MORGAN STANLEY

March 29, 1993

Biotechnology Eric M. Hecht, M.D (212) 703-6241

Gilead Sciences (GILD): Covered With Gold

Price Dividend Rate Earnings P/S P/ E Est 5Yr Growth
On 4/1 /93 $12 Current 1992A ($ 0.40) NM Revenues NM
52-Wk.Rng $1 0-20 12/93E 1993E (1.46) NM Earnings NM
S&P5 0 0 451 CurYld 1994E (1.82) NM Dividend NM
CommonStock Data Valuation Benchmarks BookCapitalization 12/31 9/ 2
AvgShs 18 .6MM Bk Val/Sh93E $7.5 Csh Em/Sh93E NM LT Debt 0%
M ktVal $220 MM BkVal/Sh94E $5.9 Csh Em/Sh94E NM Other 0%
Beta ROE93E NM P/CE93E NM Shareholder Eq 100%
Options ROE94E NM P/CE94E NM TotalCapital $144MM
* Fiscal year ending in March

Novel Antiviral Agents

Summary and Investment Conclusion
We are reiterating our buy recommendation on Gilead,
ased upon the outlook for two novel antiviral drugs in
clinical development for the treatment of AIDS and AIDS
related infections, and on estimated calendar 1997 earnings
per share of $2.82.
We expect to see Phase 2 data from both compounds in
1993. If these results are positive, Gilead's stock should
appreciate considerably. Our 12-month target price is
$23/share.
Our valuation model is anchored by GS504, the company's
lead anti-cytomegalovirus compound, which we estimate to
have a present value of $12 per share. The company's
follow-on compound GS393, its strong balance sheet, and
other research programs in antisense and drug discovery
provide valuation support estimated at $II/share.
Gilead is an emerging pharmaceutical company focused on
the development of nucleic acids as therapeutic compounds.
Nucleic acids are the building blocks of DNA, and
numerous antiviral and anti-cancer drugs are currently
based upon their structure and function. By focusing on
nucleic acids, Gilead hopes to become a leader in the
development of this class of molecules as therapeutic
compounds. To date, Gilead has demonstrated that each of
its programs is innovative and promising. We will discuss
each program, but our investment thesis is based upon the
antiviral program, which is the-most mature.
Gilead has developed several novel antiviral agents, which
function in a manner similar to other drugs of the same
class (AZT, acyclovir, etc.). In comparison to these drugs,
however, Gilead's antiviral agents appear to be more potent
and less toxic, and they stay active for longer periods of
time. Their lead compound, GS504, is currently in Phase 2

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