Analyst Conference Summary

conference date: July 19, 2007 @ 1:30 PM Pacific Time
for quarter ending: 2007 (2nd quarter)

Forward-looking statements

Overview: Record sales increased 53% in one year, but rate of growth slowed.

Basic data:

Revenues were $1.05 billion, up 2% sequentially from $1.03 billion, and up 52% from $685.3 million year-earlier.

Net income was $407.9 million, sequentially nearly flat but up 54% from $265.1 million year-earlier.

EPS was $0.42, up 51% from $0.29 year-earlier.

Cash and equivalents ended at $2 billion, up $0.6 billion from year-earlier, and up from $1.9 billion in Q1.

Guidance:

Raising product sales estimate for 2007 to $3.6 yo 3.7 billion. Lowering non-GAAP R&D to $500 to 520 million. Weaker US dollar will result in $580 to $600 SG&A expense, an increase. Tax rate lowed to 29 to 30%.

Conference Highlights:

Product sales were $905.1 million, up 53% from $590.7 million year-earlier. Was an 8% sequential increase.

Growth was driven by Atripla in US and Truvada in Europe. Viread sales were down 9% from year-earlier. Hepsera growth was also strong.

$512 million cash generated

$455 million spent on stock repurchases.

Non-GAAP EPS was $0.46 per share, up 48% over year-earlier.

Revenues by product:

Truvada $385.4 million.
Atripla $212.4 million.
Viread $154.9 million.
Emtriva $9.6 million.
Hepsera $75.2 million.
AmBisome $64.8 million.

In addition, royalty and contract revenues were $143.0 million, up 51% from year-earlier, but decreased sequentially. Tamaflu sales revenues are delayed a quarter after Roche reports them.

R&D expense was $135.9 million ($119 million non-GAAP). SG&A expense $186.2 million ($158 million non-GAAP).

28.5% tax rate, a decrease.

$19 million favorable foreign exchange impact compared to year-earlier.

$454.9 million was used for stock repurchase program.

A 2-for-1 stock split took place during the quarter.

Letairis was approved for once-daily treatment of pulmonary arterial hypertension (PAH). Four PAH classes. Letairis approval covers 80% of PAH patients. Feedback from doctors is good; patients must enroll in LEAP program to get prescriptions. Expect rapid approval by payers.

Of 500,000 U.S. patients receiving anti-retroviral agents for HIV (AIDS), over 100,000 were receiving Atripla, after only 4 quarters of availability. Doing well against competitors, especially with patients starting therapy. Believes will continue to grow pre sense in anti-HIV market. HIV detection is improving, so potential use is growing.

Viread for chronic hepatitis B results, and aztreonam lysine for patients with pulmonary infection and cystic fibrosis results, were positive. Regulatory applications (NDAs) should be submitted for both products by year's end. Revenue streams could commence as early as first half of 2008.

Reiterated already announced progress in pipeline.

Discussions with European authorities for Atripla are now over whether to take it with or without food.

Q&A:

Atripla in EU? Possible more clinical data will be required for approval. Believes submitted data supports can be given without food.

Viread cannibalization? Hepsera patients will probably mostly stay on Hepsera. Viread will be aimed at new patients.

Low sequential growth? In Q1 there was a surge in non-retail segment as bought before end of fiscal year, which we did not know at last conference. Also state reauthorization issues.

Why was Atripla and food not an issue in US? Was approved with food in U.S. Further study shows works as well without food. Without food is more popular with patients, so aiming for that in Europe. Already changed label in U.S.

Atripla inventory drawdown? Inventory as a whole remained in midrange. Atripla was up slightly but still at low end of range. Hepsera did trend up about 4 days.

2/3 of Atripla patients have come from switchers from other Gilead HIV drugs. We are starting to see a leveling of Truvada.

Letairis 222 study? Has helped with our promotions. Want initial experience with Letairis to be good for doctors and patients. LFT failures are providing switches to Letairis.

9137 (elvitegravir) trial enrollment? Should be faster than if looking for patients who could be given placebos.

Viread patent challenge? Can't say a lot, but is a highly technical matter, believe we can resolve it.

Tamiflu future revenues? Will grow other product revenue to make up for decline in Tamiflu. But Roche is committed to increasing use of it. New pills for children will help. Don't know what future of stockpiling will be. No stockpiling for children so far.

ROW market potential? Don't have a number.

Truvada still has the possibility of capturing new patients due to the continuing popularity of protease inhibitors.

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