Gilead Sciences (GILD) 10-K risk factor changes: FY2019 vs FY2018

[removed: In] [added: *In] evaluating our business, you should carefully consider the following risks in addition to the other information in this Annual Report on Form 10-K.

It is not possible to predict or identify all such factors and, therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we [removed: face.][added: face.*]

[removed: A] [added: A] substantial portion of our revenues is derived from sales of [removed: products to treat] [added: our] HIV [removed: and HCV.][added: products.]

If we are unable to increase [removed: HIV sales] or [removed: if HCV sales decrease more than anticipated,] [added: maintain our HIV sales,] then our results of operations may be adversely [removed: affected.][added: affected.]

We receive a substantial portion of our revenue from sales of our products for the treatment [added: and prevention] of HIV infection.

During the year ended December 31, [removed: 2018,] [added: 2019,] sales of our HIV products accounted for approximately [removed: 67%] [added: 74%] of our total product sales, and [removed: we expect] our HIV products [removed: to] account for a higher percentage of our total product sales in 2019 than in 2018.

Most of our HIV products contain tenofovir alafenamide (TAF), tenofovir disoproxil fumarate (TDF) and/or [removed: emtricitabine,] [added: emtricitabine (FTC),] which belong to the nucleoside class of antiviral therapeutics.

In addition, future sales of our HIV [removed: and HCV] products depend, in part, on the extent of reimbursement of our products by private and public payers.

If we are unable to achieve our forecasted HIV [removed: and HCV] sales, our stock price could be adversely impacted.

We may be unable to sustain or increase sales of our HIV [removed: or HCV] products for any number of reasons including, but not limited to, the reasons discussed above and the following:

| • | If physicians do not see the benefit of our HIV [removed: or HCV] products, the sales of our HIV [removed: or HCV] products will be limited. |

[removed: If] [added: If] we fail to [added: develop and] commercialize new products or expand the indications for existing products, our prospects for future revenues and our results of operations may be adversely [removed: affected.][added: affected.]

For example, [added: in February 2019,] we [removed: recently] announced that our [removed: KITE-585,] [added: KITE-585 program,] an [removed: anti- B-cell] [added: anti-B cell] maturation antigen [removed: (anti-BCMA)] being evaluated for the treatment of multiple myeloma, [removed: will] [added: would] not be moving forward.

We also recently announced that [added: STELLAR-3 and] STELLAR-4, [removed: a] Phase 3 [removed: study] [added: studies] evaluating the safety and efficacy of selonsertib [removed: in patients with compensated cirrhosis due to] [added: for the treatment of] nonalcoholic steatohepatitis (NASH), did not meet the pre-specified week 48 primary [removed: endpoint.][added: endpoints.]

[removed: In addition, if we are unable to obtain regulatory approval] [added: If the clinical trials] for [added: any of the] product [removed: candidates,] [added: candidates in] our [added: pipeline are delayed or terminated, our prospects for] future revenue growth and [added: our] results of operations may be adversely impacted.

[removed: Our] [added: Our] inability to accurately predict demand for our [removed: products, uptake of new] products [removed: or] [added: and] fluctuations in [removed: customer] [added: purchasing patterns or wholesaler] inventories makes it difficult for us to accurately forecast sales and may cause our forecasted revenues and earnings to fluctuate, which could adversely affect our financial results and stock [removed: price.][added: price.]

For example, the non-retail sector in the United States, which includes government institutions, including state AIDS Drug Assistance Programs (ADAPs), the U.S. Department of Veterans Affairs, correctional facilities and large health maintenance organizations, tends to be [removed: even] less consistent in terms of buying patterns and often causes quarter-over-quarter fluctuations that do not necessarily mirror patient demand for our products.

Federal and state budget pressures, as well as the annual grant cycles for federal and state funds, may cause purchasing patterns to not reflect patient demand [removed: of] [added: for] our products.

We expect to continue to experience fluctuations in the purchasing patterns of our non-retail [removed: customers] [added: customers,] which may result in fluctuations in our product sales, revenues and earnings in the future.

[removed: During the year ended December 31, 2018, approximately 85% of our product sales in the United States were to three wholesalers, AmerisourceBergen Corp., Cardinal Health, Inc. and McKesson Corp.] The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine end user demand and may not be completely effective in matching their inventory levels to actual end user demand.

[removed: For example, during the fourth quarter of 2017,] [added: In addition, we have observed that] strong wholesaler and sub-wholesaler purchases of our products [removed: resulted] in [added: the fourth quarter typically results in] inventory draw-down by wholesalers and sub-wholesalers in the [added: subsequent] first [removed: quarter of 2018.][added: quarter.]

Actual claims [added: and payments] may vary significantly from our estimates which can cause an adjustment to our product [removed: revenues.]

To the extent our actual or anticipated product revenues [removed: exceed or] fall short of investors’ expectations, our stock price could be adversely impacted.

[removed: Yescarta,] [added: Yescarta,] a chimeric antigen receptor (CAR) T cell therapy, represents a novel approach to cancer treatment that creates significant challenges for us, which may impact our ability to increase sales of [removed: Yescarta.][added: Yescarta.]

| • | educating and certifying medical personnel regarding the procedures and the potential side effect profile of our therapy, such as the potential adverse side effects related to cytokine release syndrome and neurologic toxicities, in compliance with the Risk Evaluation and Mitigation Strategy [removed: (REMS)] program required by FDA for Yescarta; |

We may not be able to establish or demonstrate to the medical community or commercial or governmental payers the safety and efficacy of Yescarta and [removed: the potential advantages compared to existing and future therapeutics.]

[added: Pharmaceutical pricing and reimbursement pressures may adversely affect our profitability and our results of operations.”] If we fail to overcome these significant challenges, our sales of Yescarta, results of operations and stock price could be adversely affected.

[removed: We] [added: We] face significant [removed: competition.][added: competition.]

In addition, because [removed: emtricitabine,] [added: FTC,] the other active pharmaceutical ingredient of Truvada, faces generic competition in the European Union, Truvada also faces generic competition in the European Union and certain other countries outside of the United States.

Our [removed: HCV] [added: hepatitis C virus (HCV)] products compete primarily with products marketed by AbbVie [added: Inc.] and [removed: Merck.][added: Merck & Co., Inc.]

Our [removed: HBV] [added: hepatitis B virus (HBV)] products face competition from existing therapies for treating patients with HBV as well as generic versions of TDF.

Yescarta competes with a CAR T cell therapy marketed by Novartis and [added: a non-CAR T product marketed by Roche and] is expected to compete with products from other companies developing advanced T cell therapies.

[removed: Our] [added: Our] results of operations may be adversely affected by current and potential future healthcare legislative and regulatory [removed: actions.][added: actions.]

In the United States, the Affordable Care Act [removed: (the ACA)] [added: (ACA)] was enacted in 2010 to expand healthcare coverage.

The ongoing challenges to the ACA [added: and new legislative proposals] have resulted in uncertainty regarding [removed: its] [added: the ACA’s] future viability and destabilization of the health insurance market.

The initiative includes proposals to increase generic drug and biosimilar competition, enable the Medicare program to negotiate drug prices more [removed: directly and] [added: directly,] improve transparency regarding drug prices and [removed: ways to] lower [removed: consumers'] [added: consumers’] out-of-pocket costs.

The Trump administration also proposed to establish an “international pricing index” that would be used as a benchmark to determine the costs [added: and potentially limit the reimbursement] of drugs under Medicare [removed: Part B.]

[added: In addition, a majority of states] have [removed: proposed or] enacted legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing, such as by requiring biopharmaceutical manufacturers to publicly report proprietary pricing information or [removed: to place a maximum] [added: creating review boards for recommending] price [removed: ceiling on] [added: caps or other means for controlling prices of] pharmaceutical products purchased by state agencies.

Proposals that could impact coverage and reimbursement of our products, including giving states more flexibility to manage drugs covered under the Medicaid [removed: program and permitting the re-importation of prescription medications from Canada or other countries,] [added: program,] could have a material adverse effect by limiting our products’ use and coverage.

Furthermore, state Medicaid programs could request additional supplemental rebates on our products [removed: as a result of an increase in the federal base Medicaid rebate.][added: for many reasons.]

The success of our business depends on our ability to introduce new products as well as expand the indications for our existing products to address areas of unmet medical need.

The launch of commercially successful products is necessary to cover our substantial R&D expenses and to offset revenue losses when our existing products lose market share due to various factors such as competition and loss of patent exclusivity, as well as to provide for the growth of our business.

There are many difficulties and uncertainties inherent in drug development and the introduction of new products.

The product development cycle is characterized by significant investments of resources, long lead times and unpredictable outcomes due to the nature of developing medicines for human use.

We expend significant time and resources on our product pipeline without any assurance that we will recoup our investments or that our efforts will be commercially successful.

A high rate of failure is inherent in the discovery and development of new products, and failure can occur at any point in the process, including late in the process after substantial investment.

For example, see “We face risks in our clinical trials, including the potential for unfavorable results, delays in anticipated timelines and disruption, which may adversely affect our prospects for future revenue growth and our results of operations.” We cannot state with certainty when or whether any of our product candidates under development will be approved or launched; whether we will be able to develop, license or acquire additional product candidates or products; or whether any products, once launched, will be commercially successful.

Failure to launch commercially successful new products or new indications for existing products could have a material adverse effect on our future revenues, results of operations and long-term success.

During the year ended December 31, 2019, approximately 87% of our product sales in the United States were to three wholesalers, AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation.

Pursuant to a settlement agreement relating to patents that protect Truvada and Atripla, Teva Pharmaceuticals is permitted to launch generic fixed-dose combinations of FTC and TDF and generic fixed-dose combinations of FTC, TDF and efavirenz in the United States on September 30, 2020.

Yescarta and other commercial products also face competition from certain clinical trials that are enrolling CAR T eligible patients.

We may be required to pay significant damages and royalty payments as a result of ongoing litigation related to Yescarta and Biktarvy.

Adverse outcomes in ongoing litigation related to our Yescarta and Biktarvy products could require us to pay significant monetary damages and royalty payments for past and future sales.

We cannot predict the ultimate outcome of these litigation matters, but the timing and magnitude of any such payments could have a material adverse impact on our results of operations, financial condition and stock price.

In October 2017, Juno Therapeutics, Inc. and Sloan Kettering Cancer Center (collectively, Juno) filed a lawsuit against us in the U.S. District Court for the Central District of California alleging that the commercialization of axicabtagene ciloleucel, sold commercially as Yescarta, infringes on U.S. Patent No. 7,446,190 (the ‘190 patent).

A jury trial was held on the ‘190 patent, and in December 2019, the jury found that the asserted claims of the ‘190 patent were valid, and that we willfully infringed the asserted claims of the ‘190 patent.

The jury also awarded Juno damages in amounts of $585 million in an up-front payment and a 27.6% running royalty from October 2017 through the date of the jury’s verdict.

The parties filed post-trial motions in January 2020 and will file further briefings during the first quarter of 2020, and we expect the judge to rule on these matters later in 2020.

Once the district court has issued these rulings and has entered judgment, the case may be appealed to the U.S. Court of Appeals for the Federal Circuit.

Although we cannot predict with certainty the ultimate outcome of this litigation, we believe the jury’s verdict to be in error, and we also believe that errors were made by the court with respect to certain rulings before and during trial.

If the jury’s verdict is not upheld on appeal, the loss will be zero, If the jury’s verdict is upheld in its entirety on appeal, we estimate the upper end of the range of possible loss through December 31, 2019 to be approximately $1.6 billion, which consists of (i) the $585 million up-front payment determined by the jury, (ii) approximately $200 million, which represents estimated royalties on our adjusted revenues from Yescarta from October 18, 2017 through December 31, 2019, and (iii) enhanced damages requested by Juno of up to two times the sum of (i) and (ii) above as a result of the jury’s finding of willfulness.

This sum excludes costs and pre-judgment interest.

Supplemental damages consisting of royalties on sales of Yescarta after December 13, 2019 through the date of judgment could be subject to the 27.6% royalty in the jury’s verdict, the 33.1% prospective royalty proposed by Juno, or to enhancement.

Any post-judgment sales of Yescarta would be subject to prospective royalties, which we have estimated could be up to 33.1%, and which would be payable on adjusted Yescarta revenues after the judgment in 2020 until the expiry of the ‘190 patent in August 2024.

We expect the judge to rule on the amount of prospective royalties and any enhanced damages in the course of deciding the post-trial motions.

The court’s determination of prospective royalties and enhanced damages, if any, can also be appealed.

If the jury’s verdict is upheld on appeal, the amount we could be required to pay to Juno could be significant, and such payment could have a material adverse impact on our results of operations, financial condition and stock price.

In February 2018, ViiV filed a lawsuit against us in the U.S. District Court of Delaware, alleging that the commercialization of bictegravir, sold commercially in combination with TAF and FTC as Biktarvy, infringes on ViiV’s U.S. Patent No. 8,129,385 (the ‘385 patent), covering ViiV’s dolutegravir.

Bictegravir is structurally different from dolutegravir, and we believe that bictegravir does not infringe the claims of the ‘385 patent.

To the extent that ViiV’s patent claims are interpreted to cover bictegravir, we believe those claims are invalid.

The court has set a trial date of September 2020 for this lawsuit.

For more information about this litigation, as well as related litigation in countries outside of the United States, see Note 14.

Although we cannot predict with certainty the ultimate outcome of this litigation, an adverse judgment could result in significant monetary damages and royalty payments on past and future sales, which could have a material impact on our results of operations, financial condition and stock price.

For example, in December 2019, the U.S. Court of Appeals for the Fifth Circuit held that the individual health insurance mandate in the ACA is unconstitutional and remanded the case back to the district court to determine whether the other provisions of the ACA can stand without the individual health insurance mandate.

Part B.

In addition, in December 2019, U.S. Food and Drug Administration (FDA) issued a proposal to implement two pathways for the legal importation of certain prescription drugs from Canada and prescription drugs that are FDA-approved, manufactured abroad, authorized for sale in a foreign country and originally intended for sale in that foreign country.

Among other pharmaceutical manufacturer industry-related proposals, Congress has proposed bills to change the Medicare Part D benefit to impose an inflation-based rebate in Medicare Part D and to alter the benefit structure to increase manufacturer contributions in some or all benefit phases.

The volume of drug pricing-related bills has dramatically increased under the current Congress, and the resulting impact on our business is uncertain and could be material.

Many other states have proposed or enacted similar legislation.

In addition, many state legislatures are considering, or have already passed, various bills that would reform drug purchasing and price negotiations, facilitate the import of lower-priced drugs from outside the United States, and encourage the use of generic drugs.

During the year ended December 31, 2018, sales of our products for the treatment of chronic hepatitis C virus (HCV) infection accounted for approximately 17% of our total product sales.

Our HCV revenues have declined, and we expect a further decline in product sales in 2019, compared to 2018, in major markets.

The drivers of our HCV product revenues are patient starts, net pricing, market share and treatment duration.

With treatment duration stabilizing and pricing largely stabilizing, we expect to continue to compete for market share across market segments and geographies.

We anticipate patient starts to continue to steadily decline and be more predictable.

Any unexpected and adverse changes to these drivers, including any larger than anticipated shifts, may adversely impact our HCV product revenues.

If we do not introduce new products or increase sales of our existing products, we will not be able to increase or maintain our total revenues nor continue to expand our R&D efforts, and our results of operations may be adversely affected.

Drug development is inherently risky and many product candidates fail during the drug development process.

We may decide to terminate product development after expending significant resources and effort.

Further, any future marketing applications we file may not be approved by the regulatory authorities on a timely basis, or at all.

Even if marketing approval is granted, there may be significant limitations on their use.

For example, in the first quarters of 2018 and certain prior years, we observed large non-retail purchases of our HIV products by a number of state ADAPs that exceeded patient demand.

We believe such purchases were driven by the grant cycle for federal ADAP funds.

Letairis competes with products marketed by Actelion Pharmaceuticals US, Inc., United Therapeutics Corporation and Pfizer Inc. Because the U.S. patent for ambrisentan, the active pharmaceutical ingredient in Letairis, expired in July 2018, Letairis is expected to face competition from manufacturers of generic versions of Letairis in the United States.

Ranexa competes predominantly with generic compounds from 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.

Ranexa is expected to face competition from manufacturers of generic versions of Ranexa in the United States starting in the first quarter of 2019.

For example, the Tax Cuts and Jobs Act, signed into law by President Trump in 2017, repealed the individual health insurance mandate, which is considered a key component of the ACA.

In December 2018, a Texas federal district court struck down the ACA on the ground that the individual health insurance mandate is unconstitutional, although this ruling has been stayed pending appeal.

In addition, many states

Similar bills have been introduced at the federal level.

For example, in December 2018, HHS proposed a rule that would modify the Medicare Part D protected class policy to provide Part D Plan Sponsors broader authority to impose step therapy, prior authorization and other utilization management controls on products in the Part D protected classes, including our HIV products.

In January 2019, HHS also proposed a rule that would remove regulatory protection under the Discount Safe Harbor to the Federal Anti-Kickback Statute for manufacturer rebates paid to Part D Plan Sponsors, Medicaid managed care organizations and pharmacy benefit managers under contract with them, and would create new safe harbors for arrangements with these entities.

A substantial portion of sales of the majority of our products is subject to significant discounts from list price.

For example, effective October 2018, the Centers for Medicare and Medicaid Services (CMS) established inpatient reimbursement for patients receiving Yescarta.

This payment methodology is likely to be in effect until at least September 2020.

CMS has also proposed a National Coverage Decision on CAR T cells and would impose certain coverage limitations on that therapy.

These coverage limitations would apply to the entire Medicare program and includes, among other things, a requirement for patients to be enrolled in a clinical trial or registry in order for the hospital and physician to be paid for CAR T cell therapy.

Further, commercial payers may follow Medicare coverage policies and could impose similar limitations.

Approximately 25% of our product sales occur outside the United States, and currency fluctuations and hedging expenses may cause our earnings to fluctuate, which could adversely affect our stock price.

Because a significant percentage of our product sales are denominated in foreign currencies, primarily the Euro, we face exposure to adverse movements in foreign currency exchange rates.

When the U.S. dollar strengthens against these foreign currencies, the relative value of sales made in the respective foreign currency decreases.

Conversely, when the U.S. dollar weakens against these currencies, the relative value of such sales increases.

Overall, we are a net receiver of foreign currencies and, therefore, benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar.

We use foreign currency exchange forward and option contracts to hedge a percentage of our forecasted international sales, primarily those denominated in the Euro.

We also hedge certain monetary assets and liabilities denominated in foreign currencies, which reduces but does not eliminate our exposure to currency fluctuations between the date a transaction is recorded and the date cash is collected or paid.

Foreign currency exchange, net of hedges, had a favorable impact on our product sales of $94 million for the year ended December 31, 2018, compared to the same period in 2017.

We cannot predict future fluctuations in the foreign currency exchange rates of the U.S. dollar.

If the U.S. dollar appreciates significantly against certain currencies and our hedging program does not sufficiently offset the effects of such appreciation, our results of operations will be adversely affected and our stock price may decline.

Additionally, the expenses that we recognize in relation to our hedging activities can also cause our earnings to fluctuate.

The level of hedging expenses that we recognize in a particular period is impacted by the changes in interest rate spreads between the foreign currencies that we hedge and the U.S. dollar.

MD&A is provided as a supplement to, and should be read in conjunction with, our audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements and other disclosures included in this Annual Report on Form 10-K (including the disclosures under Part I, Item 1A, [removed: “Risk Factors”).][added: *“*Risk Factors*”*).]

[removed: Management Overview][added: MANAGEMENT OVERVIEW]

Our portfolio of marketed products includes AmBisome®, Atripla®, Biktarvy®, Cayston®, Complera®/Eviplera®, Descovy®, [added: Descovy for PrEP®,] Emtriva®, Epclusa®, Genvoya®, Harvoni®, Hepsera®, Letairis®, Odefsey®, Ranexa®, Sovaldi®, Stribild®, Truvada®, [added: Truvada for PrEP®,] Tybost®, Vemlidy®, Viread®, Vosevi®, Yescarta® and Zydelig®.

[removed: We also] [added: In addition, we] sell and distribute certain products through our corporate partners under collaborative agreements.

[removed: 2018] [added: 2019] Business [removed: Highlights][added: Highlights]

[removed: | • |] We [removed: announced plans to launch] [added: also sell and distribute] authorized generic versions of Epclusa and Harvoni in the United States through our separate subsidiary, [removed: Asegua. |][added: Asegua Therapeutics, LLC.]

[removed: 2018 Financial Highlights][added: 2019 Financial Highlights]

Total revenues [removed: decreased] [added: increased] to [removed: $22.1] [added: $22.4] billion and total product sales [removed: decreased] [added: increased] to [removed: $21.7] [added: $22.1] billion in [removed: 2018,] [added: 2019,] compared to [removed: $26.1] [added: $22.1] billion and [removed: $25.7] [added: $21.7] billion in [removed: 2017,] [added: 2018,] respectively, primarily due to [removed: lower] [added: higher] sales of our [removed: HCV] [added: HIV] products, partially offset by [removed: higher] [added: lower] sales of [added: Ranexa and Letairis and] our [removed: HIV] [added: HCV] products.

In the United States, product sales were [removed: $16.2] [added: $16.6] billion in [removed: 2018,] [added: 2019,] compared to [removed: $18.1] [added: $16.2] billion in [removed: 2017.][added: 2018.]

In Europe, product sales were [removed: $3.7] [added: $3.6] billion in [removed: 2018,] [added: 2019,] compared to [removed: $5.0] [added: $3.7] billion in [removed: 2017.][added: 2018.]

Product sales in other international locations were [removed: $1.8] [added: $2.0] billion in [removed: 2018,] [added: 2019,] compared to [removed: $2.6] [added: $1.8] billion in [removed: 2017.][added: 2018.]

In 2018, [added: we recorded] inventory [removed: reserves] [added: write-downs] of [added: $572 million, of which] $440 million [removed: were recorded for] [added: was related to] excess raw materials primarily due to a sustained decrease in demand for Harvoni as a result of a shift in the market from Harvoni to Epclusa.

Selling, general and administrative (SG&A) expenses increased to [removed: $4.1] [added: $4.4] billion [removed: for 2018,] [added: in 2019,] compared to [removed: $3.9] [added: $4.1] billion in [removed: 2017,] [added: 2018,] primarily due to [removed: a full year of investments to support] [added: promotional expenses in] the [removed: growth] [added: United States and expenses associated with the expansion] of our business [removed: following the acquisition of Kite,] [added: in Japan and China,] partially offset by lower [removed: acquisition-related costs associated with the acquisition of Kite and lower branded prescription drug (BPD) fees.][added: stock-based compensation expense.]

As of December 31, [removed: 2018,] [added: 2019,] we had [removed: $31.5] [added: $25.8] billion of cash, cash equivalents and marketable debt securities compared to [removed: $36.7] [added: $31.5] billion as of December 31, [removed: 2017.][added: 2018.]

During [removed: 2018,] [added: 2019,] we generated [removed: $8.4] [added: $9.1] billion in operating cash flow, [added: paid $5.6 billion in connection with our collaboration with and equity investments in Galapagos,] repaid [removed: $6.3] [added: $2.8] billion of [removed: principal amount of] debt, paid cash dividends of [removed: $3.0] [added: $3.2] billion and repurchased [removed: a total of 40] [added: 26] million shares [added: of our common stock] for [removed: $2.9] [added: $1.7] billion through open market transactions.

[removed: Outlook 2019][added: In 2019:]

[removed: In order to] [added: To] further augment our product pipeline, we continue to pursue opportunities for collaborations, partnerships and strategic investments that fit into our [removed: long term] [added: long-term] strategic plan.

Our progress on all of these initiatives is subject to a number of uncertainties, including, but not limited to, the possibility of unfavorable results from new and ongoing clinical [removed: trials (for example, we recently announced that STELLAR-4, a Phase 3 study evaluating the safety and efficacy of selonsertib in patients with compensated cirrhosis due to NASH, did not meet the pre-specified week 48 primary endpoint);] [added: trials;] the continuation of an uncertain global macroeconomic environment; additional pricing pressures from payers and competitors; slower than anticipated growth in our HIV products; an increase in discounts, chargebacks and rebates due to ongoing contracts and future negotiations with commercial and government payers; market share and price erosion caused by the introduction of generic versions of products containing tenofovir disoproxil fumarate (TDF) outside the United States and Viread, Letairis and Ranexa in the United States; inaccuracies in our HCV patient start estimates; potential amendments to the Affordable Care Act or other government action that could have the effect of lowering prices; a [removed: larger-than-anticipated] [added: larger-than anticipated] shift in payer mix to more highly discounted payer segment; and volatility in foreign currency exchange rates.

[removed: 2018 Results of Operations][added: RESULTS OF OPERATIONS]

[removed: Total Revenues][added: Total Revenues]

The following table summarizes the period-over-period changes in our [removed: product sales and royalty, contract and other] revenues:

| [removed: (In] [added: (In] millions, except [removed: percentages)] [added: percentages)] | | [removed: 2018] [added: 2019] | | | | [removed: Change] [added: Change] | | | [removed: 2017] [added: 2018] | | | | [removed: Change] [added: Change] | | | [removed: 2016] [added: 2017] | | |

| Product sales | | $ | [removed: 21,677] [added: 22,119] | | | [removed: (16] [added: 2] | [removed: )%] [added: %] | | $ | [removed: 25,662] [added: 21,677] | | | [removed: (14] [added: (16] | )% | | $ | [removed: 29,953] [added: 25,662] | |

| Royalty, contract and other revenues | | [removed: 450] [added: 330] | | | | [removed: 1] [added: (27] | [removed: %] [added: )%] | | [removed: 445] [added: 450] | | | | [removed: 2] [added: 1] | % | | [removed: 437] [added: 445] | | |

| Total revenues | | $ | [removed: 22,127] [added: 22,449] | | | [removed: (15] [added: 1] | [removed: )%] [added: %] | | $ | [removed: 26,107] [added: 22,127] | | | [removed: (14] [added: (15] | )% | | $ | [removed: 30,390] [added: 26,107] | |

[removed: See Note 1,] Organization and Summary of Significant Accounting [removed: Policies, and Note 2, Revenues,] [added: Policies] of the Notes to Consolidated Financial Statements included in Item 8 of [removed: our] [added: this] Annual Report on Form [removed: 10-K for further information.][added: 10-K.]

[removed: Product Sales][added: Product Sales]

[removed: 2018 Compared to 2017][added: *2019* *Compared to* *2018*]

Total product sales [removed: decreased] [added: increased] by [removed: 16%] [added: 2%] to [removed: $21.7] [added: $22.1] billion in [removed: 2018,] [added: 2019,] compared to [removed: $25.7] [added: $21.7] billion in [removed: 2017,] [added: 2018,] primarily due to [removed: lower] [added: higher] sales of our [removed: HCV] [added: HIV] products, partially offset by [removed: increased] [added: lower] sales of [added: Ranexa and Letairis and] our [removed: HIV] [added: HCV] products.

HIV product sales increased by 12% to [removed: $14.6] [added: $16.4] billion in [removed: 2018,] [added: 2019,] compared to [removed: $13.0] [added: $14.6] billion in [removed: 2017,] [added: 2018,] primarily due to [removed: the launch] [added: higher sales volume as a result] of [removed: Biktarvy in 2018 and] the continued uptake of [removed: Descovy, Genvoya and Odefsey.][added: Biktarvy.]

Of our total product sales, 25% were generated outside the United States in [removed: 2018.][added: 2019.]

Foreign currency exchange, net of hedges, had [removed: a favorable] [added: an immaterial] impact on our product sales [removed: of $94 million] in [removed: 2018, compared to 2017.][added: 2019, based on a comparison using foreign currency exchange rates from 2018.]

We record product sales net of estimated [removed: mandatory and supplemental discounts to] government [removed: payers, in addition to discounts to private payers, including rebates,] [added: and other rebates and] chargebacks, cash discounts for prompt payment, distributor fees and other related costs.

These deductions are generally referred to as gross-to-net deductions, which totaled [removed: $16.5] [added: $15.3] billion, or [removed: 43%] [added: 41%] of gross product sales in [removed: 2018,] [added: 2019,] compared to [removed: $17.2] [added: $16.5] billion, or [removed: 40%] [added: 43%] of gross [removed: products] [added: product] sales in [removed: 2017.][added: 2018.]

[added: Of the $15.3 billion in 2019, $13.5 billion or 36% of] gross product sales [added: in 2019] was related to government and other rebates and chargebacks, and [removed: $1.7] [added: $1.8] billion was related to cash discounts for prompt payment, distributor fees and other related costs.

The decrease [added: in HCV product sales in other international locations in 2019 compared to 2018] was primarily due to lower sales of [removed: our HCV products,] [added: Sovaldi,] partially offset by higher sales of [removed: our HIV products.][added: Epclusa.]

The decrease in sales of our HCV products was primarily due to lower [added: patient starts and lower] average net selling [removed: price and lower sales volume as a result of increased competition.][added: price.]

The increase in [removed: the] sales of our HIV products was primarily due to the [removed: launch of Biktarvy in 2018, the] continued uptake of [removed: Descovy, Genvoya] [added: Biktarvy] and [removed: Odefsey,] [added: an increase in] the [removed: increased usage] [added: number] of [removed: Truvada for PrEP and higher average net selling price,] [added: individuals taking PrEP,] partially offset by the decreases in sales [removed: volume] [added: volumes] of [removed: Atripla, Complera] [added: our other HIV products including Genvoya, Atripla] and Stribild.

[removed: The decrease was] [added: Product sales in Europe decreased by 3% to $3.6 billion in 2019, compared to $3.7 billion in 2018,] primarily due to lower sales of our HCV products and the [added: broader] availability of generic versions of [removed: Truvada, Atripla] [added: Truvada] and [removed: Viread.][added: Atripla.]

The decrease in sales of our HCV products was primarily due to lower [removed: sales volume and] average net selling [removed: price as] [added: price, including] a [removed: result of increased competition.][added: decline in U.S. Medicare prices in 2019.]

Additional information related to the comparison of our results of operations between the years 2018 and 2017 is included in *“*Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations*”* of our [2018 Form 10-K](http://www.sec.gov/Archives/edgar/data/882095/000088209519000006/0000882095-19-000006-index.htm) filed with the SEC and is incorporated by reference into this Annual Report on Form 10-K.

Gilead’s primary areas of focus include viral diseases, inflammatory and fibrotic diseases and oncology.

Our financial performance in 2019 was solid, as growth across our HIV franchise continued to drive results.

We took several significant steps to position us for future growth, including an important research and development (R&D) collaboration, the introduction of a new corporate strategy and the hiring of key members of our executive leadership team.

- We developed a new, corporate strategy to guide our work as we seek to drive growth over the next decade, with the ambitious goal of launching 10 new, transformative therapies over the next 10 years.

- We continued to make progress with our pipeline.

We currently have 40 clinical-stage programs, with 14 programs either in registrational or in label-enabling studies.

Of these programs, four have already received Breakthrough Therapy designation from U.S. Food and Drug Administration (FDA).

- We achieved sales of $16.4 billion across our HIV franchise in 2019, an increase of 12% from 2018, reaching another all-time high.

The continued revenue growth of our HIV products was driven by the demand for Biktarvy and the increase in the number of individuals taking our products for pre-exposure prophylaxis (PrEP).

At the end of 2019, Biktarvy was available in most major markets and, in the United States, approximately 27% of individuals on PrEP were receiving Descovy.

- We entered into a transformative R&D collaboration with Galapagos NV (Galapagos) in July, building on an existing partnership, and effectively enabling us to double our R&D footprint and accelerate our development of novel treatments for inflammatory and fibrotic diseases.

We submitted a regulatory filing for filgotinib to FDA, and the compound is now under priority review for rheumatoid arthritis (RA).

We also submitted filgotinib for approval in Europe and Japan and actively prepared for competitive launches in all three regions.

We and Galapagos continued to advance the Phase 3 study of GLPG-1690 for the treatment of idiopathic pulmonary fibrosis.

With regard to nonalcoholic steatohepatitis (NASH), after the STELLAR and ATLAS studies failed to reach their primary endpoints, we continued to work to understand the results to determine appropriate next steps for these therapies, including the potential for combination therapeutic approaches.

- In cell therapy, Kite, a Gilead company (Kite), submitted KTE-X19 for regulatory approval in the United States and Europe as a treatment for relapsed or refractory mantle cell lymphoma (MCL).

If approved, Kite will be the first company with two cell therapies on the market.

We also continued to demonstrate the efficacy of Yescarta.

Data shared at the end of 2019 showed that approximately half of patients treated with Yescarta for refractory large B-cell lymphoma were still alive three years following treatment in the ZUMA-1 study, confirming Yescarta’s benefit/risk profile.

In addition to cell therapy, we continued to grow our research portfolio in immuno-oncology.

- Our business also expanded geographically, including in China, where eight products have been approved since 2017 and four products (Vemlidy, Epclusa, Harvoni and Genvoya) have been listed on the National Reimbursement Drug List effective in January 2020.

During 2019, we continued to advance our product pipeline across our therapeutic areas with the goal of delivering best-in-class drugs that have the potential to improve the lives of patients with serious illnesses.

Key corporate, product, pipeline and other updates included:

*Viral Diseases*

| • | Licensing and collaboration agreements with The Rockefeller University, Novartis AG and Lyndra Therapeutics, Inc. |

| • | Approval of Vosevi and Biktarvy by the China National Medical Products Administration. |

| • | Approval of a PrEP indication for Descovy by FDA. |

| • | Approval of Biktarvy and Epclusa by Japan’s Ministry of Health, Labour and Welfare (MHLW). |

*Inflammatory and Fibrotic Diseases*

| • | Collaborations with Kyverna Therapeutics, Inc. Glympse Bio, Inc., Renown Institute for Health Innovation, Goldfinch Bio, Inc., Insitro, Inc., Novo Nordisk A/S and Yuhan Corporation. |

| • | Agreement with Eisai Co., Ltd. for the distribution and co-promotion of filgotinib in Japan, pending regulatory approval from Japan’s MHLW, for the treatment of RA. |

| • | Submission of a New Drug Application (NDA) under priority review to FDA and submission of a NDA to Japan’s MHLW for filgotinib. |

| • | Topline results from the Phase 2 ATLAS study of combination and monotherapy investigational treatments in patients with bridging fibrosis (F3) and compensated cirrhosis (F4) due to NASH. While the study did not meet its primary endpoint, we continued to analyze the ATLAS data to determine appropriate next steps for these therapies. |

| • | Collaboration with Galapagos and equity investment in Galapagos to gain access to Galapagos’ current and future product portfolio. See Note 11. Collaborative and Other Arrangements of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information. |

| • | European Medicines Agency’s validation of the marketing authorization application for filgotinib; the application is now under evaluation by the Agency. |

*Oncology*

| • | FDA’s acceptance of our Biologics License Application and granting Priority Review designation for KTE-X19 for the treatment of adult patients with relapsed or refractory MCL. |

| • | European Medicines Agency’s validation of the marketing authorization application for KTE-X19; the application is now under evaluation by the Agency. |

Gilead’s primary areas of focus include HIV/AIDS, liver diseases, hematology/oncology and inflammation/respiratory diseases.

2018 was marked by operational excellence and transition as we positioned ourselves for the future growth of our business.

We continued to develop and deliver innovative medicines to help people with life-threatening illnesses around the world.

Highlights of our 2018 performance include:

| | |

| --- | --- |

| • | HIV: We achieved record sales of our HIV products in 2018, with HIV product revenues increasing by 19% in the United States and 12% worldwide compared to 2017. This growth was driven by the successful launch of Biktarvy and the continued strong uptake of our single tablet regimens containing tenofovir alafenamide (TAF) for the treatment of HIV infection as well as Truvada for a pre-exposure prophylaxis (PrEP) indication for HIV prevention. Biktarvy, a once-daily single tablet regimen containing bictegravir, emtricitabine (FTC) and TAF for the treatment of HIV infection in adults, was approved by the U.S. Food and Drug Administration (FDA) in February and by the European Commission in June. |

| • | Liver Diseases: Our revenues from our chronic hepatitis C virus (HCV) products became more predictable in 2018. Because we wanted to introduce a lower-priced alternative to our HCV products without significant disruption to the healthcare system and our business, we authorized the launch of generic versions of Epclusa and Harvoni in the United States starting in January 2019 through our separate subsidiary, Asegua Therapeutics LLC (Asegua). We also continued to advance our clinical trials for the treatment of chronic hepatitis B virus (HBV) and nonalcoholic steatohepatitis (NASH), including completing enrollment of Phase 3 clinical trials of NASH. |

| • | Cell Therapy and Immuno-Oncology: We advanced our pipeline of cancer therapies and positioned ourselves as a leader in cell therapy. Yescarta was approved by the European Commission in August for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL) and primary mediastinal large B-cell lymphoma (PMBCL) after two or more lines of systemic therapy. We certified additional centers in the United States and Europe to provide treatment for Yescarta. In order to advance and accelerate research and development efforts in cell therapy and immuno-oncology, during the year, we entered into key strategic collaborations with the National Cancer Institute, Pfizer, Inc. (Pfizer), Sangamo Therapeutics, Inc. (Sangamo), Gadeta B.V. (Gadeta), HiFiBiO Therapeutics (HiFiBiO), Tango Therapeutics (Tango) and Agenus Inc. (Agenus). |

| • | Inflammation: We continued to advance our pipeline of novel investigational agents for inflammatory diseases, including announcing positive data on filgotinib in ongoing Phase 2 and 3 clinical trials. We also entered into a strategic collaboration with Verily Life Sciences LLC, an Alphabet company (Verily), using Verily’s Immunoscape platform to identify and better understand the immunological basis of inflammatory diseases. |

During the year, we continued to invest in and advance our research and development pipeline across our therapeutic areas.

At the end of 2018, our research and development pipeline included 119 active clinical studies, of which 41 were Phase 3 clinical trials.

Additionally, we completed 26 collaborations, partnerships and strategic investments in 2018, which reflects our commitment to enabling our access to new technologies and drug candidates with the potential to evolve care for people with life-threatening illnesses.

Our investments in research and development reflect our commitment to expanding our pipeline across a range of diseases to address areas of significant unmet medical need and positioning ourselves for the long-term growth of our business.

Recent key announcements include:

HIV and Liver Diseases Programs

| • | FDA and European Commission granted marketing authorization for Biktarvy for the treatment of HIV-1 infection. |

| • | FDA approved Truvada - in combination with safer sex practices - to reduce the risk of sexually acquired HIV-1 in at-risk adolescents. |

| • | China National Drug Administration (CDA, succeeded by China National Medical Products Administration (NMPA)) approved Genvoya in China for the treatment of HIV-1 infection. |

| • | NMPA approved Descovy in China for the treatment of HIV-1 infection in adults and adolescents. |

| • | We entered into an agreement with Japan Tobacco Inc. (Japan Tobacco) to expand our rights to develop and commercialize elvitegravir to include Japan and to acquire from Japan Tobacco the rights to market and distribute certain products in our HIV portfolio in Japan effective January 1, 2019. |

| • | We entered into a research collaboration and license agreement with Hookipa Biotech AG (Hookipa) that grants us exclusive rights to Hookipa’s TheraT® and Vaxwave® arenavirus vector-based immunization technologies for chronic HBV infection and HIV infection. |

| • | NMPA approved Harvoni in China for the treatment of chronic HCV infection with genotype 1-6 in adults and adolescents aged 12 to 18 years. |

| • | CDA approved Epclusa in China for the treatment of adults with genotype 1-6 chronic HCV infection. The CDA also approved Epclusa in combination with ribavirin for adults with chronic HCV infection and decompensated cirrhosis. |

| • | NMPA approved Vemlidy in China for the treatment of chronic HBV infection in adults and adolescents. |

| • | We entered into a strategic collaboration with Precision BioSciences (Precision) to develop therapies targeting the in vivo elimination of chronic HBV infection with Precision’s proprietary genome editing platform, ARCUS. |

| • | We announced that STELLAR-4, a Phase 3, randomized, double-blind, placebo-controlled study evaluating the safety and efficacy of selonsertib, an investigational, once-daily, oral inhibitor of apoptosis signal-regulating kinase 1 (ASK1), in patients with compensated cirrhosis (F4) due to NASH, did not meet the pre-specified week 48 primary endpoint of a ≥ 1-stage histologic improvement in fibrosis without worsening of NASH. |

Oncology and Cell Therapy Programs

| • | We entered into an immuno-oncology partnership with Agenus focused on the development and commercialization of up to five novel immuno-oncology therapies. |

| • | We entered into a global strategic collaboration with Tango to discover, develop and commercialize a pipeline of targeted immuno-oncology treatments for patients with cancer. |

| • | European Commission granted marketing authorization for Yescarta as a treatment for adult patients with relapsed or refractory DLBCL and PMBCL after two or more lines of systemic therapy. |

| • | We announced new worldwide facilities to advance manufacturing of cell therapies for people with cancer. |

| • | We entered into a research collaboration with Gadeta to advance gamma delta T cell receptor technology for solid tumors. This collaboration adds an additional new platform to our current capabilities in research and cell manufacturing. |

| • | We entered into a research collaboration and license agreement with HiFiBiO to develop technology supporting the discovery of neoantigen-reactive T cell receptors for the potential treatment of various cancers, including solid tumors. |

| • | We entered into a license agreement with Trianni, Inc. (Trianni) that grants us the use of the Trianni transgenic human monoclonal antibody discovery platform to support our drug discovery efforts. |

| • | We announced a new cooperative research and development agreement with the National Cancer Institute to develop adoptive cell therapies targeting patient-specific tumor neoantigens. |

| • | We entered into a worldwide collaboration with Sangamo using Sangamo’s zinc finger nuclease technology platform for the development of next-generation ex vivo cell therapies in oncology. |

| • | We entered into a clinical trial collaboration with Pfizer to evaluate the safety and efficacy of the investigational combination of Yescarta and Pfizer’s utomilumab, a fully humanized 4-1BB agonist monoclonal antibody, in patients with refractory large B-cell lymphoma. |

Inflammation Programs

| • | We entered into a strategic collaboration with Scholar Rock Holding Corporation to discover and develop highly specific inhibitors of transforming growth factor beta activation for the treatment of fibrotic diseases. |

[removed: Foreign] [added: Foreign] Currency Exchange [removed: Risk][added: Risk]

[added: When the U.S. dollar strengthens against] these currencies, the relative value of sales made in the respective foreign currency decreases.

Approximately 25% of our product sales were denominated in foreign currencies during [removed: 2018.][added: 2019.]

As of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] we had open foreign currency forward contracts with notional amounts of [removed: $2.2] [added: $2.9] billion and [removed: $2.8] [added: $2.2] billion, respectively.

A hypothetical 10% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates at December 31, [added: 2019 and December 31,] 2018 would have resulted in a reduction in fair value of these contracts of approximately [removed: $218] [added: $285] million [added: and $218 million, respectively,] on this date and, if realized, would negatively affect earnings over the remaining life of the contracts.

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

Our portfolio of available-for-sale [removed: marketable] debt securities and our fixed [removed: and variable] rate [removed: liabilities] [added: long-term debt] create an exposure to interest rate risk.

| [removed: •] [added: *•*] | safety and preservation of principal and diversification of risk; |

The following table summarizes the expected maturities and average interest rates of our interest-generating assets and interest-bearing liabilities at December 31, [removed: 2018 (in millions, except percentages):][added: 2019:]

| | | [removed: Expected Maturity] | [added: Expected Maturity] | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: Total] [added: | Total] Fair [removed: Value] [added: Value] | |

| [added: (In millions, except percentages)] | | [removed: 2019] | [added: 2020] | | | [removed: 2020] | [added: 2021] | | | [removed: 2021] | [added: 2022] | | | [removed: 2022] | [added: 2023] | | | [removed: 2023] | [added: 2024] | | | [removed: Thereafter] | [added: Thereafter] | | | [removed: Total] | [added: Total] | | | | | [added: |]

| [removed: Assets] [added: Assets] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: |]

| Available-for-sale debt securities | [added: |] $ | [removed: 22,741] [added: 15,012] | | | $ | [removed: 1,001] [added: 1,453] | | | $ | [removed: 311] [added: 5] | | | $ | [removed: 16] [added: 3] | | | $ | [removed: 30] [added: 4] | | | $ | [removed: 65] [added: 23] | | | $ | [removed: 24,164] [added: 16,500] | | | $ | [removed: 24,164] [added: 16,500] | |

| [removed: Liabilities] [added: Liabilities] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: |]

| [removed: Long-term] [added: Fixed rate long-term] debt, including current portion(1): | | [added: $] | [added: 2,500] | | | [added: $] | [added: 2,250] | | | [added: $] | [added: 1,500] | | | [added: $] | [added: 750] | | | [added: $] | [added: 1,750] | | | [added: $] | [added: 16,000] | | | [added: $] | [added: 24,750] | | | [added: $] | [added: 27,298] | [added: |]

| Average interest rate | | [removed: 1.92] | [removed: % | | |] 2.51 | % | | | 4.44 | % | | | 2.82 | % | | | 2.50 | % | | | [removed: 4.16] [added: 3.70] | % | | | [added: 4.21] | [added: %] | | | | | [added: | | | |]

| (1) | Amounts represent principal balances. In addition to [removed: these] [added: the] fixed [removed: and variable] rate long-term debt, we have a $2.5 billion five-year revolving credit [removed: facility.] [added: facility that matures in May 2021.] There were no amounts outstanding under the five-year revolving credit facility as of December 31, [removed: 2018.] [added: 2019.] See Note [removed: 12,] [added: 12.] Debt and Credit Facilities of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information. |

[removed: Market] [added: Market] Price [removed: Risk][added: Risk]

We hold shares of common stock of certain publicly traded biotechnology companies [added: primarily] in connection with license and collaboration agreements.

The fair value of these equity securities was approximately [removed: $881 million] [added: $3.8 billion] and [removed: $635] [added: $881] million as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

Changes in fair value of these equity securities are [removed: primarily due to] [added: impacted by] the volatility of the stock market and changes in general economic conditions, among other factors.

A hypothetical 20% increase or decrease in the stock prices of these equity securities would increase or decrease their fair value at December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] by approximately [removed: $176] [added: $760] million and [removed: $127] [added: $176] million, respectively.

We have operations in more than 35 countries worldwide.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Average interest rate | | | 1.88 | % | | | 1.98 | % | | | 2.04 | % | | | 3.50 | % | | | 3.53 | % | | | 2.18 | % | | | | | | | | |

| _________________________________________ | |

These equity securities are measured at fair value with any changes in fair value recognized in earnings.

Our operations include manufacturing and sales activities in the United States, Canada and Ireland as well as sales activities in countries outside the United States, including Europe and Asia Pacific.

When the U.S. dollar strengthens against

The same hypothetical movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates at December 31, 2017, would have resulted in a reduction in fair value of these contracts of approximately $285 million on this date and, if realized, would negatively affect earnings over the remaining life of the contracts.

| --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Average interest rate | | 2.61 | % | | | 3.10 | % | | | 2.97 | % | | | 2.89 | % | | | 2.54 | % | | | 3.47 | % | | | | | | | | |

| Fixed rate | $ | 1,500 | | | $ | 2,500 | | | $ | 2,250 | | | $ | 1,500 | | | $ | 750 | | | $ | 17,750 | | | $ | 26,250 | | | $ | 25,886 | |

| Variable rate | $ | 1,250 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,250 | | | $ | 1,250 | |

| Average interest rate(2) | | 3.02 | % | | | — | % | | | — | % | | | — | % | | | — | % | | | — | % | | | | | | | | |

| _______________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Notes:

| (2) | Average interest rates for our variable rate debt were based on the interest rates on the last reset date in 2018 for each debt instrument and are dependent upon several factors subject to change, including but not limited to LIBOR, the principal amount of debt outstanding and credit ratings on each reset date. |

Credit Risk

We are subject to credit risk from our portfolio of cash equivalents and marketable debt securities.

Under our investment policy, we limit amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government.

We are not exposed to any significant concentrations of credit risk from these financial

instruments.

The goals of our investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after-tax rate of return.

We are also subject to credit risk from our accounts receivable related to our product sales.

The majority of our trade accounts receivable arises from product sales in the United States and Europe.

As of December 31, 2018, our accounts receivable, net, in Southern Europe, specifically Greece, Italy, Portugal and Spain, totaled approximately $161 million, of which $31 million were greater than 120 days past due, including $27 million greater than 365 days past due.

As of December 31, 2017, our accounts receivable, net, in Southern Europe, specifically Greece, Italy, Portugal and Spain, totaled approximately $326 million, of which $131 million were greater than 120 days past due, including $52 million greater than 365 days past due.

To date, we have not experienced significant losses with respect to the collection of our accounts receivable.

These equity securities are measured at fair value with any changes in fair value recognized in earnings starting on January 1, 2018 as a result of our adoption of Accounting Standards Update No. 2016-01 “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”.

See Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for further information.

[removed: During the year,] [added: In 2019,] we continued to invest in and advance our [removed: research and development] [added: R&D] pipeline across our therapeutic areas.

At the end of [removed: 2018,] [added: 2019,] our [removed: research and development] [added: R&D] pipeline included [removed: 119] [added: 104] active clinical studies, of which [removed: 41] [added: 27] were Phase 3 clinical trials.

[removed: Our investments in research] [added: In 2019, we completed 27 strategic partnerships, licensing deals] and [removed: development reflect] [added: equity investments, which reflects] our commitment to [removed: expanding] [added: developing] our pipeline across a range of diseases to address areas of significant unmet medical need and positioning ourselves for the long-term growth of our business.

[removed: Our] [added: Our] Principal [removed: Products][added: Products]

Our focus on innovation has allowed us to deliver more than 24 marketed products across [removed: our primary areas of focus: HIV/AIDS, liver diseases, hematology/oncology and inflammation/respiratory diseases.][added: multiple therapeutic areas.]

[removed: HIV/AIDS][added: *HIV/AIDS*]

| • | [removed: Biktarvy] [added: Biktarvy®] is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Biktarvy is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, bictegravir, emtricitabine and [removed: TAF.] [added: tenofovir alafenamide (TAF).] |

| • | [removed: Descovy®] [added: Descovy®] is an oral formulation indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection in certain patients. Descovy is a fixed-dose combination of our antiretroviral medications, emtricitabine and TAF. [added: Descovy is also approved by U.S. Food and Drug Administration (FDA) for a pre-exposure prophylaxis (PrEP) indication to reduce the risk of sexually acquired HIV-1 infection in certain at-risk patients.] |

| • | [removed: Odefsey®] [added: Odefsey®] is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Odefsey is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, emtricitabine and TAF, and rilpivirine marketed by Janssen Sciences Ireland UC, one of the Janssen Pharmaceutical Companies of Johnson & Johnson (Janssen). |

| • | [removed: Genvoya®] [added: Genvoya®] is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Genvoya is a single tablet regimen of a fixed-dose combination of our antiretroviral medicines, elvitegravir, cobicistat, emtricitabine and TAF. |

| • | [removed: Stribild®] [added: Stribild®] is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Stribild is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, elvitegravir, cobicistat, tenofovir disoproxil fumarate (TDF) and emtricitabine. |

| • | [removed: Complera®/Eviplera®] [added: Complera®/Eviplera®] is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. The product, marketed in the United States as Complera and in Europe as Eviplera, is a single tablet regimen of a fixed-dose combination of our antiretroviral medications, TDF and emtricitabine, and Janssen’s rilpivirine hydrochloride. |

| • | [removed: Atripla®] [added: Atripla®] is an oral formulation indicated as a complete regimen for the treatment of HIV-1 infection in certain patients. Atripla is a fixed-dose combination of our antiretroviral medications, TDF and emtricitabine, and Bristol-Myers Squibb [removed: Company’s (BMS’s)] [added: Company (BMS)’s] efavirenz. |

| • | [removed: Truvada®] [added: Truvada®] is an oral formulation indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection in certain patients. It is a fixed-dose combination of our antiretroviral medications, TDF and emtricitabine. [removed: FDA] [added: Truvada is] also approved [removed: Truvada] [added: by FDA] for a PrEP indication, in combination with safer sex practices, to reduce the risk of sexually acquired HIV-1 infection in certain at-risk patients. |

[removed: Liver Diseases][added: *Liver Diseases*]

| • | [removed: Vosevi®] [added: Vosevi®] is an oral formulation of a once-daily, single tablet regimen of sofosbuvir, velpatasvir and voxilaprevir for the re-treatment of chronic [removed: HCV] [added: hepatitis C virus (HCV)] infection in adults: (i) with genotype 1, 2, 3, 4, 5 or 6 previously treated with an NS5A inhibitor-containing regimen or (ii) with genotype 1a or 3 previously treated with a sofosbuvir-containing regimen without an NS5A inhibitor. |

| • | [removed: Vemlidy®] [added: Vemlidy®] is an oral formulation of TAF dosed once a day for the treatment of chronic [removed: HBV] [added: hepatitis B virus (HBV)] infection in adults with compensated liver disease. |

| • | [removed: Epclusa®] [added: Epclusa®] is an oral formulation of a once-daily single tablet regimen of sofosbuvir and velpatasvir for the treatment of chronic HCV infection in adults with genotype 1, 2, 3, 4, 5 or 6: (i) without cirrhosis or with compensated cirrhosis or (ii) with decompensated cirrhosis for use in combination with ribavirin. |

| • | [removed: Harvoni®] [added: Harvoni®] is an oral formulation of a once-daily, single tablet regimen of ledipasvir and sofosbuvir for the treatment of chronic HCV infection in: (i) adults with genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis, (ii) adults with genotype 1 infection with decompensated cirrhosis, in combination with ribavirin, [removed: (ii)] [added: (iii)] adults with genotype 1 or 4 [removed: who are liver transplant recipients without cirrhosis or with compensated cirrhosis, in combination with ribavirin, or (iv) certain pediatric patients with genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis.] |

| [removed: •] [added: •] | [removed: Viread®] [added: Viread®] is an oral formulation of TDF dosed once a day for the treatment of chronic HBV infection in adults and certain pediatric patients. |

[removed: Hematology/Oncology][added: *Hematology/Oncology*]

| • | [removed: Yescarta] [added: Yescarta®] (axicabtagene ciloleucel) is a [removed: CAR] [added: chimeric antigen receptor (CAR)] T cell therapy for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, including [removed: DLBCL] [added: diffuse large B-cell lymphoma (DLBCL)] not otherwise specified, [removed: PMBCL,] [added: primary mediastinal large B-cell lymphoma,] high-grade B-cell lymphoma and DLBCL arising from [removed: TFL.] [added: follicular lymphoma.] |

| • | [removed: Zydelig®] [added: Zydelig®] (idelalisib) is an oral formulation of a kinase inhibitor for the treatment of patients with: (i) relapsed chronic lymphocytic leukemia (CLL), in combination with rituximab, for whom rituximab alone would be considered appropriate therapy due to other co-morbidities, (ii) relapsed follicular B-cell non-Hodgkin lymphoma (FL) in patients who have received at least two prior systemic therapies or (iii) relapsed small lymphocytic lymphoma who have received at least two prior systemic therapies. |

[removed: Other][added: *Other*]

| • | [removed: Letairis®] [added: Letairis®] (ambrisentan) is an oral formulation of an endothelin receptor antagonist for the treatment of pulmonary arterial hypertension (PAH) (WHO Group I) (i) to improve exercise capacity and delay clinical worsening or (ii) in combination with tadalafil to reduce the risks of disease progression and hospitalization for worsening PAH, and to improve exercise ability. |

| • | [removed: Ranexa®] [added: Ranexa®] (ranolazine) is an oral formulation of an extended-release tablet of an antianginal for the treatment of chronic angina. |

| • | [removed: AmBisome®] [added: AmBisome®] (amphotericin B liposome for injection) is a proprietary liposomal formulation of amphotericin B, an antifungal agent, for the treatment of serious invasive fungal infections caused by various fungal species in adults. |

For information about our product revenues, including the amount of revenue contributed by each of the products listed above for each of the last three fiscal years, see Note [removed: 2, Revenues, of the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K.][added: 2.]

[removed: Commercialization] [added: Commercialization] and [removed: Distribution][added: Distribution]

Our product sales to three large wholesalers, [removed: McKesson Corporation,] AmerisourceBergen [removed: Corporation and] [added: Corporation,] Cardinal Health, [removed: Inc.,] [added: Inc. and McKesson Corporation,] each accounted for more than 10% of total revenues for each of the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016.][added: 2017.]

On a combined basis, in [removed: 2018,] [added: 2019,] these wholesalers accounted for approximately [removed: 85%] [added: 87%] of our product sales in the United States and approximately [removed: 62%] [added: 64%] of our total worldwide revenues.

[removed: Competition][added: Competition]

As our products mature, private insurers and government payers often reduce the amount they will reimburse [removed: patients,] [added: providers,] which increases pressure on us to reduce prices.

For a description of our competitors, see Item [removed: 1A - Risk Factors “We face significant competition.”][added: 1A.]

[removed: Research] [added: Research] and [removed: Development][added: Development]

| [removed: Product Candidates] [added: Product Candidates] | | [removed: Description] [added: Description] |

| [removed: Product in Phase 3] [added: Phase 2] | | |

| [removed: Product in Phase 2] [added: Phase 1] | | |

| [removed: GS-9131] [added: GS-4224] | | [removed: GS-9131,] [added: GS-4224,] a [removed: nucleoside reverse transcriptase] [added: PD-L1] inhibitor, is being evaluated for the treatment of [removed: HIV] [added: chronic HBV] infection. |

| [removed: Products in Phase 1] [added: Phase 3] | | |

Gilead’s primary areas of focus include viral diseases, inflammatory and fibrotic diseases and oncology.

who are liver transplant recipients without cirrhosis or with compensated cirrhosis, in combination with ribavirin, or (iv) certain pediatric patients with genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis.

Revenues of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Risk Factors “We face significant competition.”

Our product development efforts are focused primarily in viral diseases, inflammatory and fibrotic diseases and oncology.

*Product Candidates in Viral Diseases*

*Product Candidates in Inflammatory and Fibrotic Diseases*

| GLPG-1690(2) | | GLPG-1690, an autotaxin inhibitor, is being evaluated for the treatment of idiopathic pulmonary fibrosis. |

| Filgotinib | | Filgotinib is being evaluated for the treatment of (i) ankylosing spondylitis and (ii) uveitis. |

| GLPG-1690(2) | | GLPG-1690 is being evaluated for the treatment of systemic sclerosis. |

| GLPG-1205(1) | | GLPG-1205, a GPR84 inhibitor, is being evaluated for the treatment of idiopathic pulmonary fibrosis. |

| GLPG-3970(1) | | GLPG-3970 is being evaluated for the treatment of inflammatory diseases. |

| GLPG-3667(1) | | GLPG-3667 is being evaluated for the treatment of inflammatory diseases. |

| Phase 3 | | |

| Phase 2 | | |

| Phase 1 | | |

| Axicabtagene ciloleucel | | Axicabtagene ciloleucel is being evaluated for the treatment of DLBCL in combination with utomilumab. |

| KITE-439 | | KITE-439, an HPV E7, is being evaluated for the treatment of solid tumors. |

| GS-1423 | | GS-1423, a bi-specific antibody, is being evaluated for the treatment of solid tumors. |

| GS-4224 | | GS-4224, an oral PD-L1 inhibitor, is being evaluated for the treatment of solid tumors. |

| AGEN1223(1) | | AGEN1223, a bi-specific mAb, is being evaluated for the treatment of multiple indications in oncology. |

| AGEN2373(1) | | AGEN2373, an anti-CD137 mAb, is being evaluated for the treatment of multiple indications in oncology. |

| (1) | Optionable partner program |

| (2) | Optioned partner program |

| Product Candidates in Inflammatory and Fibrotic Diseases: | | | | | | |

| GLPG-1690 for the treatment of idiopathic pulmonary fibrosis | | 2034 | | | 2034 | |

| Cilofexor for the treatment of primary sclerosing cholangitis | | 2032 | | | 2032 | |

| Product Candidate in Oncology: | | | | | | |

__________________________________________

For our products that are fixed-dose combinations or single tablet regimens,

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | U.S. | | | E.U. | |

| _________________________________________ | | | | | | |

__________________________________________

For example, we are aware of patents and patent

For a description of our significant pending legal proceedings, see Note 14.

These facilities are located in Foster City, San Dimas, La Verne, Oceanside and El Segundo, California; Dublin and Cork, Ireland; Hoofddorp, Netherlands; and Edmonton, Canada.

| • | Hoofddorp, Netherlands: We utilize the facility for commercial manufacturing and processing of Yescarta. |

Overview

Gilead’s primary areas of focus include HIV/AIDS, liver diseases, hematology/oncology and inflammation/respiratory diseases.

2018 Highlights

2018 was marked by operational excellence and transition as we positioned ourselves for the future growth of our business.

We continued to develop and deliver innovative medicines to help people with life-threatening illnesses around the world.

Highlights of our 2018 performance include:

| • | HIV: We achieved record sales of our HIV products in 2018, with HIV product revenues increasing by 19% in the United States and 12% worldwide compared to 2017. This growth was driven by the successful launch of Biktarvy® and the continued strong uptake of our single tablet regimens containing tenofovir alafenamide (TAF) for the treatment of HIV infection as well as Truvada® for a pre-exposure prophylaxis (PrEP) indication for HIV prevention. Biktarvy, a once-daily single tablet regimen containing bictegravir, emtricitabine and TAF for the treatment of HIV infection in adults, was approved by the U.S. Food and Drug Administration (FDA) in February and by the European Commission in June. |

| • | Liver Diseases: Our revenues from our chronic hepatitis C virus (HCV) products became more predictable in 2018. Because we wanted to introduce a lower-priced alternative to our HCV products without significant disruption to the healthcare system and our business, we authorized the launch of generic versions of Epclusa® and Harvoni® in the United States starting in January 2019 through our separate subsidiary, Asegua Therapeutics LLC (Asegua). We also continued to advance our clinical trials for the treatment of chronic hepatitis B virus (HBV) and nonalcoholic steatohepatitis (NASH), including completing enrollment of Phase 3 clinical trials of NASH. |

| • | Cell Therapy and Immuno-Oncology: We advanced our pipeline of cancer therapies and positioned ourselves as a leader in cell therapy. Yescarta® was approved by the European Commission in August for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL) and primary mediastinal large B-cell lymphoma (PMBCL) after two or more lines of systemic therapy. We certified additional centers in the United States and Europe to provide treatment for Yescarta. In order to advance and accelerate research and development efforts in cell therapy and immuno-oncology, during the year, we entered into key strategic collaborations with the National Cancer Institute, Pfizer, Inc. (Pfizer), Sangamo Therapeutics, Inc. (Sangamo), Gadeta B.V. (Gadeta), HiFiBiO Therapeutics (HiFiBiO), Tango Therapeutics (Tango) and Agenus Inc. (Agenus). |

| • | Inflammation: We continued to advance our pipeline of novel investigational agents for inflammatory diseases, including announcing positive data on filgotinib in ongoing Phase 2 and 3 clinical trials. We also entered into a strategic collaboration with Verily Life Sciences LLC, an Alphabet company (Verily), using Verily’s Immunoscape platform to identify and better understand the immunological basis of inflammatory diseases. |

Additionally, we completed 26 collaborations, partnerships and strategic investments in 2018, which reflects our commitment to enabling our access to new technologies and drug candidates with the potential to evolve care for people with life-threatening illnesses.

Our product development efforts cover a wide range of medical conditions, including HIV/AIDS, liver diseases, hematology/oncology, and inflammation/respiratory diseases.

Product Candidates for the Treatment of HIV/AIDS

| | | |

| --- | --- | --- |

| Descovy | | Descovy is being evaluated for a PrEP indication. |

Product Candidates for the Treatment of Liver Diseases

Product Candidates for the Treatment of Inflammation/Respiratory Diseases

| GS-9876 | | GS-9876, a Syk inhibitor, is being evaluated for the treatment of Sjogren’s syndrome and lupus. |

We completed 26 collaborations, partnerships and strategic investments in 2018, compared to 6 in 2017, which reflects our commitment to enabling our access to new technologies and drug candidates with the potential to evolve care for people with life-threatening illnesses.

| Product Candidate for the Treatment of HIV/AIDS | | | U.S. | | E.U. | |

| Descovy for PrEP | | | 2022* | | 2021* | |

| Product Candidate for the Treatment of Liver Diseases | | | | | | |

| Selonsertib for the treatment of NASH | | | 2033 | | 2033 | |

| Product Candidates for the Treatment of Hematology/Oncology | | | | | | |

| Product Candidate for the Treatment of Inflammation/Respiratory Diseases | | | | | | |

| _______________________ | | | | | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| _______________________ | | | | | |

Notes:

| (7) | An application for patent term extension was filed in the United States that, if granted, would extend the U.S. expiration date to 2025. Applications for SPCs were filed in the European Union that, if granted, would extend the E.U. expiration date to 2026. |

We do not own patents covering ranolazine, the active ingredient of Ranexa.

Instead, when it was discovered that only a sustained-release formulation of ranolazine would achieve therapeutic plasma levels, we obtained patents on those formulations and the characteristic plasma levels they achieve.

For

For Letairis, we are the exclusive manufacturer of the ambrisentan API, but we have another qualified supplier to make this API.

In addition, these third-party manufacturers could develop their own technology related to the work they perform for us that we may need to manufacture our products.

We could be required to enter into additional agreements with these third-party manufacturers if we want to use that technology ourselves or allow another manufacturer to use that technology.

The third-party manufacturer could refuse to allow us to use their technology or could demand terms to use their technology that are not acceptable to us.

We have observed that strong wholesaler and sub-

[removed: For a description of our significant pending legal proceedings, please see Note 13,] Commitments and Contingencies - Legal Proceedings of the Notes to Consolidated Financial Statements included in [added: Part II,] Item 8 of [removed: our] [added: this] Annual Report on Form 10-K, which is incorporated herein by reference.

For a description of our significant pending legal proceedings, please see Note 14.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: (Mark One)][added: (Mark One)]

| [removed: ý] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

| [removed: o] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] File [removed: No. 000-19731][added: No. 0-19731]

[removed: GILEAD] [added: GILEAD] SCIENCES, [removed: INC.][added: INC.]

[removed: (Exact name] [added: (Exact Name] of [removed: registrant] [added: Registrant] as [removed: specified] [added: Specified] in [removed: its charter)][added: Its Charter)]

| [removed: Delaware] [added: Delaware] | [removed: 94-3047598] [added: 94-3047598] |

| (State or Other Jurisdiction of [removed: Incorporation or Organization)] [added: Incorporation)] | [removed: (I.R.S.] [added: (IRS] Employer Identification No.) |

[removed: | 333] [added: 333] Lakeside [removed: Drive, Foster City, California | 94404 |][added: Drive, Foster City, California 94404]

[removed: |] (Address of principal executive offices) [removed: |] (Zip Code) [removed: |]

[removed: Registrant’s telephone number, including area code: 650-574-3000][added: (Registrant’s Telephone Number, Including Area Code)]

[removed: SECURITIES REGISTERED PURSUANT TO SECTION] [added: Securities registered pursuant to Section] 12(b) [removed: OF THE ACT:][added: of the Act:]

| Title of each class | [added: | Trading Symbol(s) | |] Name of each exchange on which registered |

| [removed: Common] [added: Common] Stock, [removed: $0.001] par [removed: value] [added: value, $0.001] per [removed: share] [added: share] | [removed: The] [added: | GILD | | The] Nasdaq Global Select [removed: Market] [added: Market] |

Yes [removed: ý] [added: x] No ¨

Large accelerated filer [removed: ý] [added: x] Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company [removed: ¨] [added: ☐] Emerging growth company [removed: ¨][added: ☐]

Yes [removed: ¨] [added: x] No [removed: ý][added: ¨]

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 [removed: 29, 2018] [added: 28, 2019] was [removed: $79,506,595,778.*][added: $66.4 billion.*]

The number of shares outstanding of the registrant’s Common Stock on February [removed: 15, 2019] [added: 18, 2020] was [removed: 1,275,510,558.][added: 1,263,636,656.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: 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 [removed: 2019] [added: 2020] Annual Meeting of Stockholders, to be held on May [removed: 8, 2019,] [added: 6, 2020,] are incorporated by reference into Part III of this Report.

* Based on a closing price of [removed: $70.84] [added: $67.56] per share on June [removed: 29, 2018.][added: 28, 2019.]

Excludes [removed: 173,576,690] [added: 284,647,252] 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 [removed: 29, 2018.][added: 28, 2019.]

[removed: 2018 Form] [added: 2019 Form] 10-K Annual [removed: Report][added: Report]

[removed: Table] [added: Table] of [removed: Contents][added: Contents]

| [removed: PART I] [added: PART I] | | |

| Item 1 | [removed: [Business](#s39A2BC4EDEC487CA9B9B2DF72DDFDBB6)] [added: [Business](#s7141EC9E5ECF108F98A48F27BF3ADA45)] | [removed: [3](#s39A2BC4EDEC487CA9B9B2DF72DDFDBB6)] [added: [3](#s7141EC9E5ECF108F98A48F27BF3ADA45)] |

| Item 1A | [Risk [removed: Factors](#s8C338D5278897F27E37D2DF749A063AA)] [added: Factors](#s76B4F2A417E427538CBB8F280B7FEEBD)] | [removed: [14](#s8C338D5278897F27E37D2DF749A063AA)] [added: [13](#s76B4F2A417E427538CBB8F280B7FEEBD)] |

| Item 1B | [Unresolved Staff [removed: Comments](#s7ED6ADA4FB695CB55F922DF749D86D4B)] [added: Comments](#sD4127B25FFB67BE59BA08F280BA2EC1E)] | [removed: [25](#s7ED6ADA4FB695CB55F922DF749D86D4B)] [added: [26](#sD4127B25FFB67BE59BA08F280BA2EC1E)] |

| Item 2 | [removed: [Properties](#s691A494D81414F62AB722DF72DDF477F)] [added: [Properties](#s11F232EE80B7FBB9B77B8F27BF3A0F35)] | [removed: [25](#s691A494D81414F62AB722DF72DDF477F)] [added: [26](#s11F232EE80B7FBB9B77B8F27BF3A0F35)] |

| Item 3 | [Legal [removed: Proceedings](#s60D7170C76CCA523A2122DF74A0F5851)] [added: Proceedings](#s0162E6D9FE88AA291A698F280BF400DB)] | [removed: [25](#s60D7170C76CCA523A2122DF74A0F5851)] [added: [26](#s0162E6D9FE88AA291A698F280BF400DB)] |

| Item 4 | [Mine Safety [removed: Disclosures](#s0CEDE5636DDD98E613082DF74A42CC59)] [added: Disclosures](#sFD19A1271C74BCC0AAA18F280C32ED88)] | [removed: [25](#s0CEDE5636DDD98E613082DF74A42CC59)] [added: [26](#sFD19A1271C74BCC0AAA18F280C32ED88)] |

| [removed: PART II] [added: PART II] | | |

or

650\-574-3000

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

Yes ☐ No x

GILEAD SCIENCES, INC.

| [SIGNATURES](#sDA2568D24163CD5FFF278F2817AC24AF) | | [96](#sDA2568D24163CD5FFF278F2817AC24AF) |

MACUGEN® is a registered trademark of Bausch Health Ireland Limited.

10-K 1 a2018form10-k.htm FORM 10-K

| | |

| --- | --- |

or

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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.

| [SIGNATURES](#s70476063F18C1E706CB32DF7555396BD) | | [98](#s70476063F18C1E706CB32DF7555396BD) |

Our corporate headquarters [removed: is] [added: are] located in Foster City, California, where we house our [removed: administrative, manufacturing] [added: administrative] and [added: certain of our] R&D activities.

We also have R&D facilities in Emeryville, [removed: Oceanside,] [added: Oceanside and] Santa Monica, California; Gaithersburg, Maryland; Seattle, Washington; Edmonton, [removed: Alberta,] Canada; and Amsterdam, [removed: Netherlands and manufacturing facilities in El Segundo, La Verne, Oceanside, San Dimas, California; Alberta, Canada; and Dublin and Cork, Ireland.][added: Netherlands.]

[added: For more information about our manufacturing facilities, see Item 1 - Business “Our Manufacturing Facilities.”] Our global operations include offices in Europe, North America, Asia, South America, Africa, Australia and the Middle East.

Our principal manufacturing facilities are in El Segundo, La Verne, Oceanside and San Dimas, California; Edmonton, Canada; Cork, Ireland; and Hoofddorp, Netherlands.

[removed: PART II][added: PART II]

[removed: Performance Graph (1)][added: *Performance Graph* *(1)*]

[removed: Comparison] [added: Comparison] of Cumulative Total Return on Investment for the Past Five [removed: Years (2)][added: Years (2)]

[removed: ][added: ]

| (2) | Shows the cumulative return on investment assuming an investment of $100 in our common stock, the NBI Index and the S&P 500 Index on December 31, [removed: 2013,] [added: 2014,] and assuming that all dividends were reinvested. |

[removed: Equity] [added: *Equity] Compensation Plan [removed: Information][added: Information*]

The following table provides certain information with respect to our equity compensation plans in effect as of December 31, [removed: 2018:][added: 2019 (in millions, except per share amounts):]

| [removed: Plan Category] | | [removed: Number] [added: Number] of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and [removed: Rights (a) (in thousands)] [added: Rights] | | | [removed: Weighted-average] [added: Weighted-average] Exercise Price of Outstanding Options, Warrants and [removed: Rights (b) (1) (in dollars)] [added: Rights(1)] | | | | [removed: Number] [added: Number] of Common Shares Remaining Available for [added: Future] Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column [removed: (a) (c) (in thousands)] [added: (a))] | |

| Equity Compensation plans approved by security [removed: holders :] [added: holders:] | | | | | | | | | | |

| 2004 Equity Incentive Plan | | [removed: 23,524] [added: 19.5] | | | $ | [removed: 53.80] [added: 61.35] | | | [removed: 91,441] [added: 79.2] | |

| Employee Stock Purchase [removed: Plan (2)] [added: Plan(2)] | | | | | | | | | [removed: 10,491] [added: 8.9] | |

| Total equity compensation plans approved by security holders | | [removed: 23,524] [added: 19.5] | | | $ | [removed: 53.80] [added: 61.35] | | | [removed: 101,932] [added: 88.1] | |

| (1) | Does not take into account [removed: 16] [added: 18] million restricted stock [removed: and stock unit awards,] [added: units,] performance share [added: awards or] units and phantom [removed: shares] [added: shares, which have no exercise price and were] granted under our 2004 Equity Incentive Plan. |

[removed: Issuer] [added: *Issuer] Purchases of Equity [removed: Securities][added: Securities*]

During [removed: 2018,] [added: 2019,] we repurchased and retired [removed: 40] [added: 26] million shares of our common stock for [removed: $2.9] [added: $1.7] billion through open market transactions under the 2016 Program.

The table below summarizes our stock repurchase activity for the three months ended December 31, [removed: 2018:][added: 2019 (in thousands, except per share amounts):]

| | | [removed: Total Number of Shares Purchased (in thousands)] [added: Total Number of Shares Purchased] | | | [removed: Average Price Paid per Share (in dollars)] [added: Average Price Paid per Share] | | | | [removed: Total] [added: Total] Number [removed: of Shares Purchased as] [added: of Shares Purchased as] Part of a [removed: Publicly Announced Program (in thousands)] [added: Publicly Announced Program] | | | [removed: Maximum Fair Value] [added: Maximum Fair Value] of [removed: Shares that] [added: Shares that] May Yet [removed: Be Purchased Under the Program (in millions)] [added: Be Purchased Under the Program] | | |

As of February 18, 2020, we had approximately 473 stockholders of record of our common stock.

| Plan Category | | (a) | | | (b) | | | | (c) | |

| Total | | 19.5 | | | $ | 61.35 | | | 88.1 | |

| October 1 - October 31, 2019 | | 712 | | | $ | 63.84 | | | 688 | | | $ | 3,459 | |

| November 1 - November 30, 2019 | | 768 | | | $ | 65.14 | | | 557 | | | $ | 3,423 | |

| December 1 - December 31, 2019 | | 393 | | | $ | 66.59 | | | 372 | | | $ | 3,398 | |

| Total | | 1,873 | | (1) | $ | 64.95 | | | 1,617 | | (1) | | | |

In the first quarter of 2020, our Board of Directors authorized a new $5.0 billion stock repurchase program (2020 Program), which will commence upon the completion of the 2016 Program.

Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.

As of February 15, 2019, we had 1,275,510,558 shares of common stock outstanding held by approximately 375 stockholders of record, which include shares held by a broker, bank or other nominee.

Notes:

| Total | | 23,524 | | | $ | 53.80 | | | 101,932 | |

We started repurchases under the 2016 Program in April 2016.

| October 1 - October 31, 2018 | | 804 | | | $ | 73.96 | | | 751 | | | $ | 6,053 | |

| November 1 - November 30, 2018 | | 5,922 | | | $ | 69.16 | | | 5,696 | | | $ | 5,660 | |

| December 1 - December 31, 2018 | | 7,642 | | | $ | 67.39 | | | 7,608 | | | $ | 5,147 | |

| Total | | 14,368 | | (1) | $ | 68.49 | | | 14,055 | | (1) | | | |

[removed: GILEAD] [added: GILEAD] SCIENCES, [removed: INC.][added: INC.]

[removed: SELECTED] [added: SELECTED] CONSOLIDATED FINANCIAL [removed: DATA][added: DATA]

[removed: (in] [added: (in] millions, except per share [removed: data)][added: amounts)]

| | [removed: Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENT OF INCOME [removed: DATA(1):] [added: DATA(1):] | | | | | | | | | | | | | | | | | | | |

| Total revenues (2) | $ | [removed: 22,127] [added: 22,449] | | | $ | [removed: 26,107] [added: 22,127] | | | $ | [removed: 30,390] [added: 26,107] | | | $ | [removed: 32,639] [added: 30,390] | | | $ | [removed: 24,890] [added: 32,639] | |

| Total costs and expenses | $ | [removed: 13,927] [added: 18,162] | | | $ | [removed: 11,983] [added: 13,927] | | | $ | [removed: 12,757] [added: 11,983] | | | $ | [removed: 10,446] [added: 12,757] | | | $ | [removed: 9,625] [added: 10,446] | |

| Income from [removed: operations] [added: operations(2)] | $ | [removed: 8,200] [added: 4,287] | | | $ | [removed: 14,124] [added: 8,200] | | | $ | [removed: 17,633] [added: 14,124] | | | $ | [removed: 22,193] [added: 17,633] | | | $ | [removed: 15,265] [added: 22,193] | |

| Provision for income taxes(3) | $ | [removed: 2,339] [added: (204] | [added: )] | | $ | [removed: 8,885] [added: 2,339] | | | $ | [removed: 3,609] [added: 8,885] | | | $ | [removed: 3,553] [added: 3,609] | | | $ | [removed: 2,797] [added: 3,553] | |

| Net [removed: income(2)(3)] [added: income(2)(3)(4)] | $ | [removed: 5,460] [added: 5,364] | | | $ | [removed: 4,644] [added: 5,460] | | | $ | [removed: 13,488] [added: 4,644] | | | $ | [removed: 18,106] [added: 13,488] | | | $ | [removed: 12,059] [added: 18,106] | |

| Net income attributable to [removed: Gilead(2)(3)] [added: Gilead(2)(3)(4)] | $ | [removed: 5,455] [added: 5,386] | | | $ | [removed: 4,628] [added: 5,455] | | | $ | [removed: 13,501] [added: 4,628] | | | $ | [removed: 18,108] [added: 13,501] | | | $ | [removed: 12,101] [added: 18,108] | |

| Net income per share attributable to Gilead common stockholders - [removed: basic(2)(3)] [added: basic(2)(3)(4)] | $ | [removed: 4.20] [added: 4.24] | | | $ | [removed: 3.54] [added: 4.20] | | | $ | [removed: 10.08] [added: 3.54] | | | $ | [removed: 12.37] [added: 10.08] | | | $ | [removed: 7.95] [added: 12.37] | |

| Shares used in per share calculation - basic | [removed: 1,298] [added: 1,270] | | | | [removed: 1,307] [added: 1,298] | | | | [removed: 1,339] [added: 1,307] | | | | [removed: 1,464] [added: 1,339] | | | | [removed: 1,522] [added: 1,464] | | |

| Net income per share attributable to Gilead common stockholders - [removed: diluted(2)(3)] [added: diluted(2)(3)(4)] | $ | [removed: 4.17] [added: 4.22] | | | $ | [removed: 3.51] [added: 4.17] | | | $ | [removed: 9.94] [added: 3.51] | | | $ | [removed: 11.91] [added: 9.94] | | | $ | [removed: 7.35] [added: 11.91] | |

| Shares used in per share calculation - diluted | [removed: 1,308] [added: 1,277] | | | | [removed: 1,319] [added: 1,308] | | | | [removed: 1,358] [added: 1,319] | | | | [removed: 1,521] [added: 1,358] | | | | [removed: 1,647] [added: 1,521] | | |

| Cash dividends declared per share | $ | [removed: 2.28] [added: 2.52] | | | $ | [removed: 2.08] [added: 2.28] | | | $ | [removed: 1.84] [added: 2.08] | | | $ | [removed: 1.29] [added: 1.84] | | | $ | [removed: —] [added: 1.29] | |

| | [removed: December 31,] [added: December 31,] | | | | | | | | | | | | | | | | | | |

| [removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE SHEET [removed: DATA(1):] [added: DATA(1):] | | | | | | | | | | | | | | | | | | | |

| Cash, cash equivalents and marketable debt [removed: securities(4)] [added: securities(5)] | $ | [removed: 31,512] [added: 25,840] | | | $ | [removed: 36,694] [added: 31,512] | | | $ | [removed: 32,380] [added: 36,694] | | | $ | [removed: 26,208] [added: 32,380] | | | $ | [removed: 11,726] [added: 26,208] | |

| Working [removed: capital(4)(5)] [added: capital(3)(4)(5)(6)] | $ | [removed: 25,231] [added: 20,537] | | | $ | [removed: 20,188] [added: 25,231] | | | $ | [removed: 10,370] [added: 20,188] | | | $ | [removed: 14,044] [added: 10,370] | | | $ | [removed: 11,453] [added: 14,044] | |

| Total [removed: assets(4)(6)] [added: assets(5)(6)] | $ | [removed: 63,675] [added: 61,627] | | | $ | [removed: 70,283] [added: 63,675] | | | $ | [removed: 56,977] [added: 70,283] | | | $ | [removed: 51,716] [added: 56,977] | | | $ | [removed: 34,601] [added: 51,716] | |

| Other long-term [removed: obligations(5)] [added: obligations(6)] | $ | [removed: 1,040] [added: 1,009] | | | $ | [removed: 558] [added: 1,040] | | | $ | [removed: 297] [added: 558] | | | $ | [removed: 395] [added: 297] | | | $ | [removed: 594] [added: 395] | |

| Long-term debt, including current [removed: portion(4)(6)] [added: portion(5)] | $ | [removed: 27,322] [added: 24,593] | | | $ | [removed: 33,542] [added: 27,322] | | | $ | [removed: 26,346] [added: 33,542] | | | $ | [removed: 22,055] [added: 26,346] | | | $ | [removed: 12,341] [added: 22,055] | |

| Retained [removed: earnings(2)(3)] [added: earnings(2)(3)(4)(6)] | $ | [removed: 19,024] [added: 19,388] | | | $ | [removed: 19,012] [added: 19,024] | | | $ | [removed: 18,154] [added: 19,012] | | | $ | [removed: 18,001] [added: 18,154] | | | $ | [removed: 12,732] [added: 18,001] | |

| Total stockholders’ [removed: equity(2)(3)] [added: equity(2)(3)(4)(6)] | $ | [removed: 21,534] [added: 22,650] | | | $ | [removed: 20,501] [added: 21,534] | | | $ | [removed: 19,363] [added: 20,501] | | | $ | [removed: 19,113] [added: 19,363] | | | $ | [removed: 15,819] [added: 19,113] | |

| [removed: |] (1) | See Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Annual Report on Form 10-K for a description of our results of operations for [removed: 2018.] [added: 2019.] |

| [removed: | (2)] [added: (6)] | In [removed: 2018,] [added: 2019,] we adopted Accounting Standards Update No. [removed: 2014-09] [added: 2016-02] (Topic [removed: 606) “Revenue from Contracts] [added: 842) “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities for operating leases] with [removed: Customers”] [added: a lease term greater than one year. We adopted Topic 842] using the modified retrospective [removed: method applied to those contracts which were not completed as of January 1, 2018.] [added: method.] As such, results for [removed: 2018] [added: reporting periods beginning after January 1, 2019] are presented under Topic [removed: 606,] [added: 842,] while [removed: the information for] prior [removed: periods has] [added: period amounts are] not [removed: been] adjusted and [removed: continues] [added: continue] to be reported in accordance with our historical accounting under Topic [removed: 605 “Revenue Recognition”. The impact as a result of applying Topic 606 in place of Topic 605 was not material for the year ended December 31, 2018.] [added: 840 “Leases.”] See Note [removed: 1,] [added: 1.] Organization and Summary of Significant Accounting [removed: Policies,] [added: Policies] and Note [removed: 2, Revenues,] [added: 13. Leases,] of the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for further information. |

| [removed: |] (3) | In December [added: 2019, we recorded a deferred tax benefit of $1.2 billion related to intangible asset transfers from a foreign subsidiary to Ireland and the United States. In 2018, we recorded a deferred tax charge of $588 million related to a transfer of acquired intangible assets from a foreign subsidiary to the United States. In December] 2017, we recorded an estimated $5.5 billion net charge related to the enactment of the Tax Cuts and Jobs [removed: Act.] [added: Act (Tax Reform). Tax Reform also lowered the corporate tax rate in the United States from 35% to 21% effective for tax years beginning after December 31, 2017.] See Note [removed: 18,] [added: 19.] Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional details. |

| [removed: | (4)] [added: (5)] | In [added: 2019, we repaid $2.8 billion principal amount of our senior unsecured notes at maturity. In] 2018, we repaid $1.8 billion principal amount of our senior unsecured notes at maturity and repaid $4.5 billion of term loans borrowed in connection with our acquisition of Kite Pharma, Inc. [removed: (Kite).] [added: In 2017, in connection with the acquisition of Kite Pharma, Inc., we issued $3.0 billion aggregate principal amount of senior unsecured notes and borrowed $6.0 billion aggregate principal amount term loan facility credit agreement, of which $1.5 billion was repaid in 2017. In 2016, we issued $5.0 billion principal amount of senior unsecured notes and repaid $285 million of principal balance of convertible senior notes and $700 million of principal balance of senior unsecured notes at maturity. In 2015, we issued $10.0 billion principal amount of senior unsecured notes and repaid $213 million of principal balance of convertible senior notes at maturity.] |

| | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| | |

| _________________________________________ | |

| (2) | In 2018, we adopted Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers” using the modified retrospective method. As such, results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605 “Revenue Recognition.” |

| (4) | Investments in equity securities, other than equity method investments, for which we have not elected the fair value method of accounting, are recorded at fair market value, if fair value is readily determinable and, beginning January 1, 2018, unrealized gains and losses are included in Other income (expense), net on our Consolidated Statements of Income. For periods presented prior to January 1, 2018, unrealized gains and losses were included in accumulated other comprehensive income as a separate component of stockholders’ equity. |

| | |

| --- | --- |

| | | |

| --- | --- | --- |

| | ____________________ | |

| | Notes: | |

| | | In 2017, in connection with the acquisition of Kite, we issued $3.0 billion aggregate principal amount of senior unsecured notes in a registered offering and drew on a $6.0 billion aggregate principal amount term loan facility credit agreement, of which $1.5 billion was repaid in December 2017. |

| | | In 2016, we issued $5.0 billion principal amount of senior unsecured notes in a registered offering. We also repaid $285 million of principal balance of convertible senior notes due in May 2016 and $700 million of principal balance of senior unsecured notes due in December 2016. |

| | | In 2015, we issued $10.0 billion principal amount of senior unsecured notes in a registered offering. We also repaid $213 million of principal balance of convertible senior notes due in May 2016. |

| | | In 2014, we issued $8.0 billion principal amount of senior unsecured notes in registered offerings. We also repaid $912 million of principal balance of convertible senior notes due in May 2014, $750 million of principal balance of senior unsecured notes due in December 2014 and $600 million under our five-year revolving credit facility agreement. |

| | (5) | In 2017, we retrospectively adopted Accounting Standards Update No. 2015-17 “Balance Sheet Classification of Deferred Taxes,” which requires deferred tax assets and liabilities be classified as noncurrent on the balance sheet. As a result, we reclassified deferred tax assets from Total current assets to Other long-term assets and our deferred tax liabilities from Other accrued liabilities to Other long-term obligations for each of the years presented. |

| | (6) | In 2016, we retrospectively adopted Accounting Standards Update No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs,” which requires presentation of debt issuance costs as a direct deduction from the carrying amount of a recognized debt liability on the balance sheet. As a result, we reclassified unamortized debt issuance costs from assets to Long-term debt, including current portion for each of the years presented. |

[removed: GILEAD] [added: GILEAD] SCIENCES, [removed: INC.][added: INC.]

[removed: INDEX] [added: INDEX] TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA][added: DATA]

[removed: Years ended December] [added: Years ended December] 31, [removed: 2018, 2017 and 2016][added: 2019, 2018 and 2017]

[removed: CONTENTS][added: CONTENTS]

[removed: | [Report] [added: Report] of Independent Registered Public Accounting [removed: Firm](#s15B0ED6E24D9483088272DF74CDC2683) | | [47](#s15B0ED6E24D9483088272DF74CDC2683) |][added: Firm]

| [Audited Consolidated Financial [removed: Statements:](#s1575B21BC63F555F10C72DF74CFDD680)] [added: Statements:](#sD7B9FE2F2AEB199CF4AC8F280F363039)] | | |

[removed: | [Consolidated] [added: Consolidated] Balance [removed: Sheets](#sA9D1F7E876CD210BF66F2DF72DE06B4B) | | [48](#sA9D1F7E876CD210BF66F2DF72DE06B4B) |][added: Sheets]

[removed: | [Consolidated] [added: Consolidated] Statements of [removed: Income](#s62A097E7A750BD671C282DF72DF1E383) | | [49](#s62A097E7A750BD671C282DF72DF1E383) |][added: Income]

[removed: | [Consolidated] [added: Consolidated] Statements of Comprehensive [removed: Income](#s1C687943A370E561E1AB2DF72DFE547D) | | [50](#s1C687943A370E561E1AB2DF72DFE547D) |][added: Income]

[removed: | [Consolidated] [added: Consolidated] Statements of Stockholders’ [removed: Equity](#sCD308ABE3D2BF2266C982DF72E0BF3D5) | | [51](#sCD308ABE3D2BF2266C982DF72E0BF3D5) |][added: Equity]

[removed: | [Consolidated] [added: Consolidated] Statements of Cash [removed: Flows](#sDAB7925027A3F8B9CF9C2DF72E35B51B) | | [52](#sDAB7925027A3F8B9CF9C2DF72E35B51B) |][added: Flows]

[removed: | [Notes to Consolidated Financial Statements](#s489428876574871AF65A2DF74E6FE068) | | [53](#s489428876574871AF65A2DF74E6FE068) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

[removed: | [Selected Quarterly Financial Information (Unaudited)](#s61DBB9311227E16822092DF7320195BB) | | [90](#s61DBB9311227E16822092DF7320195BB) |][added: SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)]

[removed: | [Schedule] [added: Schedule] II: Valuation and Qualifying [removed: Accounts](#sCF21C16B185CAB951E9B2DF73217F4B1) | | [91](#sCF21C16B185CAB951E9B2DF73217F4B1) |][added: Accounts]

[removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM][added: | [Report of Independent Registered Public Accounting Firm](#s34110AED93A1D0179AEC8F280F20B036) | | [46](#s34110AED93A1D0179AEC8F280F20B036) |]

[removed: To] [added: To] the [removed: Shareholders] [added: Stockholders] and the Board of Directors of Gilead Sciences, [removed: Inc.][added: Inc.]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of Gilead Sciences, Inc. (the Company) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related notes and financial statement schedule listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] in conformity with U.S. generally accepted accounting principles.