GILEAD SCIENCES INC (Form: 10-Q, Received: 11/04/2005 13:05:57)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended September 30, 2005

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact name of Registrant as specified in its charter)

Delaware

94-3047598

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


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

650-574-3000

Registrant’s telephone number, including area code

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rules 12b-2 of the Exchange Act). Yes x No ¨

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

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of October 31, 2005: 457,918,576

GILEAD SCIENCES, INC.

INDEX


PART I.	FINANCIAL INFORMATION

	Item 1.	Condensed Consolidated Financial Statements:

		Condensed Consolidated Balance Sheets at September 30, 2005 and December 31, 2004	3

		Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2005 and 2004	4

		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004	5

		Notes to Condensed Consolidated Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25

	Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	25

	Item 6.	Exhibits	26

SIGNATURES			27

We own or have rights to various trademarks, copyrights and trade names used in our business including the following: GILEAD ^® , GILEAD SCIENCES ^® , HEPSERA ^® , VIREAD ^® , VISTIDE ^® , DAUNOXOME ^® , AMBISOME ^® , EMTRIVA ^® and TRUVADA ^® . MACUGEN ^® is a registered trademark belonging to Eyetech Pharmaceuticals, Inc. SUSTIVA ^® is a registered trademark and BARACLUDE ^TM is a trademark of Bristol-Myers Squibb Company. TAMIFLU ^® is a registered trademark belonging to F. Hoffmann-La Roche Ltd. This report also includes other trademarks, service marks and trade names of other companies.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)


	September 30, 2005			December 31, 2004
	(unaudited)			(1)
Assets
Current assets:
Cash and cash equivalents	$	592,722		$	280,909
Marketable securities		1,067,554			973,129
Accounts receivable, net		400,623			371,245
Inventories		174,040			135,991
Deferred tax assets		13,818			53,047
Prepaid expenses		33,528			21,681
Other current assets		15,430			13,692

Total current assets		2,297,715			1,849,694
Property, plant and equipment, net		238,310			223,106
Noncurrent portion of prepaid royalties		337,894			11,099
Noncurrent deferred tax assets		16,761			45,446
Other noncurrent assets		28,005			26,618

	$	2,918,685		$	2,155,963

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	33,134		$	47,552
Accrued clinical and preclinical expenses		8,777			7,547
Accrued compensation and employee benefits		56,774			45,469
Income taxes payable		6,839			8,698
Other accrued liabilities		150,599			124,126
Deferred revenue		11,625			19,880
Long-term obligations due within one year		118			181

Total current liabilities		267,866			253,453

Long-term deferred revenue		33,663			31,404
Long-term obligations		291			234
Minority interest in joint venture		(1,465	)		—

Commitments and contingencies

Stockholders’ equity:
Common stock, par value $0.001 per share; 700,000 shares authorized; 457,474 and 448,822 shares issued and outstanding at September 30, 2005 and December 31, 2004, respectively		457			449
Additional paid-in capital		2,080,636			1,893,926
Accumulated other comprehensive income (loss)		9,398			(18,692	)
Deferred stock compensation		(201	)		(539	)
Retained earnings (accumulated deficit)		528,040			(4,272	)

Total stockholders’ equity		2,618,330			1,870,872

	$	2,918,685		$	2,155,963

(1)	The condensed consolidated balance sheet at December 31, 2004 has been derived from audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Revenues:
Product sales	$	467,204		$	310,727		$	1,315,873		$	886,644
Royalty and contract revenue		26,247			15,460			103,261			68,392

Total revenues		493,451			326,187			1,419,134			955,036

Costs and expenses:
Cost of goods sold		65,498			40,842			186,182			117,883
Research and development		78,830			49,204			208,961			153,392
Selling, general and administrative		99,238			72,371			274,918			217,370

Total costs and expenses		243,566			162,417			670,061			488,645

Income from operations		249,885			163,770			749,073			466,391

Gain on Eyetech warrants		—			—			—			20,576
Interest and other income, net		12,492			4,801			31,385			13,137
Interest expense		(26	)		(2,042	)		(50	)		(6,202	)
Minority interest in joint venture		1,223			—			2,398			—

Income before provision for income taxes		263,574			166,529			782,806			493,902
Provision for income taxes		84,342			53,289			250,494			154,775

Net income	$	179,232		$	113,240		$	532,312		$	339,127

Net income per share – basic	$	0.39		$	0.26		$	1.18		$	0.79

Net income per share – diluted	$	0.38		$	0.25		$	1.13		$	0.74

Shares used in per share calculation – basic		456,098			431,273			452,923			429,230

Shares used in per share calculation – diluted		475,965			465,474			472,350			462,980

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine Months Ended September 30,
	2005			2004
OPERATING ACTIVITIES:
Net income	$	532,312		$	339,127
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,904			17,979
Gain on Eyetech warrants		—			(20,576	)
Deferred income taxes		67,914			101,059
Tax benefits from employee stock plans		79,000			11,392
Minority interest in joint venture		(1,465	)		—
Other non-cash transactions		2,760			(2,145	)
Changes in operating assets and liabilities:
Accounts receivable, net		3,492			(75,183	)
Inventories		(38,049	)		(18,132	)
Prepaid expenses and other assets		3,246			(4,937	)
Prepaid royalties		(341,250	)		—
Accounts payable		(14,418	)		(2,098	)
Income taxes payable		(1,859	)		10,611
Accrued liabilities		65,040			12,302
Deferred revenue		(5,996	)		17,931

Net cash provided by operating activities		374,631			387,330

INVESTING ACTIVITIES:
Purchases of marketable securities		(1,067,005	)		(1,073,764	)
Proceeds from sales of marketable securities		607,765			537,380
Proceeds from maturities of marketable securities		363,467			222,284
Capital expenditures		(34,909	)		(29,096	)

Net cash used in investing activities		(130,682	)		(343,196	)

FINANCING ACTIVITIES:
Proceeds from issuances of common stock		107,157			56,406
Repayments of long-term obligations		(166	)		(90	)

Net cash provided by financing activities		106,991			56,316

Effect of exchange rate changes on cash		(39,127	)		6,281

Net increase in cash and cash equivalents		311,813			106,731

Cash and cash equivalents at beginning of period		280,909			194,719

Cash and cash equivalents at end of period	$	592,722		$	301,450

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of Gilead Sciences, Inc. (Gilead, the Company or we) believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results to be expected for the full fiscal year.

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, management evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, inventories, clinical trial accruals and our income tax provision. Actual results may differ from these estimates. The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its joint venture with Bristol-Myers Squibb Company (BMS), for which Gilead is the primary beneficiary as determined under Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46R). Minority interest is recorded for BMS’ interest in the joint venture. Significant intercompany transactions have been eliminated. Certain prior year amounts have been reclassified to be consistent with the current year presentation. The accompanying financial information should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2004, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC).

Revenue Recognition

Eyetech Pharmaceuticals, Inc. (Eyetech) began commercial sales of Macugen ^® (pegaptanib sodium injection) in the United States during the quarter ended March 31, 2005. Royalty revenue from sales of Macugen is recognized when received, which is in the quarter following the quarter in which the corresponding sales occur. We began receiving and recognizing such royalty revenue during the quarter ended June 30, 2005.

Earnings Per Share

Basic earnings per share is calculated based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated based on the weighted-average number of shares of common stock and other dilutive securities outstanding during the period. Dilutive potential shares of common stock resulting from the assumed exercise of outstanding stock options and equivalents are determined based on the treasury stock method. Dilutive potential shares of common stock resulting from the assumed conversion of convertible notes are determined based on the -if converted method.

The following table is a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Numerator:
Net income used in calculation of basic earnings per share	$	179,232	$	113,240	$	532,312	$	339,127
Interest expense, net of related tax		—		1,304		—		3,910

Net income used in calculation of diluted earnings per share	$	179,232	$	114,544	$	532,312	$	343,037

Denominator:
Weighted-average shares of common stock outstanding used in calculation of basic earnings per share		456,098		431,273		452,923		429,230
Effect of dilutive securities:
Stock options and equivalents		19,867		19,520		19,427		19,069
Convertible debt		—		14,681		—		14,681

Weighted-average shares of common stock outstanding used in calculation of diluted earnings per share		475,965		465,474		472,350		462,980

Options to purchase approximately 0.3 million and 0.5 million shares of common stock were also outstanding during the three and nine months ended September 30, 2005, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of our common stock during these periods; therefore, their effect was antidilutive. Options to purchase approximately 1.5 million and 3.0 million shares of common stock were outstanding during the three and nine months ended September 30, 2004, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of our common stock during these periods; therefore, their effect was antidilutive.

Stock-Based Compensation

In accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation , as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure (collectively, SFAS 123), we have elected to continue to follow Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees , and FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation—an Interpretation of APB Opinion No. 25 (collectively, APB 25), in accounting for our employee stock-based plans. Under APB 25, if the exercise price of Gilead’s employee and director stock options equals or exceeds the fair value of the underlying stock on the date of grant, no compensation expense is recognized.

The table below presents net income and basic and diluted net income per share if compensation cost for the Gilead, NeXstar Pharmaceuticals, Inc. and Triangle Pharmaceuticals, Inc. stock option plans and the Gilead employee stock purchase plan (ESPP) had been determined based on the estimated fair value of awards under those plans on the grant or purchase date in accordance with SFAS 123 (in thousands, except per share amounts):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Net income – as reported	$	179,232		$	113,240		$	532,312		$	339,127
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		25			102			172			380
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects		(19,752	)		(21,458	)		(60,258	)		(60,649	)

Pro forma net income	$	159,505		$	91,884		$	472,226		$	278,858

Net income per share:
Basic - as reported	$	0.39		$	0.26		$	1.18		$	0.79

Basic - pro forma	$	0.35		$	0.21		$	1.04		$	0.65

Diluted - as reported	$	0.38		$	0.25		$	1.13		$	0.74

Diluted - pro forma	$	0.34		$	0.20		$	1.00		$	0.61

Fair values of awards granted under the stock option plans and ESPP were estimated at grant or purchase dates using a Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. As a result, further refinement of our model assumptions for our stock options may, in the future, generate fair values that differ from those calculated based on our current model and assumptions. To calculate the estimated fair value of the awards, we used the multiple option approach and the following assumptions:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2005	2004	2005	2004
Expected life in years:
Stock options (from vesting date)	1.78	1.85	1.78	1.85
ESPP	1.31	1.74	1.25	1.60
Discount rate:
Stock options	4.0%	3.4%	3.8%	3.0%
ESPP	3.8%	1.6%	3.3%	1.7%
Volatility	45%	48%	45%	48%
Expected dividend yield	0%	0%	0%	0%

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS 123R), which is a revision of SFAS 123. SFAS 123R supercedes APB 25 and amends SFAS No. 95, Statement of Cash Flows . SFAS 123R requires all share-based payments to employees and directors, including grants of stock options, to be recognized in the income statement based on their fair values, beginning with the first quarterly period after June 15, 2005, with early adoption permitted. On April 14, 2005, the Securities and Exchange Commission adopted a new rule that amended the compliance date for SFAS 123R such that the Company is now allowed to adopt the new standard effective January 1, 2006. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. We expect to adopt SFAS 123R on January 1, 2006.

Under SFAS 123R, we must determine the appropriate fair value model and related assumptions to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. The transition methods include modified prospective and retroactive adoption methods. The modified prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. We are currently evaluating the requirements of SFAS 123R as well as option valuation methodologies related to our employee and director stock options and employee stock purchase plan. Although we have not yet determined the method of adoption or the effect of adopting SFAS 123R, we expect that the adoption of SFAS 123R will have a material impact on our income statement and earnings per share. The impact of adoption of SFAS 123R cannot be predicted at this time because it will depend on, among other things, the levels of share-based payments granted in the future, the method of adoption and the option valuation method and assumptions used. SFAS 123R also requires the benefit of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.

2. Inventories

Inventories are summarized as follows (in thousands):


	September 30, 2005		December 31, 2004
Raw materials	$	130,856	$	93,942
Work in process		10,583		11,103
Finished goods		32,601		30,946

Total inventories	$	174,040	$	135,991

3. Comprehensive Income

The components of comprehensive income are as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Net income	$	179,232		$	113,240		$	532,312		$	339,127
Net foreign currency translation gain (loss)		(1,221	)		717			(6,249	)		179
Net unrealized gain (loss) on cash flow hedges, net of related tax effects		(941	)		(2,811	)		35,506			(3,643	)
Net unrealized gain (loss) on available-for-sale securities, net of related tax effects		(874	)		22			(1,167	)		(521	)

Comprehensive income	$	176,196		$	111,168		$	560,402		$	335,142

4. Eyetech Warrants

In March 2000, we entered into an agreement with Eyetech relating to our proprietary aptamer EYE001, currently known as Macugen. Pursuant to this agreement, we received a warrant to purchase 791,667 shares of Eyetech series B convertible preferred stock, exercisable at a price of $6.00 per share. In January 2004, Eyetech completed an initial public offering of its common stock at which time we adjusted the carrying value of the warrant to its estimated fair value, resulting in a gain of $20.6 million which is included in our condensed consolidated statement of income for the nine months ended September 30, 2004. The fair value of the warrant was estimated using the Black-Scholes valuation model with a volatility rate of 50% and a discount rate of 2.8%. At the end of the first quarter of 2004, we exercised the warrant on a net basis using shares of Eyetech common stock as consideration for the exercise price and subsequently held 646,841 shares of Eyetech common stock. In the second quarter of 2004, we sold all of the Eyetech shares we held and realized a gain of $2.3 million which is included in interest and other income, net, in our condensed consolidated statement of income for the nine months ended September 30, 2004.

5. Japan Tobacco

In March 2005, we entered into a licensing agreement with Japan Tobacco Inc. (Japan Tobacco), under which Japan Tobacco granted Gilead exclusive rights to develop and commercialize a novel HIV integrase inhibitor, GS 9137 (formerly called JTK-303), in all countries of the world, excluding Japan, where Japan Tobacco will retain such rights. Under the terms of the agreement, Gilead incurred an upfront license fee of $15.0 million which is included in research and development expenses in the first quarter of 2005 as there is no future alternative use for this technology. Additionally, we are obligated to make additional cash payments of up to $90.0 million upon the achievement of certain milestones as well as pay royalties based on any future net product sales in the territories where Gilead may market the drug.

6. Contingencies

Legal Proceedings

A number of states, counties and municipalities have filed complaints alleging that a large number of pharmaceutical defendants, including in some instances Gilead, reported inaccurate prices for their products, causing the governmental entity named as the plaintiff to overpay for pharmaceutical products furnished to participants in the Medicaid program. Twenty-six separate actions filed by New York City and numerous New York counties were consolidated in a multi-district litigation proceeding before the United States District Court for the District of Massachusetts. On August 23, 2005, these cases were voluntarily dismissed with respect to Gilead. To its knowledge, Gilead has been named in three additional cases, (1) State of Alabama v. Abbott Laboratories, Inc., et al., currently pending in the Circuit Court for Montgomery County, Alabama; (2) County of Erie v. Abbott Laboratories, Inc., et al. , currently pending in the United States District Court for the District of Massachusetts and (3) State of Mississippi v. Abbott Laboratories, Inc., et al. , currently pending in the Chancery Court of Hinds County, Mississippi. The complaints assert claims under federal and state law and seek damages (and, in the State of Alabama case, treble damage) and attorneys’ fees. We intend to defend the cases vigorously. The cases are all at a preliminary stage and it is not possible to predict the outcome. As such, no amounts have been accrued related to the outcome of these cases.

A purported class action complaint was filed on November 10, 2003, in the United States District Court for the Northern District of California against Gilead and our Company’s Chief Executive Officer, Chief Financial Officer, former Executive Vice President of Operations (and current Senior Business Advisor), Executive Vice President of Research and Development, Senior Vice President of Manufacturing and Senior Vice President of Research. The complaint alleges that the defendants violated federal securities laws, specifically Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 of the Securities and Exchange Commission, by making certain alleged false and misleading statements. The plaintiffs seek unspecified damages on behalf of a purported class of purchasers of Gilead’s securities during the period from July 14, 2003 through October 28, 2003. Other similar actions were subsequently filed and the court issued an order consolidating the lawsuits into a single action on December 22, 2003. On February 9, 2004, the court issued an order appointing lead plaintiffs in the consolidated action. On April 30, 2004, the lead plaintiffs, on behalf of the purported class, filed their consolidated amended complaint. On June 21, 2004, the Company and individual defendants filed their motion to dismiss the consolidated amended complaint. On January 4, 2005, the court granted the defendants’ motion to dismiss with leave to amend. Plaintiffs filed a second amended complaint on February 25, 2005 and a third amended complaint on March 11, 2005. On October 11, 2005, the court granted the defendants’ notion to dismiss the third amended complaint with leave to amend. We intend to defend the cases vigorously. As the outcome cannot be predicted at this time, no amount has been accrued related to the outcome of this matter.

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

Roche

On June 23, 2005, we delivered a notice of termination to F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively, Roche) for material breach of the Development and License Agreement for Tamiflu (the 1996 Agreement) entered into by Gilead and Roche in September 1996. The 1996 Agreement was filed as exhibit 10.42 to our report on Form 10-Q for the quarter ended September 30, 1996. The notice of termination was filed as exhibit 99.2 to the report on Form 8-K filed by Gilead on June 23, 2005. If, and when, our notice of termination becomes effective, all rights to Tamiflu granted to Roche under the 1996 Agreement would terminate and revert to us.

One of the material breaches described in the notice of termination includes Roche’s failure to properly calculate and pay the royalties owed to Gilead. During the second quarter of 2005, we concluded our audit of the royalties due from Roche to Gilead under the 1996 Agreement during the period from 2001 to 2003. The results of this audit, which were presented to Roche, identified a potential underpayment by Roche for this period of $18.2 million. In connection with our dispute with Roche related to such potential underpayment, during the third quarter of 2005, Roche advanced a payment of $18.2 million to Gilead; however, Roche has reserved its rights on the payment pending comprehensive resolution of all disputes described in the notice of termination.

We were unable to resolve the dispute with Roche during the ninety-day period following the delivery of our notice of termination. As a result, the parties have now submitted the matter for confidential binding arbitration under the terms of the 1996 Agreement. We cannot predict with certainty the final outcome of the arbitration against Roche in connection with our action to seek termination of the 1996 Agreement, including our assertion of a claim relating to the underpayment of royalties under the 1996 Agreement. As such, we have recorded the receipt of Roche’s $18.2 million payment in other accrued liabilities.

7. Segment Information

Gilead operates in one business segment, which primarily focuses on the development and commercialization of human therapeutics for infectious diseases. All products are included in one segment because our major products have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment.

Product sales consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
HIV Products:
Viread	$	189,395	$	193,880	$	596,349	$	584,138
Truvada		162,403		18,207		376,680		18,207
Emtriva		11,737		15,963		36,314		44,384

HIV products		363,535		228,050		1,009,343		646,729
AmBisome		54,736		49,831		165,157		156,665
Hepsera		46,893		29,734		135,364		76,618
Vistide		1,808		2,822		4,906		5,457
DaunoXome		232		290		1,103		1,175

Total product sales	$	467,204	$	310,727	$	1,315,873	$	886,644

Product sales and product-related contract revenues are attributed to countries based on ship-to location. Royalty and non-product related contract revenues are attributed to countries based on the location of the collaboration partner. Certain revenue amounts for 2004 and 2005 have been reclassified between geographic regions to conform to the current period presentation. The following table summarizes total revenues from external customers and collaboration partners by geographic region (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
United States	$	256,294	$	168,853	$	722,311	$	465,539
France		38,488		27,610		117,520		88,875
Spain		29,625		24,097		91,239		75,498
United Kingdom		30,719		23,362		84,537		61,298
Italy		25,268		17,725		79,261		52,402
Germany		24,090		17,152		75,007		42,975
Switzerland		15,382		4,796		69,385		46,466
Other European countries		38,769		26,924		96,490		76,673
Other countries		34,816		15,668		83,384		45,310

Total revenues	$	493,451	$	326,187	$	1,419,134	$	955,036

The following table summarizes the concentration of revenues from our three largest customers who distribute our products primarily in the United States (as a percent of total revenues):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2005	2004	2005	2004
Cardinal Health, Inc.	20%	22%	19%	17%
AmerisourceBergen Corp.	12%	10%	12%	11%
McKesson Corp.	12%	12%	12%	10%

8. European Headquarters Relocation

In June 2005, Gilead announced that the commercial, medical and administrative groups of its European headquarters, based in Paris, France, would be relocated to the London area in the United Kingdom. The European headquarters for our regulatory, safety and information technology groups are currently located in the Cambridge area in the United Kingdom, and we believe that this relocation will enable us to achieve efficiencies through the closer proximity of the groups as Gilead positions itself to compete with the large pharmaceutical companies at a global level. Gilead’s French subsidiary will continue to occupy Gilead’s existing French facilities as we will continue to maintain and expand our sales and marketing presence in France.

In the third quarter of 2005, when the relocation plans were finalized, Gilead accrued a charge of $8.4 million, primarily consisting of employee severance costs and termination benefits, which is included in selling, general and administrative expenses in the condensed consolidated statements of income. As of September 30, 2005, no significant amounts have been charged against the accrual which is included in accrued compensation and employee benefits in the condensed consolidated balance sheet. The majority of the payments are expected to be made over the next nine months. Additional costs relating to the new headquarters in the United Kingdom, including recruitment costs, legal expenses, capital expenditures and other related costs will be recorded as incurred. Based upon the most current information available, we believe that the aggregate severance, relocation and recruiting costs resulting from the European headquarters relocation will be in the approximate range of $10 to $13 million.

9. Emory University

In July 2005, Gilead and Royalty Pharma purchased the royalty interest owned by Emory University (Emory) in emtricitabine, the active pharmaceutical ingredient in certain Gilead HIV products. Under the terms of the agreement, Gilead and Royalty Pharma paid 65% and 35%, respectively, of the total purchase price of $525.0 million. We have capitalized as prepaid royalties our 65% share of the $525.0 million purchase price, or $341.3 million. We have begun to amortize this prepaid royalty to cost of goods sold over the remaining life of the underlying patent based on the royalty rate derived from our forecasted sales. In addition, we now record royalties to Royalty Pharma based on actual emtricitabine net sales relative to Royalty Pharma’s 35% interest in the Emory royalty buyout.

In July 2005, Gilead also made a payment of $15.0 million to Emory in connection with the amendment and restatement of our existing license agreement with Emory, as it pertained to our obligation to develop emtricitabine for the hepatitis B indication. We have recorded this payment in research and development expenses as we have not commercialized a product pursuant to this license and we currently do not expect to undertake any significant research and development activities in the next several years.

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

Executive Summary

We are a biopharmaceutical company that discovers, develops and commercializes therapeutics to advance the care of patients suffering from life-threatening diseases. We are a multinational company, with revenues from nine approved products and marketing operations in eleven countries. We focus our research and clinical programs on anti-infectives. Currently, we market Viread ^® (tenofovir disoproxil fumarate), Truvada ^® (tenofovir disoproxil fumarate and emtricitabine) and Emtriva ^® (emtricitabine) for the treatment of HIV infection; Hepsera ^® (adefovir dipivoxil) for the treatment of chronic hepatitis B; AmBisome ^® (amphotericin B) liposome for injection for the treatment of fungal infection; and Vistide ^® (cidofovir injection) for the treatment of cytomegalovirus (CMV) retinitis. F. Hoffmann-La Roche Ltd (Roche) currently markets Tamiflu ^® (oseltamivir phosphate) for the treatment and prevention of influenza under a royalty-paying development and license agreement with us. Eyetech Pharmaceuticals, Inc. (Eyetech) markets Macugen ^® (pegaptanib sodium injection) in the United States for the treatment of neovascular age-related macular degeneration under a royalty-paying collaborative agreement with us. We began recording royalties from Eyetech during the second quarter of 2005.

Our operating results for the third quarter of 2005 were led by strong net product sales of $467.2 million and HIV product sales (Viread, Truvada and Emtriva) of $363.5 million. A 59% increase in HIV product sales in the third quarter of 2005 over the third quarter of 2004 served as a key driver in increasing total product sales by 50% over the comparable period in 2004. In the United States, Truvada sales were up 25% sequentially from the second quarter of 2005 and represented 64% of our U.S. HIV product sales after being on the market for one year. Outside of the United States, higher HIV product sales compared to the third quarter of 2004 were primarily driven by the launch of Truvada in certain European countries in the first nine months of 2005 and increases in sales volume for Viread, particularly in Europe, Australia, Canada and Latin America. AmBisome product sales in the third quarter of 2005 increased by 10% when compared to the third quarter of 2004, primarily driven by higher sales volume outside of the United States. Hepsera product sales for the third quarter of 2005 increased 58% from the third quarter of 2004 driven primarily by significant volume growth in both the United States and Europe, which increased by 38% and 55%, respectively, compared to the same quarter last year.

We completed several important corporate initiatives during the third quarter of 2005 including the purchase of the royalty interest owned by Emory University (Emory) and the finalization of the relocation plans of our European headquarters. In July, Gilead and Royalty Pharma purchased the royalty interest owned by Emory in emtricitabine, the active pharmaceutical ingredient in certain Gilead HIV products. Gilead and Royalty Pharma paid 65% and 35%, respectively, of the total purchase price of $525.0 million. During the quarter, we also commenced the relocation of our European commercial, medical and administrative headquarters to the United Kingdom from France, which resulted in $8.4 million of severance and relocation expenses for the third quarter of 2005.

During the third quarter of 2005, we announced several updates on our collaborative activities. In August, we announced bioequivalence results demonstrating that our second formulation of the fixed-dose combination of Truvada ^® (emtricitabine and tenofovir disoproxil fumarate) and Bristol-Myers Squibb’s Sustiva ^® (efavirenz) for the treatment of HIV did not demonstrate bioequivalence to the individual products dosed separately. The company is now proceeding with the evaluation of up to three new formulations, developed based on bi-layer technology. This bi-layer technology involves co-formulation of Truvada and Sustiva as individually formulated layers combined together in one tablet. In addition, Gilead and Achillion Pharmaceuticals began dosing patients in a Phase I study of GS 9132 (also known as ACH-806) for the treatment of hepatitis C. We also made advances in the Phase I/II clinical trial to evaluate GS 9137 (also known as JTK-303), a novel HIV integrase inhibitor we licensed from Japan Tobacco Inc. (Japan Tobacco) in the first quarter of 2005.

In addition, we demonstrated our commitment to broadening access to Viread and Truvada by reducing their prices by 31% and 12% for Viread and Truvada, respectively, under the Gilead Access Program. We also signed a non-exclusive manufacture and distribution agreement with Aspen Pharmacare in October 2005, providing for the manufacture and distribution of Viread and Truvada to certain developing world countries included in the Gilead Access Program.

Our net cash used in operating activities was $144.2 million for the third quarter of 2005 compared to net cash provided by operating activities of $166.6 million in the same quarter of 2004, primarily driven by the $341.3 million payment we made to Emory for the buyout of all future royalties due to Emory on worldwide net sales of product containing emtricitabine, partially offset by positive cash flows provided by our operating income.

Forward-Looking Statements and Risk Factors

This Form 10-Q contains forward-looking statements based on our current expectations. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Because our actual results may differ materially from any forward-looking statements made by or on behalf of the Company, you should also read the “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2004 (2004 10-K) for more detailed information regarding these and other risks and uncertainties that can affect our actual financial and operating results. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission (SEC), we do not undertake and specifically decline any obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Dependence on our HIV products. We currently depend predominantly on sales of our HIV products, especially Viread and Truvada, to support our existing operations. Our HIV products are exclusively of the nucleoside class of anti-viral therapeutics. Were the treatment paradigm for HIV to change, causing nucleoside-based therapeutics to fall out of favor, our results of operations would likely suffer and we would likely need to scale back our operations, including our spending on research and development efforts. Our sales of HIV products and other products may decline for many of the reasons described in the Risk Factors set forth in our 2004 10-K and this section.

New Products and Growth of Existing Product Revenues. If we do not introduce new products or increase revenues from our existing products, we will not be able to grow our revenues. Each new product commercialization effort will face the risks outlined in the Risk Factors set forth in our 2004 10-K and this section. If we fail to increase our sales of HIV products and other products, we may not be able to increase revenues and expand our research and development efforts. In addition, we may face difficulties in our collaboration efforts with BMS to formulate a once-a-day single pill combination of Truvada and Sustiva. For example, the initial formulations we developed of this combination did not demonstrate bioequivalence in humans to the individual components, as required for regulatory approval. We are currently testing additional formulations in clinical studies for bioequivalence and the earliest potential U.S. NDA filing date is in the first half of 2006. If these subsequent formulations of this combination we develop fail, including our current formulations based on bi-layer technology, we could experience additional delays in filing for approval or fail to obtain regulatory approval. Failure to achieve any of these objectives when expected, or at all, may have a material adverse effect on our business and results of operations.

In addition, we face significant competition from businesses that have substantially greater clinical, regulatory and marketing resources and experience than we do. For example, our HIV products compete primarily and directly with products from GlaxoSmithKline (GSK), which is substantially larger than us, has more HIV products than we do and has operated in the HIV field for longer than we have. For AmBisome, we are encountering significant competition from new products produced by Merck & Co., Inc. and Pfizer Inc. (Pfizer). In addition, we are aware of reports of at least three lipid formulations that claim similarity to AmBisome becoming available outside of the United States. For Hepsera, we have encountered increased competition with the launch of BMS’ Baraclude ^TM (entecavir). These companies have substantially greater resources than we do and may significantly impede our ability to be successful with our antiviral products and AmBisome.

Product Profiles and Safety. As our products, including Viread, Truvada, Emtriva, AmBisome and Hepsera, are used over longer periods of time in many patients taking numerous other medicines, we have found and expect to continue to find new issues such as safety, resistance or drug interactions, which may require us to provide additional warnings on our labels or narrow our approved indications, each of which could reduce the market acceptance of these products. Safety and efficacy studies of Viread and Emtriva dosed as separate products are ongoing and have been underway for a longer period of time then the safety and efficacy studies of Truvada (Viread and Emtriva together), which are also underway. If serious safety, resistance or interaction issues arise with our marketed products, sales of these products could be limited or halted by us or by regulatory authorities.

Regulatory Process. The products that we develop must be approved by regulatory authorities for testing, manufacturing, quality control, labeling, marketing and sale, and, once approved, are subject to extensive regulation by the U.S. Food and Drug Administration (FDA) and comparable regulatory agencies in other countries. We are continuing clinical trials for Viread, Truvada, Emtriva, AmBisome and Hepsera for currently approved and additional uses and we anticipate that we will file for marketing approval in additional countries and for additional products over the next several years. If these products fail to receive marketing approval on a timely basis, or at all, or if our marketed products or our manufacturing processes are the subject of regulatory changes, actions or recalls, our results of operations may be adversely affected.

Clinical Trials. We are required to demonstrate the safety and effectiveness of products we develop in each intended use through extensive preclinical studies and clinical trials. The results from preclinical and early clinical studies do not always accurately predict results in later, large-scale clinical trials. Even successfully completed large-scale clinical trials may not result in marketable products. If any of our products under development fail to achieve their primary endpoint in clinical trials or if safety issues arise, commercialization of that drug candidate could be delayed or halted. In addition, clinical trials involving our commercial products could raise new safety issues for our existing products and reduce our revenues.

Manufacturing. We depend on third parties to perform manufacturing activities effectively and on a timely basis for most of our products. We depend on third parties to manufacture Viread, Truvada, Emtriva, Hepsera, and Vistide, including the Truvada and Viread made available to physicians and treatment programs at cost in developing countries under our Access Program. If one of our contract manufacturers becomes unable to manufacture the bulk drug substances for our HIV products, we may not be able to fulfill all demand for our HIV products. Roche is responsible for manufacturing Tamiflu under the Development and License Agreement entered into by Gilead and Roche in September 1996 (the 1996 Agreement), although when, and if, the notice of termination we delivered to Roche becomes effective, we would assume responsibility for such manufacturing of Tamiflu following a contractually-mandated transition period. If these third parties fail to perform as required, this could impair our ability to produce adequate product supplies or to deliver our products on a timely basis or cause delays in our clinical trials and applications for regulatory approval, and these events could harm our competitive position. Third-party manufacturers may develop problems over which we have no control and these problems may adversely affect our business.

We currently manufacture AmBisome and Macugen at our facilities in San Dimas, California. These are our only formulation and manufacturing facilities in the United States. In the event of a natural disaster, including an earthquake, equipment failure, strike or other difficulty, we may be unable to replace this manufacturing capacity in a timely manner and would be unable to manufacture AmBisome and Macugen to meet market needs.

Collaborations. We rely on a number of significant collaborative relationships with major pharmaceutical companies for the development, sales and marketing of our products in certain regions. These include collaborations with Astellas Pharma, Inc. (created through the merger of Yamanouchi Pharmaceutical Co. Ltd. and Fujisawa Pharmaceutical Co., Ltd.) and Sumitomo Pharmaceuticals Co. Ltd. for AmBisome, GSK for Hepsera, Roche for Tamiflu, Pfizer for Vistide, Eyetech and Pfizer for Macugen, and Japan Tobacco for Viread, Truvada and Emtriva and our joint venture with BMS to develop and commercialize a fixed-dose combination of Truvada and Sustiva. In many countries, we rely on international distributors for sales of Viread, Truvada, Emtriva, AmBisome, and Hepsera outside of the United States. Some of these relationships also involve the clinical development of products by our partners. Reliance on collaborative relationships poses a number of risks, including the risk that we are not able to control the resources our partners devote to our programs or products, disputes may arise with respect to the ownership of rights to technology, disagreements could cause delays in or termination of projects or result in litigation or arbitration, contracts may fail to provide significant protection or to be effectively enforced if a partner fails to perform, our partners may pursue competing technologies or devote fewer resources to the marketing of our products than they do to products of their own development and our partners may be unable to pay us. Given these risks, there is a great deal of uncertainty regarding the success of our current and future collaboration efforts. If these efforts fail, our product development or commercialization of new products could be delayed and revenue from existing products could decline.

Development and License Agreement with Roche . On June 23, 2005, we delivered a notice of termination to Roche for material breach of the 1996 Agreement. When, and if, the notice of termination becomes effective, all rights to Tamiflu granted to Roche under the 1996 Agreement would terminate and revert to us. The 1996 Agreement provides for dispute resolution procedures, including confidential binding arbitration. We were unable to resolve the dispute with Roche during the ninety-day period following the delivery of our notice of termination. As a result, the parties have now submitted the matter for arbitration under the terms of the 1996 Agreement. There can be no assurance that we will prevail in the confidential binding arbitration against Roche and we could incur considerable legal expenses in arbitration. In addition, when, and if, the notice of termination becomes effective, there are risks and uncertainties associated with our ability to assume the management of Tamiflu manufacturing and commercialization in an effective manner.

Fluctuations in Operating Results. The clinical trials required for regulatory approval of our products, as well as clinical trials we are required to conduct after approval are extremely expensive. It is difficult to accurately predict or control the amount or timing of these expenses from quarter to quarter. Uneven and unexpected activity on these programs may cause our operating results to fluctuate from quarter to quarter. In addition, approximately 90% of our product sales in the third quarter of 2005 in the United States are to three distributors, AmerisourceBergen Corp., McKesson Corp. and Cardinal Health, Inc. Channel inventory levels can cause our operating results to fluctuate unexpectedly if our sales to wholesalers do not match end user demand. The U.S. wholesalers with whom we have entered into inventory management agreements may not be completely effective in matching inventory levels to end user demand, as they make estimates to determine end user demand.

Patents and Proprietary Rights . Our success will depend to a significant degree on our ability to protect our patents and other intellectual property rights both domestically and internationally. We have a number of patents, patent applications and rights

to patents related to the compounds in our products, but we cannot be certain that issued patents will be enforceable or provide adequate protection or that pending patent applications will result in issued patents. As part of the approval process of some of our products, the FDA has determined that the products would be granted an exclusivity period during which other manufacturer’s applications for approval of our products will not be granted. Generic manufacturers often wait to challenge the patents protecting products until one year prior to the end of the exclusivity period. From time to time, we have received notices from manufacturers indicating that they intend to import chemical intermediates possibly for use in making our products. It is, therefore, possible that generic manufacturers are considering attempts to seek FDA approval for a similar or identical drug through an Abbreviated New Drug Application, which is the application form typically used by manufacturers seeking approval of a generic drug.

Foreign Currency Risk . A significant percentage of our product sales are denominated in foreign currencies, most of which are in Euro. Increases in the value of the U.S. dollar against these foreign currencies in the past have reduced, and in the future may reduce, our U.S. dollar equivalent sales and negatively impact our financial condition and results of operations. We have a hedging program to partially mitigate the impact of foreign currency fluctuations on our results of operations; however, as this program only hedges a portion of our total exposure, significant foreign exchange rate fluctuations within a short period of time could still adversely affect our results of operations.

Credit Risks. We are particularly subject to credit risk from our European customers. Our European product sales to government owned or supported customers in Greece, Italy, Portugal and Spain are subject to significant payment delays due to government funding and reimbursement practices. Historically, receivables have tended to accumulate over a period of time and then be settled with large lump sum payments as government funding became available. If significant changes were to occur in the reimbursement practices of European governments or if government funding becomes unavailable, we may not be able to collect on amounts due to us from these customers and our results of operations would be adversely affected.

Imports. Our sales in countries with relatively higher prices may be reduced if products can be imported into those countries from lower price markets. There have been cases in which pharmaceutical products were sold at steeply discounted prices in the developing world and then re-exported to European countries where they could be resold at much higher prices. If this happens with our products, particularly Viread and Truvada, which we have agreed to provide at our cost to 97 countries participating in our Access Program, our revenues would be adversely affected. In addition, in the European Union, we are required to permit cross-border sales. This allows buyers in countries where government-approved prices for our products are relatively high to purchase our products legally from countries where they must be sold at lower prices. Additionally, some U.S. consumers have been able to purchase products, including HIV medicines, from Internet pharmacies in other countries at substantial discounts. Such cross-border sales could adversely affect our revenues and results of operations.

Compulsory Licenses. Governments in developing countries could require that we grant compulsory licenses to allow competitors to manufacture and sell their own versions of our products, thereby reducing our product sales. Recently, certain offices of the government of Brazil have expressed concern over the affordability of our HIV products and declared that they are considering issuing compulsory licenses to permit the manufacture of otherwise patented products for HIV infection, including Viread. We are currently engaged in discussions with the Brazilian government regarding the affordability of our HIV products. Certain countries do not permit enforcement of our patents and manufacturers are able to sell generic versions of our products in those countries. Compulsory licenses or generic versions of our products could significantly reduce our sales and adversely affect our results of operations. Concerns over the cost and availability of Tamiflu as fear grows about a potential avian flu pandemic have generated international discussions over potential compulsory licensing of our Tamiflu patents. Should one or more compulsory licenses be issued permitting generic manufacturing to override Gilead’s Tamiflu patents, or should Roche issue its voluntary licenses to permit third-party manufacturing of Tamiflu, those developments could significantly reduce royalties received from Roche’s sales of Tamiflu, and could adversely impact the eventual resolution of the outstanding dispute between Gilead and Roche.

Pharmaceutical Pricing and Reimbursement Pressures. Successful commercialization depends, in part, on the availability of governmental and third-party payor reimbursement for the cost of our products. Government authorities and third-party payors increasingly are challenging the price of medical products and services, particularly for innovative new products and therapies. Our business may be adversely affected by an increase in global pricing pressures.

In Europe, the success of Viread, Truvada, Emtriva, Hepsera and Tamiflu will depend largely on obtaining and maintaining government reimbursement because in many European countries, patients will not use prescription drugs that are not reimbursed by their governments. Even if reimbursement is available, reimbursement policies may adversely affect our ability to sell our products on a profitable basis. For example, in Europe as in many international markets, governments control the prices of prescription pharmaceuticals and expect prices of prescription pharmaceuticals to decline over the life of the product or as volumes increase. In 2004 and 2005, as well as in previous years, we have seen significant price decreases

for our products across much of Europe. We believe that this will continue into the foreseeable future as governments struggle with escalating health care spending. As a result of these pricing practices, it may become difficult to maintain our historic levels of profitability or to achieve expected rates of growth.

Insurance Coverage. The testing, manufacturing, marketing and use of our products, as well as products in development involve substantial risk of product liability claims. We maintain product liability insurance; however, a successful product liability claim against us may not be covered by our insurance or could require us to pay amounts beyond that provided by our insurance, either of which could impair our financial condition and our ability to clinically test and to market our products.

Litigation . We are named as a defendant in three lawsuits regarding use of average wholesale price and reimbursement rates under Medicaid. We have also been named in a lawsuit alleging violations of the federal securities laws. Adverse results from these lawsuits could result in material damages which could significantly reduce our earnings and cash flows.

Tax Rate . Various factors may have favorable or unfavorable effects on our effective income tax rate. These factors include, but are not limited to, interpretations of existing tax laws, changes in tax laws and rates, future levels of research and development spending, changes in accounting standards, future levels of capital expenditures, changes in the mix of earnings in the various tax jurisdictions in which we operate and changes in overall levels of pre-tax earnings and the potential repatriation of foreign earnings under the American Job Creation Act of 2004 (the AJCA). The impact on our income tax provision resulting from the above-mentioned factors may be significant and could have a negative impact on our results of operations.

The Company notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors and, therefore, you should not consider any of the above risks or the risks set forth in our 2004 10-K to be a complete statement of all the potential risks or uncertainties that we face.

Critical Accounting Policies and Estimates

Reference is made to “Critical Accounting Policies and Estimates” included in our 2004 10-K. As of the date of the filing of this Quarterly Report, the Company has not identified any significant changes to the critical accounting policies discussed in our 2004 10-K.

Results of Operations

Total Revenues

We had total revenues of $493.5 million for the quarter ended September 30, 2005 compared with $326.2 million for the quarter ended September 30, 2004. Total revenues were $1.4 billion for the first nine months of 2005 and $955.0 million for the first nine months of 2004. Included in total revenues are product sales and royalty and contract revenue, including revenue earned from manufacturing collaborations.

Product Sales

Product sales consisted of the following (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		Change		2005		2004		Change
HIV Products:
Viread	$	189,395	$	193,880	(2	)%	$	596,349	$	584,138	2	%
Truvada		162,403		18,207	792	%		376,680		18,207	1969	%
Emtriva		11,737		15,963	(26	)%		36,314		44,384	(18	)%

HIV products		363,535		228,050	59	%		1,009,343		646,729	56	%
AmBisome		54,736		49,831	10	%		165,157		156,665	5	%
Hepsera		46,893		29,734	58	%		135,364		76,618	77	%
Vistide		1,808		2,822	(36	)%		4,906		5,457	(10	)%
DaunoXome		232		290	(20	)%		1,103		1,175	(6	)%

Total product sales	$	467,204	$	310,727	50	%	$	1,315,873	$	886,644	48	%

Total product sales increased 50% in the third quarter of 2005 compared to the third quarter of 2004, due primarily to the growth of our HIV product franchise, including the continued strong uptake of Truvada since its U.S. launch in August of 2004, as well as higher product sales for AmBisome and Hepsera.

HIV product sales for the third quarter of 2005 increased 59% from the third quarter of 2004 and increased six percent from the second quarter of 2005. Of the HIV product sales in the third quarter of 2005, $219.7 million were U.S. sales, an increase of 58% compared to the third quarter of 2004, and $143.8 million were sales outside of the United States, an increase of 62% compared to the same period in 2004. Viread sales decreased 2% in the third quarter of 2005 compared to the third quarter of 2004, primarily driven by patients switching from a Viread-containing regimen to one containing Truvada in countries where Truvada is available, offset by the continued strong sales of Viread in the regions where Truvada has yet to be launched. Sales of Truvada commenced in the third quarter of 2004 in the United States and in the first nine months of 2005 in certain European countries. In the United States, Truvada sales for the third quarter of 2005 increased 25% sequentially, primarily due to the use of Truvada in patients new to therapy and secondarily from switches of patients on other regimens, including those containing Viread or Emtriva, for which U.S. sales decreased sequentially by 15% and 2%, respectively. For the full year 2005, we expect sales from our HIV products to be in the range of $1.365 billion to $1.385 billion.

AmBisome sales for the third quarter of 2005 were $54.7 million, an increase of 10% compared to the third quarter of 2004 primarily driven by higher sales volume outside of the United States. AmBisome sales for the third quarter of 2005 decreased 3% sequentially from the prior quarter. Sales volume of AmBisome in Europe increased by 11% in the third quarter of 2005 compared to the same period in 2004. This increase in sales volume was partially offset by lower pricing in certain European markets. We continue to expect healthy sales performance of AmBisome in certain European countries; however, we also anticipate continued pressure to lower the price of AmBisome as a result of competition in other European markets. For the full year 2005, we expect AmBisome sales to be in the range of $210 million to $220 million.

For the third quarter of 2005, Hepsera sales in the United States were $21.9 million, compared to $14.6 million for the third quarter of 2004. Outside of the United States, sales of Hepsera were $25.0 million in the third quarter of 2005 compared to $15.2 million for the same period in 2004. The increase was driven primarily by significant volume growth in both the United States and Europe, an increase of 38% and 55%, respectively, compared to the same quarter last year. Volume also increased with respect to our sales of Hepsera to GSK, which we sell at cost, in connection with their distribution activities in Asia. For the full year 2005, we expect Hepsera sales to be in the range of $170 million to $180 million, which takes into account our current estimated impact of additional competition that has entered the market.

Total product sales for the nine months ended September 30, 2005 and 2004 were $1.3 billion and $886.6 million, respectively, representing an increase of 48%. Sales of HIV products for the nine months ended September 30, 2005 were $1.0 billion, up from $646.7 million in the nine months ended September 30, 2004. For the first nine months of 2005, HIV product volume increased by 40% when compared to the same period last year, with volume increasing 20% in the United States and 76% outside of the United States. Sales of Viread for the nine months ended September 30, 2005 were $596.3 million, or 45% of total product sales, compared to $584.1 million, or 66% of total product sales, for the nine months ended September 30, 2004. The year over year increase in Viread sales of 2% is primarily driven by a stronger European currency and volume increases in Europe of 30%, partially offset by volume decreases of 21% in the United States due to patients switching from a Viread-containing regimen to one containing Truvada. Of the $596.3 million in Viread sales, $259.9 million were U.S. sales and $336.5 million were sales outside of the United States. Truvada sales further contributed to the increase in total HIV product sales with $376.7 million for the nine months ended September 30, 2005 as compared to $18.2 million for the nine months ended September 30, 2004. Truvada was launched in August 2004 in the United States.

We also recognized $165.2 million in AmBisome sales for the first nine months of 2005, a 5% increase over the nine months ended September 30, 2004 primarily driven by higher sales volume outside of the United States and a stronger European currency, partially offset by lower pricing in many international regions. Sales of Hepsera totaled $135.4 million for the first nine months of 2005, an increase of 77% over the $76.6 million in the first nine months of 2004 due to strong sales growth in both Europe and the United States.

Royalty and Contract Revenue

Royalty and contract revenue was $26.2 million for the third quarter of 2005 compared with $15.5 million for the third quarter of 2004. The increase in the third quarter of 2005 was primarily driven by $12.1 million of royalties received from Roche’s sales of Tamiflu in the second quarter of 2005 and $2.4 million of royalties received from Eyetech for sales of Macugen recognized by Eyetech in the second quarter of 2005. Eyetech began selling Macugen during the first quarter of 2005.

Royalty and contract revenue was $103.3 million for the first nine months of 2005 compared with $68.4 million for the comparable period in 2004. The most significant source of royalty and contract revenue recorded in the first nine months of 2005 and 2004 was from worldwide sales of Tamiflu by Roche, which generated royalties to Gilead of $60.2 million and $38.8 million, respectively. The significant period over period increase in Tamiflu royalties was primarily due to higher royalties received from Roche in 2005 for higher Tamiflu sales caused by the significant 2004/2005 flu season, particularly in Japan, and the fulfillment of orders for pandemic readiness supplies in certain countries in 2005. We also recorded a $7.0 million milestone payment earned from Eyetech upon its first commercial sale of Macugen in the United States in the first nine months of 2005 and recorded $7.6 million in the first nine months of 2004 relating to Eyetech filing milestones for Macugen in the United States and Europe.

In June 2005, we delivered a notice of termination to Roche for material breach of the 1996 Agreement. When, and if, our notice of termination becomes effective, all rights to Tamiflu granted to Roche under the 1996 Agreement would terminate and revert to us. One of the material breaches described in the notice of termination includes Roche’s failure to properly calculate and pay the royalties owed to us. During the second quarter of 2005, we concluded our audit of the royalties due from Roche to Gilead during the period from 2001 to 2003 pertaining to the 1996 Agreement. The results of this audit, which were presented to Roche, identified a potential underpayment by Roche for this period of $18.2 million. In connection with our dispute with Roche related to such potential underpayment, during the third quarter of 2005, Roche advanced a payment of $18.2 million to Gilead; however, Roche has reserved its rights on the payment subject pending comprehensive resolution of all disputes described in the notice of termination. We are currently in confidential binding arbitration with Roche. There can be no assurance that we will prevail in the confidential binding arbitration with Roche and we could incur considerable legal expenses in arbitration. As such, we have recorded the receipt of Roche’s $18.2 million payment in other accrued liabilities.

Cost of Goods Sold and Product Gross Margin Percentage

The following table summarizes the period over period changes in our cost of goods sold (in thousands) and product gross margin percentages:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		Change		2005		2004		Change
Total product sales	$	467,204	$	310,727	50	%	$	1,315,873	$	886,644	48	%
Cost of goods sold		65,498		40,842	60	%		186,182		117,883	58	%
Product gross margin percentage		86%		87%				86%		87%

Our product gross margin percentage for the third quarter of 2005 was 86%, compared to 87% for the same quarter of 2004. The lower gross margin is primarily due to product mix changes as transitions continue from Viread, a higher margin product, to Truvada. As a result of our purchase of the royalty interest owned by Emory in emtricitabine, in July 2005, we have capitalized as prepaid royalties our 65% share of the $525.0 million purchase price, or $341.3 million. We have begun to amortize this prepaid royalty to cost of goods sold over the remaining life of the underlying patent based on the royalty rate derived from our forecasted sales. In addition, we now record royalties to Royalty Pharma based on actual emtricitabine net sales relative to Royalty Pharma’s 35% interest in the Emory royalty buyout. Excluding the potential impact of unanticipated changes in foreign currency exchange rates relative to the U.S. dollar and any significant change to the mix of product sales, we expect our product gross margin percentage to be in the range of 85% to 86% for the full year 2005. We do not expect the Emory royalty buyout to have a significant impact on our 2005 product gross margin.

Research and Development Expenses

The following table summarizes the period over period changes in our research and development (R&D) expenses into these major components (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		Change		2005		2004		Change
Research	$	15,165	$	11,127	36	%	$	39,903	$	31,601	26	%
Clinical development		49,313		30,743	60	%		137,547		99,161	39	%
Pharmaceutical development		14,352		7,334	96	%		31,511		22,630	39	%

Total research and development	$	78,830	$	49,204	60	%	$	208,961	$	153,392	36	%

The $29.6 million increase in R&D expenses for the third quarter of 2005 compared to the third quarter of 2004 was primarily driven by the $15.0 million payment made to Emory in connection with the amendment of our license agreement with Emory related to the development of emtricitabine for the hepatitis B indication, for which we are not expecting any significant activity in the next several years, $5.5 million for purchases of clinical and product development materials, increased costs and fees of $2.7 million incurred by Gilead under our hepatitis C collaborations and $2.6 million of increased salaries due to higher headcount.

R&D expenses for the first nine months of 2005 and 2004 were $209.0 million and $153.4 million, respectively. The higher R&D expenses during the first nine months of 2005 were primarily due to license fees of $32.2 million including the $15.0 million payment made to Emory mentioned above and the $15.0 million upfront license fee incurred by Gilead under its HIV licensing agreement with Japan Tobacco, increased salaries of $7.0 million due to higher headcount, the increased costs and fees of $6.9 million incurred by Gilead under its hepatitis C collaborations, and increased purchases of clinical and product development materials of $5.8 million, partially offset by a lower level of clinical trial activity and related costs compared to the nine months ended September 30, 2004.

In 2005, we expect R&D expenses to be in the range of $270 million to $280 million for the full year. This range does not reflect any expenses we may incur associated with potential collaborations or strategic acquisitions.

Selling, General and Administrative Expenses

The following summarizes the period over period changes in our selling, general and administrative (SG&A) expenses (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		Change		2005		2004		Change
Selling, general and administrative	$	99,238	$	72,371	37	%	$	274,918	$	217,370	26	%

SG&A expenses for the third quarter of 2005 increased by $26.9 million compared to the third quarter of 2004 primarily due to $8.4 million of accrued severance and relocation expenses related to the relocation of our European commercial, medical and administrative headquarters from France to the United Kingdom, increased salaries of $3.5 million due largely to higher headcount and increased medical education and journal advertising of $3.8 million.

For the first nine months of 2005 and 2004, SG&A expenses were $274.9 million and $217.4 million, respectively. The higher SG&A expenses were primarily driven by increased salaries of $10.0 million due largely to higher headcount, increased medical education and journal advertising costs of $9.2 million, $8.4 million of severance and relocation expenses related to the European headquarters relocation mentioned above, as well as increased marketing research, speaker’s programs and symposia costs of $5.6 million as a result of the expansion of our sales and marketing activities. More specifically, sales and marketing activities have expanded in order to launch Truvada in a number of major European markets, such as Germany, the United Kingdom and Spain, as well as to effectively compete against increasing levels of competition for certain of our products.

In the third quarter of 2005, when the relocation plans were finalized, Gilead recorded $8.4 million in severance and relocation expenses of which $8.2 million related to employee severance costs and termination benefits. As of September 30, 2005, no significant amounts have been charged against the accrual. The majority of the payments are expected to be made over the next nine months. Additional costs relating to the new headquarters in the United Kingdom, including recruitment costs, legal expenses, capital expenditures and other related costs will be recorded as incurred. We believe that the aggregate relocation, severance and recruiting costs resulting from the European headquarters relocation will be in the approximate range of $10 to $13 million.

In 2005, we expect SG&A expenses to be in the range of $370 million to $380 million for the full year. This includes the costs of relocating our European headquarters and the hiring of additional therapeutic specialists in certain geographic territories, but excludes any expenses we may incur associated with potential collaborations or strategic acquisitions.

Purchased In-Process Research and Development

In connection with the acquisition of the net assets of Triangle Pharmaceuticals, Inc. (Triangle) completed in January 2003, we recorded in-process research and development expenses of $488.6 million in the first quarter of 2003. The charge was due to Triangle’s incomplete research and development programs that had not yet reached technological feasibility and had no alternative future use as of the acquisition date.

The value of the purchased in-process research and development was determined by estimating the related future net cash flows between 2003 and 2020 using a present value risk adjusted discount rate of 15.75%. This discount rate was a significant assumption and was based on our estimated weighted average cost of capital adjusted upward for the risks associated with the projects acquired. The projected cash flows from the acquired projects were based on estimates of revenues and operating profits related to the projects considering the stage of development of each potential product acquired, the time and resources needed to complete the development and approval of each product, the life of each potential commercialized product and associated risks including the inherent difficulties and uncertainties in developing a drug compound including obtaining FDA and other regulatory approvals, and risks related to the viability of and potential alternative treatments in any future target markets.

A summary of these programs at the acquisition date follows, updated for subsequent changes in status of development:


Program	Description	Status of Development	Estimated Acquisition Date Fair Value (in millions)
Emtricitabine for HIV	A nucleoside analogue that has been shown to be an inhibitor of HIV replication in patients.	Four Phase III studies were completed prior to the acquisition date. U.S. marketing approval received from the FDA in July 2003 for Emtriva and European Union approval received from the European Commission in October 2003.	$	178.8

Emtricitabine/Tenofovir DF Fixed Dose Combination for HIV Therapy	A fixed-dose co-formulation of tenofovir and emtricitabine.	As of the acquisition date, work had not commenced on the potential co-formulation except to the extent that work on emtricitabine as a single agent was progressing. In March 2004, applications for marketing approval were submitted in the United States and European Union and in August 2004 marketing approval in the United States was received from the FDA for Truvada, the fixed-dose co-formulation of tenofovir and emtricitabine. Marketing approval in the European Union was received in February 2005 and sales commenced later during the first quarter.	$	106.4

Amdoxovir for HIV	A purine dioxolane nucleoside that may offer advantages over other marketed nucleosides because of its activity against drug resistant viruses as exhibited in patients with HIV infection.	This program was in Phase II trials at acquisition date. In 2004, we terminated the licensing agreement with Emory University and the University of Georgia Research Foundation, Inc. and development was discontinued.	$	114.8

Clevudine for HBV	A pyrimidine nucleoside analogue that has been shown to be an inhibitor of HBV replication in patients chronically infected with HBV.	This program was in Phase I/II trials at acquisition date. In August 2003, the licensing agreement with Bukwang Pharm. Ind. Co., Ltd was terminated and development was discontinued.	$	58.8

Emtricitabine for HBV	An inhibitor of HBV replication in patients chronically infected with HBV.	One Phase III trial has been completed as of December 31, 2004. We continue to evaluate our strategy for the development of emtricitabine for the hepatitis B indication. We currently do not expect to undertake any significant research and development activities in the next several years.	$	29.8

Gain on Eyetech Warrants

In March 2000, we entered into an agreement with Eyetech relating to our proprietary aptamer EYE001, currently known as Macugen. Pursuant to this agreement, we received a warrant to purchase 791,667 shares of Eyetech series B convertible preferred stock, exercisable at a price of $6.00 per share. In January 2004, Eyetech completed an initial public offering of its common stock at which time we adjusted the carrying value of the warrant to its estimated fair value resulting in a gain of $20.6 million which is included in our condensed consolidated statement of income for the nine months ended September 30, 2004. The fair value of the warrant was estimated using the Black-Scholes valuation model with a volatility rate of 50% and a discount rate of 2.8%. At the end of the first quarter of 2004, we exercised the warrant on a net basis utilizing shares of Eyetech common stock as consideration and subsequently held 646,841 shares of Eyetech common stock. In the second quarter of 2004, we sold all of the Eyetech shares we held and realized a gain of $2.3 million, which is included in interest and other income, net, in our condensed consolidated statement of income for the nine months ended September 30, 2004.

Interest and Other Income, net

Interest and other income, net, was $12.5 million for the third quarter of 2005, up from $4.8 million for the third quarter of 2004. Interest and other income, net, was $31.4 million and $13.1 million for the first nine months of 2005 and 2004, respectively. The increases in 2005 as compared to the same periods in 2004 are primarily due to higher investment balances and yields in 2005. In the second quarter of 2004, we sold all of the Eyetech shares we held and realized a gain of $2.3 million.

Interest Expense

Interest expense for the third quarter and first nine months of 2005 was significantly lower when compared to the $2.0 million and $6.2 million incurred in the third quarter and first nine months of 2004, respectively, due primarily to the conversion of our $345.0 million 2% convertible senior debt into shares of our common stock in November 2004.

Minority Interest in Joint Venture

We began consolidating the financial statements of our joint venture with BMS in the first quarter of 2005. We continue to record a minority interest related to BMS’ share in the operating results and financial position of the joint venture. During the third quarter of 2005, we began evaluating alternate formulations of the fixed-dose combination of Gilead’s Truvada and BMS’ Sustiva in the United States, which led to an increase in the costs of the joint venture.

Provision for Income Taxes

Our effective income tax rate was 32.0% for the third quarter and first nine months of 2005. Our effective income tax rate was 32.0% for the third quarter of 2004 and 31.3% for the first nine months of 2004. Our provision for income taxes for the third quarter of 2005 was $84.3 million compared to $53.3 million for the third quarter of 2004. Our provision for income taxes for the first nine months of 2005 was $250.5 million compared to $154.8 million for the first nine months of 2004. The effective tax rate for the third quarter and first nine months of 2005 varies from the statutory rate primarily as a result of permanently reinvested earnings of our foreign operations. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be permanently reinvested.

Various factors may have favorable or unfavorable effects on our effective tax rate during the remainder of 2005 and in subsequent years. These factors include, but are not limited to, changes in tax laws and rates, changes in the interpretations of these laws, changes in accounting rules, future levels of research and development spending, future levels of capital expenditures, changes in the mix of earnings in the various tax jurisdictions in which we operate, changes in overall levels of pre-tax earnings and the potential repatriation of foreign earnings under the AJCA.

On October 22, 2004, the AJCA was signed into law. The AJCA allows for a deduction of 85% of certain foreign earnings that are repatriated, as defined in the AJCA. We are evaluating the effects of the repatriation provisions and will complete this evaluation during the fourth quarter of 2005. The range of possible amounts that we are considering for repatriation during 2005 under this provision is between zero and $300.0 million. The related potential impact on income taxes under this provision if we choose to repatriate foreign earnings under the AJCA, would be a one-time benefit with a range between zero and $30.0 million.

Foreign Exchange

The impact on pre-tax earnings for the third quarter and first nine months of 2005 was a favorable $5.3 million and $14.7 million, respectively, compared to the same periods in 2004 principally as a result of the favorable European currency environment relative to the U.S. dollar. This includes the impact from revenues and expenses generated from outside the United States, as well as results from our hedging activity.

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities totaled $1.7 billion at September 30, 2005, up from $1.3 billion at December 31, 2004. The increase of $406.2 million was primarily due to net cash provided by operations of $374.6 million which was driven by the growth in operating income, partially offset by the non-recurring payment of $341.3 million made to Emory related to the royalty buyout of emtricitabine, and the proceeds from issuances of common stock related to our employee stock option program.

Working capital at September 30, 2005, was $2.0 billion compared to $1.6 billion at December 31, 2004. In addition to the $406.2 million increase in cash, cash equivalents and marketable securities, significant increases to working capital during the first nine months of 2005 included a $38.0 million increase in inventories primarily to support anticipated commercial product sales and the ramp up of material purchases for the Gilead Access Program, a $29.4 million increase in accounts receivable primarily related to favorable European currency partially offset by strong collections in certain European countries, a $14.4 million decrease in accounts payable and an $8.3 million decrease in current deferred revenue. These increases in working capital were partially offset by a $39.2 million decrease in current deferred tax assets and a $39.0 million increase in accrued liabilities. The increase of $39.0 million in accrued liabilities was primarily due to the $18.2 million payment received from Roche related to our royalty audit, an increase in accrued compensation and employee benefits, royalties payable and Medicaid rebates, partially offset by a decrease in our hedge-related fair value liabilities and sales and marketing accruals. The decrease in current deferred tax assets of $39.2 million was primarily due to the utilization of net operating loss and tax credit carryforwards to reduce income taxes payable.

Capital expenditures during the first nine months of 2005 were $34.9 million compared to $29.1 million during the first nine months of 2004. These expenditures were primarily related to domestic facilities improvements and purchases of laboratory and manufacturing equipment. We expect capital expenditures for the full year 2005 to be in the range of $45 million to $50 million. This includes the expenditures relating to the relocation of our European headquarters.

As mentioned earlier, we are currently evaluating various alternatives of the repatriation provisions of the AJCA. As a result, if we choose to repatriate foreign earnings under AJCA, although we would benefit from a lower rate of taxation related to certain foreign earnings that would eventually be repatriated, this one-time benefit would lead to increased cash payments for income taxes during the quarter that the foreign earnings are repatriated.

We believe that our existing capital resources, supplemented by cash generated from our operations, will be adequate to satisfy our capital needs for the foreseeable future. Our future capital requirements and the adequacy of our resources will depend on many factors, including:

•

the commercial performance of our current and future products,

•

the progress and scope of our research and development efforts, including preclinical studies and clinical trials,

•

the cost, timing and outcome of regulatory reviews,

•

the expansion of our sales and marketing capabilities,

•

the increase in administrative expenses to support the continued growth of operations,

•

the possibility of acquiring manufacturing capabilities or additional office facilities,

•

the possibility of acquiring other companies or new products,

•

the establishment of additional collaborative relationships with other companies, and

•

defense costs associated with settlements of and adverse results of litigation.

We may in the future require additional funding, which could be in the form of proceeds from equity or debt financings, such as from our universal shelf registration filed in December 2003 for the potential issuance of up to $500.0 million of our securities, or additional collaborative agreements with corporate partners. If such funding is required, we cannot be assured that it will be available on favorable terms, if at all.

Subsidiaries and Other

We have established a variety of subsidiaries in various countries for the purpose of conducting business in those locations. We have also established a joint venture with BMS. All of these subsidiaries, including our joint venture with BMS, are consolidated in our financial statements. We do not have any unconsolidated variable interests in variable interest entities where we are the primary beneficiary as determined under FIN 46R. We are also not involved in any non-exchange traded commodity contracts accounted for at fair value. We have no commercial commitments with related parties, except for employee loans. We have contractual obligations in the form of capital and operating leases, notes payable, raw material supply agreements and clinical research organization contracts. There have been no significant changes outside the ordinary course of business in our contractual obligations as disclosed in “Item 15. Exhibits and Financial Statement Schedules – Note 13. Commitments and Contingencies” of our 2004 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk compared to the disclosures in Item 7A of our 2004 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation as of September 30, 2005 was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures,” which are defined under SEC rules as controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within required time periods. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that subject to the limitations described below, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in this quarterly report on Form 10-Q was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules on Form 10-Q.

Changes in Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2005, and has concluded that there was no change during such quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in “Item 1. Condensed Consolidated Financial Statements – Note 6. Contingencies” to the interim condensed consolidated financial statements, and is incorporated by reference herein.

ITEM 6. EXHIBITS


10.1+		Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead World Markets, Ltd. and Pharmachem Technologies (Grand Bahama), Ltd. dated July 17, 2003.

10.2+		Royalty Sale Agreement by and among Gilead Sciences, Inc., Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005.

10.3+x		Amended and Restated License Agreement by and among Gilead Sciences, Inc., Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma dated July 21, 2005.

31.1		Certification

31.2		Certification

32		Certification

99.1		Manufacture and Distribution Agreement, by and between Gilead Sciences, Inc. and Aspen Pharmacare Holdings Limited dated October 12, 2005.

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 SEC without the Mark pursuant to the Registrant’s Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.

Filed as Exhibit A to the Royalty Sale Agreement by and among Gilead Sciences, Inc., Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005 (Exhibit 10.2 to this Quarterly Report on Form 10-Q) and incorporated herein by reference.

SIGNATURES

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


		GILEAD SCIENCES, INC. (Registrant)

Date: November 4, 2005		/s/ John C. Martin
		John C. Martin President and Chief Executive Officer

Date: November 4, 2005		/s/ John F. Milligan
		John F. Milligan Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit Index

(a) Exhibits


10.1+		Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead World Markets, Ltd. and Pharmachem Technologies (Grand Bahama), Ltd. dated July 17, 2003.

10.2+		Royalty Sale Agreement by and among Gilead Sciences, Inc., Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005.

10.3+x		Amended and Restated License Agreement by and among Gilead Sciences, Inc., Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma dated July 21, 2005.

31.1		Certification

31.2		Certification

32		Certification

99.1		Manufacture and Distribution Agreement, by and between Gilead Sciences, Inc. and Aspen Pharmacare Holdings Limited dated October 12, 2005.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

Exhibit 10.1

GILEAD WORLD MARKETS, LTD.-PHARMACHEM TECHNOLOGIES

(GRAND BAHAMA), LTD.

TENOFOVIR DISOPROXIL FUMARATE MANUFACTURING SUPPLY AGREEMENT

T HE P ARTIES HEREBY ACKNOWLEDGE AND AGREE THE FOLLOWING :

THIS SUPPLY AGREEMENT ( “Agreement” ) is entered into as of July 17, 2003, by and between PharmaChem Technologies (Grand Bahama), Ltd., a Commonwealth of the Bahamas company ( “PharmaChem” ) having its principal place of business at [ * ] Freeport, Grand Bahama, Commonwealth of The Bahamas, , and Gilead World Markets, Ltd., a company operating under the laws of the Cayman Islands ( “GWM” ) having its principal place of business at Queensgate House, South Church Street, PO Box 1234GT, Grand Cayman. PharmaChem and GWM may be referred to individually as a “Party” and collectively as the “Parties” in this Agreement.

WHEREAS, PharmaChem is a known manufacturer of active pharmaceutical ingredients with expertise in cGMP manufacturing, and GWM and its designees manufacture and market pharmaceutical products for human use, including tenofovir disoproxil fumarate 300 mg known as Viread ^® ( “Finished Product” );

WHEREAS, PharmaChem and GWM desire to establish mutually agreeable terms for the commercial supply of bulk tenofovir disoproxil fumarate ( “Product” ) as an active pharmaceutical ingredient by PharmaChem to GWM.

WHEREAS, the Parties’ obligations under this Agreement are subject to the condition precedent of the Closing of the acquisition by PharmaChem [ * ] of the plant located in [ * ] Freeport, Grand Bahama, (the “ Plant ”) within and not later than August 31 ^st , 2003 (the business day immediately after the date of Closing of the acquisition of the Plant is hereinafter defined as the “ Effective Date ”).

NOW, THEREFORE, in consideration of (i) PharmaChem’s agreement to manufacture and supply Product to GWM for the monetary amounts set forth in this Agreement; (ii) the promises, covenants, agreements and other valuable consideration hereinafter set forth, and intending to be legally bound, the Parties hereby, subject to the fulfillment of the condition precedent of the acquisition of the Plant as described in the recitals above, agree as follows:

AGREEMENT ACCEPTANCE: PharmaChem has read and understands this Agreement and understands that it will govern PharmaChem’s written acceptance of any order for or delivery of Product. All terms and conditions with respect to an order for Product proposed by PharmaChem or GWM that are different from or in addition to this Agreement (including without limitation any such terms in the General Sales Conditions of PharmaChem or the General Purchase Conditions of GWM) and are not agreed to in writing by both Parties are hereby expressly rejected and shall not become a part of this Agreement or such order.

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[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

GWM has read and understands this Agreement and will purchase the Product manufactured by PharmaChem and pay for the supply of the Product in accordance with the terms and provisions of this Agreement. Any delivery of Product after the Effective Date of this Agreement shall be governed by the terms of this Agreement. Any modifications to this Agreement shall, prior to their implementation, be mutually agreed upon by the Parties hereto and shall be made in accordance with Section 27. The Parties agree and acknowledge that, as expressly contemplated by this Agreement, certain of the Parties’ rights may be exercised by, and certain of the Parties’ obligations may be fulfilled by, corporate entities that control, are controlled by, or are under common control with the respective Party (such Party’s “Affiliates” ).

TERM: The term of this Agreement shall begin as of the Effective Date, and shall remain in effect until December 31, [ * ] (the “Initial Term” ), and thereafter for subsequent automatic [ * ] renewal terms (each a “Renewal Term” ), unless terminated by either Party effective at the end of the Initial Term or any Renewal Term by at least [ * ] prior written notice or unless earlier terminated according to Section 12 “Termination” of this Agreement.

SUPPLY: During the term of this Agreement, PharmaChem will manufacture Product for GWM for use in manufacture of Finished Product. During the term of this Agreement, PharmaChem is obligated to manufacture Product at the location and in the quantities set forth herein. PharmaChem will not manufacture or supply Product to any person or entity other than GWM without GWM’s prior written consent.

Facility: PharmaChem will manufacture the Product for GWM only at its facility located at [ * ] Freeport , Grand Bahama, Bahamas, or such other facilities as the Parties agree to in writing (collectively, the “Facility” ). GWM has inspected the Facility and has acknowledged, based upon information in its possession as of the Effective Date, that the Facility appears to be appropriate for the purposes of manufacturing the Products.

Minimum Quantities: During the Initial Term and any Renewal Term GWM will purchase and PharmaChem will deliver at least the quantities of Product set forth in Exhibit A. Failure in any year by GWM to purchase the required quantities will result in [ * ] an amount equal to the [ * ] the [ * ], the invoice for which will be [ * ]. For clarity, Regulatory Terminations shall not be deemed to be breaches of GWM’s obligations under this Section 3(b).

Forecasting: On the first day of [ * ] will provide to PharmaChem the projected need for Product for [ * ] period commencing [ * ] from the date the forecast is to be provided. The quantities indicated in the [ * ] period of the [ * ] projection will be an affirmative obligation for GWM to purchase, and an affirmative obligation for PharmaChem to supply Product within the limits of [ * ]. The quantities indicated in the [ * ] period of the [ * ] projection will be considered as a forecast only.

Acceptance: PharmaChem will respond to each purchase order received from GWM ( “GWM Purchase Order” ) within [ * ] calendar days of receipt. The response shall include PharmaChem’s inability to comply with, or confirmation of the delivery dates and quantities set forth in the GWM Purchase Order.

Failure to Supply: If PharmaChem is unable to supply sufficient quantities of the Product to meet either its minimum obligations under Section 3(b), or should either Party perceive

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that a shortfall in delivery of Product by PharmaChem is likely to occur for any reason, the Parties will discuss appropriate steps to alleviate such a shortfall [ * ] GWM will have the right [ * ]. Any quantities [ * ] to meet such a shortfall shall be [ * ] and [ * ] in which the shortfall occurs. If GWM must [ * ] PharmaChem shall be liable for any costs beyond the prices applicable pursuant to Exhibit B for the shortfall quantity, but limited to a total cost of not more than [ * ] of such applicable prices. Repeated shortfalls may be considered a material breach of this Agreement, as described in section 12 of this Agreement.

Delay: If release and/or shipment of any quantity is delayed after PharmaChem has accepted an order, through the fault of PharmaChem, by more than [ * ], the quantity shall be considered a shortfall, and treated as above in Section 3(e). If such delay is caused by the fault of GWM, GWM will make [ * ] to remediate the fault as soon as reasonably practicable, however, after (30) days from the date of expected release and/or shipment, PharmaChem shall be entitled to issue the relevant invoice(s) in any case.

GOOD MANUFACTURING PRACTICES. PharmaChem will manufacture all Product in accordance with, as then in effect, all laws, rules and regulations applicable in the U.S., the European Union ( “EU” ) and its member states, The Bahamas, and other countries in which the Finished Product is or is intended to be clinically tested or marketed pertaining to the manufacture, use, storage, handling, testing and transport and disposal of pharmaceutical products and materials, which laws, rules and regulations are applicable to PharmaChem’s activities with the Product, including without limitation (i) the U.S. Food, Drug and Cosmetics Act, as amended, (ii) the Federal Public Health Service Act, (iii) then-current good manufacturing practices ( “cGMP” ) as established by the United States Food and Drug Administration ( “FDA” ) or the European Medicines Evaluation Agency ( “EMEA” ) or regulatory authorities in such other countries of member states of the EU for the manufacture of pharmaceutical materials, and (iv) ICH Q7A Guideline (collectively, “Legal Requirements” ). Each Party will promptly notify the other of any new instructions or specifications required by applicable Legal Requirements and will confer with each other with respect to the best means to comply with such requirements and will allocate any costs of implementing such changes on an equitable basis. Upon written request of GWM, PharmaChem will permit representatives of GWM to observe such manufacture, or any government inspection of PharmaChem’s manufacturing process for the Product, at mutually agreeable times and, PharmaChem will permit GWM to inspect copies of PharmaChem’s manufacturing records, including its batch records, for the purposes of assuring product quality and compliance with agreed-upon manufacturing procedures.

MANUFACTURING PROCESS: GWM will make available to PharmaChem [ * ] all such know-how, information, and technical assistance that is necessary for PharmaChem to manufacture the Product to the standards set by GWM or as stated in any current New Drug Applications for Finished Product filed in the U.S., any current Marketing Authorization Application filed for Finished Product in the EU, or any equivalents thereof in other jurisdictions (collectively, “Regulatory Approval Applications” or “RAAs” ), as will be more precisely described by GWM in writing to PharmaChem before the start of manufacturing of the Product. PharmaChem will manufacture the Product in conformance with the specifications (the “Specifications” ), as set forth in the RAAs, as amended and the Gilead Contract Manufacturing Manual for Product that is in effect on the Effective Date of

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this Agreement, and as thereafter amended (the “Contract Manufacturing Manual” ), and according to the manufacturing process description as set forth in the RAAs and the Contract Manufacturing Manual.

RAW MATERIALS: PharmaChem will use raw materials in the manufacture of Product that conform to the specifications set forth in the Contract Manufacturing Manual (the “Raw Material Specifications” ), and PharmaChem will verify such conformance in accordance with the testing standards and procedures specified therein. PharmaChem will facilitate changes to the Raw Material Specifications that are necessary or appropriate in light of FDA, EMEA or other regulatory requirements. PharmaChem shall not be liable under this Agreement for any Product that fails to conform to the Specifications if the raw materials used meet the Raw Material Specifications and such non-conformity is due to the inadequacy of the Raw Material Specifications.

CHANGE IN MANUFACTURING PROCESS: PharmaChem will obtain GWM’s prior written approval before implementing any planned change (including substantial improvements) in the materials, equipment, process, raw material suppliers, analytical methods, or procedures used to manufacture the Product that would constitute a major change under cGMP, would impact the validation status of the process, or may be interpreted to be noncompliant with the manufacturing process set forth in the RAAs or the Contract Manufacturing Manual. PharmaChem will disclose all proposed changes in such manufacturing materials, equipment, process, or procedure to GWM at a level reasonably sufficient to enable GWM to practice such changed manufacturing process. GWM will notify PharmaChem in writing with reasonable notice of any change (including substantial improvements) in the materials, equipment, process, raw material suppliers, analytical methods, specifications, or procedures to be used in the manufacture of the Product whether such changes are to be reflected as updates to the Contract Manufacturing Manual or otherwise, and PharmaChem will implement within a reasonable time as agreed by the Parties. PharmaChem will provide GWM with an authentic copy of the current Master Batch Record for the preparation of the Product.

[ * ] will bear any increased costs of implementing any amendment or change of whatever nature to the procedures or specifications described in the RAAs or the Contract Manufacturing Manual as they exist on the Effective Date of this Agreement, as well as any extra costs resulting from the implementation of such change, through an [ * ] which the Parties will negotiate in good faith.

PROCESS IMPROVEMENTS:

a) [ * ] \will communicate promptly to [ * ] any idea or substantial improvement (patented or unpatented) made or developed by [ * ] solely or jointly with [ * ] employees or agents arising from its activities under this Agreement and relating to the processing, manufacture or testing of the Product ( “Improvement” ).

b) [ * ] shall own all right, title and interest in and to Improvements [ * ].

c) [ * ] shall own all right, title and interest in and to Improvements [ * ]. [ * ] shall [ * ].

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d) [ * ] shall own all right, title and interest in and to Improvements [ * ]. [ * ] hereby grants to [ * ] a worldwide royalty-free exclusive sublicensable license limited to processing, manufacturing and testing the Product and any structurally related [ * ] pharmaceutical compound. If [ * ] engages another contract manufacturer for the processing, manufacturing or testing of the Product or of structurally related GWM pharmaceutical compounds, [ * ] may disclose and sublicense such Improvements to such contract manufacturer solely for the purpose of processing, manufacturing or testing the applicable GWM pharmaceutical compound(s), and the Parties [ * ].

e) Right, title and interest in and to Improvements not covered by Sections 6(b), (c) or (d) shall be as follows: if such an Improvement is invented solely by agents and employees of one Party, such Party shall solely own such Improvement; if such an Improvement is invented jointly by agents and employees of both Parties, the Parties shall jointly own such Improvement with the right to sublicense without the consent of the other Party and with no duty of accounting to each other.

QUALITY CONTROL SAMPLE AND DOCUMENTATION: PharmaChem will manufacture the Product at all times in strict conformance with the Specifications, and PharmaChem will verify such conformance in accordance with the testing procedures specified in the Specifications and the Standard Test Methods as set forth in the Contract Manufacturing Manual. Prior to the delivery of any batch of Product, PharmaChem will provide GWM with (i) a quality control sample of such batch to be held by GWM for analytical reference, (ii) written confirmation that PharmaChem’s quality assurance unit has reviewed and approved the relevant batch records (“Certificate of Compliance”), and (iii) a Certificate of Analysis confirming that such batch meets Specifications ((i), (ii) and (iii) collectively being the “Quality Documentation”). PharmaChem will conduct quality control sampling in accordance with the most current Drug Substance Sampling/Testing Plan contained in the Contract Manufacturing Manual, unless otherwise specified by GWM in writing.

10.

QUANTITY AND PRICE: Subject to adjustment as provided in this Agreement, GWM will pay to PharmaChem the prices pursuant to Exhibit B. Using Exhibit B, “Invoice” price is set on [ * ] of each calendar year for the subsequent calendar year.

If, due to market conditions, the cost of a raw material purchased by PharmaChem for manufacture of Product increases or decreases by [ * ] of the cost therefor upon which the then-current applicable Product price quote was based, the Parties will [ * ].

If there are either alternative raw materials sources or arrangements identified by PharmaChem or Improvements, in each case that materially reduce the Product manufacturing cost, that are mutually agreed to be implemented in accordance with Section 7, the Parties will [ * ], on the principle that [ * ].

11.

DELIVERY, SHIPPING, BILLING AND PAYMENT :

a) Delivery: Unless otherwise agreed by the Parties in writing, PharmaChem will deliver all shipments [ * ] (Incoterms 2000) ] , provided, however, that [ * ] shall be responsible for the [ * ] (the “ Carrier ”) [ * ].

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b) Shipment: PharmaChem in cooperation with the Carrier, but under GWM and Carrier’s sole responsibility, will provide all necessary assistance in order to package and ship the Products in accordance with PharmaChem’s customary practices for pharmaceutical compounds, unless otherwise specified by GWM. PharmaChem and the Carrier will ship Product pursuant to written instructions provided by GWM to PharmaChem or in a GWM Purchase Order, to a facility of GWM, or a GWM designee (each such facility, a “GWM Location” ), and in such quantities as designated by GWM on the GWM Purchase Order, material transfer request, or by subsequent written instruction given by GWM. PharmaChem will give its assistance to the Carrier in order to make sure that such Product is shipped no later than the latest of (i) within [ * ] calendar days of receipt of such shipping instructions from GWM, and (ii) the date shipment must be made in order to achieve receipt as set forth in the applicable GWM Purchase Order. [ * ]

c) Invoices: All invoices from PharmaChem to GWM covering Product delivered to GWM shall be stated, and GWM will make all payments due to PharmaChem in [ * ] by wire transfer to the PharmaChem bank account notified in writing by PharmaChem from time to time. PharmaChem will issue invoices upon completion of the batches and issuance of the applicable quality control sample(s) in accordance with Section 9. GWM will pay PharmaChem’s invoice not later than [ * ] calendar days following the later of (i) the receipt of the applicable invoice, or (ii) receipt of the Certificate of Analysis and Certificate of Compliance. Any invoiced amount that is not paid within [ * ] calendar days of its due date shall be assessed a late payment fee at the rate of [ * ] or the maximum rate permitted by applicable law with respect to such obligations, whichever is less.

12.

TERMINATION :

a) Either Party may terminate this Agreement for a material breach by the other Party. A material breach may be encountered if either Party: (a) repudiates or breaches a [ * ] of this Agreement; or (b) fails to perform payments or services or deliver goods as provided in this Agreement. A Party may terminate this Agreement under this Section 12 by giving the breaching Party written notice, specifying the circumstances of the breach, including the provisions of this Agreement that are breached ( “Notice” ). The breaching Party, if such a breach has indeed occurred, has [ * ] calendar days from receipt of such Notice to cure such breach of this Agreement.

If the breach has not been cured at the end of the [ * ] day period or if the breaching Party is not making [ * ] to cure such breach, then, upon immediate Notice to the breaching Party, the breaching Party shall be in default and the non-breaching Party may terminate this Agreement. If the breaching Party is making diligent, good faith efforts to cure such breach up until the end of the [ * ] day period, the breaching Party shall be granted an additional [ * ] day period to cure said breach so long as it continues to use diligent, good faith efforts to cure such breach. Unless the termination is on the grounds of a material breach resulting [ * ], GWM will purchase raw material and intermediates at PharmaChem’s actual cost and inventories of the Product at the purchase price then in effect according to provisions of Appendix B hereto as amended during the performance of this Agreement. Otherwise, GWM shall have the right, but not the obligation, to purchase such raw materials, intermediates and inventories of the Product pursuant to Section 10 as GWM may determine in its sole

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discretion. For clarity, but without limitation on other contract damages that may be available in the event of a material breach by a party, in the event the termination is on grounds of [ * ] during the Initial Term, GWM shall pay to PharmaChem [ * ].

b) If either Party becomes bankrupt, the other Party may, with immediate Notice to the first Party, terminate the Agreement with no liabilities whatsoever, subject to relevant legislation and provisions herein contained.

c) GWM may terminate this Agreement in whole or in part at any time by giving [ * ] days written notice to PharmaChem, if GWM, in its sole discretion, determines that [ * ], or if any [ * ] a [ * ] on [ * ] or [ * ] of the [ * ] or [ * ] of [ * ] (each, a “Regulatory Termination” ). GWM may terminate this Agreement if any [ * ] that regulates [ * ] any [ * ] the result of which is [ * ] the [ * ] or to [ * ] on the [ * ]. Should GWM terminate this Agreement by a Regulatory Termination:

(i) PharmaChem will take reasonable measures to cease any ongoing production and limit further expenses associated with such ongoing production;

(ii) GWM will purchase raw material and intermediates [ * ] and inventories of the Product [ * ] of this Agreement, and will reimburse PharmaChem [ * ]; and

(iii) PharmaChem will use commercially reasonable efforts [ * ] this Agreement; and

(iv) GWM will [ * ] that PharmaChem is [ * ]:

(A) if the Regulatory Termination occurs in the first year of the term of this Agreement, GWM shall [ * ];

(B) if the Regulatory Termination occurs in the second year of the term of this Agreement, GWM shall [ * ];

(D) if the Regulatory Termination occurs in the fourth year of the term of this Agreement, GWM shall [ * ];

(E) if the Regulatory Termination occurs in the fifth year of the term of this Agreement, GWM shall [ * ].

[ * ].

d) Except as otherwise set forth in this Agreement, termination of this Agreement shall not release any Party hereto from any payment, liability or other obligation existing at the date of termination.

13.

LIMITED WARRANTY: PharmaChem warrants that Product delivered hereunder will (i) be manufactured in accordance with Legal Requirements, (ii) be manufactured in accordance with the agreed-upon manufacturing procedures described in the master batch records supplied to GWM in accordance with the provisions of Section 7, as may be modified and

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disclosed to GWM in accordance with the provisions of Section 7, (iii) be manufactured in accordance with and conform to the then-applicable Specifications, and (iv) meet the requirements for pharmaceutical commercial use as set forth in all Legal Requirements. GWM’s remedies and PharmaChem’s liability with respect to this warranty are set forth in Sections 3(e), 3(f), 12(a), 14, 16 and 17. These warranties are the only warranties made by PharmaChem with respect to Product delivered hereunder, and may only be modified or amended by a written instrument signed by a duly authorized officer of PharmaChem and accepted by GWM. T HE EXPRESS WARRANTIES SET FORTH IN THIS S ECTION 13 ARE THE EXCLUSIVE WARRANTIES MADE BY P HARMA C HEM UNDER THIS A GREEMENT OR ANY PURCHASE ORDER GOVERNED BY THIS A GREEMENT , IN LIEU OF ALL OTHER EXPRESS OR IMPLIED WARRANTIES , INCLUDING WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE . I F ANY P RODUCT FAILS TO CONFORM TO THE WARRANTIES IN THIS S ECTION 13, P HARMA C HEM ’ S EXCLUSIVE OBLIGATION AND GWM’ S ( OR GWM’ S A FFILIATES ’) EXCLUSIVE REMEDY ( SUBJECT TO S ECTIONS 3( E ), 3( F ), 12( A ), 16 AND 17) SHALL BE AS SET FORTH IN S ECTION 14. Nothing in this Section 13 is intended as a limitation of PharmaChem’s defense and indemnification obligations pursuant to Section 16 or the recall obligations of PharmaChem under Section 17.

14.

ACCEPTANCE AND REJECTION: GWM may reject Product delivered by PharmaChem for failure to comply with the warranties in Section 13 by giving PharmaChem written notice. Any rejection for noncompliance with such warranties that is based on shall be made within thirty (30) days of GWM’s receipt of the Quality Documentation, as such period may be reasonably extended by notice from GWM in the event of investigation of a potential deviation by GWM. GWM will be deemed to have accepted any shipment of Product that it does not reject consistent with the preceding timeframe. In case of notice of rejection by GWM, the Parties will cooperate to determine whether rejection was necessary or justified. PharmaChem will notify GWM promptly as to whether it accepts GWM’s basis for any rejection. If the Parties disagree whether the Product batch did not comply with the warranties, they will submit a sample of such Product batch and applicable documentation to a mutually acceptable independent third party laboratory. Such third party laboratory will determine whether such Product batch conforms with the warranties, and such determination shall be final, binding and determinative as to whether rejection of such Product batch was justified. The Party against whom the third party tester rules will bear all costs of the third party testing. If GWM has given notice of rejection, at GWM’s request PharmaChem will use best efforts to replace such rejected Product. If the third party tester rules that a rejected batch meets the warranties, GWM will purchase such batch, irrespective of whether PharmaChem has already replaced it. If PharmaChem accepts GWM’s basis for rejection or the third party tester rules that a rejected batch did not meet the warranties, PharmaChem will not charge GWM for such batch or for shipping, insurance or freight costs therefor, or will promptly refund any such amounts already paid by GWM. At its election, [ * ], until and unless it is finally determined that the batch complied with the warranties in Section 13.

15.

INDEMNIFICATION BY GWM: GWM will defend, indemnify, hold harmless PharmaChem, PharmaChem’s directors, officers, employees and agents, PharmaChem’s Affiliates, and the directors, officers, employees and agents of any PharmaChem Affiliate (the “PharmaChem Indemnitees” ) from and against any and all losses, liabilities, judgments, damages, costs, reasonable fees, and expenses, including reasonable attorneys’ fees (collectively, “Losses” ) resulting from third party claim, demand, action, suit or

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proceeding (collectively, “Third Party Claim” ) arising out of (i) the [ * ] (ii) possession, use, transformation, or sale of the Product by any person other than a PharmaChem Indemnitee, (iii) manufacture, use, offer for sale, sale and distribution of Finished Product by GWM, its Affiliates, sublicensees or distributors, or (iv) any negligent or wrongful act or omission of GWM or any GWM Indemnitee relating to this Agreement, including without limiting the generality of the foregoing any Losses whatsoever with respect to Third Party Claims of death or injury to person or damage to property, provided that PharmaChem provides GWM with prompt notice of any such Third Party Claim and the exclusive ability to defend (with the reasonable cooperation of PharmaChem) or settle any such Third Party Claim, except to the extent that GWM has a right of indemnification or defense with respect to any such Loss or Third Party Claim pursuant to Section 16.

16.

INDEMNIFICATION BY PHARMACHEM: PharmaChem will defend, indemnify, hold harmless GWM and GWM’s directors, officers, employees and agents, and the directors, officers, employees and agents of any GWM parent, subsidiary, or related company (the “GWM Indemnitees” ) from and against any and all Losses resulting from any Third Party Claim arising out of (i) PharmaChem’s manufacture of Product that fails to comply with the limited warranties set forth in Section 13 of this Agreement, (ii) the transportation, storage or use of the Product by PharmaChem while the Product is in its control, or (iii) any negligent or wrongful act or omission of PharmaChem or any PharmaChem Indemnitee relating to this Agreement, including without limiting the generality of the foregoing any Losses whatsoever with respect to Third Party Claims of death or injury to person or damage to property, provided that GWM provides PharmaChem with prompt notice of any such Third Party Claim and the exclusive ability to defend (with the reasonable cooperation of GWM) or settle any such Third Party Claim, except to the extent that PharmaChem has a right of indemnification or defense with respect to any such Loss or Third Party Claim pursuant to Section 15.

17.

RECALLS AND ADVERSE EVENTS: If there is a recall or there are adverse events for Product that may be related to the processing, manufacture or testing of Product by PharmaChem, PharmaChem will provide at GWM’s cost any assistance reasonably requested by GWM in connection with such recall or adverse events. If Product is recalled due to a breach of the warranty in Section 13, PharmaChem shall be responsible for out-of-pocket expenses reasonably incurred in connection with such recall or seizure including loss of Finished Product, notification, transportation, destruction expenses and replacement costs, [ * ].

18.

NO IMPLIED LICENSES: No right, express or implied, is granted by this Agreement to either Party to use in any manner the name of the other or any other trade name or trademark or other intellectual property rights of the other in connection with the performance of the work covered by this Agreement.

19.

INDEPENDENT CONTRACTORS: Each Party hereto will act as an independent contractor and nothing in this Agreement shall be construed as to give either Party the authority to act for, bind, or commit the other Party in any way whatsoever.

20.

FORCE MAJEURE: Neither Party shall be liable for failure to perform or for delay in performing any of its obligations under this Agreement, if such failure or delay is caused by

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lack of supply of materials or services through no fault of such Party, an act of God, riot, fire, explosion, flood, hostilities of war, executive legislation or administrative order, or other conditions reasonably beyond the control of such Party, provided that the Party experiencing the delay promptly notifies the other Party of the delay and uses and continues to use best efforts to overcome such cause; and provided further, that if such cause continues for a period of [ * ] and is not overcome by the Party whose performance is affected, the Party not subject to the force majeure may [ * ] from the date of expiration of such period, except [ * ]. Specifically excluded from causes covered by the preceding sentence is any interference, caused by [ * ] or [ * ], of the ability of PharmaChem to perform any of its obligations. PharmaChem will inform GWM of such interference, its extent and duration, without delay. Any interference with PharmaChem’s performance its obligations for more than [ * ] caused by [ * ] or [ * ], shall constitute a shortfall, as per Sections 3(e) and 3(f) of this Agreement.

21.

NONASSIGNABILITY: Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other Party, except that GWM may make such an assignment or transfer without PharmaChem’s consent to GWM’s Affiliates or to a successor to substantially all of the business of GWM relating to the Product, whether in a merger, sale of stock, sale of assets, exclusive license, or other similar transaction, provided that any such assignee or transferee (which is not an Affiliate) will have to accept in writing this Agreement and all the obligations of GWM set forth herein, including, without limitation, Section 3 of this Agreement. GWM will use commercially reasonable efforts to notify PharmaChem at least [ * ] in advance of any such assignment or transfer, or, if not practicable, as soon as reasonably practicable. Any assignment or transfer or attempted assignment or transfer by either Party in violation of the terms of this Section 21 shall be null and void and of no legal effect. In the case of any permitted assignment or transfer of or under this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the successors, executors, heirs, representatives, administrators, and assigns of the Parties hereto.

22.

GOVERNING LAW: This Agreement is made in accordance with and shall be governed by and construed, interpreted, enforced, and applied under the laws of [ * ], excluding its choice of law rules and excluding the United Nations’ Convention on Contracts for the Sale of Goods. Should any part of this Agreement be in conflict with any applicable law, all other provisions of this order shall remain in force and the Parties hereto will mutually and in good faith modify the invalid or unenforceable provisions so as to maintain essentially the spirit hereof and the original will of the Parties.

23.

SEVERABILITY: If any term of this Agreement is held to be invalid or unenforceable under any statute, regulation, ordinance, executive order or other rule of law, such term shall be deemed modified or deleted, but only to the extent necessary to comply with such statute, regulation, ordinance, order or rule, and the valid or enforceable portion thereof and the remaining terms of this Agreement will remain in full force and effect, unless the invalid or unenforceable provisions are of such essential importance to this Agreement that it is reasonably assumed that the Parties would not have entered into this Agreement without the invalid terms.

24.

WAREHOUSING: After ownership of the Product has transferred to GWM and upon agreement by both Parties, PharmaChem will hold supplies of the Product at the Facility [ * ],

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until further shipping instructions are available from GWM. Storage of the Product shall be in accordance with Legal Requirements. [ * ] shall bear the cost of any insurance against loss of the Product while it is maintained at the Facility. GWM will make all appropriate efforts to move the Product from the Facility in a reasonable period of time.

25.

NOTICES: All notices under this Agreement shall be in writing and shall be delivered personally, sent for next day delivery by internationally recognized courier service or transmitted by facsimile (transmission confirmed), with confirmation by next day delivery by

an internationally recognized courier service, to the following addresses and facsimiles of the respective Parties or such other address or facsimile as is notified pursuant to this Section 25:


If to GWM: Gilead World Markets, Ltd. Queensgate House South Church Street PO Box 1234GT Grand Cayman Attention: Gregg H. Alton, Director Facsimile: [ * ]		With a copy to: Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 USA Attention: Associate Director, Chemical Manufacturing Facsimile: [ * ]

If to PharmaChem: PharmaChem Technologies (Grand Bahama) Limited [ * ] Freeport, Grand Bahama, Commonwealth of The Bahamas Attention: Managing Director Facsimile: [ * ]		With a copy to: [ * ]

26.

CONFIDENTIALITY: “Confidential Information” means all proprietary or confidential information, data, know-how, results, trade secrets, techniques, inventions, ideas, process, formulas, drawings, or diagrams disclosed by one Party to the other Party in the course of negotiating or performing under this Agreement or any purchase order governed thereby, whether or not marked or identified as confidential or proprietary, and other confidential information disclosed under the Confidential Disclosure Agreement[ * ] between Gilead Sciences, Inc. and a PharmaChem Affiliate, except for any such information that (i) is now, or hereafter becomes, through no act or failure to act on the part of the receiving Party, its employees or contractors in breach hereof, generally known or available; (ii) is known by the receiving Party at the time of receiving such information, as evidenced by its contemporaneous written records; (iii) is hereafter furnished to the receiving Party by a Third Party, as a matter of right, without breach of any confidentiality obligation, and without restriction on disclosure; or (iv) is independently developed by the receiving Party without reference to such Confidential Information, as shown by independent, contemporaneous, written records. During the term this Agreement is in effect [ * ], each Party will maintain all Confidential Information of the other Party received by it under this Agreement in confidence and, without prior written permission of the other Party, shall not disclose any such

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Confidential Information of the other Party to any third party or use any such Confidential Information for any purposes or to an extent other than as necessary or permitted for performance under this Agreement. The Parties shall disclose Confidential Information of the other Party only to its employees, agents, consultants, Affiliates, or sublicensees who need such information for performance under this Agreement and who are subject to binding obligations to hold in confidence and not make use of such Confidential Information of the other Party for any purpose other than those permitted by this Agreement, that are at least as restrictive as those of this Section 26. Each Party will protect the confidentiality of the other Party’s Confidential Information using the same standard of care

as it uses to protect its own confidential information of a similar nature, but no less than reasonable care. Each Party will notify the other Party promptly upon discovery of any unauthorized use or disclosure of the Confidential Information of the other Party.

Notwithstanding any other provision of this Agreement, each Party (or its Affiliate, if applicable) may disclose Confidential Information if such disclosure: (i) is in response to a valid order of a court or other governmental body of the United States or a foreign country, or any political subdivision thereof; provided, however, that the receiving Party shall first have given notice to the other Party hereto and shall have made a reasonable effort to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the order was issued; (ii) is otherwise required by governmental law, rule or regulation, including without limitation rules or regulations of the U.S. Securities and Exchange Commission, or by rules of the National Association of Securities Dealers; provided, however, that the receiving Party shall first (A) have given notice to the other Party hereto in order to allow such Party the opportunity to seek confidential treatment of the Confidential Information, and (B) reasonably cooperated in such efforts; or (iii) is otherwise necessary to prosecute or defend litigation, comply with applicable governmental regulations (including in making regulatory filings for Finished Product), make governmental patent or regulatory filings, or otherwise enforce obligations under this Agreement, but only to the extent that any such disclosure is necessary for such enforcement.

Upon expiration or termination of this Agreement, each Party will, at the other Party’s election, promptly return or destroy all Confidential Information received by it from the other Party and shall certify in writing to such other Party the completion thereof.

27.

ENTIRE AGREEMENT; AMENDMENTS: This Agreement together with the attachments, exhibits, or supplements specifically referenced in this Agreement constitutes the entire, final, complete, and exclusive agreement between the Parties and supersedes all previous agreements or representations, written or oral, with respect to the subject matter of this Agreement. This Agreement may not be modified, amended, waived, discharged, or terminated orally, but only by an instrument in writing signed by a duly authorized representative of each Party. S UBJECT TO SUCH AMENDMENT , THE TERMS AND CONDITIONS SET FORTH IN THIS A GREEMENT CONSTITUTE THE FINAL , COMPLETE , EXCLUSIVE AND ENTIRE AGREEMENT BETWEEN GWM AND P HARMA C HEM WITH RESPECT TO THE SUBJECT MATTER HEREOF . A NY TERM OR CONDITION IN ANY SEPARATE AGREEMENT OR CONFIRMATION , PURCHASE ORDER , OR OTHER DOCUMENT FURNISHED BY GWM OR P HARMA C HEM THAT IS IN ANY WAY INCONSISTENT WITH THE TERMS SET FORTH IN THIS A GREEMENT IS HEREBY EXPRESSLY REJECTED .

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28.

INSURANCE: Each Party will maintain at is own cost insurance policies with respect to its activities and obligations under this Agreement that are commercially reasonable as to terms, coverage and coverage limits in view of the scope of such Party’s activities and obligations under this Agreement. At the other Party’s request, each Party will supply certificates of insurance evidencing such coverages.

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29.

SURVIVAL: The provisions of Sections 8 and 12 through 29 shall survive the termination or expiration of this Agreement.

The Parties have entered into this Agreement as of the Effective Date by their duly authorized representatives.


		G ILEAD W ORLD M ARKETS , L TD .

		By:		/s/ Mark Perry

		Name:		Mark Perry

		Date:		July 17, 2003

		Title:		Executive Vice President, Operations

		P HARMA C HEM T ECHNOLOGIES (G RAND B AHAMA ), L TD .

		By:		/s/ Pedro Stefanutti

		Name:		Pedro Stefanutti

		Date:		July 26, 2003

		Title:		Director

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Exhibit A

Product Minimum Purchase Quantities

The table below sets forth GWM’s minimum Product purchase obligations for the stated calendar years for Product for commercial use, provided that GWM, by written notice to PharmaChem on or before [ * ] shall have the right to [ * ] obligations to the levels stated in the table in Exhibit B:


Calendar Year		Minimum GWM Purchase
2004		[ * ]
2005		[ * ]
2006		[ * ]
2007		[ * ]
2008		[ * ]

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Exhibit B:

Product Price

The price of Product delivered in accordance with the Agreement will be [ * ].

If GWM provides written notice to PharmaChem on or before [ * ] for the calendar years listed in the table below are [ * ] then all Product for which purchase orders are submitted under the Agreement on or after the date of such written request will be [ * ]:


Calendar Year		Minimum GWM Purchase
2006		[ * ]
2007		[ * ]
2008		[ * ]

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E XHIBIT 10.2

ROYALTY SALE AGREEMENT

This Royalty Sale Agreement (this “ Agreement ”) is made and entered into as of July 18, 2005 by and among Gilead Sciences, Inc., a Delaware corporation (“ Gilead ”), Emory University, a not-for-profit corporation organized under the laws of the State of Georgia (“ Emory ”), and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, a unit trust organized under the laws of the Republic of Ireland (“ Royalty Pharma ”) (Gilead, Emory and Royalty Pharma are each a “ Party ” and collectively the ” Parties ”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain License Agreement dated as of April 17, 1996, by and between Emory and Gilead, as amended by the First Amendment to License Agreement dated as of May 6, 1999 (the “ First Amendment ”), the Second Amendment to License Agreement dated as of July 10, 2000, the Third Amendment to License Agreement dated as of May 31, 2002, the Fourth Amendment to License Agreement dated as of April 19, 2004 and the Fifth Amendment to License Agreement dated as of July 18, 2005 (the “ Existing License Agreement ”), Emory licensed to Gilead certain rights relating to FTC and the Licensed Products (each as defined therein);

WHEREAS, Gilead and Royalty Pharma together desire to purchase from Emory, and Emory desires to sell to them, all of the royalties payable by Gilead under the Existing License Agreement upon sale of Licensed Products for an aggregate purchase price of $525,000,000;

WHEREAS, at Closing, Emory and Gilead will amend and restate the Existing License Agreement, a copy of which Amended and Restated License Agreement is attached hereto as Exhibit A (the ” Amended and Restated License Agreement ”), whereby in combination with this Agreement Gilead will buy from Emory, and Emory will sell to Gilead, all of Emory’s right, title and interest in and to 65% of the original royalties payable under the Existing License Agreement (the ” Gilead Purchased Royalties ”), which purchase and sale will be effected by this Agreement and by reducing the royalties payable by Gilead to Emory upon sale of Licensed Products in the Amended and Restated License Agreement;

WHEREAS, simultaneously with the execution hereof, Emory and Royalty Pharma are entering into that certain Agreement for the Conveyance of Royalties, of even date herewith a copy of which has been delivered to each of Emory and Royalty Pharma (the “ Conveyance Agreement ”), whereby in combination with the Amended and Restated License Agreement, Royalty Pharma will buy from Emory, and Emory will sell to Royalty Pharma, all of Emory’s right, title and interest in and to the remaining 35% of the original royalties payable under the Existing License Agreement, which royalties are identified as the “ Receivables ” under the

Conveyance Agreement and which purchase and sale will be effected by the Conveyance Agreement and by adding Royalty Pharma as a party to the Amended and Restated License Agreement to provide for, among other things, the payment by Gilead to Royalty Pharma of the Receivables; and

WHEREAS, in consideration for the foregoing amendment and restatement of the Existing License Agreement and the purchases and sales pursuant to this Agreement and the Conveyance Agreement, Gilead will pay to Emory $341,250,000 as provided in this Agreement (the “ Gilead Purchase Price ”), and Royalty Pharma will pay to Emory $183,750,000 as provided in the Conveyance Agreement (the “ Royalty Pharma Purchase Price ”).

NOW, THEREFORE, in consideration of the promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

ARTICLE I

P URCHASE AND S ALE OF R OYALTIES BY G ILEAD

Subject to the terms and conditions of this Agreement and on the basis of the representations, warranties, covenants and agreements contained herein, at the Closing (as defined below), Emory shall sell, transfer, assign, convey and deliver to Gilead, and Gilead shall purchase and acquire from Emory, upon payment of the Gilead Purchase Price, the Gilead Purchased Royalties. For avoidance of doubt, the purchase and sale of the Receivables by Royalty Pharma by payment of the Royalty Pharma Purchase Price shall be as set forth herein and in the Conveyance Agreement.

ARTICLE II

T HE C LOSING

The closing of the transactions contemplated by this Agreement (the ” Closing ”) shall be held at the offices of Covington & Burling, 1330 Avenue of the Americas, New York, New York, 10019 at 10:00 a.m. on July 21, 2005, or at such other time or place as the Parties may mutually agree. The “ Closing Date ” shall be the date on which the Closing takes place. The Closing shall be subject to satisfaction of the conditions set forth below:

Section 2.1 Conditions to the Obligations of each Party . The obligation of each Party to consummate the Closing is, at each Party’s option, subject to the satisfaction, on or before the Closing Date, of the following conditions:

(a) Amended and Restated License Agreement . Each of the Parties shall execute and deliver the Amended and Restated License Agreement in the form attached hereto as Exhibit A .

(b) Conveyance Agreement . Each of Emory and Royalty Pharma shall have executed and delivered the Conveyance Agreement.

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(c) Secretary’s Certificates . Immediately prior to the Closing, each other Party shall deliver to the Parties a certificate of the Secretary or an Assistant Secretary of the certifying Party, dated the Closing Date, certifying as to (i) the incumbency of the officers of the certifying Party executing this Agreement and the Amended and Restated License Agreement and (ii) the attached copies of the certifying Party’s certificate of incorporation, bylaws and the resolutions adopted by the certifying Party’s Board of Directors, Board of Trustees or applicable corporate body authorizing the execution and delivery by such certifying Party of this Agreement and the Amended and Restated License Agreement and the consummation by such certifying Party of the transactions contemplated hereby and thereby.

Section 2.2 Closing . At the Closing:

(a) Payments by Gilead.

(i) Gilead shall deliver, and/or cause one or more of its Affiliates to deliver, to Emory payment, by wire transfer of immediately available funds to the account set forth on Exhibit B , the Gilead Purchase Price;

(ii) Gilead shall deliver, and/or cause one or more of its Affiliates to deliver, to Emory payment by wire transfer of immediately available funds to the account set forth on Exhibit B , $15,000,000 pursuant to a letter agreement between Gilead and Emory dated July 18, 2005; and

(iii) All payments by any Affiliate of Gilead to Emory pursuant to this Section 2.2(a) shall be made from a jurisdiction for which no withholding tax is applicable to such payment, taking into account all applicable tax laws and regulations.

(b) Payment of the Royalty Pharma Purchase Price . Royalty Pharma shall deliver to Emory payment, by wire transfer of immediately available funds to the account set forth on Exhibit B , of the Royalty Pharma Purchase Price pursuant to the terms of this Section 2.2(b) and Section 2.2 of the Conveyance Agreement.

Section 2.3 Conditions to the Obligations of Royalty Pharma . In addition to the conditions set forth in Section 2.1, the obligation of Royalty Pharma to consummate the Closing is subject to (i) Royalty Pharma’s receipt, on or before the Closing Date, of a certificate of an authorized officer of each of Gilead and Emory, respectively, to the effect that all representations and warranties of Gilead and Emory, respectively, contained in Article III shall be true and correct in all material respects as of the Closing Date and (ii) satisfaction of the conditions to Closing contained in Section 2.3(b) and (e) of the Conveyance Agreement.

Section 2.4 Conditions to Obligations of Emory . In addition to the conditions set forth in Section 2.1, the obligation of Emory to consummate the Closing is subject to (i) Emory’s receipt, on the Closing Date, of a certificate of an authorized officer of each of Gilead and Royalty Pharma, respectively, to the effect that all representations and warranties of Gilead and Royalty Pharma, respectively, contained in Article III shall be true and correct in all material respects as of the Closing Date and (ii) satisfaction of the conditions to Closing set forth Section 2.4(b) of the Conveyance Agreement.

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Section 2.5 Conditions to Obligations of Gilead . In addition to the conditions set forth in Section 2.1, the obligation of Gilead to consummate the Closing is subject to the receipt by Gilead on or before the Closing Date of a certificate of an authorized officer of each of Royalty Pharma and Emory, respectively, to the effect that all representations and warranties of Royalty Pharma and Emory, respectively, contained in Article III shall be true and correct in all material respects of the Closing Date.

ARTICLE III

R EPRESENTATIONS , W ARRANTIES AND C OVENANTS

Section 3.1 Gilead Representations and Warranties . To Gilead’s Knowledge, except as disclosed in a letter from Gilead to Royalty Pharma dated as of the date hereof (a copy of which is annexed hereto as Annex A), Gilead represents, warrants and covenants to Royalty Pharma as of the Closing Date as follows:

(a) There have been no written agreements, amendments or modifications between Gilead and Emory with respect to the subject matter of the Existing License Agreement that are not reflected in the Existing License Agreement.

(b) All payments required to be made by Gilead under the Existing License Agreement have been made in full. Gilead has not deducted or withheld any amount from any payment of amounts made by Gilead to Emory under the Existing License Agreement, including any deduction or withholding for or on account of any tax, levy, impost, duty, assessment or fiscal or governmental charge, that Emory has disputed as having been wrongfully deducted or withheld. Gilead has paid to Emory the full amounts specified as payable by Gilead to Emory in the quarterly reports required to be furnished by Gilead to Emory pursuant to Section 4.1 of the Existing License Agreement.

(c) Gilead has not granted any written waiver under the Existing License Agreement and has not, in writing, released Emory, in whole or in part, from any of its obligations under the Existing License Agreement, nor has Emory or Gilead granted any waiver under the Existing License Agreement, after the date Gilead acquired Triangle Pharmaceuticals, Inc., that would reasonably be expected to affect any payments or activities under the Amended and Restated License Agreement after the date hereof.

(d) Gilead has not (i) given Emory any written notice of termination pursuant to Sections 11.5 and 11.6 of the Existing License Agreement, or (ii) received from Emory any written notice of termination pursuant to Sections 11.2 and 11.3 of the Existing License Agreement.

(e) Gilead has not made any adjustments, modifications, offsets, credits, reductions, deductions or escrows to the payments which are required to be made by Gilead under the Existing License Agreement. No such adjustments, modifications, offsets, credits, reductions, deductions or escrows have been disputed by Emory.

(f) Gilead has not received written notice that Emory has exercised any remedy specified in Section 6.2(b) of the Existing License Agreement.

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(g) Emory has not notified Gilead of any claim of indemnification pursuant to Section 9.5(a) or 9.7 of the Existing License Agreement. Gilead has not sent to Emory any written notice pursuant to Section 9.7(a) of the Existing License Agreement of any claim for which indemnification may be provided pursuant to Section 9.5(a) of the Existing License Agreement. Gilead has not sent to Emory any written notice pursuant to Section 9.7(b) of the Existing License Agreement of any claim for indemnification by Emory pursuant to Section 9.5(b) of the Existing License Agreement.

(h) Gilead has not terminated its obligations pursuant to Section 7.1 of the Existing License Agreement. Gilead has not failed to timely pursue any of its Patent Prosecution Activities (as such term is defined in the Existing License Agreement).

The term “Gilead’s Knowledge” shall mean the actual knowledge of [ * ].

Section 3.2 Additional Gilead Representations and Warranties . Gilead represents and warrants that:

(a) This Agreement is and the Amended and Restated License Agreement, when entered into by the Parties, will be the valid and binding obligation of Gilead, enforceable against Gilead in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and other similar laws of general applicability relating to or affecting creditors’ rights or by general principles of equity (whether considered in a proceeding in equity or at law).

(b) Each of this Agreement and the Amended and Restated License Agreement has been duly authorized by all necessary action on the part of Gilead. This Agreement has been validly executed and delivered by Gilead.

(c) The Existing License Agreement has not been satisfied, amended, modified, discharged, canceled, subordinated or rescinded, in whole or in part (other than by (i) the performance of the obligations thereunder in accordance with its terms or (ii) the Amended and Restated License Agreement that shall become effective upon the Closing).

(d) Other than Lazard Ltd. (whose fees and expenses shall be paid by Gilead), there is no investment banker, broker, finder, financial advisor or other intermediary who has been retained by or is authorized to act on behalf of Gilead who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement and the Amended and Restated License Agreement.

Section 3.3 Emory Representations and Warranties . Emory represents and warrants that:

(a) This Agreement is and the Amended and Restated License Agreement, when entered into by the Parties, will be the valid and binding obligation of Emory, enforceable against Emory in accordance with its terms, except as may be limited by applicable bankruptcy,

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insolvency, moratorium, reorganization and other similar laws of general applicability relating to or affecting creditors’ rights or by general principles of equity (whether considered in a proceeding in equity or at law).

(b) Each of this Agreement and the Amended and Restated License Agreement has been duly authorized by all necessary action on the part of Emory. This Agreement has been validly executed and delivered by Emory.

(d) There is no investment banker, broker, finder, financial advisor or other intermediary who has been retained by or is authorized to act on behalf of Emory who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement, other than Citigroup Global Markets Inc., whose fees and expenses shall be paid by Emory.

Section 3.4 Royalty Pharma Representations and Warranties . Royalty Pharma represents and warrants that:

(a) This Agreement and the Amended and Restated License Agreement, when entered into by the Parties, will be the valid and binding obligation of Royalty Pharma, enforceable against Royalty Pharma in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and other similar laws of general applicability relating to or affecting creditors’ rights or by general principles of equity (whether considered in a proceeding in equity or at law).

(b) Each of this Agreement and the Amended and Restated License Agreement is duly authorized by all necessary action on the part of Royalty Pharma. This Agreement has been validly executed and delivered by Royalty Pharma.

(c) There is no investment banker, broker, finder, financial advisor or other intermediary who has been retained by or is authorized to act on behalf of Royalty Pharma who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

Section 3.5 License Agreement . Each of the parties hereto agrees that, effective immediately upon the occurrence of the Closing, the Existing License Agreement shall be amended and restated in the form attached hereto as Exhibit A and the Amended and Restated License Agreement shall be effective and in full force and effect and shall constitute the valid and binding obligation of each such party. Emory and Gilead shall be released from all of their respective duties, obligations, covenants and other liabilities to one another under the Existing License Agreement, whether presently known or unknown, none of which shall survive amending and restating except as set forth in the Amended and Restated License Agreement. Emory and Gilead further acknowledge and agree that Royalty Pharma is not assuming any of

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Emory’s or Gilead’s duties, obligations or covenants under the Existing License Agreement, except as expressly set forth in the Amended and Restated License Agreement.

Section 3.6 Excluded Obligations . Gilead agrees that it (and not Royalty Pharma) is and shall remain liable for any payment of any reimbursements, remuneration, fees, indemnification, damages, awards, settlement payments, milestone payments or any other payments, compensation or consideration of any kind pursuant to Sections 2.7, 3.1 through 3.3, 6.2, 7.1, 8.2, 9.5(a) and 9.6 of the Existing License Agreement and Sections 2(h) and 2(n) of the First Amendment (the “ Excluded Obligations ”) outstanding under the Existing License Agreement and that it shall pay directly to Emory or GSK, as applicable, such Excluded Obligations.

ARTICLE IV

C ONFIDENTIALITY

Section 4.1 Termination of Confidentiality Agreements . Effective upon the Closing, the Confidentiality Agreement dated May 4, 2005, between RP Management, LLC and Citigroup Global Markets Inc. on behalf of Emory and the Confidentiality Agreement dated May 5, 2005, between Gilead and Citigroup Global Markets Inc. on behalf of Emory shall both terminate and be of no further force or effect.

Section 4.2 Public Announcements . Except for a press release substantially in the form attached hereto as Exhibit C , none of the Parties shall, and each Party shall cause its affiliates not to, issue a press release or other public announcement or otherwise make any public disclosure with respect to this Agreement, the Amended and Restated License Agreement or the Conveyance Agreement or the subject matter hereof or thereof without the prior consent of the other Parties (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law or regulation (in which case the Party required to make the release or statement shall allow the other Parties reasonable time to comment on such release or statement in advance of such issuance).

ARTICLE V

T ERMINATION

Section 5.1 Grounds for Termination . This Agreement may be terminated at any time prior to the Closing:

(a) by mutual written agreement of Gilead, Emory and Royalty Pharma; or

(b) by notice in writing from Emory to the other Parties at or after 5:00 pm (New York time) on July 22, 2005 unless, by that time, Royalty Pharma has deposited or caused to be deposited by wire transfer of immediately available funds into the account of Emory set forth on Exhibit B the sum of [ * ] (the “Deposit”), in which case this Agreement may be terminated by notice in writing from Emory to the other Parties at or after 5:00 pm (New York time) on July 29, 2005, unless, in the case of either time, the Closing shall not have been consummated due to non-satisfaction on the part of Emory of a condition set forth in this Agreement that has not been waived; or

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(c) after 5:00 p.m. (New York City time) on July 29, 2005, by any Party by notice in writing to the other Parties, if the Closing shall not have been consummated prior to 5:00 p.m. (New York City time) on July 29, 2005; provided that no Party shall have the right to terminate this Agreement pursuant to this Section 5.1(c) if such Party has willfully failed to fulfill a condition to the consummation of Closing relating to such Party.

Section 5.2 Effect of Termination . If this Agreement is terminated as permitted by Section 5.1, such termination shall be without liability of any Party (or any Affiliate of such Party) to any other Party to this Agreement; provided , that if such termination shall result from the willful failure of a Party to fulfill a condition to the consummation of the Closing that relates to such Party in this Agreement or the Conveyance Agreement, such Party shall be fully liable for any and all loss, liability, damage or expense incurred or suffered by the other Parties as a result of such failure or breach.

Section 5.3 Deposit . Once the Deposit is made by Royalty Pharma, all rights to such Deposit (and any interest thereon) shall belong to Emory and Emory shall have no obligation to return the Deposit (or any portion thereof) to Royalty Pharma or any other Party; provided , however , that [ * ] of such Deposit (i) may be applied in the circumstances and the manner described in Section 1.3 of the Conveyance Agreement and (ii) shall be returned by Emory to Royalty Pharma, if, but only if, the Closing shall not have been consummated by 5:00 p.m. (New York City time) on July 29, 2005 as a result of the willful failure by Emory to fulfill a condition to Closing that relates to Emory.

ARTICLE VI

M ISCELLANEOUS

Section 6.1 Certain Interpretations . Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement:

(a) “include”, “includes” and “including” are not limiting;

(b) “hereof”, “hereto”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement;

(d) references to an “Article”, “Section” or “Exhibit” refer to an Article or Section of, or an Exhibit or Schedule to, this Agreement;

(e) references to “$” or otherwise to dollar amounts refer to the lawful currency of the United States;

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(f) references to a law include any amendment or modification to such law and any rules and regulations issued thereunder, whether such amendment or modification is made, or issuance of such rules and regulations occurs, before or after the date of this Agreement;

Section 6.2 No Personal Liability . It is expressly understood and agreed by Gilead, Royalty Pharma and Emory that:

(a) each of the representations, warranties, covenants and agreements made in this Agreement, the Conveyance Agreement and the Amended and Restated License Agreement on the part of Emory is made by Emory and is not intended to be a personal representation, warranty, covenant or agreement of any other Person, including those Persons named in the definition of “Knowledge of Assignor” (in the Conveyance Agreement) and any other Representative (as such term is defined in the Conveyance Agreement) of Emory or Emory’s Affiliates (as such term is defined in the Conveyance Agreement);

(b) other than Emory, no Person, including those Persons named in the definition of “Knowledge of Assignor” (in the Conveyance Agreement) and any other Representative of Emory or Emory’s Affiliates, shall have any liability whatsoever for breach of any representation, warranty, covenant or agreement herein made on the part of Emory or in respect of any claim or matter arising out of, relating to, or in connection with, this Agreement, the Conveyance Agreement and the Amended and Restated License Agreement and the transactions contemplated hereby and thereby;

(c) each of the representations, warranties, covenants and agreements herein made on the part of Royalty Pharma is made by Royalty Pharma and is not intended to be a personal representation, warranty, covenant or agreement of any other Person, including any Representative of Royalty Pharma or Royalty Pharma’s Affiliates;

(d) other than Royalty Pharma, no Person, including any other Representative of Royalty Pharma or Royalty Pharma’s Affiliates, shall have any liability whatsoever for breach of any representation, warranty, covenant or agreement herein made on the part of Royalty Pharma or in respect of any claim or matter arising out of, relating to, or in connection with, this Agreement and the transactions contemplated hereby;

(e) each of the representations, warranties, covenants and agreements made in this Agreement and the Amended and Restated License Agreement on the part of Gilead is made by Gilead and is not intended to be a personal representation, warranty, covenant or agreement of any other Person, including those Persons named in the definition of “Gilead’s Knowledge” and any other Representative of Gilead or Gilead’s Affiliates; and

(f) other than Gilead, no Person, including those Persons named in the definition of “Gilead’s Knowledge” and any other Representative of Gilead or Gilead’s Affiliates, shall have any liability whatsoever for breach of any representation, warranty, covenant or agreement herein made on the part of Gilead or in respect of any claim or matter arising out of, relating to, or in connection with, this Agreement and the Amended and Restated License Agreement and the transactions contemplated hereby and thereby.

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Section 6.3 Headings . The descriptive headings of the several Articles and Sections of this Agreement and the Exhibits are for convenience only, do not constitute a part of this Agreement and shall not control or affect, in any way, the meaning or interpretation of this Agreement.

Section 6.4 Notices . All notices and other communications under this Agreement shall be in writing and shall be by facsimile, courier services or personal delivery to the following addresses, or to such other addresses as shall be designated from time to time by a Party in accordance with this Section 6.4:


If to:	Address:	With a copy to:
Emory	Emory University Administrative Building, Suite 409 1380 Oxford Road Atlanta, GA 30322 Facsimile: (404) 727-5592 Attention: Executive Vice President for Finance and Administration	Office of the General Counsel Emory University Administrative Building, Suite 409 1380 Oxford Road Atlanta, GA 30322 Facsimile: (404) 727-6098 Attention: General Counsel

		And

		Office of Technology Transfer Emory University 1784 North Decatur Road, Suite 130 Atlanta, GA 30322 Facsimile: (404) 727-1271 Attention: Director

Gilead	Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 Facsimile: (650) 522-5488 Attention: Executive Vice President and Chief Financial Officer	Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 Facsimile: (650) 522-5537 Attention: Executive Vice President and General Counsel

		And

		Arnold & Porter LLP 1600 Tysons Boulevard Suite 900 McLean, VA 22102 Attention: Steve Parker, Esq. Telecopy: (703) 720-7006

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[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .


If to:	Address:	With a copy to:
Royalty Pharma	Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma Block D Iveagh Court Harcourt Road Dublin 2, Ireland Attention: William McManus Telecopy: (353) 14 75 71 50	RP Management, LLC 110 East 59th Street Suite 3300 New York, NY 10022 Attention: Pablo Legorreta Telecopy: (212) 883-2260

		And

		Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 Attention: F. George Davitt, Esq. Telecopy: (617) 523-1231

		And

		Sidley Austin Brown & Wood LLP 787 Seventh Avenue New York, NY 10019 Attention: Max Von Hollweg, Esq. Telecopy: (212) 839-5599

All notices and communications under this Agreement shall be deemed to have been duly given (a) when delivered by hand, if personally delivered, (b) when sent, if sent by facsimile, with an acknowledgement of sending being produced by the sending facsimile machine or (c) one Business Day following sending within the United States by overnight delivery via commercial one-day overnight courier service.

Section 6.5 Expenses . Except as otherwise provided in Article V of the Conveyance Agreement, all fees, costs and expenses (including any legal, accounting and banking fees) incurred in connection with this Agreement and to consummate the transactions contemplated hereby shall be paid by the Party incurring such fees, costs and expenses. This Section 6.5 shall survive any termination of this Agreement.

Section 6.6 Assignment . Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned, in whole or in part, by operation of law, change of control, or otherwise by any Party without the prior written consent of the other Parties, and any such purported assignment or transfer without such consent shall be void and of no effect; provided , that nothing herein shall prohibit or restrict Royalty Pharma from assigning any of its rights and obligations hereunder to any Affiliate of Royalty Pharma or to any collateral

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[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

trustee under its applicable financing facility. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by, the Parties hereto and their respective permitted successors and assigns.

Section 6.7 Amendment and Waiver .

(a) This Agreement may be amended, modified or supplemented only in a writing signed by each of the Parties hereto. Any provision of this Agreement may be waived only in a writing, which writing may be signed only by the Party granting such waiver.

(b) No failure or delay on the part of any Party in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. No course of dealing between the Parties shall be effective to amend, modify, supplement or waive any provision of this Agreement.

Section 6.8 Entire Agreement . This Agreement, the exhibits annexed hereto, the Amended and Restated License Agreement, the Conveyance Agreement and a letter agreement between Gilead and Emory of even date herewith constitute the entire understanding between the Parties with respect to the subject matter hereof, and supersede all other understandings and negotiations with respect thereto.

Section 6.9 No Third Party Beneficiaries . This Agreement is for the sole benefit of Emory, Gilead and Royalty Pharma and their permitted successors and assigns and nothing herein expressed or implied shall give or be construed to give to any person or entity, other than the Parties and such successors and assigns, any legal or equitable rights hereunder.

Section 6.10 Governing Law . This Agreement shall be governed by, and construed in accordance with, the substantive law of the State of Georgia, without regard to the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

Section 6.11 Arbitration . Except for any action prior to the Closing for specific performance, injunctive or other equitable relief, any controversy, claim or dispute arising out of, relating to, or in connection with, this Agreement or the transactions contemplated hereby shall be resolved through arbitration conducted under the auspices of the American Arbitration Association pursuant to that organization’s rules for commercial arbitration. Any such arbitration proceedings shall be held in Atlanta, Georgia.

Section 6.12 Severability . If any term or provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any situation in any jurisdiction, then, to the extent that the economic and legal substance of the transactions contemplated hereby is not affected in a manner that is materially adverse to any Party, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect and the enforceability and validity of the offending term of provision shall not be affected in any other situation or jurisdiction.

Section 6.13 Counterparts . This Agreement may be executed in any number of

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counterparts and by the Parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Copies of executed counterparts transmitted by telecopy, facsimile or other electronic transmission service shall be considered original executed counterparts, provided receipt of such counterparts is confirmed.

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[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

I N WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered by their respective representatives thereunto duly authorized as of the date first above written.


GILEAD SCIENCES, INC.

By:		/s/ John C. Martin
Name:		John C. Martin
Title:		President and CEO

EMORY UNIVERSITY

By:		/s/ Michael J. Mandl
Name:		Michael J. Mandl
Title:		Executive Vice President for Finance and Administration

INVESTORS TRUST & CUSTODIAL SERVICES (IRELAND) LIMITED, SOLELY IN ITS CAPACITY AS TRUSTEE OF ROYALTY PHARMA

By:		/s/ Paul M. McGuiggan
Name:		Paul M. McGuiggan
Title:		Director

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

E XHIBIT A

T O THE R OYALTY S ALE A GREEMENT

A MENDED AND R ESTATED L ICENSE A GREEMENT

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

AMENDED AND RESTATED

LICENSE AGREEMENT

among

EMORY UNIVERSITY

GILEAD SCIENCES, INC.

and

INVESTORS TRUST & CUSTODIAL SERVICES (IRELAND) LIMITED,

solely in its capacity as Trustee of Royalty Pharma

THIS AMENDED AND RESTATED LICENSE AGREEMENT is made and entered into as of this 21 ^st day of July, 2005 (the “Effective Date”), by and among EMORY UNIVERSITY, a Georgia nonprofit corporation with offices at 1380 South Oxford Road, N.E., Atlanta, Georgia 30322 (hereinafter referred to as “LICENSOR”), GILEAD SCIENCES, INC., a for-profit Delaware corporation with principal offices located at 333 Lakeside Drive, Foster City, CA 94404 (hereinafter referred to as “COMPANY”), and INVESTORS TRUST & CUSTODIAL SERVICES (IRELAND) LIMITED, solely in its capacity as Trustee of Royalty Pharma, a unit trust organized under the laws of the Republic of Ireland, with principal offices located at Block D, Iveagh Court, Harcourt Road, Dublin 2, Ireland (hereinafter referred to as “ROYALTY PHARMA”) and amends and restates in its entirety that certain License Agreement, dated April 17, 1996 (“Original Agreement”), between LICENSOR and Triangle Pharmaceuticals, Inc., as amended by the First Amendment to License Agreement, dated May 6, 1999, as further amended by the Second Amendment to License Agreement dated July 10, 2000, as further amended by the Third Amendment to License Agreement dated May 31, 2002, as further amended by the Fourth Amendment to License Agreement dated April 19, 2004 and as further amended by the Fifth Amendment to License Agreement dated July 18, 2005 (the Original Agreement as amended by the First, Second, Third, Fourth and Fifth Amendments is referred to herein as the “Existing Agreement”).

WITNESSETH

WHEREAS, LICENSOR is the assignee of all right, title, and interest in certain inventions developed by employees of LICENSOR and is responsible for the protection and commercial development of such inventions; and

WHEREAS, Woo-Baeg Choi, Dennis C. Liotta and Raymond Schinazi, each a current or former employee of LICENSOR, are named as inventors in the patents and patent applications identified as owned by LICENSOR in Appendix “A” to this Agreement and are hereinafter referred to as the “Inventors”; and

WHEREAS, LICENSOR wanted to have such inventions developed, commercialized, and made available for use by the public and thus entered into the Original Agreement; and

WHEREAS, LICENSOR and COMPANY, entered into the First, Second, Third, Fourth and Fifth Amendments described in the preamble hereto;

WHEREAS, Triangle Pharmaceuticals, Inc., an Affiliate of COMPANY, assigned the Existing Agreement to COMPANY, and COMPANY accepted such assignment, pursuant to Article 12 of the Original Agreement, as of June 30, 2003; and

WHEREAS, ROYALTY PHARMA and COMPANY together desire to purchase from LICENSOR, and LICENSOR desires to sell to them all royalties payable by COMPANY under the Existing Agreement, and the parties hereto are, as of this date, entering into a Royalty Sale Agreement (“Royalty Sale Agreement”) and Agreement for the Conveyance of Royalties (“Conveyance Agreement”) to effect such transaction; and

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

WHEREAS, to facilitate the purchase of the royalties, LICENSOR, COMPANY and ROYALTY PHARMA wish, as contemplated by the Conveyance Agreement and the Royalty Sale Agreement, to enter into this Agreement, which constitutes an amendment and restatement of the Existing Agreement, in order to, among other things, reduce the royalties payable by the COMPANY to LICENSOR upon sale of Licensed Products by 65%; add ROYALTY PHARMA as a party to this AGREEMENT; provide payment by the COMPANY of the remaining 35% of royalties payable directly to ROYALTY PHARMA rather than to LICENSOR in accordance with the terms of this Agreement; incorporate the five amendments to the Original Agreement; and effect certain other amendments as provided herein.

NOW, THEREFORE, for and in consideration of the mutual covenants and the premises herein contained, the parties, intending to be legally bound, hereby agree as follows.

ARTICLE 1.

DEFINITIONS

The following terms as used herein shall have the following meaning:

1.1 “Affiliate” shall mean any corporation or non-corporate business entity which controls, is controlled by, or is under common control with a party to this Agreement. A corporation or non-corporate business entity shall be regarded as in control of another corporation if it owns, or directly or indirectly controls, at least [ * ] of the voting stock of the other corporation, or (a) in the absence of the ownership of at least [ * ] of the voting stock of a corporation or (b) in the case of a non-corporate business entity, or non-profit corporation, if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation or non-corporate business entity, as applicable. For the avoidance of doubt, Affiliates of ROYALTY PHARMA shall include those entities identified in a letter dated July 18, 2005, from ROYALTY PHARMA to COMPANY and LICENSOR delivered on July 18, 2005.

1.2 “Agreement” shall mean this Amended and Restated License Agreement, including all Exhibits and Appendices attached to this Agreement.

1.3 “Dollars” shall mean United States dollars.

1.4 “FDA” shall mean the United States Food and Drug Administration or successor entity.

1.5 “Field of Use” shall mean the prevention and treatment of human immunodeficiency virus (HIV) and hepatitis B virus (HBV).

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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1.6 “Fully Absorbed Costs” shall mean an amount equal to COMPANY’s costs directly allocated to the production of Licensed Products distributed under a Treatment IND or through an expanded access program or the Global Access Program, consisting of: (i) direct labor, including all resources utilized in support of COMPANY’s manufacturing operations; (ii) materials; (iii) a reasonable allocation of overhead, facilities expense (including depreciation over the expected life of the buildings and equipment), and administrative costs directly in support of COMPANY’s manufacturing operations and such Treatment IND distribution program, expanded access program or the Global Access Program, if applicable, calculated by COMPANY in accordance with reasonable cost accounting methods consistent with the way COMPANY allocates such costs to other products; and (iv) third-party costs.

1.7 “Global Access Program” shall mean a program through which COMPANY provides Licensed Products to government agencies, not-for-profit non-governmental organizations, physicians, pharmacies or patients in identified countries at reduced costs. The countries are identified on Appendix C hereto, which Exhibit may be amended from time to time by the Parties.

1.8 “GSK/Shire Agreement” shall mean the Settlement And Exclusive License Agreement between LICENSOR and SmithKline-Beecham Corp. d/b/a GlaxoSmithKline, Glaxo Group Limited, GlaxoSmithKline, Inc., Shire Pharmaceuticals Group PLC and Shire Biochem, Inc. dated May 31, 2002.

1.9 “GW” shall mean GlaxoWellcome plc and its Affiliates including, but not limited to, all corporate entities acquired, directly or indirectly, by GlaxoWellcome plc and its Affiliates as a result of the acquisition of Wellcome plc and its Affiliates.

1.10 “GW Agreements” shall mean the GW License Agreement and the Settlement Agreement.

1.11 “GW Know How” shall mean the data package, regulatory filings and any other know-how, information or technology to which LICENSOR acquires any right, title, license or other interest under the GW Agreements.

1.12 “GW License Agreement” shall mean the Exclusive License Agreement by and among Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome, Inc. (collectively “GW”), LICENSOR and COMPANY, dated as of May 6, 1999, pursuant to which GW has, among other things, granted LICENSOR certain rights under patents and patent applications relating to FTC.

1.13 “GW Patents” shall mean the patents and patent applications under which LICENSOR has an exclusive license or a covenant not to sue under the GW Agreements. For purposes of this definition, patents and patent applications shall include any and all substitutions, extensions, divisionals, continuations, continuations-in-part, renewals, supplementary protection certificates or foreign counterparts of such patent applications and patents which issue thereon, including reexamined and reissued patents.

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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1.14 “IND” shall mean an Investigational New Drug application or its domestic or foreign equivalent.

1.15 “Indemnitees” shall mean (a) in the case of the indemnity set forth in Subsection 8.5(a), and for purposes of Section 8.6, the Inventors, LICENSOR, and their trustees, directors, employees and students and all of their heirs, executors, administrators, successors and legal representatives, ROYALTY PHARMA, its Affiliates, their directors, trustees, officers, employees and all of their heirs, successors, executors, administrators and legal representatives; and (b) in the case of the indemnity set forth in Subsection 8.5(b), COMPANY, its Affiliates, sublicensees, their directors, officers, employees, ROYALTY PHARMA, its Affiliates, their directors, trustees, officers, employees and all of their heirs, successors, executors, administrators and legal representatives.

1.16 “Inventors” shall mean Woo-Baeg Choi, Dennis C. Liotta and Raymond Schinazi.

1.17 “Licensed Compound” or “FTC” shall mean: (a) the (-) enantiomer with the chemical name (2R-cis)-4-amino-5-fluoro-1-{2-(hydroxymethyl)-1,3-oxathiolan-5-yl}-2(1H)-pyrimidinone; (b) any mixture of the (-) enantiomer described in clause (a) and the (+) enantiomer with the chemical name (2S-cis)-4-amino-5-fluoro-1-{2-(hydroxymethyl)-1,3-oxathiolan-5-yl}-2(1H)-pyrimidinone, [ * ] ; (c) any salts, esters (including, but not limited to, all [ * ] ) and N alkylated derivatives of any of the foregoing; or (d) any and all polymorphs, hydrates and solvates of any of the foregoing. “Licensed Compounds” shall mean all of the foregoing.

1.18 “Licensed Patents” shall mean (a) the patents and patent applications identified in Appendix “A,” together with any and all substitutions, extensions, divisionals, continuations, continuations-in-part, renewals, supplementary protection certificates or foreign counterparts of such patent applications and patents which issue thereon, anywhere in the world, including reexamined and reissued patents; (b) all of the patents and patent applications included within “Shire FTC-Only Patents” and the “Shire FTC-Plus Patents,” as defined in Sections 1.15 and 1.16 respectively of the GSK/Shire Agreement; and (c) all other patents and patent applications in which or to which LICENSOR has acquired or acquires rights during the term hereof which contain claims covering the manufacture, use or sale of any Licensed Product to the extent that LICENSOR possesses the right to license such patents and patent applications to COMPANY for commercial purposes without incurring financial or other non-contingent, material obligations to any third parties.

1.19 “Licensed Product(s)” shall mean any Licensed Compound or any pharmaceutical product containing one or more Licensed Compounds as active ingredients, alone or in combination with other active ingredients, the manufacture, use, importation, offer for sale or sale of which would, but for the license granted herein, infringe any Valid Claim or which is made using Licensed Technology.

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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1.20 “Licensed Technology” shall mean all technical information and data, whether or not patented, known or learned, invented, or developed by the Inventors or any employees of LICENSOR working under the Inventors’ direct or indirect supervision, prior to or during the term hereof and while they are under a duty to assign intellectual property rights to the LICENSOR, to the extent that (a) such technical information and data are useful for the manufacture, use, importation, offer for sale or sale of any Licensed Product; and (b) LICENSOR possesses the right to license the use of such information to COMPANY for commercial purposes without incurring financial or other non-contingent, material obligations to any third parties and without breaching any obligations of confidentiality with such parties. The GW Know How shall be deemed to constitute “Licensed Technology.”

1.21 “Licensed Territory” shall mean the world.

1.22 “LICENSOR” shall mean Emory University.

1.23 “Major Market Country” shall mean Japan, Germany, France, the United Kingdom or the United States of America.

1.24 “NDA” shall mean a New Drug Application or its domestic or foreign equivalent.

1.25 “Net Selling Price” of a product (including a Licensed Product) shall mean, with respect to a particular fiscal quarter, the gross invoice price (i.e. the total invoiced price therefore prior to any deductions made pursuant to clauses (i) through (iv)) paid by a purchaser of such product (including Distributors), to COMPANY, an Affiliate or sublicensee of COMPANY and their sublicensees or any other party authorized by COMPANY to sell that product (which shall not include Distributors) (collectively the “Sellers”), plus, if applicable, the value of all properties and services received in consideration of a Sale of such product, less only:

(i) discounts, including cash and quantity discounts, charge-back payments and rebates granted to managed health care organizations or to federal, state and local governments, their agencies, purchasers and reimbursers or to trade customers;

(ii) credits or allowances actually granted upon claims, damaged goods, rejections or returns of such Licensed Products, including recalls;

(iii) freight, postage, shipping, transportation and insurance charges actually allowed or paid for delivery of Licensed Products to the extent billed; and

(iv) taxes (other than income taxes), duties or other governmental charges levied on, absorbed or otherwise imposed on sale of such Licensed Products, including without limitation value-added taxes, or other governmental charges otherwise measured by the billing, when included in the billing, as adjusted for rebates and refunds.

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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(a) Notwithstanding the foregoing in this Section 1.25, amounts received by COMPANY, its Affiliates or sublicensees for the sale of Licensed Products among COMPANY, its Affiliates and sublicensees for resale shall not be included in the computation of Net Selling Price hereunder.

(b) For purposes of this Section 1.25, “Distributor” shall mean any third party (i) to which a Seller has granted (at any time during the term) a right to sell or distribute a Licensed Product, (ii) that sells Licensed Products to hospitals and/or pharmacies for their sale to or use with patients (rather than to other third parties for resale to hospitals and/or pharmacies for their sale to or use with patients), and (iii) that does not make payments to COMPANY or such COMPANY Affiliate that are calculated on the basis of a percentage of, or profit share on, such third party’s sales of Licensed Products. For purposes of calculating Net Selling Price, no Distributor shall be deemed to be a sublicensee of COMPANY or its Affiliates. Net Selling Price for the quantities of License Product sold by Distributors shall be calculated based on the amount invoiced the Distributors by COMPANY and/or its Affiliates and/or sublicensees of Affiliates and COMPANY rather than by the Distributors to their customers.

(c) Where Licensed Product is sold in the form of a combination product containing one or more active ingredients in addition to a Licensed Compound (“Combination Product”), Net Selling Price for such Combination Product for purposes of determining royalties payable under this Agreement will be calculated by multiplying the actual Net Selling Price of such Combination Product by the fraction A/(A+B) where A is the Net Selling Price for the stock keeping unit most comparable in formulation and dosing to that used for the Combination Product of the Licensed Product containing the relevant Licensed Compound as the sole active ingredient, if sold separately, in such country during the relevant fiscal quarter, and B is the Net Selling Price for the stock keeping unit, most comparable in formulation and dosing to that used for the Combination Product, of any other active ingredient, if sold separately, in such country during the relevant fiscal quarter. For clarity, if there are three or more active ingredients (including the Licensed Compound), additional B terms calculated in the same manner, shall be included in the denominator so that such fraction shall be A/(A+B _l +B ₂ +...). If, on a country-by-country basis, one or more of the other active ingredients in the Combination Product are not sold separately in said country, Net Selling Price for the purpose of determining royalties payable under this Agreement for the Combination Product shall be calculated by multiplying the actual Net Selling Price of such Combination Product by the fraction A/C where A is the Net Selling Price for the stock keeping unit most comparable in formulation and dosing to that used for the Combination Product of the Licensed Product containing the relevant Licensed Compound as the sole active ingredient, if sold separately, in such country during the relevant fiscal quarter and C is the Net Selling Price for the Combination Product in such country during the relevant fiscal quarter. If, on a country-by-country basis, the Licensed Product containing a Licensed Compound as the sole active ingredient is not sold separately in

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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said country during the relevant fiscal quarter but one or more of the other active ingredients in the Combination Product are sold separately in said country during the relevant fiscal quarter, the Net Selling Price for the Combination Product shall be calculated by multiplying the actual Net Selling Price of such Combination Product by the fraction (1-(D/C)) where D is the Net Selling Price for the stock keeping unit most comparable in formulation and dosing to that used for the Combination Product of the product containing the other active ingredient as the sole active ingredient and C is the Net Selling Price for the Combination Product in such country during the relevant fiscal quarter. If, on a country-by-country basis, the Licensed Product containing a Licensed Compound as the sole active ingredient is not sold separately and one or more of the other active ingredients in the Combination Product are not sold separately in such country during the relevant fiscal quarter Net Selling Price for the purposes of determining royalties of the Combination Product shall be deemed to be the Net Selling Price of such Combination Product multiplied by a fraction, the numerator of which is the number of Licensed Compounds in such Combination Product and the denominator of which is the number of all active ingredients in such Combination Product.

1.26 “Other Change” shall mean (i) an amendment, supplement or modification (other than a written amendment) to an agreement that might reasonably be expected to have an adverse effect on LICENSOR’s or ROYALTY PHARMA’s rights or obligations under this Agreement, or (ii) a waiver of a term of an agreement that might reasonably be expected to have an adverse effect on LICENSOR’s or ROYALTY PHARMA’s rights or obligations under this Agreement.

1.27 “Registration” shall mean, in relation to any Licensed Product, such approvals by the regulatory authorities in a given country (including pricing approvals) as may be legally required before such Licensed Product may be commercialized or Sold in such country.

1.28 “Royalty Pharma Indemnitees” shall mean ROYALTY PHARMA and all its Affiliates and their respective trustees, directors, employees, investors, partners (limited or otherwise), members and other equity and interest holders.

1.29 “Sale” or “Sold” shall mean the sale, transfer, exchange or other disposition of Licensed Products whether by gift or otherwise, subsequent to Registration in a given country (if such Registration is required) by a Seller to make such sale, transfer, exchange or disposition, to any party that is not a Seller. Sales of Licensed Products shall be deemed consummated upon the first to occur of: (a) receipt of payment from the purchase; (b) delivery of Licensed Products to the purchaser or a common carrier; (c) release of Licensed Products from consignment; or (d) if otherwise transferred, exchanged or disposed of, whether by gift or otherwise, when such transfer, exchange, gift or other disposition occurs. Notwithstanding the foregoing definition of Sale, to the extent COMPANY distributes any Licensed Product under a Treatment IND or through an expanded access program or the Global Access Program, only to the extent that the actual Net Selling Price exceeds Fully Absorbed Costs therefor will such distribution be considered a Sale. If the actual Net Selling Price exceeds the Fully

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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Absorbed Costs, the distribution shall be deemed to be a Sale with a deemed Net Selling Price (prior to any application of Section 1.25(c)) for purposes of Section 3.2 of the difference between the actual Net Selling Price and the Fully Absorbed Cost therefor.

1.30 “Settlement Agreement” shall mean the Settlement Agreement, dated as of May 6, 1999, by and among Glaxo Wellcome plc and GW on the one hand, and LICENSOR, COMPANY and Dr. David W. Barry on the other hand, providing for the settlement, release and dismissal of the FTC litigation and related claims (including but not limited to Civil Action 1:96-CV-1754-GET), and certain claims of Dr. David W. Barry against Glaxo Wellcome, plc, GW and their Affiliates.

1.31 “U.S. Government Licenses” shall mean the non-exclusive licenses to the U.S. Government or agencies thereof pursuant to [ * ] , copies of which licenses are attached hereto as Appendix “B.”

1.32 “Valid Claim” shall mean (a) an issued claim of any unexpired patent included among the Licensed Patents, or (b) a pending claim of any pending patent application included among the Licensed Patents, which has not been held unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, which has not been rendered unenforceable through disclaimer or otherwise or which has not been lost through an interference proceeding.

ARTICLE 2.

GRANT OF LICENSE

2.1 License

Insofar as it is permitted to do so under (i) the GW Agreements and (ii) the GSK/Shire Agreement with respect to the “Shire FTC-Only Patents” and the “Shire FTC-Plus Patents,” as defined in Sections 1.15 and 1.16 of such agreement, respectively, LICENSOR hereby grants COMPANY and its Affiliates, an irrevocable (subject to the transfer provisions of Sections 10.4(a) and 10.5), perpetual, fully paid-up, exclusive right and license to practice the Licensed Patents and the Licensed Technology to make, have made, use, import, offer for sale and sell Licensed Products within the Field of Use in the Licensed Territory during the term of this Agreement. COMPANY acknowledges that it has received a copy of the GSK/Shire Agreement and agrees to the confidentiality obligations imposed on sublicensees under Article 9 and Section 13.3 of the GSK/Shire Agreement.

2.2 Government Rights

The license granted in Section 2.1 above is conditional upon and subject to the U.S. Government Licenses and other rights retained by the United States in, and obligations imposed by applicable law with respect to, inventions developed by nonprofit institutions with the support of federal funds. These rights and obligations are set forth in

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35 USCA §§ 201 et seq . and 37 CFR 401 et seq ., which may be amended from time to time by the Congress of the United States or through administrative procedures. All provisions required to be made a part hereof by such statutes and regulations are hereby incorporated herein by reference, to the extent, and only to the extent required by the foregoing, COMPANY agrees that Licensed Products leased or sold in the United States shall be manufactured substantially in the United States.

2.3 Retained License

The license granted in Section 2.1 above is further conditional upon and subject to a right and license retained by LICENSOR on its behalf and LICENSOR’s academic research collaborators to make and use Licensed Products and practice Licensed Technology for research and educational purposes only. LICENSOR shall promptly verify the names of any research collaborators practicing the license retained in this Section 2.3 upon COMPANY’s written request.

2.4 Sublicenses

(a) COMPANY may grant sublicenses (including with respect to the GW Patents and GW Know How) without LICENSOR’s or ROYALTY PHARMA’s approval. COMPANY shall not (x) enter into any such sublicense, or (y) agree to any written amendment or Other Change to any such sublicense that, in the case or either (x) or (y), (i) would, to the knowledge of COMPANY, conflict with, violate or cause a violation of, contravene or cause a default under, any applicable law or regulation, or any contract, license, indenture, instrument, agreement, judgment, order, injunction or decree binding upon, or any guidelines or policies of, LICENSOR or ROYALTY PHARMA, which conflict, violation, contravention or default could reasonably be expected to cause a material adverse effect on LICENSOR’s or ROYALTY PHARMA’s operations; (ii) would otherwise, in the good faith determination of COMPANY, materially adversely affect LICENSOR or ROYALTY PHARMA, including by means of exposing LICENSOR or ROYALTY PHARMA to liability or reasonably expected liability (whether in relation to the transactions contemplated by this Agreement or the GW Agreements, GSK/Shire Agreement or otherwise); (iii) could reasonably be expected to adversely affect ROYALTY PHARMA’s right to receive payments with respect to Licensed Products as provided in this Agreement; or (iv) would cause a breach of the covenants contained in either Section 2.4(e) or in the last sentence of this Section 2.4(a). COMPANY shall, within thirty (30) days of execution of any such sublicense, written amendment or Other Change, (A) provide LICENSOR and ROYALTY PHARMA with a complete copy of such sublicense agreements or written amendments or provide a summary of such Other Change; and (B) provide to LICENSOR and ROYALTY PHARMA a written certification that COMPANY has determined that such sublicense, written amendment or Other Change, as applicable, meets the requirements described in the preceding sentence of this Section 2.4(a). COMPANY shall remain responsible to ROYALTY PHARMA for the payment of all fees and royalties due under this Agreement, whether or not such payments are made to COMPANY by its sublicensees. COMPANY shall include in any sublicense granted pursuant to this Agreement a

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provision requiring the sublicensee to indemnify LICENSOR and ROYALTY PHARMA and maintain liability insurance coverage to the same extent that COMPANY is so required pursuant to Sections 8.5 and 8.6 of this Agreement.

(b) COMPANY represents and warrants to LICENSOR and ROYALTY PHARMA that (a) the copy of the Collaboration Agreement dated as of December 17, 2004 (the “JV Agreement”) among COMPANY, Bristol-Myers Squibb Company, Bristol-Myers Squibb Company & Gilead Sciences, LLC (“JV”) and certain other parties provided with a letter, dated July 18, 2005, from COMPANY to ROYALTY PHARMA and LICENSOR (“Disclosure Letter”) is a true, complete and correct copy of the JV Agreement, and (b) [ * ] . COMPANY, LICENSOR and ROYALTY PHARMA agree that JV shall be a “sublicensee” for all purposes under this Agreement.

(i) To the extent that JV’s indemnification of LICENSOR pursuant to Section 13.7 of the JV Agreement [ * ] , the COMPANY and LICENSOR agree that such [ * ] .

(ii) [ * ] . To the extent that COMPANY’s obligation pursuant to Section 2.4 of this Agreement to require JV as a sublicensee to [ * ] to the same extent that COMPANY is so required pursuant to Section 8.6 of this Agreement is not satisfied [ * ] .

(iii) LICENSOR and COMPANY agree and acknowledge that COMPANY has provided to LICENSOR an instrument, satisfactory in form and substance to LICENSOR and a copy of which is attached hereto as Appendix “D” [ * ] .

(iv) LICENSOR has, by means of the Fifth Amendment to the Existing Agreement, provided its written approval to COMPANY pursuant to Section 2.4 of the Existing Agreement of the sublicense under COMPANY’s license pursuant to this Agreement granted by COMPANY to the JV pursuant to the JV Agreement.

(c) COMPANY represents and warrants to LICENSOR and ROYALTY PHARMA that (a) the copy of the License Agreement dated as of July 31, 2003, between Japan Tobacco Inc. (“JT”) and COMPANY (the “JT Agreement”) provided with the Disclosure Letter, is a true, complete and correct copy of the JT Agreement, and (b) [ * ] .

(d) {Intentionally blank}

(e) COMPANY agrees that, for any sublicense under COMPANY’s license pursuant to this Agreement granted by COMPANY after the Effective Date, COMPANY shall [ * ] to [ * ] the [ * ] set forth in Section [ * ] and the [ * ] , said [ * ] based on [ * ] received from or obtained through [ * ] . COMPANY further agrees that COMPANY shall use its commercially reasonable efforts to [ * ] and the [ * ] , said [ * ] . Promptly, and in any event no later than five (5) business days following receipt of said covenants, COMPANY shall furnish a copy thereof to LICENSOR.

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2.5 No Implied License

The license and rights granted in this Agreement shall not be construed to confer any rights upon COMPANY by implication, estoppel, or otherwise as to any technology not specifically identified in this Agreement, except as otherwise implied by law to the extent necessary to practice the Licensed Patents or Licensed Technology.

2.6 Third Party Licenses

In the event LICENSOR acquires (a) a license from a third party relating to intellectual property which would be deemed to be Licensed Patents or Licensed Technology but for the inability to sublicense such intellectual property to COMPANY without incurring financial or other non-contingent, material obligations or (b) a license from GW for either the GW Patents or GW Know How, LICENSOR shall give prompt notice and a copy thereof to COMPANY. Such notice shall be accompanied by such data and information in LICENSOR’s possession, which LICENSOR is authorized to transfer to COMPANY, or which can be obtained from such third party or GW, as applicable, in order to assist COMPANY in determining whether to sublicense such third party or GW license. COMPANY shall have [ * ] to elect whether to obtain a sublicense under such third party or GW license pursuant to the terms thereof within the Field of Use, but with no additional obligations of any type other than as prescribed therein. If COMPANY fails to notify LICENSOR of its decision regarding the acquisition of such sublicense within such [ * ] period, this Section 2.6 shall no longer apply to such third party or GW license, as applicable.

2.7 Right of First Refusal to [ * ]

(a) As used in this Section 2.7, [ * ] shall mean [ * ] .

(b) Except as otherwise set forth in Subsection 2.7(c), prior to entering into any license or assignment agreement with a third party relating to any of LICENSOR’s rights in respect of the [ * ] , LICENSOR shall notify COMPANY of the terms of such proposed agreement. Such notice shall include a copy of such proposed agreement, together with all data and information in LICENSOR’s possession relating to the [ * ] and its use as a therapeutic agent. Such notice shall be deemed an offer to COMPANY to enter into such proposed agreement. Thereafter, COMPANY shall have [ * ] to accept such offer. Upon acceptance of such offer by COMPANY, such proposed agreement shall be binding between COMPANY and LICENSOR. If COMPANY does not accept such offer within such [ * ] period, LICENSOR shall be entitled, for a period of [ * ] after expiration of such [ * ] period, to enter into such proposed agreement on the terms offered to COMPANY. If LICENSOR does not enter into such proposed agreement with such third party on the terms presented to COMPANY within such [ * ] period, then LICENSOR must again comply with this Subsection 2.7(b) before entering into such agreement. COMPANY agrees to maintain the confidentiality of the terms of such offer in accordance with the provisions of Article 9 hereof.

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(c) LICENSOR may license or assign its rights in respect of [ * ] to any of the Inventors or any corporate entity formed by or on behalf of the Inventors (the foregoing being referred to as “Permitted Transferees”) for purposes of clinically developing [ * ] ; provided, however, that, as a condition precedent to any such license or assignment, the Permitted Transferees agree to be bound by all the terms of Subsection 2.7(b) to the same extent as LICENSOR pursuant to a written document. Such document shall be delivered to COMPANY on or before such license or assignment to the Permitted Transferees. Any purported license or assignment to such Permitted Transferees without the execution and delivery of such written document, as aforesaid, shall be void. Not more than one license or assignment permitted by this Subsection 2.7(c) may be in effect at any time.

(d) LICENSOR represents that it has not licensed, assigned or otherwise transferred any of its rights in and to [ * ] on or before the Effective Date, except for (i) a certain License Agreement between LICENSOR and GW, dated February 1, 1992, which has been terminated, and (ii) a certain License Agreement dated as of December 8, 1998, between LICENSOR and Pharmasset, Ltd. (now Pharmasset, Inc.), as supplemented by the Termination and Reinstatement Agreement dated June 9, 1999, and as further supplemented by the Supplemental Agreement to the License Agreement dated March 26, 2004.

(e) In the event COMPANY obtains a license from GW to any intellectual property relating to [ * ] , COMPANY shall grant LICENSOR or any Permitted Transferee, as applicable, a sublicense thereunder with the right to sublicense, to the extent sublicensing is permissible and subject to the terms of such GW license. Such sublicense shall apply only to [ * ] and shall terminate in the event COMPANY exercises the right of first refusal set forth in Subsection 2.7(b).

2.8 GW Patents and Know-How

COMPANY acknowledges that LICENSOR has given COMPANY the required notice of and information concerning the licenses [ * ] under the GW Patents and the title and licenses under the GW Know-How that LICENSOR is obtaining under the GW Agreements. LICENSOR hereby grants to COMPANY a sublicense and a sub-immunity from suit under the GW Patents and the GW Know-How, each of which is exclusive in accordance and coterminous with the provisions of Sections 2.1, 2.2, 2.3, 2.4 and 2.5.

ARTICLE 3.

ROYALTIES AND OTHER PAYMENTS

3.1 License Fees

LICENSOR has received from ROYALTY PHARMA and COMPANY cash payments pursuant to the Royalty Sale Agreement and the Conveyance Agreement as payment for all license and other fees obligated to be paid to LICENSOR under the Existing Agreement, and hereby relinquishes and waives any and all claims to additional

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license and other fees otherwise owed or to be owed to LICENSOR under Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and 3.7 of the Existing Agreement in respect of all periods occurring after July 1, 2005. For the avoidance of doubt, LICENSOR shall remain entitled to all royalties payable by COMPANY for the quarter ended June 30, 2005.

3.2 Payments from COMPANY

(a) {Intentionally deleted}

(b) COMPANY shall pay ROYALTY PHARMA, a royalty equal to the following percentages of the Net Selling Price of Licensed Products Sold on or after July 1, 2005, in the Licensed Territory by COMPANY and its Affiliates and sublicensees for HIV and HBV indications:

(i)


Percentage of Net Selling Price		Annual Net Selling Price of Licensed Products for HIV
[ * ]		[ * ]

(ii)


Percentage of Net Selling Price		Annual Net Selling Price of Licensed Products for HBV
[ * ]		[ * ]

By way of example only, if during a given calendar year, the Net Selling Price of all Licensed Products for HIV were [ * ] , the royalties payable by COMPANY pursuant to Subsection 3.2(b) would be equal to [ * ] .

(c) Duration: Reduction. Royalties (at the rates set forth in Subsections 3.2(b), subject to reduction or modification only as prescribed herein) shall be paid in respect of a given Licensed Product for a period of [ * ] after commercial introduction of such Licensed Product in a given country. Thereafter, royalties shall be paid only so long as the manufacture, use, offer for sale, sale or importation of such Licensed Product in such country would, in the absence of a license, infringe a Valid Claim of an issued and unexpired patent within the Licensed Patents. If, during such [ * ] period, a third party or third parties commence selling a therapeutic product in a country in which there are no Valid Claims or are Valid Claims only of the type described in Section 1.32(b) and (i) such product contains any Licensed Compound (“unlicensed unit

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sales”) and (ii) such unlicensed unit sales for any royalty period amount to [ * ] or more of the COMPANY’S unit sales of such Licensed Product in such country in such royalty period, determined in accordance with Subsection 3.2(d) below, then COMPANY’s royalty obligation in such country with respect to such Licensed Product shall be suspended commencing with the royalty period next succeeding the royalty period in which such [ * ] threshold was initially exceeded and shall resume with the royalty period next succeeding the first royalty period in which such [ * ] threshold is no longer exceeded. COMPANY’s royalty obligations with respect to such Licensed Product shall resume in such country if and when such Valid Claim per Subsection 1.32(b) becomes a Valid Claim per Subsection 1.32(a).

(d) Unit Sales . For purposes of this Section 3.2, (i) “unlicensed unit sales” and “COMPANY unit sales” shall be deemed to mean the grams of Licensed Compound in third party product (irrespective of dosage form) or the Licensed Product (irrespective of dosage form), respectively, as reflected on the label of each such unit; and (ii) unlicensed unit sales shall be determined by the sales reports of IMS America Ltd. of Plymouth Meeting, Pennsylvania (“IMS”) or any successor to IMS or any other independent marketing auditing firm selected by COMPANY or its sublicensees and reasonably acceptable to ROYALTY PHARMA. If COMPANY is entitled to a royalty suspension based on unlicensed unit sales pursuant to Subsection 3.2(c) for any royalty period, it or its sublicensees shall submit the sales report of IMS or such other independent firm, as applicable, for the relevant royalty period to ROYALTY PHARMA, together with COMPANY’s or its sublicensees’ sales report for the relevant royalty period. Such sales reports for each royalty period in which COMPANY is entitled to such royalty suspension shall be submitted with the royalty report for such royalty period submitted pursuant to Section 4.1.

3.3 Annual Minimum Royalties

(a) Subject to Subsection 3.3(c), in the event that COMPANY’s total annual royalty payment to ROYALTY PHARMA pursuant to Subsection 3.2(b)(i) above during the calendar year [ * ] and each calendar year thereafter for so long as there exist Valid Claims in the U.S. is less than the annual minimum royalty set forth opposite such year below (the “Annual Minimum”), COMPANY shall make a payment to ROYALTY PHARMA together with the report for the fourth quarter of such year required in Section 4.1 of this Agreement equal to the difference between such Annual Minimum and the total royalties paid to ROYALTY PHARMA for the preceding year pursuant to Subsection 3.2(b)(i) above:


Calendar Year		Annual Minimum
[ * ]		[ * ]

(b) Subject to Subsection 3.3(c), in the event that COMPANY’s total annual royalty payment to ROYALTY PHARMA pursuant to Subsection 3.2(b)(ii) above during the [ * ] calendar year following the year during which the first Registration in a Major Market Country is granted for a Licensed Product covered by Subsection 3.2(b)(ii)

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above and each calendar year thereafter for so long as there exist Valid Claims in the U.S. is less than the annual minimum royalty set forth opposite such year below (the “Annual Minimum”), COMPANY shall make a payment to ROYALTY PHARMA together with the report for the fourth quarter of such year required in Section 4.1 of this Agreement equal to the difference between such Annual Minimum and the total royalties paid to ROYALTY PHARMA for the preceding year pursuant to Subsection 3.2(b)(ii) above:


Calendar Year		Annual Minimum
[ * ]		[ * ]

(c) If during a given year, the sum of royalty payments paid hereunder for all Licensed Products described in Subsection 3.2(b) of this Agreement exceeds the sum of the applicable Annual Minimums which are required to be paid for such year pursuant to Subsections 3.3(a) and 3.3(b), COMPANY shall be deemed to have satisfied the requirements of each of Subsections 3.3(a) and 3.3(b) for such year. For any year in which no Valid Claims exist in the United States for the entire year or this Agreement is not in effect for the entire year, the Annual Minimum shall be prorated accordingly.

(d) [ * ] , COMPANY may credit solely against running royalties (paid pursuant to Section 3.2), all reasonable costs incurred by COMPANY after the date hereof in connection with any litigation, interference, opposition or other inter partes action pertaining to the validity, enforceability, allowability or subsistence of the Licensed Patents or whether COMPANY’s practice of the Licensed Patents infringes a third-party patent. Until [ * ] , the amount of such credits shall not exceed in any year [ * ] of the royalty payments due hereunder in such year. Commencing in calendar year [ * ] , such credits shall not exceed in any year [ * ] of the Annual Minimum payments due in such year. Such costs shall not be credited against any other payments due to ROYALTY PHARMA under this Agreement.

3.4 Accrual of Royalties

No royalty shall be payable on a Licensed Product made, sold, or used for tests or development purposes or distributed as samples. No royalties shall be payable on sales among COMPANY, its Affiliates and sublicensees, but royalties shall be payable on subsequent sales by COMPANY, its Affiliates or sublicensees to a third party. No multiple royalty shall be payable because the manufacture, use or sale of a Licensed Product is covered by more than one Valid Claim or at least one Valid Claim and the Licensed Technology.

3.5 Third Party Royalties

(a) If COMPANY, its Affiliates or sublicensees determine after consultation with ROYALTY PHARMA, but at COMPANY’s discretion, that it or they are required to pay royalties or other fees to any third party (including under any third

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party or GW license to which Section 2.6 applies) because the manufacture, use, offer for sale, importation, or sale of a Licensed Product infringes any patent or other intellectual property rights of such third party in a given country (“Third Party Royalties”), COMPANY, its Affiliates or sublicensees may deduct from running royalties thereafter due to ROYALTY PHARMA (per Section 3.2(c) of this Agreement) with respect to the Net Selling Price of such Licensed Product in such country up to [ * ] of the Third Party Royalties. In no event shall the royalties due on such Sales of such Licensed Product in such country on account of any reduction pursuant to this Subsection 3.5(a) be thereby reduced to less than [ * ] on such Sales of such Licensed Product in such country.

(b) If the sum of (i) the royalties paid hereunder (taking into account all royalty deductions and credits taken with respect to such royalties, including those in Section 3.5(a)), plus (ii) [ * ] of all Third Party Royalties paid in respect of the manufacture, use, offer for sale, importation or sale of a Licensed Compound as contained in a given Licensed Product in a given country exceeds, at any time, [ * ] of the Net Selling Price for such Licensed Product, upon COMPANY’s request, ROYALTY PHARMA and COMPANY agree to negotiate in good faith in an effort to agree on a reduction in the royalties payable hereunder to ROYALTY PHARMA for such Licensed Product in such country. In the event the parties are unable to agree to such reduction after a reasonable period of time, not to exceed [ * ] , either party may request that the issue be arbitrated in accordance with Section 14.1 of this Agreement.

(c) COMPANY shall be responsible for paying the royalties due to GW under the GW License Agreement resulting from sale of Licensed Products (as defined in the GW License Agreement) by COMPANY, its Affiliates and sublicensees. COMPANY hereby indemnifies (i) [ * ] , and (ii) [ * ] . COMPANY will pay such royalties directly to GW, as prescribed by the GW License Agreement, with notice to LICENSOR and ROYALTY PHARMA. COMPANY’s obligation under this paragraph (c) shall terminate in respect of a given country upon the expiration or termination of the GW License Agreement in such country.

(d) The royalties actually paid by COMPANY, its Affiliates and sublicensees under the GW License Agreement shall be deemed to be “Third Party Royalties” under Section 3.5(a) and COMPANY, its Affiliates and sublicensees shall have the right of deduction pursuant to this Section 3.5 with respect to the royalties paid thereunder to GW. [ * ] .

3.6 Compulsory Licenses

Should a compulsory license be granted to any third party in any country of the Licensed Territory to make, have made, use, import, offer for sale or sell Licensed Products, the royalty rate payable thereunder for sales of the Licensed Products by COMPANY in such country [ * ] . COMPANY shall provide LICENSOR and ROYALTY PHARMA with prompt written notice of any governmental or judicial procedures initiated in any country to impose a compulsory license. COMPANY shall take all reasonable and legal steps as COMPANY deems appropriate which [ * ] .

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3.7 Reduction in Royalty Due to Invalid Claims

In the event that all applicable claims of all patents or patent applications included within the Licensed Patents under which COMPANY is selling or actively developing a Licensed Product shall be held invalid or not infringed by the Licensed Products COMPANY is selling or actively developing by a court of competent jurisdiction in a given country of the Licensed Territory, whether or not there is a conflicting decision by another court of competent jurisdiction in such country, COMPANY may cease all royalty payments on its, its Affiliates’ or its sublicensees’ sales of such Licensed Product covered by such claims and, if it does so, shall deposit such royalty payments in an interest-bearing escrow account until such judgment is finally reversed by an unappealed or unappealable decree of a court of competent jurisdiction of higher dignity in such country or is otherwise unappealable or is unappealed within the time allowed therefor; provided, however, that if such judgment is finally reversed by an unappealed or unappealable decree of a court of competent jurisdiction of higher dignity in such country, the former royalty payments shall be resumed and the royalty payments not theretofore made and interest earned thereon shall become due and payable to ROYALTY PHARMA.

3.8 Maintenance of Third-Party Agreements

(a) {Intentionally deleted.}

(b) LICENSOR covenants to COMPANY and ROYALTY PHARMA that, during the term of this Agreement, it will:

(i) fulfill all of its obligations under the GSK/Shire Agreement;

(ii) take no action or omit to take any action which would cause it to be in breach of any provision of the GSK/Shire Agreement; and

(iii) immediately notify COMPANY and ROYALTY PHARMA in the event LICENSOR receives notice from GSK or SHIRE that LICENSOR is in breach or default under the GSK/Shire Agreement. In the event of any default of the type described in this clause (iii), LICENSOR agrees that if it fails or does not intend to cure such default, COMPANY may, at COMPANY’s option, do so and may invoice LICENSOR for any reasonable expenses COMPANY incurs in curing such default, with such reasonable expenses being due and payable by LICENSOR to COMPANY within sixty (60) days of receipt of such invoice. ROYALTY PHARMA agrees that, to the extent LICENSOR does not make such payment within sixty (60) days, COMPANY, its Affiliates and sublicensees may credit up to [ * ] of such amounts so not paid against any royalties payable hereunder to ROYALTY PHARMA. The exercise by COMPANY of the right set forth in the immediately preceding sentence shall not affect LICENSOR’s obligations to ROYALTY PHARMA set forth in Sections 3.8(b)(i) and (ii).

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(c) LICENSOR and COMPANY each covenant to each other and to ROYALTY PHARMA that, during the term of the Agreement, it will:

(i) fulfill all of its obligations under the GW Agreements, including, but not limited to, any royalty obligations set forth therein;

(ii) take no action or omit to take any action which would cause it to be in breach of any provision of the GW Agreements; and

(iii) immediately notify the other parties in the event it receives notice from GW that it is in default under the GW Agreements or that GW has terminated or intends to terminate the GW Agreements. In the event of any default of the type described in this Section 3.8(c), LICENSOR or COMPANY, as applicable, agrees that if it fails or does not intend to cure such default, the other party may, at such other party’s option, do so and may invoice to such other party any reasonable expenses such other party incurs in curing such default, with such reasonable expenses being due and payable by the receiving party to the sending party within sixty (60) days of receipt of such invoice. For any invoices sent by COMPANY to LICENSOR, ROYALTY PHARMA agrees that, to the extent LICENSOR does not make such payment within sixty (60) days, COMPANY, its Affiliates and sublicensees may credit up to [ * ] of such amounts so not paid against any royalties payable hereunder to ROYALTY PHARMA. The exercise by COMPANY of the right set forth in the immediately preceding sentence shall not affect LICENSOR’s obligations to ROYALTY PHARMA set forth in Sections 3.8(c)(i) and (ii). Nothing in this Section 3.8(c) is intended to affect the obligations of COMPANY set forth in Section 3.5(c).

(d) COMPANY agrees that, to the extent it, or any of its Affiliates or sublicensees credit any amounts owed by LICENSOR against royalties payable hereunder to ROYALTY PHARMA pursuant to this Section 3.8, and COMPANY, or any of its Affiliates or sublicensees thereafter recovers such amounts so credited from LICENSOR, COMPANY will immediately pay such amounts so credited to ROYALTY PHARMA.

ARTICLE 4.

REPORTS AND ACCOUNTING

4.1 Royalty Reports and Records

During the term of this Agreement, COMPANY shall furnish, or cause to be furnished to ROYALTY PHARMA, written reports governing each of COMPANY’s, COMPANY’s Affiliates’ and COMPANY’s sublicensees’ fiscal quarters showing:

(a) the gross selling price of all Licensed Products Sold by COMPANY, its Affiliates and sublicensees, in each country of the Licensed Territory during the reporting period, together with the calculations of Net Selling Price in accordance with Section 1.25; and

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(b) the royalties payable in Dollars, which shall have accrued hereunder in respect to such Sales; and

(d) a summary of all reports provided to COMPANY by COMPANY’s sublicensees; and

(e) the basis for any credits taken against running royalties in accordance with Sections 3.3(d) and 7.1, including documentation of costs incurred by COMPANY in any litigation, infringement, interference, or other action pertaining to the Licensed Patents, and any deductions from running royalty payments taken pursuant to Section 3.5, including documentation of any royalties or other fees paid to third parties.

Reports shall be made quarterly and shall be due within sixty (60) days of the close of every COMPANY fiscal quarter. COMPANY shall keep accurate records in sufficient detail to enable royalties and other payments payable hereunder to be determined. COMPANY shall be responsible for all royalties and late payments that are due to ROYALTY PHARMA that have not been paid by COMPANY’s Affiliates and sublicensees. COMPANY’s sublicensees shall have, and shall be notified by COMPANY that they have, the option of making any royalty payment directly to ROYALTY PHARMA.

4.2 Right to Audit

(a) ROYALTY PHARMA shall have the right, upon prior notice to COMPANY, not more than once in each COMPANY fiscal year nor more than once in respect of any fiscal year, through an independent certified public accountant selected by ROYALTY PHARMA and acceptable to COMPANY, which acceptance shall not be unreasonably refused, to have access during normal business hours to those records of COMPANY as may be reasonably necessary to verify the accuracy of the royalty reports, including records reasonably necessary to verify of the accuracy of Net Selling Prices and Fully Absorbed Costs, required to be furnished by COMPANY pursuant to Section 4.1 of the Agreement. COMPANY shall include in any sublicenses granted pursuant to this Agreement a provision requiring the sublicensee to keep and maintain records of Sales made pursuant to such sublicense and to grant access to such records by ROYALTY PHARMA’s independent certified public accountant. If such independent certified public accountant’s report shows any underpayment of royalties by COMPANY its Affiliates or sublicensees, within [ * ] after COMPANY’s receipt of such report, COMPANY shall remit or shall cause its sublicensees to remit to ROYALTY PHARMA:

(i) the amount of such underpayment; and

(ii) if such underpayment exceeds [ * ] percent of the total royalties owed for the fiscal year then being reviewed, the reasonable fees and expenses

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of such independent certified public accountant performing the audit. Otherwise, ROYALTY PHARMA’s accountant’s fees and expenses shall be borne by ROYALTY PHARMA. Any overpayment of royalties shall be fully creditable against future royalties payable in any subsequent royalty periods. Upon the expiration of [ * ] following the end of any fiscal year, the calculation of royalties payable with respect to such fiscal year shall be binding and conclusive on ROYALTY PHARMA and COMPANY, unless an audit is initiated before expiration of such [ * ] .

(b) Pursuant to Section 4.2 of the GW License Agreement, COMPANY agrees to keep and maintain records of sales of Licensed Products made pursuant to the sublicense of GW Patents and GW Know-How granted hereby and to grant access and rights to GW’s independent certified accountant in the same manner and to the same extent as prescribed in the GW License Agreement.

(c) COMPANY agrees to furnish directly to GW, with a copy to LICENSOR, the written reports and other information required pursuant to Section 4.1 of the GW License Agreement in compliance with such Section 4.1 of the GW License Agreement.

4.3 Reports to LICENSOR.

COMPANY shall promptly furnish to LICENSOR such information relating to the Licensed Products as LICENSOR shall request as necessary in order to comply with LICENSOR’s obligations to government or other regulatory authorities relating to matters under this Agreement.

4.4 Confidentiality of Records

All information provided in accordance with, or subject to review, under this Article 4 shall be kept confidential to the extent provided in Article 9.

ARTICLE 5.

PAYMENTS

5.1 Payments and Due Dates

Except as otherwise provided herein, royalties and sublicense and other fees payable to ROYALTY PHARMA as a result of activities occurring during the period covered by each royalty report provided for under Article 4 of this Agreement shall be due and payable on the date such royalty report is due. Payments of royalties in whole or in part may be made in advance of such due date. Any payment in excess of [ * ] shall be made by wire transfer to an account of ROYALTY PHARMA designated by ROYALTY PHARMA from time to time; provided, however, that in the event that ROYALTY PHARMA fails to designate such account, COMPANY or its Affiliates and sublicensees may remit payment to ROYALTY PHARMA to the address applicable for the receipt of notices hereunder; providing, further, that any notice by ROYALTY PHARMA of such account or change in such account, shall not be effective until fifteen (15) days after receipt thereof by COMPANY.

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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5.2 Currency Restrictions

(a) Except as hereinafter provided in this Section 5.2, all royalties shall be paid in Dollars. If, at any time, legal restrictions prevent the prompt remittance of part of or all royalties with respect to any country in the Licensed Territory where Licensed Products are Sold, COMPANY or its sublicensee shall have the right and option to make such payments by depositing the amount thereof in local currency to ROYALTY PHARMA’s accounts in a bank or depository in such country.

(b) COMPANY shall use an exchange rate equal to [ * ] . For example, the rate used to calculate Net Sales in the month of April would be [ * ]. If COMPANY changes its currency system, COMPANY shall provide ROYALTY PHARMA with prompt written notice and the parties shall negotiate in good faith a new methodology which is acceptable under GAAP.

(c) The royalties hereunder may be paid to ROYALTY PHARMA from COMPANY and/or its Affiliates from the United States and/or up to two (2) other jurisdictions for which no withholding tax is applicable to the payment to ROYALTY PHARMA taking into account all applicable tax laws and regulations.

5.3 Interest

Royalties and other payments required to be paid by COMPANY pursuant to this Agreement shall, if overdue, bear interest at the lesser of [ * ] or a per annum rate of [ * ] until paid. The payment of such interest shall not foreclose ROYALTY PHARMA and LICENSOR from exercising any other rights it may have because any payment is overdue.

ARTICLE 6.

PATENT PROSECUTION

6.1 Licensed Patents Assigned to LICENSOR .

(a) LICENSOR shall be primarily responsible for all Patent Prosecution Activities pertaining to Licensed Patents assigned solely to LICENSOR. LICENSOR shall select patent counsel, acceptable to COMPANY, to prosecute, acquire from the relevant patent offices, defend, maintain and handle any litigation, interference, opposition or other action pertaining to the validity, enforceability, allowability or subsistence (all of the foregoing activities being referred to as “Patent Prosecution Activities”) of all such Licensed Patents and shall provide COMPANY with copies of all filings and correspondence pertaining to such Patent Prosecution Activities [ * ] in a timely manner, so as to give COMPANY an opportunity to comment thereon. COMPANY shall, in a timely manner, provide ROYALTY PHARMA with copies of all filings and correspondence in the United States or in any EPO country provided to it by LICENSOR concerning the Licensed Patents.

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(b) To the extent reasonably possible, LICENSOR shall pursue Patent Prosecution Activities in respect of Licensed Patents in at least the following countries: [ * ] . LICENSOR shall, upon COMPANY’s request, pursue Patent Prosecution Activities of Licensed Patents in additional countries.

(c) If LICENSOR decides to abandon or allow to lapse any Licensed Patent that covers a Licensed Product, or discontinue any other Patent Prosecution Activities in respect thereof in any country of the Licensed Territory, LICENSOR shall promptly inform COMPANY and COMPANY shall be given the opportunity to assume Patent Prosecution Activities in respect thereof. COMPANY shall promptly notify ROYALTY PHARMA of any such notice received from LICENSOR.

(d) COMPANY shall reimburse LICENSOR, not later than thirty (30) days after receiving an invoice from LICENSOR (and reasonable substantiation thereof if requested by COMPANY), for all reasonable out-of-pocket expenses incurred by LICENSOR in respect of Patent Prosecution Activities. Invoices shall be submitted once in respect of each calendar quarter as promptly as practicable after the end of such quarter. If COMPANY [ * ] for Patent Prosecution Activities respecting any patent application or issued patent assigned solely to LICENSOR [ * ] . If both COMPANY and ROYALTY PHARMA [ * ] , such patent application or issued patent shall [ * ] .

(e) Subject to Section 6.1(f), COMPANY reserves the right to terminate its obligations pursuant to this Section 6.1 with respect to any Licensed Patent that covers a Licensed Product in any country or countries upon at least thirty (30) days’ prior written notice to LICENSOR. After the date specified in such notice on which COMPANY’s obligation to pay further expenses for Patent Prosecution Activities terminates, such patent application or patent, as the case may be, shall no longer be included in the Licensed Patents in those countries in which COMPANY has exercised its rights to terminate such obligations.

(f) COMPANY may elect to cease Patent Prosecution Activities, subject to the following provisions:

(i) If (A) COMPANY has assumed Patent Prosecution Activities under Section 6.1(c) and (B) COMPANY subsequently decides, with respect to a Licensed Patent that covers a Licensed Product, to (1) abandon or allow to lapse such Licensed Patent or (2) discontinue any other Patent Prosecution Activities in respect thereof, or (3) to commence any reissue, re-examination, renewal or substitution proceeding, in each case in the United States or any EPO country, COMPANY shall provide ROYALTY PHARMA with thirty (30) days prior written notice of such decision or any such abandonment, lapse, discontinuation or commencement. Any such decision shall be made on a commercially reasonable basis, taking into account (i) [ * ] .

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(ii) COMPANY shall have the right to abandon or allow to lapse any Licensed Patent or discontinue any other Patent Prosecution Activities outside the United States and the EPO countries in its sole discretion and without notice to ROYALTY PHARMA.

6.2 Licensed Patents Jointly Assigned to COMPANY and LICENSOR

Any invention relating to a Licensed Compound, the invention of which under applicable patent law is attributed jointly to at least one employee of LICENSOR and at least one employee of COMPANY, shall be assigned by such employees to LICENSOR and COMPANY. Any such jointly assigned patent, or patent application which includes claims to any Licensed Products shall be considered a Licensed Patent and subject to the terms of this Agreement. COMPANY shall be primarily responsible for all Patent Prosecution Activities pertaining to Licensed Patents jointly assigned to LICENSOR and COMPANY. COMPANY shall select patent counsel, acceptable to LICENSOR, to pursue Patent Prosecution Activities in respect of all such Licensed Patents and shall provide LICENSOR with copies of all filings and correspondence pertaining to such Patent Prosecution Activities, in a timely manner, so as to give LICENSOR an opportunity to comment thereon. COMPANY shall advise such patent counsel in writing that for purposes of such Patent Prosecution Activities, such counsel represents both COMPANY and LICENSOR. COMPANY shall further inform LICENSOR of any decision by COMPANY to discontinue any Patent Prosecution Activities in respect of any pending patent application or issued patent promptly upon reaching such decision and in any case, no less than thirty (30) days before the discontinuance thereof. COMPANY shall be solely responsible for all expenses incurred by COMPANY in prosecuting and maintaining such patents or patent applications. COMPANY shall pursue Patent Prosecution Activities of such Licensed Products in those countries it deems reasonably appropriate after consultation with LICENSOR. If COMPANY fails to timely pursue Patent Prosecution Activities in respect of any patent application or issued patent jointly assigned to COMPANY and LICENSOR in any country in which LICENSOR wishes to pursue such Patent Prosecution Activities, LICENSOR shall be free at its sole expense, to continue or discontinue any or all of the Patent Prosecution Activities in respect of such patent application or issued patent in such country or grant their rights to such patent application or issued patent to third parties. Thereafter, LICENSOR’s rights to such patent application and issued patent shall no longer be included in the license granted pursuant to Section 2.1 and COMPANY shall further, upon LICENSOR’s request, license COMPANY’s rights under such jointly assigned patents to LICENSOR or any licensees of LICENSOR, non-exclusively on a royalty free basis.

6.3 GW Patent Prosecution Activities

LICENSOR agrees not to assume responsibility for any GW Patent Prosecution Activities (as defined in the GW License Agreement) without first consulting with COMPANY to discuss the commercial importance of the patents and patent applications with respect to which LICENSOR is contemplating assuming GW Patent Prosecution Activities.

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6.4 Covenant to Transfer Prosecution Activities

LICENSOR and COMPANY agree to discuss and negotiate in good faith, at the earliest time practicable after the Effective Date, a transfer of primary responsibility for Patent Prosecution Activities for all or a portion of the Licensed Patents to COMPANY, and to provide powers of attorney for such transferred Licensed Patents to COMPANY. COMPANY shall, upon any such transfer, then be responsible for the prosecution and maintenance of any and all such transferred Licensed Patents on behalf of LICENSOR, at COMPANY’s expense. COMPANY and LICENSOR shall not agree on or implement any such transfer that reasonably would be expected to have an adverse effect on ROYALTY PHARMA’s rights specified in this Article 6.

6.5 Notices Relating to the Licensed Patents

LICENSOR shall notify COMPANY of the issuance of each U.S. patent included among the Licensed Patents, giving the date of issue and patent number for each such patent. Such notices shall be given promptly, but in any event within five (5) business days of LICENSOR’s notice of each such patent’s date of issue. COMPANY shall promptly notify ROYALTY PHARMA of any such notice received from LICENSOR.

6.6 Authorization Relating to Patent Term Extension

LICENSOR hereby authorizes COMPANY: (a) to include in any data submission for a Licensed Product, as COMPANY may deem appropriate under 21 U.S.C. 355(b), (c)(2), a list of patents included among the Licensed Patents that relate to such Licensed Product and such other information as COMPANY in its reasonable discretion believes is appropriate to be filed in such submission; and (b) to exercise any rights that may be exercisable by LICENSOR as patent owner under the Act to apply for patent term restoration or extension, or supplemental protection certificates or their equivalents in any country in the Territory for any patent included among the Licensed Patents that covers a Licensed Product. LICENSOR agrees to cooperate with COMPANY or its sublicensees, as applicable, in the exercise of the authorization granted herein or which may be granted pursuant to this Section 6.6 and will execute such documents and take such additional action as COMPANY may reasonably request in connection therewith, at COMPANY’s expense.

ARTICLE 7.

INFRINGEMENT

7.1 Third Party Infringement.

If any party becomes aware of any activity that it believes infringes a Valid Claim that covers a Licensed Product, the party obtaining such knowledge shall promptly advise the other parties of all relevant facts and circumstances pertaining to the potential infringement. Subject to the rights of (i) GW with respect to patents owned or controlled

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by GW and (ii) Shire with respect to patents owned or controlled by Shire, COMPANY shall have the sole right to enforce any rights within the Licensed Patents against such infringement, at its own expense. LICENSOR and ROYALTY PHARMA shall cooperate with COMPANY in such effort, at COMPANY’s expense, including being joined as a party to such action if necessary. In each calendar year, COMPANY may [ * ] . Any damage awards or settlement payments made to COMPANY in connection with any such infringement action shall be distributed in the following order of priority:

(a) [ * ] ;

(b) [ * ] ; and

(i) If such award, recovery or settlement is for infringement by a product that is competitive to a Licensed Product, [ * ] as follows:

(A) the award, recovery or settlement shall be [ * ] ; or

(B) the award, recovery or settlement shall be [ * ] .

(ii) Any other or additional award, recovery or settlement amount shall be [ * ] .

7.2 COMPANY’s Right to Pursue Third Party Infringers.

(a) If COMPANY elects, after receiving notice of a potential infringement in the United States or any EPO country, or providing LICENSOR and ROYALTY PHARMA with notice of such infringement, to either (1) not seek to terminate such infringement; or (2) not institute an action to prevent continuation thereof and, thereafter, to prosecute such action diligently, COMPANY shall promptly provide written notice of such election to ROYALTY PHARMA. Otherwise, COMPANY shall, within a commercially reasonable time, take steps to stop such infringement and, if necessary, commence an action to terminate such infringement and prosecute such action on a commercially reasonable basis. Any decisions made by COMPANY under this Section 7.2(a) shall be made on a commercially reasonable basis, taking into account (i) ROYALTY PHARMA’s desire to maximize royalty revenue for Licensed Products in the Licensed Territory; and (ii) COMPANY’s reasonable judgment as to any material adverse effects on such revenue created by such decision.

(b) Notwithstanding the foregoing Section 7.2(a), in the event COMPANY receives the certification referenced in Section 7.5, subject to applicable laws and regulations, if requested by ROYALTY PHARMA, COMPANY shall initiate within the time period set forth in the appropriate laws and regulations for the filing of such actions, an action to terminate infringement implicated by such notice. COMPANY and ROYALTY PHARMA shall then promptly discuss a strategy for pursuing such

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action. Each party’s rights with respect to the initiation and prosecution of any such action, or any recovery obtained as a result of such action, shall be as set forth in this Article 7.

(c) COMPANY shall have the right to elect to not pursue infringement of the Licensed Patents outside the United States and the EPO countries in its sole discretion and without notice to ROYALTY PHARMA.

7.3 Third Party Infringers in Respect of GW Patents.

Any right which LICENSOR acquires to pursue third party infringers in respect of the GW Patents shall be immediately exercisable by COMPANY in accordance with the applicable terms and provisions set forth in the GW License Agreement and this Article 7.

7.4 Infringement of Third Party Rights

COMPANY shall have the sole right, but not the obligation, to defend against claims or initiate any declaratory judgment action relating to a Licensed Compound or Licensed Product or bring any such action necessary to protect its interest in such Licensed Compound or Licensed Product, at its own expense.

7.5 Notices and Authorizations

(a) LICENSOR shall notify COMPANY of each certification pertaining to any patent included among the Licensed Patents which LICENSOR receives pursuant to 21 U.S.C. §§ 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or its successor provisions, or Canada’s Patented Medicines (Notice of Compliance) Regulations Article 5, or any similar provisions in a country other than the United States and Canada, and shall provide COMPANY with a copy of such certification within five (5) days of receipt by LICENSOR. Each Party’s rights with respect to the initiation and prosecution of any legal action as a result of such certification or any recovery obtained as a result of such legal action shall be as defined in this Section 7. COMPANY shall notify ROYALTY PHARMA within five (5) days of COMPANY’s receipt of any such certification from LICENSOR or otherwise.

(b) LICENSOR hereby authorizes COMPANY to commence suit for any infringement of the Licensed Patents that covers a Licensed Product under 21 U.S.C. §§ 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or their successor provisions.

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ARTICLE 8. WARRANTIES;

EXCLUSION OF WARRANTIES; AND INDEMNIFICATION

8.1 Warranties of LICENSOR

(a) LICENSOR represents and warrants that, to the best of its knowledge:

(i) LICENSOR has disclosed to COMPANY all potential patent rights in the control of third parties known to LICENSOR as of the Effective Date which may be needed to commercialize any Licensed Products; and

(ii) Appendix “A” is a complete list of all patents and patent applications included in the Licensed Patents as of the Effective Date. LICENSOR will, from time to time during the term of this Agreement, promptly provide COMPANY, upon request, with an updated version of Appendix “A.”

(b) LICENSOR further represents and warrants that:

(i) it is the exclusive owner of the patents and patent applications identified as owned by LICENSOR on Appendix “A”;

(ii) it is a co-owner of the patents and patent applications identified as co-owned by LICENSOR and COMPANY on Appendix “A”; and

(iii) it has the exclusive right and license to practice, with the right to sublicense, the patents and patent applications identified as licensed pursuant to the GW License Agreement or the GSK/Shire Agreement on Appendix “A” to develop, make, have made, use, import, offer for sale and sell Licensed Products.

For purposes of the representation and warranty set forth in clause (i) of Subsection 8.1(a), “LICENSOR” shall mean any employees of LICENSOR who [ * ] . COMPANY acknowledges that LICENSOR has not undertaken any investigation with respect to the potential patent rights of any third party.

8.2 Warranties of Each Party

Each party hereto represents to the others that it is free to enter into this Agreement and to carry out all of the provisions hereof, including, in the case of LICENSOR, its grant to COMPANY of the license described in Section 2.1.

8.3 Merchantability and Exclusion of Warranties

COMPANY possesses the necessary expertise and skill in the technical areas pertaining to the Licensed Patents, Licensed Products and Licensed Technology to make, and has made, its own evaluation of the capabilities, safety, utility and commercial application of the Licensed Patents, Licensed Products and Licensed Technology.

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ACCORDINGLY, EXCEPT AS SET FORTH IN SECTIONS 8.1 AND 8.2, LICENSOR DOES NOT MAKE ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE VALIDITY OF LICENSED PATENTS, LICENSED TECHNOLOGY OR LICENSED PRODUCTS AND EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER IMPLIED WARRANTIES WITH RESPECT TO THE CAPABILITIES, SAFETY, UTILITY, OR COMMERCIAL APPLICATION OF THE LICENSED PATENTS, LICENSED TECHNOLOGY OR LICENSED PRODUCTS.

8.4 [ * ]

[ * ] . This Section shall not affect COMPANY’s rights hereunder to any credit or royalty reduction explicitly permitted elsewhere herein.

8.5 Indemnification

(a) COMPANY shall defend, indemnify, and hold harmless the Indemnitees, from and against any and all claims, demands, loss, liability, expense, or damage (including investigative costs, court costs and reasonable attorneys’ fees) Indemnitees may suffer, pay, or incur as a result of claims, demands or actions against any of the Indemnitees arising or alleged to arise by reason of, or in connection with, any and all personal injury (including death) and property damage caused or contributed to, in whole or in part, by manufacture, testing, design, use, Sale, promotion or labeling of any Licensed Products by COMPANY or COMPANY’s Affiliates, contractors, agents or sublicensees. COMPANY’s obligations under Sections 3.5(c), 8.4, 8.5, 8.6 and 8.7, and Article 9 shall survive the expiration or termination of this Agreement for any reason.

(b) LICENSOR shall indemnify and hold Indemnitees harmless from and against any and all claims, demands, loss, liability, expense or damage (including investigative costs, court costs and reasonable attorneys’ fees) Indemnitees may suffer, pay or incur as a result of claims, demands or actions against any of the Indemnitees arising by reason of, or in connection with, the breach by LICENSOR of any of its representations and warranties set forth in this Agreement.

8.6 Insurance .

COMPANY has provided to ROYALTY PHARMA and LICENSOR in the Disclosure Letter an accurate written description of COMPANY’s insurance [ * ] policies with respect to product liability for Licensed Products as shall be in effect on the Effective Date (the “Current Insurance Program”). LICENSOR, ROYALTY PHARMA and COMPANY agree that as of the Effective Date the Current Insurance Program is sufficient to satisfy COMPANY’s obligations pursuant to this Section 8.6. Without limiting COMPANY’s indemnity obligations under Section 8.5, COMPANY shall cause to be in force, a commercially reasonable program of insurance for Licensed Products, which program shall (x) include product liability insurance, each in an aggregate amount at least equal to an amount that is commercially reasonable with respect to

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pharmaceutical companies comparable to COMPANY for risks comparable to those involved with the Licensed Products, and in any event in an amount no less than [ * ] per occurrence for each of bodily injury, and (y) consist of one or more of the following:

(a) [ * ] in an aggregate amount at least equal to [ * ] , provided that such [ * ] will specifically insure the Indemnitees, as additional insureds, for all claims, damages, and actions mentioned in Section 8.5(a) of this Agreement; and COMPANY will provide LICENSOR and ROYALTY PHARMA with no less than [ * ] written notice of any change in such [ * ] that may reasonably be expected to have an adverse effect on LICENSOR or ROYALTY PHARMA (including, without limitation, any increase in the scope or amount of such [ * ] ) or of any termination of such [ * ] ; and

(b) an [ * ] insurance policy in an aggregate amount at least equal to the aggregate amount of [ * ] , provided that such policy will:

(i) specifically insure the Indemnitees, as additional insureds, for all claims, damages, and actions mentioned in Section 8.5(a) of this Agreement; and

(ii) require the insurance carrier to provide LICENSOR and ROYALTY PHARMA with no less than [ * ] written notice of any change in the terms or coverage of the policy or its cancellation.

8.7 Notice of Claims; Indemnification Procedures

(a) COMPANY shall promptly notify LICENSOR and ROYALTY PHARMA of all claims involving the Indemnitees for which indemnification is or may be provided in Section 8.5(a) and shall advise LICENSOR and ROYALTY PHARMA of the policy amounts that might be needed to defend and pay any such claims.

(b) An Indemnitee which intends to claim indemnification under this Article 8 shall promptly notify the party from whom it is seeking indemnification (the “Indemnitor”) and the other party to this Agreement in writing of any matter in respect of which the Indemnitee or any of its employees or agents intend to claim such indemnification. The Indemnitee shall permit, and shall cause its employees and agents to permit, the Indemnitor, at its discretion, to settle any such matter and agrees to the complete control of such defense or settlement by the Indemnitor; provided, however, that such settlement does not adversely affect the Indemnitee’s rights hereunder or impose any obligations on the Indemnitee in addition to those set forth herein in order for it to exercise such rights. No such matter shall be settled without the prior written consent of the Indemnitor and the Indemnitor shall not be responsible for any legal fees or other costs incurred other than as provided herein. The Indemnitee, its employees and agents shall cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of any matter covered by the applicable indemnification. The Indemnitee shall have the right, but not the obligation, to be represented by counsel of its own selection and expense.

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ARTICLE 9.

CONFIDENTIALITY

9.1 Treatment of Confidential Information

Except as otherwise provided hereunder, during the term of this Agreement and for a period of [ * ] thereafter:

(a) COMPANY and its Affiliates and sublicensees shall retain in confidence and use only for purposes of this Agreement, any written information and data supplied by LICENSOR or ROYALTY PHARMA to COMPANY under this Agreement; and

(b) LICENSOR and ROYALTY PHARMA shall retain in confidence and use only for purposes of this Agreement any written information and data supplied by COMPANY or on behalf of COMPANY to LICENSOR and/or ROYALTY PHARMA under this Agreement.

For purposes of this Agreement, all such information and data which a party is obligated to retain in confidence shall be called “Information.”

9.2 Right to Disclose

To the extent that it is reasonably necessary to fulfill its obligations or exercise its rights under this Agreement, or any rights which survive termination or expiration hereof, each party may disclose Information to its Affiliates, sublicensees, consultants, outside contractors, actual or prospective investors, the Inventors, governmental regulatory authorities and clinical investigators on condition that such entities or persons agree:

(a) to keep the Information confidential for a [ * ] time period and to the same extent as each party is required to keep the Information confidential; and

(b) to use the Information only for such purposes as such parties are authorized to use the Information.

Each party or its Affiliates or sublicensees may disclose Information to the government or other regulatory authorities to the extent that such disclosure (i) is necessary for the prosecution and enforcement of patents, or authorizations to conduct clinical trials or commercially market Licensed Products, provided such party is then otherwise entitled to engage in such activities during the term of this Agreement or thereafter in accordance with the provisions of this Agreement, or (ii) is legally required. Notwithstanding anything to the contrary contained herein but subject to Section 9.4, ROYALTY PHARMA may disclose written information and data supplied by LICENSOR or COMPANY to any rating agency, any note holder of ROYALTY PHARMA or its Affiliates, or any insurer thereof, provided in each case that such agency, holder or insurer is subject to commercially reasonable confidentiality obligations.

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9.3 Release from Restrictions

The obligation not to disclose Information shall not apply to any part of such Information that:

(a) is or becomes patented, published or otherwise part of the public domain, other than by unauthorized acts of the party obligated not to disclose such Information (for purposes of this Article 9 the “receiving party”) or its Affiliates or sublicensees in contravention of this Agreement; or

(b) is disclosed to the receiving party or its Affiliates or sublicensees by a third party provided that such Information was not obtained by such third party directly or indirectly from the other party to this Agreement; or

(c) prior to disclosure under this Agreement, was already in the possession of the receiving party, its Affiliates or sublicensees, provided that such Information was not obtained directly or indirectly from the other party to this Agreement; or

(d) results from research and development by the receiving party or its Affiliates or sublicensees, independent of disclosures from the other party of this Agreement, provided that the persons developing such information have not had exposure to the information received from the other party to this Agreement; or

(e) is required by law to be disclosed by the receiving party, provided that the receiving party uses reasonable efforts to notify the ^- other party immediately upon learning of such requirement in order to give the other party reasonable opportunity to oppose such requirement; or

(f) in the case of Information disclosed by a party to this Agreement, if such party agrees in writing that such Information may be disclosed by the party to this Agreement to whom such Information has been disclosed by such party.

9.4 GSK/Shire and GW Confidentiality

If COMPANY or LICENSOR provides to ROYALTY PHARMA or any sublicensee or any other third party any information or data which was furnished to LICENSOR under the GSK/Shire Agreement or the GW Agreements and then provided to COMPANY, or if COMPANY discloses to any sublicensee or to any other third party any specific terms of the GSK/Shire Agreement or the GW Agreements, COMPANY shall ensure that such sublicensee or third party is subject to the confidentiality obligations imposed on sublicensees under, as applicable, (i) Article 9 and Section 13.3 of the GSK/Shire Agreement; (ii) Article 3 of the Settlement Agreement; and (iii) Article

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

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12 and Section 15.3 of the GW License Agreement. ROYALTY PHARMA agrees that it is subject to the confidentiality obligations referred to in clauses (i), (ii) and (iii) of the immediately preceding sentence.

ARTICLE 10.

TERM AND ENFORCEMENT

10.1 Term

The term of this Agreement shall commence on the date of this Agreement and shall continue in full force and effect until the expiration of (a) the last to expire Valid Claim or (b) COMPANY’s obligations to pay royalties hereunder, whichever is last to occur. Upon the expiration of this Agreement pursuant to this Section 10.1, the licenses granted under Section 2.1 shall remain fully paid-up, perpetual and irrevocable (notwithstanding Sections 10.4(a) and 10.5).

10.2 Failure to Enforce

The failure of any party, at any time, or for any period of time, to enforce any of the provisions of this Agreement, shall not be construed as a waiver of such provisions or as a waiver of the right of such party thereafter to enforce each and every such provision of this Agreement.

10.3 No Termination

No party to this Agreement shall have the right to terminate, nor shall any party to this Agreement seek to terminate or encourage any others to terminate or seek to terminate, this Agreement for any reason, but instead upon any breach of any obligation owed under this Agreement, a party may seek money damages or equitable relief through Section 14.1, if applicable, or through other means.

10.4 Bankruptcy

The parties intend for this Agreement to be treated as an “executory” contract under Title 11 of the U.S. Code and other applicable bankruptcy law (“Title 11”). In the event that COMPANY becomes a debtor under Title 11:

(a) If this Agreement is rejected as provided in or pursuant to Title 11, (i) such rejection shall not serve to terminate this Agreement as between ROYALTY PHARMA and LICENSOR (and if this Agreement is terminated or otherwise rendered unenforceable as a result of such rejection or otherwise in connection with COMPANY’s Title 11 proceeding, LICENSOR and ROYALTY PHARMA shall be deemed to have entered into a like agreement in replacement thereof, which they shall confirm by written agreement), (ii) neither LICENSOR nor ROYALTY PHARMA shall be treated as having assumed or otherwise be liable to the other for any obligations of COMPANY under this Agreement (including any obligations to LICENSOR or ROYALTY PHARMA), (iii)

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following such rejection, ROYALTY PHARMA and LICENSOR shall use commercially reasonable efforts jointly to seek to obtain a new licensee to market the Licensed Products in accordance with the terms of this Agreement, to enjoy the rights of COMPANY under this Agreement and to assume the obligations of COMPANY under this Agreement (including all obligations to LICENSOR and ROYALTY PHARMA) (the “Re-license”) and (iv) LICENSOR shall use commercially reasonable efforts (without any requirement to make payments as a result thereof) to preserve its rights under the GSK/Shire Agreement and the GW Agreements so as to make them available for the Re-license. LICENSOR and ROYALTY PHARMA agree to negotiate the terms and conditions of the Re-license in good faith and such that Re-license will provide that (A) LICENSOR shall be reimbursed for its out-of-pocket expenses incurred as a result of COMPANY becoming a debtor under Title 11 and the Re-license, (B) the new licensee under the Re-license will bear all obligations of COMPANY to LICENSOR and ROYALTY PHARMA under this Agreement including Sections 3.5(c), 8.5 and 8.6 hereof and (C) the new licensee will make payment of royalties and other amounts, other than amounts owed to LICENSOR under this Agreement, to ROYALTY PHARMA with LICENSOR not being entitled to any such payments. Neither LICENSOR nor ROYALTY PHARMA will have any obligation to enter into the Re-license unless such Re-license complies with the immediately preceding sentence. Nothing in this paragraph shall be construed to require LICENSOR to make any payment to ROYALTY PHARMA in connection with such rejection or Re-license or to require ROYALTY PHARMA to make any payment to LICENSOR in connection with such rejection or Re-license.

(b) If COMPANY (in any capacity, including as a debtor-in-possession or by a Title 11 trustee) seeks, pursuant to or as provided in Title 11, to assume this Agreement, and if LICENSOR’s consent or other approval is required for such assumption, LICENSOR shall exercise any such consent or other approval rights at ROYALTY PHARMA’s written direction, and further shall not object to or otherwise challenge any such assumption without ROYALTY PHARMA’s prior written consent, as long as, in each case, doing so shall not expose LICENSOR to any liability other than as provided in this Agreement. If COMPANY (in any capacity, including as a debtor-in-possession or by a Title 11 trustee) seeks, pursuant to or as provided in Title 11, to assume and assign this Agreement, and if LICENSOR’s consent or other approval is required for such assumption and assignment, LICENSOR shall not unreasonably withhold or delay such consent.

The foregoing provisions of this Section 10.4 are without prejudice to any other rights or remedies LICENSOR or ROYALTY PHARMA may have arising under this Agreement, Title 11 or other applicable law.

10.5 Diligence

If during the term of this Agreement COMPANY and its sublicensees cease to market, promote and sell (other than for safety or other regulatory reasons) all of the Licensed Products previously Registered in all of the Major Market Countries for a period of [ * ] , then within [ * ] of ROYALTY PHARMA’s written request, COMPANY

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shall meet with ROYALTY PHARMA to discuss COMPANY’s future commercialization plans for such Licensed Products. Notwithstanding the foregoing, the [ * ] period described in the preceding sentence shall be extended for so long as COMPANY experiences a suspension of manufacturing of Licensed Product for reasons not within its control and COMPANY is using reasonable commercial efforts to have such manufacturing resumed. If within [ * ] of COMPANY’s receipt of such written request, COMPANY shall have failed to provide reasonable evidence to ROYALTY PHARMA of COMPANY’s marketing and sale of any one or more Licensed Products in any one or more of the Major Market Countries, then effective upon written notice from ROYALTY PHARMA:

(a) all of the rights and obligations of COMPANY hereunder (including all obligations to LICENSOR) shall be immediately and irrevocably transferred to a new licensee designated by ROYALTY PHARMA (“New Licensee”), whose identity is subject to the prior written consent of LICENSOR, which consent shall not be unreasonably withheld or delayed, with New Licensee becoming “COMPANY” hereunder for such purposes, provided that COMPANY shall not be required to transfer any rights to intellectual property other than the Licensed Patents except as provided below in this Section 10.5;

(b) COMPANY shall no longer be a party to this Agreement and shall have no rights or obligations hereunder, other than as provided pursuant to this Section 10.5 and those accrued prior to delivery of such written notice;

(c) LICENSOR shall not make or otherwise advance any claim or other position that diminishes or otherwise impairs the rights afforded ROYALTY PHARMA by the preceding Sections 10.5(a) and 10.5(b); and

(d) following the transfer in subsection (a), New Licensee’s right to assign the rights of COMPANY hereunder shall be subject to the prior written consent of LICENSOR, which consent shall not be unreasonably withheld or delayed.

In the event of any transfer of the license and rights pursuant to this Section 10.5, ROYALTY PHARMA and COMPANY shall negotiate in good faith and agree upon commercially reasonable terms for (i) the transfer of technology, intellectual property rights, including patents and trademarks, manufacturing contracts and rights, regulatory filings and approvals (including NDAs and drug master files), and such other matters as ROYALTY PHARMA and COMPANY agree are necessary and appropriate to transfer to New Licensee to enable New Licensee and its Affiliates and sublicensees to manufacture, have manufactured, use, sell, offer for sale, market, import and promote Licensed Compounds; (ii) [ * ] ; and other relevant factors); (iii) [ * ] to the extent that ROYALTY PHARMA and COMPANY agree that COMPANY shall [ * ] ; and (iv) [ * ] (to the extent those matters are not already addressed by the preceding clause (ii)). Notwithstanding the foregoing, [ * ] pursuant to this Section 10.5).

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ROYALTY PHARMA shall promptly reimburse LICENSOR for all reasonable expenses LICENSOR incurs in connection with any assignments described in Sections 10.5(a) and (d). The foregoing provisions of this Section 10.5 are without prejudice to any other rights or remedies ROYALTY PHARMA or LICENSOR may have arising under this Agreement or other applicable law.

ARTICLE 11.

ASSIGNMENT

11.1 Assignment Rights

COMPANY shall not assign this Agreement or any part thereof without the prior written consent of ROYALTY PHARMA and LICENSOR, which consents shall not be unreasonably withheld or delayed. ROYALTY PHARMA may assign this Agreement or any part hereof without the consent of either COMPANY or LICENSOR; provided that, if such assignment includes an assignment of the rights and/or obligations of Articles 6 or 7, then ROYALTY PHARMA may not effect an assignment of this Agreement without the prior written consent of COMPANY, which consent shall not be unreasonably withheld or delayed. COMPANY or ROYALTY PHARMA may, however, without the other parties’ consent, assign or sell its rights under this Agreement (a) in connection with the transfer or sale of substantially its entire business to which this Agreement pertains, (b) in the event of its merger or consolidation with another company, (c) to an Affiliate, or (d) in the case of ROYALTY PHARMA, or any of its Affiliates, any collateral trustee, as security, under its applicable financing facility. Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve any party of responsibility for the performance of any accrued obligation which such party has under this Agreement. Any assignee of this Agreement shall assume all accrued and prospective obligations including but not limited to those set forth in Article 6.

11.2 GW Agreements

Notwithstanding any provision to the contrary in the GW Agreements, COMPANY may not assign to GW or any Affiliate of GW any rights transferred, license or sublicensed to COMPANY under the GW Agreements.

ARTICLE 12.

TRANSFER OF LICENSED TECHNOLOGY

LICENSOR shall supply COMPANY with all available Licensed Technology which becomes known to LICENSOR during the term of this Agreement, which disclosure will be made at least semi-annually or sooner, if practicable.

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ARTICLE 13.

REGISTRATION OF LICENSE

COMPANY, at its expense, may register the license granted under this Agreement in any country of the Licensed Territory where the use, sale or manufacture of a Licensed Product in such country would be covered by a Valid Claim. Upon request by COMPANY, LICENSOR agrees promptly to execute any “short form” licenses submitted to it by COMPANY in order to effect the foregoing registration in such country.

ARTICLE 14.

MISCELLANEOUS

14.1 Arbitration

Any controversy, claim or dispute regarding the size of any royalty reduction pursuant to Subsection 3.5(b) shall be resolved through arbitration conducted under the auspices of the American Arbitration Association pursuant to that organization’s rules for commercial arbitration. The arbitration proceedings shall take place in [ * ] .

14.2 Export Controls

COMPANY acknowledges that LICENSOR is subject to United States laws and regulations controlling the export of technical data, biological materials, chemical compositions and other commodities and that LICENSOR’s obligations under this Agreement are contingent upon compliance with applicable United States export laws and regulations. The transfer of technical data, biological materials, chemical compositions and commodities may require a license from the cognizant agency of the United States government or written assurances by COMPANY that COMPANY shall not export data or commodities to certain foreign countries without the prior approval of certain United States agencies, or as otherwise prescribed by applicable law or regulation. LICENSOR neither represents that an export license shall not be required nor that, if required, such export license shall issue.

14.3 Legal Compliance

COMPANY shall comply with all laws and regulations relating to its manufacture, use, sale, labeling or distribution of Licensed Products and shall not take any action which would cause LICENSOR, COMPANY or ROYALTY PHARMA to violate any laws or regulations.

14.4 Independent Contractor

COMPANY’s relationship to LICENSOR shall be that of a licensee only. None of the parties hereto shall be the agent of any other party and shall have no authority to

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act for, or on behalf of, any other party in any matter. Persons retained by any party as employees or agents shall not, by reason thereof, be deemed to be employees or agents of any other party.

14.5 Patent Marking

COMPANY shall mark Licensed Products Sold in the United States with United States patent numbers. Licensed Products manufactured or Sold in other countries shall be marked in compliance with the intellectual property laws in force in such countries. The foregoing obligations shall be subject to size and space limitations.

14.6 Use of Names; Publicity .

COMPANY and ROYALTY PHARMA shall obtain the prior written approval of LICENSOR prior to making use for any commercial purpose of the name of LICENSOR, the name of any of the Inventors or any employee of LICENSOR, except that COMPANY and ROYALTY PHARMA may identify LICENSOR to prospective investors and in public announcements relating to consummation of this Agreement to the extent contemplated by Section 4.2 of the Royalty Sale Agreement.

14.7 Effect

This Agreement shall not become effective or binding upon the parties until signed by LICENSOR’s Executive Vice President, the President, the Executive Vice President and Chief Financial Officer or any other authorized officer of COMPANY and a director of ROYALTY PHARMA.

14.8 Governing Law

This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the parties hereunder, shall be construed under and governed by the laws of the State of Georgia and the United States of America.

14.9 Entire Agreement

Except for the Royalty Sale Agreement and Conveyance Agreement, this Agreement constitutes the entire agreement between LICENSOR, COMPANY and ROYALTY PHARMA with respect to the subject matter hereof, shall restate, supersede and terminate the Existing Agreement and shall not be modified, amended or terminated, except by another agreement in writing executed by the parties hereto.

14.10 Survival

Section 3.5(c), 8.4, 8.5, 8.6, 8.7 and ARTICLE 9 shall survive termination or expiration of this Agreement.

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14.11 Severability

All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision or portion of any provision of this Agreement, not essential to the commercial purpose of this Agreement, shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining provisions or portions thereof shall constitute their agreement with respect to the subject matter hereof, and all such remaining provisions, or portions thereof, shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement shall be replaced by a valid provision which shall implement the commercial purpose of the illegal, invalid, or unenforceable provision. In the event that any provision essential to the commercial purpose of this Agreement is held to be illegal, invalid or unenforceable and cannot be replaced by a valid provision which will implement the commercial purpose of this Agreement, this Agreement and the rights granted herein shall terminate.

14.12 Force Majeure

Any delays in, or failure of performance of any party to this Agreement, shall not constitute a default hereunder, or give rise to any claim for damages, if and to the extent caused by occurrences beyond the control of the party affected, including, but not limited to, acts of God, strikes or other concerted acts of workmen, civil disturbances, fires, floods, explosions, riots, war, rebellion, sabotage, acts of governmental authority or failure of governmental authority to issue licenses or approvals which may be required.

14.13 Attorneys’ Fees

If any action at law, in equity or under Section 14.1 of this Agreement is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements, in addition to any other relief to which the party may be entitled.

14.14 Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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ARTICLE 15.

NOTICES

15.1 Notices

All notices, statements, and reports required to be given under this Agreement shall be in writing and shall be deemed to have been given upon delivery in person or, when deposited (a) in the mail in the country of residence of the party giving the notice, registered or certified postage prepaid or (b) with a professional courier service ( e.g., FedEx or UPS), and addressed as follows:


To LICENSOR:		Office of Technology Transfer Emory University 1784 North Decatur Road, Suite 130 Atlanta, GA 30322 Facsimile: (404) 727-1271 Attention : Director

With an Informational Copy to:		Office of the General Counsel Emory University Administrative Building, Suite 409 1380 Oxford Road Atlanta, GA 30322 Facsimile: (404) 727-6098 Attention : General Counsel

To COMPANY:		Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 Attention: Executive Vice President and Chief Financial Officer Telecopy: *[ ]**

With an Informational Copy to:		Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 Attention: Vice President and General Counsel Telecopy: [ * ] Steve Parker Arnold & Porter, LLP 1600 Tysons Blvd. McLean, VA 22102 Telecopy: 703-720-7399

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To ROYALTY PHARMA:		Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma Block D Iveagh Court Harcourt Road Dublin 2, Ireland Attention: William McManus Telecopy: (353) 14 75 71 50

With an Informational Copy to		RP Management, LLC 110 East 59th Street Suite 3300 New York, NY 10022 Attention: Pablo Legorreta Telecopy: (212) 883-2260

and		Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 Attention: F. George Davitt, Esq. Telecopy: (617) 523-1231

and		Sidley Austin Brown & Wood LLP 787 Seventh Avenue New York, NY 10019 Attention: Max Von Hollweg, Esq. Telecopy: (212) 839-5599

Any party hereto may change the address to which notices to such party are to be sent by giving notice to the other party at the address and in the manner provided above. Any notice may be given, in addition to the manner set forth above, by facsimile, provided that the party giving such notice obtains acknowledgment by facsimile that such notice has been received by the party to be notified. Notice made in this manner shall be deemed to have been given when such acknowledgment has been transmitted.

15.2 Additional Provisions

Each party shall use reasonable efforts to give any material notice hereunder by use of a professional courier service, provided, that failure to do so shall have no effect if such notice is given in any other manner prescribed by Subsection 16.1. COMPANY shall use reasonable efforts to provide an informational copy of any notice to LICENSOR’s Office of the General Counsel as set forth in Subsection 16.1, provided, that failure to do so shall have no effect if such notice is given to LICENSOR as otherwise prescribed in Subsection 16.1.

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IN WITNESS WHEREOF, LICENSOR, COMPANY and ROYALTY PHARMA have caused this Agreement to be signed by their duly authorized representatives as of the day and year indicated below.


LICENSOR:

	EMORY UNIVERSITY

	By:	/s/ Michael J. Mandl
	Name:	Michael J. Mandl
	Title:	Executive Vice President for Finance and Administration


COMPANY:

	GILEAD SCIENCES, INC.

	By:	/s/ John F. Milligan
	Name:	John F. Milligan, Ph.D.
	Title:	Executive Vice President & CFO


ROYALTY PHARMA:

	INVESTORS TRUST & CUSTODIAL SERVICES (IRELAND) LIMITED, solely in its capacity as Trustee of Royalty Pharma

	By:	/s/ Paul M. McGuiggan
	Name:	Paul M. McGuiggan
	Title:	Director

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APPENDIX A

EMTRICITABINE PATENT PORTFOLIO

Method and Compositions for the [ * ]

Owned by Emory University

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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Antiviral Activity and Resolution of [ * ]

Owned by Emory University

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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Additional FTC Patent Applications and Patents

Owned by Emory University

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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Therapeutic Nucleosides

[ * ] Owned by Emory University

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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Method of Manufacture of [ * ]

[ * ]

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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Licensed pursuant to the GW License Agreement

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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Licensed pursuant to the GSK/Shire Agreement

[ * ]

(ALL BELOW LISTINGS TO THE END)

[ * ]

TITLE
& DOCKET NAME

COUNTRY

FILING
DATE

SERIAL
NUMBER

PATENT
NUMBER

ISSUE
DATE

STATUS

[ * ]

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APPENDIX “B”

LICENSE TO THE UNITED STATES GOVERNMENT

This instrument confers to the United States Government, as represented by the Department of Health and Human Services, a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on its behalf throughout the world the following subject invention. This license will extend to all following divisionals or continuations of the patent application and all patents or reissues which may be granted thereon:


Invention Title:		Method and Compositions for [ * ]

Inventors:		Dr. Dennis Liotta Dr. Woo Baeg Choi

Patent Application

Serial No.:		[ * ]

Filing Date:		[ * ]

Country, if other than the United States		[ * ]

This subject invention was conceived or first actually reduced to practice in performance of a government-funded project, National Institutes of Health Grant/Contract [ * ] . Principal rights to this subject invention have been left with the Licensor, Emory University, subject to the provisions of 37 CFR 401 and 45 CFR 8.


Signed:		/s/ Ann R. Stevens		Date:		6/4/93

Typed Name: Ann R. Stevens, Ph.D.

Title: Associate Vice President for Research

Accepted on behalf of Government:


		Date:

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APPENDIX “B”

LICENSE TO THE UNITED STATES GOVERNMENT


Invention Title:		Method of [ * ] and [ * ] of [ * ]

Inventors:		Dr. Dennis Liotta Dr. Raymond Schinazi Dr. Woo Baeg Choi

Patent Application

Serial No.:		[ * ]

Filing Date:		[ * ]

Country, if other than the United States


Signed:		/s/ Ann R. Stevens		Date:		6/4/93

Typed Name: Ann R. Stevens, Ph.D.

Title: Associate Vice President for Research

Accepted on behalf of Government:


		Date:

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APPENDIX “B”

LICENSE TO THE UNITED STATES GOVERNMENT


Invention Title:		Method for [ * ] , and [ * ]

Inventors:		Dr. Dennis Liotta Dr. Raymond Schinazi Dr. Woo-Baeg Choi

Patent Application

Serial No.:		[ * ]

Filing Date:		[ * ]

Patent No.:		[ * ]

Issue Date:		[ * ]

Country, if other than the United States		[ * ]


Signed:		/s/ Ann R. Stevens		Date:		6/4/93

Typed Name: Ann R. Stevens, Ph.D.

Title: Associate Vice President for Research

Accepted on behalf of Government:


		Date:

* I have enclosed a copy of the Issued Patent. The structures are not correct. I will send you a copy of the amended issued patent upon receipt.

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APPENDIX “B”

LICENSE TO THE UNITED STATES GOVERNMENT


Invention Title:		Method of [ * ] and [ * ] of [ * ]

Inventors:		Dr. Dennis Liotta Dr. Raymond Schinazi Dr. Woo-Baeg Choi

Patent Application

Serial No.:		[ * ]

Filing Date:		[ * ]

Country, if other than the United States


Signed:		/s/ Vincent La Terza		Date:		12/27/95

Typed Name: Vincent La Terza

Title: Director of Licensing and Patent Counsel

Accepted on behalf of Government:


		Date:

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APPENDIX “B”

LICENSE TO THE UNITED STATES GOVERNMENT


Invention Title:		Method of [ * ] and [ * ]

Inventors:		Dr. Dennis Liotta Dr. Raymond Schinazi Dr. Woo-Baeg Choi

Patent Application

Serial No.:		[ * ]

Filing Date:		[ * ]

Country, if other than the United States


Signed:		/s/ Vincent La Terza		Date:		12/27/95

Typed Name: Vincent La Terza

Title: Director of Licensing and Patent Counsel

Accepted on behalf of Government:


		Date:

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APPENDIX “B”

LICENSE TO THE UNITED STATES GOVERNMENT


Invention Title:		[ * ] and [ * ] of [ * ]

Inventors:		Dr. Dennis Liotta Dr. Raymond Schinazi Dr. Woo-Baeg Choi

Patent Application

Serial No.:		[ * ]

Filing Date:		[ * ]

Country, if other than the United States


Signed:		/s/ Vincent La Terza		Date:		4/11/96

Typed Name: Vincent La Terza

Title: Director of Licensing and Patent Counsel

Accepted on behalf of Government:


		Date:

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Appendix C

Global Access Program Countries



Afghanistan	Gambia	Nigeria

Algeria	Ghana	Rwanda

Angola	Guinea	Samoa

Bangladesh	Guinea Bissau	Sao Tome & Principe

Benin	Guyana	Senegal

Bhutan	Haiti	Seychelles

Botswana	Kenya	Sierra Leone

Burkina Faso	Kiribati	Solomon Islands

Burundi	Laos	Somalia

Cambodia	Lesotho	South Africa

Cameroon	Liberia	Sudan

Cape Verde	Libya	Swaziland

Central African Republic	Madagascar	Tanzania

Chad	Malawi	The Bahamas

Comoros	Maldives	Togo

Congo-Brazzaville	Mali	Tunisia

Cote dYvoire	Mauritania	Tuvalu

Democratic Republic of Congo	Mauritius	Uganda

Djibouti	Morocco	Vanuatu

Egypt	Mozambique	Yeman

Equatorial Guinea	Myanmar	Zambia

Eritrea	Namibia	Zimbabwe

Ethiopia	Nepal

Gabon	Niger

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Final

Appendix D

Covenant Agreement

[ * ]

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E XHIBIT B

T O THE R OYALTY S ALE A GREEMENT

E MORY W IRE T RANSFER I NSTRUCTIONS

[ * ]

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E XHIBIT C

T O THE R OYALTY S ALE A GREEMENT

P RESS R ELEASE

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LOGO

Contacts:

Gilead Sciences

Emory University

Royalty Pharma

Susan Hubbard, Investors

(650) 522-5715

Amy Flood, Media

(650) 522-5643

James Wagner, President

Michael Mandl, Executive Vice President

(404) 727-4347

Pablo Legorreta, Chief Executive Officer

Alexander Kwit, General Counsel

(212) 883-0200

FOR IMMEDIATE RELEASE

GILEAD SCIENCES AND ROYALTY PHARMA ANNOUNCE $525 MILLION AGREEMENT WITH EMORY UNIVERSITY TO PURCHASE ROYALTY INTEREST FOR EMTRICITABINE

Foster City, CA, New York, NY and Atlanta, GA, July 18, 2005 – Gilead Sciences, Inc. (Nasdaq: GILD) and Royalty Pharma today announced that the companies have entered into an agreement with Emory University providing for the purchase of the royalty interest owed to Emory for emtricitabine, also known as Emtriva ^® . Under the terms of the agreement, Gilead and Royalty Pharma will make a one-time cash payment of $525 million to Emory in exchange for elimination of the emtricitabine royalties due to Emory on worldwide net sales of the product. The transaction, which is subject to customary closing conditions, is expected to close on or before July 29, 2005.

Gilead and Royalty Pharma will pay 65 and 35 percent, respectively, of the $525 million cash payment to Emory. Following this transaction, Gilead will be obligated to pay to Royalty Pharma royalty revenue based on all future emtricitabine net sales relative to Royalty Pharma’s contribution to the Emory royalty buyout. Gilead will continue to have obligations to pay certain royalties to GlaxoSmithKline, fulfilling Emory’s obligations under a previous agreement. Within 30 days of closing, Emory and certain inventors of emtricitabine may acquire interests in Royalty Pharma approximating up to 25 percent of the proceeds payable by Royalty Pharma in the transaction.

Lazard is acting as financial advisor to Gilead and Citigroup is acting as financial advisor to Emory and the inventors.

The University’s share of the transaction will be reinvested in Emory’s research mission following the terms of the Bayh-Dole Act passed by Congress in 1980 to encourage commercialization of research by universities.

“We feel privileged and humbled to receive such extraordinary recognition for the value of our intellectual property,” said Emory University President Dr. James Wagner. “These dividends will be plowed back into our mission of research and discovery for the benefit of our state, our nation and the world, in accordance with the priorities we have identified in our University-wide strategic plan.”

Emtricitabine was discovered by Emory researchers Dr. Dennis C. Liotta, Dr. Raymond F. Schinazi and Dr. Woo-Baeg Choi and licensed to Triangle Pharmaceuticals by Emory University in 1996. Triangle was acquired by Gilead in 2003. Emtricitabine, marketed by Gilead as Emtriva, was first approved by the U.S.

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Food and Drug Administration in July 2003 for the treatment of HIV infection in combination with other antiretroviral agents. Emtricitabine is a component of Truvada ^® (emtricitabine and tenofovir disoproxil fumarate), approved by the U.S. Food and Drug Administration in August 2004 for the treatment of HIV infection in combination with other antiretroviral agents. Emtricitabine is also a component of the triple fixed-dose combination product under development by the Bristol-Myers Squibb and Gilead Sciences joint venture. In connection with amending and restating the license agreement, Gilead will make a one-time payment of $15 million to Emory on closing of the transaction.

Under the terms of Emory University’s intellectual property policy in effect at the time of the discovery, the majority share of the proceeds will go to the University, including various proportions to the central administration and schools, academic departments, and laboratories of the faculty inventors, who were based in the School of Medicine’s Department of Pediatrics and in Emory College’s Department of Chemistry. A minority share of the proceeds will go to Dr. Liotta, Samuel Candler Dobbs Professor of Chemistry; Dr. Schinazi, professor of pediatrics and senior research career scientist at the Atlanta Veterans Affairs Medical Center; and Dr. Choi, a former Emory researcher who is now CEO of FOB Synthesis, Inc., a new drug development company in Atlanta. They have developed a number of other significant anti-HIV and anti-hepatitis B compounds.

Drs. Liotta and Schinazi were recognized in 2003 with the top honor from the Georgia Biomedical Partnership, the Biomedical Industry Growth Award, for making a series of significant contributions to research that resulted in successful drug development. Their work in AIDS began in the mid-1980s when they established the first HIV laboratory at Emory.

Tenofovir, the active agent in Viread ^® (tenofovir disoproxil fumarate) and second component in Truvada, was discovered through a collaborative research effort between Dr. Antonin Holy, Institute for Organic Chemistry and Biochemistry, Academy of Sciences of the Czech Republic (IOCB) in Prague and Dr. Erik DeClercq, Rega Institute for Medical Research, Katholic University in Leuven, Belgium. Emory University and the inventors of both Viread and Emtriva have agreed to waive their right to a royalty on sales of Truvada in the Gilead Access Program countries to ensure the product can be offered at a no-profit price in parts of the world where the epidemic has hit the hardest.

About Truvada

Truvada combines Emtriva and Viread in one tablet taken once a day in combination with other antiretroviral agents. In the United States, Truvada is indicated in combination with other antiretroviral agents (such as non-nucleoside reverse transcriptase inhibitors or protease inhibitors) for the treatment of HIV-1 infection in adults. Safety and efficacy studies using Truvada tablets or using Emtriva and Viread in combination are ongoing.

Emtriva and Viread have each been studied as part of multi-drug regimens and have been found to be safe and effective. In clinical study 303 Emtriva and lamivudine (3TC) demonstrated comparable efficacy, safety and resistance patterns as part of multidrug regimens. These data, and those from study 903, in which lamivudine and tenofovir were used in combination, support the use of Truvada for the treatment of HIV-1 infection in treatment-naive adults. In treatment-experienced patients, the use of Truvada should be guided by laboratory testing and treatment history.

There are no study results demonstrating the effect of Truvada on clinical progression of HIV-1, and it is not recommended that Truvada be used as a component of a triple nucleoside regimen.

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Truvada should not be used with Emtriva or Viread, or other drugs containing lamivudine, including Combivir ^® , Epivir ^® , Epivir-HBV ^® , Epzicom™ or Trizivir ^® . Two-hundred eighty-three patients have received combination therapy with Emtriva and Viread with either a non-nucleoside reverse transcriptase inhibitor or protease inhibitor for 24 to 48 weeks in ongoing clinical studies. Based on these limited data, no new patterns of adverse events were identified and there was no increased frequency of established toxicities. For additional safety information about Emtriva or Viread in combination with other antiretroviral agents, please see “About Emtriva” and “About Viread,” below.

Lactic acidosis and severe hepatomegaly with steatosis, including fatal cases, have been reported with the use of nucleoside analogues alone or in combination with other antiretrovirals. Viread, Emtriva and Truvada are not indicated for the treatment of chronic hepatitis B virus (HBV) infection and the safety and efficacy of these drugs has not been established in patients co-infected with HBV and HIV. Severe acute exacerbations of hepatitis B have been reported in patients who have discontinued Viread or Emtriva. Hepatic function should be monitored closely with both clinical and laboratory follow-up for at least several months in patients who discontinue Viread, Emtriva or Truvada and are co-infected with HIV and HBV. If appropriate, initiation of anti-hepatitis B therapy may be warranted.

Immune reconstitution syndrome has been reported in patients treated with combination antiretroviral therapy, including Viread. Changes in body fat have been observed in patients taking Viread, Emtriva, Truvada and other anti-HIV medicines. The cause and long term health effect of these conditions are unknown.

About Emtriva

In the United States, Emtriva is indicated, in combination with other antiretroviral agents, for the treatment of HIV-1 infection in adults. This indication is based on analyses of plasma HIV-1 RNA levels and CD4 cell counts from controlled studies of 48 weeks duration in antiretroviral-naive patients and antiretroviral-treatment-experienced patients who were virologically suppressed on an HIV treatment regimen. In antiretroviral-treatment-experienced patients, the use of Emtriva may be considered for adults with HIV strains that are expected to be susceptible to Emtriva as assessed by genotypic or phenotypic testing.

Adverse events that occurred in more than five percent of patients receiving Emtriva with other antiretroviral agents in clinical trials include abdominal pain, asthenia (weakness), headache, diarrhea, nausea, vomiting, dizziness and rash (rash, pruritis, maculopapular rash, urticaria, vesiculobullous rash, pustular rash and allergic reaction). Approximately one percent of patients discontinued participation because of these events. All adverse events were reported with similar frequency in Emtriva and control treatment groups with the exception of skin discoloration which was reported with higher frequency in the Emtriva treated group. Skin discoloration, manifested by hyperpigmentation on the palms and/or soles, was generally mild and asymptomatic. The mechanism and clinical significance are unknown.

About Viread

In the United States, Viread is indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection. This indication is based on analyses of plasma HIV-1 RNA levels and CD4 cell counts in controlled studies of Viread in treatment-naive adults and in treatment-experienced adults. There are no study results demonstrating the effect of Viread on clinical progression of HIV-1. The use of Viread should be considered for treating adult patients with HIV-1 strains that are expected to be susceptible to tenofovir as assessed by laboratory testing or treatment history.

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Drug interactions have been observed when didanosine, atazanavir or lopinavir/ritonavir is coadministered with Viread and dose adjustments may be necessary. Data are not available to recommend a dose adjustment of didanosine for patients weighing less than 60 kg. Patients on atazanavir or lopinavir/ritonavir plus Viread should be monitored for Viread-associated adverse events which may require discontinuation. When co-administered with Viread, it is recommended that atazanavir 300 mg be given with ritonavir 100 mg. Atazanavir without ritonavir should not be co-administered with Viread.

Renal impairment, including serious cases, has been reported. Renal impairment occurred most often in patients with underlying systemic or renal disease or in patients taking concomitant nephrotoxic agents, though some cases have appeared in patients without identified risk factors. Decreases in bone mineral density (BMD) at the lumbar spine and hip and increases in biochemical markers of bone metabolism have been seen with the use of Viread. The clinical significance of changes in BMD and biochemical markers is unknown and follow-up is continuing to assess long-term impact. The most common adverse events and those occurring in more than five percent of patients receiving Viread with other antiretroviral agents in clinical trials include asthenia, pain, abdominal pain, headache, nausea, diarrhea, vomiting, rash (rash, pruritis, maculopapular rash, urticaria, vesiculobullous rash and pustular rash), flatulence, dizziness and depression. Less than one percent of patients discontinued participation because of gastrointestinal events.

About Gilead Sciences

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

About Royalty Pharma

Royalty Pharma invests in pharmaceutical and biotechnology product royalties and other revenue-producing intellectual property. Royalty Pharma has been providing capital to research institutions, inventors and life science companies in exchange for royalty interests since 1996. In addition to the royalty interests in Emtriva ^® and Truvada ^® to be acquired in this transaction, the company owns royalty interests in eleven other leading marketed biopharmaceuticals, including, among others, Amgen’s Neupogen ^® and Neulasta ^® , Genentech’s and Biogen Idec’s Rituxan ^® , Celgene’s Thalomid ^® , Eli Lilly’s and J&J/Centocor’s ReoPro ^® , Protein Design Labs’ Retavase ^® and Chiron’s TOBI ^® . Royalty Pharma also owns royalty interests in four product candidates: GlaxoSmithKline’s and Adolor’s Entereg ^® , Pfizer’s lasofoxifene and Wyeth’s bazedoxifene and bazedoxifene/CE, and will acquire in this transaction a royalty interest in Gilead’s and Bristol-Myers Squibbs’ triple-fixed dose combination product containing emtricitabine, which is currently in development. More information on Royalty Pharma is available at www.royaltypharma.com.

About Emory University

Emory University is recognized internationally as a leader in AIDS research, with a National Institutes of Health-funded Center for AIDS Research that includes more than 120 faculty members within Emory’s School of Medicine, Rollins School of Public Health, Nell Hodgson Woodruff School of Nursing, the Yerkes National Primate Research Center, Emory College and the Graduate School of Arts and Sciences.

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Known for its demanding academics, outstanding undergraduate college of arts and sciences, highly ranked professional schools and state-of-the-art research facilities, Emory is consistently ranked among the country’s top 20 national universities by U.S. News & World Report. In addition to its nine schools, the university has a partnership with The Carter Center and also encompasses Emory Healthcare, Georgia’s largest and most comprehensive health care system.

This press release includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks, uncertainties and other factors, including the risk that the closing conditions will not be satisfied and the transaction will not be completed. These risks, uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. These and other risks are described in detail in the Gilead Annual Report on Form 10-K for the year ended December 31, 2004 and in the company’s Quarterly Reports on Form 10-Q, which are on file with the U.S. Securities and Exchange Commission. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements.

# # #

For more information on Gilead Sciences, please visit the company’s web site at www.gilead.com or call the Gilead Public Affairs Department at 1-800-GILEAD-5 or 1-650-574-3000.

For more information on Royalty Pharma, please visit the company’s web site at www.royaltypharma.com or call the company at 212-883-0200.

For more information about Emory University, please visit the University’s web site at www.emory.edu or call Emory University Communications at 404-727-6216.

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A NNEX A

T O THE R OYALTY S ALE A GREEMENT

D ISCLOSURE L ETTER

[ * ]

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Exhibit 31.1

CERTIFICATION

I, John C. Martin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gilead Sciences, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 4, 2005

/s/ John C. Martin

John C. Martin

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, John F. Milligan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gilead Sciences, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.


Date: November 4, 2005		/s/ John F. Milligan
		John F. Milligan
		Executive Vice President and Chief Financial Officer

Exhibit 32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), John C. Martin, the Chief Executive Officer of Gilead Sciences, Inc. (the “Company”), and John F. Milligan, the Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2005, to which this Certification is attached as Exhibit 32 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the periods covered by the Periodic Report and results of operations of the Company for the periods covered by the Periodic Report.

Dated: November 4, 2005


/s/ John C. Martin		/s/ John F. Milligan
John C. Martin		John F. Milligan
Chief Executive Officer		Chief Financial Officer

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E XHIBIT 99.1

MANUFACTURE AND DISTRIBUTION AGREEMENT

This Manufacture and Distribution Agreement (“Agreement”) made effective as of 12 October, 2005 (“Effective Date”) is made between Gilead Sciences, Inc., a Delaware corporation (“Gilead”), with its principal place of business at 333 Lakeside Drive, Foster City, CA 94404, and Aspen Pharmacare Holdings Limited, a South African company (“Aspen”), with its principal place of business at Building 8, Healthcare Park, Woodlands Drive, Woodmead, Sandton 2052, Gauteng, Republic of South Africa. Gilead and Aspen are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

R ECITALS

A. Aspen wishes to manufacture and distribute commercial supplies of Gilead’s proprietary products ( “Products” ).

B. Aspen has the capabilities to manufacture and distribute the Products and wishes to receive the manufacturing process for the Products to manufacture and distribute Products.

C. Gilead wishes to provide Aspen a license to manufacture and distribute Products in the Territories listed on Attachment B.

D. Gilead wishes to obtain commercial supplies of Products from Aspen for distribution by Gilead in the Territories listed in Attachment C.

I. DEFINITIONS

In addition to the other terms defined elsewhere in this Agreement, the following terms will have the following meanings when used herein (any term defined in the singular will have the same meaning when used in the plural and vice versa, unless stated otherwise):

1.1. “Affiliate” means an entity that, directly or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under common control with a Party. For purposes of this definition, “control” means the legal or beneficial ownership of more than fifty percent (50%) of the voting or equity interests, or the power or right to direct the management and affairs of the business (including acting as the general partner of a limited partnership).

1.2. “API” means, for each Product, the active pharmaceutical ingredient(s) of that Product for use in and prior to Manufacture, as listed in the relevant Product Appendix.

1.3. “Applicable Law” means the applicable laws, rules, and regulations, including, without limitation, any rules, regulations, guidelines or other requirements of Regulatory Authorities relating to the Manufacture, use, marketing, storage, distribution and sale of the

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Products, that may be in effect from time to time in a jurisdiction in which a Product is Manufactured, used, distributed, stored, marketed or sold.

1.4. “Aspen Forecast” has the meaning set forth in Section 2.3(a).

1.5. “Batch” means a defined quantity of a Product that is (a) uniform in character and in quality; (b) identified by a unique identifier (either through a unique number or a number in combination with the relevant Product code); (c) of a certain amount; and (d) Manufactured during a defined cycle of Manufacture. The specific definition of a Batch will be consistent with Aspen’s customary practices for Products and will be set by Aspen for each type of Product to be supplied by Aspen.

1.6. “Binding Amount” has the meaning set forth in Section 4.3(c).

1.7. “Broader Improvement” has the meaning set forth in Section 5.2(c).

1.8. “Business Day” means all days excluding Saturdays, Sundays, and any other public holidays in the country to which the notice or other document is being sent.

1.9. “Certificate of Analysis” means a certificate in form and substance typically used by Aspen and reasonably satisfactory to Gilead that is signed by the relevant Aspen employee responsible for quality assurance stating the pharmaceutical analysis of each Batch with respect to the Product Specifications.

1.10. “Certificate of Compliance” means a certificate in form and substance typically used by Aspen, and reasonably satisfactory to Gilead, with respect to a Product that certifies that the method, facilities and controls used for the Manufacturing and packaging of the Product are in conformance with GMP and requirements contained in Regulatory Approvals for the Distribution Territory and Manufacturing Territory and that is signed by the relevant Aspen employee responsible for quality assurance.

1.11. “Change” means any major or regulatory changes to any Materials, Specifications, quantitative formulae or any other aspect of Manufacturing process and testing methods.

1.12. “Change Control” means the procedure described in Section 2.8 by which Changes are made to any part of the Manufacturing process or Specifications or the procedure for making those Changes that may potentially impact the regulatory status of a Product.

1.13. “Confidential Information” means (i) all information and materials received by either Party from the other Party pursuant to this Agreement, (ii) all Confidential Information disclosed pursuant to the Mutual Confidential Disclosure Agreement between the Parties dated August 24, 2004 and the Technology Transfer Agreement dated June 22, 2005, and (iii) the terms of this Agreement, in each case other than that portion of such information or materials that:

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(a) is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party;

(b) was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the disclosing Party, as evidenced by competent written proof;

(c) is subsequently disclosed to the receiving Party by a Third Party lawfully in possession of and not in breach of any obligation to keep it confidential;

(d) has been publicly disclosed other than by the disclosing Party and without breach of an obligation of confidentiality with respect thereto; or

(e) has been independently developed by the receiving Party without the aid, application or use of Confidential Information of the disclosing Party, as evidenced by competent written proof.

1.14. “Contract Manufacturer” means the manufacturer of API for the applicable Product authorized by Gilead to receive orders of API from Aspen, as identified in Attachment A, as may be amended from time to time.

1.15. “Control”, “Controls” and “Controlled” means, for a particular item of information or intellectual property right, ownership or possession of the ability to grant a license or sublicense without violating the terms of any agreement or other arrangement with any Third Party (if the relevant entity is a Party) or any other entity (if the relevant entity is a Third Party).

1.16. “Dispute” has the meaning set forth in Section 11.6.

1.17. “Distribution Territory” means those countries listed in Attachment B hereto, as amended from time to time.

1.18. “Documentation” has the meaning set forth in Section 2.6.

1.19. “Facility” means, for a given Product, the Aspen manufacturing facility identified in the Product Appendix for that Product, or any other Aspen facility used for the Manufacture of that Product that Gilead has approved in writing.

1.20. “FDA” means the United States government agency known as the Food and Drug Administration or any successor thereto.

1.21. “Force Majeure” means conditions beyond the reasonable control of the Parties, including without limitation, an act of nature or terrorism, voluntary or involuntary compliance with any regulation, law or order of any government, war, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, shortages of Materials beyond the reasonable control of the parties, or destruction of production facilities or Materials by fire, earthquake, storm or like catastrophe.

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1.22. “Gilead Access Program” means Gilead’s program designed to offer Truvada ^® and Viread ^® at no-profit prices to treatment programs in eligible developing countries.

1.23. “Gilead Intellectual Property” means the Intellectual Property Controlled by Gilead, including the Gilead Marks.

1.24. “Gilead Marks” has the meaning set forth in Section 5.1(a).

1.25. “Good Manufacturing Practices” or “GMP” means the current good manufacturing practices for manufacturing finished products required by any relevant Regulatory Authority and Applicable Laws in the United States and South Africa for the manufacture and testing of pharmaceutical materials or products.

1.26. “Improvement” has the meaning set forth in Section 5.2(a).

1.27. “Intellectual Property” means any intellectual property rights including, without limitation, rights in patents, patent applications, trade-marks, trade-mark applications, trade secrets, copyright and industrial designs.

1.28. “Know-How” means (i) all information, techniques and data specifically relating to Manufacture of a Product, including, but not limited to, inventions, practices, methods, knowledge, know-how, skill, experience, test data (including without limitation pharmacological, toxicological, clinical, analytical and quality control data, regulatory submissions, correspondence and communications, and marketing, pricing, distribution, cost, sales, manufacturing, patent and legal data or descriptions), and (ii) compositions of matter, assays and biological materials specifically relating to development, Manufacture, use or sale of Products.

1.29. “Latent Defect” has the meaning set forth in Section 4.4(d).

1.30. “Licensee” means a licensee or distributor other than Aspen to which Gilead has granted rights to market or commercialize a Product in a specific territory in the Distribution Territory.

1.31. “Losses” has the meaning set forth in Section 10.2.

1.32. “Manufacture, Manufactured or Manufacturing” means all such activities as may be required for the manufacture of each Product, respectively, from API supplied by a Contract Manufacturer including (as appropriate) the planning, purchasing, manufacture, processing, compounding, storage, filling, packaging, labeling, testing, sample retention, stability testing, release and dispatch of Product, and the disposal of waste material and such other matters as may be prescribed for the manufacture and supply of Product by the relevant Specifications and regulatory submissions requirements.

1.33. “Manufacturing Territory” means the countries listed in Attachment C hereto, as amended from time to time.

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1.34. “Manufacturing Territory Forecast” has the meaning set forth in Section 4.3(a).

1.35. “Master Batch Record” means, for a given Product, the then-current Procedures to be followed by Aspen with respect to the Manufacture, handling and storage of that Product and the corresponding API and Materials.

1.36. “Materials” means all excipients, raw materials, intermediate and active compounds and packaging components used in the Manufacture and transportation of Product, excluding API.

1.37. “Patent” means (i) unexpired letters patent (including inventor’s certificates) that have not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof and (ii) pending applications for letters patent, including without limitation any provisional, converted provisional, continued prosecution application, continuation, divisional or continuation-in-part thereof.

1.38. “Procedures” means the processing steps required to Manufacture Product.

1.39. “Product” means one or all of the bulk tablets and finished products described in Attachment A hereto, as amended from time to time.

1.40. “Product Appendix” means an appendix to and part of this Agreement identifying a specific Product and setting forth the required information for such Product as stated in this Agreement and any other mutually agreed information or parameters relating to Manufacture and distribution of such Product pursuant to this Agreement, including without limitation an effective date and term for such Product Appendix.

1.41. “Product Specific Improvement” has the meaning set forth in Section 5.2(b).

1.42. “Production Standards” has the meaning set forth in Section 2.2(a).

1.43. “Quantity Statement” has the meaning set forth in Section 4.2(a).

1.44. “Regulatory Applications” means all applications for Regulatory Approval submitted to or filed with a Regulatory Authority with respect to a Product.

1.45. “Regulatory Approval” means all approvals (including without limitation supplements, amendments and pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the manufacture, distribution, use or sale of a Product in a regulatory jurisdiction.

1.46. “Regulatory Authority” means the Food and Drug Administration in the United States of America or the Medicines Control Council of South Africa or any other similar

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agencies in the Distribution Territory or the Manufacturing Territory, or any successor agencies to the foregoing, in each case with jurisdiction over Regulatory Approvals or the Manufacture of Product.

1.47. “Required Change” has the meaning set forth in Section 2.8(a).

1.48. “Safety Data Exchange Agreement” means the Safety Data Exchange Agreement to be entered into by Gilead and Aspen with respect to safety data with respect to the Products. The Parties shall use their best efforts to ensure that the Safety Data Exchange Agreement is entered into within sixty (60) days of the Effective Date.

1.49. “Shelf Life” means a period measured from the initiation of Manufacture beyond which a Product must not be used, as set by Gilead consistent with regulatory filings for such Product, with the specific Shelf Life for a Product being set forth in the Product Appendix for such Product.

1.50. “Specifications” means the procedures, test results, requirements, standards and other data and documentation with respect to a Product, and the excipients and components therefor, as set forth in the Product Appendix for that Product, as may be amended from time to time pursuant to Section 2.8.

1.51. “Technical Agreement” has the meaning set forth in Section 2.2(b).

1.52. “Third Party” means any entity other than Aspen or Gilead or an Affiliate of either of Aspen or Gilead.

1.53. “Warranty” has the meaning set forth in Section 10.1.

1.54. “Year” means, for each Product, the period between the effective date of the Product Appendix for that Product until December 31 of the year of such effective date, and thereafter, the twelve-month period commencing upon the completion of the immediately preceding Year and ending the following December 31.

For clarity, in this Agreement and all Exhibits and Product Appendices to this Agreement, the United States convention shall be used with respect to commas and decimal points in numbers. For example, 5,250 shall mean five thousand two hundred fifty, and 5.250 shall mean five and two hundred fifty thousandths.

II. MANUFACTURE.

2.1 License. Subject to the terms and conditions of this Agreement, Gilead grants to Aspen a non-exclusive royalty-free non-sublicensable non-transferable license for each Product, for the period that such Product is included in this Agreement, to Manufacture such Product pursuant to this Agreement using API purchased from the designated Contract Manufacturer, using the Procedures at the designated Aspen Facility and to import, offer for sale and sell the Products in the Distribution Territory, under all Patents and Know-How that Gilead Controls

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during the term of such license that, but for the grant of such license would be infringed or misappropriated by the Manufacture of such Product by Aspen. [ * ].

2.2 General Manufacturing Obligations.

(a) Manufacturing. Aspen will Manufacture the Products only at the applicable facility(ies) in accordance with the Specifications, Technical Agreement, GMP and Applicable Law using only API supplied by the Contract Manufacturer (collectively the “Production Standards”). Aspen will maintain sufficient Manufacturing capacity at the Facility to satisfy the Product requirements set out in the then-current Aspen Forecast and Manufacturing Territory Forecast provided pursuant to Sections 2.3(a) and 4.3(a).

(b) Technical Agreement. The Parties have entered or will enter into one or more agreements, within 90 days of the Effective Date, collectively covering all Products containing the policies, procedures, and standards by which the Parties will coordinate and implement the operational and quality assurance activities and regulatory compliance objectives contemplated under this Agreement with respect to each of the Products (each, a “Technical Agreement”). Each Party will allocate, use and expend the resources necessary to perform the division of responsibilities assigned to such Party as defined in the Technical Agreement(s). The Parties will negotiate in good faith to modify the Technical Agreement(s) from time to time as necessary or appropriate in light of Applicable Laws, or at Gilead’s or Aspen’s reasonable request.

(c) Initial Costs. [ * ] Aspen’s cost for API used in the Manufacture of both the pilot and validation Batches of each Product; provided however that [ * ] will be responsible for the cost of validation Batches which are put into inventory for commercial sale. Aspen will manufacture all other Batches [ * ].

2.3 API

(a) Aspen Forecast. On the first Business Day of each calendar quarter, Aspen will, subject to Gilead having provided to Aspen Gilead’s forecast described in Section 4.3(a), provide to Gilead a forecast of its projected need for API required for each Product and its projected need for Products for each month of the [ * ] period commencing with the date of the forecast (“Aspen Forecast”) for Gilead’s review and approval of the quantity of API required for each Product. Gilead will respond to each Aspen Forecast within [ * ] of its receipt.

(b) Supply of API. Gilead or its affiliate will authorize the Contract Manufacturers (as determined by Gilead and included in the Dossier) to sell API to Aspen at [ * ] price as set forth in Attachment A hereto. [ * ]. The Parties shall use their [ * ] ensure that Aspen and the Contract Manufacturer conclude a Supply Agreement in respect of the API within [ * ] of the Effective Date, the terms and conditions of such Supply Agreement will inter-alia provide for the provisions of this Article 2.3.

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(c) In the event that a third party’s sale of API (which API is produced at an FDA approved facility meeting equivalent quality standards as API supplied by Gilead’s contract manufacturers) which can demonstrate an ability to produce [ * ] API at [ * ] Aspen’s sales of Products in the Distribution Territory during a calendar quarter by more than [ * ] of sales of such Product during [ * ], Gilead will agree to meet with Aspen to renegotiate the price at which Aspen will purchase the relevant API(s). If the Parties are unable to agree after good faith negotiations, the Parties will consider other options with respect to the acquisition of API. Aspen shall be entitled, subject to Gilead’s consent [ * ] .

(d) If a Contract Manufacturer is unable to supply API to fulfill Gilead’s and Aspen’s aggregate purchase orders, [ * ] will develop a plan for rationing API between the Parties (“Shortage Plan”) and present the Shortage Plan to [ * ]. The Parties will meet to discuss the implementation of the Shortage Plan as soon as reasonably possible after receiving notice from the Contract Manufacturer. The Parties will also discuss [ * ].

(e) Territorial Protections. Aspen agrees that any API it purchases under this Agreement will be used only for manufacture of Products in accordance with Gilead-supplied specifications and processes for distribution and sale in the Distribution Territory by or on behalf of Aspen or for supply to Gilead or Gilead’s designees for the Manufacturing Territory.

(f) Storage of API. Aspen will store and handle all API and Materials, whether held by Aspen for Manufacture or as used by Aspen in the course of Manufacture, as set forth in the applicable Master Batch Records and Specifications and in accordance with GMP, and will conform to established safety practices and procedures set forth in Gilead’s then-current applicable material safety data sheet(s) and storage conditions as defined in the applicable commercial product manual, as Gilead shall have provided to Aspen from time to time.

(g) Inventory Reports. Aspen will provide quarterly reports or information on API inventory levels at its facility and its use in Manufacture of Product and monthly reports on finished Product inventory levels.

(h) Audits. Gilead will be responsible for complete audits of the Contract Manufacturers. Aspen will have the right, after coordinating with Gilead, to perform GMP compliance audits at the Contract Manufacturers but will not have access to batch records or other detailed API manufacturing information, and Gilead will be present at any such audit by Aspen. Aspen will use all commercially reasonable efforts to conduct its audit of the Contract Manufacturer simultaneously with Gilead’s.

(i) Administrative Fee. Aspen will pay Gilead a [ * ] administration fee on all Aspen’s purchases of API to compensate Gilead for administrative services including qualifying the Contract Manufacturers to be able to release API to Aspen, regularly auditing Contract Manufacturers, monitoring API supply capacity, and assisting with forecasts. [ * ]. Aspen will pay the administrative fee to Gilead on a quarterly basis,

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based on Aspen’s invoices for API from the API contract manufacturers. All payments due hereunder to Gilead shall be paid [ * ].

2.4 Materials.

(a) Purchase and Testing. Aspen will purchase all Materials [ * ]. All materials, including excipients and components, shall meet the applicable Specifications as described in the applicable Product Appendix for each Product, as amended or supplemented from time to time. Aspen will test all Materials at [ * ] in accordance with the applicable Specifications.

(b) Suppliers. Aspen shall be entitled to either purchase all Materials from a Third Party [ * ]. Gilead may recommend a Materials supplier not on Aspen’s preferred supplier list by written notice to Aspen. Each such notice will specify either that (a) an audit of such supplier is not required by Gilead [ * ]; or (b) Gilead will conduct an audit of such supplier [ * ]. [ * ]. Gilead may request API, inactive ingredients and packaging materials for analysis, and based on an agreed-upon schedule and volume, Aspen will provide Gilead with such materials at Gilead’s expense.

2.5 Testing.

(a) Prior to release for shipment of each Product, Aspen shall perform or have performed identification testing and in-process and final quality testing, in accordance with the testing Specifications for such Product, to ensure that such shipment conforms with the then current Production Standards applicable thereto.

(b) Aspen shall, at Aspen’s expense, retain or have retained control samples of each batch of Product in quantities sufficient to conduct [ * ] rounds of testing of such Product in accordance with the Specifications applicable thereto. Records of such testing shall be retained by Aspen until the later of one (1) year after the expiration dating of the last combination Product in which such Product was used or as long as required by Applicable Law.

2.6 Documentation. Aspen will keep complete, accurate and authentic accounts, notes, data and records of the Manufacturing including but not limited to all relevant information and records relating to the Manufacture of Products under this Agreement that may be required from time to time to be provided to any Regulatory Authority pursuant to Applicable Laws, and all Manufacturing development information relating to Products (to the extent such information is in Aspen’s possession) (“Documentation”). Aspen will maintain complete and adequate records in accordance with and to the full extent required by Production Standards pertaining to the methods and the facility used for the Manufacture, holding and distribution of Products. Upon written request by Gilead with reasonable notice, Aspen will provide to representatives of Gilead or its Licensees or distributor(s) for Products, during normal business hours, reasonable access to Documentation, where such access is necessary or reasonably useful to permit Gilead or its Licensees to comply with Applicable Laws. Aspen will maintain Documentation until the later of (a) when such Documentation is no longer required by Applicable Law or other

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obligation to be maintained by Gilead or Aspen, or (b) two (2) years after expiration of the Shelf Life for the applicable Batch.

2.7 Packaging and Labeling. The Parties will discuss and determine in good faith the appropriate packaging for Products in view of the optimal packaging for the Distribution and Manufacturing Territories and Aspen’s capabilities [ * ]. Any costs incurred by Aspen in acquiring or altering equipment as required to comply with these [ * ]. All labeling and packaging materials that Aspen proposes to use for the Products will be subject to Gilead review and approval prior to use, such approval will not be unreasonably withheld.

2.8 Change Control Procedures.

(a) Both Parties will promptly notify each other of any new Change required pursuant to an Applicable Law (“Required Change”) and will confer with each other as to appropriate means to comply with such new or potential Required Change. Aspen will implement any Required Change requested by Gilead [ * ] after the approval for the Required Change is granted by the Regulatory Authority.

(b) Gilead may request any other Change in a Manufacturing process by submitting such request in writing to Aspen. Upon receipt of the requisite approvals by the Regulatory Authority, Aspen [ * ].

(c) For any Changes in Manufacture of Products not addressed in Section 2.8(b), Aspen will notify Gilead and obtain Gilead’s prior written approval before Aspen implements any of the following: [ * ] including without limitation, [ * ]; and (ii) changes that require regulatory submission to Regulatory Authorities, relating to the raw Materials or API used in manufacture of Product. Gilead’s consent with respect to such Changes will not be unreasonably withheld or delayed.

(d) For any Changes pursuant to Section 2.8(c), Gilead will review any such proposed changes and agree to a [ * ] schedule and process for implementation for such changes. In the event that the Gilead reasonably determines that any such proposed changes would materially adversely affect the Product, it will notify Aspen and Aspen will continue to manufacture the Product in accordance with the applicable existing Specifications or testing Specifications.

(e) Aspen will make any Changes permitted under this Section 2.8 in compliance with all Applicable Laws, including GMPs, and Aspen’s change control procedure, in accordance with a reasonable schedule agreed by the Parties in good faith.

2.9 Audit and Observation of Manufacturing Facilities. Gilead will have the right, on reasonable notice, to audit Aspen’s facilities used for Manufacturing or testing Product and to test Product Manufactured by Aspen for purposes of determining compliance with the Production Standards and Aspen will comply with Gilead’s reasonable requests resulting from such audits. Aspen will cooperate with and enable audits of its manufacturing facility for Products by Regulatory Authorities and duly authorized representatives of Gilead’s distributors.

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Upon prior written request, Aspen will permit duly authorized representatives of Gilead and its Licensees for any Product to observe the Manufacture of such Product; provided that Licensees’ representatives will be granted access to Aspen’s facility at the same time and to the same extent as Gilead’s representatives. Such representatives will comply with all Aspen standard operating policies and procedures while within Aspen’s facility. Aspen shall promptly comply with Gilead’s reasonable written directions for the correction of, or otherwise reasonably resolve, any GMP compliance or other deficiencies noted by Gilead representatives after good faith consultation with Gilead. Gilead’s direction under this paragraph shall not diminish or relieve Aspen of its obligations under this Agreement and all such corrections or resolutions will be implemented in accordance with the applicable terms of this Agreement. Notwithstanding the aforementioned, Aspen shall not be obliged to permit any duly authorized representatives of Gilead’s distributors or any Licensees of any Product to have any access to its manufacturing facility [ * ].

2.10 Compliance with Laws. Aspen will comply with all Applicable Laws for including, without limitation, those applicable to (a) the transportation, storage, use, handling and disposal of hazardous materials, (b) the Manufacture of Products and (c) Aspen’s performance of its obligations under this Agreement. Aspen specifically represents and warrants that it does not and will not use, in any capacity, the services of any person that is debarred under the provisions of the United States Generic Drug Diversion Act or applicable regulations under that law. Aspen represents and warrants to Gilead that it has and will maintain during the term of this Agreement, all government permits, licenses, registrations and approvals, including without limitation, health, safety and environmental permits, legally required for the conduct of the actions and procedures that it undertakes pursuant to this Agreement.

2.11 [ * ].

III. DISTRIBUTION

3.1 Appointment.

(a) Appointment of Aspen. Gilead appoints Aspen and Aspen accepts appointment as non-exclusive distributor of the Products in the Distribution Territory.

(b) Appointment of Subdistributors. Aspen may appoint subdistributors with Gilead’s prior written approval, not to be unreasonably withheld. Such approval may be conditioned on [ * ]. Before granting or withholding approval Gilead may also consider any potential subdistributor’s experiences and policies compared to global norms and standards. Gilead may conduct an investigation into the background, qualification and capabilities of any proposed subdistributor before granting its consent. Any such subdistributor shall be required to perform its obligations in accordance with the applicable provisions of Section 3.2 below.

3.2. Registration, Sales and Distribution Activities.

(a) General. Aspen will:

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(i) use its [ * ] to sell and distribute Products to promptly and adequately supply the demands of Aspen’s customers in the Distribution Territory;

(ii) use [ * ] to distribute Products and perform related activities (including protecting privacy of personal and health care information), ensure that it, its employees, agents and approved contractors comply with and adhere to the highest standards of operations, Gilead’s reasonable requirements, handling and storage limits in Product labeling and packaging, all Applicable Laws and the South African Medicines Control Council’s guidelines on Good Wholesaling Practice and Guidelines for Importation and Exportation of Medicines, and provide documentation of this compliance on Gilead’s reasonable request;

(iii) ensure all Products it sells or distributes include all information and material (including packaging, labeling, information sheets, product instructions, etc.) as agreed to by Aspen and Gilead; use only marketing and promotional materials for the Products that have been reviewed and approved by Gilead prior to use;

(iv) use appropriate methods customarily employed in pharmaceutical distribution in the Distribution Territory and furnish information on all these distribution activities relating to Products to Gilead for Gilead’s pre-approval and thereafter upon reasonable request, without charge;

(v) obtain and maintain all Regulatory Approvals and import and export authorizations required to Manufacture the Products and to provide, sell or distribute Products in the Distribution Territory and, on Gilead’s request, provide Gilead with copies and appropriate supporting documentation; and

(vi) notify Gilead and keep Gilead fully apprised of all local regulatory activity, including any governmental or regulatory inspections of Aspen facilities (including notifying Gilead of the outcome of any such inspections and providing Gilead with any regulatory agency reports and correspondence, upon Gilead’s request) that may reasonably be expected to impact Aspen’s obligations under this Agreement.

(b) Adverse Event Reporting. Aspen will maintain reasonable procedures to collect and report adverse events, other safety-related events and product complaints and permit Gilead to review such procedures and Aspen’s compliance with them. Aspen will provide to Gilead within one business day of receipt any report or other information of any adverse event, other safety-related event or product complaint associated with Products, including any such report or information received from its customers or end-users of Products, that Aspen receives, by email or facsimile as follows:

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Gilead Global Drug Safety

333 Lakeside Drive, Foster City, California 94404, United States of America

Fax: +1-650-522-5477, Telephone: +1-650-574-3000/

Email: Safety_FC@gilead.com

The Parties will exchange safety data with respect to Products pursuant to the Safety Data Exchange Agreement.

(c) Compliance with Laws. Aspen represents, warrants and certifies to Gilead that none of Aspen and its officers or directors have ever been convicted of a criminal offense (including convictions resulting from guilty pleas), or been found civilly liable for fraud. Aspen has been informed of prohibitions imposed by the United States of America Foreign Corrupt Practices Act of 1977, as amended, and represents and warrants that it has not done and will not do the following: (i) use any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, or (ii) make any unlawful payment to government officials or employees or political parties or campaigns. Aspen will provide a certification to Gilead by January 31 of each year of its continued compliance with this Section.

(d) Drug Recall Procedure. Aspen will maintain a follow-up system and a standard operating procedure adequate to assist in any requested Product drug recall program as further described in the Technical Agreement. Aspen will be responsible for recalls of all Products distributed by Aspen or its sub-distributors in the Distribution Territory. [ * ].

(e) Product Registrations. Gilead authorizes Aspen to file in Aspen’s name any Regulatory Applications required in the Distribution Territory, using regulatory dossiers and information provided or approved in advance in writing by Gilead, and to accept and receive correspondence and communications regarding such Regulatory Applications; provided that such applications be limited to Regulatory Approvals in jurisdictions which permit the Gilead Marks to be included in the labeling and packaging of the Products. For those jurisdictions in the Distribution Territory in which the applicable laws prohibit the Gilead name and trademark to be included in the labeling and packaging of the Products without holding the Regulatory Approval, Gilead authorizes Aspen to file in Gilead’s name any Regulatory Applications using regulatory dossiers and information provided or approved in advance in writing by Gilead, to accept and receive correspondence and communications regarding these applications. Gilead will transfer to Aspen any Regulatory Approval and Regulatory Application when local law permits Gilead Marks to appear on the labeling and packing without Gilead holding such Regulatory Approval. Aspen will promptly notify Gilead of and provide copies of (or summaries of oral communications) (including validated English translations if applicable) of any communications from Regulatory Authorities relating to Products or Regulatory Applications or Regulatory Approvals. Aspen will obtain Gilead’s approval prior to filing any Regulatory Applications or making material communications with or commitments to Regulatory Authorities with respect to Regulatory Applications or Regulatory Approvals. Where Gilead has filed for Regulatory Approvals, it will transfer such applications or approvals to Aspen for countries in which Aspen is to hold such

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

Regulatory Approvals. Aspen will obtain Gilead’s approval prior to submission to Regulatory Authorities of any Regulatory Application or other documents, information or communications relating to Products. Gilead will supply appropriate documents in Gilead’s possession at its discretion as required to obtain Regulatory Approvals [ * ]. Aspen will permit Gilead to use information with respect to Manufacture by Aspen in any Regulatory Approval or Regulatory Application submitted or filed by Gilead. Aspen will cooperate with Gilead to enable Gilead to cross reference Aspen’s Regulatory Approvals and Regulatory Applications in any Regulatory Application submitted or filed by Gilead with respect to the Products. Gilead may revoke the authorizations in this Section 3.2(e) effective immediately on notice to Aspen. Aspen will transfer to Gilead any Regulatory Approval and Regulatory Application held in Aspen’s name upon termination or expiration of this Agreement and Aspen will provide Gilead with a power of attorney or a letter of cession, which is required, to effect such transfers. Whilst each Party will bear its own internal costs for regulatory activities, Gilead will bear all costs payable to the Regulatory Authorities for these activities, including, all fees charged by the Regulatory Authority with respect to the registration, transfer and maintenance of Regulatory Approvals.

(f) Upon the request of the other Party, Gilead and Aspen will each cooperate to include in Aspen’s Regulatory Approvals a qualified alternate manufacturer of each Product. In the event the Parties agree to qualify another manufacturer of finished product, the Parties will enter a written agreement identifying each Party’s roles and obligations.

(g) Aspen and Gilead will cooperate to obtain U.S. Food and Drug Administration approval of either (i) supplementary U.S. New Drug Applications for Product produced by Aspen, to be held in the name of Gilead, or (ii) U.S. New Drug Applications for Product produced by Aspen, for use outside the U.S. only, to be held in the name of Aspen, that will cross-reference the Gilead New Drug Applications for Products as determined by Gilead after consultation with Aspen. All external costs associated with the aforementioned approvals will be borne by both Parties on an equitable cost-sharing basis.

3.3 Distribution Territory Pricing.

(a) Aspen will sell the Products [ * ] the prices identified in Attachment A (the “Selling Prices”). [ * ].

(b) [ * ].

(c) Other than as provided above and in Attachment A, Selling Prices will be changed only by mutual agreement between the Parties following good faith negotiation. [ * ]. Subject to the foregoing, prices will be consistent with Gilead’s announced pricing approach for Products in the Distribution Territory [ * ].

(d) [ * ].

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

3.4 Reports on Sales within Distribution Territory. Aspen will provide Gilead reports on a calendar month basis of sales of Product in the Distribution Territory by number of units and total price, broken out by country and by distributor/subdistributor. Aspen and Gilead will review and discuss Aspen’s existing distribution arrangements and work in good faith to make reasonable modifications to improve the efficiency of Product distribution in the Distribution Territory.

3.5 Territorial Protections. Aspen will agree that (a) any API it purchases under this Agreement will be used only for manufacture of Products in accordance with Gilead-supplied specifications and processes for distribution and sale in the Distribution Territory by or on behalf of Aspen or for supply to Gilead or Gilead’s designees, (b) it will not distribute or sell Products for use or sale outside the Distribution Territory other than to Gilead or Gilead’s designees, (c) it will not continue sales or distribution to any entity (other than Gilead or Gilead’s designees) it had reason to believe was selling, distributing or otherwise providing Products for use outside the Distribution Territory, (d) it will not obtain API for any Products from any source other than Gilead’s designated Contract Manufacturer(s), (e) it will not manufacture, sell or distribute any generic versions of Products [ * ] (f) it will not solicit for hire or contract, or hire or contract, any employee or consultant of Gilead or Gilead’s Contract Manufacturers for Products, and (g) it will not obtain an equity position in Gilead’s Contract Manufacturers for Products or purchase or receive any assets of such contract manufacturers.

IV. Supply of Finished Product to Gilead.

4.1 Aspen will supply Product with agreed packaging to Gilead or its designees for distribution in the Manufacturing Territory and the Distribution Territory. Gilead may use Product supplied by Aspen or from other sources for distribution in the Distribution Territory to provide for those occasions, if any, where Aspen is unable to distribute the Products in the Distribution Territory to meet demand therefor.

4.2 Product Supply.

(a) Delivery of Products. All quantities of Product manufactured by Aspen shall be packaged, labeled and shipped in accordance with the applicable Specifications, and each shipment shall be accompanied by appropriate Certificates of Analysis and Compliance and a statement of the quantity of such Product contained in each shipment (the “Quantity Statement”). All Product supplied by Aspen under this Agreement will have been released by an appropriate Aspen employee prior to shipment, unless otherwise agreed in writing between the Parties for a particular shipment. Each shipment will be marked to clearly indicate to the recipient the identity, strength/potency, quantity, Batch number, and expiry date and country of origin of the contents. Each Product shall be appropriately labeled with a traceable batch number and date of manufacture. Aspen shall deliver each shipment [ * ] within [ * ] before the delivery date specified in the applicable purchase order from Gilead for such shipment and ending on such specified delivery date, inclusive. Unless otherwise requested by Gilead or its designated distributor, Aspen will arrange transportation, at Gilead’s or its distributor’s expense,

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using the carrier and to the destination specified in the applicable purchase order. Aspen will notify Gilead of such delivery within [ * ]. Title and risk of loss as to all materials shipped by Aspen pursuant to this Agreement will pass to Gilead or its designated distributor when [ * ] . Gilead or its designated distributor or the designated carrier for each shipment will be responsible for storing and clearing the Product through customs in the country of delivery and in the country of destination, at Gilead’s or its distributor’s sole expense.

(b) All quantities of Product (including bulk tablets) ordered by Gilead and delivered by Aspen to Gilead or its designee shall have at least [ * ] of initial Shelf Life remaining at the time of shipment of the Product, and Gilead will have no obligation to accept or pay for any shipment of Product available for delivery to Gilead at the delivery date specified in the applicable purchase order with less than [ * ] of initial Shelf Life remaining at the date of shipment indicated on the purchase order.

(c) For each shipment of Product, Aspen shall submit to Gilead an invoice for such shipment of Product. All payments due hereunder to Aspen shall be paid not later than thirty (30) days following the date of the applicable invoice submitted by Aspen; provided that if such invoice is received by Gilead more than five (5) business days after such date, Aspen will make reasonable allowances for any payments that are late due to such delay provided that Gilead uses commercially reasonable efforts to pay such invoice by the end of such thirty (30) days.

4.3 Forecasts and Purchase Orders.

(a) Gilead will provide to Aspen quarterly rolling [ * ] forecasts for Product commencing [ * ] from the date of the forecast (each a “Manufacturing Territory Forecast”).

(b) Gilead will provide to Aspen binding purchase orders for Products that Gilead will purchase. Gilead will be obligated to submit orders that were no less than [ * ] of the quantity stated in the [ * ] of each most recent rolling forecast provided by Gilead. Gilead may identify distributors in writing to Aspen who will be authorized to purchase Product directly from Aspen for distribution in the Manufacturing Territory. In such event, such distributor may submit purchase orders to Aspen for Products they will purchase. Each purchase order will state the required delivery date for the Product ordered, which will be no earlier than [ * ] after the date of the purchase order, except as otherwise agreed in writing by the Parties. Aspen will acknowledge each purchase order received from Gilead (or its distributor) within five (5) Business Days of receipt.

(c) A purchase order from Gilead will be deemed automatically accepted by Aspen for any amount of Product that is equal to or less than [ * ] of the amount forecast for the relevant month in the [ * ] Forecast (“Binding Amount”). If any purchase order for a quarterly period is for more than the Binding Amount, Aspen will use commercially reasonable efforts to fulfill such purchase order as submitted and will include in its response to Gilead the amount (in addition to the Binding Amount) of such purchase

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order that Aspen will supply. If, despite using [ * ], Aspen cannot fulfill (and thus cannot accept) purchase orders for Product in amounts in excess of the Binding Amount, the Parties will discuss and agree on appropriate steps and both Parties will act reasonably in such circumstance. For purposes of determining whether a quantity in a purchase order is or is not in excess of the Binding Amount, if [ * ] of the quantity of a given Product specified for the relevant quarter in the relevant Forecast equals a fractional number of Batches, then the Binding Amount will be the next whole number of Batches above the fractional number of Batches that is equal to [ * ].

(d) All purchase orders will be sent by Gilead to the e-mail address or fax number identified below or identified in writing by Aspen:

[ * ]

Aspen will acknowledge and either accept or reject purchase orders by email or fax to Materials Management at the number set forth below:

[ * ]

(e) Gilead may cancel any purchase order previously accepted by Aspen by providing Aspen with prior written notice. If Gilead cancels any purchase order, Aspen will use [ * ] to reallocate its materials, resources and personnel to other projects (including distribution in the Distribution Territory), and Gilead will be responsible for paying for (a) [ * ], and (b) [ * ]. This Section 4.3(e) will not apply to mutually agreed changes in production or delivery schedules, or any cancellation for which alternative terms are mutually agreed upon by both Parties. It will also not apply for [ * ].

4.4 Protocol for Receipt and Rejection of Products.

(a) For any shipment of Product by Aspen, Gilead shall require the performance of identity testing and confirmation that the quantity of Product in such shipment is in accordance with the Quantity Statement and that there is no obvious damage to the Product packaging as determined by visual inspection as would constitute non-compliance with Production Standards.

(b) Within [ * ] after Gilead’s or its distributor’s receipt of each shipment of Product, Gilead shall provide Aspen with written notification if Gilead determines such shipment does not comply with Production Standards. Gilead’s failure to provide notice within such [ * ] period with respect to any shipment of Product shall be deemed an acknowledgement by Gilead that there are no such defects in such shipment and that Gilead accepts such shipment. Gilead shall notify Aspen as promptly as practicable and in any case no later than the expiration dating of such Product, of any latent defects that it discovers or learns of relating to non-compliance with Production Standards. If Gilead notifies Aspen of any defect pursuant to this Section 4.4(b), at Gilead’s request Aspen will, at its option, either perform any re-work that has been qualified by Regulatory Authorities on, or replace (or have so re-worked or replaced) such shipment as promptly as is possible through the use of commercially reasonable efforts.

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

(c) If Gilead notifies Aspen of any defects in Product pursuant to Section 4.4(b) and Aspen and Gilead, despite the use of commercially reasonable efforts, cannot agree as to whether any shipment of Product conforms with the Production Standards or Quantity Statement, Aspen and Gilead shall designate an independent testing laboratory reasonably acceptable to both Parties to determine same, the findings of which shall be binding on the Parties, absent manifest error. Expenses of such laboratory shall be borne by the Party whose position is determined to have been in error. If any such shipment of Product is ultimately agreed or found not to conform with the Production Standards applicable thereto, any rework or replacement by Aspen pursuant to Section 4.4(b), including any charges for shipping and/or storage, shall be at Aspen’s expense. If any such shipment of Product is ultimately agreed or found to conform with the Production Standards applicable thereto or the applicable Certificate of Analysis or Compliance, any rework or replacement by Aspen pursuant to Section 4.4(b), including any charges for shipping and/or storage, shall be at Gilead’s expense, with any such rework expenses to be paid at Aspen’s cost and replacement quantities to be paid for at the applicable Price pursuant to Section 4.5. [ * ] Gilead shall dispose of any shipment of Product for which it is determined pursuant to this Section 4.4(c) that rejection was proper. The Parties shall use [ * ] to resolve any non-conformance issue within [ * ].

(d) Gilead will notify Aspen promptly in writing if Gilead discovers a latent defect in any quantity of Product resulting from non-compliance with Production Standards at any time after such quantity has been accepted in accordance with this Section 4.4 and during its remaining Shelf Life, which defect could not reasonably have been discovered during the inspection conducted in accordance with Section 4.4(a) (a “Latent Defect”). The Parties will address the Latent Defect in accordance with the provisions of Sections 4.4(b) and (c).

4.5 Pricing to Gilead for such supply will be the Aspen Selling Prices (as described in Section 3.3 and Attachment A hereto).

V. Intellectual Property

5.1 Trademarks and Trade Names.

(a) Subject to this Agreement’s provisions, Gilead grants Aspen a non-exclusive license, terminating on termination or expiration of this Agreement, to use the trademarks identified on Attachment A and other trademarks, brand names and logos that Gilead may designate in writing (“Gilead Marks”) and to use Gilead’s copyrights necessary to obtain Regulatory Approvals and to use, sell and distribute Products in the Distribution Territory, solely in connection with import, offer for sale, sale, marketing and distribution in the Distribution Territory of the Products. Aspen disclaims any rights to Gilead Marks and other Gilead Intellectual Property other than the license under this Section 5 and will not make any claims of ownership of Gilead Intellectual Property. Aspen will not use Gilead Marks for any purpose not expressly permitted under this Section 5.1.

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

(b) The Products will have the brand names indicated on Attachment A and will carry the Gilead Marks and Aspen names and trademarks in labeling and packaging unless otherwise agreed to by the parties. Aspen will use Gilead Marks in all promotion of Products and in all Product promotional literature, in compliance with applicable laws, rules and regulations and in a manner reflecting favorably on and preserving the Gilead Marks’ integrity. All marketing and promotional materials that Aspen proposes to use for the Products will be subject to Gilead review and approval prior to use. Except as provided in this Section 5.1(b), Aspen will not: (a) adopt or use any trademarks, brand names, words, logos, symbols, letters, designs or marks that are combined with Gilead Marks so as to create combination marks, or that would be confusingly similar to Gilead Marks; (b) modify Gilead Marks in any way; (c) use Gilead Marks on or in connection with goods or services other than Products; or (d) take any other action that could diminish the Gilead Marks’ value or damage their associated goodwill and/or reputation.

5.2 Improvements.

(a) Aspen acknowledges and agrees that it has no proprietary Intellectual Property covering, claiming or relating to current Manufacturing process for any of the Products, as set forth in the Specifications. The Parties acknowledge that Aspen, independently or jointly with Gilead, may develop improvements to the Specifications, inventions and other know-how (including without limitation data, information, processes, techniques, methods, and unpatentable inventions) in the course of fulfilling its obligations under this Agreement (“Improvements”). Aspen will reasonably cooperate with Gilead in identifying any potential Improvements in the Manufacture of Products and will disclose any such Improvements to Gilead prior to implementing such Improvements in the Manufacture of the applicable Product under this Agreement.

(b) All Improvements that relate primarily or exclusively to the Manufacture, use or commercialization of any Product (“Product-Specific Improvements”) will be and remain the exclusive property of Gilead. Aspen assigns its entire right, title and interest in the Product-Specific Improvements to Gilead. Aspen will take all reasonable steps and execute and deliver all documents reasonably required for Gilead to evidence or record such assignment. Aspen will only use in its performance under this Agreement, employees or consultants of Aspen who have agreed in writing to assign the Product-Specific Improvements to Aspen.

(c) All Improvements that are not Product-Specific Improvements but that relate to the Manufacture, use or commercialization of any Product (“Broader Improvements”) will be and remain the exclusive property of Aspen. Aspen grants to Gilead an irrevocable, nonexclusive, worldwide, royalty-free license, with the right to sublicense (through one or more tiers of sublicensees), under the Broader Improvements to research, develop, make, have made, use, sell, offer for sale, import and otherwise commercialize Gilead’s (and its Affiliates’ and Licensees’) products throughout the world.

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(d) Aspen will not use any of Aspen’s patented or trade secret technology in its performance under this Agreement, without the prior written consent of Gilead, which consent will not be unreasonably withheld or unduly delayed. The Parties will agree, prior to the addition of each subsequent Product Appendix, whether Aspen will use any such patented or trade secret technology in the Manufacture for the given Product, and will set forth their agreement in such Product Appendix.

5.3 Notice of Infringement. Aspen will notify Gilead promptly if it becomes aware of any actual, potential, threatened or alleged infringement of Gilead Intellectual Property. Aspen will notify Gilead promptly on learning of any beneficial or potentially useful biological or clinical effects of Products that it or its customers observe and grants to Gilead a non-exclusive worldwide fully-paid license under Aspen’s right, title or interest to any Product improvements that it or its personnel makes, conceives, reduces to practice or otherwise develops, either solely or jointly with others, during the term of this Agreement.

VI. CONFIDENTIALITY

6.1 Treatment of Confidential Information. During the term of this Agreement, and for a period of [ * ] after this Agreement expires or terminates, a Party receiving Confidential Information of the other Party will (i) maintain in confidence such Confidential Information to the same extent such Party maintains its own proprietary industrial information of similar kind and value (but at a minimum each Party will use commercially reasonable efforts to maintain Confidential Information in confidence); (ii) not disclose such Confidential Information to any Third Party without prior written consent of the disclosing Party; and (iii) not use such Confidential Information for any purpose except those purposes permitted by this Agreement.

6.2 Authorized Disclosure. Notwithstanding any other provision of this Agreement, each Party may disclose Confidential Information of the other Party as follows:

(a) to the extent and to the persons and entities required by an applicable governmental law, rule, regulation or order; provided, however, that the Party required to disclose Confidential Information will first have given prompt notice to the other Party hereto to enable it to seek any available exemptions from or limitations on such disclosure requirement and will reasonably cooperate in such efforts by the other Party;

(b) as necessary to file or prosecute patent applications, prosecute or defend litigation or otherwise establish rights or enforce obligations under this Agreement, but only to the extent that any such disclosure is necessary;

(c) as necessary to file or maintain Regulatory Applications and Regulatory Approvals under this Agreement, but only to the extent that any such disclosure is necessary;

(d) as required by Gilead’s agreements with its licensors for Products; and a Party may disclose the terms of this Agreement to bona fide potential investors, acquirers or Product Licensees who are bound in writing by obligations of non-disclosure and non-use of the terms of this Agreement at least as stringent as those contained in this Section 6;

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(e) to the extent Gilead is obligated to do so pursuant to applicable U.S. governmental securities laws, rules and regulations by filing a copy of this Agreement with the US Securities and Exchange Commission (the “SEC”), provided that Gilead (i) requests confidential treatment of at least the commercial terms and material terms hereof to the extent such confidential treatment is reasonably available to Gilead, and (ii) solicits Aspen’s comments on such request for confidential treatment. Gilead will [ * ] take into account Aspen’s comments on such request to the extent reasonably practicable and permitted under Applicable Laws. Aspen recognizes that United States laws and SEC policies and regulations to which Gilead is subject may require Gilead to publicly disclose certain terms of this Agreement that neither of the Parties wishes to disclose, and that Gilead is entitled hereunder to make such required disclosures.

6.3 Aspen may request Gilead’s consent, which will not be unreasonably withheld, to disclose specified Confidential Information (other than CMC information) to the extent reasonably necessary for the sale or distribution of Products to medical aid companies.

VII. DISTRIBUTION SAFEGUARDS.

7.1 Counterfeit Products. Aspen will exercise due diligence to detect counterfeit, substandard, or otherwise adulterated or misbranded versions of Products and to prevent those versions from entering the distribution system and reaching patients.

7.2 Distribution Prohibitions. Aspen acknowledges and agrees that territorial control and jurisdictional integrity of Product distribution is in both Parties’ interests in their missions to distribute Product in the Distribution Territory at a reduced price based on the Gilead Access Program no-profit price and in Gilead’s vital business, competitive, and intellectual property interests that enable Gilead to fulfill its mission in its publicly disclosed list of the Gilead Access Program Countries. To reduce risks that Products for use in the Distribution Territory may be diverted into other countries and not reach intended markets in the Distribution Territory and as fundamental terms and conditions of this Agreement, Gilead and Aspen agree:

(a) The Products will be Manufactured as tablets of different color, shape, image or packaging than the same products approved for marketing in the U.S. and the European Union and other developed countries. These tablets are intended only for export to and sale and use in the Distribution Territory and the Manufacturing Territory.

(b) Aspen acknowledges and agrees that it has no rights to promote, market, sell, distribute or use Products outside the Distribution Territory and will not sell, provide or distribute Products for use, sale or resale in, or reimport into, any countries outside the Distribution Territory or to any person or entity that Aspen believes or reasonably should believe has in the past conducted, has plans for, or is selling or distributing Products in, or reimporting Products into, countries outside the Distribution Territory. Aspen will not

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purchase for import into, import, or cause to be purchased or imported into countries outside the Distribution Territory, any Products, other than Products manufactured by Aspen for distribution by Gilead or its authorized distributors in the Manufacturing Territory.

(c) Aspen will immediately provide Gilead with a detailed written report of any knowledge or information it has concerning any expected, likely, actual or reasonably suspected illegal or unauthorized export, resale, sale, distribution, shipment, transport or removal of Product from the Distribution Territory.

(d) Aspen will provide to Gilead at no cost complete, accurate and current information concerning the sales and provision of Product by Aspen to buyers by location in the format specified by Gilead. Aspen will deliver this information to Gilead on a monthly basis by the 15th day of each month for all such Product sales and provision for the preceding calendar month.

(e) Without affecting Gilead’s other rights or remedies, in connection with Aspen’s breach or contravention of Section 7.2 or potential consumption or use of Products outside the Distribution Territory, Gilead may cancel, suspend or modify Aspen’s API Purchase Orders, whether or not accepted by the Contract Manufacturer, to reduce the volume sold of API or provided to Aspen by the quantity that may potentially be consumed or used outside the Distribution Territory. Gilead’s right to so cancel, suspend or modify these orders shall continue until Aspen demonstrates to Gilead’s reasonable satisfaction that Products manufactured by Aspen are not being and shall not be consumed or used outside the Distribution Territory.

VIII. INSPECTION RIGHTS.

8.1 Aspen will maintain complete and accurate records of all transactions involving its purchase or sale of Products. Aspen will permit Gilead or its authorized representative to inspect at Aspen’s place of business any records relevant to assessing Aspen’s compliance with this Agreement and to inspect its facilities. Gilead will conduct any inspection upon reasonable notice to Aspen and during regular business hours.

8.2 Gilead may inspect any facility at which Aspen receives or stores Products to verify compliance with this Agreement. Gilead will conduct any inspection upon reasonable notice to Aspen and during regular business hours.

8.3 Aspen will keep complete and accurate records pertaining to purchase of API, manufacturing costs and other amounts calculated under this Agreement in sufficient detail to permit Gilead to confirm the accuracy of all payments due hereunder. Gilead will be entitled to have an independent, certified public accountant (bound by written obligation of confidentiality and non-use) audit such records to confirm payments due hereunder. Such audit rights may be exercised no more often than [ * ] year, within [ * ] after the calendar year to which such records relate, upon reasonable notice to Aspen and during normal business hours. Gilead will bear the full cost of such audit unless such audit discloses an overpayment or other financial discrepancy

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of more than [ * ] from the amount of total payments due for the period audited. In such case, Aspen will bear the full cost of such audit. The terms of this Section 8.3 will survive any termination or expiration of this Agreement for a period of [ * ].

IX. TERM AND TERMINATION.

9.1 Term and Termination Date. This term of this Agreement begins as of the Effective Date and continues until October 12, [ * ] unless earlier terminated in accordance with this Section 9 or otherwise mutually agreed in writing by the Parties.

9.2 Termination for Breach.

(a) If either Party believes that the other is in material breach of this Agreement with respect to one or more Products, then the Party holding such belief (the “Non-breaching Party”) may deliver notice of such breach to the other Party (the “Notified Party”). The Notified Party will have thirty (30) days to cure such breach, or, if cure of such breach other than non-payment cannot reasonably be effected within such thirty (30) day period, to deliver to the Non-breaching Party a plan reasonably calculated to cure such breach within a timeframe that is reasonably prompt in light of the circumstances then prevailing. Following delivery of such a plan, the notified Party will devote commercially reasonable efforts to carry out the plan and cure the breach.

(b) If the Notified Party fails to cure a material breach of this Agreement as provided for in Section 9.2(a), then the Non-breaching Party may terminate this Agreement in its entirety or on a Product-by-Product basis upon written notice to the Notified Party.

9.3 Termination on Failure to Obtain Regulatory Approval. This Agreement may be terminated by Gilead if Regulatory Approval in South Africa for Viread and Truvada, as manufactured by Aspen, has not been obtained by [ * ] (the “Target Date”), unless such date is extended by mutual written agreement between the Parties in order to take into account external factors beyond Aspen’s control and subject to Aspen’s obligation to use commercially reasonable efforts to expedite such approval. The Parties agree that in the event of the South African Regulatory Authority declining Gilead’s application for a fast track letter to be granted in respect of the registration of the Products, or should said Regulatory Authority withdraw such fast track letter, then the Target Date shall be extended to an appropriate date beyond [ * ].

9.4 Notwithstanding anything to the contrary contained in Article 9 of this Agreement, Gilead may, if commercial interests or necessity require, terminate this Agreement early for one or more (which may include all) of the Products upon no less than three (3) months written notice. Promptly after the provision of such early termination notice, the Parties shall meet in order to discuss and negotiate in good faith [ * ] due to Aspen in consideration of such early termination by Gilead, as described in Attachment D.

9.5 Effect of Termination. Expiration or termination of this Agreement will not affect the Parties’ accrued rights and obligations. The following provisions shall survive expiration or

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termination of this Agreement: Articles V, VI and X, and Sections 2.6, 3.2(b) and (e), 8.3, 9.5, 11.2 and 11.6. Nothing in this Section 9.5 shall be construed to give Aspen the right after expiration or termination of this Agreement to distribute or sell Products, other than to Gilead for liquidation by Aspen of its Products inventory. Upon expiration or termination of this Agreement pursuant to Section 9.2 as a result of a breach by Gilead, or upon termination by Gilead pursuant to Section 9.4, Gilead shall purchase quantity of Product and API in Aspen’s inventory in accordance with Aspen forecasts and Manufacturing Territory Forecasts provided under this Agreement.

9.6 Change of Control. Aspen shall give Gilead sixty (60) days’ written notice prior to the consummation of any transfer of substantially all of Aspen’s assets or the transfer of direct or indirect ownership of [ * ] of a voting or income interest in Aspen (“Change of Control”). Gilead shall be entitled to immediately terminate this Agreement upon receipt of Aspen’s notice of a Change of Control.

X. WARRANTIES AND INDEMNITIES.

10.1 Aspen Warranty. Aspen warrants that Products that it distributes (directly or indirectly) or that it sells directly to Gilead or Gilead’s distributors will, as of delivery, comply with the Production Standards (“Warranty”).

10.2 Aspen Indemnity. Aspen will defend, indemnify and hold harmless Gilead, its Affiliates, its employees and agents from and against any third party claims, demands, actions, suits or proceedings (“Third Party Claims”) (a) arising out of a breach of this Agreement including, without limitation, the Warranty, (b) arising out of the gross negligence, willful misconduct, violation of Applicable Law or regulation by Aspen or its employees, agents or contractors, (c) arising out of tablet manufacturing defects of Products (excluding those caused by API defects not reasonably detectable by Aspen) or mislabeling of the Products, (d) arising from actual or alleged trademark or trade name infringement resulting from the exercise or use of the trademarks designated by Aspen for use with the Products, and (e) from any losses, liabilities, damages, costs and expenses (including reasonable attorneys’ fees) (“Losses”) resulting from such Third Party Claims described in (a) through (d) above, except, in each case, to the extent that Gilead has responsibility, liability or an obligation of indemnity under Section 10.3 for all or part of that Third Party Claim or Loss.

10.3 Gilead Indemnity. Gilead will defend, indemnify and hold harmless Aspen, its Affiliates, its employees and agents from and against any Third Party Claims (a) arising out of the use of the Products; (b) arising out of the gross negligence, willful misconduct, violation of Applicable Law or regulation or breach of this Agreement by Gilead or its employees, agents or contractors, (c) arising from any claim for patent infringement arising out of the use of the Products by Aspen under this Agreement, (d) arising from actual or alleged trade mark or trade name infringement resulting from the exercise or use by Aspen of any rights or licenses granted to it in respect of the Gilead Marks under this Agreement, (e) and any Losses resulting from such Third Party Claims described in clauses (a) through (d), except, in each case, to the extent that Aspen has responsibility, liability or an obligation of indemnity under Section 10.2 for all or part of such Third Party Claim.

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10.4 Indemnity Procedures. A party seeking indemnity under Sections 10.2 or 10.3 will promptly notify the other party of the Third Party Claim, provide it with full authority over the defense and settlement, cooperate at its reasonable request and expense in providing information and assistance in settlement and/or defense, and will not without its express prior written consent settle, admit liability for or otherwise compromise defense or settlement of the Third Party Claim; provided that the party seeking indemnity may be represented by separate counsel at its own expense in Third Party Claim legal proceedings.

10.5 Limitation of Damages. Gilead shall not be liable for loss of profit or use, or for any incidental, consequential, indirect, and special or punitive damages in any claim asserted by Aspen relating to this Agreement.

10.6 Insurance: Aspen agrees to maintain, during the term of this Agreement and for a period of [ * ] after the or termination of this Agreement, at its sole cost and expense, with a financially solvent insurance company, a minimum of [ * ] of products liability insurance with respect to product liability claims arising out of tablet manufacturing defects of the Products, naming Gilead, its subsidiaries and affiliated companies, officers, directors and agents thereof as additional insured. Aspen shall submit a certificate evidencing such insurance and shall notify Gilead thirty days in advance of any material modifications or cancellation of such insurance.

XI. MISCELLANEOUS.

11.1 Independent Contractor. Aspen is an independent contractor dealing in Products and others’ products. This Agreement creates no joint venture, partnership, or agency relationship between the Parties, other than expressly contemplated regarding Regulatory Approvals. Aspen will make no representations or warranties that are binding upon Gilead with respect to Products or otherwise. Aspen will have no authority, and do nothing, to bind Gilead in any way.

11.2 Notice. Any notice required or permitted shall be delivered upon receipt and sent by (i) delivery in person; (ii) internationally-recognized, bonded courier for next-day delivery; (iii) postal mail, certified and return receipt requested, or (iv) facsimile, to the receiving party at its address or facsimile below, or to such other address of which such party gives notice.


To Aspen:		Aspen Pharmacare Holding Limited
		[ * ]
		Building 7 Healthcare Park
		Woodlands Drive
		Woodmead
		Gauteng
		South Africa
		Facsimile: +27 11 239 6018

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To Gilead:		Gilead Sciences, Inc.
		[ * ] 333 Lakeside Drive Foster City, California 94404 United States of America Facsimile: +1-650-522-6255

		with a copy to: Gilead Sciences, Inc. Attn: Senior Vice President and General Counsel 333 Lakeside Drive Foster City, California 94404 United States of America Facsimile: +1.650.522.5537

11.3 Force Majeure. Neither Party shall be liable for non-performance or delay in performance caused by an Event of Force Majeure. The non-performing Party shall notify the other Party of such event of Force Majeure within five (5) days after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration, and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use, throughout the period of suspension of performance, commercially reasonable efforts to remedy its inability to perform; provided, however, that in the event the suspension of performance continues for ninety (90) days after the date such Force Majeure commences, the Parties shall meet to discuss in good faith how to proceed in order to carry out the intent of this Agreement. For purpose of this Agreement a Force Majeure shall not include (i) a Party’s failure to commit sufficient resources, financial or otherwise, to its activities under this Agreement, or (ii) general market or economic conditions.

11.4 Assignment. Aspen may not assign this Agreement in whole or part without Gilead’s prior written consent; any attempted or purported assignment without that consent shall be void.

11.5 Severability; No Waiver. A finding that a provision of this Agreement is invalid shall not affect the validity of this Agreement’s other provisions, which shall remain in effect. The Parties will replace the invalid provision with a valid provision that best accomplishes the Parties’ original intent. A Party’s failure or omission to invoke a right under this Agreement in connection with an event or occurrence shall not be a waiver or affect the Party’s ability to assert that right for future events or occurrences.

11.6 Governing Law and Dispute Resolution. The laws of the State of California, USA shall govern this Agreement and its construction. The Parties expressly disclaim the applicability of the International Convention on the Sale of Goods to this Agreement, and it shall not apply to this Agreement. The Parties will resolve any dispute, controversy or claim arising out of or relating to the validity, formation, enforceability, performance, breach or termination of this Agreement (“Dispute”) in accordance with this Section 11.6, with the resolution

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commencing by a Party notifying the other Party in writing of any Dispute it intends to so resolve. The Parties will attempt to resolve any Dispute amicably through good faith discussions between an appropriate Gilead vice president or more senior officer and a senior executive of Aspen. If they cannot settle the Dispute within thirty (30) days of the written notice of the Dispute then, then on either Party’s request, the Dispute will be finally resolved by binding arbitration as follows:

(a) A single arbitrator appointed in accordance with the [ * ] will administer and conduct the arbitration under those [ * ], with the arbitral proceedings and all pleadings being in the English language. Any written evidence originally in a language other than English will be submitted in an English translation with the original written evidence or true copy of it. The arbitrator will, in rendering its decision, apply the

(b) substantive law of the state of California, USA, without regard to its conflict of laws provisions, and will have the power to decide all questions of arbitrability.

(c) At either Party’s request, the arbitrator will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings. The arbitrator will have the power 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. Either Party may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this Section 11.6 and without any abridgment of the arbitrator’s powers. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction over the award.

(d) The arbitrator will award to the prevailing Party in the arbitration its reasonable attorneys’ fees, costs and expenses incurred in arbitration and will assess them and its own its costs, fees and expenses to the non-prevailing Party, except if the arbitrator cannot make this award and assessment, each Party will bear its own attorney’s fees, costs and expenses and the arbitrator will assess its costs, fees and expenses to the Parties as it deems appropriate under the circumstances.

11.7 Entire Agreement and Amendments. This Agreement represents the Parties’ entire agreement on this subject matter and supersedes any prior agreements. This Agreement may be amended only by a writing signed and delivered by the Parties’ authorized representatives.

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The Parties have entered this Agreement as of the Effective Date by their duly authorized representatives.

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MANUFACTURING AND DISTRIBUTION AGREEMENT

Attachment A

A. Products:

Viread ^® (tenofovir disoproxil fumarate 300 mg), US FDA-approved white tablets in bottles of 30

Truvada ^® (emtricitabine 200 mg and tenofovir disoproxil fumarate 300 mg), US FDA-approved light blue tablets, in bottles of 30

B. Prices:

Viread: US$17.00 per pack of 30 tablets.

Truvada: US$26.25 per pack of 30 tablets.

[ * ].

In both cases, on mutual agreement of the Parties, prices will be subject to [ * ]. Prior to the first release of Product by Aspen, [ * ].

Selling Prices are subject to [ * ]. In the case of increases in the cost of API, [ * ].

On a [ * ] , Aspen will review its cost of formulation, tableting and packaging with respect to the Products. For each Product, if Aspen’s cost of formulation, tableting or packaging [ * ]

C. Gilead Marks:

VIREAD, TRUVADA, GILEAD SCIENCES, GILEAD, and any Gilead logo currently used by Gilead

D. Contract Manufacturer API Costs


Tenofovir disoproxil fumarate – [ * ]	[	* ]
Emtricitabine	[	* ]

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MANUFACTURING AND DISTRIBUTION AGREEMENT

Attachment B

Distribution Territory

Algeria

Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Cape Verde

Central African Republic

Chad

Comoros

Congo

Congo, Dem. Rep. of the

Côte d’Ivoire

Djibouti

Egypt

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia

Ghana

Guinea

Guinea-Bissau

Kenya

Lesotho

Liberia

Libya

Madagascar

Malawi

Mali

Mauritania

Mauritius

Morocco

Mozambique

Namibia

Niger

Nigeria

Rwanda

Sao Tome and Principe

Senegal

Seychelles

Sierra Leone

Somalia

South Africa

Sudan

Swaziland

United Republic of Tanzania

Togo

Tunisia

Uganda

Zambia

Zimbabwe

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

MANUFACTURING AND DISTRIBUTION AGREEMENT

Attachment C

Manufacturing Territory

[ * ]

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

Attachment D

Early Termination

[ * ]

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

Aspen Pharmacare Holdings Limited

Gilead Sciences, Inc.

/s/ Stavros Nicolaou

/s/ John Milligan

Stavros Nicolaou

Senior Executive

Strategic Trade Development

John F. Milligan, Ph.D

Executive Vice President & CFO