GILEAD SCIENCES INC (Form: 10-Q, Received: 08/05/2009 16:45:40)

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 quarterly period ended June 30, 2009

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

For the transition period from to

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)


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

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

650-574-3000

Registrant’s Telephone Number, Including Area Code

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

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

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


Large accelerated filer x		Accelerated filer ¨
Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨

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

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of July 31, 2009: 904,261,310

GILEAD SCIENCES, INC.

INDEX



PART I.	FINANCIAL INFORMATION		3

	Item 1.	Condensed Consolidated Financial Statements	3

		Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008	3

		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2009 and 2008	4

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008	5

		Notes to Condensed Consolidated Financial Statements	6

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

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

	Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION		41

	Item 1.	Legal Proceedings	41

	Item 1A.	Risk Factors	42

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

	Item 3.	Defaults Upon Senior Securities	58

	Item 4.	Submission of Matters to a Vote of Security Holders	58

	Item 5.	Other Information	59

	Item 6.	Exhibits	60

SIGNATURES			67

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD ^® , GILEAD SCIENCES ^® , TRUVADA ^® , VIREAD ^® , HEPSERA ^® , AMBISOME ^® , EMTRIVA ^® , VISTIDE ^® , LETAIRIS ^® , VOLIBRIS™ and RANEXA ^® . ATRIPLA ^® is a registered trademark belonging to Bristol-Myers Squibb & Gilead Sciences, LLC. MACUGEN ^® is a registered trademark belonging to OSI Pharmaceuticals, Inc. SUSTIVA ^® is a registered trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU ^® is a registered trademark belonging to Hoffmann-La Roche Inc. LEXISCAN ^® is a registered trademark belonging to Astellas US LLC. 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

(unaudited)

(in thousands, except per share amounts)


	June 30, 2009		December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	1,040,874	$	1,459,302
Short-term marketable securities		203,394		330,760
Accounts receivable, net		1,242,899		1,023,397
Inventories		969,971		927,868
Deferred tax assets		185,439		140,882
Prepaid taxes		202,049		198,318
Prepaid expenses		78,554		71,815
Other current assets		78,127		126,066

Total current assets		4,001,307		4,278,408
Property, plant and equipment, net		697,426		528,799
Noncurrent portion of prepaid royalties		240,800		257,208
Noncurrent deferred tax assets		132,609		226,728
Long-term marketable securities		1,654,178		1,449,577
Intangible assets		1,570,790		123,008
Other noncurrent assets		89,982		73,103

Total assets	$	8,387,092	$	6,936,831

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	649,999	$	601,200
Accrued government rebates		202,873		176,939
Accrued compensation and employee benefits		108,338		103,840
Income taxes payable		73,393		44,757
Other accrued liabilities		291,312		245,662
Deferred revenues		46,345		42,963
Current portion of other long-term obligations		405,622		5,631

Total current liabilities		1,777,882		1,220,992
Long-term deferred revenues		53,417		74,181
Convertible senior notes, net		1,126,401		1,098,025
Long-term income taxes payable		65,339		56,588
Other long-term obligations		50,084		21,462
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5,000 shares authorized; none outstanding		—		—
Common stock, par value $0.001 per share; 2,800,000 shares authorized; 904,546 and 909,819 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively		905		910
Additional paid-in capital		4,145,814		3,930,109
Accumulated other comprehensive income		23,293		41,240
Retained earnings		1,019,839		300,314

Total Gilead stockholders’ equity		5,189,851		4,272,573
Noncontrolling interest		124,118		193,010

Total stockholders’ equity		5,313,969		4,465,583

Total liabilities and stockholders’ equity	$	8,387,092	$	6,936,831

See accompanying notes.

GILEAD SCIENCES, INC.

Condensed Consolidated Statements of Income

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Revenues:
Product sales	$	1,568,378		$	1,217,216		$	3,015,958		$	2,358,522
Royalty revenues		73,895			50,608			126,937			160,060
Contract and other revenues		4,882			10,301			34,720			17,695

Total revenues		1,647,155			1,278,125			3,177,615			2,536,277

Costs and expenses:
Cost of goods sold		383,045			265,684			712,459			505,532
Research and development		241,638			176,542			430,417			331,843
Selling, general and administrative		261,411			219,533			465,362			414,490
Purchased in-process research and development		—			10,851			—			10,851

Total costs and expenses		886,094			672,610			1,608,238			1,262,716

Income from operations		761,061			605,515			1,569,377			1,273,561
Interest and other income, net		12,923			14,026			17,081			36,726
Interest expense		(18,484	)		(16,428	)		(35,155	)		(32,429	)

Income before provision for income taxes		755,500			603,113			1,551,303			1,277,858
Provision for income taxes		186,355			170,490			395,582			358,810

Net income		569,145			432,623			1,155,721			919,048
Net loss attributable to noncontrolling interest		2,253			2,160			4,789			4,035

Net income attributable to Gilead	$	571,398		$	434,783		$	1,160,510		$	923,083

Net income per share attributable to Gilead common stockholders—basic	$	0.63		$	0.47		$	1.28		$	1.00

Shares used in per share calculation—basic		905,611			922,796			907,684			925,455

Net income per share attributable to Gilead common stockholders—diluted	$	0.61		$	0.45		$	1.24		$	0.96

Shares used in per share calculation—diluted		934,478			965,663			938,500			966,087

See accompanying notes.

GILEAD SCIENCES, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Six Months Ended June 30,
	2009			2008
Operating Activities:
Net income	$	1,155,721		$	919,048
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		28,828			23,781
Amortization		62,955			43,338
Purchased in-process research and development expense		—			10,851
Stock-based compensation expenses		90,254			73,011
Excess tax benefits from stock-based compensation		(33,683	)		(120,595	)
Tax benefits from employee stock plans		38,836			129,372
Deferred income taxes		20,409			(158	)
Other non-cash transactions		40,944			37,282
Changes in operating assets and liabilities:
Accounts receivable, net		(217,911	)		(183,951	)
Inventories		6,872			(254,380	)
Prepaid expenses and other assets		10,600			3,005
Accounts payable		43,691			314,499
Income taxes payable		50,060			23,579
Accrued liabilities		(15,947	)		22,974
Deferred revenues		(17,382	)		4,925

Net cash provided by operating activities		1,264,247			1,046,581

Investing Activities:
Purchases of marketable securities		(1,190,277	)		(1,307,600	)
Proceeds from sales of marketable securities		992,271			1,205,699
Proceeds from maturities of marketable securities		239,200			52,300
Acquisition of CV Therapeutics, net of cash acquired		(1,247,816	)		—
Acquisition of assets from Navitas		—			(6,768	)
Capital expenditures and other		(184,945	)		(41,947	)

Net cash used in investing activities		(1,391,567	)		(98,316	)

Financing Activities:
Proceeds from issuances of common stock		102,093			135,564
Proceeds from credit facility		400,000			—
Repurchases of common stock		(468,244	)		(965,989	)
Extinguishment of long-term debt		(305,383	)		—
Repayments of other long-term obligations		(80	)		(193	)
Excess tax benefits from stock-based compensation		33,683			120,595
Distributions to noncontrolling interest		(64,103	)		(43,169	)

Net cash used in financing activities		(302,034	)		(753,192	)

Effect of exchange rate changes on cash		10,926			(43,560	)

Net change in cash and cash equivalents		(418,428	)		151,513
Cash and cash equivalents at beginning of period		1,459,302			968,086

Cash and cash equivalents at end of period	$	1,040,874		$	1,119,599

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies and estimates related to revenue recognition, allowance for doubtful accounts, prepaid royalties, intangible assets, clinical trial accruals, our tax provision and stock-based compensation. We base our estimates on historical experience and on various other market specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates.

The accompanying Condensed Consolidated Financial Statements include the accounts of Gilead, our wholly-owned subsidiaries and our joint ventures with Bristol-Myers Squibb Company (BMS), for which we are the primary beneficiary as determined under Financial Accounting Standards Board (FASB) Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities . We record a noncontrolling interest in our Condensed Consolidated Financial Statements to reflect BMS’s interest in the joint ventures. Significant intercompany transactions have been eliminated. The Condensed Consolidated Financial Statements include the operating results of companies acquired by us from the date of each acquisition for the applicable reporting periods.

The accompanying Condensed Consolidated Financial Statements and related financial information should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2008, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. The condensed consolidated balance sheet at December 31, 2008 has been derived from audited consolidated financial statements at that date. Certain prior year amounts have been revised for the retrospective application of FASB Staff Position (FSP) Accounting Principles Board Opinion No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1) and Statement of Financial Accounting Standards (SFAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51, Consolidated Financial Statements (SFAS 160) as discussed below.

Convertible Senior Notes

In May 2008, the FASB issued FSP APB 14-1. FSP APB 14-1 addresses instruments commonly referred to as Instrument C from Emerging Issues Task Force (EITF) Issue No. 90-19, Convertible Bonds with Issuer Option to Settle for Cash upon Conversion , which requires the issuer to settle the principal amount in cash and the conversion spread in cash or net shares at the issuer’s option. FSP APB 14-1 requires that issuers of these instruments account for their liability and equity components separately by bifurcating the conversion option from the debt instrument, classifying the conversion option in equity and then accreting the resulting discount on

the debt as additional interest expense over the expected life of the debt. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years and requires retrospective application to all periods presented.

On January 1, 2009, we adopted the provisions of FSP APB 14-1 on a retrospective basis and reflected additional interest expense of $13.3 million and $26.2 million, respectively, a related benefit from income taxes of $5.2 million and $10.3 million, respectively and net income per share attributable to Gilead common stockholders on a diluted basis of $0.01 and $0.02, respectively, for the three and six months ended June 30, 2008 in our Condensed Consolidated Statement of Income. We recorded additional interest expense of $14.0 million and $27.6 million, respectively, a related benefit from income taxes of $5.5 million and $10.9 million, respectively, and net income per share attributable to Gilead common stockholders on a diluted basis of $0.01 and $0.02, respectively, for the three and six months ended June 30, 2009. In addition, the retrospective adoption of FSP APB 14-1 decreased deferred tax assets and debt issuance costs included in other assets by an aggregate of $81.7 million, decreased convertible senior notes, net included in long-term liabilities by $201.8 million and increased total stockholders’ equity by $120.1 million after a charge of $82.6 million to retained earnings in our Condensed Consolidated Balance Sheet as of December 31, 2008.

Noncontrolling Interest

In December 2007, the FASB issued SFAS 160. SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income (loss) attributable to the parent and to the noncontrolling interests, changes in a parent’s ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes additional reporting requirements that identify and distinguish between the ownership interest of the parent and the interest of the noncontrolling owners. SFAS 160 is effective for interim periods and fiscal years beginning after December 15, 2008. On January 1, 2009, we adopted the provisions of SFAS 160 and reclassified the noncontrolling interest (formerly minority interest) from liabilities to stockholders’ equity on our Condensed Consolidated Balance Sheets on a retrospective basis. Our adoption also resulted in the reclassification of the change in noncontrolling interest from net cash provided by operating activities to net cash used in financing activities on our Condensed Consolidated Statements of Cash Flows. We also presented the noncontrolling interest on our Condensed Consolidated Statements of Income as net loss attributable to noncontrolling interest, a component of consolidated net income, on a retrospective basis.

Net Income Per Share Attributable to Gilead Common Stockholders

Basic net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding during the period. Diluted net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding and other dilutive securities outstanding during the period. The potential dilutive shares of our common stock resulting from the assumed exercise of outstanding stock options and equivalents (consisting primarily of performance shares) and the assumed exercise of warrants relating to the convertible senior notes due in 2011 (2011 Notes) and the convertible senior notes due in 2013 (2013 Notes) (collectively, the Notes) are determined under the treasury stock method.

Because the principal amount of the Notes will be settled in cash, only the conversion spread relating to the Notes is included in our calculation of diluted net income per share attributable to Gilead common stockholders. The potential dilutive shares of our common stock resulting from the assumed settlement of the conversion spread of the Notes are determined under the guidance set forth in SFAS No. 128, Earnings Per Share , EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share , and EITF Topic No. D-72, Effect of Contracts That May Be Settled in Stock or Cash on the Computation of Diluted Earnings Per Share . Under such guidance, the settlement of the conversion spread of the Notes has a dilutive effect when the average market price of our common stock during the period exceeds $38.75 and $38.10 for the

2011 Notes and 2013 Notes, respectively. The average market prices of our common stock during each of the three and six months ended June 30, 2009 and 2008 exceeded both of the conversion prices of the Notes and their dilutive effect is included in the table below.

Warrants relating to the 2011 Notes and 2013 Notes have a dilutive effect when the average market price of our common stock during the period exceeds the warrants’ exercise prices of $50.80 and $53.90, respectively. The average market prices of our common stock during the three and six months ended June 30, 2009 and the six months ended June 30, 2008 did not exceed the warrants’ exercise prices relating to the 2011 Notes. The average market prices of our common stock during the three and six months ended June 30, 2009 and 2008 did not exceed the warrants’ exercise price relating to the 2013 Notes. For the three months ended June 30, 2008, the dilutive effect of warrants related to the 2011 Notes is included in the table below.

Stock options to purchase approximately 18.6 million and 16.7 million weighted-average shares of our common stock were outstanding during the three and six months ended June 30, 2009, respectively, but were not included in the computation of diluted net income per share attributable to Gilead common stockholders 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 options to purchase approximately 8.5 million and 10.1 million weighted-average shares of our common stock were outstanding during the three and six months ended June 30, 2008, respectively, but were not included in the computation of diluted net income per share attributable to Gilead common stockholders because the options’ exercise prices were greater than the average market price of our common stock during these periods; therefore, their effect was antidilutive.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Numerator:
Net income attributable to Gilead	$	571,398	$	434,783	$	1,160,510	$	923,083

Denominator:
Weighted-average shares of common stock outstanding used in the calculation of basic net income per share attributable to Gilead common stockholders		905,611		922,796		907,684		925,455
Effect of dilutive securities:
Stock options and equivalents		23,877		32,775		24,998		32,846
Conversion spread related to the 2011 Notes		2,352		4,537		2,766		3,750
Conversion spread related to the 2013 Notes		2,638		4,823		3,052		4,036
Warrants related to the Notes		—		732		—		—

Weighted-average shares of common stock outstanding used in the calculation of diluted net income per share attributable to Gilead common stockholders		934,478		965,663		938,500		966,087

Concentrations of Risk

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

We are also subject to credit risk from our accounts receivable related to our product sales. The majority of our trade accounts receivable arises from product sales in the United States and Europe. In certain countries where payments are typically slow, primarily Greece, Italy, Portugal and Spain, our aggregated accounts receivable balances are significant. In most cases, slow payment practices in these countries reflect the pace at which governmental entities reimburse our customers. This, in turn, may increase the financial risk related to certain of our customers. Sales to customers in these countries in Europe that tend to pay relatively slowly have increased, and may continue to further increase, the average length of time that we have accounts receivable outstanding. At June 30, 2009, our accounts receivable for Greece, Italy, Portugal and Spain totaled $638.7 million, of which $196.2 million was more than 120 days past due. To date, we have not experienced significant losses with respect to the collection of our accounts receivable and believe that all of our past due accounts receivable, net of allowances, as reflected in our Condensed Consolidated Balance Sheets, are collectible. We perform credit evaluations of our customers’ financial conditions and generally have not required collateral.

Fair Value

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands the disclosure requirements regarding fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 for financial assets and liabilities as well as for non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis in the financial statements. In accordance with FSP No. FAS 157-2, Effective Date of FASB Statement No. 157 (FSP FAS 157-2), for all other non-financial assets and liabilities, SFAS 157 is effective for fiscal years beginning after November 15, 2008. In October 2008, the FASB issued FSP No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP FAS 157-3), that clarifies the application of SFAS 157 for financial assets in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4), that provides additional guidance on estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability. FSP FAS 157-4 supersedes FSP FAS 157-3 and is applicable to the valuation of auction rate securities held by us for which there was no active market as of June 30, 2009.

On January 1, 2009, in accordance with FSP FAS 157-2, we adopted the provisions of SFAS 157 on a prospective basis for our non-financial assets and liabilities that are not recognized or disclosed at fair value on a recurring basis. SFAS 157 requires that we determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy established in SFAS 157 and describes three levels of inputs that may be used to measure fair value, as follows:

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

Level 2 inputs which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

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

The adoption of SFAS 157 for our non-financial assets and liabilities that are not recognized or disclosed at fair value on a recurring basis had no effect on our consolidated net income for the three and six months ended June 30, 2009.

The following table summarizes, for each major category of assets or liabilities, the respective fair value and the classification by level of input within the fair value hierarchy defined in SFAS 157 (in thousands):


	June 30, 2009								December 31, 2008
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	—	$	26,980	$	—	$	26,980	$	2,500	$	179,847	$	—	$	182,347
Marketable securities		167,919		1,586,755		102,898		1,857,572		200,502		1,477,202		102,633		1,780,337
Derivatives		—		37,280		—		37,280		—		90,870		—		90,870

	$	167,919	$	1,651,015	$	102,898	$	1,921,832	$	203,002	$	1,747,919	$	102,633	$	2,053,554

Liabilities:
Derivatives	$	—	$	27,674	$	—	$	27,674	$	—	$	150	$	—	$	150

The following table is a reconciliation of marketable securities measured at fair value using significant unobservable inputs (Level 3) (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Balance, beginning of period	$	102,593		$	140,285		$	102,633		$	7,258
Total realized and unrealized gains (losses) included in:
Interest and other income, net		—			(366	)		(29	)		(2,264	)
Other comprehensive income, net		3,272			22			5,767			(8,688	)
Sales of marketable securities		(2,967	)		(8,665	)		(5,473	)		(22,729	)
Transfers into Level 3		—			—			—			157,699

Balance, end of period	$	102,898		$	131,276		$	102,898		$	131,276

Total losses for the three and six months ended June 30, 2009 and 2008 included in earnings attributable to the change in unrealized losses relating to assets still held at the reporting date	$	—		$	(366	)	$	(29	)	$	(2,264	)

Marketable securities, measured at fair value using Level 3 inputs, are substantially comprised of auction rate securities within our available-for-sale investment portfolio. The underlying assets of our auction rate securities are comprised of student loans. Although auction rate securities would typically be measured using Level 2 inputs, the failure of auctions and the lack of market activity and liquidity experienced since the beginning of 2008 required that these securities be measured using Level 3 inputs. The fair value of our auction rate securities was determined using a discounted cash flow model that considered projected cash flows for the issuing trusts, underlying collateral and expected yields. Projected cash flows were estimated based on the underlying loan principal, bonds outstanding and payout formulas. The weighted-average life over which the cash flows were projected considered the collateral composition of the securities and related historical and projected prepayments. The underlying student loans have a weighted-average expected life of three to eight years. The discount rates used in our discounted cash flow model were based on market conditions for comparable or similar term asset-backed securities as well as other fixed income securities adjusted for an illiquidity discount resulting in an annual discount rate of 3.3%. Our auction rate securities reset every seven to 35 days with maturity dates ranging from 2023 through 2041 and have annual interest rates ranging from 0.6% to 1.0%. As of June 30, 2009, our auction rate securities continued to earn interest.

Our auction rate securities were recorded in long-term marketable securities on our Condensed Consolidated Balance Sheet at June 30, 2009 and December 31, 2008. Although there continued to be failed auctions as well as lack of market activity and liquidity in 2009, we believe we had no other-than-temporary impairments on these

securities as of June 30, 2009 because we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost basis.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1). FSP 107-1 extends the disclosure requirements regarding the fair value of financial instruments under FAS No. 107, Disclosure about Fair Value of Financial Instruments (FAS 107), to interim financial statements of publicly traded companies. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. On April 1, 2009, we adopted the provisions of FSP FAS 107-1 on a prospectus basis for our financial instruments. Accordingly, the required disclosures for our available-for-sale securities are included in note 6 to our Condensed Consolidated Financial Statements. As of June 30, 2009, the amortized cost and fair value of our Notes was $1.13 billion and $1.65 billion, respectively.

2. DERIVATIVE FINANCIAL INSTRUMENTS

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced qualitative and quantitative disclosures to enable financial statement users to better understand the effects of derivatives and hedging on an entity’s financial position, financial performance and cash flows in the context of an entity’s risk exposures. SFAS 161 is effective for interim periods and fiscal years beginning after November 15, 2008. On January 1, 2009, we adopted the provisions of SFAS 161 on a prospective basis for our derivative instruments.

We operate in foreign countries which exposes us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. In order to manage the risk related to changes in foreign currency exchange rates, we hedge certain of our foreign currency exposures related to outstanding monetary assets and liabilities and forecasted product sales with foreign currency exchange forward contracts and foreign currency exchange option contracts. In general, the market risks of our foreign currency exchange contracts are offset by corresponding gains and losses on the transactions being hedged. Our exposure to credit risk from these contracts is a function of changes in interest and currency exchange rates and, therefore, varies over time. We limit the risk that counterparties to these contracts may be unable to perform by transacting only with major banks, all of which we monitor closely in the context of current market conditions. We also limit risk of loss by entering into contracts that provide for net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrecognized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative financial contracts for trading purposes. We do not hedge our net investment in any of our foreign subsidiaries.

We enter into foreign currency exchange contracts to hedge our market risk exposure associated with foreign currency exchange rate fluctuations for certain monetary assets and liabilities of our foreign subsidiaries that are denominated in a non-functional currency. As these derivative instruments are not designated as hedges under SFAS Nos. 133 and 138, Accounting for Derivative Instruments and Hedging Activities (collectively referred to as SFAS 133), we record the changes in the fair value of such instruments in interest and other income, net on our Condensed Consolidated Statements of Income.

Foreign currency exchange contracts used to hedge forecasted product sales are designated as cash flow hedges under SFAS 133. These derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified, all with maturities of 18 months or less. At the inception of a hedging relationship and on a quarterly basis, we perform a regression analysis taking the change in cash flow of the underlying contract and regressing it against the change in cash flow of the hedge instrument (excluding time value) to assess the effectiveness of the hedging relationship. We assess hedge

effectiveness on a retrospective basis using a dollar offset approach monthly. We exclude time value from our effectiveness testing and recognize changes in the time value of the hedge in interest and other income, net. The effective component of the hedge is recorded in accumulated other comprehensive income (OCI) or loss within stockholders’ equity as an unrealized gain or loss on the hedging instrument. When the hedged forecasted transactions occur, the hedges are de-designated and the unrealized gains and losses are reclassified into product sales. Substantially all values related to the hedged forecasted transactions reported in accumulated OCI at June 30, 2009 will be reclassified to product sales within 12 months.

We had notional amounts on foreign currency exchange forward and option contracts outstanding of $2.86 billion and $2.39 billion at June 30, 2009 and December 31, 2008, respectively.

The following table summarizes information about the fair values of derivative instruments on our Condensed Consolidated Balance Sheet as of June 30, 2009 (in thousands):


	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
Derivatives designated as hedges under SFAS 133:
Foreign currency exchange contracts	Other current assets	$	36,526	Other accrued liabilities	$	19,735
Foreign currency exchange contracts	Other noncurrent assets		752	Other long-term obligations		7,832

Total derivatives designated as hedges under SFAS 133			37,278			27,567

Derivatives not designated as hedges under SFAS 133:
Foreign currency exchange contracts	Other current assets		2	Other accrued liabilities		107

Total derivatives not designated as hedges under SFAS 133			2			107

Total derivatives		$	37,280		$	27,674

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


	Three Months Ended June 30, 2009			Six Months Ended June 30, 2009
Derivatives designated as hedges under SFAS 133:
Net gains (losses) recognized in OCI (effective portion)	$	(70,477	)	$	38,637

Net gains reclassified from accumulated OCI into product sales (effective portion)	$	35,239		$	73,057

Net gains (losses) recognized in interest and other income, net (ineffective portion and amounts excluded from effectiveness testing)	$	589		$	(15,530	)

Derivatives not designated as hedges under SFAS 133:
Net gains (losses) recognized in interest and other income, net	$	(47,322	)	$	9,040

The net unrealized gains related to our cash flow hedges included in accumulated OCI, net of taxes, were $20.5 million and $54.9 million at June 30, 2009 and December 31, 2008, respectively.

3. ACQUISITION OF CV THERAPEUTICS, INC.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R establishes principles and requirements for recognizing and measuring assets acquired, liabilities assumed and any noncontrolling interests in the acquiree in a business combination. SFAS 141R also provides guidance for recognizing and measuring goodwill acquired in a business combination; requires purchased in-process research and development (IPR&D) to be capitalized at fair value as intangible assets at the time of acquisition; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination; expands the definition of what constitutes a business; and requires the acquirer to disclose information that users may need to evaluate and understand the financial effect of the business combination. SFAS 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. On January 1, 2009, we adopted the provisions of SFAS 141R on a prospective basis and applied it to the acquisition of CV Therapeutics, Inc. (CV Therapeutics) as discussed below.

On April 15, 2009, we acquired CV Therapeutics through a cash tender offer under the terms of an agreement and plan of merger entered into in March 2009. CV Therapeutics was a publicly held biopharmaceutical company based in Palo Alto, California, primarily focused on applying molecular cardiology to the discovery, development and commercialization of small molecule drugs for the treatment of cardiovascular diseases. CV Therapeutics had two marketed products, Ranexa ^® (ranolazine) for the treatment of chronic angina and Lexiscan ^® (regadenoson) injection for use as a pharmacologic stress agent in radionuclide myocardial perfusion imaging in patients unable to undergo adequate exercise stress. CV Therapeutics also had several product candidates in clinical development for the treatment of atrial fibrillation, pulmonary diseases and diabetes. We believe the acquisition will provide us with an opportunity to further expand into the cardiovascular therapeutic area.

The CV Therapeutics acquisition was accounted for as a business combination in accordance with SFAS 141R. The results of operations of CV Therapeutics since April 15, 2009 have been included in our Condensed Consolidated Statement of Operations, and were not significant. The acquisition date, in accordance with the provisions of SFAS 141R, was determined to be April 15, 2009 as that is the date on which we acquired approximately 89% of the outstanding shares of common stock of CV Therapeutics and obtained effective control of the company. The acquisition was completed two days later on April 17, 2009, at which time CV Therapeutics became a wholly-owned subsidiary.

The aggregate consideration transferred to acquire CV Therapeutics was $1.39 billion, and consisted of cash paid for common stock and other equity instruments at or prior to closing of $1.38 billion and the fair value of vested stock options assumed of $15.7 million.

In accordance with the merger agreement, the number of Gilead stock options and restricted stock units into which assumed CV Therapeutics’ stock options and restricted stock units were converted was determined based on the option conversion ratio, which is the per share acquisition price of $20.00 divided by the average closing price of our common stock for the five consecutive trading days immediately preceding (but not including) the closing date of April 17, 2009, which was $46.24 per share. The fair value of stock options assumed was calculated using a Black-Scholes valuation model with the following assumptions: market price of $44.54 per share, which was the closing price of our common stock on the acquisition date; expected term ranging from 0.1 to 5.2 years; risk-free interest rate ranging from 0.1% to 1.7%; expected volatility ranging from 37.4% to 43.2%; and no dividend yield. The fair value of restricted stock units assumed was calculated using the acquisition-date closing price of $44.54 per share for our common stock.

We included the fair value of vested stock options assumed by us of $15.7 million in the consideration transferred for the acquisition. There were no vested restricted stock units assumed by us. The estimated fair value of unvested stock options and restricted stock units assumed by us of $11.2 million was not included in the

consideration transferred and is being recognized as stock-based compensation expense over the remaining future vesting period of the awards.

The following table summarizes the assets acquired and liabilities assumed at April 15, 2009 (in thousands):


Intangible assets—marketed products	$	951,200
Intangible assets—IPR&D		180,100
Goodwill		316,818
Deferred tax assets		413,816
Deferred tax liabilities		(442,969	)
Other assets/liabilities
Cash and cash equivalents		129,087
Marketable securities		116,363
Accounts receivable		9,136
Inventories		50,455
Prepaids and other current assets		60,671
Property, plant and equipment		11,672
Other assets		20,162
Accounts payable		(5,089	)
Accrued and other current liabilities		(87,898	)
Convertible senior notes		(303,060	)
Other liabilities		(27,906	)

Total other net liabilities		(26,407	)

Total consideration transferred	$	1,392,558

Intangible Assets

A substantial portion of the assets acquired consisted of intangible assets related to CV Therapeutics’ two marketed products, Ranexa and Lexiscan, and CV Therapeutics’ IPR&D projects. Management determined that the estimated acquisition-date fair values of the intangible assets related to the marketed products and IPR&D projects were $951.2 million and $180.1 million, respectively.

Of the $951.2 million of intangible assets related to the marketed products, $688.4 million related to Ranexa and $262.8 million related to Lexiscan. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), we have determined that these intangible assets have finite useful lives and will be amortized over their respective useful lives, which we estimated to be the periods over which the associated product patents will expire as those are the periods over which the intangible assets are expected to contribute to the future cash flows of the related products.

Of the $180.1 million of intangible assets related to the IPR&D projects, $93.4 million related to CVT-3619, a product candidate in Phase 1 clinical studies for the treatment of hypertriglyceridemia. The remaining balance of the intangible assets related to IPR&D projects represented various other in-process projects with no single project comprising a significant portion of the total value. In accordance with SFAS 141R and SFAS 142, intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated research and development (R&D) efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

The estimated fair value of the intangible assets related to the marketed products and IPR&D projects was determined using the income approach, which discounts expected future cash flows to present value. We estimated the fair value of these intangible assets using a present value discount rate of 9%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of CV Therapeutics. This is comparable to the estimated internal rate of return for CV Therapeutics’ operations and represents the rate that market participants would use to value the intangible assets. For the intangible assets related to the IPR&D projects, we compensated for the differing phases of development of each project by probability-adjusting our estimation of the expected future cash flows associated with each project. We then determined the present value of the expected future cash flows using the discount rate of 9%. The projected cash flows from the IPR&D projects were based on key assumptions such as estimates of revenues and operating profits related to the projects considering their stages of development; the time and resources needed to complete the development and approval of the related product candidates; the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a drug compound such as obtaining marketing approval from the U.S. Food and Drug Administration and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets.

The following table summarizes the gross carrying amounts and accumulated amortization of the intangible assets related to the marketed products as of June 30, 2009 (in thousands):


	Gross Carrying Amount		Accumulated Amortization
Intangible asset—Ranexa	$	688,400	$	(6,439	)
Intangible asset—Lexiscan		262,800		(5,363	)

Total	$	951,200	$	(11,802	)

Amortization expense for the intangible assets related to the marketed products was $11.8 million for the three and six months ended June 30, 2009 and was recorded in cost of goods sold in our Condensed Consolidated Statement of Income. The weighted-average amortization period for these intangible assets is approximately 10 years. We are amortizing the intangible asset related to Ranexa over its estimated useful life using an amortization rate derived from our forecasted future product sales for Ranexa. We are amortizing the intangible asset related to Lexiscan over its estimated useful life on a straight-line basis. Given that current Lexiscan revenues consist of royalties received from a collaboration partner and we will have limited ongoing access and visibility into that partner’s future sales forecasts, we cannot make a reasonable estimate of the amortization rate utilizing a forecasted product sales approach.

As of June 30, 2009, we estimated future amortization expense associated with the intangible assets related to the marketed products for each of the five succeeding fiscal years as follows (in thousands):


Fiscal Year	Amount
2009 (remaining six months)	$	28,325
2010		67,269
2011		76,350
2012		85,098
2013		91,607
2014		96,075

Total	$	444,724

Deferred Tax Assets and Deferred Tax Liabilities

The $413.8 million of deferred tax assets resulting from the acquisition was primarily related to federal and state net operating loss and tax credit carryforwards. The $443.0 million of deferred tax liabilities resulting from

the acquisition was primarily related to the difference between the book basis and tax basis of the intangible assets related to the marketed products and IPR&D projects. We have concluded, based on the standard set forth in SFAS No. 109, Accounting for Income Taxes (SFAS 109), that it is more likely than not that we will not realize the benefit from deferred tax assets related to certain state net operating loss carryforwards. As a result, a valuation allowance of $15.1 million was recorded related to those deferred tax assets. For presentation purposes, the $443.0 million of deferred tax liabilities, all of which is of a noncurrent nature, has been netted against noncurrent deferred tax assets on our Condensed Consolidated Balance Sheet as permitted by SFAS 109.

Convertible Senior Notes

As a result of the acquisition, we assumed convertible notes from CV Therapeutics consisting of 2.75% senior subordinated convertible notes due 2012, 3.25% senior subordinated convertible notes due 2013 and 2.0% senior subordinated convertible debentures due 2023. In accordance with SFAS 141R, all of these convertible notes were recognized at their fair values at the acquisition date. In May 2009, we offered to repurchase these convertible notes in consideration for their par value plus accrued interest, as required under the terms of the respective convertible note agreements following the occurrence of a change in control or fundamental change as defined in the agreements. As of June 30, 2009, substantially all of these convertible notes have been extinguished.

Goodwill

The excess of the consideration transferred over the fair values assigned to the assets acquired and liabilities assumed was $316.8 million, which represents the goodwill amount resulting from the acquisition. Management believes that the goodwill mainly represents the synergies and economies of scale expected from combining the operations of Gilead and CV Therapeutics. None of the goodwill is expected to be deductible for income tax purposes. We recorded the goodwill as an intangible asset in our Condensed Consolidated Balance Sheet as of the acquisition date. In accordance with SFAS 142 , goodwill is tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the goodwill below its carrying amount.

Acquisition-Related Transaction Costs and Restructuring Expenses

We recognized $8.2 million of acquisition-related transaction costs in selling, general and administrative (SG&A) expenses for the three and six months ended June 30, 2009, which consisted primarily of investment banker fees, legal and accounting costs related to the acquisition. In addition, during the three months ended June 30, 2009, we approved a plan to realize certain synergies between us and CV Therapeutics, re-align our cardiovascular operations and eliminate certain redundancies. The restructuring plan includes the consolidation and re-alignment of the cardiovascular R&D organization, the exit from certain of our facilities and the termination of certain contractual obligations. As a result of this restructuring plan, we recorded $12.9 million and $11.2 million in SG&A expenses and R&D expenses, respectively, for the three months ended June 30, 2009, primarily related to employee severance and termination benefits costs in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. We expect the total amount to be incurred in connection with the significant activities of our restructuring plan to be approximately $30 million for employee severance and termination benefits and $25 million for facilities-related costs. These costs are expected to be incurred through 2010 with the majority of the expenses to be incurred by the end of 2009.

The following table summarizes the amounts accrued for restructuring liabilities and changes in those amounts during the period (in thousands):


	Balance at March 31, 2009		Costs incurred during period		Costs paid or settled during period		Other adjustments during period		Balance at June 30, 2009
Employee severance and termination benefits	$	—	$	21,575	$	11,448	$	—	$	10,127

Pro Forma Information

The following unaudited pro forma information presents the combined results of operations of Gilead and CV Therapeutics for the six months ended June 30, 2009 and 2008 as if the acquisition of CV Therapeutics had been completed on January 1, 2009 and 2008, respectively, with adjustments to give effect to pro forma events that are directly attributable to the acquisition. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of Gilead and CV Therapeutics. Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the acquisition occurred at the beginning of each period presented, nor are they intended to represent or be indicative of future results of operations.

The unaudited pro forma results of operations are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Total revenues	$	1,653,951	$	1,327,125	$	3,221,331	$	2,608,088
Net income attributable to Gilead	$	555,307	$	415,554	$	1,061,827	$	830,687

4. ACQUISITION OF REAL ESTATE

In January 2009, we completed the purchase of an office building and approximately 30 acres of land located in Foster City, California, for an aggregate purchase price of $140.1 million. The purchase price was allocated based on the estimated relative fair values primarily to land of $71.6 million, building of $64.3 million, land improvements of $2.7 million and office furniture and equipment of $1.1 million.

5. INVENTORIES

Inventories are summarized as follows (in thousands):


	June 30, 2009		December 31, 2008
Raw materials	$	410,021	$	505,106
Work in process		214,123		140,333
Finished goods		345,827		282,429

Total inventories	$	969,971	$	927,868

As of June 30, 2009 and December 31, 2008, the joint ventures formed by Gilead and BMS, which are included in our Condensed Consolidated Financial Statements, held $621.6 million and $607.7 million in inventory, respectively, of efavirenz active pharmaceutical ingredient, purchased from BMS at BMS’s estimated net selling price of Sustiva.

6. AVAILABLE-FOR-SALE SECURITIES

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2). FSP FAS 115-2 provides new guidance on the recognition and presentation of an other-than-temporary impairment, provides some new disclosure requirements as well as extends certain annual disclosure requirements to interim periods. FSP FAS 115-2 is effective for interim periods and fiscal years ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. On April 1, 2009, we adopted the provisions of FSP FAS 115-2 on a prospective basis for available-for-sale securities.

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


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2009
Debt securities:
U.S. treasury securities	$	165,642	$	522	$	(38	)	$	166,126
U.S. government sponsored entity debt securities		675,318		9,157		(68	)		684,407
Municipal debt securities		180,969		3,523		(4	)		184,488
Corporate debt securities		587,475		8,861		(313	)		596,023
Residential mortgage-backed securities		115,800		2,157		(222	)		117,735
Student loan-backed securities		117,050		—		(14,885	)		102,165
Other debt securities		31,680		481		(338	)		31,823

Total debt securities		1,873,934		24,701		(15,868	)		1,882,767
Equity securities		1,451		334		—			1,785

Total	$	1,875,385	$	25,035	$	(15,868	)	$	1,884,552

December 31, 2008
Debt securities:
U.S. treasury securities	$	199,962	$	2,281	$	—		$	202,243
U.S. government sponsored entity debt securities		669,721		12,105		(52	)		681,774
Municipal debt securities		328,776		3,987		(126	)		332,638
Corporate debt securities		450,567		2,146		(1,983	)		450,730
Residential mortgage-backed securities		134,409		926		(574	)		134,761
Student loan-backed securities		122,400		—		(20,602	)		101,798
Other debt securities		58,468		735		(1,221	)		57,982

Total debt securities		1,964,303		22,180		(24,558	)		1,961,926
Equity securities		1,451		—		(692	)		759

Total	$	1,965,754	$	22,180	$	(25,250	)	$	1,962,685

As of June 30, 2009 and December 31, 2008, other debt securities consisted primarily of foreign government and agency securities as well as asset-backed securities that exclude student loans and residential mortgage-backed securities.

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


	June 30, 2009		December 31, 2008
Cash and cash equivalents	$	26,980	$	182,348
Short-term marketable securities		203,394		330,760
Long-term marketable securities		1,654,178		1,449,577

Total	$	1,884,552	$	1,962,685

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


	June 30, 2009				December 31, 2008
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less than one year	$	228,939	$	230,374	$	510,983	$	513,107
Greater than one year but less than five years		1,397,930		1,417,815		1,122,885		1,137,877
Greater than five years but less than ten years		32,298		32,966		43,239		43,994
Greater than ten years		214,767		201,612		287,196		266,948

Total	$	1,873,934	$	1,882,767	$	1,964,303	$	1,961,926

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Gross realized gains on sales	$	2,436		$	5,709		$	7,374		$	12,550
Gross realized losses on sales	$	(606	)	$	(3,787	)	$	(957	)	$	(4,965	)

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

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


	Less Than 12 Months					12 Months or Greater					Total
	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
June 30, 2009
Debt securities:
U.S. treasury securities	$	(38	)	$	20,665	$	—		$	—	$	(38	)	$	20,665
U.S. government sponsored entity debt securities		(68	)		68,409		—			—		(68	)		68,409
Municipal debt securities		(4	)		3,458		—			—		(4	)		3,458
Corporate debt securities		(127	)		30,792		(187	)		13,334		(314	)		44,126
Residential mortgage-backed securities		(29	)		8,830		(193	)		5,173		(222	)		14,003
Student loan-backed securities		—			—		(14,885	)		102,165		(14,885	)		102,165
Other debt securities		(12	)		1,135		(325	)		9,796		(337	)		10,931

Total	$	(278	)	$	133,289	$	(15,590	)	$	130,468	$	(15,868	)	$	263,757

December 31, 2008
Debt securities:
U.S. treasury securities	$	—		$	—	$	—		$	—	$	—		$	—
U.S. government sponsored entity debt securities		(51	)		46,944		—			—		(51	)		46,944
Municipal debt securities		(126	)		24,871		—			—		(126	)		24,871
Corporate debt securities		(1,599	)		138,726		(384	)		9,887		(1,983	)		148,613
Residential mortgage-backed securities		(217	)		37,862		(357	)		1,400		(574	)		39,262
Student loan-backed securities		(20,602	)		101,798		—			—		(20,602	)		101,798
Other debt securities		(138	)		6,789		(1,084	)		12,837		(1,222	)		19,626

Total	$	(22,733	)	$	356,990	$	(1,825	)	$	24,124	$	(24,558	)	$	381,114

As of June 30, 2009 and December 31, 2008, the gross unrealized losses were primarily caused by an increase in the yield-to-maturity of the underlying securities, and approximately 17% and 29%, respectively, of the total number of our investments were in unrealized loss positions. In the case of auction rate securities, gross unrealized losses were caused by a higher discount rate used in the valuation of these securities as compared to the coupon rates of these securities. No significant facts or circumstances have arisen to indicate that there has been any deterioration in the creditworthiness of the issuers of these securities. Based on our review of these securities, we believe we had no other-than-temporary impairments on these securities as of June 30, 2009 and December 31, 2008 because we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost basis.

During the three and six months ended June 30, 2009, the net unrealized gains on available-for-sale securities included in accumulated OCI were $8.0 million and $13.4 million, respectively. During the three and six months ended June 30, 2009, gains of $1.3 million and $4.1 million, respectively, were reclassified out of accumulated OCI into interest and other income, net.

7. REVOLVING CREDIT FACILITY

Under our amended and restated credit agreement, we, along with our wholly-owned subsidiary, Gilead Biopharmaceutics Ireland Corporation, may borrow up to an aggregate of $1.25 billion in revolving credit loans. The credit agreement also includes a sub-facility for swing-line loans and letters of credit. Loans under the credit agreement bear interest at an interest rate of either LIBOR plus a margin ranging from 0.20 percent to 0.32 percent or the base rate, as defined in the credit agreement. In April 2009, in connection with the acquisition of CV Therapeutics, we borrowed $400.0 million under the credit agreement to partially fund the acquisition. The credit agreement will terminate and all outstanding amounts owing thereunder shall be due and payable on December 17, 2012. We may reduce the commitments and may prepay loans under the credit agreement in whole or in part at any time without penalty, subject to certain conditions. We expect to repay the $400.0 million loan within the next 12 months using cash flow generated from operations. As of June 30, 2009, we had letters of credit outstanding under this credit facility of $3.8 million, and the amount available under this credit facility was approximately $846.2 million. We are required to comply with certain covenants under this credit facility and as of June 30, 2009, we were in compliance with all such covenants.

8. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

On May 12, 2006, the United States District Court for the Northern District of California executed orders dismissing in its entirety and with prejudice the fourth consolidated amended complaint associated with a purported class action lawsuit against us and our Chairman and Chief Executive Officer; President and Chief Operating Officer; former Executive Vice President of Operations; Executive Vice President of Research and Development and Chief Scientific Officer; Senior Vice President of Manufacturing; and Senior Vice President of Research, alleging 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 promulgated by the Securities Exchange Commission, by making certain alleged false and misleading statements. The plaintiffs have appealed the dismissal. On August 11, 2008, the United States Court of Appeals for the Ninth Circuit reversed the district court’s decision and remanded the case to the district court. On February 6, 2009, we filed a petition for a writ of certiorari with the Supreme Court of the United States, requesting that the court review the judgment of the court of appeals. In April 2009, the Supreme Court of the United States denied our petition. The case continues before the district court. On February 13, 2009, we filed a further motion to dismiss the fourth consolidated amended complaint on alternative grounds. On June 3, 2009, the district court granted in part and denied in part our motion to dismiss and gave plaintiffs leave to amend the complaint. On July 10, 2009, plaintiffs filed a fifth consolidated amended complaint. Our deadline to respond to the fifth consolidated amended complaint is August 12, 2009. It is not possible to predict the outcome of this case, and as such, no amounts have been accrued related to the outcome of this case.

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, consolidated results of operations or financial position.

9. STOCK-BASED COMPENSATION EXPENSES

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Cost of goods sold	$	2,771		$	2,848		$	6,025		$	4,542
Research and development expenses		24,321			15,370			41,276			32,265
Selling, general and administrative expenses		27,189			18,657			48,025			36,204

Stock-based compensation expenses included in total costs and expenses		54,281			36,875			95,326			73,011
Income tax effect		(14,320	)		(10,466	)		(25,077	)		(20,601	)

Stock-based compensation expenses included in net income	$	39,961		$	26,409		$	70,249		$	52,410

10. STOCKHOLDERS’ EQUITY

Stock Option Plan

In May 2009, our stockholders approved an amendment to the Gilead Sciences, Inc. 2004 Equity Incentive Plan (2004 Plan) to increase the number of shares authorized for issuance under the 2004 Plan by 20,000,000 shares of our common stock. As of June 30, 2009, there were 56,544,212 shares authorized and available for future grant under the 2004 Plan.

In connection with the acquisition of CV Therapeutics, we assumed CV Therapeutics’ 1994 Equity Incentive Plan, as amended and restated, Non-Employee Directors’ Stock Option Plan, as amended and restated, 2000 Equity Incentive Plan, as amended and restated, 2000 Nonstatutory Incentive Plan, as amended and restated and 2004 Employee Commencement Incentive Plan, as amended and restated (collectively, the CV Therapeutics Plans). The majority of options that were issued and outstanding under the CV Therapeutics Plans as of April 15, 2009 were converted into options to purchase approximately 1.8 million shares of our common stock and remain subject to their original terms and conditions. No shares are available for future grant under the CV Therapeutics Plans.

Stock Repurchase Programs

In October 2008, we entered into an accelerated share repurchase agreement with a financial institution to repurchase $750.0 million of our common stock on an accelerated basis. This accelerated share repurchase was part of the $3.00 billion stock repurchase program authorized by our board of directors (Board) in October 2007. Under the terms of the accelerated share repurchase agreement, we paid $750.0 million to settle the initial purchase transaction and received 14,874,519 shares of our common stock at an initial price of $50.42 per share. In March 2009, upon termination of the agreement and, in accordance with the share delivery provisions of the agreement, we received an additional 1,356,337 shares of our common stock based on the average of the daily volume weighted-average prices of our common stock during a specified period less a predetermined discount per share. As a result, the total number of shares repurchased and retired under this accelerated share repurchase agreement was 16,230,856 shares at an average purchase price of $46.21 per share.

During the three and six months ended June 30, 2009, in addition to the additional shares that we received under the terms of the accelerated share repurchase transaction, we repurchased and retired 5,317,686 and 10,326,133 shares, respectively, of our common stock at an average purchase price of $44.77 and $45.33 per share, respectively, for an aggregate purchase price of $238.1 million and $468.0 million, respectively, through open market transactions. As of June 30, 2009, the remaining authorized amount of stock repurchases that may be made under our $3.00 billion Board-authorized stock repurchase program which expires in December 2010 was $530.0 million.

We use the par value method of accounting for our stock repurchases. Under the par value method, common stock is first charged with the par value of the shares involved. The excess of the cost of shares acquired over the par value is allocated to additional paid-in capital (APIC) based on an estimated average sales price per issued share with the excess amounts charged to retained earnings. As a result of our open market stock repurchases during the six months ended June 30, 2009, we reduced common stock and APIC by an aggregate of $30.5 million and charged $437.7 million to retained earnings.

Comprehensive Income

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Net income	$	569,145		$	432,623		$	1,155,721		$	919,048
Other comprehensive income (loss):
Net foreign currency translation gain (loss)		10,681			(653	)		7,215			3,663
Net unrealized gain (loss) on available-for-sale securities, net of related tax effects		6,684			(18,849	)		9,258			(15,949	)
Net unrealized gain (loss) on cash flow hedges, net of related tax effects		(105,716	)		27,421			(34,420	)		16,638

Total other comprehensive income (loss)		(88,351	)		7,919			(17,947	)		4,352

Comprehensive income		480,794			440,542			1,137,774			923,400
Comprehensive loss attributable to noncontrolling interest		2,253			2,160			4,789			4,035

Comprehensive income attributable to Gilead	$	483,047		$	442,702		$	1,142,563		$	927,435

11. SEGMENT INFORMATION

We operate in one business segment, which primarily focuses on the development and commercialization of human therapeutics for life threatening diseases. All products are included in one segment, because our major products, Truvada, Atripla, Viread, Hepsera, Emtriva and AmBisome, which together accounted for substantially all of our total product sales for the three and six months ended June 30, 2009 and 2008, 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 June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Antiviral products:
Truvada	$	608,079	$	516,149	$	1,198,432	$	995,534
Atripla		569,142		355,101		1,079,025		679,318
Viread		158,925		150,681		319,530		303,348
Hepsera		67,074		90,365		139,788		173,387
Emtriva		7,096		8,088		14,272		16,477

Total antiviral products		1,410,316		1,120,384		2,751,047		2,168,064
AmBisome		73,310		69,768		137,581		140,796
Letairis		44,128		24,686		83,708		45,023
Ranexa		36,065		—		36,065		—
Other		4,559		2,378		7,557		4,639

Total product sales	$	1,568,378	$	1,217,216	$	3,015,958	$	2,358,522

The following table summarizes total revenues from external customers and collaboration partners by geographic region (in thousands). 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.


	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
United States	$	871,273	$	681,270	$	1,674,433	$	1,350,846
Outside of the United States:
Spain		109,541		90,706		207,612		168,430
France		111,771		97,499		205,299		189,845
United Kingdom		85,578		72,663		184,230		136,152
Italy		80,313		74,634		160,199		144,225
Germany		59,949		64,102		137,157		103,584
Switzerland		64,881		46,028		109,591		148,920
Other European countries		138,342		50,698		279,465		116,258
Other countries		125,507		100,525		219,629		178,017

Total revenues outside of the United States		775,882		596,855		1,503,182		1,185,431

Total revenues	$	1,647,155	$	1,278,125	$	3,177,615	$	2,536,277

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Cardinal Health, Inc.	18	%	21	%	19	%	22	%
McKesson Corp.	13	%	14	%	13	%	15	%
AmerisourceBergen Corp.	11	%	11	%	11	%	11	%

12. INCOME TAXES

Our income tax rate of 24.7% and 25.5% for the three and six months ended June 30, 2009, respectively, differed from the U.S. federal statutory rate of 35% primarily due to tax credits, the resolution of certain tax positions with tax authorities and certain operating earnings from non-U.S subsidiaries that are considered indefinitely invested outside the United States, partially offset by state taxes. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be permanently reinvested.

In May 2009, we reached agreement with the Internal Revenue Service (IRS) on several issues related to the examinations of our federal income tax returns for 2003 and 2004. We also amended our California income tax returns for 2003 through 2007 based on the resolution of certain tax positions with the IRS. As a result, we reduced our unrecognized tax benefits by $30.5 million in 2009.

As of June 30, 2009, we believe it is reasonably possible that our unrecognized tax benefits will decrease by approximately $40 million in the next 12 months as we expect to have clarification from the IRS and other tax authorities around some of our uncertain tax positions. With respect to the remaining unrecognized tax benefits, we are currently unable to make a reasonable estimate as to the period of cash settlement, if any, with the respective tax authorities.

We file federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. For U.S. federal and California income tax purposes, the statute of limitations remains open for all years from inception due to our utilization of net operating losses relating to prior years.

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the IRS for the 2005, 2006 and 2007 tax years and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.

We record liabilities related to uncertain tax positions in accordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes . We do not believe any such uncertain tax positions currently pending will have a material adverse effect on our Condensed Consolidated Financial Statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period.

13. SUBSEQUENT EVENTS

In July 2009, we and our wholly-owned subsidiary, Gilead Sciences Limited, entered into a license and collaboration agreement with Tibotec Pharmaceuticals (Tibotec), a wholly-owned subsidiary of Johnson & Johnson, to develop and commercialize a new once-daily fixed-dose combination (the Combination Product) containing our Truvada and Tibotec’s non-nucleoside reverse transcriptase inhibitor, TMC278 (25 mg rilpivirine hydrochloride), which is currently in Phase 3 clinical trials. Under the agreement, Tibotec granted us an

exclusive license to the Combination Product for administration to adults in a once daily, oral dosage form, worldwide excluding low-income countries and Japan. Neither party is restricted from combining its drug products with any other drugs.

In accordance with the terms of the agreement, we will pay up to €71.5 million (approximately $100.0 million) of Tibotec’s development costs for TMC278, and we are required to use commercially reasonable efforts to develop and formulate the Combination Product, including the completion of bioequivalence studies. Tibotec is required to use commercially reasonable efforts to develop TMC278 and obtain its approval in the United States and Europe. We will manufacture the Combination Product and assume the lead role in registration, distribution and, subject to regulatory approval, commercialization of the Combination Product in the licensed countries. Tibotec will have the right to detail the Combination Product in the licensed countries, and, at its option, can request that it be the distributor of the Combination Product in a limited number of such countries. The price of the Combination Product is expected to be the sum of the price of Truvada and the price of TMC278 purchased separately. We expect to recognize product sales revenue from future sales of the Combination Product if and when it is approved. The cost of TMC278 purchased by us from Tibotec for the Combination Product will approximate the market price of TMC278, less a specified percentage of up to 30%.

Either party may terminate the agreement if the Combination Product is withdrawn from the market, if a party materially breaches the agreement, or if certain clinical or regulatory conditions are not met. We may terminate the agreement in the United States and Canada on or after the expiration of the last to expire patent for tenofovir disoproxil fumarate in the United States, and may terminate the agreement in any other country on or after the expiration of the last to expire patent for tenofovir disoproxil fumarate in a country of the European Union. Tibotec may terminate the agreement in the United States and Canada on or after the expiration of the last to expire patent for TMC278 in the United States, and may terminate the agreement in any other country on or after the expiration of the last to expire patent for TMC278 in a country of the European Union.

We evaluated all subsequent events that occurred after the balance sheet date through August 5, 2009.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements based on our current expectations. The forward-looking statements are contained principally in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “could,” “should,” “might,” “believe,” “seek,” “estimate,” “continue,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated trends in our businesses and other characterizations of future events or circumstances are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified below under “Risk Factors.” Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not undertake 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. In evaluating our business, you should carefully consider the risks described in the section entitled “Risk Factors” under Part II, Item 1A below, in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2008 and our unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2009 and other disclosures (including the disclosures under “Part II. Item 1A. Risk Factors”) included in this Quarterly Report on Form 10-Q. Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles and are presented in U.S. dollars.

Management Overview

We are a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. Our mission is to advance the care of patients suffering from life threatening diseases worldwide. Headquartered in Foster City, California, we have operations in North America, Europe and Australia. We market Truvada ^® (emtricitabine/tenofovir disoproxil fumarate), Atripla ^® (efavirenz 600 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg), Viread ^® (tenofovir disoproxil fumarate) and Emtriva ^® (emtricitabine) for the treatment of human immunodeficiency virus (HIV) infection; Hepsera ^® (adefovir dipivoxil) and Viread for the treatment of chronic hepatitis B virus (HBV); AmBisome ^® (amphotericin B) liposome for injection for the treatment of severe fungal infections; Letairis ^® (ambrisentan) for the treatment of pulmonary arterial hypertension (PAH); Ranexa ^® (ranolazine) for the treatment of chronic angina; and Vistide ^® (cidofovir injection) for the treatment of cytomegalovirus infection. F. Hoffmann-La Roche Ltd (together with Hoffmann-La Roche Inc., Roche) markets Tamiflu ^® (oseltamivir phosphate) for the treatment and prevention of influenza under a royalty-paying collaborative agreement with us. OSI Pharmaceuticals, Inc. markets Macugen ^® (pegaptanib sodium injection) in the United States and Europe for the treatment of neovascular age-related macular degeneration under a royalty-paying collaborative agreement with us. GlaxoSmithKline Inc. (GSK) markets Volibris ^™ (ambrisentan) outside of the United States for the treatment of PAH under a royalty-paying collaborative agreement with us. Menarini International Operations Luxembourg SA markets Ranexa outside of the United States under a royalty-paying collaborative agreement with us. Astellas Pharma US, Inc. markets Lexiscan ^® (regadenoson) injection in the United States for use as a pharmacologic stress agent in radionuclide myocardial perfusion imaging under a royalty-paying collaborative agreement with us.

Business Highlights

In July 2009, we entered into a collaboration and license agreement with Tibotec Pharmaceuticals (Tibotec), a wholly-owned subsidiary of Johnson & Johnson, to develop and commercialize a new once-daily fixed-dose combination containing our Truvada and Tibotec’s investigational non-nucleoside reverse transcriptase inhibitor, TMC278 (25 mg rilpivirine hydrochloride), which is currently in Phase 3 clinical trials. We will pay up to €71.5 million (approximately $100.0 million) of Tibotec’s development costs for TMC278. We expect to recognize product sales revenue from future sales of this new combination product if and when it is approved. The cost of TMC278 purchased by us from Tibotec for the combination product will approximate the market price of TMC278, less a specified percentage of up to 30%.

With regard to our antiviral research and development (R&D) efforts, in April 2009, we initiated a Phase 2 study of a complete single-tablet fixed-dose regimen containing elvitegravir, GS 9350 and Truvada in treatment-naïve patients. In April 2009, we also initiated a Phase 2 study of GS 9350-boosted atazanavir compared to ritonavir-boosted atazanavir, each in combination with Truvada. Both studies were fully enrolled during the second quarter of 2009.

In the cardiovascular area, in April 2009, we announced preliminary data from DAR-311 (DORADO), a Phase 3 clinical study for darusentan for the treatment of resistant hypertension. In May 2009, we announced results from ARIES-3, an open-label, single-arm, Phase 3 clinical study of ambrisentan in patients with pulmonary hypertension. In May 2009, our marketing authorisation application (MAA) for regadenoson, an investigational pharmacologic stress agent for radionuclide myocardial perfusion imaging, was validated by the European Medicines Agency (EMEA) and is being formally reviewed by members of the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the EMEA.

With regard to our respiratory efforts, in June 2009, the CHMP adopted a positive opinion on our MAA for aztreonam lysine 75 mg powder and solvent for nebulizer solution for the suppressive therapy of chronic pulmonary infections due to Pseudomonas aeruginosa in patients with cystic fibrosis (CF) aged 18 years and older. The CHMP’s positive recommendation will be reviewed by the European Commission, and we anticipate that the European Commission will issue its decision later in 2009.

Acquisition of CV Therapeutics, Inc. and Restructuring

In April 2009, we completed the acquisition of CV Therapeutics, Inc. (CV Therapeutics), a publicly held biopharmaceutical company based in Palo Alto, California, primarily focused on applying molecular cardiology to the discovery, development and commercialization of small molecule drugs for the treatment of cardiovascular diseases. CV Therapeutics had two marketed products as well as several product candidates in clinical development for the treatment of atrial fibrillation, pulmonary diseases and diabetes. We believe the acquisition will provide us with an opportunity to further expand into the cardiovascular therapeutic area. We adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations (SFAS 141R), in recognizing the consideration transferred of $1.39 billion and recorded $951.2 million and $180.1 million in intangible assets relating to marketed products and in-process research and development (IPR&D) projects, respectively, which constituted a significant portion of the assets acquired from CV Therapeutics. The results of operations of CV Therapeutics beginning on April 15, 2009, the acquisition date, were included in our Condensed Consolidated Financial Statements for the three months ended June 30, 2009.

During the three months ended June 30, 2009, we also approved a plan to realize certain synergies between us and CV Therapeutics, re-align our cardiovascular operations and eliminate certain redundancies. The restructuring plan includes the consolidation and re-alignment of the cardiovascular R&D organization, the exit from certain of our facilities and the termination of certain contractual obligations. As a result of this restructuring plan, we recorded an aggregate of $24.1 million in expenses for the three months ended June 30, 2009, primarily related to employee severance and termination benefits costs in accordance with SFAS No. 146,

Accounting for Costs Associated with Exit or Disposal Activities. We expect the total amount to be incurred in connection with the significant activities of our restructuring plan to be approximately $30 million for employee severance and termination benefits and $25 million for facilities-related costs. These costs are expected to be incurred through 2010 with the majority of the expenses to be incurred by the end of 2009.

Financial Highlights

Our operating results for the three months ended June 30, 2009 were led by total product sales of $1.57 billion. Antiviral product sales (Truvada, Atripla, Viread, Hepsera and Emtriva) increased 26% to $1.41 billion in the three months ended June 30, 2009 from the three months ended June 30, 2008, and were the key drivers for total product sales growth of 29% for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008. Atripla contributed $569.1 million, or 40%, to our second quarter 2009 antiviral product sales, which included the launch of the product in France. The growth of Atripla product sales and its increased proportion relative to our overall product sales caused our product gross margin to decrease to 76% for the three months ended June 30, 2009 from 78% in the same period of 2008, due primarily to the efavirenz component of Atripla sales which is recorded at zero gross margin. Truvada product sales for the three months ended June 30, 2009 comprised $608.1 million, or 43% of our second quarter 2009 antiviral product sales. Truvada product sales for the three months ended June 30, 2009 increased 18% from the three months ended June 30, 2008 primarily due to continued sales volume growth in the United States and Europe. Foreign currency fluctuations for the three months ended June 30, 2009 had an unfavorable impact of approximately $50.0 million on total revenues and $18.4 million on pre-tax income when compared to the three months ended June 30, 2008.

Royalty, contract and other revenues that we recognized from our collaborations with corporate partners were $78.8 million for the three months ended June 30, 2009, an increase of 29% from the three months ended June 30, 2008. The increase was driven primarily by higher Tamiflu royalties from Roche of $51.9 million for the three months ended June 30, 2009 compared to Tamiflu royalties of $37.5 million in the same period in 2008 due to increased sales related to pandemic planning initiatives worldwide.

Operating expenses which include R&D and selling, general and administrative (SG&A) expenses increased $107.0 million for the three months ended June 30, 2009, or 27%, compared to the three months ended June 30, 2008, reflecting the incremental operating expenses associated with our acquisition of CV Therapeutics, higher headcount required to support the continued growth of our business, severance and termination benefits costs incurred as a result of our restructuring activities as well as the increased clinical study activity related to product candidates in our pipeline.

Cash, cash equivalents and marketable securities decreased by $341.2 million during the six months ended June 30, 2009, driven primarily by the cash used to acquire CV Therapeutics of $1.13 billion, net of cash, cash equivalents and marketable securities assumed from CV Therapeutics of $245.4 million, partially offset by operating cash flows of $1.26 billion. During the six months ended June 30, 2009, we repurchased a total of $468.0 million of our common stock through open market purchases, or approximately 10.3 million shares. As of June 30, 2009, the remaining authorized amount of stock repurchases that may be made under our $3.00 billion Board-authorized stock repurchase program which expires in December 2010 was $530.0 million.

Critical Accounting Policies, Estimates and Judgments

Reference is made to “Critical Accounting Policies, Estimates and Judgments” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2008.

Intangible Assets

In conjunction with the business combinations that we have completed, we recorded intangible assets primarily related to marketed products, IPR&D projects and goodwill as part of our recognition and measurement of assets acquired and liabilities assumed in a business combination. Identifiable intangible assets such as those

related to marketed products or IPR&D projects, are measured at their respective fair values as of the acquisition date. We have adopted the provisions of SFAS 141R for measuring and recognizing intangible assets that were acquired after January 1, 2009. We believe the fair values assigned to our acquired intangible assets are based on reasonable estimates and assumptions given the available facts and circumstances as of the acquisition dates. Discounted cash flow models are used in valuing these intangible assets, and these models require the use of significant estimates and assumptions including but not limited to:

•

estimates of revenues and operating profits related to the products or product candidates;

•

the probability of success for unapproved product candidates considering their stages of development;

•

the time and resources needed to complete the development and approval of product candidates;

•

the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a product candidate such as obtaining U.S. Food and Drug Administration (FDA) and other regulatory approvals; and

•

risks related to the viability of and potential alternative treatments in any future target markets.

Goodwill represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed in a business combination. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142) , goodwill and intangible assets determined to have indefinite useful lives are not amortized, but are required to be tested for impairment at least annually. We test goodwill and other indefinite-lived intangible assets for impairment on an annual basis and in between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the assets below their carrying amounts. As of June 30, 2009, we had $617.6 million of indefinite-lived intangible assets consisting of $437.5 million of goodwill resulting from various business combinations and $180.1 million of intangible assets related to the IPR&D projects that we acquired from CV Therapeutics.

In accordance with SFAS 142, intangible assets with finite useful lives are amortized over their estimated useful lives and are reviewed for impairment when facts or circumstances suggest that the carrying value of these assets may not be recoverable. With respect to intangible assets related to the marketed products that we acquired from CV Therapeutics, we are amortizing the intangible asset related to Ranexa over its estimated useful life using an amortization rate derived from our forecasted future product sales for Ranexa. Our product sales forecasts are prepared annually and determined using our best estimates of future activity upon considering such factors as historical and expected future patient usage or uptake of our products, the introduction of complimentary or combination therapies or products and future product launch plans. If a previously unanticipated and significant change occurs to our sales forecasts, we will prospectively update the rate used to amortize our intangible asset related to Ranexa which may increase future cost of goods sold, as that is where we record the amortization expense. We are amortizing the intangible asset related to Lexiscan over its estimated useful life on a straight-line basis. Given that current Lexiscan revenues consist of royalties received from a collaboration partner and we will have limited ongoing access and visibility into that partner’s future sales forecasts, we cannot make a reasonable estimate of the amortization rate utilizing a forecasted product sales approach. As of June 30, 2009, we had $953.2 million of net unamortized finite-lived intangible assets consisting primarily of intangible assets related to the marketed products that we acquired from CV Therapeutics.

Our judgment regarding the existence of impairment indicators is based on our historical and projected future operating results, our extent or manner of use of the acquired assets, legal and regulatory factors and events, our overall business strategy and market and economic trends. If events occur in the future that cause us to conclude that impairment indicators exist and that certain intangible assets are impaired, our financial condition and results of operations may be adversely impacted.

Other than as set forth herein, there have been no other material changes in our critical accounting policies, estimates and judgments during the three months ended June 30, 2009 compared to the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2008.

Adoption of New Accounting Pronouncements

On April 1, 2009, we adopted the provisions of Financial Accounting Standards Board Staff Position (FSP) No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4) on a prospective basis. FSP FAS 157-4 provides additional guidance on estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability. FSP FAS 157-4 supersedes FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active , and is applicable to the valuation of auction rate securities held by us for which there was no active market as of June 30, 2009.

On April 1, 2009, we adopted the provisions of FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2) on a prospective basis for available-for-sale securities. FSP FAS 115-2 provides new guidance on the recognition and presentation of an other-than-temporary impairment, provides some new disclosure requirements as well as extends certain annual disclosure requirements to interim periods. FSP FAS 115-2 is effective for interim periods and fiscal years ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.

On April 1, 2009, we adopted the provisions of FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1) on a prospectus basis for our financial instruments. FSP 107-1 extends the disclosure requirements regarding the fair value of financial instruments under FAS No. 107, Disclosure about Fair Value of Financial Instruments , to interim financial statements of publicly traded companies. FSP FAS 107-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009

In December 2007, the FASB issued SFAS 141R. SFAS 141R establishes principles and requirements for recognizing and measuring assets acquired, liabilities assumed and any noncontrolling interests in the acquiree in a business combination. SFAS 141R also provides guidance for recognizing and measuring goodwill acquired in a business combination; requires purchased IPR&D to be capitalized at fair value as intangible assets at the time of acquisition; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination; expands the definition of what constitutes a business; and requires the acquirer to disclose information that users may need to evaluate and understand the financial effect of the business combination. SFAS 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. On January 1, 2009, we adopted the provisions of SFAS 141R on a prospective basis and applied it to the acquisition of CV Therapeutics.

On January 1, 2009, we adopted the provisions of SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 161) on a prospective basis for our derivative instruments. SFAS 161 is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced qualitative and quantitative disclosures to enable financial statement users to better understand the effects of derivatives and hedging on an entity’s financial position, financial performance and cash flows in the context of an entity’s risk exposures. SFAS 161 is effective for interim periods and fiscal years beginning after November 15, 2008.

On January 1, 2009, we adopted the provisions of FSP Accounting Principles Board Opinion No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1) on a retrospective basis for our convertible senior notes. FSP APB 14-1 requires us to account for the liability and equity components of our convertible senior notes separately by bifurcating the conversion option from the debt instrument, classifying the conversion option in equity and then accreting the resulting discount on the debt as additional interest expense over the expected life of the debt. Accordingly, we reflected additional interest expense of $13.3 million and $26.2 million, respectively, a related benefit from income taxes of $5.2 million and $10.3 million, respectively, and net income per share attributable to Gilead common stockholders on a diluted basis of $0.01 and $0.02, respectively, for the three and six months

ended June 30, 2008 in our Condensed Consolidated Statement of Income, and recorded additional interest expense of $14.0 million and $27.6 million, respectively, a related benefit from income taxes of $5.5 million and $10.9 million, respectively, and net income per share attributable to Gilead common stockholders on a diluted basis of $0.01 and $0.02, respectively, for the three and six months ended June 30, 2009. In addition, the retrospective adoption of FSP APB 14-1 decreased deferred tax assets and debt issuance costs included in other assets by an aggregate of $81.7 million, decreased convertible senior notes, net included in long-term liabilities by $201.8 million and increased total stockholders’ equity by $120.1 million after a charge of $82.6 million to retained earnings in our Condensed Consolidated Balance Sheet as of December 31, 2008.

On January 1, 2009, we adopted the provisions of SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51, Consolidated Financial Statements (SFAS 160). Accordingly, we reclassified the noncontrolling interest (formerly minority interest) from liabilities to stockholders’ equity on our Condensed Consolidated Balance Sheets on a retrospective basis, which resulted in the reclassification of the change in noncontrolling interest from net cash provided by operating activities to net cash used in financing activities on our Condensed Consolidated Statements of Cash Flows. We also presented the noncontrolling interest on our Condensed Consolidated Statements of Income as net loss attributable to noncontrolling interest, a component of consolidated net income, on a retrospective basis.

Results of Operations

Total Revenues

We had total revenues of $1.65 billion for the three months ended June 30, 2009 compared to $1.28 billion for the same period in 2008. We had total revenues of $3.18 billion for the six months ended June 30, 2009 and $2.54 billion for the same period in 2008. Included in total revenues were product sales, royalty revenues and contract and other revenues.

Product Sales

The following table summarizes the period over period changes in our product sales (in thousands, except percentages):


	Three Months Ended June 30,						Six Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Antiviral products:
Truvada	$	608,079	$	516,149	18	%	$	1,198,432	$	995,534	20	%
Atripla		569,142		355,101	60	%		1,079,025		679,318	59	%
Viread		158,925		150,681	5	%		319,530		303,348	5	%
Hepsera		67,074		90,365	(26	)%		139,788		173,387	(19	)%
Emtriva		7,096		8,088	(12	)%		14,272		16,477	(13	)%

Total antiviral products		1,410,316		1,120,384	26	%		2,751,047		2,168,064	27	%
AmBisome		73,310		69,768	5	%		137,581		140,796	(2	)%
Letairis		44,128		24,686	79	%		83,708		45,023	86	%
Ranexa		36,065		—	100	%		36,065		—	100	%
Other		4,559		2,378	92	%		7,557		4,639	63	%

Total product sales	$	1,568,378	$	1,217,216	29	%	$	3,015,958	$	2,358,522	28	%

Total product sales increased by 29% and 28% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008, due primarily to an overall increase in our antiviral product sales, including the strong growth in sales of Atripla and Truvada. A significant percentage of our product sales continued to be denominated in foreign currencies. We used foreign currency exchange forward and option

contracts to hedge a percentage of our forecasted international sales, primarily those denominated in Euro. This reduced, but did not eliminate, fluctuations in sales due to changes in foreign currency exchange rates.

Antiviral Products

Antiviral product sales increased by 26% and 27% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008, driven primarily by sales volume growth of Atripla and Truvada.

•

Truvada

Truvada sales increased by 18% and 20% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008, driven primarily by sales volume growth in the United States and Europe. Truvada sales accounted for 43% and 44% of our total antiviral product sales for the three and six months ended June 30, 2009, respectively.

•

Atripla

Atripla sales increased by 60% and 59% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008, driven primarily by sales volume growth in the United States and Europe including the launch of Atripla in France in the second quarter of 2009. Atripla sales include the efavirenz portion at zero product gross margin. The efavirenz portion of our Atripla sales was approximately $208.0 million and $395.5 million for the three and six months ended June 30, 2009, respectively, and approximately $130.5 million and $250.1 million for the three and six months ended June 30, 2008, respectively. Atripla sales accounted for 40% and 39% of our total antiviral product sales for the three and six months ended June 30, 2009, respectively.

•

Other Antiviral Products

Other antiviral product sales, which include product sales of Viread, Hepsera and Emtriva decreased by six percent and four percent for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008, driven primarily by sales volume decreases in Hepsera, partially offset by sales volume increases in Viread.

Letairis

Sales of Letairis increased by 79% and 86% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008, driven primarily by sales volume growth in the United States.

Ranexa

Sales of Ranexa were $36.1 million from April 15, 2009 (the date of our acquisition of CV Therapeutics) to June 30, 2009.

Royalty Revenues

The following table summarizes the period over period changes in our royalty revenues (in thousands, except percentages):


	Three Months Ended June 30,						Six Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Royalty revenues	$	73,895	$	50,608	46	%	$	126,937	$	160,060	(21	)%

Royalty revenues for the three months ended June 30, 2009 were $73.9 million, an increase of 46% compared to the same period in 2008, driven primarily by the recognition of Tamiflu royalties from Roche of $51.9 million in the three months ended June 30, 2009, compared to Tamiflu royalties from Roche of $37.5

million recognized in the same period in 2008. The higher Tamiflu royalties were due primarily to increased Roche sales related to pandemic planning initiatives worldwide. Royalty revenues for the six months ended June 30, 2009 were $126.9 million, a decrease of 21% compared to the same period in 2008, driven primarily by the recognition of Tamiflu royalties from Roche of $85.1 million in the six months ended June 30, 2009 compared to Tamiflu royalties from Roche of $130.9 million recognized in the same period in 2008. The lower Tamiflu royalties were due primarily to decreased Roche sales related to pandemic planning initiatives worldwide. We recognize royalties on Tamiflu sales by Roche in the quarter following the quarter in which the product is sold.

Cost of Goods Sold and Product Gross Margin

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


	Three Months Ended June 30,						Change		Six Months Ended June 30,						Change
	2009			2008			Change		2009			2008			Change
Total product sales	$	1,568,378		$	1,217,216		29	%	$	3,015,958		$	2,358,522		28	%
Cost of goods sold	$	383,045		$	265,684		44	%	$	712,459		$	505,532		41	%
Product gross margin		76	%		78	%				76	%		79	%

Our product gross margin for both the three and six months ended June 30, 2009 was 76%, compared to 78% and 79% for the same periods in 2008, respectively. The lower product gross margins for the three and six months ended June 30, 2009 compared to the same periods in 2008 were due primarily to the higher proportion of Atripla sales, which include the efavirenz portion at zero product gross margin as well as the amortization associated with the intangible assets related to the marketed products acquired in our acquisition of CV Therapeutics.

Restructuring

During the three months ended June 30, 2009, we approved a plan to realize certain synergies between us and CV Therapeutics to re-align our cardiovascular operations and eliminate certain redundancies. The restructuring plan includes the consolidation and re-alignment of the cardiovascular R&D organization, the exit from certain of our facilities and the termination of certain contractual obligations. As a result of this restructuring plan, we recorded $12.9 million and $11.2 million in SG&A expenses and R&D expenses, respectively, for the three months ended June 30, 2009, primarily related to employee severance and termination benefits costs in accordance with SFAS No. 146. We expect the total amount to be incurred in connection with the significant activities of our restructuring plan to be approximately $30 million for employee severance and termination benefits and $25 million for facilities-related costs. These costs are expected to be incurred through 2010 with the majority of the expenses to be incurred by the end of 2009.

Research and Development Expenses

The following table summarizes the period over period changes in the major components of our R&D expenses (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Research	$	48,264	$	40,757	18	%	$	92,262	$	75,266	23	%
Clinical development		156,248		109,987	42	%		271,320		204,755	33	%
Pharmaceutical development		37,126		25,798	44	%		66,835		51,822	29	%

Total research and development	$	241,638	$	176,542	37	%	$	430,417	$	331,843	30	%

R&D expenses consist primarily of personnel costs, including salaries, benefits and stock-based compensation, clinical studies performed by contract research organizations, materials and supplies, licenses and fees and overhead allocations consisting of various support and facilities-related costs. Our R&D activities are separated into three main categories: research, clinical development and pharmaceutical development. Research costs typically consist of preclinical and toxicology costs. Clinical development costs include costs for Phase 1, 2, 3 and 4 clinical trials. Pharmaceutical development expenses consist of costs for product formulation and chemical analysis.

R&D expenses for the three months ended June 30, 2009 increased by $65.1 million, or 37%, compared to the same period in 2008, due primarily to increased compensation and benefit expenses of $34.1 million driven primarily by higher headcount related to the acquisition of CV Therapeutics and the growth of our business, as well as severance and termination benefits associated with our restructuring activities of $9.1 million; and increased clinical study expenses of $8.6 million primarily in the antiviral and cardiovascular areas.

R&D expenses for the six months ended June 30, 2009 increased by $98.6 million, or 30%, compared to the same period in 2008, due primarily to increased compensation and benefit expenses of $47.9 million driven primarily by higher headcount related to the acquisition of CV Therapeutics and the growth of our business, as well as severance and termination benefits associated with our restructuring activities of $9.1 million; and increased clinical study expenses of $18.6 million primarily in the antiviral and cardiovascular areas.

Selling, General and Administrative Expenses

The following summarizes the period over period changes in our SG&A expenses (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Selling, general and administrative	$	261,411	$	219,533	19	%	$	465,362	$	414,490	12	%

SG&A expenses for the three months ended June 30, 2009 increased by $41.9 million, or 19%, compared to the same period of 2008, due primarily to increased compensation and benefit expenses of $25.4 million driven primarily by higher headcount related to the acquisition of CV Therapeutics and the growth of our business, as well as severance and termination benefits associated with our restructuring activities of $12.3 million; and acquisition-related transaction costs of $8.2 million. During the three months ended June 30, 2008, we incurred costs of $12.4 million associated with certain employee termination-related disputes in our international operations.

SG&A expenses for the six months ended June 30, 2009 increased by $50.9 million, or 12%, compared to the same period in 2008, due primarily to increased compensation and benefit expenses of $38.0 million driven primarily by higher headcount related to the acquisition of CV Therapeutics and the growth of our business, as well as severance and termination benefits associated with our restructuring activities of $12.3 million; and acquisition-related transaction costs of $8.2 million. During the six months ended June 30, 2008, we incurred costs of $12.4 million associated with certain employee termination-related disputes in our international operations.

Interest and Other Income, Net

Interest and other income, net, was $12.9 million and $17.1 million for the three and six months ended June 30, 2009, respectively, a decrease of $1.1 million and $19.6 million from the same periods in 2008, respectively. The decrease for the three months ended June 30, 2009 compared to the same period in 2008 was due primarily to decreased interest income of $9.4 million due primarily to a reduction in the average yield of our investment portfolio as a result of lower interest rates, partially offset by decreased costs related to our hedging

activities of $7.8 million. The decrease for the six months ended June 30, 2009 compared to the same period in 2008 was due primarily to decreased interest income of $19.5 million due primarily to a reduction in the average yield of our investment portfolio as a result of lower interest rates and increased costs related to our hedging activities of $7.1 million, partially offset by net foreign currency exchange gains of $9.3 million.

Provision for Income Taxes

Our income tax rate was 24.7% and 25.5% for the three and six months ended June 30, 2009, respectively, compared to 28.3% and 28.1% for the same periods in 2008, respectively. Our provision for income taxes for the three and six months ended June 30, 2009 was $186.4 million and $395.6 million, respectively, compared to $170.5 million and $358.8 million, respectively, for the three and six months ended June 30, 2008. The tax rates for the three and six months ended June 30, 2009 differed from the U.S. federal statutory rate of 35% due primarily to tax credits, the resolution of certain tax positions with tax authorities and certain operating earnings from non-U.S. subsidiaries that are considered indefinitely invested outside the United States, partially offset by state taxes. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be permanently reinvested.

Purchased In-process Research and Development

In connection with our acquisition of CV Therapeutics in April 2009, we recorded intangible assets of $180.1 million related to the IPR&D projects that we acquired from CV Therapeutics. Of the $180.1 million of intangible assets related to the IPR&D projects, $93.4 million related to CVT-3619, a product candidate in Phase 1 clinical studies for the treatment of hypertriglyceridemia. The remaining balance of the intangible assets related to IPR&D projects represented various other in-process projects with no single project comprising a significant portion of the total value. In accordance with SFAS 141R and SFAS 142, intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

The estimated fair value of the intangible assets related to the IPR&D projects acquired from CV Therapeutics was determined using the income approach, which discounts expected future cash flows to present value. We estimated the fair value of these intangible assets using a present value discount rate of 9%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of CV Therapeutics. This is comparable to the estimated internal rate of return for CV Therapeutics’ operations and represents the rate that market participants would use to value the intangible assets. We compensated for the differing phases of development of each project by probability-adjusting our estimation of the expected future cash flows associated with each project. We then determine the present value of the expected future cash flows using the discount rate of 9%. The projected cash flows from the IPR&D projects were based on key assumptions such as estimates of revenues and operating profits related to the projects considering their stages of development; the time and resources needed to complete the development and approval of the related product candidates; the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a drug compound such as obtaining marketing approval from the FDA and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets.

In connection with our acquisition of the cicletanine assets from Navitas in 2008, we recorded IPR&D expense of $10.9 million during the three months ended June 30, 2008 in accordance with SFAS No. 141, Business Combination (SFAS 141). As we do not consider the acquisition to be a material purchase, we have not made further disclosures regarding the related purchased IPR&D.

In connection with our acquisitions of Myogen Inc. (Myogen) and Corus Pharma, Inc. (Corus) in 2006, we recorded purchased IPR&D expenses of $2.06 billion and $335.6 million, respectively, during the year ended December 31, 2006 in accordance with SFAS 141.

The purchased IPR&D expense for Myogen represented the estimated fair value of Myogen’s incomplete R&D programs that had not yet reached technological feasibility and had no alternative future uses as of the acquisition date and, therefore, was expensed upon acquisition. A summary of these programs at the acquisition date, updated for subsequent changes in status of development, is as follows:


Program	Description	Status of Development	Estimated Acquisition Date Fair Value (in millions)
Ambrisentan	An orally active, non-sulfonamide, propanoic acid-class, endothelin receptor antagonist (ERA) for the treatment of PAH.	Phase 3 clinical trials were completed prior to the acquisition date. We filed an new drug application (NDA) with the FDA in December 2006 and, in June 2007, the FDA approved Letairis for the treatment of PAH in the United States. Additionally, in March 2007, the EMEA validated the MAA for ambrisentan for the treatment of PAH, filed by our collaboration partner, GSK. In April 2008, the European Commission granted GSK marketing authorization for ambrisentan for the treatment of PAH, which is marketed under the name Volibris by GSK.	$	1,413.7

Darusentan	An orally active ETA-selective ERA for the treatment of resistant hypertension.	In Phase 3 clinical development as of the acquisition date and the date of this filing.	$	644.5

The remaining efforts for completing the darusentan IPR&D program consist primarily of clinical trials, the cost, length and success of which are extremely difficult to predict, and obtaining necessary regulatory approvals. Numerous risks and uncertainties exist that could prevent completion of development, including the possibility of unfavorable results of our clinical trials and the risk of failing to obtain FDA and other regulatory body approvals. Feedback from regulatory authorities or results from clinical trials might require modifications to or delays in later stage clinical trials or additional trials to be performed. We cannot be certain that darusentan for the treatment of resistant hypertension will be approved in the United States or in countries outside of the United States or whether marketing approvals will have significant limitations on its use. Future discussions with regulatory agencies will determine the amount of data needed and timelines for review, which may differ materially from current projections. Darusentan may never be successfully commercialized. As a result, we may make a strategic decision to discontinue development of darusentan if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. If this program cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted. No assurance can be given that the underlying assumptions used to forecast the above cash flows or the timely and successful completion of this project will materialize as estimated. For these reasons, among others, actual results may vary significantly from estimated results.

The purchased IPR&D expense for Corus represented the estimated fair value of Corus’s incomplete aztreonam for inhalation solution for CF IPR&D program that had not yet reached technological feasibility and had no alternative future use as of the acquisition date and, therefore, was expensed upon acquisition. A description of this program at the acquisition date, updated for subsequent changes in status of development, is as follows:


Program	Description	Status of Development	Estimated Acquisition Date Fair Value (in millions)
Aztreonam for inhalation solution for the treatment of CF	Aztreonam formulation for inhalation to be used against Gram-negative bacteria that cause lung infections in patients with CF.	In Phase 3 clinical trials as of the acquisition date. We filed an NDA with the FDA in November 2007. In September 2008, we received a complete response letter from the FDA informing us that the FDA will not approve our NDA for aztreonam for inhalation solution for the treatment of CF in its current form and requesting we conduct an additional Phase 3 clinical study. In November 2008, we filed a request for a formal dispute resolution with the FDA. In February 2009, in response to our appeal, the FDA notified us that it was reiterating its position that we will need to conduct another clinical study of aztreonam for inhalation solution before we can resubmit our NDA. In March 2008, we also submitted a MAA in the European Union and received notice of acceptance and priority review by Health Canada for approval in Canada. In March 2009, the CHMP notified us that it adopted a negative opinion on our MAA. In June 2009, the CHMP notified us that it adopted a positive opinion on the MAA for aztreonam lysine 75 mg powder and solvent for nebuliser solution for the suppressive therapy of chronic pulmonary infections due to Pseudomonas aeruginosa in patients with CF aged 18 years and older. The CHMP’s positive recommendation will be reviewed by the European Commission, and we anticipate that the European Commission will issue its decision later in 2009.	$	335.6

The remaining efforts for completing Corus’s IPR&D program consist primarily of clinical trials, the cost, length and success of which are extremely difficult to predict. Numerous risks and uncertainties exist that could prevent completion of development, including the possibility of unfavorable results of our clinical trial and the risk of failing to obtain FDA and other regulatory body approvals. We cannot be certain that aztreonam for

inhalation solution for the treatment of CF will be approved in the United States or in countries outside of the United States or whether marketing approvals will have significant limitations on its use. Aztreonam for inhalation solution for the treatment of CF may never be successfully commercialized. As a result, we may make a strategic decision to discontinue development of aztreonam for inhalation solution for the treatment of CF if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. If this program cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted. No assurance can be given that the underlying assumptions used to forecast the above cash flows or the timely and successful completion of the project will materialize as estimated. For these reasons, among others, actual results may vary significantly from estimated results.

Liquidity and Capital Resources

The following table summarizes our cash, cash equivalents and marketable securities, our working capital, and our cash flow activity (in thousands):


	June 30, 2009			December 31, 2008
Cash, cash equivalents and marketable securities	$	2,898,446		$	3,239,639
Working capital	$	2,223,425		$	3,057,416

	Six Months Ended June 30,
	2009			2008
Cash provided by (used in):
Operating activities	$	1,264,247		$	1,046,581
Investing activities	$	(1,391,567	)	$	(98,316	)
Financing activities	$	(302,034	)	$	(753,192	)

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities totaled $2.90 billion at June 30, 2009, a decrease of $341.2 million or 11% from December 31, 2008. This decrease was primarily attributable to:

•

cash used to acquire CV Therapeutics of $1.13 billion, net of cash, cash equivalents and marketable securities assumed from CV Therapeutics of $245.4 million;

•

$468.2 million used to repurchase our common stock under our stock repurchase program; and

•

$305.4 million used to extinguish the convertible senior notes we assumed in our acquisition of CV Therapeutics.

This decrease was partially offset by the following:

•

net cash provided by operations of $1.26 billion;

•

proceeds from our credit facility of $400.0 million; and

•

proceeds from issuances of common stock under our employee stock plans of $102.1 million.

Working Capital

Working capital was $2.22 billion at June 30, 2009, a decrease of $834.0 million or 27% from December 31, 2008. This decrease was primarily attributable to:

•

a decrease of $545.8 million in cash, cash equivalents and short-term marketable securities; and

•

an increase of $400.0 million in the current portion of other long-term obligations driven by proceeds from our credit facility.

This decrease was partially offset by an increase of $219.5 million in accounts receivable, net, primarily driven by increased product sales.

Cash Provided by Operating Activities

Cash provided by operating activities of $1.26 billion for the six months ended June 30, 2009 primarily related to net income of $1.16 billion, adjusted for non-cash items such as $91.8 million of depreciation and amortization and $90.3 million of stock-based compensation expenses, partially offset by $140.0 million of net cash outflow related to changes in operating assets and liabilities.

Cash provided by operating activities of $1.05 billion for the six months ended June 30, 2008 was comprised primarily of $919.0 million in net income, adjusted for non-cash items such as $129.4 million of tax benefits from employee stock plans and $73.0 million of stock-based compensation expenses. This was partially offset by $120.6 million of excess tax benefits from stock option exercises which are required to be included in cash used in financing activities in accordance with SFAS No. 123 (revised 2004), Share-Based Payment , as well as $69.3 million of net cash outflow related to changes in operating assets and liabilities. Our operating cash flows for the six months ended June 30, 2008 has been revised for our retrospective application of SFAS 160 on January 1, 2009, and the resulting reclassification of the change in noncontrolling interest from cash provided by operating activities to cash used in financing activities.

Cash Used in Investing Activities

Cash used in investing activities for the six months ended June 30, 2009 primarily related to our acquisition of CV Therapeutics, purchases, sales and maturities of available-for-sale securities as well as capital expenditures. Cash used in investing activities for the six months ended June 30, 2008 primarily related to purchases, sales and maturities of available-for-sale securities as well as capital expenditures.

We used $1.39 billion of cash in investing activities in the six months ended June 30, 2009, compared to $98.3 million during the six months ended June 30, 2008. The increase was due primarily to cash used in our acquisition of CV Therapeutics of $1.25 billion, net of cash and cash equivalents acquired and increased capital expenditures in the six months ended June 30, 2009 compared to the same period in 2008. Capital expenditures and other items of $184.9 million made in the six months ended June 30, 2009 related primarily to the purchase of an office building and approximately 30 acres of land located in Foster City, California.

Cash Used in Financing Activities

Cash used in financing activities for the six months ended June 30, 2009 was $302.0 million, driven primarily by the $468.2 million used to repurchase our common stock under our stock repurchase program and the $305.4 million used to extinguish the convertible senior notes assumed from the acquisition of CV Therapeutics. The cash outflows were partially offset by proceeds of $400.0 million that we borrowed under our existing revolving credit agreement to partially fund the acquisition of CV Therapeutics and proceeds of $102.1 million from issuances of common stock under our employee stock plans.

Cash used in financing activities for the six months ended June 30, 2008 was $753.2 million, driven primarily by the $966.0 million used to repurchase our common stock under our stock repurchase program. The cash outflows were partially offset by $120.6 million of excess tax benefits from stock option exercises, as well as proceeds of $135.6 million that we received from issuances of common stock under our employee stock plans.

As a result of our adoption of SFAS 160, we reclassified the changes in noncontrolling interest from cash provided by operating activities to cash used in financing activities, as discussed above.

Under our amended and restated credit agreement, we, along with our wholly-owned subsidiary, Gilead Biopharmaceutics Ireland Corporation, may borrow up to an aggregate of $1.25 billion in revolving credit loans. The credit agreement also includes a sub-facility for swing-line loans and letters of credit. Loans under the credit agreement bear interest at an interest rate of either LIBOR plus a margin ranging from 0.20 percent to 0.32 percent or the base rate, as defined in the credit agreement. In April 2009, in connection with the acquisition of CV Therapeutics, we borrowed $400.0 million under the credit agreement to partially fund the acquisition. The credit agreement will terminate and all amounts owing thereunder shall be due and payable on December 17, 2012. As of June 30, 2009, approximately $846.2 million was available under our amended and restated credit agreement. We may reduce the commitments and may prepay loans under the credit agreement in whole or in part at any time without penalty, subject to certain conditions. We expect to repay the $400.0 million loan within the next 12 months using cash flow generated from operations.

In October 2008, we entered into an accelerated share repurchase agreement with a financial institution to repurchase $750.0 million of our common stock on an accelerated basis. Under the terms of this accelerated share repurchase agreement, we paid $750.0 million to settle the initial purchase transaction and received 14,874,519 shares of our common stock at a price of $50.42 per share. In March 2009, upon termination of the agreement and in accordance with the share delivery provisions of the agreement, we received an additional 1,356,337 shares of our common stock based on the average of the daily volume weighted-average prices of our common stock during a specified period less a predetermined discount per share. As a result, the total number of shares repurchased and retired under this transaction was 16,230,856 shares at an average purchase price of $46.21 per share. The accounting for this accelerated share repurchase was consistent with that of our previous accelerated share repurchase.

As of June 30, 2009, the remaining authorized amount of stock repurchases that may be made under our $3.00 billion Board-authorized stock repurchase program which expires in December 2010 was $530.0 million.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our consolidated financial position or results of operations.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the six months ended June 30, 2009 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2008.

A portion of our marketable securities are held in auction rate securities. During the three months ended March 31, 2008, we began observing the failed auctions for our auction rate securities for which the underlying assets are comprised of student loans. Most of our auction rate securities, including those subject to the failed auctions, are currently rated AAA, consistent with the high quality rating required by our investment policy, are supported by the federal government as part of the Federal Family Education Loan Program, and are over-collateralized. Our auction rate securities reset every seven to 35 days with maturity dates ranging from 2023 through 2041 and have interest rates ranging from 0.6% to 1.0%. As of June 30, 2009, our auction rate securities continued to earn interest.

If auctions continue to fail for securities in which we have invested, we may be unable to liquidate some or all of our auction rate securities at par, should we need or desire to access the funds invested in those securities. However, based on our total cash and marketable securities position, our expected operating cash flows as well as access to funds through our credit facility, we believe that we will be able to hold these securities until there is a recovery in the auction market and the related securities, which may be at final maturity. As a result, we do not

anticipate that the current illiquidity of these auction rate securities will have a material effect on our cash requirements or working capital.

In light of the volatility and developments that we have seen in the financial markets, we continue to review our cash equivalents and marketable securities carefully and strive to invest prudently. We believe that maintaining the primary goals of our investment policy, safety and preservation of principal and diversification of risk, as well as liquidity, has protected us from many of the risks in the credit markets while allowing us to continue to meet our operating cash flow requirements as well as execute on other strategic opportunities such as the acquisition of CV Therapeutics.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation as of June 30, 2009 was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures,” which are defined under Securities and Exchange Commission (SEC) rules as controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at June 30, 2009.

Changes in Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2009, 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

In November 2008, we received notice that Teva Pharmaceuticals (Teva) submitted an abbreviated new drug application (ANDA) to the U.S. Food and Drug Administration (FDA) requesting permission to manufacture and market a generic version of Truvada. In the notice, Teva alleges that two of the patents associated with emtricitabine, U.S. Patent Numbers 6,642,245 and 6,703,396, owned by Emory University and licensed exclusively to us, are invalid, unenforceable and/or will not be infringed by Teva’s manufacture, use or sale of a generic version of Truvada. In December 2008, we filed a lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. In March 2009, we received notice that Teva Pharmaceuticals submitted an ANDA to the FDA requesting permission to manufacture and market a generic

version of Atripla. In the notice, Teva alleges that the same two emtricitabine patents are invalid, unenforceable and/or will not be infringed by Teva’s manufacture, use or sale of a generic version of Atripla. In May 2009, we filed another lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. We cannot predict the ultimate outcome of these actions, and we may spend significant resources defending these patents. If we are unsuccessful in one or both of these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated, and the patent protection for Truvada and Atripla in the United States would be shortened to expire in 2017 instead of 2021.

Information pertaining to certain of our other legal proceedings can be found in “Part I. Item 1. Condensed Consolidated Financial Statements—Notes to Condensed Consolidated Financial Statements—Note 8. Commitments and Contingencies” to the interim Condensed Consolidated Financial Statements, and is incorporated by reference herein.

ITEM 1A.

RISK FACTORS

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

A substantial portion of our revenues is derived from sales of our HIV products, particularly Truvada and Atripla. If we are unable to maintain or continue increasing sales of these products, our results of operations may be adversely affected.

We are currently dependent on sales of our products for the treatment of HIV, particularly Truvada and Atripla, to support our existing operations. Our HIV products contain tenofovir disoproxil fumarate and/or emtricitabine, which belong to the nucleoside class of antiviral therapeutics. Were the treatment paradigm for HIV to change, causing nucleoside-based therapeutics to fall out of favor, or if we were unable to continue increasing our HIV product sales, our results of operations would likely suffer and we would likely need to scale back our operations, including our spending on research and development (R&D) efforts. For the three months ended June 30, 2009, Truvada and Atripla product sales together were $1.18 billion, or 71% of our total revenues. We may not be able to sustain the growth rate of sales of our HIV products, especially Truvada and Atripla, for any number of reasons including, but not limited to, the following:

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

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

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

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As generic HIV products are introduced into major markets, our ability to maintain pricing and market share may be affected.

Our inability to accurately estimate demand for our products, as well as sales fluctuations as a result of inventory levels held by wholesalers, pharmacies and non-retail customers make it difficult for us to accurately forecast sales and may cause our earnings to fluctuate, which could adversely affect our financial results and our stock price.

During the six months ended June 30, 2009, approximately 84% of our product sales in the United States were to three wholesalers, Cardinal Health, Inc., McKesson Corp. and AmerisourceBergen Corp. The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine end user demand and may not be completely effective in matching their inventory levels to actual end user demand. As a result, changes in inventory levels held by those wholesalers can cause our operating results to fluctuate unexpectedly if our sales to these wholesalers do not match end user demand. In addition, inventory is held at retail pharmacies and other non-wholesale locations with whom we have no inventory management agreements and no control over buying patterns. Adverse changes in economic conditions or other factors may cause retail pharmacies to reduce their inventories of our products, which would reduce their orders from wholesalers and, consequently, the wholesalers’ orders from us, even if end user demand has not changed. For example, in the fourth quarter of 2008, strong prescription demand for Truvada and Atripla was not fully reflected in our revenues for that quarter. We believe this is because inventories were drawn down within the retail distribution channel during the quarter. During the second quarter of 2009, the wholesalers increased their inventory levels for Atripla and Truvada, while inventory levels for Viread decreased. Given that demand from retail pharmacies was consistent with both prescription demand and revenue growth during the quarter, we expect that U.S. wholesalers may decrease their inventory levels in the second half of 2009. As inventory in the distribution channel fluctuates from quarter to quarter, we may continue to see fluctuations in our earnings and a mismatch between prescription demand for our products and our revenues.

In addition, the non-retail sector in the United States, which includes government institutions, including state AIDS Drug Assistance Programs (ADAP), correctional facilities and large health maintenance organizations, tends to be even less consistent in terms of buying patterns, and often causes quarter over quarter fluctuations that do not necessarily mirror the purchasing patterns that can be seen within the retail sector. For example, in the first quarter of 2008, we observed large non-retail purchases by a small number of state ADAPs that purchase centrally and have significant warehousing capacity. We believe such purchases were driven by the grant cycle for federal ADAP funds rather than current patient demand, which tempered orders and our associated product sales, revenues and earnings in the second quarter of 2008 as these organizations depleted their increased inventory levels established during the first quarter of 2008. We expect to continue to experience fluctuations in the purchasing patterns of our non-retail customers which may result in fluctuations in our product sales, revenues and earnings in the future.

We estimate the future demand for our products, consider the shelf life of our inventory and regularly review the realizability of our inventory. If actual demand is less than our estimated demand, we could be required to record inventory write-downs, which would have an adverse impact on our results of operations and our stock price.

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

If we do not introduce new products to market or increase sales of our existing products, we will not be able to increase or maintain our total revenues and continue to expand our R&D efforts. For example, the new drug application (NDA) submitted by us for aztreonam for inhalation solution for the treatment of cystic fibrosis (CF) in the United States was delayed when we received a complete response letter from the FDA informing us that the FDA will not approve the NDA in its current form and requesting we conduct an additional Phase 3 clinical study. In November 2008, we filed a request for dispute resolution with the FDA to determine whether further analyses of the existing data could lead to approval or whether we will need to conduct an additional study. In February 2009, in response to our appeal, the FDA notified us that it was reiterating its position that we will need

to conduct another clinical study of aztreonam for inhalation solution before we can resubmit our NDA. We are conferring with the FDA to determine what further studies would be required to address their concerns and support approval of this product candidate. Existing data from any ongoing or additional clinical trial that we may commence to satisfy FDA concerns may not support the approval of aztreonam for inhalation solution in the United States, which may cause us considerable expense and may lead to further delays or cause us to abandon further development of the product. There are also risks that health authorities in other countries where marketing authorization applications are pending will undertake similar additional reviews which would compound the risks described above. As a result, aztreonam for inhalation solution may never be successfully commercialized. Further, we may make a strategic decision to discontinue development of such product candidate if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. If this program and others in our pipeline cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted.

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

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

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

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

We face significant competition.

We face significant competition from large pharmaceutical and biotechnology companies, most of whom have substantially greater resources than we do. In addition, our competitors have more products and have operated in the fields in which we compete for longer than we have. Our HIV products compete primarily with products from GlaxoSmithKline Inc. (GSK), which markets fixed dose combination products that compete with Truvada and Atripla. GSK and Pfizer Inc. (Pfizer) recently announced that they are combining their HIV drug businesses into a single, jointly-owned company that will focus solely on competing in the HIV market. For Hepsera and Viread for treatment of chronic hepatitis B, we compete primarily with products produced by GSK, Bristol-Myers Squibb Company (BMS) and Novartis Pharmaceuticals Corporation (Novartis) in the United States, the European Union and China. For AmBisome, we compete primarily with products produced by Merck & Co., Inc. (Merck) and Pfizer. In addition, we are aware of at least two lipid formulations that claim similarity to AmBisome becoming available outside of the United States, including the possible entry of one such formulation in Greece. These formulations may reduce market demand for AmBisome. Furthermore, the manufacture of lipid formulations of amphotericin B is very complex and if any of these formulations are found to be unsafe, sales of AmBisome may be negatively impacted by association. Letairis competes directly with

Actelion Pharmaceuticals US, Inc. (Actelion) and indirectly with PAH products from United Therapeutics Corporation and Pfizer. Ranexa competes predominately with generic compounds from three distinct classes of drugs, beta-blockers, calcium channel blockers and long-acting nitrates for the treatment of chronic angina in the United States. Tamiflu competes with products sold by GSK and generic competitors. Aztreonam for inhalation solution for the treatment of CF, if approved for marketing, will compete with a product marketed by Novartis.

In addition, a number of companies are pursuing the development of technologies which are competitive with our existing products or research programs. These competing companies include specialized pharmaceutical firms and large pharmaceutical companies acting either independently or together with other pharmaceutical companies. Furthermore, academic institutions, government agencies and other public and private organizations conducting research may seek patent protection and may establish collaborative arrangements for competitive products or programs.

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

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

Our product Letairis, which was approved by the FDA in June 2007, is a member of a class of compounds called endothelin receptor antagonists (ERAs) which pose specific risks, including serious risks of liver injury and birth defects. Because of these risks, Letairis is available only through the Letairis Education and Access Program (LEAP), a restricted distribution program intended to help physicians and patients learn about the risks associated with the product and assure appropriate use of the product. As the product is used by additional patients, we may discover new risks associated with Letairis which may result in changes to the distribution program and additional restrictions on the use of Letairis which may decrease demand for the product. For example, since the launch of Letairis, cases of edema in certain patients taking Letairis have been reported. This information has recently been added to the product label, which may negatively impact demand for the product.

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

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

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

In September 2008, we received a complete response letter from the FDA informing us that the FDA will not approve our NDA for aztreonam for inhalation solution for treatment of CF in its current form and requesting we conduct an additional Phase 3 clinical study. In November 2008, we filed a request for dispute resolution with the FDA to determine whether further analyses of the existing data could lead to approval or whether we will

need to conduct an additional study. In February 2009, in response to our appeal, the FDA notified us that it was reiterating its position that we will need to conduct another clinical study of aztreonam for inhalation solution before we can resubmit our NDA. We are conferring with the FDA to determine what further studies would be required to address their concerns and support approval of this product candidate. Existing data from any ongoing or from any additional clinical trial that we may commence to satisfy FDA concerns may not support the approval of aztreonam for inhalation solution in the United States, which may cause us considerable expense and may lead to further delays or cause us to abandon further development of the product. There are also risks that health authorities in other countries where marketing authorization applications are pending will undertake similar additional reviews which would compound the risks described above.

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

On September 27, 2007, President Bush signed into law the Food and Drug Administration Amendments Act of 2007, which significantly expanded the FDA’s authority, including, among other things, to:

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require sponsors of marketed products to conduct post-approval clinical studies to assess a known serious risk, signals of serious risk or to identify an unexpected serious risk;

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mandate labeling changes to products, at any point in a product’s lifecycle, based on new safety information; and

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require sponsors to implement a Risk Evaluation and Mitigation Strategy for a product which could include a medication guide, patient package insert, a communication plan to healthcare providers or other elements as the FDA deems are necessary to assure safe use of the drug, which could include imposing certain restrictions on distribution or use of a product.

Failure to comply with these or other requirements, if imposed on a sponsor by the FDA, could result in significant civil monetary penalties.

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

We are required to demonstrate the safety and efficacy of products that we develop for each intended use through extensive preclinical studies and clinical trials. The results from preclinical and early clinical studies do not always accurately predict results in later, large-scale clinical trials. Even successfully completed large-scale clinical trials may not result in marketable products. If any of our product candidates fails to achieve its primary endpoint in clinical trials, if safety issues arise or if the results from our clinical trials are otherwise inadequate to support regulatory approval of our product candidates, commercialization of that product candidate could be delayed or halted. We may also face challenges in clinical trial protocol design. If the clinical trials for any of the product candidates in our pipeline are delayed or terminated, our prospects for future revenue growth would be adversely impacted. For example, we face numerous risks and uncertainties with our product candidates, including elvitegravir, our novel HIV integrase inhibitor; darusentan for the treatment of resistant hypertension; and ambrisentan for the treatment of idiopathic pulmonary fibrosis (IPF), each currently in Phase 3 clinical trials that could prevent completion of development of these product candidates. These risks include our ability to enroll patients in clinical trials, the possibility of unfavorable results of our clinical trials, the need to modify or delay our clinical trials or to perform additional trials and the risk of failing to obtain FDA and other regulatory body approvals. As a result, our product candidates may never be successfully commercialized. Further, we may make a strategic decision to discontinue development of our product candidates if, for example, we believe

commercialization will be difficult relative to other opportunities in our pipeline. If these programs and others in our pipeline cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted. In addition, clinical trials involving our commercial products could raise new safety issues for our existing products, which could in turn decrease our revenues and harm our business.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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not effectively sell or support Letairis;

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

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

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cease operations.

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

Further, we will be dependent on the supplier of the inhalation device that delivers aztreonam for inhalation solution, if and when regulatory approval is obtained, to distribute the device through specialty pharmacies or other distribution channels, and we will not have control over many key aspects related to the device. For example, the supplier could encounter issues with regulatory agencies related to the device or be unable to supply sufficient quantities of this device at the time of a commercial launch or following a commercial launch. Moreover, because this device will be subject to a separate reimbursement approval process, in the event our supplier is unable to obtain reimbursement approval or receives approval at a lower-than-expected price, sales of aztreonam for inhalation solution may be adversely affected. In addition, we may not be able to obtain adequate supplies of inhalation devices from our supplier. Any of the previously described issues may limit or further delay the commercial launch of aztreonam for inhalation solution, which would adversely affect our financial results.

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

Successful commercialization of our products depends, in part, on the availability of governmental and third party payor reimbursement for the cost of such products and related treatments. Government health administration authorities, private health insurers and other organizations generally provide reimbursement. In

the United States, the European Union and other significant or potentially significant markets for our products and product candidates, government authorities and third party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices. For example, a significant portion of our sales of the majority of our products are subject to significant discounts from list price and rebate obligations. In addition, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our product revenues and profitability. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement policies and pricing in general.

In Europe, the success of our commercialized products, and any other product candidates we may develop, will depend largely on obtaining and maintaining government reimbursement, because in many European countries patients are unlikely to use prescription drugs that are not reimbursed by their governments. In addition, negotiating prices with governmental authorities can delay commercialization by 12 months or more. Reimbursement policies may adversely affect our ability to sell our products on a profitable basis. In many international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference pricing, price cuts, rebates, revenue-related taxes and profit control, and expect prices of prescription pharmaceuticals to decline over the life of the product or as volumes increase. In recent years, many countries in the European Union have increased the amount of discounts required on our products, and we expect this to continue as countries attempt to manage health care expenditures, especially in light of the global economic downturn. As new drugs come to market, we may face significant price decreases for our products across most of the European countries. 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.

Our results of operations could be adversely affected by current and future health care reforms.

Legislative and regulatory changes to government prescription drug procurement and reimbursement programs occur relatively frequently in the United States and foreign jurisdictions. There have been significant changes to the federal Medicare system in recent years in the United States that could impact the pricing of our products. Under the Medicare Prescription Drug Improvement and Modernization Act of 2003, Medicare beneficiaries are able to elect coverage for prescription drugs under Medicare Part D. The prescription drug program began on January 1, 2006 and although we have benefited from patients transitioning from Medicaid to Medicare Part D since 2006, the longer term impact of Medicare Part D on our business is not yet clear to us, and the impact will depend in part on specific decisions regarding the level of coverage provided for the therapeutic categories in which our products are included, the terms on which such coverage is provided, and the extent to which preference is given to selected products in a category. Third party payors providing Medicare Part D coverage have attempted to negotiate price concessions from pharmaceutical manufacturers. In addition, discussions are taking place at the federal level to pass legislation that would either allow or require the federal government to directly negotiate price concessions from pharmaceutical manufacturers or set minimum requirements for Medicare pricing. The increasing pressure to lower prescription drug prices may limit drug access for Medicare Part D enrollees. Further, Medicare patients have to pay co-insurance, which may influence which products are recommended by physicians and selected by patients. Our results of operations could be materially adversely affected by the reimbursement changes emerging from Medicare prescription drug coverage legislation. In addition to federal Medicare proposals, state Medicaid drug payment changes could also lower payment for our products. To the extent that private insurers or managed care programs follow Medicaid coverage and payment developments, the adverse effects may be magnified by private insurers adopting lower payment schedules. Additionally, any additional statutory or regulatory changes, including potential changes to Medicare Part D, and health care reform at both the federal and state levels could adversely affect payment for our drugs and demand for our product. At this time, a few states have already enacted health care reform legislation, and the federal government and individual state governments continue to consider health care reform

policies and legislation. The pricing and reimbursement environment for our products may change in the future and become more challenging due to, among other reasons, new policies of the new presidential administration or new health care legislation passed by Congress.

The Ryan White Program, the largest federal program designed to provide care and support services for people living with HIV in the United States, provides funding for our HIV products through state ADAPs to many patients who are uninsured or underinsured. Federal funding is appropriated by Congress each year and is provided to cities, states, providers and other organizations. In addition to federal funding, some states and localities provide additional funding for Ryan White Program services. The program is up for reauthorization again by September 2009 unless otherwise extended by Congress, and there may be changes to the program which would change or decrease the funding available for our HIV products. For example, if appropriations for the Ryan White Program are held at the same amount as in previous years and more people access our HIV drugs through ADAP, then it is likely that we will face pressures to provide even greater discounts for drugs purchased through the program. In addition, falling state revenues and budget cuts may result in reduction of state or local funding for the Ryan White Program, which could lead to increased demand on our patient assistance programs, under which we offer our HIV products free of charge to eligible patients.

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

The clinical trials required for regulatory approval of our products, as well as clinical trials we are required to conduct after approval, are very expensive. It is difficult to accurately predict or control the amount or timing of these expenses from quarter to quarter, and the FDA may require more clinical testing that we originally anticipated. For example, the FDA has recently reiterated its position that we will need to conduct another Phase 3 clinical study of aztreonam for inhalation solution before we can resubmit our NDA. Uneven and unexpected spending on these programs may cause our operating results to fluctuate from quarter to quarter, and our stock price may decline.

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 may not be able to obtain effective patents to protect our technologies from use by competitors and patents of other companies could require us to stop using or pay for the use of required technology.

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

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obtain patents and licenses to patent rights;

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preserve trade secrets; and

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operate without infringing on the proprietary rights of others.

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

We have a number of U.S. and foreign patents, patent applications and rights to patents related to our compounds, products and technology, but we cannot be certain that issued patents will be enforceable or provide adequate protection or that pending patent applications will result in issued patents. Patent applications are confidential for a period of time until a patent is issued. As a result, we may not know if our competitors filed patent applications for technology covered by our pending applications or if we were the first to invent the

technology that is the subject of our patent applications. Competitors may have filed patent applications or received patents and may obtain additional patents and proprietary rights that block or compete with our patents. In addition, if competitors file patent applications covering our technology, we may have to participate in interference proceedings or litigation to determine the right to a patent. Litigation and interference proceedings are expensive, such that, even if we are ultimately successful, our results of operations may be adversely affected by such events.

From time to time, certain individuals or entities may challenge our patents. For example, in 2007, the Public Patent Foundation filed requests for re-examination with the United States Patent and Trademark Office (PTO) challenging four of our patents related to tenofovir disoproxil fumarate, which is an active ingredient in Truvada, Atripla and Viread. The PTO granted these requests and issued non-final rejections for the four patents, which is a step common in a proceeding to initiate the re-examination process. In 2008, the PTO confirmed the patentability of all four patents.

Although we were successful in responding to the PTO office actions in the instance above, similar organizations may still challenge our patents in foreign jurisdictions. For example, in April 2008, the Brazilian Health Ministry, citing the U.S. patent re-examination proceedings as grounds for rejection, requested that the Brazilian patent authority issue a decision that is not supportive of our patent application for tenofovir disoproxil fumarate in Brazil. In August 2008, an examiner in the Brazilian patent authority issued a final rejection of our fumarate salt patent application, the only patent application for tenofovir disoproxil fumarate we have filed in Brazil. We then filed an appeal within the patent authority responding to the questions raised in the rejection. In July 2009, the Brazilian patent authority again rejected the application. This was the highest level of appeal available to us within the Brazilian patent authority. We intend to file a civil action in Brazilian federal court to further appeal the action of the Brazilian patent authority. We cannot predict the outcome of this proceeding on our tenofovir disoproxil fumarate patent application. If we are unable to successfully appeal the decision by the patent authority in the courts, the Brazilian government would likely purchase generic tenofovir disoproxil fumarate, which would significantly reduce our sales of HIV products in Brazil.

Patents do not cover the active ingredients in AmBisome. In addition, we do not have patent filings in China or certain other Asian countries covering all forms of adefovir dipivoxil, the active ingredient in Hepsera. Asia is a major market for therapies for hepatitis B infection, the indication for which Hepsera has been developed.

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

As part of the approval process of some of our products, the FDA granted an exclusivity period during which other manufacturers’ applications for approval of generic versions of our product will not be granted. Generic manufacturers often wait to challenge the patents protecting products that have been granted exclusivity 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 (ANDA), which is the application form typically used by manufacturers seeking approval of a generic drug. If our patents are subject to challenges, we may need to spend significant resources to defend such challenges and we may not be able to defend our patents successfully. For example, in November 2008, we received notice that Teva Pharmaceuticals (Teva) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Teva alleges that two of the patents associated with emtricitabine, owned by Emory University and licensed exclusively to us, are invalid, unenforceable and/or will not be infringed by Teva’s manufacture, use or sale of a generic version of Truvada. In December 2008, we filed a lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. In March 2009, we received notice that Teva

Pharmaceuticals submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Atripla. In the notice, Teva alleges that the same two emtricitabine patents are invalid, unenforceable and/or will not be infringed by Teva’s manufacture, use or sale of a generic version of Atripla. In May 2009, we filed another lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. We cannot predict the ultimate outcome of either of these actions and we may spend significant resources defending these patents. If we are unsuccessful in one or both of these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated and the patent protection for Truvada and Atripla in the United States would be shortened to expire in 2017 instead of 2021.

In August 2007, the PTO adopted new rules which were scheduled to become effective on November 1, 2007. In October 2007, GSK successfully obtained a preliminary injunction against implementation of these rules, and in April 2008, the court ruled in support of GSK’s challenge to the rules and obtained a permanent injunction against their implementation. The rules would have restricted the number of claims permitted in a patent application and the number of continuing patent applications that can be filed. Following the court’s ruling, the PTO filed a notice of appeal to the Court of Appeals for the Federal Circuit. In March 2009, the Court of Appeals for the Federal Circuit affirmed one of the rules, vacated one of the rules, and remanded the case to the district court. The rule restricting the number of claims permitted in a patent application was held to be a legitimate exercise of the PTO’s authority. The rule restricting the number of continuing patent applications that can be filed was held to be beyond the authority of the PTO. Upon GSK’s petition for reconsideration, the Federal Circuit voted to reconsider the decision in an en banc proceeding, which is now pending. If GSK is ultimately unsuccessful in challenging the implementation of the rules and the rules are implemented, we may be limited in our ability to obtain broad patent coverage for our products and product candidates, which may allow competitors to market products very similar to ours or to obtain patent coverage for closely related products.

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

If we infringe the patents of others, we may be prevented from commercializing products or may be required to obtain licenses from these third parties. We may not be able to obtain alternative technologies or any required license on reasonable terms or at all. If we fail to obtain these licenses or alternative technologies, we may be unable to develop or commercialize some or all of our products. For example, we are aware of a body of patents that may relate to our operation of LEAP, our restricted distribution program designed to support Letairis. In addition, Actelion, which markets Tracleer, has applied for a patent that claims a method of use for ERAs for the treatment of IPF. If issued, this patent may interfere with our efforts to commercialize our own ERA, ambrisentan, for the treatment of IPF.

Furthermore, we use significant proprietary technology and rely on unpatented trade secrets and proprietary know-how to protect certain aspects of our production and other technologies. Our trade secrets may become known or independently discovered by our competitors.

We may not be able to successfully integrate our existing business with the business of CV Therapeutics, Inc., or any other business or assets that we may acquire.

Integrating the business of CV Therapeutics, Inc. (CV Therapeutics) with our existing business will be a complex and time-consuming process. Until recently, CV Therapeutics operated independently of us, with its own business, corporate culture, locations, employees and systems. As a result of this acquisition, we will have to operate our existing business, along with the business of CV Therapeutics, utilizing common information and communication systems, operating procedures, financial controls and human resources practices, including benefits, training and professional development programs. There may be substantial difficulties, costs and delays involved in the integration of our business with CV Therapeutics and the integration of our business with any other company or assets that we may from time to time acquire. The failure to successfully integrate our business with CV Therapeutics, or any other assets or companies we may acquire, may have a material adverse effect on our business, financial condition and results of operations.

Manufacturing problems could delay product shipments and regulatory approvals, which may adversely affect our results of operations.

We depend on third parties to perform manufacturing activities effectively and on a timely basis for the majority of our solid dose products. In addition, Roche, either by itself or through third parties, is responsible for manufacturing Tamiflu. The manufacturing process for pharmaceutical products is highly regulated and regulators may shut down manufacturing facilities that they believe do not comply with regulations. We, our third party manufacturers and our corporate partners are subject to the FDA’s current Good Manufacturing Practices (GMP), which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards. Similar regulations are in effect in other countries. Our manufacturing operations are also subject to routine inspections by regulatory agencies. Additionally, these third party manufacturers and corporate partners are independent entities who are subject to their own unique operational and financial risks which are out of our control. If we or any of these third party manufacturers or corporate partners fail to perform as required, this could impair our ability to deliver our products on a timely basis or receive royalties or cause delays in our clinical trials and applications for regulatory approval. To the extent these risks materialize and affect their performance obligations to us, our financial results may be adversely affected.

Our ability to successfully manufacture and commercialize aztreonam for inhalation solution, if approved, will depend upon our ability to manufacture in a multi-product facility.

Aztreonam is a mono-bactam Gram-negative antibiotic that we currently plan to manufacture, by ourselves or through third parties, in multi-product manufacturing facilities. Historically, the FDA has permitted the manufacture of mono-bactams in multi-product manufacturing facilities; however, there can be no assurance that the FDA will continue to allow this practice. We do not currently have a single-product facility that can be dedicated to the manufacture of aztreonam for inhalation solution nor have we engaged a contract manufacturer with a single-product facility for aztreonam for inhalation solution. If the FDA prohibits the manufacture of mono-bactam antibiotics, like aztreonam for inhalation solution, in multi-product manufacturing facilities in the future, we may not be able to procure a single-product manufacturing facility in a timely manner, which would adversely affect our commercial supplies of aztreonam for inhalation solution and our anticipated financial results attributable to such product, if approved.

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

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

Suppliers of key components and materials must be named in an NDA filed with the FDA for any product candidate for which we are seeking FDA approval, and significant delays can occur if the qualification of a new supplier is required. Even after a manufacturer is qualified by the FDA, the manufacturer must continue to expend time, money and effort in the area of production and quality control to ensure full compliance with GMP. Manufacturers are subject to regular, periodic inspections by the FDA following initial approval. If, as a result of these inspections, the FDA determines that the equipment, facilities, laboratories or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA may suspend the manufacturing operations. If the manufacturing operations of any of the single suppliers for our products are suspended, we may be unable to generate sufficient quantities of commercial or clinical supplies of product to meet market demand, which would in turn decrease our revenues and harm our business.

In addition, if delivery of material from our suppliers were interrupted for any reason, we may be unable to ship certain of our products for commercial supply or to supply our products in development for clinical trials. In addition, some of our products and the materials that we utilize in our operations are made at only one facility. For example, we manufacture AmBisome and fill and finish Macugen exclusively at our facilities in San Dimas, California. In the event of a natural disaster, including an earthquake, equipment failure or other difficulty, we may be unable to replace this manufacturing capacity in a timely manner and may be unable to manufacture AmBisome and Macugen to meet market needs.

Our product candidate, aztreonam for inhalation solution, which is pending FDA approval, is dependent on four different single-source suppliers. First, aztreonam, the active pharmaceutical ingredient in aztreonam for inhalation solution, is manufactured by a single supplier at a single site. Second, it is administered to the lungs of patients through a device that is made by a single supplier at a single site. Third, the FDA recently approved our facilities in San Dimas to manufacture aztreonam for inhalation solution, subject to FDA approval of the product and delivery device. The San Dimas facility is the only manufacturing site authorized to manufacture aztreonam for inhalation solution, although we are pursuing FDA approval of a third party supplier. Fourth, the diluent for aztreonam for inhalation solution will be manufactured by a single manufacturer at a single site.

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

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

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. This has resulted and may continue to result in an increase in days sales outstanding due to the average length of time that we have accounts receivable outstanding. Our accounts receivable in these countries totaled approximately $638.7 million as of June 30, 2009, of which $196.2 million was more than 120 days past due. Historically, receivables balances with certain government owned hospitals accumulated over a period of time and were then subsequently settled as large lump sum payments. If significant changes were to occur in the reimbursement practices of these European governments or if government funding becomes unavailable, we may not be able to collect on amounts due to us from these customers and our results of operations would be adversely affected.

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

Prices for our products are based on local market economics and competition and sometimes differ from country to country. Our sales in countries with relatively higher prices may be reduced if products can be imported into those or other countries from lower price markets. There have been cases in which other pharmaceutical products were sold at steeply discounted prices in the developing world and then re-exported to European countries where they could be re-sold at much higher prices. If this happens with our products, particularly Truvada and Viread, which we have agreed to make available at substantially reduced prices to more than 125 countries participating in our Gilead Access Program, or Atripla, which Merck distributes at substantially reduced prices to HIV infected patients in developing countries under our August 2006 agreement, our revenues would be adversely affected. In addition, we have established partnerships with ten Indian generic manufacturers to distribute high-quality, low-cost generic versions of tenofovir disoproxil fumarate to 95 developing world countries, including India. If generic versions of our medications under these licenses are then re-exported to the United States, Europe or other markets outside of these 95 countries, our revenues would be adversely affected.

In addition, purchases of our products in countries where our selling prices are relatively low for resale in countries in which our selling prices are relatively high may adversely impact our revenues and gross margin and may cause our sales to fluctuate from quarter to quarter. For example, in the European Union, we are required to permit products purchased in one country to be sold in another country. Purchases of our products in countries where our selling prices are relatively low for resale in countries in which our selling prices are relatively high affect the inventory level held by our wholesalers and can cause the relative sales levels in the various countries to fluctuate from quarter to quarter and be more difficult to forecast. In addition, wholesalers may attempt to arbitrage the pricing differential between countries by purchasing excessive quantities of our products. These activities may result in fluctuating quarterly sales in certain countries which do not reflect the actual demand for our products from customers. Such quarterly fluctuations may impact our earnings, which could adversely affect our stock price. For example, during 2007, we experienced increased sales of our HIV products in France. We believe a portion of these products was being re-exported to other countries and resold at higher prices. Our sales of Truvada, Atripla and Viread in France and any countries to or from which sales have been re-exported may continue to fluctuate. Although we established an order management system in France to manage Truvada, Atripla and Viread sales to facilitate the adequate and appropriate supply of those products commensurate with market demand in France, there can be no assurance that this management system will be effective or that these re-exporting activities will not continue in France, other European countries or elsewhere, and as a result, our results of operations could be adversely affected.

In some countries, we may be required to grant compulsory licenses for our products or face generic competition for our products.

In a number of developing countries, government officials and other interested groups have suggested that pharmaceutical companies should make drugs for HIV infection available at low cost. Alternatively, governments in those developing countries could require that we grant compulsory licenses to allow competitors to manufacture and sell their own versions of our products, thereby reducing our product sales. For example, in the past, certain offices of the government of Brazil have expressed concern over the affordability of our HIV products and declared that they were considering issuing compulsory licenses to permit the manufacture of otherwise patented products for HIV infection, including Viread. In July 2009, the Brazilian patent authority rejected our patent application for tenofovir disoproxil fumarate, the active pharmaceutical ingredient in Viread. We intend to file a civil action in Brazilian federal court to further appeal the action of the Brazilian patent authority. If we are unable to successfully appeal the decision by the patent authority in the courts, the Brazilian government would likely purchase generic tenofovir disoproxil fumarate, which would significantly reduce our sales of HIV products in Brazil. In addition, concerns over the cost and availability of Tamiflu related to a potential avian flu pandemic have generated international discussions over compulsory licensing of our Tamiflu patents. For example, the Canadian government may allow Canadian manufacturers to manufacture and export the active ingredient in Tamiflu to eligible developing and least developed countries under Canada’s Access to Medicines Regime. Furthermore, Roche has issued voluntary licenses to permit third party manufacturing of Tamiflu. For example, Roche has granted a sublicense to Shanghai Pharmaceutical (Group) Co., Ltd. for China and a sublicense to India’s Hetero Drugs Limited for India and certain developing countries. Should one or more compulsory licenses be issued permitting generic manufacturing to override our Tamiflu patents, or should Roche issue additional voluntary licenses to permit third party manufacturing of Tamiflu, those developments could reduce royalties we receive from Roche’s sales of Tamiflu. Certain countries do not permit enforcement of our patents, and third party manufacturers are able to sell generic versions of our products in those countries. Compulsory licenses or sales of generic versions of our products could significantly reduce our sales and adversely affect our results of operations, particularly if generic versions of our products are imported into territories where we have existing commercial sales.

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

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

Our assumptions used to determine our self-insurance levels could be wrong and materially impact our business.

We continually evaluate our levels of self-insurance based on historical claims experience, demographic factors, severity factors and other actuarial assumptions. However, if future occurrences and claims differ from these assumptions and historical trends, our business, financial results and financial condition could be materially impacted by claims and other expenses.

Expensive litigation and government investigations may reduce our earnings.

In November 2008, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Teva alleges that two of the patents associated with emtricitabine, owned by Emory University and licensed exclusively to us, are invalid, unenforceable and/or will not be infringed by Teva’s manufacture, use or sale of a generic version of Truvada. In December 2008, we filed a lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. In March 2009, we received notice that Teva Pharmaceuticals submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Atripla. In the notice, Teva alleges that the same two emtricitabine patents are invalid, unenforceable and/or will not be infringed by Teva’s manufacture, use or sale of a generic version of Atripla. In May 2009, we filed another lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. We cannot predict the ultimate outcome of either of these actions, and we may spend significant resources defending these patents. If we are unsuccessful in one or both of these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated, and the patent protection for Truvada and Atripla in the United States would be shortened to expire in 2017 instead of 2021.

In addition, we, along with certain of our officers and a former officer, were named as defendants in a class action lawsuit alleging violations of federal securities laws. The lawsuit was dismissed by the United States District Court for the Northern District of California, but in August 2008 the United States Court of Appeals for the Ninth Circuit reversed the dismissal and remanded the case to the district court. In February 2009, we filed a petition for a writ of certiorari with the Supreme Court of the United States, requesting that the Supreme Court review the judgment of the court of appeals. In April 2009, the U.S. Supreme Court denied our petition. The case continues before the district court. In February 2009, we filed a further motion to dismiss the fourth consolidated amended complaint on alternative grounds. On June 3, 2009, the district court granted in part and denied in part our motion to dismiss and gave plaintiffs leave to amend the complaint. On July 10, 2009, plaintiffs filed a fifth consolidated amended complaint. Our deadline to respond to the fifth consolidated amended complaint is August 12, 2009. We cannot predict the ultimate outcome of this action, and we may spend significant resources defending this lawsuit.

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

Various factors may have favorable or unfavorable effects on our income tax rate. These factors include, but are not limited to, interpretations of existing tax laws, changes in tax laws and rates, the accounting for stock options and other share-based payments, mergers and acquisitions, future levels of R&D spending, changes in accounting standards, changes in the mix of earnings in the various tax jurisdictions in which we operate, changes in overall levels of pre-tax earnings and finalization of federal, state and foreign income tax audits. The impact on our income tax provision resulting from the above mentioned factors may be significant and could have a negative impact on our net income. For example, California recently passed legislation which may potentially reduce our California income tax commencing in 2011. In response to the legislation, we have evaluated certain tax planning strategies. If the tax planning strategies are not implemented, we may need to revalue certain of our tax assets. Any required revaluation may impact our income tax provision which could have a negative impact on our earnings.

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for the 2005, 2006 and 2007 tax years and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. Resolution of one or more of these exposures in any reporting period could have a material impact on the results of operations for that period.

Changes in accounting rules or policies may affect our financial position and results of operations.

U.S. generally accepted accounting principles and related implementation guidelines and interpretations can be highly complex and involve subjective judgments. Changes in these rules or their interpretation, the adoption of new pronouncements or the application of existing pronouncements to changes in our business could significantly affect our financial position and results of operations.

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

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

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In October 2007, our board of directors authorized a program for the repurchase of our common stock in an aggregate amount up to $3.00 billion through open market and private block transactions pursuant to Rule 10b5-1 plans, privately negotiated purchases or other means, including accelerated share repurchase transactions or similar arrangements. This stock repurchase program expires on December 31, 2010.

The table below summarizes our stock repurchase activity for the three months ended June 30, 2009 (in thousands, except per share amounts):


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Fair Value of Shares that May Yet Be Purchased Under the Program
April 1 – April 30, 2009	938,880		$	46.35	937,686		$	724,628
May 1 – May 31, 2009	2,164,452		$	43.49	2,160,000		$	630,695
June 1 – June 30, 2009	2,221,667		$	45.35	2,220,000		$	530,019

Total	5,324,999	(1)	$	44.77	5,317,686	(1)

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

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The 2009 annual meeting of stockholders was held on May 6, 2009 in Millbrae, California. Of the 910,142,516 shares of our common stock entitled to vote at the meeting, 798,196,570 shares were represented at the meeting in person or by proxy, constituting a quorum. The voting results are presented below.

Our stockholders elected 11 directors to serve for the ensuing year and until their successors are elected and qualified, or until their earlier death, resignation or removal. The votes regarding the election of directors were as follows:


Name	Shares Voted For	Votes Withheld
Paul Berg	780,377,231	17,819,339
John F. Cogan	789,776,876	8,419,694
Etienne F. Davignon	766,711,190	31,485,380
James M. Denny	780,309,416	17,887,154
Carla A. Hills	785,350,037	12,846,533
John W. Madigan	786,679,110	11,517,460
John C. Martin	779,228,408	18,968,162
Gordon E. Moore	776,723,987	21,472,583
Nicholas G. Moore	789,909,157	8,287,413
Richard J. Whitley	782,062,766	16,133,804
Gayle E. Wilson	790,180,770	8,015,800

Our stockholders ratified the selection of Ernst & Young LLP by the Audit Committee of our Board of Directors as our independent registered public accounting firm for the fiscal year ending December 31, 2009. There were 783,278,020 votes cast for the proposal, 14,024,046 votes cast against, 894,504 abstentions and no broker non-votes.

Our stockholders approved an amendment to our 2004 Equity Incentive Plan (2004 Plan) to (i) increase the number of shares authorized for issuance under the 2004 Plan by 20,000,000 shares of our common stock; (ii) increased the limit on the maximum number of shares that may be issued under the Plan pursuant to full-value awards, such as restricted stock, restricted stock units, performance shares, performance units (to the extent settled in common stock) and phantom shares, by an additional 15,000,000 shares to a total of 25,000,000 over the term of the 2004 Plan; (iii) increased the limit on the maximum number of shares of common stock for which restricted stock, restricted stock units, performance shares, performance units, phantom shares and stock appreciation rights may be granted to any one individual per calendar year by an additional 600,000 shares to a total of 1,000,000 shares; and (iv) increased the limit on the maximum value of awards denominated in U.S. dollars that may be granted to any one individual per calendar year by an additional $3,000,000 to a total of $10,000,000. There were 559,583,391 votes cast for the proposal, 170,720,596 votes cast against, 1,017,151 abstentions and 66,875,432 broker non-votes.

ITEM 5.

OTHER INFORMATION

Not applicable.

ITEM 6.

EXHIBITS


Exhibit Footnote	Exhibit Number	Description of Document
(1)	2.1	Agreement and Plan of Merger among Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc., dated as of March 12, 2009

(1)	2.2	Stockholder Agreement by and between Registrant and Louis G. Lange, dated as of March 12, 2009

(2)	3.1	Restated Certificate of Incorporation of the Registrant

(3)	3.2	Certificate of Designation of the Series A Junior Participating Preferred Stock of Registrant

(4)	3.3	Certificate of Amendment to Certificate of Designation of Series A Junior Participating Preferred Stock of the Registrant

(5)	3.4	Amended and Restated Bylaws of the Registrant, as amended and restated on October 24, 2008

	4.1	Reference is made to Exhibit 3.1, Exhibit 3.2, Exhibit 3.3 and Exhibit 3.4

(6)	4.2	Amended and Restated Rights Agreement between the Registrant and ChaseMellon Shareholder Services, LLC, dated October 21, 1999

(7)	4.3	First Amendment to Amended and Restated Rights Agreement between the Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated October 29, 2003

(8)	4.4	Second Amendment to Amended and Restated Rights Agreement between the Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated May 11, 2006

(9)	4.5	Indenture related to the Convertible Senior Notes, due 2011, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.50% Convertible Senior Note due 2011), dated April 25, 2006

(9)	4.6	Indenture related to the Convertible Senior Notes, due 2013, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.625% Convertible Senior Note due 2013), dated April 25, 2006

(10)	10.1	Confirmation of OTC Convertible Note Hedge related to 2011 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

(10)	10.2	Confirmation of OTC Convertible Note Hedge related to 2013 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

(10)	10.3	Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2011

(10)	10.4	Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2013


Exhibit Footnote	Exhibit Number	Description of Document
(11)	10.5	Amended and Restated Credit Agreement among Registrant, Gilead Biopharmaceutics Ireland Corporation, the lenders parties thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, dated as of December 18, 2007

(11)	10.6	Parent Guaranty Agreement, dated as of December 18, 2007, by Registrant

(12)	10.7	Master Confirmation by and between Registrant and Citibank N.A., together with the Supplemental Confirmation, dated as of October 21, 2008

*(13)	10.8	Gilead Sciences, Inc. 1991 Stock Option Plan, as amended through January 29, 2003

*(14)	10.9	Form of option agreements used under the 1991 Stock Option Plan

*(13)	10.10	Gilead Sciences, Inc. 1995 Non-Employee Directors’ Stock Option Plan, as amended through January 30, 2002

*(15)	10.11	Form of option agreement used under the Gilead Sciences, Inc. 1995 Non-Employee Directors’ Stock Option Plan

*(16)	10.12	Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended through May 6, 2009

*(17)	10.13	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants prior to February 2008)

*(18)	10.14	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants made February 2008 through April 2009)

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

*(17)	10.16	Form of non-employee director stock option agreement used under 2004 Equity Incentive Plan (for grants prior to 2008)

*(18)	10.17	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for initial grants made in 2008)

*(18)	10.18	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2008)

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

*	10.20	Form of restricted stock agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2009)

*	10.21	Form of restricted stock agreement used under 2004 Equity Incentive Plan (for annual grants to certain non-employee director)

*(19)	10.22	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants made in 2007)

*(20)	10.23	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants made in 2008)


Exhibit Footnote	Exhibit Number	Description of Document
*	10.24	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants made in 2009)

*(21)	10.25	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants made prior to May 2009)

*	10.26	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants commencing in May 2009)

*(22)	10.27	Gilead Sciences, Inc. Employee Stock Purchase Plan, as amended through May 9, 2007

*(23)	10.28	Gilead Sciences, Inc. Deferred Compensation Plan—Basic Plan Document

*(23)	10.29	Gilead Sciences, Inc. Deferred Compensation Plan—Adoption Agreement

*(23)	10.30	Addendum to the Gilead Sciences, Inc. Deferred Compensation Plan

*(24)	10.31	Gilead Sciences, Inc. 2005 Deferred Compensation Plan, as amended and restated on October 23, 2008

*(24)	10.32	Gilead Sciences, Inc. Severance Plan, as amended on December 15, 2008

*(17)	10.33	Gilead Sciences, Inc. Corporate Bonus Plan

*(17)	10.34	Gilead Sciences, Inc. Code Section 162(m) Bonus Plan

*(25)	10.35	2009 Base Salaries for the Named Executive Officers

*(26)	10.36	Offer Letter dated April 16, 2008 between Registrant and Robin Washington

*(14)	10.37	Form of Indemnity Agreement entered into between the Registrant and its directors and executive officers

*(14)	10.38	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

*(19)	10.39	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised in September 2006)

+(27)	10.40	Amended and Restated Collaboration Agreement by and among Registrant, Gilead Holdings, LLC, Bristol-Myers Squibb Company, E.R. Squibb & Sons, L.L.C., and Bristol-Myers Squibb & Gilead Sciences, LLC, dated September 28, 2006

+(18)	10.41	Commercialization Agreement by and between Gilead Sciences Limited and Bristol-Myers Squibb Company, dated December 10, 2007

+(28)	10.42	Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement), the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement) and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)


Exhibit Footnote	Exhibit Number	Description of Document
(29)	10.43	Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000 amending the 1991 License Agreement and the December 1992 License Agreement

(27)	10.44	Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006 amending the October 1992 License Agreement and the December 1992 License Agreement

+(27)	10.45	Development and License Agreement among Registrant and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., dated September 27, 1996

+(30)	10.46	First Amendment and Supplement dated November 15, 2005 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

+(31)	10.47	Exclusive License Agreement between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

+(32)	10.48	Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

+(32)	10.49	Amended and Restated License Agreement between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005.

+(33)	10.50	License Agreement between Japan Tobacco Inc. and Registrant, dated March 22, 2005

+(34)	10.51	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Deutschland Holding GmbH dated October 8, 2001

+(34)	10.52	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Laboratories, dated June 30, 2003

+(35)	10.53	License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated March 27, 1996

+(36)	10.54	First Amendment to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated July 3, 1997

+(37)	10.55	Amendment No. 4 to Collaboration and License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC, dated June 20, 2006

+(38)	10.56	Master Clinical and Commercial Supply Agreement between Gilead World Markets, Limited, Registrant and Patheon Inc., dated January 1, 2003

+(32)	10.57	Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama), Ltd., dated July 17, 2003

+(39)	10.58	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated May 10, 2007


Exhibit Footnote	Exhibit Number	Description of Document
+(24)	10.59	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated December 5, 2008

+(20)	10.60	Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Registrant and Ampac Fine Chemicals LLC, dated March 6, 2008

+(30)	10.61	Restated and Amended Toll Manufacturing Agreement between Gilead Sciences Limited, Registrant and ALTANA Pharma Oranienburg GmbH, dated November 7, 2005

+(11)	10.62	Emtricitabine Manufacturing Supply Agreement between Gilead Sciences Limited and Degussa AG, dated June 6, 2006

(24)	10.63	Purchase and Sale Agreement and Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated October 23, 2008

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

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

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

	101***	The following materials from Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008, (ii) Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2009 and 2008, (iii) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

(1)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on March 12, 2009, and incorporated herein by reference.

(2)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 9, 2008, and incorporated herein by reference.

(3)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on November 22, 1994, and incorporated herein by reference.

(4)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 11, 2006, and incorporated herein by reference.

(5)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 28, 2008, and incorporated herein by reference.

(6)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 22, 1999, and incorporated herein by reference.

(7)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on October 31, 2003, and incorporated herein by reference.

(8)	Filed as an exhibit to Registrant’s Registration Statement on Form S-8 (No. 333-135412) filed on June 28, 2006, and incorporated herein by reference.

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

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

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

(12)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 21, 2008, and incorporated herein by reference.

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

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

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

(16)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 11, 2009, and incorporated herein by reference.

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

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

(19)	Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and incorporated herein by reference.

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

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

(22)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 11, 2007, and incorporated herein by reference.

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

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

(25)	Information is included in Registrant’s Current Report on Form 8-K filed on January 27, 2009, and incorporated herein by reference.

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

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

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

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

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

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

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

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

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

(35)	Filed as an exhibit to CV Therapeutics, Inc.’s Registration Statement on Form S-3 (No. 333-59318), filed on July 23, 2001, and incorporated herein by reference.

(36)	Filed as an exhibit to CV Therapeutics, Inc.’s Registration Statement on Form S-3 (No. 333-59318), as amended, originally filed on July 23, 2001, and incorporated herein by reference.

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

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

(39)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on August 7, 2007, and incorporated herein by reference

Management contract or compensatory plan or arrangement.

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

***

XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities and Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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 Registrant’s Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

SIGNATURES

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


		GILEAD SCIENCES, INC. (Registrant)

Date: August 5, 2009		/s/ J OHN C. M ARTIN
		John C. Martin, Ph.D. Chairman and Chief Executive Officer (Principal Executive Officer)

Date: August 5, 2009		/s/ R OBIN L. W ASHINGTON
		Robin L. Washington Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit Index


Exhibit Footnote	Exhibit Number	Description of Document
(1)	2.1	Agreement and Plan of Merger among Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc., dated as of March 12, 2009

(1)	2.2	Stockholder Agreement by and between Registrant and Louis G. Lange, dated as of March 12, 2009

(2)	3.1	Restated Certificate of Incorporation of the Registrant

(3)	3.2	Certificate of Designation of the Series A Junior Participating Preferred Stock of Registrant

(4)	3.3	Certificate of Amendment to Certificate of Designation of Series A Junior Participating Preferred Stock of the Registrant

(5)	3.4	Amended and Restated Bylaws of the Registrant, as amended and restated on October 24, 2008

	4.1	Reference is made to Exhibit 3.1, Exhibit 3.2, Exhibit 3.3 and Exhibit 3.4

(6)	4.2	Amended and Restated Rights Agreement between the Registrant and ChaseMellon Shareholder Services, LLC, dated October 21, 1999

(7)	4.3	First Amendment to Amended and Restated Rights Agreement between the Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated October 29, 2003

(8)	4.4	Second Amendment to Amended and Restated Rights Agreement between the Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated May 11, 2006

(9)	4.5	Indenture related to the Convertible Senior Notes, due 2011, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.50% Convertible Senior Note due 2011), dated April 25, 2006

(9)	4.6	Indenture related to the Convertible Senior Notes, due 2013, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.625% Convertible Senior Note due 2013), dated April 25, 2006

(10)	10.1	Confirmation of OTC Convertible Note Hedge related to 2011 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

(10)	10.2	Confirmation of OTC Convertible Note Hedge related to 2013 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

(10)	10.3	Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2011

(10)	10.4	Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2013

(11)	10.5	Amended and Restated Credit Agreement among Registrant, Gilead Biopharmaceutics Ireland Corporation, the lenders parties thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, dated as of December 18, 2007


Exhibit Footnote	Exhibit Number	Description of Document
(11)	10.6	Parent Guaranty Agreement, dated as of December 18, 2007, by Registrant

(12)	10.7	Master Confirmation by and between Registrant and Citibank N.A., together with the Supplemental Confirmation, dated as of October 21, 2008

*(13)	10.8	Gilead Sciences, Inc. 1991 Stock Option Plan, as amended through January 29, 2003

*(14)	10.9	Form of option agreements used under the 1991 Stock Option Plan

*(13)	10.10	Gilead Sciences, Inc. 1995 Non-Employee Directors’ Stock Option Plan, as amended through January 30, 2002

*(15)	10.11	Form of option agreement used under the Gilead Sciences, Inc. 1995 Non-Employee Directors’ Stock Option Plan

*(16)	10.12	Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended through May 6, 2009

*(17)	10.13	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants prior to February 2008)

*(18)	10.14	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants made February 2008 through April 2009)

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

*(17)	10.16	Form of non-employee director stock option agreement used under 2004 Equity Incentive Plan (for grants prior to 2008)

*(18)	10.17	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for initial grants made in 2008)

*(18)	10.18	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2008)

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

*	10.20	Form of restricted stock agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2009)

*	10.21	Form of restricted stock agreement used under 2004 Equity Incentive Plan (for annual grants to certain non-employee director)

*(19)	10.22	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants made in 2007)

*(20)	10.23	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants made in 2008)
*	10.24	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants made in 2009)

*(21)	10.25	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants made prior to May 2009)


Exhibit Footnote	Exhibit Number	Description of Document
*	10.26	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants commencing in May 2009)

*(22)	10.27	Gilead Sciences, Inc. Employee Stock Purchase Plan, as amended through May 9, 2007

*(23)	10.28	Gilead Sciences, Inc. Deferred Compensation Plan—Basic Plan Document

*(23)	10.29	Gilead Sciences, Inc. Deferred Compensation Plan—Adoption Agreement

*(23)	10.30	Addendum to the Gilead Sciences, Inc. Deferred Compensation Plan

*(24)	10.31	Gilead Sciences, Inc. 2005 Deferred Compensation Plan, as amended and restated on October 23, 2008

*(24)	10.32	Gilead Sciences, Inc. Severance Plan, as amended on December 15, 2008

*(17)	10.33	Gilead Sciences, Inc. Corporate Bonus Plan

*(17)	10.34	Gilead Sciences, Inc. Code Section 162(m) Bonus Plan

*(25)	10.35	2009 Base Salaries for the Named Executive Officers

*(26)	10.36	Offer Letter dated April 16, 2008 between Registrant and Robin Washington

*(14)	10.37	Form of Indemnity Agreement entered into between the Registrant and its directors and executive officers

*(14)	10.38	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

*(19)	10.39	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised in September 2006)

+(27)	10.40	Amended and Restated Collaboration Agreement by and among Registrant, Gilead Holdings, LLC, Bristol-Myers Squibb Company, E.R. Squibb & Sons, L.L.C., and Bristol-Myers Squibb & Gilead Sciences, LLC, dated September 28, 2006

+(18)	10.41	Commercialization Agreement by and between Gilead Sciences Limited and Bristol-Myers Squibb Company, dated December 10, 2007

+(28)	10.42	Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement), the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement) and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)

(29)	10.43	Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000 amending the 1991 License Agreement and the December 1992 License Agreement

(27)	10.44	Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006 amending the October 1992 License Agreement and the December 1992 License Agreement


Exhibit Footnote	Exhibit Number	Description of Document
+(27)	10.45	Development and License Agreement among Registrant and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., dated September 27, 1996

+(30)	10.46	First Amendment and Supplement dated November 15, 2005 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

+(31)	10.47	Exclusive License Agreement between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

+(32)	10.48	Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

+(32)	10.49	Amended and Restated License Agreement between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005.

+(33)	10.50	License Agreement between Japan Tobacco Inc. and Registrant, dated March 22, 2005

+(34)	10.51	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Deutschland Holding GmbH dated October 8, 2001

+(34)	10.52	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Laboratories, dated June 30, 2003

+(35)	10.53	License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated March 27, 1996

+(36)	10.54	First Amendment to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated July 3, 1997

+(37)	10.55	Amendment No. 4 to Collaboration and License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC, dated June 20, 2006

+(38)	10.56	Master Clinical and Commercial Supply Agreement between Gilead World Markets, Limited, Registrant and Patheon Inc., dated January 1, 2003

+(32)	10.57	Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama), Ltd., dated July 17, 2003

+(39)	10.58	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated May 10, 2007

+(24)	10.59	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated December 5, 2008

+(20)	10.60	Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Registrant and Ampac Fine Chemicals LLC, dated March 6, 2008

+(30)	10.61	Restated and Amended Toll Manufacturing Agreement between Gilead Sciences Limited, Registrant and ALTANA Pharma Oranienburg GmbH, dated November 7, 2005


Exhibit Footnote	Exhibit Number	Description of Document
+(11)	10.62	Emtricitabine Manufacturing Supply Agreement between Gilead Sciences Limited and Degussa AG, dated June 6, 2006

(24)	10.63	Purchase and Sale Agreement and Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated October 23, 2008

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

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

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

	101***	The following materials from Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008, (ii) Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2009 and 2008, (iii) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

(1)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on March 12, 2009, and incorporated herein by reference.

(2)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 9, 2008, and incorporated herein by reference.

(3)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on November 22, 1994, and incorporated herein by reference.

(4)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 11, 2006, and incorporated herein by reference.

(5)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 28, 2008, and incorporated herein by reference.

(6)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 22, 1999, and incorporated herein by reference.

(7)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on October 31, 2003, and incorporated herein by reference.

(8)	Filed as an exhibit to Registrant’s Registration Statement on Form S-8 (No. 333-135412) filed on June 28, 2006, and incorporated herein by reference.

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

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

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

(12)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 21, 2008, and incorporated herein by reference.

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

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

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

(16)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 11, 2009, and incorporated herein by reference.

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

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

(19)	Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and incorporated herein by reference.

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

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

(22)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on May 11, 2007, and incorporated herein by reference.

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

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

(25)	Information is included in Registrant’s Current Report on Form 8-K filed on January 27, 2009, and incorporated herein by reference.

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

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

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

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

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

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

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

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

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

(35)	Filed as an exhibit to CV Therapeutics, Inc.’s Registration Statement on Form S-3 (No. 333-59318), filed on July 23, 2001, and incorporated herein by reference.

(36)	Filed as an exhibit to CV Therapeutics, Inc.’s Registration Statement on Form S-3 (No. 333-59318), as amended, originally filed on July 23, 2001, and incorporated herein by reference.

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

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

(39)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed on August 7, 2007, and incorporated herein by reference

Management contract or compensatory plan or arrangement.

***

Exhibit 10.15

GILEAD SCIENCES, INC.

STOCK OPTION AGREEMENT

RECITALS

A. Optionee is to render valuable services to the Corporation (or a Related Entity), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

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

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

1. Grant of Option . The Corporation hereby grants to the person identified on attached Schedule I (the “Optionee”) an option to purchase shares of Common Stock under the Plan. The date on which this option is granted (the “Grant Date”), the number of shares of Common Stock purchasable under this option (the “Option Shares”), the exercise price payable per share (the “Exercise Price”), the applicable vesting schedule by which this option shall vest and become exercisable incrementally for the Option Shares (the “Vesting Schedule”) and the date to be used to measure the maximum term of this option (the “Expiration Date”) are also indicated on attached Schedule I to this Agreement. The option is a non-statutory option under the US federal income tax laws. The remaining terms and conditions governing this option shall be as set forth in this Agreement.

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

3. Limited Transferability .

(a) This option may be assigned in whole or in part during Optionee’s lifetime to a Living Trust. The assigned portion may only be exercised by the Living Trust. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents to be executed by the Optionee and the Living Trust as the Corporation may deem appropriate.

(b) Except for the limited transferability provided under Paragraph 3(a), this option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option by completing the Corporation’s Universal Beneficiary Designation form and filing the completed form with the Corporation’s Human Resources Department. Should Optionee file such Universal Beneficiary Designation form and die while holding this option, then this option shall automatically be transferred to the designated

beneficiary or beneficiaries. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5 below, be exercised following Optionee’s death.

4. Dates of Exercise . This option shall vest and become exercisable for the Option Shares in a series of installments in accordance with the Vesting Schedule set forth in attached Schedule I. As the option vests and becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the last business day prior to the Expiration Date or any sooner termination of the option term under Paragraph 5 or 6 below.

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

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

(b) In the event Optionee ceases Continuous Service by reason of his or her death while this option is outstanding, then this option may be exercised, for any or all of the Option Shares for which this option is vested and exercisable at the time of Optionee’s cessation of Continuous Service, by (i) the personal representative of Optionee’s estate or (ii) the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance following Optionee’s death. However, if Optionee dies while holding this option and has an effective beneficiary designation in effect for this option at the time of his or her death, then the designated beneficiary or beneficiaries shall have the exclusive right to exercise this option following Optionee’s death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the close of business on the last business day prior to the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s death or (ii) the Expiration Date. Upon the expiration of such limited exercise period, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised.

(c) Should Optionee cease Continuous Service by reason of Permanent Disability while this option is outstanding, then Optionee shall have until the close of business on the last business day prior to the expiration of the twelve (12)-month period measured from the date of such cessation of Continuous Service during which to exercise this option for any or all of the Option Shares for which this option is vested and exercisable at the time of such cessation of Continuous Service. In no event, however, shall this option be exercisable at any time after the close of business on the last business day prior to the Expiration Date.

(d) Except as otherwise precluded by Applicable Laws, should (i) Optionee cease Continuous Service after completion of at least three (3) years of Continuous Service and (ii) the sum of Optionee’s attained age and completed years of Continuous Service at the time of such cessation of service equals or exceeds seventy (70) years, then Optionee shall have until the close of business on the last business day prior to the expiration of the thirty-six (36)-month period measured from the date of such cessation of Continuous Service during which to exercise this option for any or all of the Option Shares for which this option is vested and exercisable at the time of such cessation of Continuous Service. In no event, however, shall this option be exercisable at any time after the close of business on the last business day prior to the Expiration Date.

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

(f) Should Optionee’s Continuous Service be terminated for Cause, or should Optionee engage in any other conduct, while in Continuous Service or following cessation of Continuous Service, that is materially detrimental to the business or affairs of the Corporation (or any Related Entity), as determined in the sole discretion of the Administrator, then this option, whether or not vested and exercisable at the time, shall terminate immediately and cease to be outstanding.

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

6. Special Acceleration of Option .

(a) This option, to the extent outstanding at the time of an actual Change in Control but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Change in Control, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock. However, this option shall not become exercisable on such an accelerated basis if and to the extent: (i) this

option is to be assumed by the successor corporation (or parent thereof) or is otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction, (ii) this option is to be replaced with an economically-equivalent substitute award or (iii) this option is to be replaced with a cash retention program of the successor corporation which preserves the spread existing at the time of the Change in Control on any Option Shares for which this option is not otherwise at that time vested and exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for the subsequent vesting and concurrent payout of that spread in accordance with the same Vesting Schedule for those Option Shares as set forth in attached Schedule I.

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

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

(d) If this option is assumed or otherwise continued in effect in connection with a Change in Control or replaced with an economically-equivalent award or a cash retention program in accordance with Paragraph 6(a) above, then:

(i) the option (or such economically equivalent award) shall vest and become immediately exercisable for all of the Option Shares or other securities at the time subject to the option (or such award) and may, within the applicable exercise period under Paragraph 5, be exercised for any or all of those Option Shares or other securities as fully vested shares or securities, or

(ii) the balance credited to Optionee under any cash retention program established pursuant to Paragraph 6(a) shall immediately be paid to Optionee in a lump sum, subject to the Corporation’s collection of all applicable Withholding Taxes;

if, within the period beginning with the execution date of the definitive agreement for the Change in Control transaction and ending with the earlier of (i) the termination of that definitive agreement without the consummation of such Change in Control or (ii) the expiration of the

Applicable Acceleration Period following the consummation of such Change in Control, Optionee’s Continuous Service terminates due to an involuntary termination (other than for death or Permanent Disability) without Cause or a voluntary termination by Optionee due to Constructive Termination.

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

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

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

9. Manner of Exercising Option .

(a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i) Execute and deliver to the Corporation a Notice of Exercise as to the Option Shares for which the option is exercised or comply with such other procedures as the Corporation may establish for notifying the Corporation, either directly or through an on-line internet transaction with a brokerage firm authorized by the Corporation to effect such option exercises, of the exercise of this option for one or more Option Shares. Copies of the Notice of Exercise may be obtained from the Corporation’s intranet at http://gnet/finance/doc/noe.doc.

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to the Corporation; or

(B) through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (i) to a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in accordance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of all or a sufficient portion of the purchased shares so that such brokerage firm can remit to the Corporation, on the settlement date, sufficient funds out of the resulting sale proceeds to cover the aggregate Exercise Price payable for all the purchased shares plus all applicable Withholding Taxes and (ii) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date.

Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise (or other notification procedure) delivered to the Corporation in connection with the option exercise.

(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all applicable Withholding Taxes.

(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares (either in paper or electronic form), with the appropriate legends affixed thereto.

10. Compliance with Laws and Regulations .

(a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all Applicable Laws relating thereto.

any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.

11. Successors and Assigns . Except to the extent otherwise provided in Paragraphs 3 and 6 above, the provisions of this Agreement shall inure to the benefit of and be binding upon the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

12. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the most current address then indicated for Optionee on the Corporation’s employee records or shall be delivered electronically to Optionee through the Corporation’s electronic mail system or through an on-line brokerage firm authorized by the Corporation to effect option exercises through the internet. All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

13. Construction . This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

14. Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to California’s conflict-of-laws rules.

15. Excess Shares . If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this option shall be void with respect to those excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan. In no event shall the option be exercisable with respect to any of the excess Option Shares unless and until such stockholder approval is obtained.

16. Leaves of Absence . The following provisions shall govern leaves of absence, except to the extent the application of such provisions to Optionee would contravene Applicable Laws.

(a) For purposes of this Agreement, Optionee’s Continuous Service shall not be deemed to cease during any period for which Optionee is on a military leave, sick leave or other personal leave approved by the Corporation. However, Optionee shall not receive any Continuous Service credit, for purposes of vesting in this option and the Option Shares

pursuant to the Vesting Schedule set forth in attached Schedule I, for any period of such leave of absence, except to the extent otherwise required by law or pursuant to the following policy:

- Optionee shall receive Continuous Service credit for such vesting purposes for (i) the first three (3) months of an approved personal leave of absence or (ii) the first seven (7) months of any bona fide leave of absence (other than an approved personal leave), but in no event beyond the expiration date of such leave of absence.

(b) In no event shall Optionee be deemed to remain in Continuous Service at any time after the earlier of (i) the expiration date of his or her leave of absence, unless Optionee returns to active Continuous Service on or before that date, or (ii) the date Optionee’s Continuous Service actually terminates by reason of his or her voluntary or involuntary termination or by reason of his or her death or disability.

17. Employment at Will . Nothing in this Agreement or in the Plan shall confer upon Optionee any right to remain in Employee status for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Related Entity employing Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Employee status at any time for any reason, with or without Cause.

18. Plan Prospectus . The official prospectus for the Plan is available on the Corporation’s intranet at: http://gnet/HR/stocks_new.asp . Optionee may also obtain a printed copy of the prospectus by contacting Stock Administration either through the internet at stockadministration@gilead.com or by telephoning 650-522-5517.

19. Optionee Acceptance . Optionee must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall this option be exercised in the absence of such acceptance.

IN WITNESS WHEREOF, Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.


GILEAD SCIENCES, INC.

By:

Title:

APPENDIX

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board (or a subcommittee thereof) acting in its capacity as administrator of the Plan.

B. Agreement shall mean this Stock Option Agreement.

C. Applicable Acceleration Period shall have the meaning assigned to such term in Section 2(b) of the Plan and shall be determined on the basis of Optionee’s status on the Grant Date.

D. Applicable Laws shall mean the legal requirements related to the Plan and the option under applicable provisions of the federal securities laws, state corporate and state securities laws, the Code, the rules of any applicable Stock Exchange on which the Common Stock is listed for trading, and the rules of any non-U.S. jurisdiction applicable to options granted to residents therein.

E. Board shall mean the Corporation’s Board of Directors.

F. Cause shall, for purposes of Paragraph 5 of the Agreement, mean the termination of Optionee’s Continuous Service as a result of Optionee’s (i) performance of any act, or failure to perform any act, in bad faith and to the detriment of the Corporation or a Related Entity; (ii) dishonesty, intentional misconduct, material violation of any applicable Corporation or Related Entity policy, or material breach of any agreement with the Corporation or a Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person. However, for purposes of Paragraph 6(d) of the Agreement, Cause shall mean the termination of Optionee’s Continuous Service as a result of Optionee’s (a) conviction of, a guilty plea with respect to, or a plea of nolo contendere to, a charge that Optionee has committed a felony under the laws of the United States or of any State or a crime involving moral turpitude, including (without limitation) fraud, theft, embezzlement or any crime that results in or is intended to result in personal enrichment to Optionee at the expense of the Corporation or a Related Entity; (b) material breach of any agreement entered into between Optionee and the Corporation or a Related Entity that impairs the Corporation’s or the Related Entity’s interest therein; (c) willful misconduct, significant failure to perform his or her duties or gross neglect of his or her duties; or (d) engagement in any activity that constitutes a material conflict of interest with the Corporation or a Related Entity.

G. Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

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successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction;

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve- (12) month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (a) have been Board members continuously since the beginning of such period or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) above who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation’s incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly, and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to the formation of such entity.

H. Code shall mean the Internal Revenue Code of 1986, as amended.

I. Common Stock shall mean shares of the Corporation’s common stock.

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J. Constructive Termination shall have the meaning assigned to such term in Section 11(d) of the Plan.

K. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however, that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include a member of the board of directors of a Related Entity.

L. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Optionee shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Optionee no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Optionee is performing such services ceases to remain a Related Entity of the Corporation, even though Optionee may subsequently continue to perform services for that entity. In jurisdictions requiring notice in advance of an effective termination of Optionee’s service as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of such service to the Corporation or a Related Entity notwithstanding any required notice period that must be fulfilled before Optionee’s termination as an Employee, Director or Consultant can be effective under Applicable Laws.

M. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

N. Director shall mean a member of the Board.

O. Employee shall mean an individual who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

P. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

Q. Exercise Price shall mean the exercise price payable per Option Share as specified in attached Schedule I.

R. Expiration Date shall mean the date specified on attached Schedule I for measuring the maximum term for which the option may remain outstanding.

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closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

T. Grant Date shall mean the date on which the option is granted, as specified on attached Schedule I.

U. Living Trust shall mean a revocable living trust established by Optionee or by Optionee and his or her spouse of which Optionee is the sole trustee (or sole co-trustee with his or her spouse) and sole beneficiary (or sole co-beneficiary with his or her spouse) during Optionee’s lifetime.

V. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

W. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

X. Notice of Exercise shall mean the notice of option exercise in the form authorized by the Corporation.

Y. Option Shares shall mean the number of shares of Common Stock subject to the option as specified in attached Schedule I.

Z. Optionee shall mean the person identified in attached Schedule I to whom the option is granted pursuant to the Agreement.

AA. Parent shall mean a “parent corporation,” whether now existing or hereafter established, as defined in Section 424(e) of the Code.

BB. Permanent Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or to be of continuous duration of twelve (12) months or more.

CC. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended from time to time.

DD. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Optionee provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least twenty percent (20%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain and there is a legitimate non-tax business purpose for making this option grant to Optionee.

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EE. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

FF. Subsidiary shall mean a “subsidiary corporation,” whether now existing or hereafter established, as defined in Section 424(f) of the Code.

GG. Vesting Schedule shall mean the schedule set forth in attached Schedule I, pursuant to which the option is to vest and become exercisable for the Option Shares in a series of installments over Optionee’s period of Continuous Service.

HH. Withholding Taxes shall mean the federal, state, local and/or foreign income taxes and the employee portion of the federal, state, local and/or foreign employment taxes required to be withheld by the Corporation in connection with the exercise of the option.

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SCHEDULE I

OPTION GRANT SPECIFICS

Name of Optionee: «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»

Grant Date: «DATE» «MONTH» «YEAR»

Total Number of Option Shares: «SHARES_GRANTED»

Exercise Price: «OPTION_PRICE»

Vesting Schedule:


Shares	Vest Type	Full Vest Date	Expiration Date
«SHARES_PERIOD_1»	«VEST_TYPE_PERIOD_1»	«VEST_DATE_PERIOD_1»	«EXPIRATION_DATE_PERIOD_1»
«SHARES_PERIOD_2»	«VEST_TYPE_PERIOD_2»	«VEST_DATE_PERIOD_2»	«EXPIRATION_DATE_PERIOD_2»
«SHARES_PERIOD_3»	«VEST_TYPE_PERIOD_3»	«VEST_DATE_PERIOD_3»	«EXPIRATION_DATE_PERIOD_3»
«SHARES_PERIOD_4»	«VEST_TYPE_PERIOD_4»	«VEST_DATE_PERIOD_4»	«EXPIRATION_DATE_PERIOD_4»
«SHARES_PERIOD_5»	«VEST_TYPE_PERIOD_5»	«VEST_DATE_PERIOD_5»	«EXPIRATION_DATE_PERIOD_5»

The option will vest and become exercisable for the number of Option Shares noted on the first line above on the first anniversary of the Grant Date, as noted by the date listed under “Full Vest Date.” With respect to each subsequent line, the option will vest and become exercisable for the listed Option Shares in equal quarterly installments, beginning one quarter after the Full Vest Date on the previous line and ending on the corresponding Full Vest Date for the listed Option Shares at issue. Fractional shares will be rounded down to the nearest whole number.

Exhibit 10.19

NON-EMPLOYEE BOARD MEMBER

GILEAD SCIENCES, INC.

STOCK OPTION AGREEMENT

RECITALS

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

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

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

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

AWARD SUMMARY


Optionee :		«FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»

Grant Date :		«OPTION_DATE»

Exercise Price :		«OPTION_PRICE» per share

Number of Option Shares :		«SHARES_GRANTED» shares of Common Stock

Expiration Date :		«EXPIRATION_DATE_PERIOD_1»*

Type of Option :		Non-Statutory Stock Option

Exercise Schedule :		The option will vest and become exercisable for the Option Shares in four (4) successive equal quarterly installments upon Optionee’s completion of each quarter of Continuous Service over the one (1) year period measured from the Grant Date.

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

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

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

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

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

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

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

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

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

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

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

6. Change in Control .

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

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

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

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

9. Manner of Exercising Option .

(a) In order to exercise this option with respect to all or any portion of the Option Shares for which this option is at the time vested and exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i) Execute and deliver to the Corporation a Notice of Exercise as to the Option Shares for which the option is exercised or comply with such other procedures as the Corporation may establish for notifying the Corporation, directly or through a brokerage firm authorized by the Corporation to effect option exercises, of the exercise of this option for one or more Option Shares. The applicable Notice of Exercise may be obtained upon request through stockadministration@gilead.com or by telephoning Stock Administration at 650-522-5517.

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to the Corporation; or

(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all applicable Withholding Taxes.

10. Compliance with Laws and Regulations .

(a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all Applicable Laws relating thereto.

(b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.

12. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the most current address then indicated for Optionee on the Corporation’s records or shall be delivered electronically to Optionee through the Corporation’s electronic mail system. All notices shall be deemed effective upon personal delivery or electronic delivery as specified above or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

16. No Impairment of Rights . This Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Corporation or its stockholders to remove Optionee from the Board at any time in accordance with the provisions of applicable law.

17. Plan Prospectus . The official prospectus for the Plan is attached if this option is the first option made to Optionee under the October 2007 restatement of the Plan. Optionee may obtain an additional printed copy of the prospectus by contacting Stock Administration through the internet at stockadministration@gilead.com or by telephoning 650-522-5517.

18. Optionee Acceptance . Optionee must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall this option be exercised in the absence of such acceptance.

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.


GILEAD SCIENCES, INC.

By:

Title:

APPENDIX

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board (or any subcommittee thereof) acting in its capacity as administrator of the Plan.

B. Agreement shall mean this Stock Option Agreement.

C. Applicable Laws shall mean the legal requirements related to the Plan and the option under applicable provisions of the federal securities laws, state corporate and state securities laws, the Code, the rules of any applicable Stock Exchange on which the Common Stock is listed for trading, and the rules of any non-U.S. jurisdiction applicable to options granted to residents therein.

D. Board shall mean the Corporation’s Board of Directors.

E. Cause shall mean the termination of Optionee’s Continuous Service as a result of Optionee’s (i) performance of any act, or failure to perform any act, in bad faith and to the detriment of the Corporation; (ii) dishonesty, intentional misconduct, material breach of any fiduciary duty owed to the Corporation; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

F. Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

(i) a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction;

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

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convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

G. Code shall mean the Internal Revenue Code of 1986, as amended.

H. Common Stock shall mean shares of the Corporation’s common stock.

I. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however, that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include (i) a former Board member during his or her period of service as Director Emeritus immediately following his or her cessation of service as a Board member, without an intervening break in Continuous Service, or (ii) an individual serving as a member of the board of directors of a Related Entity.

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K. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

L. Director shall mean a member of the Board.

M. Domestic Partner shall mean a person who meets and continues to meet all of the criteria detailed in the Gilead Sciences Affidavit of Domestic Partnership when the Domestic Partnership has been internally registered with the Corporation by filing with the Corporation an original, properly completed, notarized Gilead Sciences Affidavit of Domestic Partnership.

N. Employee shall mean an individual who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

O. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

P. Exercise Price shall mean the exercise price per Option Share as specified in Paragraph 1 of the Agreement.

Q. Exercise Schedule shall mean the schedule set forth in Paragraph 1 of the Agreement, pursuant to which the option is to vest and become exercisable for the Option Shares in four (4) successive equal quarterly installments upon Optionee’s completion of each quarter of Continuous Service over the one (1) year period measured from the Grant Date.

R. Expiration Date shall mean the date specified in Paragraph 1 of the Agreement for measuring the maximum term for which the option may remain outstanding.

S. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported) on that date, as quoted on the Stock Exchange that is at the time serving as the primary trading market for the Common Stock; provided, however, that if there no reported closing price or closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

T. Grant Date shall mean the date of grant of the option as specified in Paragraph 1 of the Agreement.

U. Immediate Family shall mean, with respect to Optionee, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law including adoptive relationships, Domestic Partner, a trust in which such persons (or person)

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have more than fifty percent (50%) of the beneficial interest, a foundation in which such persons (or person) control the management of such entity’s assets, or any other entity in which such persons (or person) own more than fifty percent (50%) of the voting interests.

V. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

W. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

X. Notice of Exercise shall mean the notice of option exercise in the form prescribed by the Corporation.

Y. Option Shares shall mean the number of shares of Common Stock subject to the option as specified in Paragraph 1 of the Agreement.

Z. Optionee shall mean the person to whom the option is granted pursuant to the Agreement.

AA. Parent shall mean a “parent corporation,” whether now or hereafter established, as defined in Section 424(e) of the Code.

BB. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended from time to time.

CC. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Optionee provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least twenty percent (20%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain and there is a legitimate non-tax business purpose for making this option grant to Optionee.

DD. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

EE. Subsidiary shall mean a “subsidiary corporation,” whether now or hereafter established, as defined in Section 424(f) of the Code.

FF. Withholding Taxes shall mean any federal, state and local taxes required to be withheld by the Corporation in connection with the exercise of the option.

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Exhibit 10.20

NON-EMPLOYEE DIRECTOR AWARD

GILEAD SCIENCES, INC.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of providing incentives to attract, retain and motivate eligible Employees, Directors and Consultants who provide services to the Corporation (or any Related Entity).

B. Participant is to render valuable services to the Corporation as a non-employee Director, and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Common Stock to Participant thereunder.

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

NOW, THEREFORE , the Corporation hereby awards Restricted Stock Units to Participant upon the following terms and conditions:

1. Grant of Restricted Stock Units . The Corporation hereby awards to Participant, as of the Award Date, Restricted Stock Units under the Plan. Each Restricted Stock Unit that vests hereunder will entitle Participant to receive one share of Common Stock on the specified issuance date for that unit. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting schedule for those shares, the dates on which those vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “ Award ”) shall be as set forth in this Agreement.

AWARD SUMMARY


Participant:		____________________________

Award Date:		, 200

Number of Shares Subject to Award:		shares of Common Stock (the “Shares”)

Vesting Schedule:		The Shares shall vest upon the Participant’s completion of one year of Continuous Service measured from the Award Date (the *“Normal Vesting Schedule”* ). However, the Shares may be subject to accelerated vesting in accordance with the provisions of Paragraph 5 of this Agreement.


Issuance Schedule		The Shares in which Participant vests in accordance with the Normal Vesting Schedule shall become issuable immediately on the applicable vesting date. In no event will the Shares in which the Participant so vests be issued later than the *later* of (i) the close of the calendar year in which the Shares vest pursuant to the Normal Vesting Schedule or (ii) the fifteenth day of the third calendar month following such vesting date.

2. Limited Transferability . Prior to actual receipt of the Shares which vest hereunder, Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws of inheritance or to Participant’s designated beneficiary or beneficiaries of this Award. Participant may also direct the Corporation to re-issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his or her lifetime to one or more designated members of Participant’s Immediate Family or a trust established for Participant and/or the members of his or her Immediate Family.

3. Cessation of Service . Except as otherwise provided in Paragraph 5 below, should Participant cease Continuous Service for any reason prior to vesting in the Shares pursuant to the Normal Vesting Schedule, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced accordingly. Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units. However, for purposes of this Agreement, Participant shall not be deemed to cease Continuous Service if Participant continues to serve the Corporation as a Director Emeritus immediately following his or her cessation of service as a Board member without an intervening break in Continuous Service.

4. Stockholder Rights and Dividend Equivalents

(a) The holder of this Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the Shares subject to the Award until Participant becomes the record holder of those Shares upon their actual issuance following the Corporation’s collection of the applicable Withholding Taxes.

form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution or in such other form as the Administrator deems appropriate under the circumstances) concurrently with the issuance of the vested Shares to which those phantom dividend equivalents relate.

5. Change of Control .

(a) Should Participant remain in Continuous Service until the effective date of a Change in Control, then the Restricted Stock Units at the time subject to this Award will vest immediately prior to the closing of the Change in Control. The Shares subject to those vested units shall be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control, and such consideration per Share shall be distributed to Participant at the same time as such shareholder payments, but such distribution to Participant shall in all events be completed no later than the later of (i) the close of the calendar year in which such Change in Control is effected or (ii) the fifteenth (15th) of the third (3rd) calendar month following the effective date of that Change in Control.

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

6. Adjustment in Shares . Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change. In making such adjustments, the Administrator shall take into account any amounts to be credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and the determination of the Administrator shall be final, binding and conclusive. In the event of a Change in Control, the provisions of Paragraph 5 shall be controlling.

7. Issuance of Shares of Common Stock .

(a) On the date on which the Shares are to be issued in accordance with the express provisions of this Agreement, the Corporation shall issue to or on behalf of the Participant a certificate (which may be in electronic form) for those Shares and shall concurrently distribute to the Participant any phantom dividend equivalents with respect to those Shares, subject in each instance to the Corporation’s collection of the applicable Withholding Taxes.

(b) Except as otherwise provided in Paragraph 5, the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock. In no event, however, shall any fractional shares be issued. Accordingly, the total number of shares of Common Stock to be issued at the time the Award vests shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

8. Compliance with Laws and Regulations . The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all Applicable Laws relating thereto.

9. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most current address then indicated for Participant on the Corporation’s employee records or shall be delivered electronically to Participant through the Corporation’s electronic mail system. All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

10. Successors and Assigns . Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

11. Construction . This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

12. Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

13. No Impairment of Rights . This Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Corporation or its stockholders to remove Participant from the Board at any time in accordance with the provisions of applicable law.

14. Plan Prospectus . The official prospectus for the Plan is attached if this Award the first restricted stock unit award made to Participant under the Plan. Participant may obtain an additional printed copy of the prospectus by contacting Stock Administration through the internet at stockadministration@gilead.com or by telephoning 650-522-5517.

15. Participant Acceptance . Participant must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation,

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.


GILEAD SCIENCES, INC.

By:

Title:

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board in its capacity as administrator of the Plan.

B. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

C. Applicable Laws shall mean the legal requirements related to the Plan and the Award under applicable provisions of the federal securities laws, state corporate and securities laws, the Code, the rules of any applicable Stock Exchange on which the Common Stock is listed for trading, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.

D. Award shall mean the award of restricted stock units made to Participant pursuant to the terms of this Agreement.

E. Award Date shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

F. Board shall mean the Corporation’s Board of Directors.

G. Cause shall mean the termination of Participant’s Continuous Service as a result of his or her (i) performance of any act, or failure to perform any act, in bad faith and to the detriment of the Corporation; (ii) dishonesty, intentional misconduct, material breach of any fiduciary duty owed to the Corporation; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

H. Change in Control shall mean a change in ownership or control of the Corporation effected through the consummation of any of the following transactions:

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

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(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation’s incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to the formation of such entity.

F. Code shall mean the Internal Revenue Code of 1986, as amended.

G. Common Stock shall mean shares of the Corporation’s common stock.

H. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however, that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include (i) a former Board member during his or her period of service as Director Emeritus immediately following his or her cessation of service as a Board member, without an intervening break in Continuous Service, or (ii) an individual serving as a member of the board of directors of a Related Entity.

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I. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Participant shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Participant is performing such services ceases to remain a Related Entity of the Corporation, even though Participant may subsequently continue to perform services for that entity.

J. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

K. Director shall mean a member of the Board.

L. Domestic Partner shall mean a person who meets and continues to meet all of the criteria detailed in the Gilead Sciences Affidavit of Domestic Partnership when the Domestic Partnership has been internally registered with the Corporation by filing with the Corporation an original, properly completed, notarized Gilead Sciences Affidavit of Domestic Partnership.

M. Employee shall mean any person who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the Corporation or Related Entity as to both the work to be performed and the manner and method of performance.

N. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported) on that date, as quoted on the Stock Exchange that is at the time serving as the primary trading market for the Common Stock; provided, however, that if there no reported closing price or closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

O. Immediate Family shall mean, with respect to Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law including adoptive relationships, Domestic Partner, a trust in which such persons (or person) have more than fifty percent (50%) of the beneficial interest, a foundation in which such persons (or person) control the management of the entity’s assets, or any other entity in which such persons (or person) own more than fifty percent (50%) of the voting interests.

P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

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Q. Normal Vesting Schedule shall mean the schedule set forth in Paragraph 1 of the Agreement, pursuant to which the Restricted Stock Units and the underlying Shares are to vest upon Participant’s completion of one year of Continuous Service measured from the Award Date.

R. Participant shall mean the person to whom the Award is made pursuant to the Agreement.

S. Parent shall mean a “parent corporation,” whether now existing or hereafter established, as defined in Section 424(e) of the Code.

T. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended and restated from time to time.

U. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Participant provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least twenty percent (20%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain and there is a legitimate non-tax business purpose for making this Award to Participant.

V. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

W. Subsidiary shall mean a “subsidiary corporation,” whether now existing or hereafter established, as defined in Section 424(f) of the Code.

X. Withholding Taxes shall mean the federal, state and local taxes required to be withheld by the Corporation in connection with the issuance of the shares of Common Stock which vest under the Award and any phantom dividend equivalents distributed with respect to those shares.

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Exhibit 10.21

GILEAD SCIENCES, INC.

2004 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

THIS RESTRICTED STOCK AWARD AGREEMENT is made and entered into effective as of the _____ day of May, 20____ (the “ Award Date ”), by and between GILEAD SCIENCES, INC., a Delaware corporation (the “ Company ”), and ETIENNE F. DAVIGNON (the “ Grantee ”). In consideration of the agreements set forth below, the Company and Grantee agree as follows:

1. Award . An award of __________ ( ) shares of the Company’s common stock (the “ Restricted Stock ”) is hereby made to the Grantee, subject to the terms and conditions of this Agreement and to the provisions of the Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended and restated (the “ Plan ”), the terms of which are incorporated by reference herein.

2. Transfer Restrictions . The Restricted Stock may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of in any manner at any time while the Restricted Stock remains subject to the Forfeiture Restrictions. Notwithstanding the foregoing, the Restricted Stock may be transferred by will or by the laws of descent and distribution following the Grantee’s death.

3. Vesting Schedule . The Restricted Stock shall vest, and cease to be subject to forfeiture hereunder, upon Grantee’s completion of six (6) months of Continuous Service (as such term is defined in the Plan) measured from the Award Date (the “ Vesting Schedule ”).

4. Forfeiture Restrictions . Should the Grantee cease Continuous Service prior to the completion of the Vesting Schedule for any reason other than those listed in Section 5 below, then the Restricted Stock shall be forfeited to the Company, without any consideration due or payable to Grantee, and Grantee shall cease to have any further right, title or interest in the forfeited Restricted Stock. This provision is referred to in this Agreement as the “ Forfeiture Restrictions .”

5. Lapse of Forfeiture Restrictions . Notwithstanding the Vesting Schedule or any other provision contained herein or in the Plan, the Forfeiture Restrictions shall lapse, and any Restricted Stock shall immediately vest, prior to the completion of the Vesting Schedule upon the earliest to occur of the following: (i) termination of the Grantee’s Continuous Service as a result of his death or disability (as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “ Code ”)) or his retirement at or after age 65; (ii) a Change in Control, as such term is defined in the Plan; or (iii) an action by the Compensation Committee of the Company’s Board of Directors (the “ Committee ”), in its sole discretion, terminating such Forfeiture Restrictions.

6. Stock Certificates . The Company shall issue a certificate in the Grantee’s name evidencing the Restricted Stock awarded hereunder. The certificate shall bear a restrictive legend evidencing the Forfeiture Restrictions and the transfer restrictions set forth in Section 2 above. The Company shall cause such certificate to be delivered upon issuance to the Secretary of the Company as a depository for safekeeping until forfeiture occurs or the Forfeiture Restrictions lapse pursuant to the terms of this Agreement. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause a new certificate without such restrictive legend to be issued in the name of the Grantee for the shares as to which the Forfeiture Restrictions have lapsed. Notwithstanding any other provisions of this Agreement, the issuance or delivery of any shares of Restricted Stock (whether subject to restrictions or unrestricted) may be postponed for such period as may be required to comply with applicable requirements of any national securities exchange or any requirements under any law or regulation applicable to the issuance or delivery of such shares.

7. Rights as Stockholder . Grantee shall be entitled to all of the rights of a stockholder with respect to the Restricted Stock, including the right to vote such shares and to receive dividends and other distributions payable with respect to such Restricted Stock on and after the Award Date.

8. Election to Recognize Gross Income in the Year of Grant . Pursuant to Section 83(b) of the Code, Grantee may elect within thirty (30) days after the Award Date to include in gross income for U.S. federal income tax purposes an amount equal to the Fair Market Value (as such term is defined in Section 10 below) of the Restricted Stock on such Award Date. If such a valid and timely election is made, Grantee shall pay to the Company, or make arrangements satisfactory to the Committee to pay to the Company in the year of such grant, any U.S. federal, state or local taxes required to be withheld with respect to such shares as a result of such election. The Company shall provide Grantee with an appropriate Section 83(b) election form upon the Grantee’s request.

9. Tax Withholding . In the absence of a valid and timely Code Section 83(b) election under Section 8 above, Grantee shall make appropriate arrangements with the Company for satisfaction of any U.S. federal, state or local income tax or foreign tax withholding requirements applicable to the vesting of the Restricted Stock upon the completion of the Vesting Schedule or any earlier termination of the Forfeiture Restrictions. Such arrangements may include an election by the Grantee to have the Company retain some portion of the Restricted Stock to satisfy such withholding requirements. The election must be made prior to the date on which the amount to be withheld is determined. If such election is made, then upon the lapse of the Forfeiture Restrictions, the Company will retain the number of shares of Restricted Stock with a Fair Market Value equal to the amount necessary to satisfy any such applicable tax withholding requirements. In no event, however, shall the number of shares of Common Stock which the Company shall be required to so retain exceed in Fair Market Value the amount necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates, including payroll taxes, that are applicable to supplemental taxable income.

If the Grantee shall fail to make appropriate arrangements for the satisfaction of the applicable tax withholding requirements, then the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Grantee any U.S. federal, state or local taxes or foreign taxes of any kind required by law to be withheld with respect to such shares of Restricted Stock.

The Committee is hereby authorized to establish such rules, forms and procedures as it deems necessary to implement the foregoing. In no event, however, shall the Company be required to issue fractional shares of Common Stock.

10. Fair Market Value . For purposes of this Agreement, the “ Fair Market Value ” per share of the Company’s common stock on any relevant date shall be the closing price per share of the Company’s common stock (or the closing bid, if no sales were reported) on that date, as quoted on the national stock exchange that is at the time serving as the primary trading market for such common stock; provided, however, that if there no reported closing price or closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Committee deems reliable.

11. Designation of Beneficiary . Grantee may designate a beneficiary or beneficiaries to receive the distribution of the Restricted Stock in the event of the Grantee’s death and may change such designation from time to time by filing a written designation of beneficiary with the Committee on a form prescribed by it; provided, that no such designation shall be effective unless received prior to the death of the Grantee.

12. Status of Restricted Stock . Grantee agrees that he will not sell or otherwise dispose of the Restricted Stock in any manner which would constitute a violation of any applicable federal or state securities laws.

13. Committee Decisions Conclusive . All decisions of the Committee relating to questions arising under the Plan or under this Agreement shall be conclusive and binding on Grantee.

14. Binding Effect . This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Grantee.

15. Successors . “Grantee” as used herein shall include Grantee’s executor, administrator, or other legal representative or the person or persons to whom Grantee’s rights under this Restricted Stock Award Agreement pass by will or by the applicable laws of descent and distribution.

16. Amendments . This Agreement may not be amended, modified or terminated except by a writing signed by the Company and Grantee.

17. Governing Law . This Agreement and all actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware.

IN WITNESS WHEREOF, the Company has caused this Award to be made and Agreement to be executed by its duly authorized officer as of the date first above written.


GILEAD SCIENCES, INC.

By:
Title:

Accepted:

GRANTEE

Etienne Davignon

Exhibit 10.24

SECTION 16 OFFICERS

GILEAD SCIENCES, INC.

PERFORMANCE SHARE AWARD AGREEMENT

RECITALS

A. The Corporation has implemented the Plan for the purpose of providing incentives to attract, retain and motivate eligible Employees, Directors and Consultants to continue their service relationship with the Corporation.

B. Participant is to render valuable services to the Corporation (or a Related Entity), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Common Stock to Participant thereunder.

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

NOW, THEREFORE , it is hereby agreed as follows:

1. Grant of Restricted Stock Units . The Corporation hereby awards to Participant, as of the Award Date indicated below, an award (the “Award”) of Performance Shares under the Corporation’s 2004 Equity Incentive Plan, as amended (the “Plan”). Each Performance Share which vests pursuant to the terms of this Agreement shall provide Participant with the right to receive one or more shares of Common Stock on the designated issuance date. The number of shares of Common Stock subject to the awarded Performance Shares, the applicable performance vesting requirement for those shares, the date on which those vested shares of Common Stock shall become issuable and the remaining terms and conditions governing the Award, including the applicable service vesting requirement, shall be as set forth in this Agreement.

AWARD SUMMARY

Participant

__________________________________

Award Date:

__________, 200__

Designated Number of Performance Shares:

The actual number of shares of Common Stock that may become issuable pursuant to the Performance Shares awarded under this Agreement shall be determined in accordance with the Vesting Schedule below. For purposes of the percentage calculations set forth in the Performance Vesting section of such schedule, the designated number of Performance Shares to be utilized is ______ shares.

Vesting Schedule:

The number of shares of Common Stock which may actually vest and become issuable pursuant to the Award shall be determined pursuant to a two-step process: (i) first the maximum number of shares of Common Stock in which Participant can vest under the Performance Vesting section below shall be calculated on the basis of the level at which each of the Performance Goals specified on attached Schedule I is actually attained and (ii) then the number of shares calculated under clause (i) in which Participant may actually vest shall be determined on the basis of his or her completion of the applicable Continuous Service vesting requirements set forth in Paragraph 3 of this Agreement.

Performance Vesting : Attached Schedule I specifies the two Performance Goals to be attained for the specified Performance Period. Within seventy-five (75) days after the completion of that Performance Period, the Administrator shall determine and certify the actual level of attainment for each Performance Goal. On the basis of that certified level of attainment, the number of Performance Shares will be multiplied by the applicable percentage (which may range from 0% to 200%) determined in accordance with the percentile matrix set forth in Schedule I. The number of shares resulting from such calculation shall constitute the maximum number of shares of Common Stock in which Participant may vest under this Award and shall be designated the “Performance-Qualified Shares.” In no event may the number of such Performance-Qualified Shares exceed 200% of the number of Performance Shares specified in the Number of Performance Shares section above.

To the extent any Performance Goal is attained at a level below the twentieth percentile, a portion of the Performance Shares, as determined in accordance with the percentile matrix set forth in Schedule I, may be forfeited, and any such forfeited Performance Shares shall be immediately cancelled. Participant shall thereupon cease to have any further right, title or interest in the shares of Common Stock underlying those cancelled Performance Shares.

Continuous Service Vesting. The number of Performance-Qualified Shares in which Participant actually vests shall be determined on the basis of his or her satisfaction of the Continuous-Service vesting requirements set forth in Paragraph 3.

Change in Control Vesting. The shares of Common Stock underlying the Performance Shares subject to this Award may also vest on an accelerated basis in accordance with Paragraph 5 should a Change in Control occur prior to the completion of the Performance Period.

Issuance Date:

The shares of Common Stock which actually vest and become issuable pursuant to the terms of this Agreement shall be issued in accordance with the provisions of this Agreement applicable to the particular circumstances under which such vesting occurs.

2. Limited Transferability . Prior to the actual issuance of the shares of Common Stock which vest hereunder, Participant may not transfer any interest in the Performance Shares subject to this Award or the underlying shares of Common Stock or pledge or otherwise hedge the sale of those Performance Shares or underlying shares, including (without limitation) any short sale or any acquisition or disposition of any put or call option or other instrument tied to the value of the underlying shares of Common Stock. However, any shares of Common Stock which vest hereunder but otherwise remain unissued at the time of Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws of inheritance or to Participant’s designated beneficiary or beneficiaries of this Award. Participant may also direct the Corporation to record the ownership of any shares of Common Stock which in fact vest and become issuable hereunder in the name of a revocable living trust established for the exclusive benefit of Participant or Participant and his or her spouse. Participant may make such a beneficiary designation or ownership directive at any time by completing the Corporation’s Universal Beneficiary Designation form and filing the completed form with the Plan Administrator or its designee.

3. Continuous Service Requirement . The number of Performance-Qualified Shares calculated in accordance with the Performance-Vesting provisions of Paragraph 1 and attached Schedule I represent the maximum number of shares of Common Stock in which Participant can vest hereunder. The actual number of shares of Common Stock in which Participant shall vest shall be determined as follows:

- If Participant remains in Continuous Service through the date following the completion of the Performance Period on which the Administrator certifies the attained level of the Performance Goals for that Performance Period, Participant shall vest in one hundred percent (100%) of the Performance-Qualified Shares.

- If Participant’s Continuous Service terminates prior to the completion of the Performance Period (or after the completion of the Performance Period but before the date the Administrator certifies the attained level of the Performance Goals for that Performance Period) by reason of death or Permanent Disability, then Participant shall, following the completion of the Performance Period, vest in that number of shares of Common Stock (if any) determined by multiplying the maximum number of Performance-Qualified Shares in which Participant could vest, based on the actual level at which the Performance Goals are attained and certified for the Performance Period, by a fraction, the numerator

of which is the number of months of Continuous Service actually completed by Participant in such Performance Period (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) constituting the entire Performance Period.

- If Participant’s Continuous Service terminates by reason of his or her Retirement at any time after the completion of the first twelve (12) months of the Performance Period but prior to the completion of the entire Performance Period, then Participant shall, following the completion of the Performance Period, vest in that number of shares of Common Stock (if any) determined by multiplying the maximum number of Performance-Qualified Shares in which Participant could vest, based on the actual level at which the Performance Goals are attained and certified for the Performance Period, by a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in such Performance Period prior to his or her Retirement (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) constituting the entire Performance Period.

- If Participant’s Continuous Service ceases for any other reason (including, without limitation, any deemed cessation of Continuous Service under Paragraph 10) prior to the completion of the Performance Period or prior to the date on which the Administrator certifies the attained level of the Performance Goals for that Performance Period, then Participant shall not vest in any of the Performance-Qualified Shares, and all of Participant’s right, title and interest to the shares of Common Stock subject to this Award shall immediately terminate; provided, however, that should a Change in Control occur prior to the completion of the Performance Period, then the provisions of Paragraph 5 shall govern the vesting of the Performance Shares.

4. Stockholder Rights and Dividend Equivalents

(a) The holder of this Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the shares of Common Stock subject to the Award until Participant becomes the record holder of those shares upon their actual issuance following the Corporation’s collection of the applicable Withholding Taxes.

outstanding and entitled to that dividend or distribution. As one or more shares of Common Stock subsequently vest hereunder upon the satisfaction of the applicable vesting requirements, the phantom dividend equivalents credited to those particular shares in the book account shall vest and shall be distributed to Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution or in such other form as the Administrator deems appropriate under the circumstances) concurrently with the issuance of those vested shares. However, such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution.

(c) To the extent the maximum number of shares of Common Stock that can qualify as Performance-Qualified Shares under this Award are not in fact earned by reason of the levels at which the Performance Goals are actually attained, then the phantom dividend equivalents credited to those unearned shares shall be cancelled, and Participant shall cease to have any right or entitlement to receive any distributions or other amounts with respect to those cancelled dividend equivalents.

(d) Should Participant cease Continuous Service without vesting in one or more of the shares of Common Stock subject to this Award (including any shares which do not otherwise vest at that time after taking into account any applicable vesting acceleration provisions set forth in Paragraphs 3 and 5 of this Agreement), then the phantom dividend equivalents credited to those unvested shares shall be cancelled, and Participant shall thereupon cease to have any further right or entitlement to those cancelled amounts.

5. Change in Control . The following provisions shall apply only to the extent a Change in Control is consummated prior to the completion of the Performance Period and shall have no force or effect in the event the effective date of the Change in Control occurs after the completion of such Performance Period.

(a) Should (i) the Change in Control occur within the first twelve (12) months of the Performance Period and (ii) Participant remain in Continuous Service through the effective date of that Change in Control, then Participant shall immediately vest in that number of shares of Common Stock equal to the designated number of Performance Shares set forth in Paragraph 1, without any measurement of Performance Goal attainment to date.

(b) Should (i) the Change in Control occur at any time on or after the completion of the first twelve (12) months of the Performance Period and (ii) Participant remain in Continuous Service through the effective date of that Change in Control, then Participant shall immediately vest in that number of shares of Common Stock equal to the greater of:

(i) the designated number of Performance Shares set forth in Paragraph 1, or

(ii) the number of Performance-Qualified Shares determined by multiplying (A) the number of Performance Shares set forth in Paragraph 1 by (B) the applicable percentage (determined in accordance with the percentile matrix in attached Schedule I) for the levels at which the Performance

Goals are attained over an abbreviated Performance Period ending with the close of the Corporation’s fiscal quarter coincident with or immediately preceding the effective date of the Change in Control.

(c) The provisions of subparagraphs (a) and (b) of this Paragraph 5 shall also apply should Participant’s Continuous Service terminate, by reason of an involuntary termination other than for Cause or his or her resignation due to Constructive Termination, at any time during the period beginning with the execution date of the definitive agreement for the Change in Control transaction and ending with the earlier of (i) the effective date of that Change in Control or (ii) the termination of the definitive agreement without the consummation of the Change in Control; provided, however , that in no event shall Participant become entitled to any shares of Common Stock pursuant to this Paragraph 5 if the Change in Control is not in fact consummated.

(d) Should Participant cease Continuous Service during the Performance Period by reason of death or Permanent Disability and a Change in Control subsequently occur prior to the completion of that Performance Period, then the Participant shall, at the time of such Change in Control, vest in a pro-rated number of shares of Common Stock calculated by multiplying (i) the number of Performance Shares or Performance-Qualified Shares determined in accordance with the applicable provisions of subparagraphs (a) and (b) of this Paragraph 5 by (ii) a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in such Performance Period (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) comprising the portion of the Performance Period ending with the earlier of (i) the effective date of the Change in Control or (ii) the last day of the abbreviated Performance Period (if any) taken into account under Paragraph 5(b)(ii).

(e) Should Participant cease Continuous Service by reason of his or her Retirement at any time after the completion of the first twelve (12) months of the Performance Period but prior to the completion of the entire Performance Period and a Change in Control subsequently occur prior to the completion of that Performance Period, then the Participant shall, at the time of such Change in Control, vest in a pro-rated number of shares of Common Stock calculated by multiplying (i) the number of Performance Shares or Performance-Qualified Shares determined in accordance with the provisions of subparagraph (b) of this Paragraph 5 by (ii) a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in such Performance Period prior to his or her Retirement (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) comprising the portion of the Performance Period ending with the last day of the abbreviated Performance Period (if any) taken into account under Paragraph 5(b)(ii).

(f) The number of shares of Common Stock in which Participant vests on the basis of the Performance Shares or Performance-Qualified Shares determined in accordance with the foregoing provisions of this Paragraph 5 shall be issued on the effective date of such Change in Control or as soon as administratively practicable thereafter, but in no event more than fifteen (15) business days after such effective date. Alternatively, those vested shares

of Common Stock shall be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of the Change in Control, and such consideration shall be distributed to Participant within fifteen (15) business days following the effective date of that Change in Control. Each issuance or distribution made under this Paragraph 5(c) shall be subject to the Corporation’s collection of the applicable Withholding Taxes.

(g) Except for the actual number of shares of Common Stock in which Participant vests in accordance with this Paragraph 5, Participant shall have cease to have any further right or entitlement to any additional shares of Common Stock under this Agreement following the effective date of the Change in Control.

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

6. Adjustment in Shares . Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of the outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change. In making such equitable adjustments, the Administrator shall take into account any amounts credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and the determination of the Administrator shall be final, binding and conclusive. In the event of any Change in Control transaction, the provisions of Paragraph 5 shall be controlling.

7. Issuance or Distribution of Vested Shares or Other Amounts .

(a) Except as otherwise provided in Paragraph 5, the shares of Common Stock in which Participant vests pursuant to the Performance and Continuous Service vesting provisions of Paragraphs 1 and 3 shall be issued following the completion of the Performance Period, in accordance with the following provisions:

(i) If the applicable Performance Period is coincidental with one or more successive complete calendar years, the issuance shall be effected during the period beginning with the first business day of the calendar year immediately succeeding the end of the Performance Period and ending no later than March 15 of that year.

(ii) If the applicable Performance Period ends on a date other than the last day of the calendar year, then the issuance shall be effected as soon as administratively practicable following the completion of that Performance Period, but no later than the later of (A) the last day of the calendar year in which such Performance Period ends or (B the fifteenth (15th) day of third (3rd) calendar month following the last of day of such Performance Period.

(b) The Corporation shall, on the applicable issuance date, issue to or on behalf of Participant a certificate (which may be in electronic form) for the shares of Common Stock in which Participant vests pursuant to the Performance and Continuous Service vesting provisions of Paragraphs 1 and 3 or the special vesting provisions of Paragraph 5 and shall concurrently distribute to the Participant any phantom dividend equivalents with respect to those Shares.

(c) Except as otherwise provided in Paragraph 5, no shares of Common Stock shall be issued prior to the completion of the Performance Period. No fractional shares of Common Stock shall be issued pursuant to this Award, and any fractional share resulting from any calculation made in accordance with the terms of this Agreement shall be rounded down to the next whole share.

(d) The Corporation shall collect the Withholding Taxes with respect to each distribution of phantom dividend equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld.

(e) Unless Participant (i) otherwise makes satisfactory arrangements with the Corporation’s Human Resources Department, not later than forty-five (45) days prior to the applicable issuance date of the shares of Common Stock which vest and become issuable hereunder, to pay the applicable Withholding Taxes through the delivery of a check payable to the Corporation in the amount of such Withholding Taxes and (ii) in fact delivers such check to the Corporation not later than that issuance date, the Corporation shall collect the applicable Withholding Taxes through the following automatic share withholding method:

- On the applicable issuance date, the Corporation shall withhold, from the vested shares of Common Stock otherwise issuable to Participant at that time, a portion of those shares with a Fair Market Value (measured as of the issuance date) equal to the applicable Withholding Taxes; provided, however , that the number of shares of Common Stock which the Corporation shall be required to so withhold shall not exceed in Fair Market Value the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to supplemental taxable income.

(f) Notwithstanding the foregoing provisions of Paragraphs 7(d) and 7(e), the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting of the shares of Common Stock or any other amounts hereunder (the “Employment Taxes”) shall in all events be collected from Participant no later than the last business day of the calendar year in which those shares or other amounts vest hereunder. Accordingly, to the extent the applicable issuance date for one or more vested shares of Common Stock or the distribution date for such other amounts is to occur in a year subsequent to the calendar year in which those shares or other amounts vest, the Participant shall, on or before the last business day of the calendar year in which such shares or other amounts vest, deliver to the Corporation a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those shares or other amounts. The provisions of this Paragraph 7(f) shall be applicable only to the extent necessary to comply with the applicable tax withholding requirements of Code Section 3121(v).

(g) Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all Performance or Performance-Qualified Shares which vest under the Award shall be made solely in shares of Common Stock.

8. Special Deferral Election . Provided Participant is a U.S. tax resident and subject to Participant’s satisfaction of any applicable Withholding Tax obligations under Paragraph 7, Participant may elect to defer the receipt of any shares of Common Stock which may become issuable to Participant pursuant to the terms of this Agreement, by submitting to the Corporation on a timely basis a deferral election in the form provided for such purpose. Such deferral election must be submitted to the Corporation prior to the last six (6) months of the Performance Period (including any abbreviated Performance Period), and any deferral election submitted within that six (6)-month period shall have no force and effect. In submitting such deferral election, Participant must represent that he or she understands the effect of such deferral under relevant federal, state and local income and employment tax laws, including (without limitation) the fact that Social Security, Medicare and other taxes may be due upon the vesting of the shares of Common Stock notwithstanding the deferral election. In no event may such a deferral election be made after Participant’s cessation of Continuous Service.

9. Deferred Issuance Date . Notwithstanding any provision to the contrary in this Agreement, to the extent this Award may be deemed to create a deferred compensation arrangement under Code Section 409A, then the following limitations shall apply:

- No shares of Common Stock or other amounts which become issuable or distributable under this Agreement by reason of Participant’s cessation of Continuous Service shall actually be issued or distributed to Participant until the date of Participant’s Separation from Service or as soon thereafter as administratively practicable, but in no event later than the later of (i) the close of the calendar year in which such Separation from Service occurs or (ii) the fifteenth day of the third calendar month following the date of such Separation from Service.

- No shares of Common Stock or other amounts which become issuable or distributable under this Agreement by reason of Participant’s cessation of Continuous Service shall actually be issued or distributed to Participant prior to the earlier of (i) the first day of the seventh (7th) month following the date of such Separation from Service or (ii) the date of Participant’s death, if Participant is deemed at the time of such Separation from Service to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A, as determined by the Administrator in accordance with consistent and uniform standards applied to all other Code Section 409A arrangements of the Corporation, and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). The deferred Shares or other distributable amount shall be issued or distributed in a lump sum on the first day of the seventh (7th) month following the date of Participant’s Separation from Service or, if earlier, the first day of the month immediately following the date the Corporation receives proof of Participant’s death.

10. Leaves of Absence . For purposes of the applying the various Continuous Service vesting provisions of this Agreement, Participant shall be deemed to cease Continuous Service on the commencement date of any leave of absence and not to remain in Continuous Status during the period of that leave, except to the extent otherwise required by law or pursuant to the following policy:

- Participant shall be deemed to remain in Continuous Service status during (i) the first three (3) months of an approved personal leave of absence or (ii) the first seven (7) months of any bona fide leave of absence (other than an approved personal leave) and shall be deemed to cease Continuous Service upon the expiration of the applicable three (3)-month or seven (7)-month period.

- In no event, however, shall Participant be deemed, for vesting purposes hereunder, to remain in Continuous Service beyond the earlier of (i) the expiration date of that leave of absence, unless Participant returns to active Continuous Service or Employee status on or before that date or (ii) the date Participant’s Continuous Service or Employee status actually terminates by reason of his or her voluntary or involuntary termination or by reason of his or her death or disability.

11. Compliance with Laws and Regulations . The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all Applicable Laws relating thereto.

12. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most current address then indicated for Participant on the Corporation’s employee records or shall be delivered electronically to Participant through the Corporation’s electronic mail system or through an on-line brokerage firm authorized by the Corporation to effect sales of the Common Stock issued hereunder. All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

13. Successors and Assigns . Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, Participant’s assigns, the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

14. Construction . This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

15. Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

16. Employment at Will . Nothing in this Agreement or in the Plan shall confer upon Participant any right to remain in Continuous Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Related Entity employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s Continuous Service at any time for any reason, with or without Cause.

17. Plan Prospectus . The official prospectus for the Plan is available on the Corporation’s intranet at: http://gnet/ HR/stocks_new.asp . Participant may also obtain a printed copy of the prospectus by contacting Stock Administration either through the internet at stockadministration@gilead.com or by telephoning 650-522-5517.

18. Participant Acceptance . Participant must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall any shares of Common Stock be issued under this Agreement in the absence of such acceptance.

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.


GILEAD SCIENCES, INC.

By:
Title:

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board acting in its capacity as administrator of the Plan.

B. Agreement shall mean this Performance Share Award Agreement.

D. Award shall mean the award of Performance Shares made to Participant pursuant to the terms of this Agreement.

E. Award Date shall mean the date the Performance Shares are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

F. Board shall mean the Corporation’s Board of Directors.

G. Cause shall have the meaning assigned to such term in Section 11(c) of the Plan.

H. Change in Control shall mean a change in ownership or control of the Corporation effected through the consummation of any of the following transactions:

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

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(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation’s incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to the formation of such entity. Should such holding company structure or other Parent entity be established for the Corporation, then subparagraph (iv) shall be applied solely to the board of directors of that holding company or Parent entity.

I. Code shall mean the Internal Revenue Code of 1986, as amended.

J. Common Stock shall mean shares of the Corporation’s common stock.

K. Constructive Termination shall have the meaning assigned to such term in Section 11(d) of the Plan.

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L. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however , that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include a member of the board of directors of a Related Entity.

M. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Participant shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Participant is performing such services ceases to remain a Related Entity of the Corporation, even though Participant may subsequently continue to perform services for that entity. In jurisdictions requiring notice in advance of an effective termination of Participant’s service as an Employee, Director or Consultant, Continuous Service shall be deemed to terminate upon the actual cessation of such service to the Corporation or a Related Entity notwithstanding any required notice period that must be fulfilled before Participant’s termination as an Employee, Director or Consultant can be effective under Applicable Laws.

N. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

O. Director shall mean a member of the Board.

P. Employee shall mean an individual who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

Q. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported), as quoted on the Stock Exchange serving as the primary trading market for the Common Stock, on the last market trading day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

R. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

S. Participant shall mean the person to whom the Award is made pursuant to the Agreement.

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T. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U. Performance Goals shall mean the performance goals specified on attached Schedule I which must be attained in order to satisfy the performance vesting requirements for the shares of Common Stock subject to this Award.

V. Performance Period shall mean the period specified on attached Schedule I over which the attainment of the Performance Goals is to be measured.

W. Performance-Qualified Shares shall mean the maximum number of shares of Common Stock in which Participant can vest based on the level at which the Performance Goals for the Performance Period are attained and shall be calculated in accordance with the provisions of this Agreement. In no event shall the number of such Performance-Qualified Shares exceed two hundred percent (200%) of the number of Performance Shares designated in Paragraph 1 of this Agreement.

X. Performance Share shall mean the phantom shares of Common Stock awarded under this Agreement which will entitle Participant to receive one or more actual shares of Common Stock pursuant to this Award upon the satisfaction of the performance and Continuous Service vesting requirements applicable to such Award.

Y. Permanent Disability shall mean the inability of Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

Z. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended.

AA. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Participant provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least fifty percent (50%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain.

BB. Retirement shall mean the Participant’s cessation of Employee status on or after the date on which his or her combined age and years of Continuous Service equal or exceed seventy (70) years.

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CC. Separation from Service shall mean the Participant’s cessation of Employee status by reason of his or her death, retirement or termination of employment. The Participant shall be deemed to have terminated employment for such purpose at such time as the level of his or her bona fide services to be performed as an Employee (or as a consultant or independent contractor) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter period for which he or she may have rendered such services). Solely for purposes of determining when a Separation from Service occurs, Participant will be deemed to continue in “Employee” status for so long as he or she remains in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. “Employer Group” means the Corporation and any Parent or Subsidiary and any other corporation or business controlled by, controlling or under common control with, the Corporation, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.4.14(c)-2 of the Treasury Regulations. Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code.

DD. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

EE. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

FF. Vesting Schedule shall mean the schedule set forth in Paragraph 1 of the Agreement, pursuant to which the Performance Shares and the underlying shares of Common Stock are to vest upon the satisfaction of the performance and Continuous Service vesting requirements applicable to this Award.

GG. Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting and issuance of the shares of Common Stock which vest under of the Award, any phantom dividend equivalents distributed with respect to those shares and any other amounts distributable in replacement or substitution of such shares.

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SCHEDULE I

PERFORMANCE GOALS AND PERFORMANCE PERIOD

PERFORMANCE PERIOD

The measurement period for the Performance Shares awarded to Participant shall be the three-year period beginning January 1, 2009 and ending December 31, 2011 (the “Performance Period”)

PERFORMANCE GOALS FOR PERFORMANCE VESTING

Performance Goal One – Total Shareholder Return: The first performance vesting requirement for the Performance Shares awarded to Participant shall be tied to the percentile level at which the total shareholder return (including stock price appreciation and reinvestment of any cash dividends or other stockholder distributions) to the Corporation’s stockholders over the Performance Period stands in relation to the total shareholder return realized for that period by the companies comprising the AMEX BioPharma Index.

For such purpose, the total shareholder return (“TSR”) shall be determined pursuant to the following formula:

TSR = ( Ending Stock Price*- Beginning Stock Price**) + Reinvested Dividends***

Beginning Stock Price**

* Ending Stock Price is the average daily closing price per share calculated for all trading days within the entire duration of the Performance Period

** Beginning Stock Price is the average daily closing price per share calculated for all trading days within the 2008 calendar year

*** Reinvested Dividends shall be calculated by multiplying (i) the aggregate number of shares (including fractional shares) that could have been purchased during the Performance Period had each cash dividend paid on a single share during that period been immediately reinvested in additional shares (or fractional shares) at the closing selling price per share on the applicable dividend payment date by (ii) the average daily closing price per share calculated for the entire duration of the Performance Period.

Each of the foregoing amounts shall be equitably adjusted for stock splits, stock dividends, recapitalizations and other similar events affecting the shares in question without the issuer’s receipt of consideration.

For companies in the AMEX BioPharma Index which are not on a calendar fiscal year, TSR will be measured on the basis of their four fiscal quarters each year that coincide with the Corporation’s calendar fiscal year.

Should a Change in Control occur during the Performance Period, then TSR will be measured on the basis of daily closing prices and reinvested dividends over an abbreviated Performance Period ending with the Corporation’s last complete fiscal quarter coincident with or immediately preceding the effective date of that Change in Control.

Performance Goal Two – Revenue Growth: The second performance vesting requirement for the Performance Shares shall be tied to the percentile level at which Corporation’s revenue growth for that same 3-year period stands in relation to the revenue growth realized for that period by the companies comprising the AMEX BioPharma Index.

For such purpose, revenue growth shall be determined pursuant to the following formula:

Revenue Growth = (Ending Revenue** - Beginning Revenue*)

Beginning Revenue*

* Ending Revenue is the annual revenue recognized for financial reporting purposes (on a consolidated basis) for the last completed calendar year in the Performance Period.

** Beginning Revenue is the annual revenue recognized for financial reporting purposes (on a consolidated basis) for the 2008 calendar year.

Revenue Growth shall be calculated for the Corporation and each company comprising the AMEX BioPharma Index on a calendar fiscal year basis, whether or not that company is on a calendar fiscal year. Accordingly, for each non-calendar fiscal year company, Ending Revenue shall be measured on the basis of its four fiscal quarters falling within the 2011 calendar year.

Should a Change in Control occur during the Performance Period, then Ending Revenue for the Corporation and each company comprising the AMEX BioPharma Index shall be calculated by multiplying (i) the quarterly revenue for each such company for the fiscal quarter ending coincident with or immediately prior to the effective date of the Change in Control by four (4).

Performance-Qualified Shares: The actual number of Performance-Qualified Shares may range from 0% to 200% of the number of Performance Shares designated in Paragraph 1 of this Agreement, with the actual percentage to be determined on the basis of the percentile level at which the Administrator certifies that each Performance Goal has been attained in relation to the corresponding Performance Goal for the companies comprising the AMEX BioPharma Index; provided, however , that the maximum number of the shares of the Corporation’s common stock that may qualify as Performance-Qualified Shares may not exceed 200% of the number of Performance Shares designated in Paragraph 1 of this Agreement.

Matrix for Determining Number of Performance-Qualified Shares Based on Attained Levels of Performance Goals: The number of shares of the Corporation’s common stock that may qualify as Performance-Qualified Shares on the basis of the certified percentile levels of attainment shall be calculated by multiplying the number of Performance Shares designated in Paragraph 1 of this Agreement by the applicable percentage determined in accordance with the following matrix:

TSR of Corporation vs. AMEX BioPharma Index


³ 80th percentile	100.0%	110.0%	150.0%	175.0%	200.0%

60th to 79th percentile	75.0%	85.0%	125.0%	150.0%	175.0%

40th to 59th percentile	50.0%	60.0%	100.0%	125.0%	150.0%

20th to 39th percentile	10.0%	20.0%	60.0%	85.0%	110.0%

< 20th percentile	0.0%	10.0%	50.0%	75.0%	100.0%
	< 20th percentile	20th to 39th percentile	40th to 59th percentile	60th to 79th percentile	³ 80th percentile

Revenue Growth of Corporation vs. AMEX BioPharma Index

Exhibit 10.26

INDIVIDUAL GOALS

GILEAD SCIENCES, INC.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

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

NOW, THEREFORE , the Corporation hereby awards Restricted Stock Units to Participant upon the following terms and conditions:

1. Grant of Restricted Stock Units . The Corporation hereby awards to Participant, as of the Award Date, Restricted Stock Units under the Plan. Each Restricted Stock Unit represents the right to receive one share of Common Stock on the vesting date of that unit. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting schedule for those shares, the dates on which those vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

AWARD SUMMARY


Participant :

Award Date :		, 20

Number of Shares Subject to Award :		shares of Common Stock (the “Shares”)

Vesting Schedule :

The vesting of the Shares shall be tied to the attainment of the Performance Objectives set forth in attached Schedule I and the Participant’s Continuous Service through the Completion Date of each Performance Objective. The Performance Objectives shall be equally weighted in that the number of Shares allocated to each Performance Objective shall be determined by dividing the total number of such Shares by the ( ) Performance Objectives, and the number of Shares so allocated to each Performance Objective shall be designated the “Pro-Rated Shares.”

Participant shall, within fifteen (15) days after the attainment of each Performance Objective, notify the Administrator of the Completion Date of that Performance Objective. Within forty-five (45) days after receipt of such notice, the Administrator shall, in its sole discretion, determine and certify whether that Performance Objective has in fact been attained. Upon the Administrator’s certification that the Performance Objective has been attained, the Pro-Rated Shares allotted to that Performance Objective shall vest; provided, however that Participant shall not vest in any portion of those Pro-Rated Shares unless Participant remained in Continuous Service through the Completion Date for that Performance Objective (the “Normal Vesting Schedule”).

Should the Administrator determine that one or more Performance Objectives has not been attained prior to the latest Completion Dates for those Performance Objectives, then Participant shall not vest in any of the Pro-Rated Shares allotted to those Performance Objectives, and this Award shall be cancelled with respect to the Restricted Stock Units covering those Pro-Rated Shares.

One or more Shares may also vest accordance with the special vesting provisions of Paragraph 3 or 5 of this Agreement, whether or not the Performance Objectives allotted to those Shares are attained.

Issuance Schedule :

Each allotment of Pro-Rated Shares in which Participant vests in accordance with the Normal Vesting Schedule shall be issued on the date that Pro-Rated Share allotment so vests or as soon thereafter as administratively practicable, but in no event later than the later of (i) the close of the calendar year in which the Completion Date for that Pro-Rated Share allotment occurs or (ii) the fifteenth day of the third calendar month following such Completion Date (the “Issuance Date”). Each allotment of Pro-Rated Shares that vests pursuant to the special vesting provisions of Paragraph 3 or 5 of this Agreement shall be issued in accordance with the applicable provisions of such Paragraph. The Corporation shall collect the applicable Withholding Taxes with respect to the issued Shares pursuant to the procedures set forth in Paragraph 7 of this Agreement.

2. Limited Transferability . Prior to the actual issuance of the Shares which vest hereunder, Participant may not transfer any interest in the restricted stock units subject to the Award or the underlying Shares or pledge or otherwise hedge the sale of those units or Shares, including (without limitation) any short sale or any acquisition or disposition of any put or call option or other instrument tied to the value of those Shares. However, any Shares which vest hereunder but otherwise remain unissued at the time of Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws of inheritance or to Participant’s designated beneficiary or beneficiaries of this Award. Participant may also direct the Corporation to record the ownership of any Shares which in fact vest and become issuable hereunder in the name of a revocable living trust established for the exclusive benefit of Participant or Participant and his or her spouse. Participant may make such a beneficiary designation or ownership directive at any time by filing the appropriate form with the Plan Administrator or its designee.

3. Continuous Service Requirement .

(a) Should Participant’s Continuous Service terminate for any reason other than death or Permanent Disability prior to the latest Completion Dates for one or more Performance Objective that have not otherwise been attained, then the Award shall be immediately cancelled with respect to the Pro-Rated Shares allocated to those Performance Objective, and the number of Restricted Stock Units will be reduced accordingly. Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units.

(b) Should Participant’s Continuous Service terminate by reason of death or Permanent Disability prior to the latest Completion Dates for one or more Performance Objectives that have not otherwise been attained, then Participant shall vest in a portion of the Pro-Rated Shares allotted to each of those particular Performance Objectives. The portion of Pro-Rated Shares in which Participant shall vest with respect to each such Performance Objective shall be determined by multiplying the number of those Pro-Rated Shares by a fraction, the numerator of which is the number of months (rounded to the next whole month) in which Participant remained in Continuous Service following the Award Date, and the denominator of which is the number of months (rounded to the closest whole number) in the period beginning with the Award Date and ending with the latest Completion Date for that particular Performance Objective. The Pro-Rated Shares in which Participant so vests shall be issued within thirty (30) days after the date on which the Participant’s Continuous Service terminates, but in no event later than the later of (i) the close of the calendar year in which such termination of Continuous Service occurs or (ii) the fifteenth day of the third calendar month following such termination date (the “Issuance Date”).

4. Stockholder Rights and Dividend Equivalents .

(a) The holder of this Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the Shares subject to the Award until Participant becomes the record holder of those Shares following their actual issuance after the Corporation’s collection of the applicable Withholding Taxes.

(b) Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary and whether payable in cash, securities (other than Common Stock) or other property, be declared and paid on the outstanding Common Stock while one or more Shares remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the Shares at the time subject to this Award had they been issued and outstanding and entitled to that dividend or distribution. As one or more Shares subsequently vest hereunder upon the satisfaction of the applicable vesting requirements, the phantom dividend equivalents credited to those particular Shares in the book account shall vest and be distributed to Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution or in such other form as the Administrator deems appropriate under the circumstances) concurrently with the issuance of those vested Shares. However, such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution. Should Participant cease Continuous Service prior to vesting in one or more Shares, then the phantom dividend equivalents credited to those Shares shall be cancelled, and Participant shall thereupon cease to have any further right or entitlement to those cancelled amounts.

5. Change of Control .

(a) To the extent (i) a Change in Control is consummated prior to the latest Completion Dates for one or more Performance Objectives that have not otherwise been attained and (ii) Participant remains in Continuous Service through the effective date of that Change in Control, then the Pro-Rata Shares allotted to each of those particular Performance Objectives shall immediately vest at the time of such Change in Control and shall be issued immediately on the effective date of such Change in Control or as soon as administratively practicable thereafter, but in no event more than fifteen (15) business days after such effective date, or will otherwise be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of the Change in Control and distributed at the same time as such stockholder payments, but in no event shall such distribution to Participant be completed later than the later of (i) the end of the calendar year in which such Change in Control is effected or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the effective date of that Change in Control (the “Issuance Date”). Each issuance or distribution made under this Paragraph 5 shall be subject to the Corporation’s collection of the applicable Withholding Taxes.

outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable and proportional adjustments shall be made by the Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change and thereby prevent a dilution or enlargement of benefits hereunder. In making such equitable and proportional adjustments, the Administrator shall take into account any amounts to be credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and the determination of the Administrator shall be final, binding and conclusive. In the event of a Change in Control, the provisions of Paragraph 5 shall be controlling.

7. Issuance of Shares of Common Stock .

(a) The Corporation shall, on the applicable Issuance Date, issue to or on behalf of Participant a certificate (which may be in electronic form) for the shares of Common Stock in which Participant vests pursuant to the Normal Vesting Schedule set forth in Paragraph 1 or the special vesting provisions of Paragraph 3 or 5 and shall concurrently distribute to the Participant any phantom dividend equivalents with respect to those Shares.

(b) Except as otherwise provided in Paragraph 3(b) or 5(a), no shares of Common Stock shall be issued prior to the Completion Date of the Performance Objective to which those shares are allotted.

(c) The Corporation shall collect the Withholding Taxes with respect to each distribution of phantom dividend equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld.

(d) Unless Participant (i) otherwise makes satisfactory arrangements with the Corporation’s Human Resources Department, not later than forty-five (45) days prior to the applicable vesting date of the shares which become issuable hereunder, to pay the applicable Withholding Taxes through the delivery of a check payable to the Corporation in the amount of such Withholding Taxes and (ii) in fact delivers such check to the Corporation not later than that vesting date, the Corporation shall collect the applicable Withholding Taxes through the following automatic share withholding method:

- On the applicable Issuance Date, the Corporation shall withhold, from the vested shares otherwise issuable to Participant at that time, a portion of those shares with a Fair Market Value (measured as of the issuance date) equal to the applicable Withholding Taxes; provided, however , that the number of shares which the Corporation shall be required to so withhold shall not exceed in Fair Market Value the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to supplemental taxable income.

(e) Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all restricted stock units which vest under the Award shall be made solely in shares of Common Stock. In no event, however, shall any fractional shares be issued. Accordingly, the total number of shares of Common Stock to be issued at the time the Award vests shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

8. Deferred Issue Date . Notwithstanding any provision to the contrary in this Agreement, to the extent this Award may be deemed to create a deferred compensation arrangement under Code Section 409A, then the following limitations shall apply:

- No Shares or other amounts which become issuable under this Agreement by reason of Participant’s cessation of Continuous Service shall actually be issued to Participant until the date of Participant’s Separation from Service or as soon thereafter as administratively practicable, but in no event later than the later of (i) the close of the calendar year in which such Separation from Service occurs or (ii) the fifteenth day of the third calendar month following the date of such Separation from Service.

- No Shares or other amounts which become issuable under this Agreement by reason of Participant’s cessation of Continuous Service shall actually be issued to a Participant prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of his or her Separation from Service or (ii) the date of his or her death, if the Participant is, pursuant to procedures established by the Administrator, deemed at the time of such Separation from Service to be a “specified employee” within the meaning of that term under Code Section 416(i) and such delayed issuance is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable deferral period, all Shares or other amounts deferred pursuant to this Paragraph 8 shall be issued in a lump sum to the Participant.

9. Leaves of Absence . For purposes of the Normal Vesting Schedule set forth in Paragraph 1 of this Agreement, Participant shall be deemed to remain in Continuous Service during any period Participant is on a military leave, sick leave or other personal leave approved by the Corporation. However, for purposes of applying the special vesting acceleration provisions of Paragraphs 3(b) and 5(a), Participant shall be deemed to have ceased Continuous Service upon the commencement date of any leave of absence and not to remain in Continuous Status during the period of that leave, except to the extent otherwise required by law or pursuant to the following policy:

- In the event Participant is on such an approved or bona fide leave of absence, he or she shall in all events be deemed to cease Continuous Service upon the earlier of (i) the expiration date of that leave of absence, unless Participant returns to active Continuous Service on or before that date, or (ii) the date Participant’s Continuous Service actually terminates by reason of his or her voluntary or involuntary termination or by reason of his or her death or disability.

10. Compliance with Laws and Regulations . The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all Applicable Laws relating thereto.

11. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most current address then indicated for Participant on the Corporation’s employee records or shall be delivered electronically to Participant through the Corporation’s electronic mail system or through an on-line brokerage firm authorized by the Corporation to effect sales of the Common Stock issued hereunder. All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

12. Successors and Assigns . Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, Participant’s assigns, the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

13. Construction . This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

14. Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

15. Employment at Will . Nothing in this Agreement or in the Plan shall confer upon Participant any right to remain in Continuous Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Related Entity employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s Continuous Service at any time for any reason, with or without cause.

16. Plan Prospectus . The official prospectus for the Plan is available on the Corporation’s intranet at: http://gnet/ finance/ . Participant may also obtain a printed copy of the prospectus by contacting Stock Administration either through the internet at stockadministration@gilead.com or by telephoning 650-522-5517.

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.


GILEAD SCIENCES, INC.

By:
Title:

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board in its capacity as administrator of the Plan.

B. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

D. Award shall mean the award of Restricted Stock Units made to Participant pursuant to the terms of this Agreement.

E. Award Date shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

F. Board shall mean the Corporation’s Board of Directors.

G. Change in Control shall mean a change in ownership or control of the Corporation effected through the consummation of any of the following transactions:

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

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of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders; or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation’s incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to the formation of such entity.

F. Code shall mean the Internal Revenue Code of 1986, as amended.

G. Common Stock shall mean shares of the Corporation’s common stock.

H. Completion Date shall mean, for each Performance Objective, the date on which that Performance Objective is attained and shall in no event be later than the latest date specified for completion of that Performance Objective in attached Schedule I.

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J. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Participant shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Participant is performing such services ceases to remain a Related Entity of the Corporation, even though Participant may subsequently continue to perform services for that entity. In jurisdictions requiring notice in advance of an effective termination of Participant’s service as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of such service to the Corporation or a Related Entity notwithstanding any required notice period that must be fulfilled before Participant’s termination as an Employee, Director or Consultant can be effective under Applicable Laws.

L. Director shall mean a member of the Board.

N. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported), as quoted on the Stock Exchange serving as the primary trading market for the Common Stock, on the last market trading day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

O. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

P. Normal Vesting Schedule shall mean the schedule set forth in Paragraph 1 of the Agreement, pursuant to which the Restricted Stock Units and the underlying Shares are to vest in one or more allotments upon the satisfaction of the performance and Continuous Service vesting requirements applicable to that allotment.

Q. Participant shall mean the person to whom the Award is made pursuant to the Agreement.

R. Parent shall mean a “parent corporation,” whether now existing or hereafter established, as defined in Section 424(e) of the Code.

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S. Performance Objectives shall mean the various performance objectives specified on attached Schedule I which must be attained in order to satisfy the applicable performance vesting requirements for the shares of Common Stock subject to this Award.

T. Permanent Disability shall mean the inability of Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or to be of continuous duration of twelve (12) months or more.

U. Plan shall mean the Corporation’s 2004 Equity Incentive Plan, as amended from time to time.

V. Related Entity shall mean (i) any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Participant provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least fifty percent (50%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain.

W. Restricted Stock Unit shall mean the right to receive one share of Common Stock pursuant to this Award upon the satisfaction of the performance and/or Continuous Service vesting requirements to which that right is subject.

X. Separation from Service shall mean the Participant’s cessation of Employee status by reason of his or her death, retirement or termination of employment. The Participant shall be deemed to have terminated employment for such purpose at such time as the level of his or her bona fide services to be performed as an Employee (or as a consultant or independent contractor) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter period for which he or she may have rendered such services). Solely for purposes of determining when a Separation from Service occurs, Participant will be deemed to continue in “Employee” status for so long as he or she remains in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. “Employer Group” means the Corporation and any Parent or Subsidiary and any other corporation or business controlled by, controlling or under common control with, the Corporation, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.4.14(c)-2 of the Treasury Regulations. Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code.

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Y. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

Z. Subsidiary shall mean a “subsidiary corporation,” whether now existing or hereafter established, as defined in Section 424(f) of the Code.

AA. Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the issuance of the shares of Common Stock which vest under the Award and any phantom dividend equivalents distributed with respect to those shares.

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SCHEDULE I

PERFORMANCE OBJECTIVES AND COMPLETION DATES

Performance Objective One and Latest Completion Date

Performance Objective Two and Latest Completion Date

Performance Objective Three and Latest Completion Date

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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:

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;

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;

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

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

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

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

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

Date: August 5, 2009

/ S / J OHN C. M ARTIN

John C. Martin, Ph.D.

Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Robin L. Washington, certify that:

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

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

Date: August 5, 2009

/ S / R OBIN L. W ASHINGTON

Robin L. Washington

Senior Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), John C. Martin, Ph.D., the Chairman and Chief Executive Officer of Gilead Sciences, Inc. (the Company), and Robin L. Washington, the Senior Vice President and Chief Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2009, to which this Certification is attached as Exhibit 32 (the Periodic Report), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

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

Dated: August 5, 2009


/ S / J OHN C. M ARTIN				/ S / R OBIN L. W ASHINGTON
John C. Martin, Ph.D. Chairman and Chief Executive Officer				Robin L. Washington Senior Vice President and Chief Financial Officer

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