J.P Morgan Peri Equity Research . . Overweight Gilead Sciences ceeeenawe Thoughts on the RSV Space; Sales Could Top $2B Price: $8181 Price Target: $100.00 Although Gilead’s hepatitis C franchise is by far the key focus for investors, : . . . ~~ US Biotechnology the expanding pipeline has a number of major call options in hepatitis B, , aa ; Geoff Meacham “° NASH, IPF, hematology/oncology and now respiratory syncytial virus (RSV). a Indeed, at the ATS meeting this week, Gilead revealed phase 2a data for GS- _ $< 5806 in RSV. In this report, we review the data, the therapeutic landscape and Bloomberg JPMA MEACHAM <GO> the opportunity in RSV including feedback we've received from several Michael E Ulz pulmonologists. From a timing perspective, Gilead expects to begin a phase 2/3 trial in RSV in mid 2014, with a potential for a regulatory filing in 2H16 in adults. Physicians we spoke to viewed the phase 2a data as “very Anupam Rama promising,” but were understandably cautious on extrapolating the results to children (the larger opportunity). Of note, no therapies are approved for active RSV; Synagis is approved as a prophylaxis in a narrow segment of infants and very few assets are in clinical development. GS-5806 is not included in JPM or Street models; confirmation is needed in patients with active infection, but Hl Morgan Securities LLC we'd peg the WW opportunity at close to $2B. When putting GS-5806 in the Carter L Gould context of Gilead’s growing pipeline, plus a stable base HIV business and ee Performance aggressive growth expected in hep C, we'd argue that GILD shares still have « 7 meaningful upside. Reiterate Overweight. $6 e The basics of RSV: RSV is a single-stranded RNA virus that infects the SW « T T T T respiratory tract. The virus is fairly common and most healthy people ftoss) hamid) Weel Fabid Manu recover within a few weeks, however, certain populations are at increased GAD share price ¢$) risk. These include children less than one year of age, those with certain ae {reboned) ime Lowe — Y m am pulmonary infections and immuncompromised adult patients where an RSV Abs [88% 143% 09% 449% infection could lead to hospitalization and death. Of note, infections Re | 57% 13.4% Mh 31.8% typically follow a seasonal pattern that differs based on geographically. In the US, the RSV season typically begins in November and ends in March. e High unmet need: There are currently no approved treatment options in infants or adults with RSV infection. Indeed, in children, RSV treatment guidelines issued by the American Academy of Pediatrics only recommends Synagis specifically for prophylaxis in an increasingly narrow segment of infants. Additionally, the guidelines caution that supportive therapy (inhaled bronchodilators and corticosteroids) and ribavirin should not be routinely used. Of note, physicians indicate that ribavirin is very difficult to administer in inhaled form and efficacy is “questionable”. Gilead Sciences, Inc. (GILD;GILD US) FYE Dec 2013A 2014E 2015E 2016E Company Data EPS Reported (S$) Price ($) 81.81 Q1 (Mar) 0.48 148A - - Date Of Price 21 May 14 Q2 (Jun) 0.50 1.32 - - 52-week Range ($) 84.88-46.70 Q3 (Sep) 0.52 1.18 - - Market Cap ($ mn) 133,757.20 Q4 (Dec) 0.55 1.63 - - Fiscal Year End Dec FY 2.05 5.61 6.52 7.54 Shares O/S (mn) 1,635 Bloomberg EPS FY ($) 2.00 6.05 7.60 8.67 Price Target ($) 100.00 Source: Company data, Bloomberg, I Morgan estimates Price Target End Date 31-Dec-14 See page 6 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com EFTA00300337

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Geoff Meacham North America Equity Research qn 22 May 2014 J.P-Morgan « Encouraging efficacy in phase 2a challenge study: In a phase 2a challenge study in healthy adults, GS-5806 met the primary endpoint of viral load reductions and met the secondary endpoints that included improvement in total mucus weight and symptom diary score. Indeed, a significant 99.9% reduction in viral load was observed (p<0.001). Additionally, GS-5806 resulted in a significant improvement in both mucus weight (6.9g vs. 15.1g placebo; p=0.028) and symptom diary score (-20.2 vs. 204.9 placebo; p=0.005). e Clean safety profile in phase 2a: No SAEs were observed in the study and all AEs for GS-5806 were mild or moderate in severity. These included headache, diarrhea, nausea, upper respiratory tract infection and rash, with a Grade 1 decline in pulmonary function the only AE occurring in >2 patients. « Physicians perspective: Physicians we spoke to characterized the phase 2a data as “very promising.” In particular, one physician was impressed with the study design that he indicated was “elegant” and "as good as it gets" referring to the double blind and placebo control. With respect to the primary endpoint, the 99.9% reduction in viral load was viewed as “unbelievable.” That said, in a phase 3 adult natural infection study, where patients are likely to have more co- morbidities, a lower reduction in viral load would be expected, but even a 70% reduction would be impressive. Additionally, while physicians were encouraged they were cautious on read-through to pediatric patients (which are the larger market) given the difference in lung physiology compared to adults. Phase 2/3 expected to begin mid 2014: Gilead is currently finalizing the design of a phase 2/3 study expected to begin in mid 2014. While details have not been disclosed, further development will focus on both children and adult populations. That said, we anticipate an adult study will likely be first as it would provide for a faster path to market and help inform the design of a study in children. Based on feedback from physicians and prior studies in RSV, we anticipate a duration of 3-6 month implying data potential in 1H16. With respect to a primary endpoint, physicians were mixed (ranging from a mortality endpoint in children to length of stay in adults), but generally agreed it could be different in an adult and pediatric studies. Given the unmet need in RSV, we believe the phase 2/3 study could be used for registration. Other therapies in development: Despite the high unmet need for the treatment of RSV, there is a dearth of emerging treatments in the clinic. Alnylam and Cubist were collaborating on ALN-RSV, but further development has slowed since Cubist opted-out of the collaboration after a mixed result in a phase 2 study. Alios (private) has an oral nucleoside analog (AL-8176) currently in a proof-of-concept study in adults, which could have data in the near term. Incidence of RSV. RSV infections lead to complications most commonly in infants and immunocompromised adults. Of note, there are ~150K RSV-related hospitalizations in the US per year in children, weighted heavily towards infants <6 mos), leading to death in ~5% of patients. Separately, there are another 25- 30K hospitalizations in the adult immunocompromised segment, including (but not limited to) elderly patients, ~160K solid-organ transplant recipients, and ~20K recent hematopoetic stem-cell transplant recipients. EFTA00300338

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North America Equity Research 22 May 2014 J.PMorgan e Potential Market Opportunity. As noted above, we expect GS-5806 will be developed in two segments: infants and adults. Overall, we size the US opportunity at ~$1.3B. In the pediatric segment, physician feedback indicates that ~50% of patients resolve with currently available treatments and a short period of hospitalization. Assuming 50% share in the remaining patients, and a conservative $25K cost per treatment, we size the US pediatric opportunity at ~$940M; using a 60% share in the adult population (25,000 patient addressable market), we size the US adult opportunity at ~$375M. Assuming an US/OUS market split of 65/35 (relatively in-line with existing Synagis trends; $975M WW with $570M in the US), we forecast a WW opportunity at peak of ~$2B. « Reiterate Overweight rating. EFTA00300339

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Geoff Meacham North America Equity Research J.P-Morgan ees sews Investment Thesis, Valuation and Risks Gilead Sciences (Overweight; Price Target: $100.00) Investment Thesis We rate GILD shares Overweight on the basis of solid fundamentals in HIV, very significant momentum in hep C, and an oncology pipeline coming into focus. We expect a continued robust launch of Solvadi in hep C given meaningful improvements relative to currently available therapies. We expect the fixed dose combination (FDC) of sofosbuvir + ledipasvir to raise the bar particularly high in GTI with a once-a-day pill. We anticipate data from the ION studies will support approval in 4Q14. We conservatively estimate peak WW sales of $12B+ for the hep C business. We also expect solid growth for the HIV franchise supported by the continued launch of Stribild and Complera, both once-daily, single-tablet regimens. Additionally, we expect oncology to begin to contribute to revenue growth with approval of idelalisib in mid 2014 in iNHL and CLL. Valuation Our December 2014 price target of $100 is based on a P/E multiple of ~18x our 2014 non-GAAP EPS estimate of $5.61. We believe growth and margin expansion from the HIV business (Stribild, in particular) are underappreciated in Street models. Gilead is also well on its way to repeating this story in hep C with the addition of Sovaldi. As such, we believe a P/E multiple inline to above that of the large-cap group is justified given the growth outlook and where GILD is currently trading (P/E of ~18x 2014E, in line with large-cap group at 19x). We believe our valuation multiple is warranted as Gilead’s 2013-16E revenue and EPS CAGRs are 29% and 54%, respectively, well above the peer group average. Risks to Rating and Price Target Key downside risks include 1) commercial risk to the HIV franchise, 2) failure of Sovaldi to meet Street expectations, and 3) clinical and regulatory risk for the FDC or for idelalisib. EFTA00300340

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Geoff Meacham North America Equity Research 22 May 2014 Gilead Sciences: Summary of Financials J.P-Morgan Income Statement - Annual FY13A_FY14E FY15E FY16E Income Statement - Quarterly 1Q14A_2Q14E 3Q14E — AQUAE Revenues 11,202 20,219 22121 23,891 Revenues 499A 4726 4516 5,978 Cost of products sold (2,708) (3,319) (3,327) (3,335) Cost of products sold (611)A (662) (788) = (1,258) Gross profit - - - - Gross profit - - - - SG&A (1,557) (2,173) (2,632) (2,604) SG&A (500)A (525) (861) (898) Rad (1,948) (2,302) (2,478) (2,437) R&D (558)A (572) (580) (892) Operating income 4,988 12424 13,684 15,515 Operating income 330A 2968 2596 3,531 EBITDA 4,968 12424 13,684 15,515 EBITDA 330A 2968 2596 3,531 Nat interest (incorne) / expense (318) = (183) 0 100 Net interest (incorne) / expense (S6)A (43) (28) (16) Other incorne / (expense) - - - - Other income / (expense) - - - - Income taxes (1,240) (3,006) (3,153) (3,441) Income taxes (751)A (732) (643) (680) Nat income - GAAP 3,449 9,255 10,554 12,200 Net incorne - GAAP 24884 «2197 ©1990 2,640 Net income - recurring 3,449 9,255 10,554 12,200 Net incorne - recurring 24884 2197 1,930 2,640 Diluted shares outstanding 1,685 1,649 1,619 1,619 Diluted shares outstanding 1679A 1,659 1,639 1,619 EPS - excluding non-recurring 205 561 6452 7.54 EPS - excluding non-tecurring 1484 1.32 1.18 1.63 EPS - recurring 205 561 652 7.54 EPS - recurring 1484 1.32 1.18 1.63 Balance Sheet and Cash Flow Data FY13A_FY14E FY15E FY16E Ratio Analysis FYI3A FYI4E FYISE — FY16E Cash and cash equivalents 2,113 7,607 17,646 29,404 Sales growth 15.5% 80.5% 9.4% 6.0% Accounts receivable 2,100 4,869 5327 5,753 EBIT growth 89% 149.1% 10.1% 13.4% Inventories 2,05 2213 2.218 2,223 EPS growth - recurring 49% 174.3% 16.2% 15.6% Other current assets 986 61275 «41,375 «1434 Current assets 7,274 15,983 26,585 38,833 Gross margin : - : - PP&E 1,166 1,139 1,106 1,073 EBIT margin 445% 614% 61.9% 64.9% Total assets 22,497 30,980 41,549 53,764 EBITDA margin 445% 614% 61.9% 64.9% Tax rate 264% 24.5% 23.0% 22.0% Total debt 6876 5720 5220 4,720 Net margin WB 45.8% 47.7% 51.1% Total liabilities 10,688 «9448 6954 6,460 Shareholders’ equity 11,745 21,532 32.595 45,305 Net Debt/ EBITDA 95.5% (15.2%) (90.8%) (159.1%) Net Debt / Capital (book) 28.9% (9.6%) (61.6%) (119.7%) Nat incorne (including charges} 3,057 9,255 10,554 12,200 DaA M5 M5 M5 345 Return on assets (ROA) 15.8% U6% 29.1% 25.6% Change in working capital (563) (3,141) (857) (485) Return on equity (ROE) 328% 55.6% 39.0% 31.3% Other 266 112 112 112 Cash flow from operations 3,105 6,570 10,454 12,172 Enterprise value / sales 91 a7 38 30 Enterprise value / EBITDA 20.4 77 6.2 47 Capex (191) (75) ~~ (70)—s(70) ‘Free cash flow yield 23% 49% 7.8% 9.1% Free cash flow 3,148 6,633 10,384 12,024 Cash flow from investing activities (254) (75) (70) (70) Cash flow from financing activities (2,544) (962) (307) (307) Dividends - - - - Dividend yield - - : - ‘Source: Company reports and J.P. Morgan estimates. Nate: $ in millions (except per-share data) Fiscal year ends Dec EFTA00300341

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Geoff Meacham North America Equity Research ae J.PMorgan Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures ®@ Market Maker: JPMS makes a market in the stock of Gilead Sciences. ® Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Gilead Sciences within the past 12 months. © Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Gilead Sciences. © Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company/(ies) as investment banking clients: Gilead Sciences. © Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company/(ies) as clients, and the services provided were non-investment-banking, securities-related: Gilead Sciences. ® Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Gilead Sciences. © Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Gilead Sciences. © Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Gilead Sciences. ® Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Gilead Sciences. Company-Specifie Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan— covered companies by visiting hty mm_com/research/disclosures, calling 1-800-477-0406, or e-mailing research disclosure inquiries(@jpmorgan.com with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may Screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail research disclosure.inquiries@jpmorgan.com. Gilead Sciences (GILD, GILD US) Price Chart Date Rating Share Price Price Target {s) 's) 2i-Jueia OW 1646 22.50 13-Oct-10 OW 18.34 45.00 27-Jul-11 OW 24.48 25.00 22-Now1l OW 19.38 27.80 03-Feb-12 OW 27.38 32.50 27-Jul-12 OW 27.75 35.00 17-Sep-12 OW 31.01 37.50 24-Oct-12 OW 32.46 40.00 0S-Feb-13 OW 39.59 45.00 12-Feb-13 OW 40.40 50.00 19-Apr-13 OW 50.86 75.00 17-May-13 OW 54.96 80.00 Jan Oct Jot Ape Jan Oct 30-Oct-13 OW 72.67 85.00 * * " " " " 18-Dec-13 OW 73.59 100.00 ‘Source; Biocmberg and fl Morgan; price cata achusted for stock splits and dividends, Initiated coverage Jul 21, 2010. EFTA00300342

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Geoff Meacham North America Equity Research J.P-Morgan ——— sewers The chart(s) show [.- Morgan's continuing coverage of the stocks: the current analysts may or may not have covered it over the entire iod. iP. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total retum of the stocks in the analyst's (or the analyst's team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U_K. small- and mid-cap equity research, each stock’s expected total retum is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Meacham, Geoffrey: AMAG Pharmaceuticals (AMAG), Acorda Therapeutics Inc. (ACOR), Agios Pharmaceuticals (AGIO), Alexion Pharmaceuticals (ALXN), Alnylam Pharmaceuticals (ALNY), Amgen Inc (AMGN), Biogen Idec (BIIB), Celgene (CELG), ChemoCentryx, Inc. (CCX1), Dynavax (DVAX), Enanta Pharmaceuticals (ENTA), Gilead Sciences (GILD), Idenix Pharmaceuticals (IDLX), InterMune (ITMN), Ironwood Pharmaceuticals (IRWD), Medivation (MDVN), Merrimack Pharmaceuticals (MACK), NPS Pharmaceuticals (NPSP), Ophthotech (OPHT), PTC Therapeutics (PTCT), Regeneron Pharmaceuticals (REGN), Synageva BioPharma (GEVA), United Therapeutics (UTHR), Vertex Pharmaceuticals (VRTX) J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014 Overweight Neutral Underweight (buy) (hold) (sell) J.P. Morgan Global Equity Research Coverage 44% 11% IB clients* 49% 40% JPMS Equity Research Coverage 48% 7% IB clients* 67% 60% *Percentage of investment banking clients in cach rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. 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