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`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`
`FORM 10-K
`
`
`
`
`(Mark One)
`x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
`1934
`For the fiscal year ended December 31, 2011
`
`or
`¨ 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)
`
`
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`
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`
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`94-3047598
`(I.R.S. Employer Identification No.)
`94404
`(Zip Code)
`
`Delaware
`(State or other jurisdiction of incorporation or organization)
`333 Lakeside Drive, Foster City, California
`
`
`(Address of principal executive offices)
`Registrant’s telephone number, including area code: 650-574-3000
`
`SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
`
`Name of each exchange on which registered
`Title of each class
`Common Stock, $0.001 par value per share
`The Nasdaq Global Select Market
`
`SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
`
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
`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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be
`contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
`amendment to this Form 10-K. x
`Indicate by check mark whether 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. (Check one):
`Smaller reporting company ¨
`Non-Accelerated filer ¨
`Large accelerated filer x
`Accelerated filer ¨
`
`
`
`(Do not check if a 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
`The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant based upon the closing price of its
`Common Stock on the Nasdaq Global Select Market on June 30, 2011 was $ 29,933,970,092.*
`The number of shares outstanding of the registrant’s Common Stock on February 10, 2012 was 757,315,361.
`DOCUMENTS INCORPORATED BY REFERENCE
`Specified portions of the registrant’s proxy statement, which will be filed with the Commission pursuant to Regulation 14A in connection with the
`registrant’s 2012 Annual Meeting of Stockholders, to be held on May 10, 2012, are incorporated by reference into Part III of this Report.
`* Based on a closing price of $41.41 per share on June 30, 2011. Excludes 48,586,996 shares of the registrant’s Common Stock held by executive officers,
`directors and any stockholders whose ownership exceeds 5% of registrant’s common stock outstanding at June 30, 2011. Exclusion of such shares should
`not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the
`registrant or that such person is controlled by or under common control with the registrant.
`
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`Table of Contents
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`
`PART I
` Business
`Item 1
`Item 1A Risk Factors
`Item 1B Unresolved Staff Comments
` Properties
`Item 2
` Legal Proceedings
`Item 3
` Mine Safety Disclosures
`Item 4
`
`GILEAD SCIENCES, INC.
`2011 Form 10-K Annual Report
`Table of Contents
`
`PART II
` Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
`Item 5
`Item 6
` Selected Financial Data
` Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Item 7
`Item 7A Quantitative and Qualitative Disclosures about Market Risk
` Financial Statements and Supplementary Data
`Item 8
` Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`Item 9
`Item 9A Controls and Procedures
`Item 9B Other Information
`
`PART III
`Item 10
`Item 11
`Item 12
`Item 13
`Item 14
`
` Directors, Executive Officers and Corporate Governance
` Executive Compensation
` Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
` Certain Relationships and Related Transactions, and Director Independence
` Principal Accountant Fees and Services
`
`PART IV
`Item 15
` Exhibits and Financial Statement Schedules
`SIGNATURES
`
`
`2
`
` 30
` 48
` 48
` 49
` 50
`
`
` 51
` 54
` 5 6
` 78
` 80
` 80
` 80
` 81
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`
` 83
` 83
` 83
` 83
` 83
`
`
` 84
` 153
`
`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 , COMPLERA , EVIPLERA , VISTIDE , LETAIRIS , VOLIBRIS ,
`®
`®
`®
`®
`®
`®
`®
`®
`®
`®
`®
`RANEXA , CAYSTON and RAPISCAN . ATRIPLA is a registered trademark belonging to Bristol-Myers Squibb & Gilead Sciences, LLC. LEXISCAN
`®
`®
`®
`®
`is a registered trademark belonging to Astellas U.S. LLC. MACUGEN is a registered trademark belonging to Eyetech Inc. SUSTIVA is a registered
`®
`®
`trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU is a registered trademark belonging to Hoffmann-La Roche Inc. This report also includes
`®
`other trademarks, service marks and trade names of other companies.
`
`®
`
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`This Annual Report on Form 10-K, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of
`Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the
`Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934, as amended (the Exchange Act). Words such as
`“expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,”
`“should,” “might,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any
`statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends, operating cost and
`revenue trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and
`similar expressions. We have based these forward-looking statements on our current expectations about future events. 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,” beginning at
`page 30. 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 (SEC), we do not undertake, and specifically decline, any obligation to update any of these statements or to
`publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new
`information, future events, changes in assumptions or otherwise.
`
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`Table of Contents
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`PART I
`
`BUSINESS
`
`
`ITEM 1.
`Overview
`Gilead Sciences, Inc. (Gilead, we or us), incorporated in Delaware on June 22, 1987, is a research-based biopharmaceutical company that discovers,
`develops and commercializes innovative medicines in areas of unmet medical need. With each new discovery and experimental drug candidate, we seek to
`improve the care of patients suffering from life-threatening diseases around the world. Gilead’s primary areas of focus include human immunodeficiency virus
`(HIV)/AIDS, liver diseases such as hepatitis B and C and serious cardiovascular/metabolic and respiratory conditions. Headquartered in Foster City,
`California, we have operations in North America, Europe and Asia Pacific. We continue to seek to add to our existing portfolio of products through our internal
`discovery and clinical development programs and through a product acquisition and in-licensing strategy.
`
`Over the past year, we executed our philosophy and strategy to bring best-in-class drugs to market. In keeping with this strategy, we completed several
`acquisitions and licensing transactions to enhance our pipeline. We also expanded our single-tablet regimen product offerings for the treatment of HIV with the
`launch of Complera/Eviplera (emtricitabine/rilpivirine/tenofovir disoproxil fumarate) and the anticipated 2012 launch of Quad, which combines four of our
`HIV medicines in a once-daily single-tablet regimen and is pending Food and Drug Administration (FDA) approval.
`
`Our largest transaction was the acquisition of Pharmasset, Inc. in January 2012 for $11.1 billion. For several years, we have focused a large proportion
`of our research and development effort on discovering and advancing direct-acting antivirals for the treatment of chronic hepatitis C virus (HCV). The HCV
`therapeutic market has been and continues to be vastly underserved. Due to the limitations of available therapies, only a small fraction of individuals who are
`infected with HCV are diagnosed, and an even smaller fraction of those patients are treated. Prior to May 2011, when the first protease inhibitors were
`approved, only about half of the patients responded to the standard of care combination of pegylated interferon and ribavirin. The addition of protease
`inhibitors to the standard of care has resulted in incremental response rates for patients with genotype 1 infection; however, this regimen causes substantial
`side effects such as fatigue, bone marrow suppression, potentially debilitating rash, anemia and neuropsychiatric effects. As such, discontinuation rates with
`these triple therapy combinations have significantly increased.
`
`Over the last two years, we have progressed several early stage HCV molecules with various mechanisms of action into clinical development. During
`2011, the field of HCV research evolved rapidly, and it became clear our HCV portfolio of oral antiviral development compounds would have difficulty
`competing because it was behind the development programs of many of our competitors. Through our acquisition of Pharmasset, we gained ownership of GS-
`7977, the most advanced, and to date the most potent, nucleotide analog that acts to inhibit the replication of HCV with limited safety or resistance concerns
`detected thus far. The compound has been studied extensively in Phase 2 studies in genotype 2 and 3 infected patients in combination with ribavirin with or
`without pegylated interferon and is currently being studied in genotype 1 infected patients. The first of two Phase 3 trials, known as FISSION, evaluating GS-
`7977 in genotype 2 and 3 patients is currently enrolling. A second Phase 3 study of genotype 2 and 3 patients is scheduled to begin enrolling in the next few
`weeks. If Phase 3 data for genotype 2 and 3 patients is consistent with data from our Phase 2 trials, we would expect to file a new drug application (NDA) for
`the treatment of genotype 2 and 3 patients in 2013 for potential approval in late 2013 or early 2014.
`
`Two thirds of HCV-infected individuals in the United States and Europe are infected with HCV genotype 1. We are conducting Phase 2 studies to
`determine the efficacy of GS-7977 plus ribavirin in this population. Results from these studies will be available over the next several months. We expect the
`first data evaluating GS-7977 plus ribavirin for 12 weeks in genotype 1 treatment-naïve patients from an arm of the QUANTUM study with 25 patients will
`be available at the end of the first quarter of 2012. We expect that this will be followed in the second quarter by data from an arm of the ELECTRON study
`involving 25 treatment-naïve patients treated for 12 weeks and, early in the third quarter, data on GS-7977 and ribavirin treatment for 24 weeks from an arm
`of the QUANTUM study will become available.
`
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`On February 17, 2012, we announced that the majority of HCV genotype 1 patients with a prior “null” response to an interferon-containing regimen
`enrolled in an arm of our ongoing ELECTRON study experienced viral relapse within four weeks of completing 12 weeks of treatment with GS-7977 plus
`ribavirin. Ten patients were randomized to this arm of the ELECTRON study and data were available for eight of the ten patients at the time of the
`announcement. Among these eight patients, six experienced viral relapse. Two patients had not relapsed; however, they had only reached the two week post-
`treatment time point. These data indicate that treatment of genotype 1 patients classified as null responders with GS-7977 plus ribavirin for 12 weeks will not
`be sufficient to cure their disease. Regulatory authorities require that patients have a sustained viral response for 12 weeks after the cessation of therapy to be
`considered “cured” of the disease.
`
`To the extent data from the ELECTRON and QUANTUM studies indicate genotype 1 treatment-naïve patients can be effectively treated using GS-7977
`and ribavirin, larger Phase 3 studies in genotype 1 patients are expected to commence in 2012. If we are able to commence Phase 3 trials on that timeline and the
`results of those trials are positive, we expect to file a NDA that includes data for genotype 1 patients in 2013 for potential approval in 2014. If GS-7977 with
`ribavirin is not sufficiently effective in treating genotype 1 treatment-naïve patients, we would need to explore combination therapy using GS-7977 and other
`direct acting antiviral compounds from our or others’ portfolios, which would delay development and approval of GS-7977 for use in genotype 1 treatment-
`naïve patients. We expect to begin clinical studies evaluating GS-7977 in combination with our GS-5885 NS5A inhibitor in genotype 1 treatment-naïve
`patients in the second quarter of 2012.
`
`See the Risk Factor entitled “The public announcement of data from clinical studies evaluating GS-7977 in HCV-infected patients is likely to cause
`significant volatility in our stock price” on page 30.
`
`Our Products
`HIV/AIDS
` Atripla (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg) is an oral formulation dosed once a day for the treatment
`•
`of HIV infection in adults. Atripla is the first once-daily single-tablet regimen for HIV intended as a stand alone therapy or in combination with
`other antiretrovirals. It is a fixed-dose combination of our antiretroviral medications, Viread (tenofovir disoproxil fumarate) and Emtriva
`(emtricitabine), and Bristol Myers-Squibb Company’s (BMS) non-nucleoside reverse transcriptase inhibitor, Sustiva (efavirenz).
` Truvada (emtricitabine and tenofovir disoproxil fumarate) is an oral formulation dosed once a day as part of combination therapy to treat HIV
`infection in adults. It is a fixed-dose combination of our antiretroviral medications, Viread and Emtriva.
` Viread is an oral formulation of a nucleotide analog reverse transcriptase inhibitor, dosed once a day as part of combination therapy to treat HIV
`infection in patients 2 years of age and older. Viread is also approved for the treatment of chronic hepatitis B in adults.
` Complera/Eviplera is an oral formulation dosed once a day for the treatment of HIV-1 infection in treatment-naïve adults. The product,
`marketed in the United States as Complera and in Europe as Eviplera, is the second complete single-tablet regimen for the treatment of HIV and is
`a fixed-dose combination of our antiretroviral medications, Viread and Emtriva, and Tibotec Pharmaceuticals’ non-nucleoside reverse
`transcriptase inhibitor, Edurant (rilpivirine).
` Emtriva is an oral formulation of a nucleoside analog reverse transcriptase inhibitor, dosed once a day as part of combination therapy to treat
`HIV infection in adults. In the United States and Europe, Emtriva is also available as an oral solution approved as part of combination therapy to
`treat HIV infection in children.
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`•
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`Liver Disease
` Viread is an oral formulation of a nucleotide analog reverse transcriptase inhibitor, dosed once a day for the treatment of chronic hepatitis B in
`•
`adults with compensated and decompensated liver disease.
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`We have licensed to GlaxoSmithKline Inc. (GSK) the rights to commercialize Viread for the treatment of chronic hepatitis B in Asia and certain
`other territories. As noted above, Viread is also approved for the treatment of HIV infection in patients 2 years of age and older in combination with
`other antiretroviral agents.
` Hepsera (adefovir dipivoxil) is an oral formulation of a nucleotide analog polymerase inhibitor, dosed once a day to treat chronic hepatitis B in
`patients 12 years of age and older. We have licensed to GSK the rights to commercialize Hepsera for the treatment of chronic hepatitis B in Asia,
`Latin America and certain other territories.
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`Cardiovascular
` Letairis (ambrisentan) is an oral formulation of an endothelin receptor antagonist (ERA) indicated for the treatment of pulmonary arterial
`•
`hypertension (PAH) (WHO Group 1) in patients with WHO Class II or III symptoms to improve exercise capacity and delay clinical worsening.
`We sublicensed to GSK the rights to ambrisentan, marketed by GSK as Volibris (ambrisentan), for PAH in territories outside of the United
`States.
` Ranexa (ranolazine) is an extended-release tablet for the treatment of chronic angina. We have licensed to Menarini International Operations
`Luxembourg SA the rights to Ranexa in territories outside of the United States.
` Lexiscan/Rapiscan (regadenoson) injection is indicated for use as a pharmacologic stress agent in radionuclide myocardial perfusion imaging
`(MPI), a test that detects and characterizes coronary artery disease, in patients unable to undergo adequate exercise stress. Astellas US LLC has
`exclusive rights to manufacture and sell regadenoson under the name Lexiscan in the United States, subject to its obligations to pay us royalties
`based on sales of Lexiscan in the United States. Rapidscan Pharma Solutions, Inc. (RPS) holds the exclusive right to manufacture and sell
`regadenoson under the name Rapiscan in Europe and certain territories outside the United States. We receive royalties from Astellas and RPS for
`sales in these territories.
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`Respiratory
` Cayston (aztreonam for inhalation solution) is an inhaled antibiotic for the treatment of respiratory systems in cystic fibrosis (CF) patients 7
`•
`years of age and older with Pseudomonas aeruginosa (P. aeruginosa).
` Tamiflu (oseltamivir phosphate) is an oral antiviral available in capsule form for the treatment and prevention of influenza A and B. Tamiflu is
`approved for the treatment of influenza in children and adults in more than 60 countries, including the United States, Japan and the European
`Union. Tamiflu is also approved for the prevention of influenza in children and adults in the United States, Japan and the European Union. We
`developed Tamiflu with F. Hoffmann-La Roche Ltd (together with Hoffmann-La Roche Inc., Roche). Roche has the exclusive right to manufacture
`and sell Tamiflu worldwide, subject to its obligation to pay us royalties based on a percentage of the net sales of Tamiflu.
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`Other
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` AmBisome (amphotericin B liposome for injection) is a proprietary liposomal formulation of amphotericin B, an antifungal agent to treat serious
`invasive fungal infections caused by various fungal species in adults. Our corporate partner, Astellas Pharma US, Inc., promotes and sells
`AmBisome in the United States and Canada, and we promote and sell AmBisome in Europe, Australia and New Zealand.
` Vistide (cidofovir injection) is an antiviral injection for the treatment of cytomegalovirus retinitis in adult patients with AIDS.
` Macugen (pegaptanib sodium injection) is an intravitreal injection of an anti-angiogenic oligonucleotide for the treatment of neovascular age-related
`macular degeneration. Macugen was
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`developed by Eyetech Inc. (Eyetech) using technology licensed from us and is now promoted in the United States by Eyetech. Eyetech holds the
`exclusive rights to manufacture and sell Macugen in the United States, and Pfizer Inc. (Pfizer) holds the exclusive right to manufacture and sell
`Macugen in the rest of the world. We receive royalties from Eyetech based on sales of Macugen worldwide.
`
`The following table lists aggregate product sales for our major products (in thousands):
`
`
`
`
`
`
`Antiviral products:
`Atripla
`Truvada
`Viread
`Hepsera
`Complera/Eviplera
`Emtriva
`Total antiviral products
`
`AmBisome
`Letairis
`Ranexa
`Other
`
`Total product sales
`
`2011
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`
`
`
`
` $ 3,224,518
` 2,875,141
`
`
`737,867
`
`
`144,679
`
`
`38,747
`
`
`28,764
`
` 7,049,716
`
`
`330,156
`
`
`293,426
`
`
`320,004
`
`
`109,057
`
` $8,102,359
`
`% of
`Total
`Product
`Sales
`
`2010
`
`
`
`
`
` 40% $2,926,579
` 35%
` 2,649,908
` 9%
`
`732,240
` 2%
`
`200,592
`
`0%
`
`—
`
`0%
`
`27,679
` 87%
` 6,536,998
`
`4%
`
`305,856
`
`4%
`
`240,279
`
`4%
`
`239,832
` 1%
`
`66,956
` 100% $ 7,389,921
`
`% of
`Total
`Product
`Sales
`
`2009
`
`
`
`
`
` 40% $ 2,382,113
` 36%
` 2,489,682
` 10%
`
`667,510
`
`3%
`
`271,595
` —
`
`—
`
`0%
`
`27,974
` 88%
` 5,838,874
`
`4%
`
`298,597
`
`3%
`
`183,949
`
`3%
`
`131,062
` 1%
`
`16,829
` 100% $6,469,311
`
`% of
`Total
`Product
`Sales
`
`
`
` 37%
` 38%
` 10%
`
`4%
` —
`
`0%
` 90%
` 5%
`
`3%
` 2%
`
`0%
` 100%
`
`See Item 8, Note 16 to our Consolidated Financial Statements included in this Annual Report on Form 10-K, for our total revenues by geographic area.
`
`Commercialization and Distribution
`We have U.S. and international commercial sales operations, with marketing subsidiaries in Australia, Austria, Belgium, Canada, Denmark, Finland,
`France, Germany, Greece, Hong Kong, Ireland, Italy, the Netherlands, New Zealand, Norway, Poland, Portugal, South Korea, Spain, Sweden, Switzerland,
`Turkey, the United Kingdom and the United States.
`
`Our products are marketed through our commercial teams and/or in conjunction with third-party distributors and corporate partners. Our commercial
`teams promote our products through direct field contact with physicians, hospitals, clinics and other healthcare providers. We generally grant our third-party
`distributors the exclusive right to promote our product in a territory for a specified period of time. Most of our agreements with these distributors provide for
`collaborative efforts between the distributor and Gilead in obtaining and maintaining regulatory approval for the product in the specified territory.
`
`We sell and distribute Atripla, Truvada, Viread, Hepsera, Complera, Emtriva, Ranexa and Vistide in the United States exclusively through the
`wholesale channel. Our product sales to three large wholesalers, Cardinal Health, Inc., McKesson Corp. and AmerisourceBergen Corp., each accounted for
`more than 10% of total revenues for each of the years ended December 31, 2011, 2010 and 2009. On a combined basis, in 2011, these wholesalers accounted
`for approximately 79% of our product sales in the United States and approximately 43% of our total worldwide revenues. Letairis and Cayston are distributed
`exclusively by specialty pharmacies. These specialty pharmacies dispense medications for complex or chronic conditions that require a high level of patient
`education and ongoing counseling. We sell and distribute Atripla, Truvada, Viread, Hepsera, Emtriva, Complera/Eviplera, and AmBisome in Asia, Australia,
`Canada, Europe, Latin America, the Middle East and New Zealand either through our commercial teams, third-party distributors or corporate partners.
`
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`We also rely on our corporate partners to help promote and sell our products under collaboration agreements. For example, BMS has rights to promote
`Atripla in the United States. BMS also has rights to promote Atripla in a majority of the countries in Europe. In a limited number of Central and Eastern
`European countries, either Gilead, BMS or a third-party distributor is the sole promoting, selling and distributing company. Under an agreement with
`Merck & Co., Inc. (Merck), we promote and distribute Atripla in 12 countries in Latin America and Asia Pacific either through Merck or our existing third-
`party distributors. We have licensed to GSK the right to promote and sell Viread and Hepsera for the treatment of hepatitis B in certain countries outside the
`United States. We licensed the rights to manufacture and sell Tamiflu, Macugen and Lexiscan/Rapiscan worldwide to third parties, subject to our corporate
`partners’ obligation to pay us royalties based on a percentage of the sales of these products.
`
`Access in the Developing World
`Through the Gilead Access Program, established in 2003, certain of our HIV and other products are available at substantially reduced prices in 134
`countries in the developing world. We have developed a system of tiered pricing that reflects economic status, using gross national income per capita (GNI) and
`HIV prevalence. This approach allows us to price our therapies based on a country’s ability to pay.
`
`We also support many clinical studies through the donation of our products to help define the best treatment strategies in developing world countries. For
`example, we donated tenofovir for the Centre for the AIDS Programme of Research in South Africa (CAPRISA) 004 microbicide trial, which assessed the
`effectiveness and the safety of a tenofovir-based microbicide gel for the prevention of HIV infection in South African women. We also provide drugs for a
`number of innovative international studies investigating whether Viread or Truvada can prevent HIV transmission among at-risk, uninfected adults. This is a
`potential HIV prevention strategy called pre-exposure prophylaxis, or PrEP. In December 2011, we announced the submission of a supplemental NDA (sNDA)
`to the FDA for the approval of once-daily Truvada for PrEP to reduce the risk of HIV-1 infection among uninfected adults. If the sNDA is approved, Truvada
`would be the first agent indicated for uninfected individuals to reduce the risk of acquiring HIV through sex.
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`We also work closely with the World Health Organization and with non-governmental organizations to provide AmBisome for the treatment of
`leishmaniasis, a parasitic disease, at a preferential price in resource limited settings. We support numerous clinical studies investigating the role of AmBisome
`to treat visceral and cutaneous leishmaniasis in developing countries through collaborations with organizations such as the Drugs for Neglected Diseases
`initiative and Médecins Sans Frontières. We also support clinical research studies aimed at identifying the best treatment course for visceral leishmaniasis and
`donated AmBisome to support clinical studies assessing combination therapies and the cost-effectiveness of multiple visceral leishmaniasis treatment
`interventions. In December 2011, we signed a partnership agreement with World Health Organization to donate 445,000 vials of AmBisome over five years.
`This donation will be used to treat more than 50,000 patients in resource-limited countries.
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`We have also entered into a number of collaborations related to access to our products in the developing world, which include:
` PharmaChem Technologies (Grand Bahama), Ltd (PharmaChem). In 2005, PharmaChem, one of our commercial manufacturing
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`partners, established a facility in The Bahamas to manufacture tenofovir disoproxil fumarate, the active pharmaceutical ingredient in Viread and
`one of the active pharmaceutical ingredients in Atripla and Truvada, for resource limited countries through a cooperative effort with PharmaChem
`and the Grand Bahama Port Authority. This partnership increases manufacturing capacity for our HIV medicines, and improve delivery
`efficiency, since the medicines are produced in or near the markets where they are needed most.
` Aspen Pharmacare Holdings Ltd (Aspen). In 2005, we entered into a non-exclusive manufacturing and distribution agreement with Aspen,
`providing for the manufacture and distribution of Viread and Truvada for the treatment of HIV infection to certain developing world countries
`included in our Gilead Access Program. In 2007, we amended our agreement with Aspen. Under the amended
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`agreement, Aspen retained the right to manufacture and distribute Viread and Truvada for the treatment of HIV infection in these developing world
`countries. Aspen has the right to purchase Viread and Truvada in unlabeled bottles from us for distribution in such countries, and also has the
`right to manufacture Viread and Truvada using active pharmaceutical ingredient that has been purchased by Aspen from suppliers approved by
`us. Aspen was also granted the right to manufacture and distribute generic versions of emtricitabine and tenofovir disoproxil fumarate, including
`versions of tenofovir disoproxil fumarate in combination with emtricitabine for the treatment of HIV infection. Aspen is required to pay us
`royalties on net sales of Viread and Truvada, as well as royalties on net sales of generic versions of tenofovir disoproxil fumarate, including
`versions of tenofovir disoproxil fumarate in combination with generic versions of emtricitabine that are manufactured and distributed by Aspen.
` Licenses with Generic Manufacturers. In 2006, we entered into non-exclusive license agreements with thirteen Indian generic manufacturers,
`granting them the rights to produce and distribute generic versions of tenofovir disoproxil fumarate for the treatment of HIV infection to low income
`countries around the world, which includes India and many of the low income countries in our Gilead Access Program. The agreements require
`that the generic manufacturers meet certain national and international regulatory standards and include technology transfers to enable expeditious
`production of large volumes of high quality generic versions of tenofovir disoproxil fumarate. In addition, these agreements allow for the
`manufacture of commercial quantities of both active pharmaceutical ingredient and finished product. In 2011, we expanded these non-exclusive
`license agreements to increase the number of countries included in the license, and also to include rights to our future pipeline products
`elvitegravir, an investigational integrase inhibitor; cobicistat, an investigati