March 29, 1993

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

Gilead Sciences G :Covered ith Gold Price Dividend Rate Earnings PIS PIE Est 5Yr Growth

On 411/93 52-WkRng S&P500

$12 Current $10-20 1YJ3E

451 CurYld

Common Stock Data Valuation Bencbntarks

---

1992A ($0.40) 1993E - (1.46) 1994E (1.82)

NM Revenues NM NM Earnings NM NM Dividend NM

Book Capital~zation 12131192 AvgShs 18.6MM Bk Val/Sh 93E $15 Csh Em/Sh 93E NM LTDebt 0% MktVal $22.0MM Bk Vai/Sh 94E $5.9 Csh Em/Sh 94E NM Other 0% Beta - ROE93E NM P/CE93E NM Shareholder Eq 100% Options - ROE94E NM P/CE94E NM Total Capital $144MM • Fiscal ~r e11ding in March

and lnvtsb11ent Conclusion

We are reiterating our buy endation on Gilead, based upon the outlook for two novel antiviral drugs in clinical developtnent 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 egalovirus which we estirnate to have a present value of $12 per share. The company's follow-on compound GS393, its strong balance sheet and and other research programs in antisense and drug discovery provide valuation suppott estimated at $11/share.

Novel Antiviral Agents

Gilead is is an en1erging phaatnaceutical company focused on the development of nucleic acids as therapeutic compounds. Nucleic acids are the building blocks of DNA, and nuanerous 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 developanent of this class of molecules as utic compounds. To date, Gilead has demonstrated that each of its prograans is innovative and protnising. We will discuss each progratn, 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 (AZf, 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 tirne. Their lead compound, GS504, is cmrently in Phase 2

This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This me.norandum is not an offer to buy or sell or a solicitation of an offer to buy or seU the securities mentioned. Morgan Stanley & Co. Inc. and others associated with it may have positions in and effect transactions in securities of companies mentioned and may also perform or seek to perfo1 111 invesunent banking services for those companies.