoidance of doubt, there shall be no Post-Conversion Invoices issued and no Additional Supply Price paid by Gilead with respect to Combination Product sold, in accordance with the terms of this Agreement, in the Region B or Region C Janssen Countries on and after the Revenue Share Effective Date therefor.

Annex M Page 9

CONFIDENTIAL

Exhibit N

Annex N: Post-Conversion Supply Price

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”). The Post-Conversion Supply Price for the applicable Region and Selling Party shall be as follows:

This amended Exhibit N applies to all Triggering Sales on or after the applicable Revenue Share Effective Date for the applicable Region or Country; the prior Exhibit N shall apply for any Triggering Sales prior to such date.

A. The Gilead Countries in the Expanded Existing Region

For purposes of this Section A, Region shall mean the Gilead Countries in the Expanded Existing Region.

A.1. Post-Conversion Supply Price

The Post-Conversion Supply Price for a given month (per kilogram of Supplied TMC278) with respect to the Region shall equal:

[*]

Annex N Page 1

CONFIDENTIAL

[*]

Annex N Page 2

CONFIDENTIAL

A.2. Calculation of [*]

[*]

Annex N Page 3

CONFIDENTIAL

An example of the calculation of the [*] in the Limited Region A Revenue Share Exceptions and Gilead Countries in Region B and Region C is below.

[*]

Annex N Page 4

CONFIDENTIAL

B. Janssen Countries

For the avoidance of doubt, [*].

C. Gilead Countries in Limited Region A

C.1. Post-Conversion Supply Price

The term “Region” as used in this Section C.1 shall refer to the Gilead Countries in Limited Region A, except that such term shall not include the Limited Region A Revenue Share Exceptions on and after the Revenue Share Effective Date therefor.

The Post-Conversion Supply Price for a given Calendar Year (per kilogram of Supplied TMC278) with respect to the Region shall equal:

[*]

An example of the calculation of the Post-Conversion Supply Price based on certain estimates with respect to TMC278 in the Gilead Countries in the Limited Region A is included below.

Annex N Page 5

CONFIDENTIAL

[*]

Annex N Page 6

CONFIDENTIAL

C.2. Limited Region A TMC278 Annual True Up; Pre Revenue Share Effective Date True Up for Regions B and C.

The following adjustment (the “Limited Region A TMC278 Annual True Up”) shall be performed separately for (i) the Gilead Countries in Limited Region A (excluding the Limited Region A Revenue Share Exceptions) for all periods and (ii) solely for the purpose of conducting a true up for Triggering Sales of Territory Combination Product therein prior to the Revenue Share Effective Date therefor, the Gilead Countries in Region B and Region C and the Limited Region A Revenue Share Exceptions (each of (i) and (ii), a “Region” for purposes of this Section).

[*]

Annex N Page 7

CONFIDENTIAL

An example of the calculation of the Limited Region A TMC278 Annual True Up in the Limited Region A is included below.

[*]

Annex N Page 8

CONFIDENTIAL

D. Gilead Countries in Region B and Region C and Limited Region A Revenue Share Exceptions

The term “Region” as used in this Section D shall refer to the Gilead Countries in both Region B and Region C and the Limited Region A Revenue Share Exceptions, on and after the Revenue Share Effective Date therefor, collectively. For clarity, the Post-Conversion Supply Price and the US TMC278 Ratio True Up for the Region shall be calculated for all Gilead Countries in the Region collectively.

D.1. Post-Conversion Supply Price

The Post-Conversion Supply Price for a given month (per kilogram of Supplied TMC278) with respect to the applicable Gilead Country shall equal:

[*]

Annex N Page 9

CONFIDENTIAL

An example of the calculation of the Post-Conversion Supply Price and the Additional Supply Price, provided for illustrative purposes only, is set forth below.

[*]

Annex N Page 10

CONFIDENTIAL

D.2. Calculation of [*]

[*]

Annex N Page 11

Exhibit P

Annex P: Yield Rates

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”).

Estimated Yield Rate

The Estimated Yield Rate with respect to Supplied TMC278 for a given Calendar Year shall be as mutually agreed by the Parties, taking into account relevant factors, including [*]. If the Parties are unable to agree on an Estimated Yield Rate for a given Calendar Year by the preceding September 30, the dispute shall be referred for resolution to the Manufacturing Executives (as defined below). If the Manufacturing Executives are unable to reach agreement on such Estimated Yield Rate within ten (10) Business Days after such referral, then such dispute shall constitute an Arbitration Matter and the arbitrator shall determine the Estimated Yield Rate for such Calendar Year based on the foregoing principles and following any such determination the Estimated Yield Rate determined by the arbitrator shall be binding on the Parties for such Calendar Year.

The Estimated Yield Rate shall be used in the calculation of the Post-Conversion Supply Price for such Calendar Year.

“ Manufacturing Executives ” shall mean (a) with respect to Janssen, a Senior Vice President of Pharmaceutical Manufacturing or any direct report designated by the foregoing and (b) with respect to Gilead, Gilead Parent’s Senior Vice President of Manufacturing or any direct report designated by the foregoing.

Annual Yield Rate

[*]

Annex P – Page 1

Exhibit Q

Annex Q: Additional Financial Reporting

Capitalized terms used in this Annex and not defined herein shall have the meaning set forth in the agreement to which this Annex is attached (the “ Agreement ”). Section references used in this Annex shall refer to Sections in the Agreement except as otherwise provided.

I. Review of Calculations . Without limitation of a Party’s audit rights under Sections 12.2(b) and (c) of the Agreement, each Party may review any calculation provided by the other Party under this Annex Q with respect to the Limited Region A, Region B and Region C. If the reviewing Party disagrees with the other Party’s calculations, the reviewing Party shall promptly notify the other Party and the Parties’ respective finance representatives shall confer to discuss such disagreement. If they are unable to resolve such dispute within ten (10) Business Days, to the extent such dispute regards the calculation itself (rather than a dispute regarding an interpretation of the Agreement (including this Annex or any other Annexes) or those matters covered by Section 12.2(b) or (c)), then the reviewing Party may refer such dispute to an Independent Accounting Expert. The determination of such Independent Accounting Expert shall be deemed binding upon the Parties absent an agreement to the contrary. For clarity, any dispute regarding the interpretation of the Agreement (including this Annex or any other Annexes) shall be subject to the dispute resolution provisions set forth in the Agreement. For the avoidance of doubt, this provision is intended to apply only to review of the calculations performed pursuant to this Annex Q, and shall not entitle either Party to audit the underlying information utilized in such calculations, which audit right is exclusively provided pursuant to Section 12.2(b) and (c) of the Agreement.

II. Expanded Existing Region . This Section II applies only with respect to the Expanded Existing Region. The Parties shall exchange information as follows:

Each Party shall provide the other Party with the following information at the times set forth below. Reporting pursuant to Section II of this Annex Q shall be on a country-by-country basis and, where appropriate in light of the calculations to be made under the Agreement or any Ancillary Agreements, in the aggregate for all countries reported by the applicable Party in the Expanded Existing Region. Furthermore, to the extent applicable to the reporting contemplated in Section II of this Annex Q, the Parties shall coordinate in good faith to establish categories into which the reporting Party may group Customers based on discounts and other factors deemed relevant by the Parties (“ Customer Groups ”) in order to limit the level of administrative burden to the Selling Party, and such Customer Groups may change from time to time as the result of changes in Customers’ respective discounts or changes in such other factors. Once agreed by the Parties, such Customer Groups may be used by Gilead for purposes of determining the Post-Conversion Supply Price pursuant to Annex N for the Expanded Existing Region.

A. [*]

Annex Q – Page 1

[*]

Annex Q – Page 2

An example of the revenue share report for the United States provided for illustrative purposes only, is set forth below.



[*]
[*]

[*]		[*]

[*]		[*]
[*]		[*]

[*]
[*]		[*]
[*]		[*]
[*]		[*]
[*]		[*]
[*]		[*]
[*]		[*]
[*]		[*]
[*]		[*]
[*]		[*]

Annex Q – Page 3

Exhibit V

[*]

Annex V Page 1

[*]

Annex V Page 2

[*]

Annex V Page 3

[*]

Annex V Page 4

Annex V Page 5

[*]

Annex V Page 6

Exhibit Y

Annex Y: Limited Region A, Region B and Region C Pricing and Discounts

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”).

A. Generally.

The provisions set forth in this Annex Y shall apply to the pricing of Territory Combination Product sold by the Selling Party or any of its applicable Affiliates to any Third Party, including a Third Party Distributor, in any country outside the Expanded Existing Region. For clarity, the Discount Committee described in Section 7 of the Agreement shall not govern the pricing activities under this Annex Y.

B. Pricing Principles Outside the Expanded Existing Region.

The Selling Party shall have discretion as to the price that it offers to sell the Territory Combination Product unless otherwise specifically provided in this Annex Y. Except as otherwise agreed by the Parties in writing, with respect to any Price Approval Country, the Selling Party shall be responsible for managing the negotiation with the applicable authority(ies) in each such country in the Territory to obtain and maintain pricing approval.


2.	Upon request of one Party, the other Party shall make available to such requesting Party, solely to the extent allowed by Applicable Law, such information Controlled by such other Party and its Affiliates as is required in order to obtain pricing and reimbursement approvals for the Territory Combination Product.


3.	The following shall apply to Price Approval Countries in Limited Region A other than Limited Region A Revenue Share Exceptions. If, following the Launch of the Territory Combination Product in any such country, [*]


4.	As between the Parties (and their respective Affiliates), the Selling Party (and its Affiliates) (or its Third Party Distributor) shall have sole responsibility for conducting pricing and discounting negotiations (and all other contracting matters) with respect to the Territory Combination Product with Customers in the applicable country in the Territory in accordance with this Annex Y.


5.	Gilead and Janssen shall each retain sole discretion with respect to price-setting and discounts for its respective Single Agent Products and Double Agent Product. Notwithstanding the foregoing, [*].

Annex Y – Page 1

C. Disputes.

In the event that interpretation or application of this Annex Y is necessary to implement the provisions of this Annex Y, the Alliance Managers shall discuss the matter and attempt to resolve the matter by consensus.

To the extent any of the above procedures is not permitted by Applicable Law, the Parties shall promptly agree on alternative procedures to replace such procedures.

Annex Y – Page 2

Exhibit AA

Annex AA: Selling Party and Country List for Region A, Region B and Region C

This list shall automatically include any country that is derived from the territory of a country listed below (for example, the independent country of Southern Sudan from Sudan). For clarity, the column entitled “Janssen as Holder of Marketing Authorization” indicates for each country whether Janssen holds the Marketing Authorization in accordance with Section 4.4(a) of the Agreement.



Region A
Country	Original Selling Party (Prior to April 25. 2014)	Selling Party (As of April 25, 2014 and as of the Third Amendment Effective Date)	Janssen as Holder of Marketing Authorization
Albania	Gilead	Gilead	No
Argentina	Gilead	Gilead	No
Bahrain	Janssen	Non-Assigned	No
Bosnia-Herzegovina	Gilead	Gilead	No
Chile	Gilead	Gilead	No
Colombia	Gilead	Gilead	No
Costa Rica	Gilead	Gilead	No
FYR Macedonia	Gilead	Gilead	No
Hong Kong	Janssen	Janssen	Yes
Israel	Janssen	Janssen	Yes
Japan	Janssen	Janssen	Yes
Kosovo	Gilead	Gilead	No
Kuwait	Janssen	Non-Assigned	No
Lebanon	Janssen	Janssen	Yes
Macau	Janssen	Janssen	Yes
Malaysia	Janssen	Janssen	Yes
Mexico	Janssen	Janssen	Yes
Montenegro	Gilead	Gilead	No
Oman	Janssen	Non-Assigned	No
Qatar	Janssen	Non-Assigned	No
Russia	Janssen	Janssen	No
Saudi Arabia	Janssen	Non-Assigned	No
Serbia	Gilead	Gilead	No
Singapore	Janssen	Janssen	Yes
South Korea	Janssen	Janssen	Yes
Taiwan	Janssen	Janssen	Yes
United Arab Emirates	Janssen	Non-Assigned	No
Uruguay	Gilead	Gilead	No
Venezuela	Gilead	Gilead	No

Annex AA – Page 1



Region B

Country	Original Selling Party (Prior to April 25. 2014)	Selling Party (As of April 25, 2014 and as of the Third Amendment Effective Date)	Janssen as Holder of Marketing Authorization
Algeria	Janssen	Janssen	Yes
Azerbaijan	Janssen	Janssen	Yes
Belarus	Janssen	Janssen	Yes
Cayman Islands	Gilead	Gilead	No
Curacao	Gilead	Gilead	No
China (Mainland)	Janssen	Janssen	No
Egypt	Janssen	Janssen	Yes
Iran	Janssen	Non-Assigned	No
Iraq	Janssen	Non-Assigned	No
Jordan	Janssen	Janssen	Yes
Libya	Janssen	Janssen	Yes
Morocco	Janssen	Non-Assigned	No
Panama	Gilead	Gilead	No
Paraguay	Gilead	Gilead	No
Peru	Gilead	Gilead	No
Philippines	Janssen	Janssen	Yes
Sint Maarten	Gilead	Gilead	No
Tunisia	Janssen	Non-Assigned	No
Ukraine	Janssen	Janssen	Yes

Annex AA – Page 2



Region C

Country	Original Selling Party (Prior to April 25. 2014)	Selling Party (As of April 25, 2014 and as of the Third Amendment Effective Date)	Janssen as Holder of Marketing Authorization
Afghanistan	Janssen	Non-Assigned	No
Angola	Janssen	Non-Assigned	No
Anguilla	Gilead	Gilead	No
Antigua and Barbuda	Gilead	Gilead	No
Armenia	Janssen	Janssen	Yes
Aruba	Gilead	Gilead	No
Bahamas	Gilead	Gilead	No
Bangladesh	Janssen	Non-Assigned	No
Barbados	Gilead	Gilead	No
Belize	Gilead	Gilead	No
Benin	Janssen	Non-Assigned	No
Bhutan	Janssen	Non-Assigned	No
Bolivia	Gilead	Gilead	No
Botswana	Janssen	Gilead	No
British Virgin Islands	Gilead	Gilead	No
Burkina Faso	Janssen	Non-Assigned	No
Burundi	Janssen	Non-Assigned	No
Cambodia	Janssen	Non-Assigned	No
Cameroon	Janssen	Non-Assigned	No
Cape Verde	Janssen	Non-Assigned	No
Central African Republic	Janssen	Non-Assigned	No
Chad	Janssen	Non-Assigned	No
Comoros	Janssen	Non-Assigned	No
Congo	Janssen	Non-Assigned	No
Congo, Dem. Rep. of the	Janssen	Non-Assigned	No
Cote d'Ivoire	Janssen	Non-Assigned	No
Cuba	Gilead	Gilead	No
Djibouti	Janssen	Non-Assigned	No
Dominica	Gilead	Gilead	No
Dominican Republic	Gilead	Gilead	No
Ecuador	Gilead	Gilead	No
El Salvador	Gilead	Gilead	No
Equatorial Guinea	Janssen	Non-Assigned	No
Eritrea	Janssen	Non-Assigned	No
Ethiopia	Janssen	Non-Assigned	No
Fiji	Janssen	Non-Assigned	No

Annex AA – Page 3



Gabon	Janssen	Non-Assigned	No
Gambia	Janssen	Non-Assigned	No
Georgia	Janssen	Non-Assigned	No
Ghana	Janssen	Non-Assigned	No
Grenada	Gilead	Gilead	No
Guatemala	Gilead	Gilead	No
Guinea	Janssen	Non-Assigned	No
Guinea-Bissau	Janssen	Non-Assigned	No
Guyana	Gilead	Gilead	No
Haiti	Gilead	Gilead	No
Honduras	Gilead	Gilead	No
India	Janssen	Non-Assigned	No
Indonesia	Janssen	Non-Assigned	No
Jamaica	Gilead	Gilead	No
Kazakhstan	Janssen	Janssen	Yes
Kenya	Janssen	Non-Assigned	No
Kiribati	Janssen	Non-Assigned	No
Korea, Dem. People’s Rep of	Janssen	Non-Assigned	No
Kyrgyzstan	Janssen	Janssen	Yes
Lao, People’s Dem. Rep.	Janssen	Non-Assigned	No
Lesotho	Janssen	Gilead	No
Liberia	Janssen	Non-Assigned	No
Madagascar	Janssen	Non-Assigned	No
Malawi	Janssen	Non-Assigned	No
Maldives	Janssen	Non-Assigned	No
Mali	Janssen	Non-Assigned	No
Mauritania	Janssen	Non-Assigned	No
Mauritius	Janssen	Non-Assigned	No
Moldova, Rep. of	Janssen	Non-Assigned	No
Mongolia	Janssen	Non-Assigned	No
Montserrat	Gilead	Gilead	No
Mozambique	Janssen	Non-Assigned	No
Myanmar	Janssen	Non-Assigned	No
Namibia	Janssen	Non-Assigned	No
Nauru	Janssen	Non-Assigned	No
Nepal	Janssen	Non-Assigned	No
Nicaragua	Gilead	Gilead	No
Niger	Janssen	Non-Assigned	No
Nigeria	Janssen	Non-Assigned	No
Pakistan	Janssen	Non-Assigned	No

Annex AA – Page 4



Palau	Janssen	Non-Assigned	No
Papua New Guinea	Janssen	Non-Assigned	No
Rwanda	Janssen	Non-Assigned	No
Saint Kitts and Nevis	Gilead	Gilead	No
Saint Lucia	Gilead	Gilead	No
Saint Vincent and the Grenadines	Gilead	Gilead	No
Samoa	Janssen	Non-Assigned	No
Sao Tome and Principe	Janssen	Non-Assigned	No
Senegal	Janssen	Non-Assigned	No
Seychelles	Janssen	Non-Assigned	No
Sierra Leone	Janssen	Non-Assigned	No
Solomon Islands	Janssen	Non-Assigned	No
Somalia	Janssen	Non-Assigned	No
South Africa	Janssen	Gilead	No
South Sudan	Janssen	Non-Assigned	No
Sri Lanka	Janssen	Non-Assigned	No
Sudan	Janssen	Non-Assigned	No
Suriname	Gilead	Gilead	No
Swaziland	Janssen	Gilead	No
Syria	Janssen	Non-Assigned	No
Tajikistan	Janssen	Janssen	Yes
Tanzania, U. Rep. of	Janssen	Non-Assigned	No
Thailand	Janssen	Non-Assigned	No
Timor-Leste	Janssen	Non-Assigned	No
Togo	Janssen	Non-Assigned	No
Tonga	Janssen	Non-Assigned	No
Trinidad and Tobago	Gilead	Gilead	No
Turkmenistan	Janssen	Non-Assigned	No
Turks and Caicos	Gilead	Gilead	No
Tuvalu	Janssen	Non-Assigned	No
Uganda	Janssen	Non-Assigned	No
Uzbekistan	Janssen	Janssen	Yes
Vanuatu	Janssen	Non-Assigned	No
Vietnam	Janssen	Non-Assigned	No
Yemen	Janssen	Non-Assigned	No
Zambia	Janssen	Non-Assigned	No
Zimbabwe	Janssen	Non-Assigned	No

Annex AA – Page 5

Exhibit BB

Annex BB: Invoice and Payment Terms for Territory Combination Product in Janssen Countries

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”).

With respect to Region A Janssen Countries, including Japan, Gilead shall issue to Janssen an Interim TCP Invoice for the TCP Interim Supply Price upon shipment of Territory Combination Product pursuant to the Janssen Distributor Agreement.

With respect to Region B and Region C Janssen Countries, Gilead shall issue to Janssen an Interim TCP Invoice for the TCP Interim Supply Price upon shipment of Territory Combination Product pursuant to the Janssen Distributor Agreement, and Gilead shall issue to Janssen a Final TCP Invoice within [*] Each such Interim TCP Invoice or Final TCP Invoice shall state the invoiced amount and quantity of Territory Combination Product covered by such invoice. Janssen shall pay each such invoice in accordance with the payment terms and calculations set forth in this Annex BB of the Agreement.

[*]

A. Janssen Country Territory Combination Product Invoicing

All TCP Invoices shall be issued and paid in U.S. Dollars on the date set forth below.

A.2. Invoicing and Payment in Region A Janssen Countries

The Janssen Countries in Region A are collectively the “Region” for purposes of this Section A.1, such that there shall be a single Average Janssen Region Payment Term for all of the Janssen Countries in Region A.

[*]

An example of the calculation of the payment term with respect to the Janssen Countries in Region A is included below.

Annex BB – Page 1

[*]

Annex BB – Page 2

[*]

B. Janssen Country Territory Combination Product Interim Supply Price

[*]

An example of the calculation of the TCP Interim Supply Price with respect to Territory Combination Product in Region A Janssen Countries (excluding [*]) is included below.

Annex BB – Page 3

[*]

Annex BB – Page 4

B.1. Region B and Region C Janssen Countries

Subject to the true up described in Section C.2 of this Annex BB, Gilead shall supply each Unit of Branded Region B/C Combination Product to Janssen or its designated Affiliate at [*] (collectively, the Janssen Countries of Region B and Region C shall constitute a single “Region” for purposes of this Section B.2). The invoiced amount for the Final TCP Invoice for a given month shall equal the product of: [*]

Annex BB – Page 5

[*]

Annex BB – Page 6

B.3 [*]

[*]

Annex BB – Page 7

[*]

Annex BB – Page 8

C. Janssen Country Territory Combination Product True Ups

C.1. Region A Janssen Countries Excluding [*]

Within ninety (90) days following the end of each Calendar Year, Gilead shall provide Janssen with a Final TCP Invoice with respect to each Interim TCP Invoice (or portion thereof) for the Janssen Countries in Region A (excluding Japan) (collectively, the “Region” for purposes of this Section C.1). [*]

An example of the calculation of the TCP Annual True Up amount is included below.

Annex BB – Page 9

[*]

Annex BB – Page 10

[*]

Annex BB – Page 11

C.2 Region B and Region C: Calculation of [*]

[*]

Annex BB – Page 12

[*]

Annex BB – Page 13

C.3 [*]

[*]

Annex BB – Page 14

CONFIDENTIAL

Exhibit CC

Annex CC: Exchange Rates and Currency Conversion True Up Principles

Capitalized terms not defined in this Annex shall have the meanings set forth in the agreement to which this Annex is attached (the “ Agreement ”).

A. Estimated Net Selling Price and TCP Interim Supply Price Currency Conversions

With respect to the calculation of the TMC278 Post-Conversion Supply Price in Annex N with respect to the Limited Region A and the TCP Interim Supply Price in Annex BB with respect to the Janssen Countries in Region A (including [*]) and the calculations associated therewith, the conversion of currency values used in such calculations with respect to a country from the local currency into U.S. Dollars shall be calculated utilizing the applicable Intra-Year Conversion Rate for such country during such Calendar Year.

“ Intra-Year Conversion Rate ” shall mean, with respect to a Calendar Year and a country, the daily exchange rate between the applicable country’s currency and U.S. Dollars reported by the Bloomberg Professional <R> service application on the last Business Day during the month of October in the previous Calendar Year.


B.	Limited Region A TMC278 Annual True Up and TCP Annual True Up

Notwithstanding Section 10.9(a) of the Agreement and except as otherwise specified in Annex BB Section C.1 with regard to the DCP and Combination Product Actual Net Selling Price values in Mexico and Russia, with respect to the calculation of the Limited Region A TMC278 Annual True Up in Annex N and the TCP Annual True Up in Annex BB with respect to Region A (including Japan), the conversion of currency values used in such calculations with respect to a country from the local currency into U.S. Dollars shall be calculated utilizing the applicable Final Year Conversion Rate for such country for such Calendar Year with respect to which the applicable true up is being calculated.

“ Final Year Conversion Rate ” shall mean, with respect to a Calendar Year and a country, the weighted average of the applicable country’s Monthly Average Exchange Rate for each of the months in such Calendar Year, weighted by the corresponding Actual Unit Sales, as applicable, with respect to such country for such calendar month.

“ Monthly Average Exchange Rate ” shall mean, with respect to a country and a calendar month, the actual average daily exchange rate for such month for converting the applicable country’s currency into U.S. Dollars, as such rate is reported in Bloomberg Professional <R> service application.

“ Actual Unit Sales ” shall mean, with respect to a country and a calendar month, the actual number of Units of Territory Combination Product for which a Triggering Sale by Gilead and its

Annex CC - 1

CONFIDENTIAL

Affiliates or Janssen and its Affiliates, as applicable, has occurred in such country for such calendar month.

An example of the calculation of the Final Year Conversion Rate for the TCP Annual True Up in the Janssen Countries is included below.

Annex CC - 2

CONFIDENTIAL

[*]

Annex CC - 3

CONFIDENTIAL

Exhibit DD

Annex DD: Calendar Year End Revaluation Invoice Adjustments

A. Combination Product for Janssen Countries

For purposes of this Section A of Annex DD, “Region” shall be deemed to mean each of (a) Region A (excluding [*]), (b) Region B and Region C collectively (such that there shall be one calculation for all Janssen Countries in Region B and Region C) and (c) [*]

An example of the calculation of the Revaluation TCP Invoice with respect to the Janssen Countries is included below.

Annex DD - 1

CONFIDENTIAL

[Note: Example was updated by the A&R Second Amendment]

Annex DD - 2

CONFIDENTIAL

[*]

Annex DD - 3

CONFIDENTIAL

B. TMC278 Invoices

Section B of this Annex DD shall apply retroactively to the Effective Date. [*]

Annex DD - 4

Exhibit 31.1

CERTIFICATION

I, John C. Martin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gilead Sciences, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2014

/s/ J OHN C. M ARTIN

John C. Martin, Ph.D.

Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Robin L. Washington, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gilead Sciences, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2014

/ S / R OBIN L. W ASHINGTON

Robin L. Washington

Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), John C. Martin, Ph.D., the Chairman and Chief Executive Officer of Gilead Sciences, Inc. (the Company), and Robin L. Washington, the Executive Vice President and Chief Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014 , to which this Certification is attached as Exhibit 32 (the Periodic Report), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the periods covered by the Periodic Report and results of operations of the Company for the periods covered by the Periodic Report.

Dated: August 4, 2014



/s/ J OHN C. M ARTIN		/s/ R OBIN L. W ASHINGTON
John C. Martin, Ph.D. Chairman and Chief Executive Officer		Robin L. Washington Executive Vice President and Chief Financial Officer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.



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