Edgar Filing: GILEAD SCIENCES INC

Q1'15 Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2015



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware	94-3047598
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California	94404
(Address of principal executive offices)	(Zip Code)

650-574-3000

Registrant’s Telephone Number, Including Area Code

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of April 30, 2015: 1,469,605,980

GILEAD SCIENCES, INC.

INDEX



PART I.	FINANCIAL INFORMATION		2

	Item 1.	Condensed Consolidated Financial Statements	2

		Condensed Consolidated Balance Sheets at March 31, 2015 and December 31, 2014 (unaudited)	2

		Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2015 and 2014 (unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2015 and 2014 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014 (unaudited)	5

		Notes to Condensed Consolidated Financial Statements (unaudited)	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

	Item 4.	Controls and Procedures	31

PART II.	OTHER INFORMATION		32

	Item 1.	Legal Proceedings	32

	Item 1A.	Risk Factors	36

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

	Item 3.	Defaults Upon Senior Securities	52

	Item 4.	Mine Safety Disclosures	52

	Item 5.	Other Information	52

	Item 6.	Exhibits	53

SIGNATURES			59

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD^®, GILEAD SCIENCES^®, HARVONI^®, SOVALDI^®, TRUVADA^®, STRIBILD^®, COMPLERA^®, EVIPLERA^®, VIREAD^®, LETAIRIS^®, RANEXA^®, AMBISOME^®, ZYDELIG^®, EMTRIVA^®, TYBOST^®, HEPSERA^®, VITEKTA^®,CAYSTON^®, VOLIBRIS^® and RAPISCAN^®. ATRIPLA^® is a registered trademark belonging to Bristol-Myers Squibb & Gilead Sciences, LLC. LEXISCAN^® is a registered trademark belonging to Astellas U.S. LLC. MACUGEN^® is a registered trademark belonging to Eyetech, Inc. SUSTIVA^® is a registered trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU^® is a registered trademark belonging to Hoffmann-La Roche Inc. This report also includes other trademarks, service marks and trade names of other companies.


PART I.	FINANCIAL INFORMATION


ITEM I.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share amounts)



	March 31, 2015		December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	10,635	$	10,027
Short-term marketable securities	659		101
Accounts receivable, net	4,835		4,635
Inventories	1,908		1,386
Deferred tax assets	655		508
Prepaid taxes	373		391
Prepaid expenses	236		194
Other current assets	761		472
Total current assets	20,062		17,714
Property, plant and equipment, net	1,765		1,674
Long-term portion of prepaid royalties	447		466
Long-term deferred tax assets	205		236
Long-term marketable securities	3,220		1,598
Intangible assets, net	10,867		11,073
Goodwill	1,172		1,172
Other long-term assets	583		731
Total assets	$	38,321	$	34,664

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,011	$	955
Accrued government and other rebates	4,020		2,316
Accrued compensation and employee benefits	226		316
Income taxes payable	98		105
Other accrued liabilities	1,440		1,452
Deferred revenues	191		134
Current portion of long-term debt and other obligations, net	442		483
Total current liabilities	7,428		5,761
Long-term debt, net	11,921		11,921
Long-term income taxes payable	713		562
Long-term deferred tax liabilities	41		51
Other long-term obligations	619		535
Commitments and contingencies (Note 9)
Equity component of currently redeemable convertible notes	11		15
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; shares authorized of 5,600 at March 31, 2015 and December 31, 2014; shares issued and outstanding of 1,477 at March 31, 2015 and 1,499 at December 31, 2014	1		2
Additional paid-in capital	2,724		2,391
Accumulated other comprehensive income	539		301
Retained earnings	13,916		12,732
Total Gilead stockholders’ equity	17,180		15,426
Noncontrolling interest	408		393
Total stockholders’ equity	17,588		15,819
Total liabilities and stockholders’ equity	$	38,321	$	34,664

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in millions, except per share amounts)



	Three Months Ended
	March 31,
	2015			2014
Revenues:
Product sales	$	7,405		$	4,871
Royalty, contract and other revenues	189			128
Total revenues	7,594			4,999
Costs and expenses:
Cost of goods sold	882			813
Research and development expenses	696			595
Selling, general and administrative expenses	645			548
Total costs and expenses	2,223			1,956
Income from operations	5,371			3,043
Interest expense	(153		)	(76		)
Other income (expense), net	21			(18		)
Income before provision for income taxes	5,239			2,949
Provision for income taxes	907			726
Net income	4,332			2,223
Net loss attributable to noncontrolling interest	1			4
Net income attributable to Gilead	$	4,333		$	2,227
Net income per share attributable to Gilead common stockholders—basic	$	2.91		$	1.45
Shares used in per share calculation—basic	1,488			1,537
Net income per share attributable to Gilead common stockholders—diluted	$	2.76		$	1.33
Shares used in per share calculation—diluted	1,569			1,680

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in millions)



	Three Months Ended
	March 31,
	2015			2014
Net income	$	4,332		$	2,223
Other comprehensive income:
Net foreign currency translation gain (loss), net of tax	(10		)	6
Available-for-sale securities:
Net unrealized gains, net of tax impact of $3 and $0	6			—
Net change	6			—
Cash flow hedges:
Net unrealized gains, net of tax impact of $6 and $2	383			1
Reclassifications to net income, net of tax impact of $(4) and $(1)	(141		)	22
Net change	242			23
Other comprehensive income	238			29
Comprehensive income	4,570			2,252
Comprehensive loss attributable to noncontrolling interest	1			4
Comprehensive income attributable to Gilead	$	4,571		$	2,256

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)



	Three Months Ended
	March 31,
	2015			2014
Operating Activities:
Net income	$	4,332		$	2,223
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	37			24
Amortization expense	232			217
Stock-based compensation expense	92			82
Excess tax benefits from stock-based compensation	(186		)	(157		)
Tax benefits from exercise and vesting of stock-based awards	186			158
Deferred income taxes	(121		)	(3		)
Change in fair value of contingent consideration	2			3
Other	(5		)	3
Changes in operating assets and liabilities:
Accounts receivable, net	(348		)	(1,118		)
Inventories	(370		)	(85		)
Prepaid expenses and other assets	52			(169		)
Accounts payable	58			(20		)
Income taxes payable	149			241
Accrued liabilities	1,530			166
Deferred revenues	61			3
Net cash provided by operating activities	5,701			1,568

Investing Activities:
Purchases of marketable securities	(2,462		)	(94		)
Proceeds from sales of marketable securities	249			83
Proceeds from maturities of marketable securities	38			14
Capital expenditures	(124		)	(164		)
Net cash used in investing activities	(2,299		)	(161		)

Financing Activities:
Proceeds from debt financing, net of issuance costs	—			3,968
Proceeds from convertible note hedges	154			601
Purchases of convertible note hedges	—			(26		)
Proceeds from issuances of common stock	118			109
Repurchases of common stock	(3,001		)	(450		)
Repayments of debt and other long-term obligations	(199		)	(1,419		)
Excess tax benefits from stock-based compensation	186			157
Contributions from (distributions to) noncontrolling interest	20			(56		)
Net cash provided by (used in) financing activities	(2,722		)	2,884
Effect of exchange rate changes on cash and cash equivalents	(72		)	—
Net change in cash and cash equivalents	608			4,291
Cash and cash equivalents at beginning of period	10,027			2,113
Cash and cash equivalents at end of period	$	10,635		$	6,404

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of Gilead Sciences, Inc. (Gilead, we or us) believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

The accompanying Condensed Consolidated Financial Statements include the accounts of Gilead, our wholly-owned subsidiaries and certain variable interest entities for which we are the primary beneficiary. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interests in our Condensed Consolidated Statements of Income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. All intercompany transactions have been eliminated. The Condensed Consolidated Financial Statements include the results of companies acquired by us from the date of each acquisition for the applicable reporting periods.

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2014, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission.

Significant Accounting Policies, Estimates and Judgments

The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. Estimates are assessed each period and updated to reflect current information.

Concentrations of Risk

We are subject to credit risk from our portfolio of cash equivalents and marketable 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 March 31, 2015, our accounts receivable in Southern Europe, specifically Greece, Italy, Portugal and Spain, totaled approximately $765 million, of which $132 million were greater than 120 days past due and $42 million were greater than 365 days past due. To date, we have not experienced significant losses with respect to the collection of our accounts receivable. We believe that our allowance for doubtful accounts was adequate at March 31, 2015.

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board issued an accounting standard update which requires presentation of debt issuance costs as a direct deduction from the carrying amount of a recognized debt liability on the balance sheet. The update does not change current guidance on the recognition and measurement of debt issuance costs. This guidance will become effective for us for annual periods ending after December 15, 2015, and interim periods thereafter. At the time of adoption, we will reclassify debt issuance costs to a liability as a direct deduction from the carrying value of the debt, consistent

with the presentation of a debt discount. We do not expect that the adoption of this update will have a material impact on our Consolidated Financial Statements.


2.	FAIR VALUE MEASUREMENTS

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:


•	Level 1 inputs which include quoted prices in active markets for identical assets or liabilities;

•

Level 2 inputs which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. For our marketable securities, we review trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and

•

Level 3 inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Our Level 3 liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts receivable, foreign currency exchange contracts, accounts payable and short-term and long-term debt. Cash and cash equivalents, marketable securities and foreign currency exchange contracts that hedge accounts receivable and forecasted sales are reported at their respective fair values on our Condensed Consolidated Balance Sheets. Short-term and long-term debt are reported at their amortized cost on our Condensed Consolidated Balance Sheets. The remaining financial instruments are reported on our Condensed Consolidated Balance Sheets at amounts that approximate current fair values.

The following table summarizes the assets and liabilities measured at fair value on a recurring basis, by level, within the fair value hierarchy (in millions):



	March 31, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	7,683	$	—	$	—	$	7,683	$	7,926	$	—	$	—	$	7,926
Corporate debt securities	—		1,888		—		1,888		—		938		—		938
U.S. treasury securities	1,342		—		—		1,342		363		—		—		363
Residential mortgage and asset-backed securities	—		516		—		516		—		269		—		269
U.S. government agencies securities	—		210		—		210		—		113		—		113
Certificates of deposit	—		71		—		71		—		—		—		—
Non-U.S. government securities	—		37		—		37		—		—		—		—
Municipal debt securities	—		27		—		27		—		16		—		16
Foreign currency derivative contracts	—		607		—		607		—		349		—		349
Deferred compensation plan	61		—		—		61		54		—		—		54
	$	9,086	$	3,356	$	—	$	12,442	$	8,343	$	1,685	$	—	$	10,028

Liabilities:
Contingent consideration	$	—	$	—	$	135	$	135	$	—	$	—	$	133	$	133
Deferred compensation plan	61		—		—		61		54		—		—		54
Foreign currency derivative contracts	—		9		—		9		—		—		—		—
	$	61	$	9	$	135	$	205	$	54	$	—	$	133	$	187

Level 2 Inputs

We estimate the fair values of our corporate debt securities, residential mortgage and asset-backed securities, government related securities and certificates of deposit by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data and other observable inputs.

Substantially all of our foreign currency derivative contracts have maturities primarily over an 18-month time horizon and all are with counterparties that have a minimum credit rating of A- or equivalent by Standard & Poor's, Moody's Investors Service, Inc. or Fitch, Inc. We estimate the fair values of these contracts by taking into consideration valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency rates, London Interbank Offered Rates (LIBOR) and swap rates. These inputs, where applicable, are at commonly quoted intervals.

The fair values of our convertible senior notes and senior unsecured notes were determined using Level 2 inputs based on their quoted market values. The following table summarizes the carrying values and fair values of our convertible senior notes and senior unsecured notes (in millions):



		March 31, 2015				December 31, 2014
Type of Borrowing	Description	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible Senior	May 2016 Notes	$	442	$	1,971	$	483	$	2,097
Senior Unsecured	April 2021 Notes	995		1,166		995		1,108
Senior Unsecured	December 2016 Notes	700		725		700		727
Senior Unsecured	December 2021 Notes	1,248		1,400		1,248		1,377
Senior Unsecured	December 2041 Notes	998		1,271		998		1,229
Senior Unsecured	April 2019 Notes	499		507		499		500
Senior Unsecured	April 2024 Notes	1,747		1,865		1,747		1,836
Senior Unsecured	April 2044 Notes	1,747		2,016		1,747		1,954
Senior Unsecured	February 2020 Notes	499		514		499		504
Senior Unsecured	February 2025 Notes	1,748		1,851		1,748		1,797
Senior Unsecured	February 2045 Notes	1,740		1,947		1,740		1,872

Level 3 Inputs

As of March 31, 2015 and December 31, 2014, the only assets or liabilities that were measured using Level 3 inputs were contingent consideration liabilities. Our policy is to recognize transfers into or out of Level 3 classification as of the actual date of the event or change in circumstances that caused the transfer.

Contingent Consideration Liabilities

As of March 31, 2015 and December 31, 2014, we had contingent consideration liabilities of $135 million and $133 million, respectively. These accruals included the potential future contingent consideration payments resulting from the acquisition of Arresto Biosciences, Inc. for royalty obligations on future sales once specified sales-based milestones are achieved, and the acquisitions of CGI Pharmaceuticals, Inc. and Calistoga Pharmaceuticals, Inc. upon achievement of development or regulatory approval-based milestones. The $2 million net change in valuation for the three months ended March 31, 2015 was primarily due to the passage of time.


3.	AVAILABLE-FOR-SALE SECURITIES

Estimated fair values of available-for-sale securities are generally based on prices obtained from commercial pricing services. The following table is a summary of available-for-sale securities recorded in cash and cash equivalents or marketable securities in our Condensed Consolidated Balance Sheets (in millions):



	March 31, 2015									December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

Money market funds	$	7,683	$	—	$	—		$	7,683	$	7,926	$	—	$	—		$	7,926
Corporate debt securities	1,885		4		(1		)	1,888		941		—		(3		)	938
U.S. treasury securities	1,340		2		—			1,342		363		—		—			363
Residential mortgage and asset-backed securities	516		—		—			516		269		—		—			269
U.S. government agencies securities	210		—		—			210		113		—		—			113
Certificates of deposit	71		—		—			71		—		—		—			—
Non-U.S. government securities	37		—		—			37		—		—		—			—
Municipal debt securities	27		—		—			27		16		—		—			16
Total	$	11,769	$	6	$	(1	)	$	11,774	$	9,628	$	—	$	(3	)	$	9,625

The following table summarizes the classification of the available-for-sale securities on our Condensed Consolidated Balance Sheets (in millions):



	March 31, 2015		December 31, 2014
Cash and cash equivalents	$	7,895	$	7,926
Short-term marketable securities	659		101
Long-term marketable securities	3,220		1,598
Total	$	11,774	$	9,625

Cash and cash equivalents in the table above exclude cash of $2.7 billion as of March 31, 2015 and $2.1 billion as of December 31, 2014.

The following table summarizes our portfolio of available-for-sale securities by contractual maturity (in millions):



	March 31, 2015
	Amortized Cost		Fair Value
Less than one year	$	8,554	$	8,554
Greater than one year but less than five years	3,167		3,172
Greater than five years but less than ten years	37		37
Greater than ten years	11		11
Total	$	11,769	$	11,774

The following table summarizes our available-for-sale debt securities that were in a continuous unrealized loss position, but were not deemed to be other-than-temporarily impaired (in millions):



	Less Than 12 Months					12 Months or Greater				Total
	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
March 31, 2015
Corporate debt securities	$	(1	)	$	570	$	—	$	—	$	(1	)	$	570
Residential mortgage and asset-backed securities	—			239		—		5		—			244
U.S. treasury securities	—			112		—		—		—			112
U.S. government agencies securities	—			101		—		—		—			101
Non-U.S. government securities	—			24		—		—		—			24
Municipal debt securities	—			6		—		—		—			6
Total	$	(1	)	$	1,052	$	—	$	5	$	(1	)	$	1,057

December 31, 2014
Corporate debt securities	$	(3	)	$	802	$	—	$	—	$	(3	)	$	802
Residential mortgage and asset-backed securities	—			227		—		1		—			228
U.S. treasury securities	—			206		—		—		—			206
U.S. government agencies securities	—			22		—		—		—			22
Municipal debt securities	—			2		—		—		—			2
Total	$	(3	)	$	1,259	$	—	$	1	$	(3	)	$	1,260

We held a total of 378 positions as of March 31, 2015 and 468 positions as of December 31, 2014 that were in an unrealized loss position. The unrealized losses were immaterial both individually and in aggregate. We did not record any other-than-temporary impairments on these securities as of March 31, 2015, because we do not intend to sell these securities nor do we believe that we will be required to sell them before they recover their amortized costs at maturity.


4.	DERIVATIVE FINANCIAL INSTRUMENTS

We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. In order to manage this risk, we hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward or option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We also seek to limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrecognized gains on outstanding contracts (i.e. those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes.

We hedge our exposure to foreign currency exchange rate fluctuations for certain monetary assets and liabilities of our foreign subsidiaries that are denominated in a non-functional currency. The derivative instruments we use to hedge this exposure are not designated as hedges, and as a result, changes in their fair value are recorded in other income (expense), net on our Condensed Consolidated Statements of Income.

We hedge our exposure to foreign currency exchange rate fluctuations for forecasted product sales that are denominated in a non-functional currency. The derivative instruments we use to hedge this exposure are designated as cash flow hedges and have maturity dates of 18 months or less. Upon executing a hedging contract and quarterly thereafter, we assess prospective hedge effectiveness using regression analysis which calculates the change in cash flow as a result of the hedge instrument. On a monthly basis, we assess retrospective hedge effectiveness using a dollar offset approach. We exclude time value from our effectiveness testing and recognize changes in the time value of the hedge in other income (expense), net. The effective component of our hedge is recorded as an unrealized gain or loss on the hedging instrument in accumulated other comprehensive income (OCI) within stockholders' equity. When the hedged forecasted transaction occurs, the hedge is de-

designated and the unrealized gains or losses are reclassified into product sales. The majority of gains and losses related to the hedged forecasted transactions reported in accumulated OCI at March 31, 2015 will be reclassified to product sales within 12 months.

The cash flow effects of our derivative contracts for the three months ended March 31, 2015 and 2014 are included within net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.

We had notional amounts on foreign currency exchange contracts outstanding of $6.8 billion at March 31, 2015 and $6.4 billion at December 31, 2014.

While all of our derivative contracts allow us the right to offset assets or liabilities, we have presented amounts on a gross basis. Under the International Swap Dealers Association, Inc. master agreements with the respective counterparties of the foreign currency exchange contracts, subject to applicable requirements, we are allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The following table summarizes the classification and fair values of derivative instruments on our Condensed Consolidated Balance Sheets (in millions):



	March 31, 2015
	Asset Derivatives			Liability Derivatives
	Classification	Fair Value		Classification	Fair Value
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	$	567	Other accrued liabilities	$	6
Foreign currency exchange contracts	Other long-term assets	40		Other long-term obligations	3
Total derivatives		$	607		$	9



	December 31, 2014
	Asset Derivatives			Liability Derivatives
	Classification	Fair Value		Classification	Fair Value
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	$	314	Other accrued liabilities	$	—
Foreign currency exchange contracts	Other long-term assets	35		Other long-term obligations	—
Total derivatives		$	349		$	—

The following table summarizes the effect of our foreign currency exchange contracts on our Condensed Consolidated Financial Statements (in millions):



	Three Months Ended
	March 31,
	2015		2014
Derivatives designated as hedges:
Gains recognized in accumulated OCI (effective portion)	$	389	$	3
Gains (losses) reclassified from accumulated OCI into product sales (effective portion)	$	145	$	(21	)
Gains recognized in other income (expense), net (ineffective portion and amounts excluded from effectiveness testing)	$	1	$	—
Derivatives not designated as hedges:
Gains recognized in other income (expense), net	$	108	$	1

From time to time, we may discontinue cash flow hedges and as a result, record related amounts in other income (expense), net on our Condensed Consolidated Statements of Income. There were no material amounts recorded in other income (expense), net for the three months ended March 31, 2015 and 2014 as a result of the discontinuance of cash flow hedges.

As of March 31, 2015 and December 31, 2014, we held one type of financial instrument, derivative contracts related to foreign currency exchange contracts. The following table summarizes the potential effect of offsetting derivatives by type of financial instrument on our Condensed Consolidated Balance Sheets (in millions):



As of March 31, 2015
Offsetting of Derivative Assets/Liabilities
									Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
Description	Gross Amounts of Recognized Assets/Liabilities			Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Amounts of Assets/Liabilities Presented in the Condensed Consolidated Balance Sheet			Derivative Financial Instruments			Cash Collateral Received/Pledged		Net Amount (Legal Offset)
Derivative assets	$	607		$	—	$	607		$	(9	)	$	—	$	598
Derivative liabilities	(9		)	—		(9		)	9			—		—



As of December 31, 2014
Offsetting of Derivative Assets/Liabilities
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
Description	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Amounts of Assets/Liabilities Presented in the Condensed Consolidated Balance Sheet		Derivative Financial Instruments		Cash Collateral Received/Pledged		Net Amount (Legal Offset)
Derivative assets	$	349	$	—	$	349	$	—	$	—	$	349
Derivative liabilities	—		—		—		—		—		—


5.	INVENTORIES

Inventories are summarized as follows (in millions):



	March 31, 2015		December 31, 2014
Raw materials	$	1,219	$	909
Work in process	580		500
Finished goods	441		466
Total	$	2,240	$	1,875

Recognized as:
Inventories	$	1,908	$	1,386
Other long-term assets	332		489
Total	$	2,240	$	1,875

Amounts reported as other long-term assets are comprised almost entirely of raw materials as of March 31, 2015 and December 31, 2014.

The joint ventures formed by Gilead Sciences, LLC and Bristol-Myers Squibb (BMS) (See Note 7, Collaborative Arrangements), which are included in our Condensed Consolidated Financial Statements, held efavirenz active pharmaceutical ingredient in inventory. This efavirenz inventory was purchased from BMS at BMS's estimated net selling price of efavirenz and totaled $1.2 billion as of March 31, 2015 and $806 million as of December 31, 2014.


6.	INTANGIBLE ASSETS

The following table summarizes the carrying amounts of our intangible assets (in millions):



	March 31, 2015		December 31, 2014
Finite-lived intangible assets	$	10,435	$	10,641
Indefinite-lived intangible assets	432		432
Total intangible assets	$	10,867	$	11,073

Finite-Lived Intangible Assets

The following table summarizes our finite-lived intangible assets (in millions):



	March 31, 2015				December 31, 2014
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible asset - sofosbuvir	$	10,720	$	932	$	10,720	$	757
Intangible asset - Ranexa	688		298		688		277
Other	455		198		455		188
Total	$	11,863	$	1,428	$	11,863	$	1,222

Amortization expense related to finite-lived intangible assets included primarily in cost of goods sold in our Condensed Consolidated Statements of Income totaled $206 million for the three months ended March 31, 2015 and $200 million for the three months ended March 31, 2014. As of March 31, 2015, the estimated future amortization expense associated with our finite-lived intangible assets for the remaining nine months of 2015 and each of the five succeeding fiscal years is as follows (in millions):



Fiscal Year	Amount
2015 (remaining nine months)	$	620
2016	832
2017	846
2018	853
2019	741
2020	713
Total	$	4,605

Indefinite-Lived Intangible Assets

The following table summarizes our indefinite-lived intangible assets (in millions):



	March 31, 2015		December 31, 2014
Indefinite-lived intangible asset - momelotinib (formerly CYT387)	$	308	$	308
Indefinite-lived intangible assets - Other	117		117
	425		425
Foreign currency translation adjustment	7		7
Total	$	432	$	432


7.	COLLABORATIVE ARRANGEMENTS

We enter into collaboration arrangements with third parties for the development and commercialization of certain products. Both parties are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities. Collaboration arrangements are assessed at their inception, and at each reporting date to determine whether we are the primary beneficiary of an entity determined to be a variable interest entity (VIE) and therefore would be required to consolidate the third party.

For VIEs, we may be required to consolidate an entity if the contractual terms of the arrangement essentially provide us with control over the entity, even if we do not have a majority voting interest. We assess whether we are the primary beneficiary of a VIE based on our power to direct the activities of the VIE that most significantly impact the VIE's economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As such, we have consolidated those entities in our consolidated financial statements. As of March 31, 2015, the only material VIE was our joint venture with BMS which is described below.

Bristol-Myers Squibb Company

North America

In 2004, we entered into a collaboration arrangement with BMS to develop and commercialize a single tablet regimen containing our Truvada and BMS's Sustiva (efavirenz) in the United States. This combination was approved for use in the

United States in 2006 and is sold under the brand name Atripla. We and BMS structured this collaboration as a joint venture that operates as a limited liability company named Bristol-Myers Squibb & Gilead Sciences, LLC, which we consolidate. We and BMS granted royalty free sublicenses to the joint venture for the use of our respective company owned technologies and, in return, were granted a license by the joint venture to use any intellectual property that results from the collaboration. In 2006, we and BMS amended the joint venture's collaboration agreement to allow the joint venture to sell Atripla in Canada. The economic interests of the joint venture held by us and BMS (including a share of revenues and out-of-pocket expenses) are based on the portion of the net selling price of Atripla attributable to efavirenz and Truvada. Since the net selling price for Truvada may change over time relative to the net selling price of efavirenz, both our and BMS's respective economic interests in the joint venture may vary annually.

We and BMS shared marketing and sales efforts. Starting in the second quarter of 2011, except for a limited number of activities that will be jointly managed, the parties no longer coordinate detailing and promotional activities in the United States, and the parties reduced their joint promotional efforts since we launched Complera in August 2011 and Stribild in August 2012. The parties will continue to collaborate on activities such as manufacturing, regulatory, compliance and pharmacovigilance. The daily operations of the joint venture are governed by four primary joint committees formed by both BMS and Gilead. We are responsible for accounting, financial reporting, tax reporting, manufacturing and product distribution for the joint venture. Both parties provide their respective bulk active pharmaceutical ingredients to the joint venture at their approximate market values. The agreement will continue until terminated by the mutual agreement of the parties. In addition, either party may terminate the other party's participation in the collaboration within 30 days after the launch of at least one generic version of such other party's single agent products (or the double agent products). The terminating party then has the right to continue to sell Atripla and become the continuing party, but will be obligated to pay the terminated party certain royalties for a three-year period following the effective date of the termination.

As of March 31, 2015 and December 31, 2014, the joint venture held efavirenz active pharmaceutical ingredient which it purchased from BMS at BMS's estimated net selling price of efavirenz in the U.S. market. These amounts are included in inventories on our Condensed Consolidated Balance Sheets. As of March 31, 2015, total assets held by the joint venture were $2.4 billion and consisted primarily of cash and cash equivalents of $254 million, accounts receivable of $231 million and inventories of $1.9 billion; total liabilities were $1.3 billion and consisted primarily of accounts payable of $881 million and other accrued expenses of $453 million. As of December 31, 2014, total assets held by the joint venture were $2.1 billion and consisted primarily of cash and cash equivalents of $250 million, accounts receivable of $297 million and inventories of $1.6 billion; total liabilities were $1.2 billion and consisted primarily of accounts payable of $750 million and other accrued expenses of $408 million. These asset and liability amounts do not reflect the impact of intercompany eliminations that are included in our Condensed Consolidated Balance Sheets. Although we consolidate the joint venture, the legal structure of the joint venture limits the recourse that its creditors will have over our general credit or assets. Similarly, the assets held in the joint venture can be used only to settle obligations of the joint venture.

Europe

In 2007, Gilead Sciences Ireland Unlimited Company, our wholly-owned subsidiary, and BMS entered into a collaboration agreement with BMS which sets forth the terms and conditions under which we and BMS commercialize and distribute Atripla in the European Union, Iceland, Liechtenstein, Norway and Switzerland (collectively, the European Territory). The parties formed a limited liability company which we consolidate, to manufacture Atripla for distribution in the European Territory using efavirenz that it purchases from BMS at BMS's estimated net selling price of efavirenz in the European Territory. We are responsible for manufacturing, product distribution, inventory management and warehousing. Through our local subsidiaries, we have primary responsibility for order fulfillment, collection of receivables, customer relations and handling of sales returns in all the territories where we and BMS promote Atripla. In general, the parties share revenues and out-of-pocket expenses in proportion to the net selling prices of the components of Atripla, Truvada and efavirenz.

Starting in 2012, except for a limited number of activities that will be jointly managed, the parties no longer coordinate detailing and promotional activities in the region. We are responsible for accounting, financial reporting and tax reporting for the collaboration. As of March 31, 2015 and December 31, 2014, efavirenz purchased from BMS at BMS's estimated net selling price of efavirenz in the European Territory is included in inventories on our Condensed Consolidated Balance Sheets.

The parties also formed a limited liability company to hold the marketing authorization for Atripla in Europe. We have primary responsibility for regulatory activities. In the major market countries, both parties have agreed to independently continue to use commercially reasonable efforts to promote Atripla.

The agreement will terminate upon the expiration of the last-to-expire patent which affords market exclusivity to Atripla or one of its components in the European Territory. In addition, since December 31, 2013, either party may terminate the agreement for any reason and such termination will be effective two calendar quarters after notice of termination. The non-terminating party has the right to continue to sell Atripla and become the continuing party, but will be obligated to pay the terminating party certain royalties for a three-year period following the effective date of the termination. In the event the continuing party decides not to sell Atripla, the effective date of the termination will be the date Atripla is withdrawn in each country or the date on which a third party assumes distribution of Atripla, whichever is earlier.


8.	DEBT AND CREDIT FACILITY

Financing Arrangements

The following table summarizes the carrying amounts of our borrowings under various financing arrangements (in millions):



Type of Borrowing	Description	Issue Date	Due Date	Interest Rate	March 31, 2015		December 31, 2014
Convertible Senior	May 2016 Notes	July 2010	May 2016	1.625%	$	442	$	483
Senior Unsecured	April 2021 Notes	March 2011	April 2021	4.50%	995		995
Senior Unsecured	December 2016 Notes	December 2011	December 2016	3.05%	700		700
Senior Unsecured	December 2021 Notes	December 2011	December 2021	4.40%	1,248		1,248
Senior Unsecured	December 2041 Notes	December 2011	December 2041	5.65%	998		998
Senior Unsecured	April 2019 Notes	March 2014	April 2019	2.05%	499		499
Senior Unsecured	April 2024 Notes	March 2014	April 2024	3.70%	1,747		1,747
Senior Unsecured	April 2044 Notes	March 2014	April 2044	4.80%	1,747		1,747
Senior Unsecured	February 2020 Notes	November 2014	February 2020	2.35%	499		499
Senior Unsecured	February 2025 Notes	November 2014	February 2025	3.50%	1,748		1,748
Senior Unsecured	February 2045 Notes	November 2014	February 2045	4.50%	1,740		1,740
Total debt, net					12,363		12,404
Less current portion					442		483
Total long-term debt, net					$	11,921	$	11,921

Convertible Senior Notes

During the three months ended March 31, 2015, a portion of our convertible senior notes due in May 2016 (the May 2016 Notes) was converted and we repaid $45 million of principal balance related to these notes. We also paid $154 million in cash related to the conversion spread of the May 2016 Notes, which represents the conversion value in excess of the principal amount, and received $154 million in cash from the convertible note hedges related to the May 2016 Notes.

Concurrent with the issuance of the May 2016 Notes, we also sold warrants in private transactions. There are 55 million shares of our common stock underlying our warrants expiring in 2016 (the 2016 Warrants). The 2016 Warrants have a strike price of $30.05 per share and are exercisable only on their expiration date. If the market value of our common stock at the time of the exercise of the warrants exceeds their strike price, we will be required to net settle in cash or shares of our common stock, at our option, for the value of the warrants in excess of the warrant strike price.

As of March 31, 2015 and December 31, 2014, the May 2016 Notes were classified as current given that their conversion criteria had been met. As a result, the related unamortized discount of $11 million and $15 million, as of March 31, 2015 and December 31, 2014, respectively, were classified as equity component of currently redeemable convertible notes on our Condensed Consolidated Balance Sheets.

Credit Facility

There were no amounts outstanding under the revolving credit facility credit agreement as of March 31, 2015.

We are required to comply with certain covenants under the credit agreement and note indentures and as of March 31, 2015, we were not in violation of any covenants.


9.	COMMITMENTS AND CONTINGENCIES

We are a party to various legal actions. The most significant of these are described below. It is not possible to determine the outcome of these matters, and we cannot reasonably estimate the maximum potential exposure or the range of possible loss.

Litigation Related to Sofosbuvir

In January 2012, we acquired Pharmasset, Inc. (Pharmasset). Through the acquisition, we acquired sofosbuvir, a nucleotide analog that acts to inhibit the replication of the hepatitis C virus (HCV). In December 2013, we received U.S. Food and Drug Administration (FDA) approval of sofosbuvir, now known commercially as Sovaldi. In October 2014, we also received approval of the fixed-dose combination of ledipasvir and sofosbuvir, now known commercially as Harvoni. We have received a number of contractual and intellectual property claims regarding sofosbuvir. While we have carefully considered these claims both prior to and following the acquisition and believe they are without merit, we cannot predict the ultimate outcome of such claims or range of loss.

We own patents and patent applications that claim sofosbuvir (Sovaldi) as a chemical entity and its metabolites and the fixed-dose combination of ledipasvir and sofosbuvir (Harvoni). Third parties may have, or may obtain rights to, patents that allegedly could be used to prevent or attempt to prevent us from commercializing Sovaldi or Harvoni. For example, we are aware of patents and patent applications owned by other parties that have been or may in the future be alleged by such parties to cover the use of Sovaldi and Harvoni. We cannot predict the ultimate outcome of intellectual property claims related to Sovaldi or Harvoni, and we have spent, and will continue to spend, significant resources defending against these claims.

If third parties successfully obtain valid and enforceable patents, and successfully prove infringement of those patents by Sovaldi and/or Harvoni, we could be prevented from selling these products unless we were able to obtain a license under such patents. Such a license may not be available on commercially reasonable terms or at all.

Interference Proceedings and Litigation with Idenix Pharmaceuticals, Inc. (Idenix)

In February 2012, we received notice that the U.S. Patent and Trademark Office (USPTO) had declared Interference No. 105,871 (First Idenix Interference) between our U.S. Patent No. 7,429,572 (the ’572 patent) and Idenix's pending U.S. Patent Application No. 12/131,868. An interference is an administrative proceeding before the USPTO designed to determine who was the first to invent the subject matter claimed by both parties. On January 29, 2014, the USPTO Patent Trial and Appeal Board (PTAB) determined that Pharmasset and not Idenix was the first to invent the compounds in dispute and accordingly Gilead prevailed in the First Idenix Interference. Idenix has appealed the PTAB’s decisions to the U.S. District Court for the District of Delaware.

In December 2013, after receiving our request to do so, the USPTO declared Interference No. 105,981 (Second Idenix Interference) between our pending U.S. Patent Application No. 11/854,218 and Idenix’s U.S. Patent No. 7,608,600 (the ’600 patent). The ’600 patent includes claims directed to methods of treating HCV with nucleoside compounds similar to those which were involved in the First Idenix Interference. The purpose of the Second Idenix Interference was to determine who was first to invent the claimed methods of treating HCV with compounds similar to those which were involved in the First Idenix Interference. On March 23, 2015, the PTAB determined that Pharmasset and not Idenix was the first to invent the claimed methods of treating HCV. Idenix has the right to appeal this decision to a federal court.

We believe that the Idenix claims involved in the First and Second Idenix Interferences, and similar U.S. and foreign patents claiming the same compounds, metabolites and uses thereof, are invalid. As a result, we filed an Impeachment Action in the Federal Court of Canada to invalidate Idenix Canadian Patent No. 2,490,191 (the ’191 patent), which is the Canadian patent that corresponds to the ’600 patent and the Idenix patent application that was the subject of the First Idenix Interference. Idenix has asserted that the commercialization of Sovaldi in Canada will infringe its ’191 patent and that our Canadian Patent No. 2,527,657, corresponding to the ’572 patent involved in the First Idenix Interference, is invalid. A trial on these issues was held in January and February 2015 and we are currently awaiting a decision.

We filed a similar legal action in Norway in the Oslo District Court seeking to invalidate Idenix's Norwegian patent corresponding to the ’600 patent. In September 2013, Idenix filed an invalidation action in the Norwegian proceedings against our Norwegian Patent No. 333700 patent, which corresponds to the ’572 patent. On March 21, 2014, the Norwegian court found all claims in the Idenix Norwegian patent to be invalid and upheld the validity of all claims in the challenged Gilead patent. On April 30, 2014, Idenix appealed the March 21, 2014 decision to the Norwegian Court of Appeal. The appeal hearing from the March 2014 decision is scheduled for February 2016.

In January 2013, we filed a legal action in the Federal Court of Australia seeking to invalidate Idenix’s Australian patent corresponding to the ’600 patent. In April 2013, Idenix asserted that the commercialization of Sovaldi in Australia will infringe

its Australian patent corresponding to the ’600 patent. A trial on these issues is scheduled to commence in September 2015 in Sydney.

On March 12, 2014 the European Patent Office (EPO) granted Idenix European Patent No. 1 523 489 (the ’489 patent), which corresponds to the ’600 patent. The same day that the ’489 patent was granted, we filed an opposition with the EPO seeking to revoke the ’489 patent. Also on that day, Idenix initiated infringement proceedings against Gilead in the United Kingdom (UK) alleging that the commercialization of Sovaldi would infringe the UK counterpart of the ’489 patent. A trial was held in the UK in October 2014 to determine the issues of infringement and validity of the Idenix UK patent. In December 2014, the High Court of Justice of England and Wales (UK Court) invalidated all claims of the ’489 patent on multiple grounds. The UK Court has granted Idenix permission to appeal the December 1, 2014 judgment. On March 12, 2015, the German court in Düsseldorf determined that the Idenix patent was highly likely to be invalid and stayed the infringement proceedings pending the outcome of the opposition filed in the EPO. Idenix has not appealed this decision of the German court staying the proceedings.

Idenix has not been awarded patents corresponding to the ’600 patent in Japan or China. In the event such patents are issued, we expect to challenge them in proceedings similar to those we invoked in other countries.

In December 2013, Idenix, Universita Degli Studi di Cagliari (UDSG), Centre National de la Recherche Scientifique and L’Université Montpellier II sued us in U.S. District Court for the District of Delaware alleging that the commercialization of sofosbuvir will infringe the ’600 patent and that an interference exists between the ’600 patent and our U.S. Patent No. 8,415,322. Also in December 2013, Idenix and UDSG sued us in the U.S. District Court for the District of Massachusetts alleging that the commercialization of sofosbuvir will infringe U.S. Patent Nos. 6,914,054 and 7,608,597. On June 30, 2014, the court in Massachusetts granted our request and transferred the Massachusetts litigation to the U.S. District Court for the District of Delaware. We believe that Idenix’s patents are invalid and would not be infringed by our commercialization of sofosbuvir and that we have the sole right to commercialize sofosbuvir. The district court has set trial dates in October 2016 and December 2016 for resolution of these issues. A decision by the district court may be appealed by either party to the U.S. Court of Appeals for the Federal Circuit (CAFC).

Idenix was acquired by Merck in August 2014. While the acquisition does not change our view of the lack of merit in the claims made by Idenix, Merck has greater resources than Idenix and may therefore choose to fund the litigation at higher levels than Idenix.

Litigation with Merck

In August 2013, Merck contacted us requesting that we pay royalties on the sales of sofosbuvir and obtain a license to U.S. Patent Nos. 7,105,499 and 8,481,712, which it co-owns with Isis Pharmaceuticals, Inc. We believe that Merck’s patents are invalid and are not infringed by our commercialization of sofosbuvir and that we have the sole right to commercialize sofosbuvir. In August 2013, we filed a lawsuit in the U.S. District Court for the Northern District of California seeking a declaratory judgment that the Merck patents are invalid and not infringed. Merck’s U.S. Patent Nos. 7,105,499 and 8,481,712 cover compounds which do not include, but may relate to, sofosbuvir. During patent prosecution, Merck amended its patent application in an attempt to cover compounds related to sofosbuvir. If the court determines that Merck’s patents are valid and that we have infringed those claims, we may be required to obtain a license from and pay royalties to Merck to commercialize sofosbuvir. Either party may appeal a decision by the District Court to the CAFC. The court has set a trial date of March 7, 2016 for this lawsuit.

Litigation with AbbVie, Inc. (AbbVie)

AbbVie has obtained U.S. Patent Nos. 8,466,159, 8,492,386, 8,680,106, 8,685,984, and 8,809,265 (AbbVie Patents) which purport to cover the use of a combination of LDV/SOF (or Harvoni) for the treatment of HCV. Gilead is aware that AbbVie has pending patent applications in the United States and granted and pending applications in other countries. We own published and pending patent applications directed to the use of combinations for the treatment of HCV, and, specifically, to the combination of ledipasvir and sofosbuvir. Certain of our applications were filed before the AbbVie Patents. For this reason and others, we believe the AbbVie Patents are invalid.

Accordingly, in December 2013, we filed a lawsuit in the U.S. District Court for the District of Delaware seeking declaratory judgment that the AbbVie Patents are invalid and unenforceable, as well as other relief. We believe that Abbott Laboratories, Inc. and AbbVie conspired to eliminate competition in the HCV market by falsely representing to the USPTO that they, and not Gilead, invented methods of treating HCV using a combination of LDV/SOF. In February and March 2014, AbbVie responded to our lawsuit by also filing two lawsuits in the U.S. District Court for the District of Delaware alleging that our fixed-dose combination of LDV/SOF will infringe its patents. All of those lawsuits have been consolidated into a single action. In the United States, either party may appeal a decision by the District Court to the CAFC. The AbbVie Patents have not blocked or delayed the commercialization of our combination product in the United States, Canada, or Europe. We do not

expect any other foreign patents to block or delay the commercialization around the world. If a court determines that the AbbVie Patents are valid and that we have infringed those claims, we may be required to obtain a license from and pay royalties to AbbVie to commercialize sofosbuvir combination products. The court has set a trial date of September 12, 2016 for this lawsuit.

Litigation with Generic Manufacturers

As part of the approval process for some of our products, the FDA granted us a New Chemical Entity (NCE) exclusivity period during which other manufacturers' applications for approval of generic versions of our product will not be approved. Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (ANDA), the application form typically used by manufacturers seeking approval of a generic drug. The sale of generic versions of these products earlier than their patent expiration would have a significant negative effect on our revenues and results of operations.

Current legal proceedings of significance with some of our generic manufacturers include:

Mylan

In April 2014, we received notice that Mylan Inc. (Mylan) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Mylan alleges that two of the patents associated with emtricitabine and one of our patents associated with the fixed-dose combination of emtricitabine with tenofovir disoproxil fumarate are invalid, unenforceable and/or will not be infringed by Mylan's manufacture, use or sale of a generic version of Truvada. In June 2014, we filed a lawsuit against Mylan in U.S. District Court for the Northern District of West Virginia for infringement of our patents. In June 2014, we received notice that Mylan submitted petitions for Inter Partes Review (IPR) to the PTAB alleging that four patents associated with tenofovir disoproxil fumarate are invalid. We opposed Mylan’s petitions. In December 2014, the PTAB issued decisions denying each of Mylan’s petitions for IPR against the tenofovir disoproxil fumarate-associated patents on the grounds that Mylan had not established a reasonable likelihood of success that it would prevail in its challenge to each of these patents. Mylan has requested a rehearing on the basis that it believes the PTAB decision is wrong.

Apotex

In June 2014, we received notice that Apotex Corp. (Apotex) submitted an abbreviated new drug submission (ANDS) to Health Canada requesting permission to manufacture and market a generic fixed-dose combination of emtricitabine and tenofovir disoproxil fumarate and a separate ANDS requesting permission to manufacture and market a generic version of Viread. In the notice, Apotex alleges that three of the patents associated with Truvada and two of the patents associated with Viread are invalid, unenforceable and/or will not be infringed by Apotex's manufacture, use or sale of a generic version of Truvada or Viread. In August 2014, we filed a lawsuit against Apotex in the Federal Court of Canada seeking an order of prohibition against approval of this ANDS.

Teva

In August 2012, Teva Pharmaceuticals (Teva) filed an Impeachment Action in the Federal Court of Canada seeking invalidation of our two Canadian patents associated with Viread. In September 2013, a hearing on the consolidated requests for orders of prohibition in connection with all three of Teva’s ANDS filings to Health Canada (for Teva’s generic versions of Viread, Truvada, and Atripla) took place. In December 2013, the court issued our requested order prohibiting the Canadian Minister of Health from issuing a Notice of Compliance for Teva’s generic versions of our Viread, Truvada, and Atripla products until expiry of our patent in July 2017. Teva appealed the decision of the court prohibiting Health Canada from issuing the Notices of Compliance until expiry of our patent in July 2017. This decision did not rule on the validity of the patents and accordingly the only issue on appeal is whether Health Canada should be prohibited from issuing the Notices of Compliance for Teva’s products. The appeal will be heard by the Canadian Federal Court of Appeal after the trial in the Impeachment Action. Separately, the court will determine the validity of the patents in the pending Impeachment Action. A trial in the Impeachment Action is scheduled for November 2016. If Teva is successful in invalidating our patents, Teva may be able to launch generic versions of our Viread, Truvada and Atripla products in Canada prior to the expiry of our patents.

Watson

In February 2015, we received notice that Watson Laboratories, Inc. (Watson) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Letairis. In the notice, Watson alleges that one of the patents associated with ambrisentan tablets is invalid, unenforceable and/or will not be infringed by Watson's manufacture, use or sale of a generic version of Letairis. In April 2015, we filed a lawsuit against Watson in the U.S. District Court for the District of Delaware and we also filed a protective suit with the U.S. District Court for the District of New Jersey.

Department of Justice Investigation

In June 2011, we received a subpoena from the U.S. Attorney's Office for the Northern District of California requesting documents related to the manufacture, and related quality and distribution practices, of Complera, Atripla, Truvada, Viread, Emtriva, Hepsera and Letairis. We cooperated with the government’s inquiry. In April 2014, the United States Department of Justice informed us that, following an investigation, it declined to intervene in a False Claims Act lawsuit filed by two former employees. In April 2014, the former employees served a First Amended Complaint. In January 2015, the federal district court issued an order granting in its entirety, without prejudice, our motion to dismiss the First Amended Complaint. In February 2015, the former employees served a Second Amended Complaint. We have moved to dismiss the Second Amended Complaint.

Other Matters

We are a party to various legal actions that arise in the ordinary course of our business. We do not believe that these other legal actions will have a material adverse impact on our consolidated business, financial position or results of operations.


10.	STOCKHOLDERS’ EQUITY

Stock Repurchase Program

During the first quarter of 2015, we completed the $5.0 billion stock repurchase program authorized in May 2014 and repurchased a total of $3.0 billion or 30 million shares of common stock under this program. In February 2015, we announced that our Board of Directors authorized a new $15.0 billion five-year stock repurchase program. We began repurchases under this new program in April 2015.

Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated OCI by component, net of tax (in millions):



	Foreign Currency Items			Unrealized Gains and Losses on Available-for-Sale Securities		Unrealized Gains and Losses on Cash Flow Hedges			Total
Balance at December 31, 2014	$	(54	)	$	12	$	343		$	301
Other comprehensive income (loss) before reclassifications	(10		)	6		383			379
Amounts reclassified from accumulated other comprehensive income (loss)	—			—		(141		)	(141		)
Net current period other comprehensive income (loss)	(10		)	6		242			238
Balance at March 31, 2015	$	(64	)	$	18	$	585		$	539

Amounts reclassified for gains (losses) on cash flow hedges are recorded as part of product sales on our Condensed Consolidated Statements of Income. Amounts reclassified for gains (losses) on available-for-sale securities are recorded as part of other income (expense), net on our Condensed Consolidated Statements of Income.


11.	STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expenses included in our Condensed Consolidated Statements of Income (in millions):



	Three Months Ended
	March 31,
	2015			2014
Cost of goods sold	$	3		$	3
Research and development expenses	42			34
Selling, general and administrative expenses	47			45
Stock-based compensation expense included in total costs and expenses	92			82
Income tax effect	(23		)	(19		)
Stock-based compensation expense, net of tax	$	69		$	63


12.	NET INCOME PER SHARE ATTRIBUTABLE TO GILEAD COMMON STOCKHOLDERS

Basic net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding during the period. Diluted net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding and other dilutive securities outstanding during the period. The potential dilutive shares of our common stock resulting from the assumed exercise of outstanding stock options, performance shares and the assumed exercise of warrants relating to our convertible senior notes, including the convertible senior notes due in May 2014 (the May 2014 Notes) and the May 2016 Notes (collectively, the May Notes) are determined under the treasury stock method.

Because the principal amount of the May Notes has been or will be settled in cash, only the conversion spread relating to the May Notes is included in our calculation of diluted net income per share attributable to Gilead common stockholders. Our common stock resulting from the assumed settlement of the conversion spread of the May 2016 Notes has a dilutive effect when the average market price of our common stock during the period exceeds the conversion price of $22.71 for the May 2016 Notes. Warrants relating to the May 2016 Notes have a dilutive effect when the average market price of our common stock during the period exceeds the warrants’ exercise price of $30.05.

Our May 2014 Notes matured and as a result, we have only included their impact for the periods they were outstanding on our net income per share calculations for the periods shown. Our common stock resulting from the assumed settlement of the conversion spread of the May 2014 Notes had a dilutive effect when the average market price of our common stock during the period exceeded the conversion price of $22.54 for the May 2014 Notes. Warrants related to our May 2014 Notes settled in the third quarter of 2014 and as a result, we have only included their impact for the period they were outstanding on our net income per share calculation. The related warrants had a dilutive effect when the average market price of our common stock during the period exceeded the warrants’ exercise price of $28.38.

We have excluded stock options to purchase approximately 1 million weighted-average shares of our common stock that were outstanding during the three months ended March 31, 2015, and approximately 1 million weighted-average shares of our common stock that were outstanding during the three months ended March 31, 2014. These shares were excluded in the computation of diluted net income per share attributable to Gilead common stockholders because their effect was antidilutive.

The following table is a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share attributable to Gilead common stockholders (in millions):



	Three Months Ended
	March 31,
	2015		2014
Net income attributable to Gilead	$	4,333	$	2,227
Shares used in per share calculation - basic	1,488		1,537
Effect of dilutive securities:
Stock options and equivalents	26		35
Conversion spread related to the May 2014 Notes	—		7
Conversion spread related to the May 2016 Notes	16		32
Warrants related to the May Notes	39		69
Shares used in per share calculation - diluted	1,569		1,680


13.	SEGMENT INFORMATION

We operate in one business segment, which primarily focuses on the discovery, development and commercialization of innovative medicines in areas of unmet medical need. All products are included in one segment, because the majority of our products have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment. Total product sales on an individual product basis are summarized in the following table (in millions):



	Three Months Ended
	March 31,
	2015		2014
Antiviral products:
Harvoni	$	3,579	$	—
Sovaldi	972		2,274
Truvada	771		760
Atripla	734		780
Stribild	356		215
Complera/Eviplera	320		251
Viread	234		211
Other antiviral	22		18
Total antiviral products	6,988		4,509
Other products:
Letairis	151		123
Ranexa	117		111
AmBisome	85		92
Zydelig	26		—
Other	38		36
Total product sales	$	7,405	$	4,871

The following table summarizes revenues from each of our customers who individually accounted for 10% or more of our total revenues (as a percentage of total revenues):



	Three Months Ended
	March 31,
	2015		2014
McKesson Corp.	25	%	23	%
AmerisourceBergen Corp.	21	%	27	%
Cardinal Health, Inc.	17	%	13	%


14.	INCOME TAXES

Our income tax rate of 17.3% for the three months ended March 31, 2015, differed from the U.S. federal statutory rate of 35% due primarily to certain operating earnings from non-U.S. subsidiaries that are considered indefinitely reinvested and tax credits, partially offset by state taxes, our portion of the non-tax deductible Branded Prescription Drug Fee, also known as the pharmaceutical excise tax, and amortization expense of the intangible asset related to sofosbuvir for which we receive no tax benefit. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries.

We file federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. For federal income tax purposes, the statute of limitations is open for 2010 and onwards. For certain acquired entities, the statute of limitations is open for all years from inception due to our utilization of their net operating losses and credits carried over from prior years. For California income tax purposes, the statute of limitations is open for 2008 and onwards.

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service (IRS) for the 2010, 2011 and 2012 tax years and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.

As of March 31, 2015, we believe that it is reasonably possible that our unrecognized tax benefits will decrease by approximately $12 million in the next 12 months as we expect to have clarification from the IRS and other tax authorities regarding our uncertain tax positions. With respect to the remaining unrecognized tax benefits, we are currently unable to make a reasonable estimate as to the period of cash settlement, if any, with the respective tax authorities.

We record liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period.


15.	SUBSEQUENT EVENT

On April 30, 2015, we announced that our Board of Directors declared a quarterly cash dividend of $0.43 per share of our common stock, with a payment date of June 29, 2015 to all stockholders of record as of the close of business on June 16, 2015. This is the first quarterly dividend declared under our dividend program previously announced on February 3, 2015.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The forward-looking statements are contained principally in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends, operating cost and revenue trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions. We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified below under “Risk Factors.” Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in the section entitled “Risk Factors” under Part II, Item 1A below, in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2014 and our unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2015 and other disclosures (including the disclosures under Part II, Item 1A, "Risk Factors") included in this Quarterly Report on Form 10-Q. Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles and are presented in U.S. dollars.

Management Overview

Gilead Sciences, Inc. (Gilead, we or us), incorporated in Delaware on June 22, 1987, is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. With each new discovery and investigational drug candidate, we strive to transform and simplify care for people with life-threatening illnesses around the world. Gilead's primary areas of focus include human immunodeficiency virus (HIV), liver diseases such as chronic hepatitis C virus (HCV) infection and chronic hepatitis B virus (HBV) infection, oncology and inflammation, and serious cardiovascular and respiratory conditions. We have operations in more than 30 countries worldwide, with headquarters in Foster City, California. We continue to add to our existing portfolio of products through our internal discovery and clinical development programs and through a product acquisition and in-licensing strategy.

Our portfolio of marketed products includes Harvoni^®, Sovaldi^®, Truvada^®, Atripla^®, Stribild^®, Complera^®/Eviplera^®, Viread^®, Letairis^®, Ranexa^®, AmBisome^®, Zydelig^®, Emtriva^®, Tybost^®, Hepsera^®, Vitekta^®, Cayston^®, and Tamiflu^®. We have U.S. and international commercial sales operations, with marketing subsidiaries in North and South America, Europe and Asia-Pacific. We also sell and distribute certain products through our corporate partners under royalty-paying collaborative agreements.

Business Highlights

During the first quarter of 2015, we continued to advance our product pipeline across our therapeutic areas with the goal of delivering best-in-class drugs that advance the current standard of care and/or address unmet medical needs. Recent key announcements made include:

Antiviral Program


•	Submitted a new drug application to the U.S. Food and Drug Administration (FDA) for two doses of an investigational fixed-dose combination of emtricitabine and tenofovir alafenamide (TAF) for the treatment of HIV-1 infection in adults and pediatric patients age twelve years and older, in combination with other HIV antiretroviral agents.


•	Announced that the Japanese Ministry of Health, Labour and Welfare approved Sovaldi for the suppression of viremia in patients with genotype 2 chronic HCV infection with or without compensated cirrhosis. In Japan, Sovaldi is

indicated for use in combination with ribavirin (RBV) for 12 weeks and is the first all-oral, interferon-free treatment regimen for genotype 2 HCV infection.


•	Presentation of data at the 22nd Conference on Retroviruses and Opportunistic Infections included announcement of:


◦	Positive results from a Phase 3 clinical trial evaluating the once-daily single tablet regimen Harvoni for the treatment of genotypes 1 or 4 chronic HCV infection among patients co-infected with HIV. In the trial, 96 percent of HCV patients achieved a sustained virologic response 12 weeks after completing therapy (SVR12). Patients who achieve SVR12 are considered cured of HCV infection.

◦

Positive 48-week results from two Phase 3 studies (Studies 104 and 111) evaluating an investigational once-daily single tablet regimen containing TAF for the treatment of HIV-1 infection in treatment-naïve adults. TAF is a novel nucleotide reverse transcriptase inhibitor that has demonstrated high antiviral efficacy at a dose 10 times lower than Viread, as well as improved renal and bone laboratory parameters, in clinical trials.

◦

Positive results from a preclinical study conducted in collaboration with researchers at Beth Israel Deaconess Medical Center evaluating a proprietary investigational oral TLR7 agonist and analogue of GS-9620 as part of an HIV eradication strategy. Data demonstrated that treatment with the TLR7 agonist induced transient plasma Simian Immunodeficiency Virus (SIV) RNA, as well as reduced SIV DNA in virally suppressed rhesus macaques given antiretroviral therapy (ART). In addition, the study found that after discontinuation of ART, SIV viral loads were lower among macaques that received the proprietary TLR7 agonist compared to the placebo group.

Oncology Program

•

Entered into a definitive agreement with EpiTherapeutics ApS, a privately-held Danish company, pursuant to which we acquired EpiTherapeutics for $65 million, subject to certain purchase price adjustments. EpiTherapeutics has generated a library of first-in-class, selective small molecule inhibitors of epigenetic regulation of gene transcription, in particular histone demethylases. The company’s lead pre-clinical compounds are being studied for the treatment of certain cancers.

Financial Highlights

During the first quarter of 2015, total revenues increased to $7.6 billion, compared to $5.0 billion in the first quarter of 2014 primarily due to an increase in HCV product sales, which consist of Harvoni and Sovaldi. Sales of HCV products totaled $4.6 billion for the first quarter of 2015, an increase of 100% year over year. Increases in volume of HCV product sales driven by higher demand and continued launches across geographies were partially offset by additional discounts or rebates to public and private payers resulting from contracting activity during the quarter. Sales of HIV products, which include Atripla, Complera/Eviplera, Stribild, Truvada and Viread, totaled $2.4 billion for the first quarter of 2015, an increase of 9% year over year. Growth in HIV product sales was driven by our single tablet regimens, with Stribild increasing by 66% and Complera/Eviplera by 27%. The recently updated HIV treatment guidelines from the U.S. Department of Health and Human Services downgraded Atripla and reinforced the benefit of improved single tablet regimens like Stribild.

Research and development (R&D) expenses increased 17% to $696 million for the first quarter of 2015 compared to the same period in 2014 due primarily to the progression and expansion of our clinical studies. Selling, general and administrative (SG&A) expenses increased 18% to $645 million for the first quarter of 2015 compared to the same period in 2014 due to the growth in our business and geographic expansions during the past year as we continue to launch Sovaldi and Harvoni.

Net income attributable to Gilead for the first quarter of 2015 increased to $4.3 billion or $2.76 per diluted share, compared to $2.2 billion or $1.33 per diluted share during the same period in 2014, due primarily to the launch of Harvoni, partially offset by the increase in R&D and SG&A expenses.

As of March 31, 2015, our cash, cash equivalents and marketable securities totaled $14.5 billion. During the first quarter of 2015, we generated $5.7 billion of operating cash flows and repurchased $3.0 billion of common stock which completed our stock repurchase program authorized in May 2014 (the 2014 Program).

Results of Operations

Total Revenues

The following table summarizes our product sales, and royalty, contract and other revenues:



	Three Months Ended
	March 31,
(In millions)	2015		2014
Revenues:
Product sales	$	7,405	$	4,871
Royalty, contract and other revenues	189		128
Total revenues	$	7,594	$	4,999

Product Sales

Total product sales were $7.4 billion for the three months ended March 31, 2015, an increase of $2.5 billion compared to the same period in 2014. The increase in product sales was primarily driven by an increase in antiviral product sales which totaled $7.0 billion for the three months ended March 31, 2015. We continue to experience pricing pressure such as increases in the amount of rebates required on our products which could negatively impact our future product sales and results of operations. During the three months ended March 31, 2015, 30% of our product sales were generated outside of the United States and as a result, we face exposure to adverse movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a percentage of our foreign currency exposure. Foreign currency exchange, net of hedges, had an unfavorable impact of $122 million on our product sales for the three months ended March 31, 2015, compared to the same period in 2014.

Product sales in the United States increased by 44% to $5.2 billion for the three months ended March 31, 2015 compared to the same period in 2014, due primarily to sales of Harvoni and increases in sales of Stribild and Complera, which were partially offset by a decrease in sales of Sovaldi.

Product sales in Europe increased by 80% to $1.8 billion for the three months ended March 31, 2015 compared to the same period in 2014, due primarily to sales of Sovaldi and Harvoni and increases in sales of Stribild and Eviplera. Foreign currency exchange, net of hedges, had an unfavorable impact of $102 million on our product sales in Europe for the three months ended March 31, 2015, compared to the same period in 2014.

The following table summarizes the period over period changes in our net product sales by product:



	Three Months Ended
	March 31,
(In millions, except percentages)	2015		2014		Change
Antiviral products:
Harvoni	$	3,579	$	—	—
Sovaldi	972		2,274		(57	)%
Truvada	771		760		1	%
Atripla	734		780		(6	)%
Stribild	356		215		66	%
Complera/Eviplera	320		251		27	%
Viread	234		211		11	%
Other antiviral	22		18		22	%
Total antiviral products	6,988		4,509		55	%
Other products:
Letairis	151		123		23	%
Ranexa	117		111		5	%