International Directory of Company Histories, Vol. 54. St. JamesPress, 2003Gilead Sciences, Inc. History 1987-2002Address:333 Lakeside DriveFoster City, California 94404U.S.A.Telephone: (650) 574-3000Toll Free: 800-445-3235Fax: (650) 578-9264Website: www.gilead.comPublic CompanyIncorporated: 1987Employees: 1,027Sales: $233.80 million (2001)Stock Exchanges: NASDAQTicker Symbol: GILDNAIC: 325414 Biological Product (Except Diagnostic) Manufacturing; 541710 Research andDevelopment in the Physical, Engineering, and Life SciencesCompany Perspectives:From our inception, the people of Gilead across the United States, Europe and Australia have shared avision of advancing therapeutics for life-threatening diseases worldwide. As a leading biopharmaceuticalcompany, we have been fulfilling that vision for more than a decade--discovering, developing andcommercializing small molecule therapeutics to advance the care of patients suffering from life-threatening infectious diseases.Key Dates:1987: Gilead Sciences, Inc. is founded by Michael Riordan, M.D.1992: The company completes its initial public offering of stock.1996: The FDA approves the sale of Vistide.1999: Gilead acquires NeXstar Pharmaceuticals, Inc.2001: Gilead receives FDA approval for Viread, an HIV treatment drug.2002: Gilead announces that it will acquire Triangle Pharmaceuticals, Inc.
Company History:Gilead Sciences, Inc. is a biotechnology company specializing in developing and marketing drugs to treatantiviral diseases. Gileads primary focus is in developing treatments for the human immunodeficiencyvirus (HIV), a virus that causes acquired immune deficiency syndrome (AIDS) and infections related toAIDS. The company markets Vistide, used to treat eye infections, and Viread, an HIV treatment. Asidefrom its work related to HIV and AIDS, Gilead also markets a drug to treat the flu, a pharmaceuticalmarketed by the company as Tamiflu, and a drug to treat fungal infections, which is marketed under thename AmBisome.OriginsGilead drew its strategic focus from its founder, Michael Riordan. Riordan, who started Gilead when hewas 29 years old, earned his medical degrees from Johns Hopkins University and Harvard. With hisdegrees in hand, Riordan entered the realm of finance, a seemingly incongruent career choice thatproved indispensable to Gileads financial well-being. Riordan spent a year working for Menlo Ventures,learning the vagaries of venture capitalism. As his success in finding funding for Gilead would reflect,Riordan proved to be an adept venture capitalist. Gilead, as a pharmaceutical developer, would requiresubstantial amounts of capital to finance its research, capital that could not be recouped for years,perhaps even decades. Riordan directed the companys research toward the discovery of drugs designedto cure or to mitigate the effects of viral diseases, particularly sexually transmitted diseases (STDs), andnotably the most notorious of all STDs, HIV. For the name of his company, Riordan drew his inspirationfrom the history of the ancient Middle East, where a region known as Gilead gained recognition for amedication called the balm of Gilead, considered the worlds first genuine pharmaceutical product.Riordan founded Gilead in June 1987. The following year he raised $2 million from his venture capitalistsources. With the infusion of capital, Riordan moved the company to Foster City, California, where Gileadscientists focused their efforts on developing pharmaceuticals to fight viral diseases, cardiovasculardisease, and cancer. The companys research centered on what were known as "anti-sense" drugs,which were believed to have the potential to block the genetic messages that trigger disease. The fieldwas promising but, like all business pursuits characterized as promising, the financial rewards werespeculative. Riordan was gambling on future discoveries and future rewards.In 1989, a year after Riordan raised $2 million to finance Gileads relocation to Foster City, he succeededin raising $10 million in venture capital. Gilead did not generate any revenues, as expected, until the endof its fiscal year in March 1991. For the year, the company collected $1.3 million in revenue, but the first-time gross was offset by a $4 million loss. Financially, Gileads progress was bleak during its formativedecade of existence. The company posted annual losses consistently, but the red ink did not dissuadeventure capitalists from banking on the promise of Gileads pharmaceutical discoveries gaining entry intothe market. In September 1991, Riordan secured $20 million in private equity financing, bolsteringGileads research and development coffers. The $20 million private placement was part of the more than$40 million Riordan secured from financial institutions, a figure that included funds received from thecompanys partnership with the respected $3.5 billion English drug conglomerate Glaxo Holdings PLC.From Glaxo, Gilead received $8 million to develop genetic code-blockers to combat cancer.Several months after securing $20 million in private equity financing, Riordan began preparing forGileads debut in the public spotlight. In December 1991, the company filed with the Securities andExchange Commission for its initial public offering (IPO). The IPO was slated to be completed in January1992, at which point the company hoped to raise $42 million. As Riordan prepared to turn to Wall Streetas a source of research and development capital, Gilead scientists were hard at work developing smallmolecule antiviral therapeutics, research that was based on nucleotide compounds that had beenlicensed from two European academic laboratories. Toward the end of January 1992, Gilead completedits IPO, an offering that resulted in $86.25 million in proceeds. The investing public appeared willing to
take a gamble on Gileads future success. Gileads IPO would not be the last time Riordan turned to WallStreet for cash.Roughly six months after Gileads debut on the NASDAQ, the company had yet to introduce apharmaceutical product. Instead, revenue was derived from research and development projectsconducted in partnership with other parties. The companys work to combat cancer, undertaken at thebehest of Glaxo, represented one such project. By mid-1992, the company also was working on aprogram tied to the U.S. Defense Departments Advanced Research Projects Agency. Under thespecifications of the project, Gilead scientists were charged with developing drugs to combat malaria,Dengue fever, and other tropical diseases. Of particular importance during this juncture of the companyshistory was its work on CMV retinitis, an AIDS-related eye disease. During the first half of 1992, Gileadfiled an investigational new drug application with the U.S. Food and Drug Administration (FDA) covering acompound, cidofovir injection, for the treatment for CMV retinitis. The compound was branded as Vistideby Gilead, a product that would figure prominently in the companys future.In 1995, after waiting eight years and spending $93.3 million on drug research and development, Gileadwas ready to introduce its first product on the market. The company applied to the FDA for approval ofVistide in October 1995, which, when approved by the FDA, would thrust Gilead into a market estimatedto be worth $150 million in annual revenue. In December 1995, the company submitted an equivalentapplication to the European Medicines Evaluation Agency. Vistide, according to the companys claims,represented a breakthrough, one that potentially could increase the size of the CMV retinitis market.Unlike the other treatments available on the market, foscarnet and ganciclovir, which required surgicallyinserted catheters, Vistide was administered intravenously. His long wait nearly over, Riordan hoped toobtain FDA approval within six months, setting the stage for Vistides debut in the U.S. market for late1996.As expectations rose for the introduction of Vistide, Gilead had yet to generate any profits. During fiscal1995, it generated $4.9 million in revenue thanks to its collaborative relationship with Glaxo, but otherwisethe financial highlights of Gileads first eight years of business were nonexistent. Despite the seeminglyprecarious position held by Gilead, Riordan found himself surrounded by money. A secondary publicoffering in August 1995 raised $94.2 million, giving the companys founder and chief executive officernearly $160 million to use to market Vistide and Gileads other antiviral drugs.1996: The Debut of VistideAs Gilead braced itself for the market introduction of Vistide and while it tended to the development of theother drugs in its portfolio, the desire for additional cash did not abate. In February 1996, the companycompleted its fourth public offering, issuing four million shares of stock that yielded net proceeds of$162.5 million. The stockpiled financial resources found expression in June 1996, when the FDA gave itsnod of approval. The federal agency gave its approval of Vistides use for the treatment of CMV retinitis inpatients suffering from AIDS, triggering a quick response from Gileads Roster City headquarters. Withinhours of the FDAs approval, the company began shipping Vistide to wholesaler and specialty distributorsnationwide, with sales spearheaded by a network of agents Gilead referred to as "Antiviral Specialists."One month later, the company prepared for a similar rollout of Vistide in foreign markets, signing anagreement with pharmaceutical giant Pharmacia & Upjohn to market the AIDs-related blindness drug inall markets outside the United States.During the latter half of the 1990s, Gileads legitimacy as a drug developer increased, as its claims ofpossessing drugs of valuable efficacy proved themselves on the market. The company grabbed theheadlines at the end of the decade when it announced the acquisition of a much larger company. InMarch 1999, the company revealed its plan to acquire Boulder, Colorado-based NeXstar PharmaceuticalsInc., a company whose 1998 sales volume of $130 million was three times Gileads total for the year. Theproposed merger, reportedly, was the result of two years of negotiations, stemming from discussions heldbetween Gilead and NeXstar officials that had begun in April 1997. For its part, NeXstar wanted toconsummate the merger because the company had decided against evolving into a full-fledged
pharmaceutical company. By completing the merger, NeXstars biochemistry scientists would be free tofocus on science, cut free from the distractions of dealing with federal regulators, the demands of WallStreet, and the concerns of delivering financial figures to appease others. Gilead, willing to accept theresponsibilities of operating as a full-fledged pharmaceutical company, desired NeXstars two revenue-generating drugs, a fungal treatment marketed as AmBisome and an anti-cancer agent used by AIDSpatients marketed as DaunoXome. Sweetening the pot for Gilead was NeXstars European and Australiansales force, which would prove useful as the company exerted itself as an international drug developerand marketer.Rapid Sales Growth During the Late 1990sAs Gilead exited the 1990s and entered the 21st century, its revenues increased at a fantastic rate.Between 1998 and 2001, the companys sales increased 501 percent, pushed upward by the growingpopularity of Gileads portfolio of pharmaceuticals. Leading the pack was AmBisome, the injectableantifungal medication that the company gained through the NeXstar merger. AmBisome generated $142million in sales in 2000. Two other drugs, Vistide and Tamiflu, an influenza treatment, also were gainingmarket share, helping to drive the companys sales upward. Looking ahead, Gilead executives wereexcited by the revenue generating potential of a new drug. In May 2001, the company applied for FDAmarket approval of Tenofovir DF, an oral tablet that blocked reverse transcriptase, an enzyme crucial tothe replication of HIV. Expectations for Tenofovirs market success were high, both inside and outside thecompany. In a May 25, 2001 interview with the San Francisco Business Times, a pharmaceutical analystremarked, "Tenofovir has the potential to generate annual sales of more than $100 million, which couldmake Gilead profitable in 2002."As its 15th anniversary approached, Gilead sharpened its focus on its expertise in infectious diseases. InNovember 2001, the company received FDA approval for a new HIV treatment drug it named Viread.Later in the month, the company sold its oncology business to OSI Pharmaceuticals, Inc. forapproximately $170 million, shedding its involvement in developing drugs to treat cancer so moreattention could be paid to infectious diseases. At roughly the same time, the company sold the use of itstechnology library to Cambridge, Massachusetts-based Archemix Corp., a two-year agreement thatnetted Gilead $17.5 million. In a November 30, 2001 interview with the San Francisco Business Times,John Martin, Gileads president and chief executive officer at the time, remarked, "This deal is animportant step for Gilead as we continue to focus on our core competence."Gileads achievements during its first 15 years of business were sufficient to ensure its place among theindustrys leading concerns. Years of research and development work, fueled by the investment ofmillions of dollars, had produced several important drugs whose market appeal had delivered sizablefinancial rewards. The sale of the companys oncology business left it focused exclusively on the antiviralmarket, providing a clear indication of which direction Gilead was pointed toward for the future. InDecember 2002, the company announced an acquisition that promised to bolster its position in theantiviral market considerably. Gilead announced that it had made a $464 million offer for TrianglePharmaceuticals, Inc. The union of the two companies was viewed as complementary, with Triangleslate-stage HIV candidate Coviracil and its collection of other HIV and chronic hepatitis B therapeuticsmeshing well with Gileads antiviral product portfolio. In anticipation of consummating the acquisition,Gilead announced that it would begin developing a co-formulation of Coviracil and Viread, its HIV drug. Ifsuccessful, the result would be the first combination product dosed as one pill taken daily.Principal Subsidiaries: Triangle Pharmaceuticals, Inc.Principal Competitors: Bristol-Meyers Squibb Company; Merck & Co., Inc.; Shire BioChem Inc.
Further Reading: Austin, Marsha, "NeXstar Deal May Mark Change in Biotech Future," Business Journal-- Serving Phoenix & The Valley of the Sun, February 18, 2000, p. 17B. Doherty, Brendan, "New AIDS Drug May Be Solid Prescription for Gileads Profitability," San Francisco Business Times, May 25, 2001, p. 53. Dubroff, Henry, "NeXstar Points Toward Biotechs Future," Denver Business Journal, March 5, 1999, p. 1A. "Gilead Sciences Inc.," Insiders Chronicle, May 4, 1992, p. 2. "Gileads Viread Gains FDA Approval," San Francisco Business Times, November 2, 2001, p. 54. Ginsberg, Steve, "Improving Its Vision," San Francisco Business Times, October 6, 1995, p. 3. Gorman, Christine, "Flu Stopper: A New Compound Is Set for Human Testing This Year," Time, February 10, 1997, p. 62. Graebner, Lynn, "Gilead in a Growth Mode," Business Journal, November 19, 1999, p. 20. "OSI Pharmaceuticals Acquires Gilead Cancer Business," Long Island Business News, November 30, 2001, p. 13A. Rauber, Chris, "Gileads Offering Seeks $42 Million," San Francisco Business Times, December 20, 1991, p. 1.Source: International Directory of Company Histories, Vol. 54. St. James Press, 2003.