Gilead And Roche End Tamiflu(R) Dispute

Foster, CA - Gilead Sciences, Inc. and Roche recently announced the companies have ended their dispute related to the companies' 1996 Development and License Agreement for Tamiflu(R) (oseltamivir phosphate). With increasing public concern over the threat of an influenza pandemic, in particular related to the growing incidence of avian influenza, Gilead and Roche have reached this settlement in the interest of working together to address public health needs.

Tamiflu, the only oral antiviral for the treatment and prevention of influenza A and B, was invented by Gilead and licensed to Roche in 1996. The companies collaborated on the development of the product, advancing Tamiflu through clinical trials, initiated in 1997, to its first market approval approximately two and a half years later. In June of this year, Gilead delivered a notice of termination to Roche for the companies' 1996 Agreement and the companies subsequently entered into arbitration. With today's execution of an amendment to the 1996 agreement, Gilead has terminated arbitration proceedings with Roche.

Under the terms of the amended agreement, Gilead and Roche will establish joint committees to oversee manufacturing, commercial and pandemic planning for the product. Gilead will also have the option to co-promote Tamiflu in specialized areas in the United States. Gilead will not co-promote Tamiflu in 2006 and has not yet determined whether it will exercise its option for co-promotion in 2007 or beyond.

"The global threat of a potential avian flu pandemic has challenged governments, public health officials and the pharmaceutical industry to join together in partnership for the purpose of establishing a comprehensive plan to combat this deadly disease. Beyond this threat, seasonal influenza outbreaks result in hundreds of thousands of deaths each year around the world. We have ended our dispute with Roche in an effort to work together, with the utmost diligence, to address this global public health need," said John C. Martin, PhD, President and Chief Executive Officer, Gilead Sciences. "As the inventor and the company that devised the manufacturing process for Tamiflu, Gilead looks forward to partnering our expertise with that of Roche, serving as an additional resource to support this important product."

William M. Burns, CEO Roche Pharmaceuticals Division, commented: "The redefined agreement with Gilead is an important step. Together, Roche and Gilead will be able to focus their efforts even more on making sure that the needs for this medicine can be met, both for the treatment and prevention of seasonal influenza as well as for the worldwide stockpiling for pandemic plans."

Gilead receives a blended royalty on sales of Tamiflu, tiered from 14 to 22 percent based on Roche's annual net sales. Roche has agreed to eliminate the pre-existing contractual cost of goods adjustments from the royalty calculations, retroactive to calendar year 2004 and for all future calculations. As a result of the elimination of the cost of goods adjustment, Roche will begin to pay Gilead at the contractually specified royalty rate based on the level of sales achieved, instead of the prior year's effective royalty rate. Without the cost of goods adjustments, based on actual sales for the first nine months of 2005 and estimated pandemic sales for the fourth quarter, Gilead anticipates receiving a blended royalty for Roche's full year 2005 Tamiflu sales in the range of 18 to 19 percent. Within 15 days after the amendment becomes effective, Roche will pay Gilead $62.5 million to reimburse Gilead for cost of goods adjustments retroactive to 2004 as well as to update the royalties payable to Gilead for the first nine months of 2005 based on current year royalty rates. Finally, Roche has agreed to waive its rights on the $18.2 million that Roche previously paid to Gilead and that Gilead deferred, for the disputed royalty calculations in the period from 2001 through 2003, as outlined in the notice of termination delivered to Roche on June 23, 2005.

SOURCE: Gilead Sciences