Funding Universe article on Gilead Sciences, its founding by Dr Michael L Riordan, and Gilead's new medicines for AIDs and other viral diseases. 2003

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Gilead Sciences, Inc. History
Address:
333 Lakeside Drive
Foster City, California 94404
U.S.A.
Telephone: (650) 574-3000
Toll Free: 800-445-3235
Fax: (650) 578-9264
Website: www.gilead.com
Company Perspectives:
Public Company
Incorporated: 1987
Employees: 1,027
Sales: $233.80 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: GILD
NAIC: 325414 Biological Product (Except Diagnostic)
Manufacturing; 541710 Research and Development in the
Physical, Engineering, and Life Sciences
From our inception, the people of Gilead across the United States, Europe and Australia have shared a vision of advancing
therapeutics for life-threatening diseases worldwide. As a leading biopharmaceutical company, we have been fulfilling that vision
for more than a decade--discovering, developing and commercializing 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 treat antiviral diseases.
Gilead's primary focus is in developing treatments for the human immunodeficiency virus (HIV),a virus that causes acquired
immune deficiency syndrome (AIDS)and infections related to AIDS. The company markets Vistide, used to treat eye infections, and
Viread, an HIV treatment. Aside from its work related to HIV and AIDS, Gilead also markets a drug to treat the flu, a pharmaceutical
marketed by the company as Tamiflu, and a drug to treat fungal infections, which is marketed under the name AmBisome.
Origins
Gilead drew its strategic focus from its founder, Michael Riordan. Riordan, who started Gilead when he was 29 years old, earned
his medical degrees from Johns Hopkins University and Harvard. With his degrees in hand, Riordan entered the realm of finance, a
seemingly incongruent career choice that proved indispensable to Gilead's 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 require substantial amounts of capital to
finance its research, capital that could not be recouped for years, perhaps even decades. Riordan directed the company's
research toward the discovery of drugs designed to cure or to mitigate the effects of viral diseases, particularly sexually
transmitted diseases (STDs), and notably the most notorious of all STDs, HIV.For the name of his company, Riordan drew his
inspiration from the history of the ancient Middle East, where a region known as Gilead gained recognition for a medication called
the balm of Gilead, considered the world's first genuine pharmaceutical product.

2. Riordan founded Gilead in June 1987. The following year he raised $2 million from his venture capitalist sources. With the infusion
of capital, Riordan moved the company to Foster City, California, where Gilead scientists focused their efforts on developing
pharmaceuticals to fight viral diseases, cardiovascular disease, and cancer. The company's 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
field was promising but, like all business pursuits characterized as promising, the financial rewards were speculative. Riordan was
gambling on future discoveries and future rewards.
In 1989, a year after Riordan raised $2 million to finance Gilead's relocation to Foster City, he succeeded in raising $10 million in
venture capital. Gilead did not generate any revenues, as expected, until the end of 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, Gilead's progress
was bleak during its formative decade of existence. The company posted annual losses consistently, but the red ink did not
dissuade venture capitalists from banking on the promise of Gilead's pharmaceutical discoveries gaining entry into the market. In
September 1991, Riordan secured $20 million in private equity financing, bolstering Gilead's 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 the company's 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 for Gilead's debut in the public
spotlight. In December 1991, the company filed with the Securities and Exchange Commission for its initial public offering {IPO).
The IPO was slated to be completed in January 1992, at which point the company hoped to raise $42 million. As Riordan prepared
to turn to Wall Street as a source of research and development capital, Gilead scientists were hard at work developing small
molecule antiviral therapeutics, research that was based on nucleotide compounds that had been licensed from two European
academic laboratories. Toward the end of January 1992, Gilead completed its IPO, an offering that resulted in $86.25 million in
proceeds. The investing public appeared willing to take a gamble on Gilead's future success. Gilead's IPO would not be the last
time Riordan turned to Wall Street for cash.
Roughly six months after Gilead's debut on the NASDAQ, the company had yet to introduce a pharmaceutical product. Instead,
revenue was derived from research and development projects conducted in partnership with other parties. The company's work to
combat cancer, undertaken at the behest of Glaxo, represented one such project. By mid-1992, the company also was working on
a program tied to the U.S. Defense Department's Advanced Research Projects Agency. Under the specifications 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 company's history was its work on CMV retinitis, an AIDS-related eye disease. During the
first half of 1992, Gilead filed an investigational new drug application with the U.S. Food and Drug Administration {FDA)covering a
compound, cidofovir injection, for the treatment for CMV retinitis. The compound was branded as Vistide by Gilead, a product that
would figure prominently in the company's future.
In 1995, after waiting eight years and spending $93.3 million on drug research and development, Gilead was ready to introduce its
first product on the market. The company applied to the FDA for approval of Vistide in October 1995, which, when approved by the
FDA, would thrust Gilead into a market estimated to be worth $150 million in annual revenue. In December 1995, the company
submitted an equivalent application to the European Medicines Evaluation Agency. Vistide, according to the company's 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 surgically inserted catheters, Vistide was administered
intravenously. His long wait nearly over, Riordan hoped to obtain FDA approval within six months, setting the stage for Vistide's
debut in the U.S. market for late 1996.
As expectations rose for the introduction of Vistide, Gilead had yet to generate any profits. During fiscal 1995, it generated $4.9
million in revenue thanks to its collaborative relationship with Glaxo, but otherwise the financial highlights of Gilead's first eight
years of business were nonexistent. Despite the seemingly precarious position held by Gilead, Riordan found himself surrounded
by money. A secondary public offering in August 1995 raised $94.2 million, giving the company's founder and chief executive
officer nearly $160 million to use to market Vistide and Gilead's other antiviral drugs.

3. 1996: The Debut of Vistide
As Gilead braced itself for the market introduction of Vistide and while it tended to the development of the other drugs in its
portfolio, the desire for additional cash did not abate. In February 1996, the company completed 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 its nod of approval. The federal agency gave its approval of Vistide's use for the treatment of CMV
retinitis in patients suffering from AIDS, triggering a quick response from Gilead's Roster City headquarters. Within hours of the
FDA's approval, the company began shipping Vistide to wholesaler and specialty distributors nationwide, with sales spearheaded
by a network of agents Gilead referred to as "Antiviral Specialists. 11
One month later, the company prepared for a similar rollout of
Vistide in foreign markets, signing an agreement with pharmaceutical giant Pharmacia & Upjohn to market the AIDs-related
blindness drug in all markets outside the United States.
During the latter half of the 1990s, Gilead's legitimacy as a drug developer increased, as its claims of possessing drugs of valuable
efficacy proved themselves on the market. The company grabbed the headlines at the end of the decade when it announced the
acquisition of a much larger company. In March 1999, the company revealed its plan to acquire Boulder, Colorado-based NeXstar
Pharmaceuticals Inc., a company whose 1998 sales volume of $130 million was three times Gilead's total for the year. The
proposed merger, reportedly, was the result of two years of negotiations, stemming from discussions held between Gilead and
NeXstar officials that had begun in April 1997. For its part, NeXstar wanted to consummate the merger because the company had
decided against evolving into a full-fledged pharmaceutical company. By completing the merger, NeXstar's biochemistry scientists
would be free to focus on science, cut free from the distractions of dealing with federal regulators, the demands of Wall Street, and
the concerns of delivering financial figures to appease others. Gilead, willing to accept the responsibilities of operating as a full-
fledged pharmaceutical company, desired NeXstar's two revenue-generating drugs, a fungal treatment marketed as AmBisome
and an anti-cancer agent used by AIDS patients marketed as DaunoXome. Sweetening the pot for Gilead was NeXstar's European
and Australian sales force, which would prove useful as the company exerted itself as an international drug developer and
marketer.
Rapid Sales Growth During the Late 1990s
As Gilead exited the 1990s and entered the 21st century, its revenues increased at a fantastic rate. Between 1998 and 2001, the
company's sales increased 501 percent, pushed upward by the growing popularity of Gilead's portfolio of pharmaceuticals.
Leading the pack was AmBisome, the injectable antifungal medication that the company gained through the NeXstar merger.
AmBisome generated $142 million in sales in 2000. Two other drugs, Vistide and Tamiflu, an influenza treatment, also were gaining
market share, helping to drive the company's sales upward. Looking ahead, Gilead executives were excited by the revenue
generating potential of a new drug. In May 2001, the company applied for FDA market approval of Tenofovir DF,an oral tablet that
blocked reverse transcriptase, an enzyme crucial to the replication of HIV. Expectations for Tenofovir's market success were high,
both inside and outside the company. In a May 25, 2001 interview with the San Francisco Business Times, a pharmaceutical
analyst remarked, "Tenofovir has the potential to generate annual sales of more than $100 million, which could make Gilead
profitable in 2002. 11
As its 15th anniversary approached, Gilead sharpened its focus on its expertise in infectious diseases. In November 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. for approximately $170 million, shedding its involvement in developing drugs to treat cancer
so more attention could be paid to infectious diseases. At roughly the same time, the company sold the use of its technology
library to Cambridge, Massachusetts-based Archemix Corp., a two-year agreement that netted Gilead $17.5 million. In a
November 30, 2001 interview with the San Francisco Business Times, John Martin, Gilead's president and chief executive officer at
the time, remarked, "This deal is an important step for Gilead as we continue to focus on our core competence. 11
Gilead's achievements during its first 15 years of business were sufficient to ensure its place among the industry's leading
concerns. Years of research and development work, fueled by the investment of millions of dollars, had produced several
important drugs whose market appeal had delivered sizable financial rewards. The sale of the company's oncology business left it
focused exclusively on the antiviral market, providing a clear indication of which direction Gilead was pointed toward for the future.
In December 2002, the company announced an acquisition that promised to bolster its position in the antiviral market
considerably. Gilead announced that it had made a $464 million offer for Triangle Pharmaceuticals, Inc. The union of the two
companies was viewed as complementary, with Triangle's late-stage HIV candidate Coviracil and its collection of other HIV and
chronic hepatitis B therapeutics meshing well with Gilead's 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. If successful,
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.

4. Further Reading:
• Austin, Marsha, 11
NeXstar Deal May Mark Change in Biotech Future,11
Business Journal--Serving Phoenix & The Valleyof the
Sun, February 18, 2000, p. 178.
• Doherty, Brendan, "New AIDS Drug May Be Solid Prescription for Gilead's Profitability," San Francisco Business Times, May
25, 2001, p. 53.
• Dubroff, Henry, 11
NeXstar Points Toward Biotech's Future,11
Denver Business Journal, March 5, 1999, p. 1A.
•
11
Gilead Sciences lnc., 11
Insiders• Chronicle, May 4, 1992, p. 2.
•
11
Gilead's Viread Gains FDA Approval, 11
San Francisco Business Times, November 2, 2001, p. 54.
• Ginsberg, Steve, 11
lmproving Its Vision,11
San Francisco Business Times, October 6, 1995, p. 3.
• Gorman, Christine, 11
Flu Stopper: A New Compound Is Set for Human Testing This Year,11
Time, February 10, 1997, p. 62.
• Graebner, Lynn, "Gilead in a Growth Mode, 11
Business Journal, November 19, 1999, p. 20.
•
11
OSI Pharmaceuticals Acquires Gilead Cancer Business, 11
Long Island Business News, November 30, 2001, p. 13A.
• Rauber, Chris, 11
Gilead's Offering Seeks $42 Million, 11
San Francisco Business Times, December 20, 1991, p. 1.
Source: International Directory of Company Histories, Vol. 54. St. James Press, 2003.