10-K 1 d10k.htm FORM 10-K
`
`Table of Contents
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`
`FORM 10-K
`
`(Mark One)
`
`ANNUAL REPORT PURSUANTTO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF1934
`
`Forthe fiseal year ended December31, 2010
`
`or
`
`O
`
`TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES
`EXCHANGEACTOF 1934
`
`Forthe transition period from
`
`to
`
`Commission File No. 0-19731
`
`GILEAD SCIENCES,INC.
`(Exact name ofregistrant as specified in its charter)
`
`Delaware
`(State or other jurisdiction of incorporation or organization)
`
`333 Lakeside Drive, Foster City, California
`(Address of principal executive offices)
`
`94-3047598
`(LR.S. Employer Identification No.)
`
`94404
`(Zip Code)
`
`Registrant’s telephone number, including area code: 630-574-3000
`
`SECURITIES REGISTERED PURSUANTTO SECTION 12(b) OF THE ACT:
`Title of each class
`Nameof each exchange on whichregistered
`Common Stock, $0.001 par value per share
`The Nasdaq Global Select Market
`SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
`
`
`
`
`
`
`
`
`
`ndicate by check mark ifthe registrant 1s a well-known seasonedissuer, as defined in Rule 405 ofthe Securities
`Act. Yes
`No O
`
`ndicate by check mark ifthe registrant 1s not requiredto file reports pursuant to Section 13 or Section 15(d) ofthe
`Act. Yes O No
`
`ndicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or 15¢d) ofthe Securities
`Exchange Act of 1934 during the preceding 12 months(or [or such shorter period that the registrant was required lo [ile such reports), and
`(2) has been subject to such filing requirements for the past 90 days. Yes
`No O
`ndicate by check mark whetherthe registrant has submitted electronically and posted onits corporate Website, 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 shorterperiod that the registrant was required to submit and post such files). Yes
`No O
`ndicate by check mark ifdisclosure of delinquentfilers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein,
`and will not be contained,to the best ofregistrant’s knowledge, in definitive proxy or mformation statements incorporated by reference in
`Part III of this Form 10-K or any amendmentto this Form 10-K. O
`ndicate by check mark whether registrant 1s 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):
`
`Large accelerated filer
`
`Accelerated filer O
`
`Smaller reporting company O
`Non-Accelerated filer O
`(Do not check if a smaller reporting company)
`
`REG_NDNY00000004
`Regeneron Exhibit 1227.001
`Regeneron Exhibit 1227.001
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes O No
`‘The aggregate market valuc of the voting and non-voting common equity held by non-atfiliatcs of the registrant based upon the
`closing price of its Common Stock on the Nasdaq Global Select Market on June 30, 2010 was $25,450,411,375.*
`The numberofshares outstanding ofthe registrant’s Common Stock on February 18, 2011 was 795,264,644.
`DOCUMENTS INCORPORATED BY REFERENCE
`
`
`
`Specified portions ofthe registrant’s proxy statement, which will be filed with the Commission pursuant to Regulation 14A in
`connection with the registrant’s 2011 Annual Meeting of Stockholders, to be held on May 12, 2011, are incorporated by reference into
`Part III ofthis Report.
`*Bascd on a closing price of $34.28 per share on June 30, 2010. Excludes 96,205,183 shares ofthe registrant’s Common Stock held by
`executive officers, directors and any stockholders whose ownership exceeds 5% ofregistrant’s common stock outstanding at June 30,
`2010. 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 managementor policies ofthe registrant or that such person is controlled by or under common control with
`the registrant.
`
`REG_NDNY00000005
`Regeneron Exhibit 1227.002
`Regeneron Exhibit 1227.002
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`GILEAD SCIENCES,INC.
`
`2010 Form 10-K Annual Report
`Table of Contents
`
`Business
`Risk Factors
`Unresolved Staff Comments
`
`Properties
`Legal Proceedings
`Reserved
`
`
`Market for Registrant’s Common Liquity, Related Stockholder Matters and Issuer Purchases of Liquity Securities
`Selected Financial Data
`
`Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Quantitative and Qualitative Disclosures about Market Risk
`Financial Statements and Supplementary Data
`
`Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`Controls and Procedures
`Other Information
`
`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
`
`Exhibits and Financial Statement Schedules
`
`
`
`PARTI
`Item 1
`Item 1A
`Item 1B
`
`Item 2
`Ttem 3
`Item 4
`
`PART I
`
`Item 5
`Item 6
`
`Item 7
`Item 7A
`Item 8
`Item 9
`Item 9A
`Item 9B
`
`PART I
`
`Item 10
`Item 11
`Item 12
`Iter 13
`Item 14
`
`PART IV
`Item 15
`
`4
`28
`45
`
`AS
`46
`47
`
`
`
`48
`51
`
`52
`71
`74
`74
`74
`76
`
`716
`76
`76
`76
`76
`
`77
`
`141
`
`SIGNATURES
`
`
`
`We own or haverights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD®,
`GILEAD SCIENCEIS®, TRUVADA®, VIREAD®, HEPSERA®, AMBISOME®, MTRIVA®, VISTIDE®, LU'TAIRIS®, VOLIBRIS®,
`
`RANEXA® and CAYSTON®. ATRIPLA®is a registered trademark belonging to Bristol-Myers Squibb & Gilead Sciences, LLC.
`
`
`LEXISCAN®1s a registered trademark belonging to Astellas U.S. LLC. MACUGEMN®1s a registered trademark belonging to Eyetech Inc.
`SUSTIVA®is a registered trademark of Bristol-Myers Squibb Pharma Company. ‘TAMIFLU® 1s a registered trademark belonging to
`lloffmann-La Roche Inc. ‘This report also includes other trademarks, service marks and trade namesof other companies.
`
`
`
`REG_NDNY00000006
`Regeneron Exhibit 1227.003
`Regeneron Exhibit 1227.003
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`This Annual Report on Form 10-K, including the section entitled “Managements Discussion and Analysis ofFinancial Condition
`and Results ofOperations,” contains forward-looking statements regardingfuture events and ourfuture 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
`D2
`66
`27
`66
`9 46
`(the Exchange Act). Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,”
`“estimate,”
`“continue,”
`“may,”
`“could,” “should,” “might,” variations ofsuch words andsimilar expressions are intendedto identify
`suchforward-looking statements. In addition, any statements other than statements ofhistoricalfact are forward-looking statements,
`including statements regarding overall trends, operating cost and revenue trends, liquidity and capital needs andother 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 aboutfuture events. These statements are not guarantees offuture performance and involve
`risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materiallyfrom those suggested by these
`forward-looking statementsfor various reasons, including those identified below under “Risk Factors,” beginning at page 28. Giventhese
`risks and uncertainties, you are cautioned notto place undue reliance on forward-looking statements. The forward-looking statements
`included inthis report are made only as of the date hereof. Fxcept as required underfederal 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 orto publicly announce the results ofanyrevisions to anyforward-looking statements after the distributionof this report,
`whether as a result ofnew information, future events, changes in assumptions or otherwise.
`
`3
`
`REG_NDNY00000007
`Regeneron Exhibit 1227.004
`Regeneron Exhibit 1227.004
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`ITEM 1.
`
`BUSINESS
`
`Overview
`
`PART 1
`
`Gilead Sciences, Inc. (Gilead, we or us), incorporated in Delaware on June 22, 1987, is a biopharmaceutical company that discovers,
`develops and commercializes innovative therapeutics in areas of unmet medical need. Our missionis 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 Asia Pacific. To date, we have focused ourefforts on bringing novel therapeutics for the treatmentof life threatening diseases
`to market. 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.
`
`Our Products
`
`Arripla (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg) 1s an oral formulation dosed once a
`day for the treatment of human immunodeficiency virus (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 dayas part of combination
`therapyto treat HIV infection in adults. It is a fixed-dose combination ofour antiretroviral medications, Viread and Emtriva.
`
`Viread is an oral formulationof a nucleotide analogue reverse transcriptase inhibitor, dosed once a day as part of combination
`therapy to treat HIV infection in adults. In 2008, we received marketing approval of Viread for the treatment of chronic hepatitis
`B. We have licensed to GlaxoSmithKline Inc. (GSK) the rights to commercialize Viread for the treatment of chronic hepatitis B
`in China, Japan and Saudi Arabia.
`
`Emtriva is an oral formulation of a nucleoside analogue reverse transcriptase inhibitor, dosed once a dayas part of combination
`therapyto treat [ITV infection in adults. In the United States and Europe, Emtrivais also approvedas part of combination
`therapyto treat HIV infection in children.
`
`Hepsera (adefovir dipivoxil) is an oral formulation of a nucleotide analogue polymerase inhibitor, dosed once a day to treat
`
`chronic hepatitis B. We have licensed to GSK the rights to commercialize Hepsera for the treatment of chronic hepatitis B in
`Asia, Latin America and certain otherterritories.
`
`AmBisome (amphotericin B liposomefor injection) 1s a proprietary liposomal formulation of amphotericin B, an antifungal
`agent to treat serious invasive fungal infections caused by various fungal species. Our corporate partner, Astellas Pharma US,
`Inc., promotes and sells AmBisome 1n the United States and Canada, and we promote and sell AmBisome in Europe, Australia
`and New Zealand.
`
`Letairis (ambrisentan) is an endothelin receptor antagonist (ERA) indicated for the treatment of pulmonary arterial hypertension
`(PAH) (WHO Group 1) in patients with WHOClassII or II symptomsto improve exercise capacity and delayclinical
`worsening. We sublicensed to GSK the rights to ambrisentan, marketed by GSK as Volibris (ambrisentan), for PAH interritories
`outside of the United States.
`
`Ranexa (ranolazine) is indicated for the treatment of chronic angina. We have licensed to Menarini International Operations
`Luxembourg SA the nghts to Ranexain territories outside of the United States.
`
`Vistide (cidofovir injection) is an antrviral medication for the treatment of cytomegalovirusretinitis in patients with AIDS.
`
`4
`
`REG_NDNY00000008
`Regeneron Exhibit 1227.005
`Regeneron Exhibit 1227.005
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`*—Caysten (aztreonamfor inhalation solution) is an inhaled antibiotic as a treatment to improve respiratory systemsin cystic
`fibrosis (CF) patients with Pseudomonas aeruginosa (P. aeruginosa). In September 2009, we received conditional marketing
`
`approval of Cayston in Europe and Canada. In February 2010, we received marketing approval of Cayston in the United States.
`
`The followingtable lists aggregate product sales for our major products (in thousands):
`
`Antiviral products:
`Atripla
`lruvada
`Viread
`Hepsera
`Emiriva
`‘Total antiviral products
`
`AmBisome
`Letairis
`Ranexa
`Other
`
`Total product sales
`
`% of
`Total
`Product
`Sales
`
`40%
`36%
`10%
`3%
`
`O%
`88%
`4%
`3%
`3%
`1%
`
`
`100%
`
`% of
`Total
`Product
`Sales
`
`37%
`38%
`10%
`4%
`
`O%
`90%
`5%
`3%
`2%
`
`0%
`
`
`100%
`
`%of
`Total
`Product
`Sales
`
`31%
`41%
`12%
`T%
`
`1%
`92%
`6%
`2%
`
`2008
`
`$1,572,455
`2, 106,687
`621,187
`341,023
`31,080
`4,672,432
`289,651
`112,855
`
`9,858
`$5,084,796
`
`0%
`
`
`100%
`
`2009
`
`$2,382,113
`2,489,682
`667,510
`27 |E595
`27,974
`5,838,874
`298,597
`183,949
`131,062
`16,829
`$6,469,311
`
`2010
`
`$2,926,579
`2,649,908
`732,240
`200,592
`27,679
`6,536,998
`305,856
`240,279
`239,832
`66,956
`$7,389,921
`
`See Item 8, Note 16 to our Consolidated Financial Statements included tn this Annual Report on Form 10-K, for our total revenues
`by geographic area.
`
`Royalties from Other Products
`
`.
`
`s
`
`*
`
`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 adultsin 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.
`
`Macugen (pegaptanib sodium injection) is an mtravitreal injection of an anti-angiogenic oligonucleotide for the treatmentof
`neovascular age-related macular degeneration. Macugen was developed by Evetech Inc. (Eyetech) using technologylicensed
`from us and is now promoted in the United States by Eyctech. Eyctech holds the exclusive rights to manufacture and scll
`Macugenin the United States, and PfizerInc. (Pfizer) holds the exclusive right to manufacture and sell Macugen in the rest of
`the world. We receive royaltics from Eyetech based on sales of Macugen worldwide.
`
`
`
`
`
` Lexiscan/Rapiscan (regadenoson) injection is indicated for use as a pharmacologic stress agent in radionuclide myocardial
`perfusion imaging (MPD), a test that detects and characterizes coronary artery disease, in patients unable to undergo adequate
`exercise stress. Astellas US LLC hasexclusive 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. In September 2010,
`our marketing authorization application for regadenoson for MPI in the European Union was approved by the European
`Medicines Agency. Rapidscan Pharma Solutions, Inc. (Rapidscan) holds the exclusive right to manufacture and sell
`regadenoson under the name Rapiscan in Europe and certain territories outside the United States. We will receive royalties from
`Rapidscanfor sales in these territories.
`
`REG_NDNY00000009
`Regeneron Exhibit 1227.006
`Regeneron Exhibit 1227.006
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`Commercialization and Distribution
`
`Our products are marketed through our commercial teams and/or 1n 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 productin 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 specifiedterritory.
`
`We have U.S. and international commercial sales operations, with marketing subsidiaries in Australia, Austria, Belgtum, Canada,
`Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden,
`Switzerland, Turkey, the United Kingdom and the United States.
`
`
`
`
`In the United States, our commercial team promotes Truvada, Viread, Emtriva, Hepsera, Letairis and Ranexa. We promote Atripla in
`the United States with our joint venture partner,BMS. We distribute Atripla, Truvada, Viread, Emtriva, Hepsera, Vistide and Ranexa 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, 2010,
`2009 and 2008. On a combinedbasis, in 2010, these wholesalers accounted for approximately 82% of our product sales in the United
`States and approximately 43% of our total worldwide revenues. Our corporate partner, Astellas, promotes, sells and distributes AmBisome
`and T,exiscan for us in the United States. Cayston and Letatris are distributed exclusively by specialty pharmacies. These specialty
`pharmacies specialize in the dispensing of medications for complex or chronic conditions that may require a high level of patient
`education and ongoing counseling.
`
`
`
`
`
`Wesell and distribute Truvada, Viread, Emtriva, Hepsera and AmBisome in Asia, Australia, Europe, Latin America, the Middle East
`and New Zealand either through our commercial teams, third-party distributors or corporate partners. We promote Atripla jointly with
`BMS1n the majority of countries in Europe and are responsible for selling and distributing the product in these countries. 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 I atin
`America and Asia Pacific either through Merck or our existing third-party distributors. GSK promotes, sells and distributes Hepsera in
`Asia, I.atin America and certain otherterritories and plans to promote,sell and distribute Viread for the treatment of chronic hepatitis B in
`China, Japan and Saudi Arabia. We rely on our corporate partner, Japan ‘Tobacco Inc., to promote andsell Truvada, Viread and Emtriva in
`Japan. Our corporate partner, Astellas, promotes, sells and distributes AmBisome in Canada. Dainippon Sumitomo Pharma Co., Ltd is
`responsible for promotion and distribution of AmBisomein Japan. Menarini International Operations Luxembourg SA markets Ranexain
`certain territories outside ofthe United States tor the treatment of chronic angina. Rapidscan Pharma Solutions, Inc. markets Rapiscan
`(regadenoson) in certain territories outside of the United States for the inducement of pharmacological stress and/or vasodilation ofthe
`coronary vasculature strictly for purposes of diagnosing cardiovascular disease.
`
`
`
`Access in the Developing World
`
`Through the Gilead Access Program, established in 2003, certain of our HIV products are available at substantially reduced prices in
`130 countries in the developing world. We have developed a system oftiered pricing that reflects economicstatus, using gross national
`income per capita (GNI) and HIV prevalence. This approach allowsus to price our therapies based on a country’s ability to pay.
`
`Wealso support many clinical studies through the donation of our products to help define the best treatment strategies in developing
`world countries. For example, in November 2002, we entered into a collaborative agreement with the Medical Research Council (MRC) of
`the United Kingdom, Boehringer Ingelheim GmbH and GSK in connection with a clinical study conducted by the MRC onantiretroviral
`HIV therapy in Africa. The
`
`REG_NDNY00000010
`Regeneron Exhibit 1227.007
`Regeneron Exhibit 1227.007
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`trial, called the DART (Development of AntiRetroviral Therapy) study, was aimed at studying clinical versus laboratory monitoring
`practices and structured treatment interruptions on continuousantiretroviral therapy in adults with HIV infection in sub-Saharan Africa.
`We provided Viread at no cost for the DART study. In addition, we donated tenofovir for the Centre for the AIDS Programme of Research
`in South Africa (CAPRISA) 004 microbicidetrial, 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 numberof innovative international studies
`investigating whether Viread or Truvada can prevent HIV transmission amongat-risk, uninfected adults. This is a potential HIV
`
`prevention strategy called pre-exposure prophylaxis, or PrEP.
`
`We also work closely with the World Health Organization and with non-governmental organizations lo provide AmBisomefor the
`treatment of leishmaniasis, a parasitic disease, at a preferential price in resource limited settings. We support numerousclinical studies
`investigating the role of AmBisometotreat visceral and cutaneousleishmaniasis in developing countries through collaborations with
`organizations such as the Drugs for Neglected Diseasesinitiative and Médecins Sans Frontieres.
`
`We havealso entered into a numberofcollaborations related to access to our products in the developing world, which include:
`
`.
`
`*
`
`s
`
`PharmaChem Technologies (Grand Bahama), Ltd (PharmaChem). In 2005, PharmaChem,one of our commercial
`manufacturing 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 PharmaChemand the Grand Bahama Port Authority.
`
`Aspen Pharmacare Holdings Ltd (Aspen). In October 2005, we entered into a non-exclusive manufacturing and distribution
`agreement with Aspen, providing for the manufacture and distribution of Viread and Truvadafor the treatment of HIV infection
`to certain developmg world countrics included in our Gilead Access Program. In November 2007, we amended our agreement
`with Aspen. Under the amended agreement, Aspen retained the night to manufacture and distribute Viread and Truvadafor the
`treatment of HIV infection in these developing world countries. Aspen has the nght to purchase Viread and Truvada in
`unlabeled bottles [rom usfor distribution in such countries, and also has the nght to manufacture Viread and Truvada using
`active pharmaceutical ingredient that has been purchased by Aspen from suppliers approved by us. Aspen wasalso granted the
`right to manufacture and distribute generic versions of emtincitabine 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.
`
`Generic Licenses. We have 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
`95 low income countries around the world, which includes India and manyofthe low incomecountries in our Gilead Access
`Program. The agreements require that the generic manufacturers meet certain national and international regulatory standards
`and include technologytransfers to enable expeditious production oflarge volumesof high quality generic versions of tenofovir
`disoproxil fumarate. In addition, these agreements allow for the manufacture of commercial quantities ofboth active
`pharmaccutical ingredient and fimished product.
`
`* Merck & Co., Inc. In August 2006, we entered into an agreement with anaffiliate of Merck pursuant to which Gilead and
`Merck provide Atripla at substantially reduced prices to HIV infected patients in developing countries in Africa, the Caribbean,
`Latin America and Southeast Asia. Under the agreement, we manufacture Atripla using efavirenz supplied by Merck, and
`Merck handles distribution of the product in the countries covered by the agreement.
`
`7
`
`REG_NDNY00000011
`Regeneron Exhibit 1227.008
`Regeneron Exhibit 1227.008
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`.
`
`International Partnership for Microbicides IPM) and CONRAD.In December2006, we entered into an agreement under
`which we granted rights to IPM and CONRAD,a cooperating agency of the U.S. Agency for International Development
`committed to improving reproductive health by expanding the contraceptive choices of women and men, to develop,
`manufacture, and, if proven efficacious, arrange for the distribution in resource limited countries of certain formulations of
`tenofovir for use as a topical microbicide to prevent HIV infection.
`
`Competition
`
`Our products target a numberof areas, including viral, fungal, respiratory and cardiovascular diseases. There are many commercially
`available products forthe treatment of these diseases. Many companies andinstitutions are making substantial investments in developing
`additional productsto treat these diseases. Our products compete with other available products based primarily on:
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`efficacy;
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`safety,
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`tolerability;
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`acceptance by doctors;
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`ease of patient compliance;
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`patent protection;
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`ease of use:
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`price;
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`insurance and other reimbursement coverage;
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`distribution; and
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`marketing.
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`Our HIVProducts. The HIV landscape is becoming more competitive and complex as treatment trends continue to evolve. A
`growing numberofanti-HIV drugsare currently sold or are in advancedstagesofclinical development. Ofthe approximately 32 branded
`HIV drugs available in the United States, our products primarily compete with the frxed-dose combination products in the
`nucleotide/nucleoside reverse transcriptase inhibitors (NR) class, including Combivir (lamivudine/zidovudine), Epzicom/Kivexa
`(abacavir/lamivudine) and Trizivir (abacavir/lamivudine/zidovudine), each sold by a jomt venture established in November 2009 by GSK
`and Pfizer focused on LIV therapies. Our ILLV products also compete broadly with 111 V products from Abbott Laboratories, Inc.,
`Boehringer Ingelheim GmbH, Merck, Roche and Tibotec Pharmaceuticals.
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`BMS’s Videx EC (didanosine, ddI) becamethefirst generic HIV product in the United States in 2004. GSK’s Retrovir (zidovudine)
`also faces generic competition in the United States as a result of the launch of generic zidovudine in 2005. BMS’s Zerit (stavudine) also
`faces generic competition in the United States as a result of the launch of generic stavudine in 2008. To date, there has been little impact
`from generic didanosine, zidovudine or stavudine on the price of our I 11 V products; however, price decreases for all L11V products may
`result in the longer term.
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`Lamivudine, marketed by the joint venture established by GSK and Pfizer, is competitive with emtricitabine, the active
`pharmaceutical ingredient of T’mtriva and a component of both Atripla and Truvada. In May 2010, the compound patent covering prvir
`(lamivudine)itself expired in the United States, and we expect to see generic lamivudinein the United States in the near future. Generic
`lamivudine has been available in Spain since March 2010. We expect that generic versions of lamivudine will be launched in other
`countries within the European Unionasearly as the first quarter of 2011.
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`8
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`REG_NDNY00000012
`Regeneron Exhibit 1227.009
`Regeneron Exhibit 1227.009
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
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`Our HBVProducts. Ourhepatitis B virus (HBV) products, Hepsera and Viread, face sigmficant competition from existing and
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`expected therapies for treating patients with chronic hepatitis B. Our HBV products face competition from Baraclude (entecavir), an oral
`nucleoside analogue developed by BMSand launched in the United States in 2005, and Tyzeka/Sebivo (telbivudine), an oral nucleoside
`analogue developed by Novartis Pharmaceuticals Corporation (Novartis) for sale in the United States, the European Union and China.
`
`Our HBV products also compete with Eptvir-HB V/Zeffix (lamivudine), which was developed by GSK in collaboration with Shire
`Pharmaceuticals Group PLC andis sold in the major countries throughout North and South America, Europe and Asia.
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`Hepsera and Viread for the treatment of chronic hepatitis B also compete with established immunomodulatory therapies, including
`Intron-A (interferon alfa-2b), which is sold by Schering Plough Corporation in major countrics throughout North and South America,
`Europe and Asia, and Pegasys (pegylated interferon alfa-2a), an injectable drug similar to Intron-A sold by Rochefor the treatment of
`chronic hepatitis B.
`
`Our Cardiovascular Products.
`
`Letairis competes directly with Tracleer (bosentan) sold by Actelion Pharmaceuticals US, Inc. (Actelion) and indirectly with a PAH
`product from United Therapeutics Corporation.
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`Ranexa competes predominantly with generic compoundsfrom three distinct classes of drugs for the treatment of chronic angina in
`the United States, including generic and/or branded beta-blockers, calcium channel blockers and long-acting nitrates. In addition, surgical
`treatments and interventions such as coronaryartery bypass grafting and percutaneous coronary intervention can be another option for
`angina patients, and may be perceived byhealthcare practitioners as preferred methods to treat the cardiovascular disease that underlies
`and causes angina.
`
`In the United States, there are numerous marketed generic and/or branded pharmacologic stress agents that compete with Lexiscan.
`Clinical Data, Inc. is developing apadenosonas a pharmacologic stress agent for MPI which1s currently in Phase3clinicaltrials. These
`stress agents and product candidates could also compete with Lexiscan.
`
`Our Other Products.
`
`AmBisomefaces strong competition from several current and expected competitors. Competition from these current and expected
`competitors may erode the revenues we receive from sales of AmBisome. AmBisome[aces competition from Vfend (voriconazole)
`developed by Pfizer and caspofungin, a product developed by Merck that is marketed as Cancidas in the United States and as Caspofungin
`elsewhere. AmBisome also competes with other lipid-based amphotericin B products, including Abelcet (amphotericin B lipid complex
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`injection), sold by Enzon Pharmaceuticals, Inc. in the United States, Canada and Japan and by Zeneus Pharma Ltd. in Europe; Amphotec
`(amphotericin B cholesteryl sulfate complex for injection), sold by Three Rivers Pharmaceuticals, LLC worldwide; and Anfogen
`(amphotericin B liposomal), sold by Genpharma, S.A. in Argentina. BMS and numerous generic manufacturers sell conventional
`amphotericin B, which also competes with AmBisome.
`
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`We are aware of at least two lipid formulationsthat 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. The