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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3047598
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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333 Lakeside Drive, Foster City, California
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94404
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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The Nasdaq Global Select Market
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PART I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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PART II
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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Item 16
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ITEM 1.
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BUSINESS
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•
|
HIV: We achieved record sales of our HIV products in 2018, with HIV product revenues increasing by
19%
in the United States and
12%
worldwide compared to 2017. This growth was driven by the successful launch of Biktarvy
®
and the continued strong uptake of our single tablet regimens containing tenofovir alafenamide (TAF) for the treatment of HIV infection as well as Truvada
®
for a pre-exposure prophylaxis (PrEP) indication for HIV prevention. Biktarvy, a once-daily single tablet regimen containing bictegravir, emtricitabine and TAF for the treatment of HIV infection in adults, was approved by the U.S. Food and Drug Administration (FDA) in February and by the European Commission in June.
|
•
|
Liver Diseases: Our revenues from our chronic hepatitis C virus (HCV) products became more predictable in 2018. Because we wanted to introduce a lower-priced alternative to our HCV products without significant disruption to the healthcare system and our business, we authorized the launch of generic versions of Epclusa
®
and Harvoni
®
in the United States starting in January 2019 through our separate subsidiary, Asegua Therapeutics LLC (Asegua). We also continued to advance our clinical trials for the treatment of chronic hepatitis B virus (HBV) and nonalcoholic steatohepatitis (NASH), including completing enrollment of Phase 3 clinical trials of NASH.
|
•
|
Cell Therapy and Immuno-Oncology: We advanced our pipeline of cancer therapies and positioned ourselves as a leader in cell therapy. Yescarta
®
was approved by the European Commission in August for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL) and primary mediastinal large B-cell lymphoma (PMBCL) after two or more lines of systemic therapy. We certified additional centers in the United States and Europe to provide treatment for Yescarta. In order to advance and accelerate research and development efforts in cell therapy and immuno-oncology, during the year, we entered into key strategic collaborations with the National Cancer Institute, Pfizer, Inc. (Pfizer), Sangamo Therapeutics, Inc. (Sangamo), Gadeta B.V. (Gadeta), HiFiBiO Therapeutics (HiFiBiO), Tango Therapeutics (Tango) and Agenus Inc. (Agenus).
|
•
|
Inflammation: We continued to advance our pipeline of novel investigational agents for inflammatory diseases, including announcing positive data on filgotinib in ongoing Phase 2 and 3 clinical trials. We also entered into a strategic collaboration with Verily Life Sciences LLC, an Alphabet company (Verily), using Verily’s Immunoscape platform to identify and better understand the immunological basis of inflammatory diseases.
|
•
|
Biktarvy
is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Biktarvy is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, bictegravir, emtricitabine and TAF.
|
•
|
Descovy
®
is an oral formulation indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection in certain patients. Descovy is a fixed-dose combination of our antiretroviral medications, emtricitabine and TAF.
|
•
|
Odefsey
®
is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Odefsey is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, emtricitabine and TAF, and rilpivirine marketed by Janssen Sciences Ireland UC, one of the Janssen Pharmaceutical Companies of Johnson & Johnson (Janssen).
|
•
|
Genvoya
®
is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Genvoya is a single tablet regimen of a fixed-dose combination of our antiretroviral medicines, elvitegravir, cobicistat, emtricitabine and TAF.
|
•
|
Stribild
®
is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Stribild is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, elvitegravir, cobicistat, tenofovir disoproxil fumarate (TDF) and emtricitabine.
|
•
|
Complera
®
/Eviplera
®
is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. The product, marketed in the United States as Complera and in Europe as Eviplera, is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, TDF and emtricitabine, and Janssen’s rilpivirine hydrochloride.
|
•
|
Atripla
®
is an oral formulation indicated as a complete regimen for the treatment of HIV-1 infection in certain patients. Atripla is a fixed-dose combination of our antiretroviral medications, TDF and emtricitabine, and Bristol-Myers Squibb Company’s (BMS’s) efavirenz.
|
•
|
Truvada
®
is an oral formulation indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection in certain patients. It is a fixed-dose combination of our antiretroviral medications, TDF and emtricitabine. FDA also approved Truvada for a PrEP indication, in combination with safer sex practices, to reduce the risk of sexually acquired HIV-1 infection in certain at-risk patients.
|
•
|
Vosevi
®
is an oral formulation of a once-daily, single tablet regimen of sofosbuvir, velpatasvir and voxilaprevir for the re-treatment of chronic HCV infection in adults: (i) with genotype 1, 2, 3, 4, 5 or 6 previously treated with an NS5A inhibitor-containing regimen or (ii) with genotype 1a or 3 previously treated with a sofosbuvir-containing regimen without an NS5A inhibitor.
|
•
|
Vemlidy
®
is an oral formulation of TAF dosed once a day for the treatment of chronic HBV infection in adults with compensated liver disease.
|
•
|
Epclusa
®
is an oral formulation of a once-daily single tablet regimen of sofosbuvir and velpatasvir for the treatment of chronic HCV infection in adults with genotype 1, 2, 3, 4, 5 or 6: (i) without cirrhosis or with compensated cirrhosis or (ii) with decompensated cirrhosis for use in combination with ribavirin.
|
•
|
Harvoni
®
is an oral formulation of a once-daily, single tablet regimen of ledipasvir and sofosbuvir for the treatment of chronic HCV infection in: (i) adults with genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis, (ii) adults with genotype 1 infection with decompensated cirrhosis, in combination with ribavirin, (ii) adults with genotype 1 or 4 who are liver transplant recipients without cirrhosis or with compensated cirrhosis, in combination with ribavirin, or (iv) certain pediatric patients with genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis.
|
•
|
Viread
®
is an oral formulation of TDF dosed once a day for the treatment of chronic HBV infection in adults and certain pediatric patients.
|
•
|
Yescarta
(axicabtagene ciloleucel) is a CAR T cell therapy for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high-grade B-cell lymphoma and DLBCL arising from TFL.
|
•
|
Zydelig
®
(idelalisib) is an oral formulation of a kinase inhibitor for the treatment of patients with: (i) relapsed chronic lymphocytic leukemia (CLL), in combination with rituximab, for whom rituximab alone would be considered appropriate therapy due to other co-morbidities, (ii) relapsed follicular B-cell non-Hodgkin lymphoma (FL) in patients who have received at least two prior systemic therapies or (iii) relapsed small lymphocytic lymphoma who have received at least two prior systemic therapies.
|
•
|
Letairis
®
(ambrisentan) is an oral formulation of an endothelin receptor antagonist for the treatment of pulmonary arterial hypertension (PAH) (WHO Group I) (i) to improve exercise capacity and delay clinical worsening or (ii) in combination with tadalafil to reduce the risks of disease progression and hospitalization for worsening PAH, and to improve exercise ability.
|
•
|
Ranexa
®
(ranolazine) is an oral formulation of an extended-release tablet of an antianginal for the treatment of chronic angina.
|
•
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AmBisome
®
(amphotericin B liposome for injection) is a proprietary liposomal formulation of amphotericin B, an antifungal agent, for the treatment of serious invasive fungal infections caused by various fungal species in adults.
|
Product Candidates
|
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Description
|
Product in Phase 3
|
|
|
Descovy
|
|
Descovy is being evaluated for a PrEP indication.
|
Product in Phase 2
|
|
|
GS-9131
|
|
GS-9131, a nucleoside reverse transcriptase inhibitor, is being evaluated for the treatment of HIV infection.
|
Products in Phase 1
|
|
|
GS-6207
|
|
GS-6207, a capsid inhibitor, is being evaluated for the treatment of HIV infection.
|
Vesatolimod
|
|
Vesatolimod (formerly GS-9620), a TLR-7 agonist, is being evaluated as a potential cure for HIV infection.
|
GS-9722
|
|
GS-9722, a broadly neutralizing antibody, is being evaluated as a potential cure for HIV infection.
|
Product Candidates
|
|
Description
|
Product in Phase 3
|
|
|
Selonsertib
|
|
Selonsertib, an ASK-1 inhibitor, is being evaluated in the STELLAR-3 trial for the treatment of NASH and bridging fibrosis.
|
Products in Phase 2
|
|
|
GS-9688
|
|
GS-9688, a TLR-8 agonist, is being evaluated for the treatment of HBV infection.
|
Cilofexor
|
|
Cilofexor (formerly GS-9674), a FXR agonist, is being evaluated for the treatment of NASH, primary biliary cirrhosis and primary sclerosing cholangitis.
|
Firsocostat
|
|
Firsocostat (formerly GS-0976), an ACC inhibitor, is being evaluated for the treatment of NASH.
|
Product Candidates
|
|
Description
|
Products in Phase 3
|
|
|
Axicabtagene ciloleucel
|
|
Axicabtagene ciloleucel is being evaluated for the treatment of second line diffuse large B-cell lymphoma (DLBCL).
|
Products in Phase 2
|
|
|
Axicabtagene ciloleucel
|
|
Axicabtagene ciloleucel is being evaluated for the treatment of indolent non-Hodgkin lymphoma. Axicabtagene ciloleucel is also being evaluated for the treatment of DLBCL in combination with anti-PD-L1 mAB and first line DLBCL.
|
Tirabrutinib
|
|
Tirabrutinib, a BTK inhibitor, is being evaluated for the treatment of B-cell malignancies.
|
KTE-X19
|
|
KTE-X19, a CAR T cell therapy, is being evaluated for the treatment of mantle cell lymphoma and adult and pediatric acute lymphoblastic leukemia.
|
Products in Phase 1
|
|
|
KITE-718
|
|
KITE-718, a MAGE A3/A6, is being evaluated for the treatment of solid tumors.
|
Product Candidates
|
|
Description
|
Product in Phase 3
|
|
|
Filgotinib
|
|
Filgotinib, a JAK1 inhibitor, is being evaluated for the treatment of rheumatoid arthritis, Crohn’s disease and ulcerative colitis.
|
Products in Phase 2
|
|
|
Filgotinib
|
|
Filgotinib is being evaluated for the treatment of various inflammatory diseases.
|
GS-9876
|
|
GS-9876, a Syk inhibitor, is being evaluated for the treatment of Sjogren’s syndrome and lupus.
|
Products in Phase 1
|
|
|
GS-4875
|
|
GS-4875, a TPL2 inhibitor, is being evaluated for the treatment of inflammatory bowel disease.
|
Product Candidate
|
|
Description
|
Product in Phase 2
|
|
|
Remdesivir
|
|
Remdesivir, a Nuc inhibitor, is being evaluated for the treatment of Ebola virus infection.
|
(1)
|
In 2017, Gilead and Watson Laboratories, Inc. reached an agreement to settle a patent litigation matter related to Letairis.
|
(2)
|
In 2013, Gilead and Lupin Limited (Lupin) reached an agreement to settle a patent litigation matter related to Ranexa.
|
(3)
|
In 2014, Gilead and Teva Pharmaceuticals reached an agreement to settle the patent litigation concerning patents that protect emtricitabine in our Truvada and Atripla products.
|
(4)
|
Supplementary protection certificates (SPCs) have been granted in several European countries. The validity of these SPCs has been challenged by several generic manufacturers, many of whom launched their competing product in 2017. The validity of these SPCs is being considered in national courts and by the Court of Justice for the European Union.
|
(5)
|
The composition of matter patent has expired in the European Union. In the European Union and the United States, patent applications are pending relating to Kite’s proprietary manufacturing processes.
|
(6)
|
Applications for patent term extensions are pending in the United States and/or SPCs are pending in one or more countries in the European Union for these products.
|
(7)
|
An application for patent term extension was filed in the United States that, if granted, would extend the U.S. expiration date to 2025. Applications for SPCs were filed in the European Union that, if granted, would extend the E.U. expiration date to 2026.
|
•
|
Foster City, California: We conduct process chemistry research and development activities, manufacture API for our clinical trials and oversee our third-party contract manufacturers.
|
•
|
San Dimas and La Verne, California: We manufacture AmBisome (in San Dimas), package and label the majority of our commercial products and distribute our products to the Americas and Pacific Rim.
|
•
|
Oceanside, California: We utilize the facility for clinical manufacture and process development of our biologics candidates.
|
•
|
El Segundo, California: We utilize the facility for clinical and commercial manufacture and processing of Yescarta.
|
•
|
Cork and Dublin, Ireland: We utilize the Cork facility for commercial manufacture, packaging and labeling of our antiviral products. We also perform quality control testing, labeling, packaging and final release of many of our products for distribution to the European Union and other international markets. The Dublin facility is also responsible for distribution activities of our products.
|
•
|
Edmonton, Alberta, Canada: We conduct process chemistry research and scale-up activities of our clinical development candidates, manufacture API for both investigational and commercial products and conduct chemical development activities to improve existing commercial manufacturing processes.
|
•
|
Phase 1. The drug candidate is given to a small number of healthy human control subjects or patients suffering from the indicated disease, to test for safety, dose tolerance, pharmacokinetics, metabolism, distribution and excretion.
|
•
|
Phase 2. The drug candidate is given to a limited patient population to determine the effect of the drug candidate in treating the disease, the best dose of the drug candidate, and the possible side effects and safety risks of the drug candidate. It is not uncommon for a drug candidate that appears promising in Phase 1 clinical trials to fail in the more rigorous and extensive Phase 2 clinical trials.
|
•
|
Phase 3. If a drug candidate appears to be effective and safe in Phase 2 clinical trials, Phase 3 clinical trials are commenced to confirm those results. Phase 3 clinical trials are conducted over a longer term, involve a significantly larger population, are conducted at numerous sites in different geographic regions and are carefully designed to provide reliable and conclusive data regarding the safety and benefits of a drug candidate. It is not uncommon for a drug candidate that appears promising in Phase 2 clinical trials to fail in the more rigorous and extensive Phase 3 clinical trials.
|
Item 1A.
|
RISK FACTORS
|
•
|
As our 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 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.
|
•
|
If physicians do not see the benefit of our HIV or HCV products, the sales of our HIV or HCV products will be limited.
|
•
|
As new branded or generic products are introduced into major markets, our ability to maintain pricing and market share may be affected.
|
•
|
educating and certifying medical personnel regarding the procedures and the potential side effect profile of our therapy, such as the potential adverse side effects related to cytokine release syndrome and neurologic toxicities, in compliance with the Risk Evaluation and Mitigation Strategy (REMS) program required by FDA for Yescarta;
|
•
|
using medicines to manage adverse side effects of our therapy, such as tocilizumab and corticosteroids, which may not be available in sufficient quantities, may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment;
|
•
|
developing a robust and reliable process, while limiting contamination risks, for engineering a patient’s T cells ex vivo and infusing the engineered T cells back into the patient; and
|
•
|
conditioning patients with chemotherapy in advance of administering our therapy, which may increase the risk of adverse side effects.
|
•
|
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.
|
•
|
obtain patents and licenses to patent rights;
|
•
|
preserve trade secrets and internal know-how;
|
•
|
defend against infringement of our patents and efforts to invalidate them; and
|
•
|
operate without infringing on the intellectual property of others.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
(1)
|
This section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
|
(2)
|
Shows the cumulative return on investment assuming an investment of $100 in our common stock, the NBI Index and the S&P 500 Index on December 31, 2013, and assuming that all dividends were reinvested.
|
Plan Category
|
|
Number of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)
(in thousands)
|
|
Weighted-average Exercise Price of Outstanding Options, Warrants and Rights (b)
(1)
(in dollars)
|
|
Number of Common Shares Remaining Available for Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) (c)
(in thousands)
|
||||
Equity Compensation plans approved by security holders :
|
|
|
|
|
|
|
||||
2004 Equity Incentive Plan
|
|
23,524
|
|
|
$
|
53.80
|
|
|
91,441
|
|
Employee Stock Purchase Plan
(2)
|
|
|
|
|
|
10,491
|
|
|||
Total equity compensation plans approved by security holders
|
|
23,524
|
|
|
$
|
53.80
|
|
|
101,932
|
|
Equity Compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
23,524
|
|
|
$
|
53.80
|
|
|
101,932
|
|
_________________________________________
|
|
|
|
|
|
|
(1)
|
Does not take into account 16 million restricted stock and stock unit awards, performance share units and phantom shares granted under our 2004 Equity Incentive Plan.
|
(2)
|
Under our Employee Stock Purchase Plan, participants are permitted to purchase our common stock at a discount on certain dates through payroll deductions within a pre-determined purchase period. Accordingly, these numbers are not determinable.
|
|
|
Total Number
of Shares
Purchased
(in thousands)
|
|
Average
Price Paid
per Share
(in dollars)
|
|
Total Number of
Shares Purchased
as Part of a Publicly
Announced Program
(in thousands)
|
|
Maximum Fair
Value of Shares
that May Yet Be
Purchased Under
the Program
(in millions)
|
||||||
October 1 - October 31, 2018
|
|
804
|
|
|
$
|
73.96
|
|
|
751
|
|
|
$
|
6,053
|
|
November 1 - November 30, 2018
|
|
5,922
|
|
|
$
|
69.16
|
|
|
5,696
|
|
|
$
|
5,660
|
|
December 1 - December 31, 2018
|
|
7,642
|
|
|
$
|
67.39
|
|
|
7,608
|
|
|
$
|
5,147
|
|
Total
|
|
14,368
|
|
(1)
|
$
|
68.49
|
|
|
14,055
|
|
(1)
|
|
||
_________________________________________
|
|
|
|
|
|
|
|
|
(1)
|
The difference between the total number of shares purchased and the total number of shares purchased as part of a publicly announced program is due to shares of common stock withheld by us from employee restricted stock unit awards in order to satisfy applicable tax withholding obligations.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
CONSOLIDATED STATEMENT OF INCOME DATA
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
(2)
|
$
|
22,127
|
|
|
$
|
26,107
|
|
|
$
|
30,390
|
|
|
$
|
32,639
|
|
|
$
|
24,890
|
|
Total costs and expenses
|
$
|
13,927
|
|
|
$
|
11,983
|
|
|
$
|
12,757
|
|
|
$
|
10,446
|
|
|
$
|
9,625
|
|
Income from operations
|
$
|
8,200
|
|
|
$
|
14,124
|
|
|
$
|
17,633
|
|
|
$
|
22,193
|
|
|
$
|
15,265
|
|
Provision for income taxes
(3)
|
$
|
2,339
|
|
|
$
|
8,885
|
|
|
$
|
3,609
|
|
|
$
|
3,553
|
|
|
$
|
2,797
|
|
Net income
(2)(3)
|
$
|
5,460
|
|
|
$
|
4,644
|
|
|
$
|
13,488
|
|
|
$
|
18,106
|
|
|
$
|
12,059
|
|
Net income attributable to Gilead
(2)(3)
|
$
|
5,455
|
|
|
$
|
4,628
|
|
|
$
|
13,501
|
|
|
$
|
18,108
|
|
|
$
|
12,101
|
|
Net income per share attributable to Gilead
common stockholders - basic
(2)(3)
|
$
|
4.20
|
|
|
$
|
3.54
|
|
|
$
|
10.08
|
|
|
$
|
12.37
|
|
|
$
|
7.95
|
|
Shares used in per share calculation - basic
|
1,298
|
|
|
1,307
|
|
|
1,339
|
|
|
1,464
|
|
|
1,522
|
|
|||||
Net income per share attributable to Gilead
common stockholders - diluted
(2)(3)
|
$
|
4.17
|
|
|
$
|
3.51
|
|
|
$
|
9.94
|
|
|
$
|
11.91
|
|
|
$
|
7.35
|
|
Shares used in per share calculation - diluted
|
1,308
|
|
|
1,319
|
|
|
1,358
|
|
|
1,521
|
|
|
1,647
|
|
|||||
Cash dividends declared per share
|
$
|
2.28
|
|
|
$
|
2.08
|
|
|
$
|
1.84
|
|
|
$
|
1.29
|
|
|
$
|
—
|
|
|
December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
CONSOLIDATED BALANCE SHEET DATA
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and marketable debt securities
(4)
|
$
|
31,512
|
|
|
$
|
36,694
|
|
|
$
|
32,380
|
|
|
$
|
26,208
|
|
|
$
|
11,726
|
|
Working capital
(4)(5)
|
$
|
25,231
|
|
|
$
|
20,188
|
|
|
$
|
10,370
|
|
|
$
|
14,044
|
|
|
$
|
11,453
|
|
Total assets
(4)(6)
|
$
|
63,675
|
|
|
$
|
70,283
|
|
|
$
|
56,977
|
|
|
$
|
51,716
|
|
|
$
|
34,601
|
|
Other long-term obligations
(5)
|
$
|
1,040
|
|
|
$
|
558
|
|
|
$
|
297
|
|
|
$
|
395
|
|
|
$
|
594
|
|
Long-term debt, including current portion
(4)(6)
|
$
|
27,322
|
|
|
$
|
33,542
|
|
|
$
|
26,346
|
|
|
$
|
22,055
|
|
|
$
|
12,341
|
|
Retained earnings
(2)(3)
|
$
|
19,024
|
|
|
$
|
19,012
|
|
|
$
|
18,154
|
|
|
$
|
18,001
|
|
|
$
|
12,732
|
|
Total stockholders’ equity
(2)(3)
|
$
|
21,534
|
|
|
$
|
20,501
|
|
|
$
|
19,363
|
|
|
$
|
19,113
|
|
|
$
|
15,819
|
|
____________________
|
||
Notes:
|
||
(1)
|
See Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Annual Report on Form 10-K for a description of our results of operations for 2018.
|
|
(2)
|
In 2018, we adopted Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers” using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. As such, results for 2018 are presented under Topic 606, while the information for prior periods has not been adjusted and continues to be reported in accordance with our historical accounting under Topic 605 “Revenue Recognition”. The impact as a result of applying Topic 606 in place of Topic 605 was not material for the year ended December 31, 2018. See Note 1, Organization and Summary of Significant Accounting Policies, and Note 2, Revenues, of the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for further information.
|
|
(3)
|
In December 2017, we recorded an estimated $5.5 billion net charge related to the enactment of the Tax Cuts and Jobs Act. See Note 18, Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional details.
|
|
(4)
|
In 2018, we repaid $1.8 billion principal amount of our senior unsecured notes at maturity and repaid $4.5 billion of term loans borrowed in connection with our acquisition of Kite Pharma, Inc. (Kite).
|
|
|
In 2017, in connection with the acquisition of Kite, we issued $3.0 billion aggregate principal amount of senior unsecured notes in a registered offering and drew on a $6.0 billion aggregate principal amount term loan facility credit agreement, of which $1.5 billion was repaid in December 2017.
|
|
|
In 2016, we issued $5.0 billion principal amount of senior unsecured notes in a registered offering. We also repaid $285 million of principal balance of convertible senior notes due in May 2016 and $700 million of principal balance of senior unsecured notes due in December 2016.
|
|
|
In 2015, we issued $10.0 billion principal amount of senior unsecured notes in a registered offering. We also repaid $213 million of principal balance of convertible senior notes due in May 2016.
|
|
|
In 2014, we issued $8.0 billion principal amount of senior unsecured notes in registered offerings. We also repaid $912 million of principal balance of convertible senior notes due in May 2014, $750 million of principal balance of senior unsecured notes due in December 2014 and $600 million under our five-year revolving credit facility agreement.
|
|
(5)
|
In 2017, we retrospectively adopted Accounting Standards Update No. 2015-17 “Balance Sheet Classification of Deferred Taxes,” which requires deferred tax assets and liabilities be classified as noncurrent on the balance sheet. As a result, we reclassified deferred tax assets from Total current assets to Other long-term assets and our deferred tax liabilities from Other accrued liabilities to Other long-term obligations for each of the years presented.
|
|
(6)
|
In 2016, we retrospectively adopted Accounting Standards Update No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs,” which requires presentation of debt issuance costs as a direct deduction from the carrying amount of a recognized debt liability on the balance sheet. As a result, we reclassified unamortized debt issuance costs from assets to Long-term debt, including current portion for each of the years presented.
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
HIV: We achieved record sales of our HIV products in 2018, with HIV product revenues increasing by
19%
in the United States and
12%
worldwide compared to 2017. This growth was driven by the successful launch of Biktarvy and the continued strong uptake of our single tablet regimens containing tenofovir alafenamide (TAF) for the treatment of HIV infection as well as Truvada for a pre-exposure prophylaxis (PrEP) indication for HIV prevention. Biktarvy, a once-daily single tablet regimen containing bictegravir, emtricitabine (FTC) and TAF for the treatment of HIV infection in adults, was approved by the U.S. Food and Drug Administration (FDA) in February and by the European Commission in June.
|
•
|
Liver Diseases: Our revenues from our chronic hepatitis C virus (HCV) products became more predictable in 2018. Because we wanted to introduce a lower-priced alternative to our HCV products without significant disruption to the healthcare system and our business, we authorized the launch of generic versions of Epclusa and Harvoni in the United States starting in January 2019 through our separate subsidiary, Asegua Therapeutics LLC (Asegua). We also continued to advance our clinical trials for the treatment of chronic hepatitis B virus (HBV) and nonalcoholic steatohepatitis (NASH), including completing enrollment of Phase 3 clinical trials of NASH.
|
•
|
Cell Therapy and Immuno-Oncology: We advanced our pipeline of cancer therapies and positioned ourselves as a leader in cell therapy. Yescarta was approved by the European Commission in August for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL) and primary mediastinal large B-cell lymphoma (PMBCL) after two or more lines of systemic therapy. We certified additional centers in the United States and Europe to provide treatment for Yescarta. In order to advance and accelerate research and development efforts in cell therapy and immuno-oncology, during the year, we entered into key strategic collaborations with the National Cancer Institute, Pfizer, Inc. (Pfizer), Sangamo Therapeutics, Inc. (Sangamo), Gadeta B.V. (Gadeta), HiFiBiO Therapeutics (HiFiBiO), Tango Therapeutics (Tango) and Agenus Inc. (Agenus).
|
•
|
Inflammation: We continued to advance our pipeline of novel investigational agents for inflammatory diseases, including announcing positive data on filgotinib in ongoing Phase 2 and 3 clinical trials. We also entered into a strategic collaboration with Verily Life Sciences LLC, an Alphabet company (Verily), using Verily’s Immunoscape platform to identify and better understand the immunological basis of inflammatory diseases.
|
•
|
FDA and European Commission granted marketing authorization for Biktarvy for the treatment of HIV-1 infection.
|
•
|
FDA approved Truvada - in combination with safer sex practices - to reduce the risk of sexually acquired HIV-1 in at-risk adolescents.
|
•
|
China National Drug Administration (CDA, succeeded by China National Medical Products Administration (NMPA)) approved Genvoya in China for the treatment of HIV-1 infection.
|
•
|
NMPA approved Descovy in China for the treatment of HIV-1 infection in adults and adolescents.
|
•
|
We entered into an agreement with Japan Tobacco Inc. (Japan Tobacco) to expand our rights to develop and commercialize elvitegravir to include Japan and to acquire from Japan Tobacco the rights to market and distribute certain products in our HIV portfolio in Japan effective January 1, 2019.
|
•
|
We entered into a research collaboration and license agreement with Hookipa Biotech AG (Hookipa) that grants us exclusive rights to Hookipa’s TheraT® and Vaxwave® arenavirus vector-based immunization technologies for chronic HBV infection and HIV infection.
|
•
|
We announced plans to launch authorized generic versions of Epclusa and Harvoni in the United States through our separate subsidiary, Asegua.
|
•
|
NMPA approved Harvoni in China for the treatment of chronic HCV infection with genotype 1-6 in adults and adolescents aged 12 to 18 years.
|
•
|
CDA approved Epclusa in China for the treatment of adults with genotype 1-6 chronic HCV infection. The CDA also approved Epclusa in combination with ribavirin for adults with chronic HCV infection and decompensated cirrhosis.
|
•
|
NMPA approved Vemlidy in China for the treatment of chronic HBV infection in adults and adolescents.
|
•
|
We entered into a strategic collaboration with Precision BioSciences (Precision) to develop therapies targeting the in vivo elimination of chronic HBV infection with Precision’s proprietary genome editing platform, ARCUS.
|
•
|
We announced that STELLAR-4, a Phase 3, randomized, double-blind, placebo-controlled study evaluating the safety and efficacy of selonsertib, an investigational, once-daily, oral inhibitor of apoptosis signal-regulating kinase 1 (ASK1), in patients with compensated cirrhosis (F4) due to NASH, did not meet the pre-specified week 48 primary endpoint of a ≥ 1-stage histologic improvement in fibrosis without worsening of NASH.
|
•
|
We entered into an immuno-oncology partnership with Agenus focused on the development and commercialization of up to five novel immuno-oncology therapies.
|
•
|
We entered into a global strategic collaboration with Tango to discover, develop and commercialize a pipeline of targeted immuno-oncology treatments for patients with cancer.
|
•
|
European Commission granted marketing authorization for Yescarta as a treatment for adult patients with relapsed or refractory DLBCL and PMBCL after two or more lines of systemic therapy.
|
•
|
We announced new worldwide facilities to advance manufacturing of cell therapies for people with cancer.
|
•
|
We entered into a research collaboration with Gadeta to advance gamma delta T cell receptor technology for solid tumors. This collaboration adds an additional new platform to our current capabilities in research and cell manufacturing.
|
•
|
We entered into a research collaboration and license agreement with HiFiBiO to develop technology supporting the discovery of neoantigen-reactive T cell receptors for the potential treatment of various cancers, including solid tumors.
|
•
|
We entered into a license agreement with Trianni, Inc. (Trianni) that grants us the use of the Trianni transgenic human monoclonal antibody discovery platform to support our drug discovery efforts.
|
•
|
We announced a new cooperative research and development agreement with the National Cancer Institute to develop adoptive cell therapies targeting patient-specific tumor neoantigens.
|
•
|
We entered into a worldwide collaboration with Sangamo using Sangamo’s zinc finger nuclease technology platform for the development of next-generation ex vivo cell therapies in oncology.
|
•
|
We entered into a clinical trial collaboration with Pfizer to evaluate the safety and efficacy of the investigational combination of Yescarta and Pfizer’s utomilumab, a fully humanized 4-1BB agonist monoclonal antibody, in patients with refractory large B-cell lymphoma.
|
•
|
We entered into a strategic collaboration with Scholar Rock Holding Corporation to discover and develop highly specific inhibitors of transforming growth factor beta activation for the treatment of fibrotic diseases.
|
•
|
We entered into a scientific collaboration with Verily, using Verily’s Immunoscape platform to identify and better understand the immunological basis of three common and serious inflammatory diseases: rheumatoid arthritis, inflammatory bowel disease and lupus-related diseases.
|
•
|
Following 28 years of service, John F. Milligan, Ph.D., stepped down from his role as President and Chief Executive Officer (CEO) effective December 31, 2018. Our Board announced the selection of Daniel O’Day to be our new Chairman and CEO effective March 1, 2019. Mr. O’Day brings more than 30 years of executive management, creative leadership and operational excellence. Most recently, Mr. O’Day served as the CEO of Roche Pharmaceuticals, the pharma division of Roche Group. We had other leadership transitions throughout the year resulting from planned successions and normal industry turnover.
|
(In millions, except percentages)
|
|
2018
|
|
Change
|
|
2017
|
|
Change
|
|
2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Product sales
|
|
$
|
21,677
|
|
|
(16
|
)%
|
|
$
|
25,662
|
|
|
(14
|
)%
|
|
$
|
29,953
|
|
Royalty, contract and other revenues
|
|
450
|
|
|
1
|
%
|
|
445
|
|
|
2
|
%
|
|
437
|
|
|||
Total revenues
|
|
$
|
22,127
|
|
|
(15
|
)%
|
|
$
|
26,107
|
|
|
(14
|
)%
|
|
$
|
30,390
|
|
(In millions, except percentages)
|
|
2018
|
|
Change
|
|
2017
|
|
Change
|
|
2016
|
||||||||
Atripla
|
|
$
|
1,206
|
|
|
(33
|
)%
|
|
$
|
1,806
|
|
|
(31
|
)%
|
|
$
|
2,605
|
|
Biktarvy
|
|
1,184
|
|
|
*
|
|
|
—
|
|
|
*
|
|
|
—
|
|
|||
Complera/Eviplera
|
|
653
|
|
|
(32
|
)%
|
|
966
|
|
|
(34
|
)%
|
|
1,457
|
|
|||
Descovy
|
|
1,581
|
|
|
30
|
%
|
|
1,218
|
|
|
*
|
|
|
298
|
|
|||
Genvoya
|
|
4,624
|
|
|
26
|
%
|
|
3,674
|
|
|
*
|
|
|
1,484
|
|
|||
Odefsey
|
|
1,598
|
|
|
44
|
%
|
|
1,106
|
|
|
*
|
|
|
329
|
|
|||
Stribild
|
|
644
|
|
|
(39
|
)%
|
|
1,053
|
|
|
(45
|
)%
|
|
1,914
|
|
|||
Truvada
|
|
2,997
|
|
|
(4
|
)%
|
|
3,134
|
|
|
(12
|
)%
|
|
3,566
|
|
|||
Other HIV
(1)
|
|
61
|
|
|
5
|
%
|
|
58
|
|
|
23
|
%
|
|
47
|
|
|||
Revenue share - Symtuza
(2)
|
|
79
|
|
|
*
|
|
|
—
|
|
|
*
|
|
|
—
|
|
|||
Total HIV
|
|
14,627
|
|
|
12
|
%
|
|
13,015
|
|
|
11
|
%
|
|
11,700
|
|
|||
AmBisome
|
|
420
|
|
|
15
|
%
|
|
366
|
|
|
3
|
%
|
|
356
|
|
|||
Epclusa
|
|
1,966
|
|
|
(44
|
)%
|
|
3,510
|
|
|
100
|
%
|
|
1,752
|
|
|||
Harvoni
|
|
1,222
|
|
|
(72
|
)%
|
|
4,370
|
|
|
(52
|
)%
|
|
9,081
|
|
|||
Letairis
|
|
943
|
|
|
6
|
%
|
|
887
|
|
|
8
|
%
|
|
819
|
|
|||
Ranexa
|
|
758
|
|
|
6
|
%
|
|
717
|
|
|
6
|
%
|
|
677
|
|
|||
Vemlidy
|
|
321
|
|
|
*
|
|
|
122
|
|
|
*
|
|
|
3
|
|
|||
Viread
|
|
307
|
|
|
(71
|
)%
|
|
1,046
|
|
|
(12
|
)%
|
|
1,186
|
|
|||
Vosevi
|
|
396
|
|
|
35
|
%
|
|
293
|
|
|
*
|
|
|
—
|
|
|||
Yescarta
|
|
264
|
|
|
*
|
|
|
7
|
|
|
*
|
|
|
—
|
|
|||
Zydelig
|
|
133
|
|
|
(11
|
)%
|
|
149
|
|
|
(11
|
)%
|
|
168
|
|
|||
Other
(3)
|
|
320
|
|
|
(73
|
)%
|
|
1,180
|
|
|
(72
|
)%
|
|
4,211
|
|
|||
Total product sales
|
|
$
|
21,677
|
|
|
(16
|
)%
|
|
$
|
25,662
|
|
|
(14
|
)%
|
|
$
|
29,953
|
|
_______________________
|
|
|
|
|
|
|
|
|
|
|
•
|
Descovy (FTC/TAF)-based products - Biktarvy, Descovy, Genvoya and Odefsey
|
•
|
Truvada (FTC/TDF)-based products - Atripla, Complera/Eviplera, Stribild and Truvada
|
•
|
HCV products - Epclusa, Harvoni, Sovaldi and Vosevi
|
(In millions, except percentages)
|
|
2018
|
|
Change
|
|
2017
|
|
Change
|
|
2016
|
||||||||
Total product sales
|
|
$
|
21,677
|
|
|
(16
|
)%
|
|
$
|
25,662
|
|
|
(14
|
)%
|
|
$
|
29,953
|
|
Cost of goods sold
|
|
$
|
4,853
|
|
|
11
|
%
|
|
$
|
4,371
|
|
|
3
|
%
|
|
$
|
4,261
|
|
Product gross margin
|
|
78
|
%
|
|
|
|
83
|
%
|
|
|
|
86
|
%
|
(In millions, except percentages)
|
|
2018
|
|
Change
|
|
2017
|
|
Change
|
|
2016
|
||||||||
R&D expenses
|
|
$
|
5,018
|
|
|
34
|
%
|
|
$
|
3,734
|
|
|
(27
|
)%
|
|
$
|
5,098
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Clinical studies and outside services
|
|
$
|
1,665
|
|
|
$
|
1,881
|
|
|
$
|
2,446
|
|
Personnel, infrastructure and other expenses
|
|
1,876
|
|
|
1,399
|
|
|
1,271
|
|
|||
IPR&D impairment charges
|
|
820
|
|
|
—
|
|
|
432
|
|
|||
Up-front collaboration expenses
|
|
278
|
|
|
—
|
|
|
373
|
|
|||
Acquired IPR&D
|
|
—
|
|
|
222
|
|
|
400
|
|
|||
Stock-based compensation expenses
|
|
379
|
|
|
232
|
|
|
176
|
|
|||
Total
|
|
$
|
5,018
|
|
|
$
|
3,734
|
|
|
$
|
5,098
|
|
(In millions, except percentages)
|
|
2018
|
|
Change
|
|
2017
|
|
Change
|
|
2016
|
||||||||
SG&A expenses
|
|
$
|
4,056
|
|
|
5
|
%
|
|
$
|
3,878
|
|
|
14
|
%
|
|
$
|
3,398
|
|
|
|
|
December 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Cash, cash equivalents and marketable debt securities
|
|
$
|
31,512
|
|
|
$
|
36,694
|
|
|
Working capital
|
|
$
|
25,231
|
|
|
$
|
20,188
|
|
•
|
the commercial performance of our current and future products;
|
•
|
the progress and scope of our R&D efforts, including preclinical studies and clinical trials;
|
•
|
the cost, timing and outcome of regulatory reviews;
|
•
|
the expansion of our sales and marketing capabilities;
|
•
|
the possibility of acquiring additional manufacturing capabilities or office facilities;
|
•
|
the possibility of acquiring other companies or new products;
|
•
|
debt service requirements;
|
•
|
the establishment of additional collaborative relationships with other companies; and
|
•
|
costs associated with the defense, settlement and adverse results of government investigations and litigation
|
Accrued government and other rebates and chargebacks:
|
|
Balance at Beginning of Year
|
|
Decrease/(Increase) to Product Sales
|
|
Payments
|
|
Balance at End of Year
|
||||||||
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
||||||||
Activity related to 2018 sales
|
|
$
|
—
|
|
|
$
|
14,784
|
|
|
$
|
(10,953
|
)
|
|
$
|
3,831
|
|
Activity related to sales prior to 2018
|
|
5,044
|
|
|
41
|
|
|
(4,496
|
)
|
|
589
|
|
||||
Total
|
|
$
|
5,044
|
|
|
$
|
14,825
|
|
|
$
|
(15,449
|
)
|
|
$
|
4,420
|
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Activity related to 2017 sales
|
|
$
|
—
|
|
|
$
|
15,809
|
|
|
$
|
(11,170
|
)
|
|
$
|
4,639
|
|
Activity related to sales prior to 2017
|
|
5,657
|
|
|
(264
|
)
|
|
(4,988
|
)
|
|
405
|
|
||||
Total
|
|
$
|
5,657
|
|
|
$
|
15,545
|
|
|
$
|
(16,158
|
)
|
|
$
|
5,044
|
|
•
|
estimates of revenues and operating profits related to the products or product candidates;
|
•
|
the probability of success for unapproved product candidates considering their stages of development;
|
•
|
the time and resources needed to complete the development and approval of product candidates;
|
•
|
the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a product candidate such as obtaining FDA and other regulatory approvals; and
|
•
|
risks related to the viability of and potential alternative treatments in any future target markets.
|
|
|
Payments due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than one
year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5
years
|
||||||||||
Debt
(1)
|
|
$
|
41,876
|
|
|
$
|
3,753
|
|
|
$
|
6,582
|
|
|
$
|
3,801
|
|
|
$
|
27,740
|
|
Operating lease obligations
|
|
574
|
|
|
89
|
|
|
144
|
|
|
112
|
|
|
229
|
|
|||||
Capital commitments
(2)
|
|
336
|
|
|
336
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations
(3)
|
|
1,629
|
|
|
1,280
|
|
|
214
|
|
|
72
|
|
|
63
|
|
|||||
Clinical trials
(5)
|
|
1,678
|
|
|
930
|
|
|
505
|
|
|
207
|
|
|
36
|
|
|||||
Transition Tax Payable
(6)
|
|
4,639
|
|
|
—
|
|
|
621
|
|
|
1,359
|
|
|
2,659
|
|
|||||
Total
(4)(7)
|
|
$
|
50,732
|
|
|
$
|
6,388
|
|
|
$
|
8,066
|
|
|
$
|
5,551
|
|
|
$
|
30,727
|
|
_______________________
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Debt consists of senior unsecured notes and includes principal and interest payments. Interest payments for our fixed rate senior unsecured notes are incurred and calculated based on terms of the related notes. Interest payments for our variable rate debt are calculated based on the interest rates on the last reset date in 2018 for each debt instrument. See Note
12
, Debt and Credit Facilities of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.
|
(2)
|
Amounts include capital project commitments primarily relating to construction of new buildings.
|
(3)
|
Amounts include purchase commitments primarily relating to active pharmaceutical ingredients with minimum purchase requirements and certain inventory-related items. These amounts also include a
$365 million
accrued payment to Japan Tobacco, Inc. as a result of a collaboration arrangement. See Note
11
, Collaborative Arrangements of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.
|
(4)
|
In addition to the above, we have committed to make potential future milestone payments to third parties as part of licensing, collaboration and development arrangements. Payments under these agreements generally become due and payable only upon achievement of certain developmental, regulatory and/or commercial milestones. Because the achievement of these milestones is neither probable nor reasonably estimable, such contingencies have not been recorded on our Consolidated Balance Sheets and have not been included in the table above.
|
(5)
|
At
December 31, 2018
, we had several clinical studies in various clinical trial phases. Our most significant clinical trial expenditures are to contract research organizations (CROs). Although all of our material contracts with CROs are cancelable, we historically have not canceled such contracts. These amounts reflect commitments based on existing contracts and do not reflect any future modifications to, or terminations of, existing contracts or anticipated or potential new contracts.
|
(6)
|
In connection with Tax Reform, as of
December 31, 2017
, we recorded a federal income tax payable for transition tax on the mandatory deemed repatriation of foreign earnings that will be payable over an eight-year period. The amounts included in the table above represent the remaining federal income tax payable after applying the first year’s installment payment and early payments of future installments. See Note
18
, Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional details on Tax Reform.
|
(7)
|
As of
December 31, 2018
, our long-term income taxes payable includes unrecognized tax benefits, interest and penalties totaling $1.3 billion. Due to the high degree of uncertainty on the timing of future cash settlement and other events that could extinguish these unrecognized tax benefits, we are unable to estimate the period of cash settlement and therefore we have excluded these unrecognized tax benefits from the table above.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
•
|
safety and preservation of principal and diversification of risk;
|
•
|
liquidity of investments sufficient to meet cash flow requirements; and
|
•
|
competitive after-tax rate of return.
|
|
|
Expected Maturity
|
|
|
|
|
|
|
|
|
Total Fair Value
|
||||||||||||||||||||
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
|
Total
|
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale debt securities
|
$
|
22,741
|
|
|
$
|
1,001
|
|
|
$
|
311
|
|
|
$
|
16
|
|
|
$
|
30
|
|
|
$
|
65
|
|
|
$
|
24,164
|
|
|
$
|
24,164
|
|
Average interest rate
|
|
2.61
|
%
|
|
|
3.10
|
%
|
|
|
2.97
|
%
|
|
|
2.89
|
%
|
|
|
2.54
|
%
|
|
|
3.47
|
%
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, including current portion
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed rate
|
$
|
1,500
|
|
|
$
|
2,500
|
|
|
$
|
2,250
|
|
|
$
|
1,500
|
|
|
$
|
750
|
|
|
$
|
17,750
|
|
|
$
|
26,250
|
|
|
$
|
25,886
|
|
Average interest rate
|
|
1.92
|
%
|
|
|
2.51
|
%
|
|
|
4.44
|
%
|
|
|
2.82
|
%
|
|
|
2.50
|
%
|
|
|
4.16
|
%
|
|
|
|
|
|
|
|
|
Variable rate
|
$
|
1,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
Average interest rate
(2)
|
|
3.02
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
_______________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts represent principal balances. In addition to these fixed and variable rate long-term debt, we have a
$2.5 billion
five-year revolving credit facility. There were no amounts outstanding under the five-year revolving credit facility as of
December 31, 2018
. See Note
12
, Debt and Credit Facilities of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.
|
(2)
|
Average interest rates for our variable rate debt were based on the interest rates on the last reset date in
2018
for each debt instrument and are dependent upon several factors subject to change, including but not limited to LIBOR, the principal amount of debt outstanding and credit ratings on each reset date.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
||
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,940
|
|
|
$
|
7,588
|
|
Short-term marketable securities
|
12,149
|
|
|
17,922
|
|
||
Accounts receivable, net of allowances of $583 and $455, respectively
|
3,327
|
|
|
3,851
|
|
||
Inventories
|
814
|
|
|
801
|
|
||
Prepaid and other current assets
|
1,606
|
|
|
1,661
|
|
||
Total current assets
|
35,836
|
|
|
31,823
|
|
||
Property, plant and equipment, net
|
4,006
|
|
|
3,295
|
|
||
Long-term marketable securities
|
1,423
|
|
|
11,184
|
|
||
Intangible assets, net
|
15,738
|
|
|
17,100
|
|
||
Goodwill
|
4,117
|
|
|
4,159
|
|
||
Other long-term assets
|
2,555
|
|
|
2,722
|
|
||
Total assets
|
$
|
63,675
|
|
|
$
|
70,283
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
790
|
|
|
$
|
814
|
|
Accrued government and other rebates
|
3,928
|
|
|
4,704
|
|
||
Other accrued liabilities
|
3,139
|
|
|
3,370
|
|
||
Current portion of long-term debt and other obligations, net
|
2,748
|
|
|
2,747
|
|
||
Total current liabilities
|
10,605
|
|
|
11,635
|
|
||
Long-term debt, net
|
24,574
|
|
|
30,795
|
|
||
Long-term income taxes payable
|
5,922
|
|
|
6,794
|
|
||
Other long-term obligations
|
1,040
|
|
|
558
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001 per share; 5,600 authorized; 1,282 and 1,308 shares issued and outstanding, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
2,282
|
|
|
1,264
|
|
||
Accumulated other comprehensive income
|
80
|
|
|
165
|
|
||
Retained earnings
|
19,024
|
|
|
19,012
|
|
||
Total Gilead stockholders’ equity
|
21,387
|
|
|
20,442
|
|
||
Noncontrolling interest
|
147
|
|
|
59
|
|
||
Total stockholders’ equity
|
21,534
|
|
|
20,501
|
|
||
Total liabilities and stockholders’ equity
|
$
|
63,675
|
|
|
$
|
70,283
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Product sales
|
|
$
|
21,677
|
|
|
$
|
25,662
|
|
|
$
|
29,953
|
|
Royalty, contract and other revenues
|
|
450
|
|
|
445
|
|
|
437
|
|
|||
Total revenues
|
|
22,127
|
|
|
26,107
|
|
|
30,390
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
|
4,853
|
|
|
4,371
|
|
|
4,261
|
|
|||
Research and development expenses
|
|
5,018
|
|
|
3,734
|
|
|
5,098
|
|
|||
Selling, general and administrative expenses
|
|
4,056
|
|
|
3,878
|
|
|
3,398
|
|
|||
Total costs and expenses
|
|
13,927
|
|
|
11,983
|
|
|
12,757
|
|
|||
Income from operations
|
|
8,200
|
|
|
14,124
|
|
|
17,633
|
|
|||
Interest expense
|
|
(1,077
|
)
|
|
(1,118
|
)
|
|
(964
|
)
|
|||
Other income (expense), net
|
|
676
|
|
|
523
|
|
|
428
|
|
|||
Income before provision for income taxes
|
|
7,799
|
|
|
13,529
|
|
|
17,097
|
|
|||
Provision for income taxes
|
|
2,339
|
|
|
8,885
|
|
|
3,609
|
|
|||
Net income
|
|
5,460
|
|
|
4,644
|
|
|
13,488
|
|
|||
Net income (loss) attributable to noncontrolling interest
|
|
5
|
|
|
16
|
|
|
(13
|
)
|
|||
Net income attributable to Gilead
|
|
$
|
5,455
|
|
|
$
|
4,628
|
|
|
$
|
13,501
|
|
Net income per share attributable to Gilead common stockholders - basic
|
|
$
|
4.20
|
|
|
$
|
3.54
|
|
|
$
|
10.08
|
|
Shares used in per share calculation - basic
|
|
1,298
|
|
|
1,307
|
|
|
1,339
|
|
|||
Net income per share attributable to Gilead common stockholders - diluted
|
|
$
|
4.17
|
|
|
$
|
3.51
|
|
|
$
|
9.94
|
|
Shares used in per share calculation - diluted
|
|
1,308
|
|
|
1,319
|
|
|
1,358
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
5,460
|
|
|
$
|
4,644
|
|
|
$
|
13,488
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Net foreign currency translation gain (loss), net of tax
|
|
(38
|
)
|
|
(47
|
)
|
|
177
|
|
|||
Available-for-sale securities:
|
|
|
|
|
|
|
||||||
Net unrealized gain, net of tax impact of $0, $6 and $19, respectively
|
|
43
|
|
|
218
|
|
|
7
|
|
|||
Reclassifications to net income (loss), net of tax impact of $0, ($9) and $0, respectively
|
|
4
|
|
|
(8
|
)
|
|
(7
|
)
|
|||
Net change
|
|
47
|
|
|
210
|
|
|
—
|
|
|||
Cash flow hedges:
|
|
|
|
|
|
|
||||||
Net unrealized gain (loss), net of tax impact of $2, ($11) and $0, respectively
|
|
112
|
|
|
(304
|
)
|
|
5
|
|
|||
Reclassification to net income, net of tax impact of $0, $0 and $(8), respectively
|
|
87
|
|
|
28
|
|
|
8
|
|
|||
Net change
|
|
199
|
|
|
(276
|
)
|
|
13
|
|
|||
Other comprehensive income (loss)
|
|
208
|
|
|
(113
|
)
|
|
190
|
|
|||
Comprehensive income
|
|
5,668
|
|
|
4,531
|
|
|
13,678
|
|
|||
Comprehensive income (loss) attributable to noncontrolling interest
|
|
5
|
|
|
16
|
|
|
(13
|
)
|
|||
Comprehensive income attributable to Gilead
|
|
$
|
5,663
|
|
|
$
|
4,515
|
|
|
$
|
13,691
|
|
|
|
Gilead Stockholders’ Equity
|
|
Noncontrolling
Interest
|
|
Total
Stockholders’ Equity |
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
|||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
||||||||||||||||||||||
Balance at December 31, 2015
|
|
1,422
|
|
|
1
|
|
|
444
|
|
|
88
|
|
|
18,001
|
|
|
579
|
|
|
19,113
|
|
||||||
Change in noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
(90
|
)
|
||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,501
|
|
|
(13
|
)
|
|
13,488
|
|
||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
190
|
|
||||||
Issuances under employee stock purchase plan
|
|
1
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84
|
|
||||||
Issuances under equity incentive plans
|
|
13
|
|
|
—
|
|
|
128
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
||||||
Tax benefits from employee stock plans
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
186
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
381
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
381
|
|
||||||
Repurchases of common stock
|
|
(126
|
)
|
|
—
|
|
|
(302
|
)
|
|
—
|
|
|
(10,883
|
)
|
|
—
|
|
|
(11,185
|
)
|
||||||
Warrants settlement
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
||||||
Convertible notes settlement
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
||||||
Convertible note hedges settlement
|
|
—
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95
|
|
||||||
Dividends declared ($1.84 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,465
|
)
|
|
—
|
|
|
(2,465
|
)
|
||||||
Reclassification of conversion spread of convertible notes
|
|
—
|
|
|
—
|
|
|
(733
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(733
|
)
|
||||||
Reclassification of convertible note hedges
|
|
—
|
|
|
—
|
|
|
733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
733
|
|
||||||
Reclassification to equity component of currently redeemable convertible notes
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Balance at December 31, 2016
|
|
1,310
|
|
|
1
|
|
|
454
|
|
|
278
|
|
|
18,154
|
|
|
476
|
|
|
19,363
|
|
||||||
Change in noncontrolling interest
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(433
|
)
|
|
(436
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,628
|
|
|
16
|
|
|
4,644
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
||||||
Issuances under employee stock purchase plan
|
|
1
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
||||||
Issuances under equity incentive plans
|
|
11
|
|
|
—
|
|
|
146
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
146
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
618
|
|
||||||
Repurchases of common stock
|
|
(14
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(1,028
|
)
|
|
—
|
|
|
(1,062
|
)
|
||||||
Dividends declared ($2.08 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,742
|
)
|
|
—
|
|
|
(2,742
|
)
|
||||||
Balance at December 31, 2017
|
|
1,308
|
|
|
1
|
|
|
1,264
|
|
|
165
|
|
|
19,012
|
|
|
59
|
|
|
20,501
|
|
||||||
Change in noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
83
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,455
|
|
|
5
|
|
|
5,460
|
|
||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
208
|
|
|
—
|
|
|
—
|
|
|
208
|
|
||||||
Issuances under employee stock purchase plan
|
|
2
|
|
|
—
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91
|
|
||||||
Issuances under equity incentive plans
|
|
14
|
|
|
—
|
|
|
197
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
197
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
842
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
842
|
|
||||||
Repurchases of common stock
|
|
(42
|
)
|
|
—
|
|
|
(112
|
)
|
|
—
|
|
|
(2,940
|
)
|
|
—
|
|
|
(3,052
|
)
|
||||||
Dividends declared ($2.28 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,986
|
)
|
|
—
|
|
|
(2,986
|
)
|
||||||
Cumulative effect from the adoption of new accounting standards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(293
|
)
|
|
483
|
|
|
—
|
|
|
190
|
|
||||||
Balance at December 31, 2018
|
|
1,282
|
|
|
$
|
1
|
|
|
$
|
2,282
|
|
|
$
|
80
|
|
|
$
|
19,024
|
|
|
$
|
147
|
|
|
$
|
21,534
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating Activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
5,460
|
|
|
$
|
4,644
|
|
|
$
|
13,488
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation expense
|
|
226
|
|
|
233
|
|
|
177
|
|
|||
Amortization expense
|
|
1,203
|
|
|
1,053
|
|
|
981
|
|
|||
Stock-based compensation expense
|
|
845
|
|
|
638
|
|
|
380
|
|
|||
Deferred income taxes
|
|
289
|
|
|
(82
|
)
|
|
(119
|
)
|
|||
In-process research and development impairment
|
|
820
|
|
|
—
|
|
|
432
|
|
|||
Inventory reserves for excess raw materials
|
|
440
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
56
|
|
|
304
|
|
|
162
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
480
|
|
|
754
|
|
|
1,192
|
|
|||
Inventories
|
|
(310
|
)
|
|
(253
|
)
|
|
(488
|
)
|
|||
Prepaid expenses and other
|
|
903
|
|
|
358
|
|
|
(520
|
)
|
|||
Accounts payable
|
|
(39
|
)
|
|
(430
|
)
|
|
47
|
|
|||
Income taxes payable
|
|
(1,459
|
)
|
|
5,497
|
|
|
1,010
|
|
|||
Accrued liabilities
|
|
(514
|
)
|
|
(818
|
)
|
|
305
|
|
|||
Net cash provided by operating activities
|
|
8,400
|
|
|
11,898
|
|
|
17,047
|
|
|||
|
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
|
||||||
Purchases of marketable securities
|
|
(10,233
|
)
|
|
(23,314
|
)
|
|
(25,619
|
)
|
|||
Proceeds from sales of marketable securities
|
|
1,522
|
|
|
10,440
|
|
|
13,039
|
|
|||
Proceeds from maturities of marketable securities
|
|
24,336
|
|
|
7,821
|
|
|
1,700
|
|
|||
Other investments
|
|
(346
|
)
|
|
—
|
|
|
(357
|
)
|
|||
Acquisitions, net of cash acquired
|
|
—
|
|
|
(10,426
|
)
|
|
—
|
|
|||
Capital expenditures
|
|
(924
|
)
|
|
(590
|
)
|
|
(748
|
)
|
|||
Net cash provided by (used in) investing activities
|
|
14,355
|
|
|
(16,069
|
)
|
|
(11,985
|
)
|
|||
|
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
|
||||||
Proceeds from debt financing, net of issuance costs
|
|
—
|
|
|
8,985
|
|
|
5,293
|
|
|||
Proceeds from convertible note hedges
|
|
—
|
|
|
—
|
|
|
956
|
|
|||
Proceeds from issuances of common stock
|
|
289
|
|
|
234
|
|
|
208
|
|
|||
Repurchases of common stock
|
|
(2,900
|
)
|
|
(954
|
)
|
|
(11,001
|
)
|
|||
Repayments of debt and other obligations
|
|
(6,250
|
)
|
|
(1,811
|
)
|
|
(1,981
|
)
|
|||
Payments to settle warrants
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|||
Payment of dividends
|
|
(2,971
|
)
|
|
(2,731
|
)
|
|
(2,455
|
)
|
|||
Other
|
|
(486
|
)
|
|
(330
|
)
|
|
(276
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
(12,318
|
)
|
|
3,393
|
|
|
(9,725
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(85
|
)
|
|
137
|
|
|
41
|
|
|||
Net change in cash and cash equivalents
|
|
10,352
|
|
|
(641
|
)
|
|
(4,622
|
)
|
|||
Cash and cash equivalents at beginning of period
|
|
7,588
|
|
|
8,229
|
|
|
12,851
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
17,940
|
|
|
$
|
7,588
|
|
|
$
|
8,229
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Interest paid, net of amounts capitalized
|
|
$
|
1,070
|
|
|
$
|
1,038
|
|
|
$
|
885
|
|
Income taxes paid
|
|
$
|
3,198
|
|
|
$
|
3,342
|
|
|
$
|
2,436
|
|
1
.
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
•
|
We account for shipping and handling activities that are performed after a customer has obtained control of a good as fulfillment costs rather than as separate performance obligations; and
|
•
|
If we expect, at contract inception, that the period between the transfer of control and corresponding payment from the customer will be one year or less, we do not adjust the amount of consideration for the effects of a significant financing component.
|
Description
|
Estimated Useful Life
|
Buildings and improvements
|
Shorter of 35 years or useful life
|
Laboratory and manufacturing equipment
|
4-10
|
Office and computer equipment
|
3-7
|
Leasehold improvements
|
Shorter of useful life or lease term
|
|
|
December 31, 2017
|
|
Adjustments Due to Topic 606
|
|
January 1, 2018
|
||||||
Prepaid and other current assets
|
|
$
|
1,661
|
|
|
$
|
96
|
|
|
$
|
1,757
|
|
Other long-term assets
|
|
$
|
2,722
|
|
|
$
|
10
|
|
|
$
|
2,732
|
|
Other accrued liabilities
|
|
$
|
3,370
|
|
|
$
|
(115
|
)
|
|
$
|
3,255
|
|
Other long-term obligations
|
|
$
|
558
|
|
|
$
|
31
|
|
|
$
|
589
|
|
Retained earnings
|
|
$
|
19,012
|
|
|
$
|
190
|
|
|
$
|
19,202
|
|
2
.
|
REVENUES
|
|
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||||||||||||||
(In millions)
|
|
U.S.
|
|
Europe
|
|
Other International
|
|
Total
|
|
U.S.
|
|
Europe
|
|
Other International
|
|
Total
|
|
U.S.
|
|
Europe
|
|
Other International
|
|
Total
|
||||||||||||||||||||||||
Product Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Atripla
|
|
$
|
967
|
|
|
$
|
131
|
|
|
$
|
108
|
|
|
$
|
1,206
|
|
|
$
|
1,288
|
|
|
$
|
335
|
|
|
$
|
183
|
|
|
$
|
1,806
|
|
|
$
|
1,898
|
|
|
$
|
520
|
|
|
$
|
187
|
|
|
$
|
2,605
|
|
Biktarvy
|
|
1,144
|
|
|
39
|
|
|
1
|
|
|
1,184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Complera/Eviplera
|
|
276
|
|
|
327
|
|
|
50
|
|
|
653
|
|
|
406
|
|
|
503
|
|
|
57
|
|
|
966
|
|
|
821
|
|
|
580
|
|
|
56
|
|
|
1,457
|
|
||||||||||||
Descovy
|
|
1,217
|
|
|
308
|
|
|
56
|
|
|
1,581
|
|
|
958
|
|
|
226
|
|
|
34
|
|
|
1,218
|
|
|
226
|
|
|
69
|
|
|
3
|
|
|
298
|
|
||||||||||||
Genvoya
|
|
3,631
|
|
|
794
|
|
|
199
|
|
|
4,624
|
|
|
3,033
|
|
|
534
|
|
|
107
|
|
|
3,674
|
|
|
1,301
|
|
|
160
|
|
|
23
|
|
|
1,484
|
|
||||||||||||
Odefsey
|
|
1,242
|
|
|
335
|
|
|
21
|
|
|
1,598
|
|
|
964
|
|
|
132
|
|
|
10
|
|
|
1,106
|
|
|
302
|
|
|
27
|
|
|
—
|
|
|
329
|
|
||||||||||||
Stribild
|
|
505
|
|
|
97
|
|
|
42
|
|
|
644
|
|
|
811
|
|
|
195
|
|
|
47
|
|
|
1,053
|
|
|
1,523
|
|
|
314
|
|
|
77
|
|
|
1,914
|
|
||||||||||||
Truvada
|
|
2,605
|
|
|
260
|
|
|
132
|
|
|
2,997
|
|
|
2,266
|
|
|
644
|
|
|
224
|
|
|
3,134
|
|
|
2,384
|
|
|
913
|
|
|
269
|
|
|
3,566
|
|
||||||||||||
Other HIV
(1)
|
|
40
|
|
|
7
|
|
|
14
|
|
|
61
|
|
|
43
|
|
|
6
|
|
|
9
|
|
|
58
|
|
|
41
|
|
|
6
|
|
|
—
|
|
|
47
|
|
||||||||||||
Revenue share - Symtuza
(2)
|
|
27
|
|
|
52
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
AmBisome
|
|
46
|
|
|
229
|
|
|
145
|
|
|
420
|
|
|
28
|
|
|
207
|
|
|
131
|
|
|
366
|
|
|
20
|
|
|
209
|
|
|
127
|
|
|
356
|
|
||||||||||||
Epclusa
|
|
934
|
|
|
654
|
|
|
378
|
|
|
1,966
|
|
|
2,404
|
|
|
869
|
|
|
237
|
|
|
3,510
|
|
|
1,591
|
|
|
141
|
|
|
20
|
|
|
1,752
|
|
||||||||||||
Harvoni
|
|
802
|
|
|
144
|
|
|
276
|
|
|
1,222
|
|
|
3,053
|
|
|
704
|
|
|
613
|
|
|
4,370
|
|
|
4,941
|
|
|
1,810
|
|
|
2,330
|
|
|
9,081
|
|
||||||||||||
Letairis
|
|
943
|
|
|
—
|
|
|
—
|
|
|
943
|
|
|
887
|
|
|
—
|
|
|
—
|
|
|
887
|
|
|
819
|
|
|
—
|
|
|
—
|
|
|
819
|
|
||||||||||||
Ranexa
|
|
758
|
|
|
—
|
|
|
—
|
|
|
758
|
|
|
717
|
|
|
—
|
|
|
—
|
|
|
717
|
|
|
677
|
|
|
—
|
|
|
—
|
|
|
677
|
|
||||||||||||
Vemlidy
|
|
245
|
|
|
12
|
|
|
64
|
|
|
321
|
|
|
111
|
|
|
5
|
|
|
6
|
|
|
122
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||||||||
Viread
|
|
50
|
|
|
82
|
|
|
175
|
|
|
307
|
|
|
514
|
|
|
238
|
|
|
294
|
|
|
1,046
|
|
|
591
|
|
|
302
|
|
|
293
|
|
|
1,186
|
|
||||||||||||
Vosevi
|
|
304
|
|
|
78
|
|
|
14
|
|
|
396
|
|
|
267
|
|
|
22
|
|
|
4
|
|
|
293
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Yescarta
|
|
263
|
|
|
1
|
|
|
—
|
|
|
264
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Zydelig
|
|
61
|
|
|
70
|
|
|
2
|
|
|
133
|
|
|
69
|
|
|
77
|
|
|
3
|
|
|
149
|
|
|
91
|
|
|
76
|
|
|
1
|
|
|
168
|
|
||||||||||||
Other
(3)
|
|
137
|
|
|
76
|
|
|
107
|
|
|
320
|
|
|
283
|
|
|
314
|
|
|
583
|
|
|
1,180
|
|
|
2,036
|
|
|
949
|
|
|
1,226
|
|
|
4,211
|
|
||||||||||||
Total product sales
|
|
16,197
|
|
|
3,696
|
|
|
1,784
|
|
|
21,677
|
|
|
18,109
|
|
|
5,011
|
|
|
2,542
|
|
|
25,662
|
|
|
19,265
|
|
|
6,076
|
|
|
4,612
|
|
|
29,953
|
|
||||||||||||
Royalty, contract and other revenues
|
|
72
|
|
|
310
|
|
|
68
|
|
|
450
|
|
|
85
|
|
|
300
|
|
|
60
|
|
|
445
|
|
|
89
|
|
|
289
|
|
|
59
|
|
|
437
|
|
||||||||||||
Total revenues
|
|
$
|
16,269
|
|
|
$
|
4,006
|
|
|
$
|
1,852
|
|
|
$
|
22,127
|
|
|
$
|
18,194
|
|
|
$
|
5,311
|
|
|
$
|
2,602
|
|
|
$
|
26,107
|
|
|
$
|
19,354
|
|
|
$
|
6,365
|
|
|
$
|
4,671
|
|
|
$
|
30,390
|
|
____________________
|
|
Notes:
|
|
(1)
|
Includes Emtriva and Tybost
|
(2)
|
Represents Gilead’s revenue from cobicistat (C), emtricitabine (FTC) and tenofovir alafenamide (TAF) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland UC (Janssen)
|
(3)
|
Includes Cayston, Hepsera and Sovaldi
|
3
.
|
FAIR VALUE MEASUREMENTS
|
•
|
Level 1 inputs include quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 inputs 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 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 assets and 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.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. treasury securities
|
$
|
3,969
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,969
|
|
|
$
|
4,061
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,061
|
|
Certificates of deposit
|
—
|
|
|
4,361
|
|
|
—
|
|
|
4,361
|
|
|
—
|
|
|
5,131
|
|
|
—
|
|
|
5,131
|
|
||||||||
U.S. government agencies securities
|
—
|
|
|
938
|
|
|
—
|
|
|
938
|
|
|
—
|
|
|
926
|
|
|
—
|
|
|
926
|
|
||||||||
Non-U.S. government securities
|
—
|
|
|
305
|
|
|
—
|
|
|
305
|
|
|
—
|
|
|
664
|
|
|
—
|
|
|
664
|
|
||||||||
Corporate debt securities
|
—
|
|
|
13,067
|
|
|
—
|
|
|
13,067
|
|
|
—
|
|
|
14,747
|
|
|
—
|
|
|
14,747
|
|
||||||||
Residential mortgage and asset-backed securities
|
—
|
|
|
1,524
|
|
|
—
|
|
|
1,524
|
|
|
—
|
|
|
4,058
|
|
|
—
|
|
|
4,058
|
|
||||||||
Marketable equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
5,305
|
|
|
—
|
|
|
—
|
|
|
5,305
|
|
|
4,714
|
|
|
—
|
|
|
—
|
|
|
4,714
|
|
||||||||
Equity securities
|
881
|
|
|
—
|
|
|
—
|
|
|
881
|
|
|
635
|
|
|
—
|
|
|
—
|
|
|
635
|
|
||||||||
Deferred compensation plan
|
124
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
116
|
|
||||||||
Foreign currency derivative contracts
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||||
Total
|
$
|
10,279
|
|
|
$
|
20,273
|
|
|
$
|
—
|
|
|
$
|
30,552
|
|
|
$
|
9,526
|
|
|
$
|
25,539
|
|
|
$
|
—
|
|
|
$
|
35,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
116
|
|
Foreign currency derivative contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
93
|
|
|
—
|
|
|
93
|
|
||||||||
Total
|
$
|
124
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
125
|
|
|
$
|
116
|
|
|
$
|
93
|
|
|
$
|
—
|
|
|
$
|
209
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
5,305
|
|
|
$
|
4,714
|
|
Prepaid and other current assets
|
863
|
|
|
637
|
|
||
Other long-term assets
|
142
|
|
|
114
|
|
||
Total
|
$
|
6,310
|
|
|
$
|
5,465
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
||||||||||||||||
U.S. treasury securities
|
|
$
|
3,978
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
3,969
|
|
|
$
|
4,090
|
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
|
$
|
4,061
|
|
Certificates of deposit
|
|
4,361
|
|
|
—
|
|
|
—
|
|
|
4,361
|
|
|
5,131
|
|
|
—
|
|
|
—
|
|
|
5,131
|
|
||||||||
U.S. government agencies securities
|
|
943
|
|
|
—
|
|
|
(5
|
)
|
|
938
|
|
|
934
|
|
|
—
|
|
|
(8
|
)
|
|
926
|
|
||||||||
Non-U.S. government securities
|
|
307
|
|
|
—
|
|
|
(2
|
)
|
|
305
|
|
|
668
|
|
|
—
|
|
|
(4
|
)
|
|
664
|
|
||||||||
Corporate debt securities
|
|
13,095
|
|
|
1
|
|
|
(29
|
)
|
|
13,067
|
|
|
14,790
|
|
|
3
|
|
|
(46
|
)
|
|
14,747
|
|
||||||||
Residential mortgage and asset-backed securities
|
|
1,532
|
|
|
—
|
|
|
(8
|
)
|
|
1,524
|
|
|
4,072
|
|
|
1
|
|
|
(15
|
)
|
|
4,058
|
|
||||||||
Total
|
|
$
|
24,216
|
|
|
$
|
1
|
|
|
$
|
(53
|
)
|
|
$
|
24,164
|
|
|
$
|
29,685
|
|
|
$
|
4
|
|
|
$
|
(102
|
)
|
|
$
|
29,587
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
10,592
|
|
|
$
|
481
|
|
Short-term marketable securities
|
12,149
|
|
|
17,922
|
|
||
Long-term marketable securities
|
1,423
|
|
|
11,184
|
|
||
Total
|
$
|
24,164
|
|
|
$
|
29,587
|
|
|
December 31, 2018
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
Within one year
|
$
|
22,786
|
|
|
$
|
22,741
|
|
After one year through five years
|
1,364
|
|
|
1,358
|
|
||
After five years through ten years
|
46
|
|
|
45
|
|
||
After ten years
|
20
|
|
|
20
|
|
||
Total
|
$
|
24,216
|
|
|
$
|
24,164
|
|
|
|
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 |
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. treasury securities
|
|
$
|
—
|
|
|
$
|
896
|
|
|
$
|
(9
|
)
|
|
$
|
1,383
|
|
|
$
|
(9
|
)
|
|
$
|
2,279
|
|
U.S. government agencies securities
|
|
—
|
|
|
30
|
|
|
(5
|
)
|
|
553
|
|
|
(5
|
)
|
|
583
|
|
||||||
Non-U.S. government securities
|
|
—
|
|
|
86
|
|
|
(2
|
)
|
|
192
|
|
|
(2
|
)
|
|
278
|
|
||||||
Corporate debt securities
|
|
(1
|
)
|
|
1,600
|
|
|
(28
|
)
|
|
4,204
|
|
|
(29
|
)
|
|
5,804
|
|
||||||
Residential mortgage and asset-backed securities
|
|
—
|
|
|
192
|
|
|
(8
|
)
|
|
1,186
|
|
|
(8
|
)
|
|
1,378
|
|
||||||
Total
|
|
$
|
(1
|
)
|
|
$
|
2,804
|
|
|
$
|
(52
|
)
|
|
$
|
7,518
|
|
|
$
|
(53
|
)
|
|
$
|
10,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. treasury securities
|
|
$
|
(2
|
)
|
|
$
|
821
|
|
|
$
|
(27
|
)
|
|
$
|
3,240
|
|
|
$
|
(29
|
)
|
|
$
|
4,061
|
|
U.S. government agencies securities
|
|
(1
|
)
|
|
206
|
|
|
(7
|
)
|
|
700
|
|
|
(8
|
)
|
|
906
|
|
||||||
Non-U.S. government securities
|
|
(1
|
)
|
|
203
|
|
|
(3
|
)
|
|
461
|
|
|
(4
|
)
|
|
664
|
|
||||||
Corporate debt securities
|
|
(14
|
)
|
|
7,674
|
|
|
(32
|
)
|
|
3,561
|
|
|
(46
|
)
|
|
11,235
|
|
||||||
Residential mortgage and asset-backed securities
|
|
(4
|
)
|
|
2,245
|
|
|
(11
|
)
|
|
1,206
|
|
|
(15
|
)
|
|
3,451
|
|
||||||
Total
|
|
$
|
(22
|
)
|
|
$
|
11,149
|
|
|
$
|
(80
|
)
|
|
$
|
9,168
|
|
|
$
|
(102
|
)
|
|
$
|
20,317
|
|
5
.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
|
|
December 31, 2018
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
|
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair
Value
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
|
Other current assets
|
|
$
|
73
|
|
|
Other accrued liabilities
|
|
$
|
(1
|
)
|
Foreign currency exchange contracts
|
|
Other long-term assets
|
|
5
|
|
|
Other long-term obligations
|
|
—
|
|
||
Total derivatives designated as hedges
|
|
|
|
78
|
|
|
|
|
(1
|
)
|
||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign currency exchange contracts
|
|
Other current assets
|
|
—
|
|
|
Other accrued liabilities
|
|
—
|
|
||
Total derivatives not designated as hedges
|
|
|
|
—
|
|
|
|
|
—
|
|
||
Total derivatives
|
|
|
|
$
|
78
|
|
|
|
|
$
|
(1
|
)
|
|
|
December 31, 2017
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
|
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair
Value
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
|
Other current assets
|
|
$
|
2
|
|
|
Other accrued liabilities
|
|
$
|
(89
|
)
|
Foreign currency exchange contracts
|
|
Other long-term assets
|
|
1
|
|
|
Other long-term obligations
|
|
(3
|
)
|
||
Total derivatives designated as hedges
|
|
|
|
3
|
|
|
|
|
(92
|
)
|
||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
|
Other current assets
|
|
10
|
|
|
Other accrued liabilities
|
|
(1
|
)
|
||
Total derivatives not designated as hedges
|
|
|
|
10
|
|
|
|
|
(1
|
)
|
||
Total derivatives
|
|
|
|
$
|
13
|
|
|
|
|
$
|
(93
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
||||||
Gains (losses) recognized in AOCI
|
|
$
|
114
|
|
|
$
|
(315
|
)
|
|
$
|
5
|
|
Gains (losses) reclassified from AOCI into product sales
|
|
$
|
(87
|
)
|
|
$
|
(28
|
)
|
|
$
|
73
|
|
Gains (losses) recognized in Other income (expense), net
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
(32
|
)
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|||
Gains (losses) recognized in Other income (expense), net
|
|
$
|
(2
|
)
|
|
$
|
(113
|
)
|
|
$
|
206
|
|
As of December 31, 2018
|
||||||||||||||||||||||||
Offsetting of Derivative Assets/Liabilities
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Gross Amounts Not Offset on the Consolidated Balance Sheets
|
|
|
||||||||||||||
Description
|
|
Gross Amounts of Recognized Assets/Liabilities
|
|
Gross Amounts Offset on the Consolidated Balance Sheets
|
|
Amounts of Assets/Liabilities Presented on the Consolidated Balance Sheets
|
|
Derivative Financial Instruments
|
|
Cash Collateral Received/Pledged
|
|
Net Amount (Legal Offset)
|
||||||||||||
Derivative assets
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
78
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
77
|
|
Derivative liabilities
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
|
||||||||||||||||||||||||
As of December 31, 2017
|
||||||||||||||||||||||||
Offsetting of Derivative Assets/Liabilities
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Gross Amounts Not Offset on the Consolidated Balance Sheets
|
|
|
||||||||||||||
Description
|
|
Gross Amounts of Recognized Assets/Liabilities
|
|
Gross Amounts Offset on the Consolidated Balance Sheets
|
|
Amounts of Assets/Liabilities Presented on the Consolidated Balance Sheets
|
|
Derivative Financial Instruments
|
|
Cash Collateral Received/Pledged
|
|
Net Amount (Legal Offset)
|
||||||||||||
Derivative assets
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
5
|
|
Derivative liabilities
|
|
(93
|
)
|
|
—
|
|
|
(93
|
)
|
|
8
|
|
|
—
|
|
|
(85
|
)
|
Cash and cash equivalents
|
|
$
|
652
|
|
Identifiable intangible assets
|
|
|
||
Indefinite-lived intangible assets - IPR&D
|
|
8,950
|
|
|
Outlicense acquired
|
|
91
|
|
|
Deferred income taxes
|
|
(1,564
|
)
|
|
Other assets acquired (liabilities assumed), net
|
|
81
|
|
|
Total identifiable net assets
|
|
8,210
|
|
|
Goodwill
|
|
2,945
|
|
|
Total consideration transferred
|
|
$
|
11,155
|
|
7
.
|
INVENTORIES
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Raw materials
|
|
$
|
1,888
|
|
|
$
|
1,880
|
|
Work in process
|
|
235
|
|
|
352
|
|
||
Finished goods
|
|
507
|
|
|
670
|
|
||
Total
|
|
$
|
2,630
|
|
|
$
|
2,902
|
|
|
|
|
|
|
||||
Reported as:
|
|
|
|
|
||||
Inventories
|
|
$
|
814
|
|
|
$
|
801
|
|
Other long-term assets
|
|
1,816
|
|
|
2,101
|
|
||
Total
|
|
$
|
2,630
|
|
|
$
|
2,902
|
|
8
.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Land and land improvements
|
|
$
|
404
|
|
|
$
|
396
|
|
Buildings and improvements (including leasehold improvements)
|
|
2,344
|
|
|
2,176
|
|
||
Laboratory and manufacturing equipment
|
|
697
|
|
|
533
|
|
||
Office and computer equipment
|
|
558
|
|
|
494
|
|
||
Construction in progress
|
|
1,194
|
|
|
690
|
|
||
Subtotal
|
|
5,197
|
|
|
4,289
|
|
||
Less accumulated depreciation and amortization
|
|
(1,191
|
)
|
|
(994
|
)
|
||
Total
|
|
$
|
4,006
|
|
|
$
|
3,295
|
|
9
.
|
INTANGIBLE ASSETS
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Foreign Currency Translation Adjustment
|
|
Net Carrying Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
||||||||||||||
Finite-lived assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Intangible asset - sofosbuvir
|
|
$
|
10,720
|
|
|
$
|
(3,554
|
)
|
|
$
|
—
|
|
|
$
|
7,166
|
|
|
$
|
10,720
|
|
|
$
|
(2,855
|
)
|
|
$
|
7,865
|
|
Intangible asset - axicabtagene ciloleucel (DLBCL)
|
|
6,200
|
|
|
(416
|
)
|
|
—
|
|
|
5,784
|
|
|
6,200
|
|
|
(72
|
)
|
|
6,128
|
|
|||||||
Intangible asset - Ranexa
|
|
688
|
|
|
(678
|
)
|
|
—
|
|
|
10
|
|
|
688
|
|
|
(566
|
)
|
|
122
|
|
|||||||
Other
|
|
1,096
|
|
|
(359
|
)
|
|
(3
|
)
|
|
734
|
|
|
546
|
|
|
(311
|
)
|
|
235
|
|
|||||||
Total finite-lived assets
|
|
18,704
|
|
|
(5,007
|
)
|
|
(3
|
)
|
|
13,694
|
|
|
18,154
|
|
|
(3,804
|
)
|
|
14,350
|
|
|||||||
Indefinite-lived assets - IPR&D
|
|
2,047
|
|
|
—
|
|
|
(3
|
)
|
|
2,044
|
|
|
2,750
|
|
|
—
|
|
|
2,750
|
|
|||||||
Total intangible assets
|
|
$
|
20,751
|
|
|
$
|
(5,007
|
)
|
|
$
|
(6
|
)
|
|
$
|
15,738
|
|
|
$
|
20,904
|
|
|
$
|
(3,804
|
)
|
|
$
|
17,100
|
|
Fiscal Year
|
Amount
|
||
2019
|
$
|
1,149
|
|
2020
|
1,125
|
|
|
2021
|
1,124
|
|
|
2022
|
1,124
|
|
|
2023
|
1,124
|
|
|
Thereafter
|
8,048
|
|
|
Total
|
$
|
13,694
|
|
10
.
|
OTHER FINANCIAL INFORMATION
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Compensation and employee benefits
|
|
$
|
555
|
|
|
$
|
455
|
|
Accrued payment for marketing-related rights acquired from Japan Tobacco
|
|
365
|
|
|
—
|
|
||
Income taxes payable
|
|
190
|
|
|
713
|
|
||
Other accrued expenses
|
|
2,029
|
|
|
2,202
|
|
||
Total
|
|
$
|
3,139
|
|
|
$
|
3,370
|
|
11
.
|
COLLABORATIVE ARRANGEMENTS
|
12
.
|
DEBT AND CREDIT FACILITIES
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
Type of Borrowing
|
|
Issue Date
|
|
Due Date
|
|
Interest Rate
|
|
2018
|
|
2017
|
||||
Senior Unsecured
|
|
September 2015
|
|
September 2018
|
|
1.85%
|
|
$
|
—
|
|
|
$
|
999
|
|
Senior Unsecured
|
|
September 2017
|
|
September 2018
|
|
3-month LIBOR + 0.17%
|
|
—
|
|
|
749
|
|
||
Term Loan
|
|
October 2017
|
|
October 2018
|
|
Variable
|
|
—
|
|
|
999
|
|
||
Senior Unsecured
|
|
September 2017
|
|
March 2019
|
|
3-month LIBOR + 0.22%
|
|
750
|
|
|
748
|
|
||
Senior Unsecured
|
|
March 2014
|
|
April 2019
|
|
2.05%
|
|
500
|
|
|
499
|
|
||
Senior Unsecured
|
|
September 2017
|
|
September 2019
|
|
1.85%
|
|
999
|
|
|
997
|
|
||
Senior Unsecured
|
|
September 2017
|
|
September 2019
|
|
3-month LIBOR + 0.25%
|
|
499
|
|
|
499
|
|
||
Senior Unsecured
|
|
November 2014
|
|
February 2020
|
|
2.35%
|
|
499
|
|
|
499
|
|
||
Senior Unsecured
|
|
September 2015
|
|
September 2020
|
|
2.55%
|
|
1,996
|
|
|
1,994
|
|
||
Term Loan
|
|
October 2017
|
|
October 2020
|
|
Variable
|
|
—
|
|
|
998
|
|
||
Senior Unsecured
|
|
March 2011
|
|
April 2021
|
|
4.50%
|
|
997
|
|
|
995
|
|
||
Senior Unsecured
|
|
December 2011
|
|
December 2021
|
|
4.40%
|
|
1,247
|
|
|
1,246
|
|
||
Senior Unsecured
|
|
September 2016
|
|
March 2022
|
|
1.95%
|
|
498
|
|
|
497
|
|
||
Senior Unsecured
|
|
September 2015
|
|
September 2022
|
|
3.25%
|
|
997
|
|
|
996
|
|
||
Term Loan
|
|
October 2017
|
|
October 2022
|
|
Variable
|
|
—
|
|
|
2,497
|
|
||
Senior Unsecured
|
|
September 2016
|
|
September 2023
|
|
2.50%
|
|
746
|
|
|
745
|
|
||
Senior Unsecured
|
|
March 2014
|
|
April 2024
|
|
3.70%
|
|
1,744
|
|
|
1,742
|
|
||
Senior Unsecured
|
|
November 2014
|
|
February 2025
|
|
3.50%
|
|
1,745
|
|
|
1,744
|
|
||
Senior Unsecured
|
|
September 2015
|
|
March 2026
|
|
3.65%
|
|
2,731
|
|
|
2,729
|
|
||
Senior Unsecured
|
|
September 2016
|
|
March 2027
|
|
2.95%
|
|
1,245
|
|
|
1,244
|
|
||
Senior Unsecured
|
|
September 2015
|
|
September 2035
|
|
4.60%
|
|
990
|
|
|
990
|
|
||
Senior Unsecured
|
|
September 2016
|
|
September 2036
|
|
4.00%
|
|
740
|
|
|
740
|
|
||
Senior Unsecured
|
|
December 2011
|
|
December 2041
|
|
5.65%
|
|
995
|
|
|
995
|
|
||
Senior Unsecured
|
|
March 2014
|
|
April 2044
|
|
4.80%
|
|
1,734
|
|
|
1,733
|
|
||
Senior Unsecured
|
|
November 2014
|
|
February 2045
|
|
4.50%
|
|
1,730
|
|
|
1,730
|
|
||
Senior Unsecured
|
|
September 2015
|
|
March 2046
|
|
4.75%
|
|
2,216
|
|
|
2,215
|
|
||
Senior Unsecured
|
|
September 2016
|
|
March 2047
|
|
4.15%
|
|
1,724
|
|
|
1,723
|
|
||
Total debt, net
|
|
27,322
|
|
|
33,542
|
|
||||||||
Less current portion
|
|
2,748
|
|
|
2,747
|
|
||||||||
Total long-term debt, net
|
|
$
|
24,574
|
|
|
$
|
30,795
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||
Contractual Maturities
|
|
$
|
2,750
|
|
|
$
|
2,500
|
|
|
$
|
2,250
|
|
|
$
|
1,500
|
|
|
$
|
750
|
|
13
.
|
COMMITMENTS AND CONTINGENCIES
|
2019
|
$
|
89
|
|
2020
|
78
|
|
|
2021
|
66
|
|
|
2022
|
60
|
|
|
2023
|
52
|
|
|
Thereafter
|
229
|
|
|
Total
|
$
|
574
|
|
14
.
|
STOCKHOLDERS’ EQUITY
|
|
|
Year ended December 31,
|
||||||||||
|
|
2018
(1)
|
|
2017
(1)
|
|
2016
(2)
|
||||||
Shares repurchased and retired
|
|
40
|
|
|
13
|
|
|
123
|
|
|||
Amount
|
|
$
|
2,900
|
|
|
$
|
954
|
|
|
$
|
11,001
|
|
Average price per share
|
|
$
|
72.95
|
|
|
$
|
71.79
|
|
|
$
|
89.15
|
|
_______________________
|
|
|
|
|
|
|
Notes:
|
|
(1)
|
All repurchases were under the 2016 Program.
|
(2)
|
Includes 36 million shares repurchased for $3.0 billion under the 2016 Program and 87 million shares repurchased for $8.0 billion under the 2015 Program.
|
|
|
Year ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Reduction of common stock and APIC
|
|
$
|
112
|
|
|
$
|
34
|
|
|
$
|
302
|
|
Charge to retained earnings
|
|
2,940
|
|
|
$
|
1,028
|
|
|
$
|
10,883
|
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
Dividend Per Share
|
|
Amount
|
|
Dividend Per Share
|
|
Amount
|
||||||||
First quarter
|
|
$
|
0.57
|
|
|
$
|
752
|
|
|
$
|
0.52
|
|
|
$
|
685
|
|
Second quarter
|
|
0.57
|
|
|
747
|
|
|
0.52
|
|
|
685
|
|
||||
Third quarter
|
|
0.57
|
|
|
746
|
|
|
0.52
|
|
|
685
|
|
||||
Fourth quarter
|
|
0.57
|
|
|
741
|
|
|
0.52
|
|
|
687
|
|
||||
Total
|
|
$
|
2.28
|
|
|
$
|
2,986
|
|
|
$
|
2.08
|
|
|
$
|
2,742
|
|
|
|
Foreign Currency Translation
|
|
Unrealized Gains and Losses on Available-for-Sale Securities
|
|
Unrealized Gains and Losses on Cash Flow Hedges
|
|
Total
|
||||||||
Balance at December 31, 2016
|
|
$
|
132
|
|
|
$
|
(16
|
)
|
|
$
|
162
|
|
|
$
|
278
|
|
Other comprehensive income (loss) before reclassifications
|
|
(47
|
)
|
|
218
|
|
|
(304
|
)
|
|
(133
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
|
—
|
|
|
(8
|
)
|
|
28
|
|
|
20
|
|
||||
Net current period other comprehensive income (loss)
|
|
(47
|
)
|
|
210
|
|
|
(276
|
)
|
|
(113
|
)
|
||||
Balance at December 31, 2017
|
|
$
|
85
|
|
|
$
|
194
|
|
|
$
|
(114
|
)
|
|
$
|
165
|
|
Reclassifications to retained earnings as a result of the adoption of new accounting standards
|
|
—
|
|
|
(293
|
)
|
|
—
|
|
|
(293
|
)
|
||||
Balance at January 1, 2018
|
|
$
|
85
|
|
|
$
|
(99
|
)
|
|
$
|
(114
|
)
|
|
$
|
(128
|
)
|
Net unrealized gain (loss)
|
|
(38
|
)
|
|
43
|
|
|
112
|
|
|
117
|
|
||||
Reclassifications to net income
|
|
—
|
|
|
4
|
|
|
87
|
|
|
91
|
|
||||
Net current period other comprehensive income (loss)
|
|
(38
|
)
|
|
47
|
|
|
199
|
|
|
208
|
|
||||
Balance at December 31, 2018
|
|
$
|
47
|
|
|
$
|
(52
|
)
|
|
$
|
85
|
|
|
$
|
80
|
|
|
|
Shares
(in thousands)
|
|
Weighted-
Average
Exercise Price
(in dollars)
|
|
Weighted-Average
Remaining
Contractual Term
(Years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at December 31, 2017
|
|
30,220
|
|
|
$
|
43.93
|
|
|
|
|
|
||
Granted
|
|
3,659
|
|
|
$
|
79.49
|
|
|
|
|
|
||
Forfeited
|
|
(1,943
|
)
|
|
$
|
70.23
|
|
|
|
|
|
||
Expired
|
|
(284
|
)
|
|
$
|
71.09
|
|
|
|
|
|
||
Exercised
|
|
(8,128
|
)
|
|
$
|
24.16
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
|
23,524
|
|
|
$
|
53.80
|
|
|
5.63
|
|
$
|
417
|
|
Exercisable at December 31, 2018
|
|
15,521
|
|
|
$
|
45.67
|
|
|
4.21
|
|
$
|
372
|
|
Expected to vest, net of estimated forfeitures at December 31, 2018
|
|
7,629
|
|
|
$
|
69.34
|
|
|
8.37
|
|
$
|
43
|
|
|
|
Shares
(1)
(in thousands)
|
|
Weighted-
Average Grant Date Fair Value Per Share (1)
(in dollars)
|
|||
Outstanding at December 31, 2017
|
|
757
|
|
|
$
|
82.80
|
|
Granted
|
|
452
|
|
|
$
|
88.76
|
|
Vested
|
|
(228
|
)
|
|
$
|
83.75
|
|
Forfeited
|
|
(149
|
)
|
|
$
|
103.80
|
|
Outstanding at December 31, 2018
|
|
832
|
|
|
$
|
82.42
|
|
_______________________
|
|
|
|
|
(1)
|
Weighted-average grant-date fair value per share excludes shares related to grants that currently have no grant date as the performance objectives have not yet been defined.
|
|
|
Shares
(in thousands) |
|
Weighted-
Average Grant Date Fair Value Per Share (in dollars) |
|||
Outstanding at December 31, 2017
|
|
15,005
|
|
|
$
|
79.37
|
|
Granted
|
|
7,196
|
|
|
$
|
77.98
|
|
Vested
|
|
(5,619
|
)
|
|
$
|
82.22
|
|
Forfeited
|
|
(1,688
|
)
|
|
$
|
78.48
|
|
Outstanding at December 31, 2018
|
|
14,894
|
|
|
$
|
77.72
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cost of goods sold
|
|
$
|
61
|
|
|
$
|
24
|
|
|
$
|
14
|
|
Research and development expenses
|
|
379
|
|
|
232
|
|
|
176
|
|
|||
Selling, general and administrative expenses
|
|
405
|
|
|
393
|
|
|
190
|
|
|||
Stock-based compensation expense included in total costs and expenses
|
|
845
|
|
|
649
|
|
|
380
|
|
|||
Income tax effect
|
|
(164
|
)
|
|
(280
|
)
|
|
(104
|
)
|
|||
Stock-based compensation expense, net of tax
|
|
$
|
681
|
|
|
$
|
369
|
|
|
$
|
276
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Expected volatility:
|
|
|
|
|
|
|
|||
Stock options
|
|
28
|
%
|
|
28
|
%
|
|
30
|
%
|
ESPP
|
|
28
|
%
|
|
28
|
%
|
|
30
|
%
|
Expected term in years:
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
5.2
|
|
|
4.6
|
|
|
5.5
|
|
ESPP
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
Risk-free interest rate:
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
2.5
|
%
|
|
2.1
|
%
|
|
1.4
|
%
|
ESPP
|
|
2.6
|
%
|
|
1.8
|
%
|
|
1.1
|
%
|
Expected dividend yield
|
|
2.8
|
%
|
|
2.7
|
%
|
|
1.9
|
%
|
16
.
|
NET INCOME PER SHARE ATTRIBUTABLE TO GILEAD COMMON STOCKHOLDERS
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income attributable to Gilead
|
|
$
|
5,455
|
|
|
$
|
4,628
|
|
|
$
|
13,501
|
|
Shares used in per share calculation - basic
|
|
1,298
|
|
|
1,307
|
|
|
1,339
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
||||||
Stock options and equivalents
|
|
10
|
|
|
12
|
|
|
13
|
|
|||
Conversion spread related to the Convertible Notes
|
|
—
|
|
|
—
|
|
|
2
|
|
|||
Warrants related to the Convertible Notes
|
|
—
|
|
|
—
|
|
|
4
|
|
|||
Shares used in per share calculation - diluted
|
|
1,308
|
|
|
1,319
|
|
|
1,358
|
|
|||
Net income per share attributable to Gilead common stockholders - basic
|
|
$
|
4.20
|
|
|
$
|
3.54
|
|
|
$
|
10.08
|
|
Net income per share attributable to Gilead common stockholders - diluted
|
|
$
|
4.17
|
|
|
$
|
3.51
|
|
|
$
|
9.94
|
|
17
.
|
SEGMENT INFORMATION
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
AmerisourceBergen Corp.
|
|
20
|
%
|
|
20
|
%
|
|
18
|
%
|
Cardinal Health, Inc.
|
|
21
|
%
|
|
19
|
%
|
|
16
|
%
|
McKesson Corp.
|
|
21
|
%
|
|
23
|
%
|
|
22
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Domestic
|
|
$
|
7,074
|
|
|
$
|
8,099
|
|
|
$
|
7,646
|
|
Foreign
|
|
725
|
|
|
5,430
|
|
|
9,451
|
|
|||
Total income before provision for income taxes
|
|
$
|
7,799
|
|
|
$
|
13,529
|
|
|
$
|
17,097
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Federal:
|
|
|
|
|
|
|
||||||
Current
|
|
$
|
1,716
|
|
|
$
|
8,817
|
|
|
$
|
3,351
|
|
Deferred
|
|
324
|
|
|
(123
|
)
|
|
(85
|
)
|
|||
|
|
2,040
|
|
|
8,694
|
|
|
3,266
|
|
|||
State:
|
|
|
|
|
|
|
|
|
|
|||
Current
|
|
162
|
|
|
97
|
|
|
131
|
|
|||
Deferred
|
|
(17
|
)
|
|
(20
|
)
|
|
28
|
|
|||
|
|
145
|
|
|
77
|
|
|
159
|
|
|||
Foreign:
|
|
|
|
|
|
|
||||||
Current
|
|
175
|
|
|
54
|
|
|
261
|
|
|||
Deferred
|
|
(21
|
)
|
|
60
|
|
|
(77
|
)
|
|||
|
|
154
|
|
|
114
|
|
|
184
|
|
|||
Provision for income taxes
|
|
$
|
2,339
|
|
|
$
|
8,885
|
|
|
$
|
3,609
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Federal statutory rate
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes, net of federal benefit
|
|
0.6
|
%
|
|
0.1
|
%
|
|
0.7
|
%
|
Foreign earnings at different rates
|
|
(0.9
|
)%
|
|
(11.2
|
)%
|
|
(16.0
|
)%
|
Research and other credits
|
|
(1.1
|
)%
|
|
(0.6
|
)%
|
|
(0.7
|
)%
|
US tax on foreign earnings
|
|
2.1
|
%
|
|
1.2
|
%
|
|
0.7
|
%
|
Deferred tax charge on acquired intangibles
|
|
7.5
|
%
|
|
—
|
%
|
|
—
|
%
|
Transition tax
|
|
(0.7
|
)%
|
|
42.9
|
%
|
|
—
|
%
|
Deferred tax revaluation
|
|
0.8
|
%
|
|
(2.3
|
)%
|
|
—
|
%
|
Settlement of tax examinations
|
|
(1.9
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other
|
|
2.6
|
%
|
|
0.6
|
%
|
|
1.4
|
%
|
Effective tax rate
|
|
30.0
|
%
|
|
65.7
|
%
|
|
21.1
|
%
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
344
|
|
|
$
|
322
|
|
Stock-based compensation
|
|
163
|
|
|
165
|
|
||
Reserves and accruals not currently deductible
|
|
426
|
|
|
336
|
|
||
Deferred revenue
|
|
—
|
|
|
27
|
|
||
Depreciation related
|
|
61
|
|
|
56
|
|
||
Research and other credit carryforwards
|
|
363
|
|
|
293
|
|
||
Other, net
|
|
183
|
|
|
102
|
|
||
Total deferred tax assets before valuation allowance
|
|
1,540
|
|
|
1,301
|
|
||
Valuation allowance
|
|
(331
|
)
|
|
(162
|
)
|
||
Total deferred tax assets
|
|
1,209
|
|
|
1,139
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
|
||
Intangibles
|
|
(1,667
|
)
|
|
(1,316
|
)
|
||
Other
|
|
(80
|
)
|
|
(70
|
)
|
||
Total deferred tax liabilities
|
|
(1,747
|
)
|
|
(1,386
|
)
|
||
Net deferred tax assets (liabilities)
|
|
$
|
(538
|
)
|
|
$
|
(247
|
)
|
|
|
December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, beginning of period
|
|
$
|
2,181
|
|
|
$
|
1,852
|
|
|
$
|
1,350
|
|
Tax positions related to current year:
|
|
|
|
|
|
|
|
|
|
|||
Additions
|
|
64
|
|
|
299
|
|
|
522
|
|
|||
Reductions
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
|
|
|
||||
Additions
|
|
125
|
|
|
67
|
|
|
33
|
|
|||
Reductions
|
|
—
|
|
|
(16
|
)
|
|
(3
|
)
|
|||
Settlements
|
|
(774
|
)
|
|
(12
|
)
|
|
(49
|
)
|
|||
Lapse of statute of limitations
|
|
(1
|
)
|
|
(9
|
)
|
|
(1
|
)
|
|||
Balance, end of period
|
|
$
|
1,595
|
|
|
$
|
2,181
|
|
|
$
|
1,852
|
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
|
$
|
5,088
|
|
|
$
|
5,648
|
|
|
$
|
5,596
|
|
|
$
|
5,795
|
|
Gross profit on product sales
|
|
$
|
4,000
|
|
|
$
|
4,344
|
|
|
$
|
4,369
|
|
|
$
|
4,111
|
|
Net income
(1)
|
|
$
|
1,539
|
|
|
$
|
1,819
|
|
|
$
|
2,099
|
|
|
$
|
3
|
|
Net income attributable to Gilead
(1)
|
|
$
|
1,538
|
|
|
$
|
1,817
|
|
|
$
|
2,097
|
|
|
$
|
3
|
|
Net income per share attributable to Gilead common stockholders - basic
(2)
|
|
$
|
1.18
|
|
|
$
|
1.40
|
|
|
$
|
1.62
|
|
|
$
|
—
|
|
Net income per share attributable to Gilead common stockholders - diluted
(2)
|
|
$
|
1.17
|
|
|
$
|
1.39
|
|
|
$
|
1.60
|
|
|
$
|
—
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenues
|
|
$
|
6,505
|
|
|
$
|
7,141
|
|
|
$
|
6,512
|
|
|
$
|
5,949
|
|
Gross profit on product sales
|
|
$
|
5,420
|
|
|
$
|
5,920
|
|
|
$
|
5,370
|
|
|
$
|
4,581
|
|
Net income (loss)
(3)
|
|
$
|
2,699
|
|
|
$
|
3,069
|
|
|
$
|
2,712
|
|
|
$
|
(3,836
|
)
|
Net income (loss) attributable to Gilead
(3)
|
|
$
|
2,702
|
|
|
$
|
3,073
|
|
|
$
|
2,718
|
|
|
$
|
(3,865
|
)
|
Net income (loss) per share attributable to Gilead common stockholders - basic
(3)
|
|
$
|
2.07
|
|
|
$
|
2.35
|
|
|
$
|
2.08
|
|
|
$
|
(2.96
|
)
|
Net income (loss) per share attributable to Gilead common stockholders - diluted
(3)
|
|
$
|
2.05
|
|
|
$
|
2.33
|
|
|
$
|
2.06
|
|
|
$
|
(2.96
|
)
|
_______________________
|
|
|
|
|
|
|
|
|
Notes:
|
||
(1)
|
Amounts for the fourth quarter of 2018 included $820 million and $588 million from an impairment and a non-cash tax charge related to intangible assets acquired from Kite Pharma, Inc., respectively, and inventory reserves of $410 million for excess raw materials primarily due to a sustained decrease in demand for Harvoni. See Note 7, Inventories, Note 9, Intangible Assets and Note 18, Income Taxes, of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional details.
|
|
(2)
|
Amounts for the fourth quarter of 2018 included an unfavorable impact of $1.31 per basic share and $1.30 per diluted share from the factors noted above.
|
|
(3)
|
In December 2017, we recorded a $5.5 billion net charge, or $4.20 per basic share and $4.16 per diluted share, related to the enactment of the Tax Cuts and Jobs Act. See Note 18, Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional details.
|
|
|
|
Balance at Beginning of Period
|
|
Additions/Charged to Expense
|
|
Deductions
|
|
Balance at End of Period
|
||||||||
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
455
|
|
|
$
|
7,572
|
|
|
$
|
7,444
|
|
|
$
|
583
|
|
Sales return allowance
|
|
$
|
162
|
|
|
$
|
85
|
|
|
$
|
88
|
|
|
$
|
159
|
|
Valuation allowances for deferred tax assets
|
|
$
|
162
|
|
|
$
|
170
|
|
|
$
|
1
|
|
|
$
|
331
|
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
763
|
|
|
$
|
7,682
|
|
|
$
|
7,990
|
|
|
$
|
455
|
|
Sales return allowance
|
|
$
|
195
|
|
|
$
|
23
|
|
|
$
|
56
|
|
|
$
|
162
|
|
Valuation allowances for deferred tax assets
|
|
$
|
126
|
|
|
$
|
72
|
|
|
$
|
36
|
|
|
$
|
162
|
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
1,032
|
|
|
$
|
9,287
|
|
|
$
|
9,556
|
|
|
$
|
763
|
|
Sales return allowance
|
|
$
|
371
|
|
|
$
|
(141
|
)
|
|
$
|
35
|
|
|
$
|
195
|
|
Valuation allowances for deferred tax assets
|
|
$
|
6
|
|
|
$
|
120
|
|
|
$
|
—
|
|
|
$
|
126
|
|
_______________________
|
|
|
|
|
|
|
|
|
Notes:
|
|
(1)
|
Allowances are for doubtful accounts, cash discounts and chargebacks.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
|
*(20)
|
10.23
|
|
||
|
|
|
|
|
*(21)
|
10.24
|
|
||
|
|
|
|
|
*(22)
|
10.25
|
|
||
|
|
|
|
|
*(23)
|
10.26
|
|
||
|
|
|
|
|
*(24)
|
10.27
|
|
||
|
|
|
|
|
*(25)
|
10.28
|
|
||
|
|
|
|
|
*(26)
|
10.29
|
|
||
|
|
|
|
|
*(27)
|
10.30
|
|
||
|
|
|
|
|
*(28)
|
10.31
|
|
||
|
|
|
|
|
*(29)
|
10.32
|
|
Form of Indemnity Agreement entered into between Registrant and its directors and executive officers
|
|
|
|
|
|
|
*(29)
|
10.33
|
|
Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees
|
|
|
|
|
|
|
*(30)
|
10.34
|
|
||
|
|
|
|
|
+(31)
|
10.35
|
|
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)
|
|
|
|
|
|
|
+(32)
|
10.36
|
|
||
|
|
|
|
|
+(33)
|
10.37
|
|
||
|
|
|
|
|
+(34)
|
10.38
|
|
||
|
|
|
|
|
+(35)
|
10.39
|
|
||
|
|
|
|
|
+(36)
|
10.40
|
|
||
|
|
|
|
|
+(36)
|
10.41
|
|
||
|
|
|
|
|
+
|
10.42
|
|
||
|
|
|
|
|
+
|
10.43
|
|
||
|
|
|
|
|
+(37)
|
10.44
|
|
||
|
|
|
|
|
+(38)
|
10.45
|
|
||
|
|
|
|
|
|
21.1
|
|
||
|
|
|
|
|
|
23.1
|
|
||
|
|
|
|
|
|
31.1
|
|
||
|
|
|
|
|
|
31.2
|
|
||
|
|
|
|
|
|
32.1**
|
|
||
|
|
|
|
|
|
101.INS***
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
101.SCH***
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
101.CAL***
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
101.DEF***
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
101.LAB***
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
101.PRE***
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 8, 2014, and incorporated herein by reference.
|
(2)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on December 23, 2015, and incorporated herein by reference.
|
(3)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on April 1, 2011, and incorporated herein by reference.
|
(4)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on December 13, 2011, and incorporated herein by reference.
|
(5)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on March 7, 2014, and incorporated herein by reference.
|
(6)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on November 17, 2014, and incorporated herein by reference.
|
(7)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on September 14, 2015, and incorporated herein by reference.
|
(8)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on September 20, 2016, and incorporated herein by reference.
|
(9)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on September 21, 2017, and incorporated herein by reference.
|
(10)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 12, 2017, and incorporated herein by reference.
|
(11)
|
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.
|
(12)
|
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.
|
(13)
|
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.
|
(14)
|
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.
|
(15)
|
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
|
(16)
|
Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, and incorporated herein by reference.
|
(17)
|
Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and incorporated herein by reference.
|
(18)
|
Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, and incorporated herein by reference.
|
(19)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 8, 2015, and incorporated herein by reference.
|
(20)
|
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.
|
(21)
|
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.
|
(22)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on March 11, 2016, and incorporated herein by reference.
|
(23)
|
Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and incorporated herein by reference.
|
(24)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 17, 2016, and incorporated herein by reference.
|
(25)
|
Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, and incorporated herein by reference.
|
(26)
|
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.
|
(27)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on August 7, 2018, and incorporated herein by reference.
|
(28)
|
Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on December 10, 2018, and incorporated herein by reference.
|
(29)
|
Filed as an exhibit to Registrant’s Registration Statement on Form S-1 (No. 33-55680), as amended, and incorporated herein by reference.
|
(30)
|
Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and incorporated herein by reference.
|
(31)
|
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.
|
(32)
|
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.
|
(33)
|
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.
|
(34)
|
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.
|
(35)
|
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.
|
(36)
|
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.
|
(37)
|
Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated herein by reference.
|
(38)
|
Filed as an exhibit to Kite Pharma, Inc.’s Registration Statement on Form S-1/A (No. 333-196081) filed on June 17, 2014, and incorporated herein by reference.
|
*
|
Management contract or compensatory plan or arrangement.
|
**
|
Furnished herewith.
|
***
|
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.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
G
ILEAD
S
CIENCES
, I
NC
.
|
|
|
|
By:
|
/
S
/ G
REGG
H. A
LTON
|
|
Gregg H. Alton
Interim Chief Executive Officer and Chief Patient Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ G
REGG
H. A
LTON
|
|
Interim Chief Executive Officer and Chief Patient Officer
|
|
February 25, 2019
|
Gregg H. Alton
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/
S
/ R
OBIN
L. W
ASHINGTON
|
|
Executive Vice President and Chief Financial Officer
|
|
February 25, 2019
|
Robin L. Washington
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/
S
/ J
OHN
C. M
ARTIN
|
|
Chairman of the Board of Directors
|
|
February 25, 2019
|
John C. Martin, Ph.D.
|
|
|
|
|
|
|
|
|
|
/
S
/ J
ACQUELINE
K. B
ARTON
|
|
Director
|
|
February 25, 2019
|
Jacqueline K. Barton, Ph.D.
|
|
|
|
|
|
|
|
|
|
/
S
/ J
OHN
F. C
OGAN
|
|
Director
|
|
February 25, 2019
|
John F. Cogan, Ph.D.
|
|
|
|
|
|
|
|
|
|
/
S
/ K
ELLY
A. K
RAMER
|
|
Director
|
|
February 25, 2019
|
Kelly A. Kramer
|
|
|
|
|
|
|
|
|
|
/
S
/ K
EVIN
E. L
OFTON
|
|
Director
|
|
February 25, 2019
|
Kevin E. Lofton
|
|
|
|
|
|
|
|
|
|
/
S
/ N
ICHOLAS
G. M
OORE
|
|
Director
|
|
February 25, 2019
|
Harish Manwani
|
|
|
|
|
|
|
|
|
|
/
S
/ R
ICHARD
J. W
HITLEY
|
|
Director
|
|
February 25, 2019
|
Richard J. Whitley, M.D.
|
|
|
|
|
|
|
|
|
|
/
S
/ G
AYLE
E. W
ILSON
|
|
Director
|
|
February 25, 2019
|
Gayle E. Wilson
|
|
|
|
|
|
|
|
|
|
/
S
/ P
ER
W
OLD
-O
LSEN
|
|
Director
|
|
February 25, 2019
|
Per Wold-Olsen
|
|
|
|
|
Gilead Sciences, Inc.
By:
/s/ John F. Milligan
Name: John F. Milligan, Ph.D.
Title: Chief Executive Officer
|
Japan Tobacco Inc.
By:
/s/ Muneaki Fujimoto
Name: Muneaki Fujimoto
Title: President, Pharmaceutical Business
|
ARTICLE 1
|
DEFINITIONS
|
2
|
||
ARTICLE 2
|
TRANSACTION; CLOSING
|
10
|
||
|
2.1
|
Transaction
|
10
|
|
|
|
2.1.1
|
Purchase and Sale of Assigned Assets
|
11
|
|
|
2.1.2
|
Cooperation
|
11
|
|
|
2.1.3
|
Excluded Liabilities
|
11
|
|
|
2.1.4
|
Assumed Liabilities
|
12
|
|
|
2.1.5
|
Product Returns and Recalls
|
12
|
|
|
2.1.6
|
New Ancillary Agreements
|
13
|
|
|
2.1.7
|
Bill of Sale
|
13
|
|
|
2.1.8
|
Inventory Treatment Summary and Inventory Purchase Agreement
|
13
|
|
|
2.1.9
|
Transition Services Agreement
|
13
|
|
|
2.1.10
|
Co-promotion Appointment and Co-Promotion Fee
|
13
|
|
|
2.1.11
|
Packaging Summary and Packaging and Labeling Agreement
|
14
|
|
|
2.1.12
|
Amended and Restated Pharmacovigilance Agreement Termination Agreement
|
14
|
|
|
2.1.13
|
Supply Agreement Amendment
|
14
|
|
|
2.1.14
|
Quality Agreement Amendment
|
14
|
|
|
2.1.15
|
Safety Information Reporting Agreement and Quality Information Reporting Agreement
|
14
|
|
|
2.1.16
|
Amendment of EVG License Agreement
|
14
|
|
|
2.1.17
|
Termination of VTE License Agreement and Related Agreements
|
14
|
|
|
2.1.18
|
Termination of Memorandum
|
15
|
|
2.2
|
Closing
|
15
|
|
|
6.2.1
|
Role of the Joint Committee
|
24
|
|
|
6.2.2
|
Decision-Making
|
25
|
|
|
6.2.3
|
Joint Committee Membership and Procedures
|
25
|
ARTICLE 7
|
COMPETITION LAW FILINGS; RESTRICTIVE COVENANTS
|
26
|
||
|
7.1
|
General
|
26
|
|
|
7.2
|
Efforts to Consummate Transaction
|
27
|
|
|
7.3
|
Notification of Certain Matters
|
27
|
|
|
7.4
|
Competition Law Filings
|
28
|
|
|
7.5
|
[*]
|
28
|
|
|
7.6
|
No Termination of EVG License Agreement
|
28
|
|
|
7.7
|
No Termination of VTE License Agreement
|
28
|
|
ARTICLE 8
|
OTHER COVENANTS
|
28
|
||
|
8.1
|
Wholesaler Introduction
|
28
|
|
|
8.2
|
HIV Physician Introduction
|
29
|
|
|
8.3
|
Speaker/Seminar Transition
|
29
|
|
|
8.4
|
sNDA
|
29
|
|
|
8.5
|
Each Party’s Obligation During the Period from Marketer Change Date to MAH Transfer and Thereafter
|
29
|
|
|
8.6
|
Notices
|
30
|
|
|
8.7
|
MAH Transfer
|
30
|
|
|
8.7
|
[*]
|
30
|
|
|
8.9
|
Discontinuation of Names and Logos
|
30
|
|
|
8.10
|
Discontinuation of Promotion of HIV Products
|
31
|
|
|
8.11
|
Discontinuation of Distribution of HIV Products
|
31
|
|
8.12
|
JT Assistance
|
31
|
|
|
8.13
|
JT Ongoing Study Support
|
31
|
|
ARTICLE 9
|
REPRESENTATIONS AND WARRANTIES
|
31
|
||
|
9.1
|
Mutual Representations and Warranties of the Parties
|
31
|
|
|
|
9.1.1
|
Corporate Existence and Power
|
31
|
|
|
9.1.2
|
Authority and Binding Agreement
|
32
|
|
|
9.1.3
|
No Conflict
|
32
|
|
|
9.1.4
|
Board Approvals
|
32
|
|
9.2
|
Representations and Warranties of JT
|
32
|
|
|
|
9.2.1
|
Sufficiency
|
32
|
|
|
9.2.2
|
EVG and VTE Representations
|
32
|
|
|
9.2.3
|
Title to Assets
|
33
|
|
|
9.2.4
|
Assigned Contracts
|
33
|
|
|
9.2.5
|
Compliance with Law; Permits; Regulatory Matters
|
33
|
|
|
9.2.6
|
Litigation
|
34
|
|
|
9.2.7
|
Taxes
|
34
|
|
|
9.2.8
|
No Debarment
|
35
|
|
|
9.2.9
|
No Trademarks or Domain Names; No Patents
|
35
|
|
9.3
|
Anti-Corruption; Operational Audits and Inspections
|
35
|
|
|
|
9.3.1
|
Anti-Corruption
|
35
|
|
|
9.3.2
|
Operational Audits and Inspections
|
36
|
|
9.4
|
No Other Representations and Warranties
|
36
|
|
|
9.5
|
Survival; Right to Indemnification
|
36
|
|
12.4
|
Withdrawal of Certain Filings
|
45
|
|
ARTICLE 13
|
MISCELLANEOUS
|
45
|
||
|
13.1
|
Entire Agreement; Amendment
|
45
|
|
|
13.2
|
Force Majeure
|
45
|
|
|
13.3
|
Notices
|
46
|
|
|
13.4
|
No Strict Construction
|
46
|
|
|
13.5
|
Assignment
|
46
|
|
|
13.6
|
Performance by Affiliates
|
47
|
|
|
13.7
|
Further Actions
|
47
|
|
|
13.8
|
Compliance With Laws
|
47
|
|
|
13.9
|
Governing Law
|
47
|
|
|
13.10
|
Dispute Resolution
|
47
|
|
|
13.11
|
Independent Contractors
|
49
|
|
|
13.12
|
Guarantees
|
49
|
|
|
13.13
|
Severability
|
49
|
|
|
13.14
|
Headings
|
49
|
|
|
13.15
|
No Waiver
|
49
|
|
|
13.16
|
Translations
|
50
|
|
|
13.17
|
Certain Conventions
|
50
|
|
|
13.18
|
Counterparts
|
50
|
2.1.3.1
|
all Liabilities to the extent related to any assets of JT and its Affiliates that are not Assigned Assets, including any Contracts (other than Existing Contracts) that are not Assigned Contracts;
|
2.1.3.2
|
all Liabilities of JT or its Affiliates to the extent related to each Assigned Asset, including each Assigned Contract, arising from any act or omission by JT or its Affiliates occurring prior to the applicable Assignment Date thereof or from the conduct of the Japan HIV Products Business by or on behalf of JT or its Affiliates, including from the sale of any HIV Product in Japan prior to January 1, 2019, except with respect to Liabilities of Gilead or GSJ as set forth in the Existing Contracts,
|
2.1.3.3
|
any Liabilities, obligations or commitments of JT, or any member of any consolidated, affiliated, combined or unitary group of which JT is or has been a member, for Taxes; provided, however, that Transfer Taxes incurred in connection with the transactions contemplated by this Agreement shall be paid in the manner set forth in Section 9.2.7.2; and
|
2.1.3.4
|
all Liabilities of JT or its Affiliates under the Existing Contracts.
|
2.1.5.1
|
JT will be responsible for processing all returns of any HIV Products sold by JT or its Affiliates until the MAH Transfer Date. Gilead will be responsible for processing all returns of any HIV
|
2.1.5.2
|
Prior to the MAH Transfer, JT will be responsible for fulfilling the role of the marketing authorization holder in Japan as it relates to recalls of the HIV Products. After the Distribution Change Date, JT and Gilead will cooperate regarding any recalls of the HIV Products in Japan. Gilead shall bear the costs of any recalls of HIV Products occurring after January 1, 2019, except in the case in which the recall is due to
[*]
. JT shall invoice Gilead for its and its Affiliate’s costs associated therewith for which Gilead is responsible under this Section 2.1.5.2, including
[*]
.
|
2.2.2.1
|
each of the New Ancillary Agreements listed on Schedule 2.2.2 to which JT or any of its Affiliates is a party, duly executed by one or more of JT or its respective Affiliates, as applicable; and
|
2.2.2.2
|
the Required Consents, if any, in form and substance reasonably satisfactory to Gilead.
|
Milestone
|
Milestone Amount
|
1. The completion of the
[*]
in all material respects
|
US $
[*]
|
2. The completion of the [*] in all material respects
|
US $
[*]
|
3. The completion of the [*] in all material respects
|
US $
[*]
|
4. [*]
|
US $
[*]
|
5. [*]
|
US $
[*]
|
Net Sales [*]
|
Royalty Rate
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
4.3.3.1
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
;
|
4.3.3.2
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
; and
|
4.3.3.3
|
Gilead shall pay
[*]
of the Net Sales of
[*]
.
|
4.3.4.1
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
;
|
4.3.4.2
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
;
|
4.3.4.3
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
;
|
4.3.4.4
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
; and
|
4.3.4.5
|
Gilead shall pay
[*]
of the annual Net Sales of
[*]
.
|
1.
|
[*]
if any, for such period; and
|
2.
|
[*]
for all units of HIV Products sold during such period, where the
[*]
.
|
6.1.2.1
|
The transfer by JT (or any of its Affiliates) of drug safety documents and records, including without limitation (i) individual case reports, (ii) periodic safety reports, (iii) risk management plans, (iv) information relating to early phase post-marketing vigilance and post-marketing surveillance, (v) records of safety measures and notices of taking such measures, and (vi) records of inspections and audits by PMDA, self-inspections and corrective and preventive actions concerning each of the HIV Products, following the sequence to be determined by Gilead; and
|
6.1.2.2
|
The transfer by JT (or any of its Affiliates) of information relating to the drug safety database, including without limitation (i) information relating to technical specifications of the drug safety database (i.e. the name of the vendor and application and its version number), (ii) the number of cases reported, the evaluation of each case, if any, (iii) information about the numbering system of the cases, (iv) rules on special situation reports, (v) rules on treatment of safety information of active moieties, and (vi) information on CRO, if any.
|
6.1.2.3
|
The transfer by Gilead (including any programming by Gilead of the necessary algorithms) of the safety data of JT’s
[*]
database into Gilead’s
[*]
database.
|
6.2.1.1
|
oversee the establishment and operation of the taskforces described in Section 6.1 and establish rules and procedures governing such taskforces;
|
6.2.1.2
|
facilitate the exchange of information between the Parties under this Agreement and the Ancillary Agreements (including the exchange of information relating to HIV Products outside Japan, to the extent necessary to perform the activities as NDA holder under the Transition Services Agreement);
|
6.2.1.3
|
review, discuss and facilitate resolution of matters discussed in the Joint Committee;
|
6.2.1.4
|
establish such working groups or sub-committees, as it may choose from time to time to accomplish its purposes, and such groups or subcommittees may include those not members of the Joint Committee;
|
6.2.1.5
|
establish procedures for the efficient sharing of Regulatory Documentation, Know-How and materials necessary for the Commercial Handover, consistent with this Agreement and the Transition Services Agreement;
|
6.2.1.6
|
perform the functions assigned to the committees under the VTE License Agreement until such agreement is terminated, and perform the functions assigned to the “Joint Committee” as defined under the EVG License Agreement as such functions relate specifically to Japan until the Amended and Restated EVG License Agreement is in effect; and
|
6.2.1.7
|
perform such other functions as appropriate to further the purposes of this Agreement and the New Ancillary Agreements, as specified herein or in the applicable New Ancillary Agreement, including the resolution of disputes as contemplated by Section 13.10, or as otherwise agreed in writing by the Parties.
|
6.2.3.1
|
Membership
. JT and Gilead have each designated three (3) representatives to serve on the Joint Committee, as set forth in Schedule 6.2.3. Either Party may designate substitutes for its representatives if one (1) or more of such Party’s designated representatives is unable to be present at a meeting. From time to time each Party may replace its representatives by written notice to the other Party specifying the prior representative(s) and their replacement(s). A representative of Gilead shall serve as the chairperson of the Joint Committee.
|
6.2.3.2
|
Meetings
. The Joint Committee shall hold meetings at such times as it elects to do so. The chairperson shall be responsible for calling meetings. As the Joint Committee so determines at each such meeting, participants shall discuss the Commercial Handover and other transitional activities. Meetings of the Joint Committee shall be effective only if at least two (2) representatives of each Party are present or participating. The Joint Committee may meet either (i) in person at either Party’s facilities, (ii) by audio or video teleconference, or (iii) at such locations as the Parties may otherwise agree. With the prior consent of each Party’s representatives, other representatives of each Party or Third Parties involved with Development, Regulatory Approval, manufacture or Commercialization of HIV Products in Japan and procurement, maintenance and enforcement of Patent and trademark protection for HIV Products in Japan may attend meetings as observers.
|
6.2.3.3
|
Minutes
. One of Gilead’s Joint Committee representatives shall be responsible for preparing and issuing minutes of each such meeting within
[*]
days thereafter. Such minutes will not be finalized until JT reviews and confirms with Gilead the accuracy of such minutes in writing.
|
6.2.3.4
|
Meeting
Agendas
. A Gilead Joint Committee representative shall, after consulting with other Joint Committee representatives, develop and circulate an agenda containing the topics (i.e., Development, manufacturing or Commercialization issues and other agenda items) for
|
6.2.3.5
|
Disbandment
. The Joint Committee shall disband upon notice by Gilead after the MAH Transfer.
|
8.5.1.1
|
JT shall import the HIV Products, have them packaged and labeled and sell (but neither market nor promote) the HIV Products in Japan;
|
8.5.1.2
|
JT shall pay the Promotion Fee to GSJ and the amounts set forth in Section 4.5;
|
8.5.1.3
|
In accordance with the Transition Services Agreement, JT shall undertake the activities as the marketing authorization holder, including pharmacovigilance and quality assurance activities and governance of approval of materials; and
|
8.5.1.4
|
GSJ shall promote and market the HIV Products in accordance with the applicable Law in Japan and duly cooperate with JT in meeting JT’s obligation as the marketing authorization holder.
|
8.5.2.1
|
GSJ shall sell the HIV Products in Japan;
|
8.5.2.2
|
JT shall continue as the marketing authorization holder in Japan and pay the Promotion Fee (if any) to GSJ in accordance with the Promotion Agreement, if any;
|
8.5.2.3
|
In accordance with the Transition Services Agreement, JT shall continue undertaking the activities as the marketing authorization holder, including pharmacovigilance and quality assurance activities and governance of approval of materials; and
|
8.5.2.4
|
GSJ shall have the sole right to promote, market and distribute the HIV Products and shall do so in accordance with the applicable Law in Japan and duly cooperate with JT in meeting JT’s obligation as the marketing authorization holder.
|
8.5.3.1
|
GSJ shall have the sole right to import the HIV Products, have them packaged and labeled and sell the HIV Products in Japan;
|
8.5.3.2
|
GSJ shall have the sole responsibility to undertake the activities as the marketing authorization holder, including pharmacovigilance and quality assurance activities and governance of approval of materials; and
|
8.5.3.3
|
GSJ shall have the sole right to promote and market, and distribute the HIV Products in Japan.
|
9.2.7.1
|
Payment of Taxes
. JT or its applicable Affiliate has timely paid all Taxes that will have been required to be paid by it, the non-payment of which would result in a lien on any Assigned Asset, would otherwise adversely affect the Japan HIV Products Business or would result in Gilead becoming liable or responsible therefor.
|
9.2.7.2
|
Transfer Taxes
. All recordation, transfer, documentary, excise, sales, value added, use, stamp, conveyance or other similar Taxes, duties or governmental charges, and all recording or filing fees or similar costs, imposed or levied by reason of, in connection with or attributable to this Agreement and the Ancillary Agreements or the transactions contemplated hereby and thereby (collectively, “
Transfer Taxes
”) shall be the responsibility of the Party responsible for them under applicable law (unless otherwise provided herein); provided, however, that the Japanese consumption tax that may be levied on the payment under the Transition Services Agreement or Inventory Purchase Agreement or the payment of Promotion Fee, if any, shall be borne by
[*]
. For clarity, all existing and future withholding taxes and other taxes, duties, fees and further levies payable outside Japan with respect to the payments due to JT under this Agreement shall be payable by Gilead; provided, however that, if any tax treaty is applicable, Gilead and JT shall cooperate with each other to reduce or eliminate the tax withholding or similar obligations in respect of the payment under this Agreement and the Ancillary Agreements.
|
9.3.1.1
|
Neither JT nor any of its Affiliates or any or all of their respective directors, officers, employees or agents, or any other Person or entity acting on JT’s or any such Affiliate’s behalf (all the foregoing, collectively “
JT Representatives
”), has taken any action, directly or indirectly, that would result in a violation by such Persons of the Foreign Corrupt Practices Act of 1977, as amended (such act, including the rules and regulations thereunder, the “
FCPA
”), the UK Bribery Act of 2010, Gilead’s Anti-Corruption Policy set forth in Exhibit E, as may be updated from time to time by Gilead, or any other applicable anti-corruption Laws, rules or regulations (collectively, all the foregoing the “
Anti-Corruption Standards
”).
|
9.3.1.2
|
JT and all JT Representatives have conducted and will conduct their business through the MAH Transfer Date in compliance with the Anti-Corruption Standards. JT and its Affiliates has and will have through the MAH Transfer Date necessary procedures in place to prevent bribery and corrupt conduct by the JT Representatives under this Agreement and the Ancillary Agreements. JT shall immediately notify Gilead if JT has any information or suspicion that there may be a violation of the Anti-Corruption Standards in connection with the performance of this Agreement or any Ancillary Agreement. Without limiting the foregoing, JT shall promptly notify Gilead in the event it becomes aware that any JT Representative is in violation of the Anti-Corruption Standards.
|
9.3.1.3
|
JT will provide Gilead with written certification of JT’s and its Representative’s compliance with the Anti-Corruption Standards through the MAH Transfer Date as reasonably requested by Gilead, in the form set forth on Exhibit E.
|
With a copy to:
|
Holland & Knight LLP
31 West 52
nd
Street
New York, New York 10019, U.S.A.
Attn: Neal N. Beaton
Fax: 1 212.
[*]
|
13.10.2.1
|
The arbitration shall be conducted by a panel of three neutral arbitrators (the “
Panel
”) appointed in accordance with the ICC Rules.
|
13.10.2.2
|
The arbitration proceedings shall take place in New York, New York. The arbitral proceedings and all pleadings shall be in the English language. Any written evidence originally in a language other than English shall be submitted in English translation accompanied by the original or true copy thereof unless relating solely to the Transaction.
|
13.10.2.3
|
The Panel shall have the power to decide all questions of arbitrability.
|
13.10.2.4
|
At the request of either Party, the Panel will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings.
|
13.10.2.5
|
The Panel is empowered to award any remedy allowed by law, including monetary damages, prejudgment interest and punitive damages, and to grant final, complete, interim or interlocutory relief, including injunctive relief.
|
13.10.2.6
|
The Parties may apply to a state or federal court of competent jurisdiction within the County of New York, New York for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration provision and without any abridgment of the powers of the arbitrators. Judgment on the award rendered by the Panel may be entered in any court having jurisdiction thereof. Each Party hereby waives any defenses it may have to the personal jurisdiction and venue of such courts to resolve such disputes, including without limitation the defense of
forum non conveniens,
and each Party agrees not to file any motion to seek any relief under any
forum non conveniens
defense.
|
13.10.2.7
|
Each Party shall bear its own legal fees arising in connection with the Dispute. The Panel may assess costs, fees and expenses of the ICC and the Panel to the Parties in the manner the Panel deems appropriate under the circumstances.
|
GILEAD SCIENCES, INC.
|
JAPAN TOBACCO INC.
|
By:
/s/ John F. Milligan
Name: John F. Milligan, Ph.D.
Title: President and CEO
GILEAD SCIENCES, K.K.
By:
/s/ Luc Hermans
Name: Luc Hermans, M.D.
Title: President and Representative Director
|
By:
/s/ Muneaki Fujimoto
Name: Muneaki Fujimoto
Title: President, Pharmaceutical Business
|
Name of Asset
|
Delivery Date
|
Assignment Date
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
Quality assurance related documents, processes, and records relating to customer complaints, change management, deviation management, audits, product releases, quality standard codes, and other relevant information concerning each of the HIV Products, following the sequence to be determined by Gilead (to the extent owned by JT or its Affiliates and as further set forth in the Transition Services Agreement)
|
By MAH Transfer Date
|
MAH Transfer Date
|
Drug safety documents and records, including without limitation (a) individual case reports, (b) periodic safety reports, (c) risk management plans, (d) information relating to EPPV and PMS, (e) records of safety measures and notices of taking such measures, and (f) records of inspections and audits by PMDA, self-inspections and CAPA, concerning each of the HIV Products, following the sequence to be determined by Gilead (to the extent owned by JT or its Affiliates and as further set forth in the Transition Services Agreement)
|
By MAH Transfer Date
|
MAH Transfer Date
|
Information relating to the drug safety database, including without limitation (a) information relating to technical specifications of the drug safety database (i.e. the name of the vendor and application and its version number), (b) the number of cases reported, the evaluation of each case , if any, (c) information about the numbering system of the cases, (d) rules on special situation reports, (e) rules on treatment of safety information of active moieties, and (f) information on CRO (to the extent owned by JT or its Affiliates and as further set forth in the Transition Services Agreement)
|
By MAH Transfer Date
|
MAH Transfer Date
|
#
|
Category
|
Date
|
JT/Torii
|
Other Parties
|
Title
|
Notes
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
•
|
Emtriva༈エムトリバカプセル200mg ༉
|
•
|
Viread༈ビリアード錠300mg ༉
|
•
|
Truvada༈ツルバダ配合錠 ༉
|
•
|
Stribild༈スタリビルド配合錠 ༉
|
•
|
Genvoya༈ゲンボイヤ配合錠 ༉
|
•
|
Descovy༈デシコビ配合錠 LT 、デシコビ配合錠HT ༉
|
SUBSIDIARIES OF GILEAD SCIENCES, INC.
|
|
(as of December 31, 2018)
|
|
|
|
Name of Subsidiary
|
Country of Incorporation
|
Asegua Therapeutics, LLC
|
United States
|
Bristol-Myers Squibb and Gilead Sciences Limited
|
Ireland
|
Gilead Sciences, LLC
|
United States
|
Cytopia Pty. Ltd.
|
Australia
|
EpiTherapeutics ApS
|
Denmark
|
Gilead Alberta ULC
|
Canada
|
Gilead Alberta, LLC
|
United States
|
Gilead Apollo, LLC
|
United States
|
Gilead Apollo Unlimited Company
|
Ireland
|
Gilead Biopharmaceutics Ireland UC
|
Ireland
|
Gilead Calistoga, LLC
|
United States
|
Gilead Connecticut, Inc.
|
United States
|
Gilead Holdings, LLC
|
United States
|
Gilead Ireland Research UC
|
Ireland
|
Gilead Oncology Ireland UC
|
Ireland
|
Gilead Pharmasset LLC
|
United States
|
Gilead Sciences (NZ)
|
New Zealand
|
Gilead Sciences (Shanghai) Consulting Co., Ltd.
|
China
|
Gilead Sciences Americas S. de R.L.
|
Panama
|
Gilead Sciences Argentina S.R.L.
|
Argentina
|
Gilead Sciences Belgium BVBA
|
Belgium
|
Gilead Sciences Canada, Inc.
|
Canada
|
Gilead Sciences Denmark ApS
|
Denmark
|
Gilead Sciences Europe Limited
|
United Kingdom
|
Gilead Sciences Farmacêutica do Brasil Ltda.
|
Brazil
|
Gilead Sciences Finland Oy
|
Finland
|
Gilead Sciences GesmbH.
|
Austria
|
Gilead Sciences GmbH
|
Germany
|
Gilead Sciences Hangzhou Pharmaceutical Co., Ltd.
|
China
|
Gilead Sciences Hellas EPE
|
Greece
|
Gilead Sciences Holding, LLC
|
United States
|
Gilead Sciences Hong Kong Limited
|
Hong Kong
|
Gilead Sciences International Limited
|
United Kingdom
|
Gilead Sciences Israel Limited
|
Israel
|
Gilead Sciences KK
|
Japan
|
Gilead Sciences Korea Limited
|
South Korea
|
Gilead Sciences Lda.
|
Portugal
|
Gilead Sciences Ireland UC
|
Ireland
|
Gilead Sciences llac Ticaret Limited Sirketi
|
Turkey
|
Gilead Sciences Limited
|
United Kingdom
|
Gilead Sciences Luxembourg S.a.r.l.
|
Luxembourg
|
Gilead Sciences Malaysia Sdn. Bhd.
|
Malaysia
|
Gilead Sciences Mexico S. de R.L. de C.V.
|
Mexico
|
Gilead Sciences Netherlands BV
|
Netherlands
|
SUBSIDIARIES OF GILEAD SCIENCES, INC. (continued)
|
|
Name of Subsidiary
|
Country of Incorporation
|
Gilead Sciences Norway AS
|
Norway
|
Gilead Sciences Poland Sp. z o.o.
|
Poland
|
Gilead Sciences Pty. Ltd.
|
Australia
|
Gilead Sciences Russia LLC
|
Russia
|
Gilead Sciences S.L.
|
Spain
|
Gilead Sciences S.r.l.
|
Italy
|
Gilead Sciences s.r.o.
|
Czech Republic
|
Gilead Sciences SAS
|
France
|
Gilead Sciences Singapore Pte. Ltd.
|
Singapore
|
Gilead Sciences Slovakia s.r.o.
|
Slovakia
|
Gilead Sciences South Africa (Pty) Ltd.
|
South Africa
|
Gilead Sciences Sweden AB
|
Sweden
|
Gilead Sciences Switzerland Sarl
|
Switzerland
|
Gilead Sciences YM Australia Pty. Ltd.
|
Australia
|
Gilead YM ULC
|
Canada
|
Gilead Sciences India Private Limited
|
India
|
Nimbus Ceres LLC
|
United States
|
Tri-Supply Limited
|
Ireland
|
YM BioSciences Australia Pty. Ltd.
|
Australia
|
Gilead Therapeutics A1 Unlimited Company
|
Ireland
|
Gilead Therapeutics A2 Unlimited Company
|
Ireland
|
Gilead Sciences Shanghai Pharmaceutical Technology Co., Ltd.
|
China
|
Kite Pharma, Inc.
|
United States
|
Kite Pharma, LLC
|
United States
|
neoKite, Inc.
|
United States
|
Kite Pharma UK, Ltd
|
United Kingdom
|
KP EU C.V.
|
Netherlands
|
Kite Pharma EU B.V.
|
Netherlands
|
Cell Design Labs, Inc.
*
|
United States
|
Fosun Pharma Kite Biotechnology Co., Ltd.
|
China
|
Date:
|
February 25, 2019
|
/
S
/ G
REGG
H. A
LTON
|
|
|
Gregg H. Alton
Interim Chief Executive Officer and Chief Patient Officer |
Date:
|
February 25, 2019
|
/
S
/ R
OBIN
L. W
ASHINGTON
|
|
|
Robin L. Washington
Executive Vice President and Chief Financial Officer
|
/
S
/ G
REGG
H. A
LTON
|
|
/
S
/ R
OBIN
L. W
ASHINGTON
|
Gregg H. Alton
Interim Chief Executive Officer and Chief Patient Officer |
|
Robin L. Washington
Executive Vice President and Chief Financial Officer
|