GILEAD SCIENCES INC, DEF 14A, 2000-04-18

GILEAD SCIENCES INC
DEF 14A, 2000-04-18
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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GILEAD SCIENCES, INC.
333 LAKESIDE DRIVE
FOSTER CITY, CALIFORNIA 94404

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2000

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TO THE STOCKHOLDERS OF GILEAD SCIENCES, INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Gilead
Sciences, Inc., a Delaware Corporation (the "Company") will be held on
Wednesday, May 24, 2000, at 10:00 a.m. local time, at the Hotel Sofitel, 223
Twin Dolphin Drive, Redwood City, California for the following purposes:

1. To elect seven directors to serve for the next year and until their
successors are elected.

2. To approve an amendment to the Company's 1991 Stock Option Plan to
increase the total number of shares of Common Stock authorized for
issuance under that plan from 10,000,000 to 10,750,000 shares and to
extend the term of the plan from October 2001 to April 2010.

3. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for its fiscal year ending December 31, 2000.

4. To transact such other business as may properly come before the annual
meeting or any adjournment or postponement of the annual meeting.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

The Board of Directors has fixed the close of business on April 10, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.

By Order of the Board of Directors,

[SIGNATURE]

Mark L. Perry
SECRETARY

Foster City, CA
April 12, 2000

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE MEETING A
LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR BENEFICIAL
OWNERSHIP OF THE SHARES. ADDITIONALLY, IN ORDER TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
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GILEAD SCIENCES, INC.
333 LAKESIDE DRIVE
FOSTER CITY, CALIFORNIA 94404

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PROXY STATEMENT

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INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed proxy is solicited on behalf on the Board of Directors of
Gilead Sciences, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Wednesday, May 24, 2000 at
10:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at such date at the Hotel
Sofitel, 223 Twin Dolphin Drive, Redwood City, California.

SOLICITATION

The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, and any
additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of common stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other employees of the Company, or at the
Company's request, by D.F. King & Co., a professional proxy solicitor. No
additional compensation will be paid to directors, officers or other employees
for such services, but D.F. King & Co. will be paid its customary fee, estimated
to be $5,000, for its solicitation services.

The Company intends to mail this Proxy Statement and the accompanying proxy
card on or about April 17, 2000 to all stockholders entitled to vote at the
Annual Meeting.

STOCKHOLDER PROPOSALS

Proposals of stockholders that are intended to be presented at the Company's
2001 Annual Meeting must be received by the Company no later than November 15,
2000 in order to be included in the proxy statement and proxy relating to that
Annual Meeting.

VOTING RIGHTS AND OUTSTANDING SHARES

Only holders of record of Common Stock at the close of business on
April 10, 2000 will be entitled to notice of and to vote at the Annual Meeting.
Each holder of record of Common Stock on such date will be entitled to one vote
for each share held on all matters to be voted upon at the Annual Meeting. At
the close of business on April 10, 2000, the Company had outstanding and
entitled to vote 44,547,212 shares of Common Stock.
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Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a particular
matter has been approved.

REVOCABILITY OF PROXIES

Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 333
Lakeside Drive, Foster City, California 94404, a written notice of revocation or
a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.

PROPOSAL 1
ELECTION OF DIRECTORS

There are seven nominees for the seven Board positions presently authorized
by resolution of the Board of Directors. Each director to be elected will hold
office until the next annual meeting of stockholders and until his successor is
elected and has qualified, or until such director's earlier death, resignation
or removal. Each nominee listed below is currently a director of the Company.
Messrs. Berg, Davignon, Denny, Martin, Moore, Rumsfeld and Shultz were elected
by the stockholders.

Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the seven nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected and management has no reason to believe that any
nominee will be unable to serve.

Directors are elected by a plurality of the votes present and in person or
represented by proxy and entitled to vote on the proposal at the meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.

NOMINEES

The names of the nominees in alphabetical order, and certain information
about them as of April 10, 2000, are set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY/PRINCIPAL OCCUPATION
- ---- -------- --------------------------------------------------------
<S> <C> <C>
Paul Berg(1)......................... 73 Cahill Professor, Department of Biochemistry, Stanford
University School of Medicine

Etienne F. Davignon.................. 67 Chairman, Societe Generale de Belgique

James M. Denny(1)(2)................. 67 Senior Advisor, William Blair Capital Partners LLC

John C. Martin....................... 48 President and Chief Executive Officer

Gordon E. Moore(1)(2)................ 71 Chairman Emeritus, Intel Corporation

Donald H. Rumsfeld................... 67 Chairman of the Board of Directors

George P. Shultz(2).................. 79 Distinguished Fellow, Hoover Institution, Stanford
University
</TABLE>

- ------------------------

(1) Member of the Compensation Committee

(2) Member of the Audit Committee

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Dr. Berg joined Gilead's Board of Directors in April 1998. Dr. Berg is
currently Cahill Professor in Cancer Research in the Department of Biochemistry
at Stanford University School of Medicine where he has been on the faculty since
1959. He has served as Director of the Stanford University Beckman Center for
Molecular and Genetic Medicine since its founding in 1985. Dr. Berg is a
director of Affymetrix, Inc. and Transgene, Inc. He is the founder and a
scientific advisor to Schering-Plough's DNAX Research Institute. Dr. Berg
received the Nobel Prize for Chemistry in 1980.

Mr. Davignon joined Gilead's Board of Directors in September 1990. He has
served as the Chairman of Societe Generale de Belgique, a diversified financial
and industrial company, since 1988. Mr. Davignon served as the European
Community's Commissioner for Industry and International Markets from 1977 to
1981, and as the EC's Vice President for Research, Industry and Energy Policies
from 1981 to 1984. Mr. Davignon is a director of BASF, Compagnie de Suez,
Pechiney and a number of other European companies.

Mr. Denny joined Gilead's Board of Directors in January 1996. Mr. Denny is a
Senior Advisor to William Blair Capital Partners LLC, a private equity fund
manager. Mr. Denny is a retired Vice Chairman of Sears, Roebuck & Co. As Vice
Chairman, he had responsibility for Allstate Insurance Corporation, Coldwell
Banker Real Estate Group and the corporate financial organization. Previously,
he served as Executive Vice President and Chief Financial and Planning Officer
of G.D. Searle & Co., as well as Chairman of Pearle Health Services, Inc., a
Searle-affiliated company. He is a director of Allstate Corporation, GATX
Corporation and ChoicePoint, Inc.

Dr. Martin has served as President and Chief Executive Officer of Gilead
since April 1996. He joined the Company in October 1990 as Vice President for
Research and Development. From 1984 to 1990 he was employed at Bristol-Myers
Squibb, a pharmaceutical company, where he was Director of Antiviral Chemistry.
Dr. Martin was with Syntex Corporation from 1978 to 1984. Dr. Martin is the
co-inventor of ganciclovir, a pharmaceutical developed by Syntex and marketed
for the treatment of cytomegalovirus infection. He is President of the
International Society of Antiviral Research and Chairman of the Board of
Directors of the Bay Area Bioscience Center. Dr. Martin received his Ph.D. in
organic chemistry from the University of Chicago.

Dr. Moore joined Gilead's Board of Directors in January 1996, and served as
a member of the Company's Business Advisory Board from July 1991 until
January 1996. Dr. Moore is a co-founder and Chairman Emeritus of Intel
Corporation, where he previously served as Chairman, President and Chief
Executive Officer. He also served as Director of Research and Development for
the Fairchild Semiconductor Division of Fairchild Camera and Instrument
Corporation. Dr. Moore is Chairman of the Board of Trustees at the California
Institute of Technology. He received the National Medal of Technology in 1990.

Mr. Rumsfeld joined Gilead's Board of Directors in July 1988 and was elected
Chairman of the Board in January 1997. Mr. Rumsfeld has been in private business
since August 1993. He served as the Chairman and Chief Executive Officer of
General Instrument Corporation, a diversified electronics company, from 1990 to
1993, and was Chief Executive Officer of G.D. Searle & Co., a pharmaceutical
company, from 1977 to 1985. Mr. Rumsfeld formerly served as Presidential Envoy
to the Middle East, U.S. Secretary of Defense, White House Chief of Staff, U.S.
Ambassador to NATO and U.S. Congressman. Mr. Rumsfeld is a director of ABB AB,
Amylin Pharmaceuticals, Inc., Overx, Inc. and Tribune Company. In 1977,
Mr. Rumsfeld was awarded the Medal of Freedom, the nation's highest civilian
award.

Dr. Shultz joined Gilead's Board of Directors in January 1996. Dr. Shultz
currently serves as Distinguished Fellow at the Hoover Institution and as a
director of the Bechtel Group, Inc., Freemont Group, Inc. and Charles Schwab. He
also serves as Chairman of J.P. Morgan's International Advisory Committee.
Dr. Shultz served as U.S. Secretary of State from 1982 to 1989 and earlier
served as Secretary of Labor, Director of the Office of Management and Budget
and Secretary of the Treasury.

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Previously, he served as Dean of the Graduate School of Business at the
University of Chicago and as President of the Bechtel Group, Inc. In 1989,
Dr. Shultz was awarded the Medal of Freedom, the nation's highest civilian
award.

BOARD COMMITTEES AND MEETINGS

During 1999 the Board of Directors held eight meetings. The Board has an
Audit Committee and a Compensation Committee.

The Audit Committee meets with the Company's independent auditors at least
annually to review their independence, the results of the annual audit and
discuss the financial statements; recommends to the Board the independent
auditors to be retained; and receives and considers the auditors' comments as to
controls, adequacy of staff, and management performance and procedures in
connection with audit and financial controls. The Audit Committee, which during
1999 was composed of Messrs. Denny (Chairman), Moore and Shultz, met three times
during such period.

The Compensation Committee makes recommendations and, with respect to
executive officers, determinations concerning salaries and incentive
compensation, awards stock options to employees and consultants under the
Company's stock option plans and otherwise determines compensation levels and
performs such other functions regarding compensation as the Board may delegate.
The Compensation Committee, which during 1999 was composed of Messrs. Moore
(Chairman), Berg and Denny, met one time during such period.

During 1999, each director, with the exception of Messrs. Davignon and
Shultz, attended at least 75% of the meetings of the aggregate of the meetings
of the Board and of the committees on which he served, held during the period
for which he was a director or committee member, respectively. Mr. Davignon
attended 50% of such Board meetings held during the period and Dr. Shultz
attended 64% of the aggregate of the Board meetings and Audit Committee
meetings.

EXECUTIVE OFFICERS

The names of the Company's executive officers who are not also directors of
the Company and certain information about each of them are set forth below:

Norbert W. Bischofberger, age 44, is Gilead's Senior Vice President,
Research & Development. Dr. Bischofberger joined Gilead in 1990 as Director of
Organic Chemistry, became Vice President of Organic Chemistry in March 1993 and
was named Vice President of Research in August 1995. Dr. Bischofberger was
appointed Senior Vice President, Research in January 1998, at which time he
became an executive officer. Dr. Bischofberger was named Senior Vice President,
Research and Development in January 2000. Prior to joining Gilead,
Dr. Bischofberger worked in research at Genentech, Inc. from 1986 to 1990, most
recently as Manager of DNA Synthesis. He received his B.S. in chemistry at the
University of Innsbruck in Austria, and his Ph.D. in Organic Chemistry at the
Eidgennossische Technische Hochschule (ETH) in Zurich, Switzerland.

Mark L. Perry, age 44, is Gilead's Senior Vice President, Operations.
Mr. Perry joined Gilead in July 1994 as its Vice President and General Counsel
and became Chief Financial Officer in May 1996. Mr. Perry was appointed Senior
Vice President, Chief Financial Officer and General Counsel in January 1998 and
served in that capacity until he was appointed to his present position in
February 2000. He has also served as Corporate Secretary since May 1994. From
1981 to 1994, Mr. Perry was with Cooley Godward LLP in San Francisco and Palo
Alto, California. Cooley Godward serves as Gilead's primary outside counsel.
Mr. Perry was an associate with Cooley Godward from 1981 to 1987, and a partner
from 1987 to 1994. Mr. Perry received his J.D. from the University of
California, Davis and is a member of the California bar.

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Sharon Surrey-Barbari, age 45, is the Company's Vice President and Chief
Financial Officer. Ms. Surrey-Barbari joined the Company in January 1998 as
Director of Finance. In January 1999, she became Vice President of Finance and
served in that capacity until appointed to her present position in
February 2000. From 1996 to 1998, Ms. Surrey-Barbari was with Foote, Cone &
Belding HealthCare as Vice President, Strategic Planning. From 1972 to 1995, she
was employed at Syntex Corporation, where she held various management positions
in corporate finance, financial planning, marketing, and commercial planning.
Her most recent position at Syntex was as Director of Commercial Planning.
Ms. Surrey-Barbari received her B.S. in Accounting from San Jose State
University, California.

PROPOSAL 2
APPROVAL OF THE AMENDED AND RESTATED 1991 STOCK OPTION PLAN

In November 1991, the Board of Directors ("Board") adopted, and the
stockholders subsequently approved, the Company's 1991 Stock Option Plan ("1991
Plan"). In April 2000, the Board adopted an amendment and restatement of the
1991 Plan ("Restated 1991 Plan") and reserved an additional 750,000 shares of
Common Stock for issuance under the Restated 1991 Plan, bringing the total
shares authorized for issuance thereunder to 10,750,000. The Board adopted this
amendment to enable the Company to continue to grant stock options to employees
at levels that the Board and the Compensation Committee deem to be appropriate.
The Board intends to increase the shares available under the Restated 1991 Plan
on an annual basis in amounts approximating the number of shares required for
the options the Company anticipates granting over the next year.

As of February 25, 2000, options (net of canceled or expired options)
covering an aggregate of 7,350,480 shares of Common Stock had been granted under
the Restated 1991 Plan, and 3,399,520 shares (plus any shares that might in the
future be returned as a result of the cancellation or expiration of options)
remained available for future grant under the Restated 1991 Plan, giving effect
to the April 2000 amendment.

During 1999, under the 1991 Plan, the Company granted the following:

- options to purchase 245,000 shares at exercise prices ranging from $35.75
to $58.38 per share to all current executive officers, as a group;

- options to purchase 1,222,300 shares at exercise prices ranging from
$35.75 to $83.63 per share to all employees, other than executive
officers, as a group; and

- no options to current directors who are not officers.

For information regarding stock option grants to the Company's Chief
Executive Officer and its four other most highly compensated executive officers
for the year ended December 31, 1999 (the "Named Executive Officers"), see
"Executive Compensation--Stock Option Grants and Exercises."

Stockholders are requested in this Proposal to approve the amendment and
restatement of the 1991 Plan as the Restated 1991 Plan in the form attached
hereto as Exhibit A. This amendment and restatement involves reserving for
issuance an additional 750,000 shares of Common Stock and extending the term of
the 1991 Plan from October 31, 2001 to April 30, 2010. If the stockholders fail
to approve this Proposal, the 1991 Plan will continue in the form prior to the
amendment and restatement.

The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to approve the Restated 1991 Plan. Abstentions will be counted toward
the tabulation of votes cast on proposals presented to the

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stockholders and will have the same effect as negative votes. Broker non-votes
are counted toward a quorum, but are not counted for any purpose in determining
whether this matter has been approved.

THE BOARD RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.

The essential features of the Restated 1991 Plan are outlined below:

GENERAL

The Restated 1991 Plan provides for the grant of both incentive stock
options and nonstatutory stock options. Incentive stock options granted under
the Restated 1991 Plan are intended to qualify as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code. Nonstatutory
stock options granted under the Restated 1991 Plan are intended not to qualify
as incentive stock options under the Internal Revenue Code. See "Federal Income
Tax Information" for a discussion of the tax treatment of the options included
in the Restated 1991 Plan.

PURPOSE

The Restated 1991 Plan was adopted to provide a means:

- by which selected directors and employees of, and consultants to, the
Company and its affiliates could be given an opportunity to receive stock
in the Company;

- to secure and retain the services of persons capable of filling such
positions;

- to assist in retaining the services of employees holding key positions;
and

- to provide incentives for such persons to exert maximum efforts for the
success of the Company and its affiliates.

ADMINISTRATION

The Board administers the Restated 1991 Plan unless and until the Board
delegates administration to a committee. Under the Restated 1991 Plan, the
committee would consist of one or more members of the Board and all of the
members of the Board on the committee may be non-employee directors or outside
directors.

The Board has delegated administration of the Restated 1991 Plan to the
Compensation Committee of the Board. In this proposal, the "Board" refers to the
Compensation Committee as well as to the Board. In connection with the
administration of the Restated 1991 Plan, the Compensation Committee generally
has the powers possessed by the Board. However, the Compensation Committee's
powers may be restricted by resolutions adopted by the Board from time to time
so long as the resolutions are not inconsistent with the provisions of the
Restated 1991 Plan.

The Board or the Compensation Committee may delegate to a committee of one
or more members of the Board the authority to grant options to eligible persons
who are not then subject to Section 16 of the Securities Exchange Act of 1934,
as amended, and/or who are either:

- not then employees covered by Section 162(m) of the Internal Revenue Code
and are not expected to be covered by Section 162(m) of the Internal
Revenue Code at the time of recognition of income resulting from such
option; or

- not persons with respect to whom the Company wishes to avoid the
application of Section 162(m) of the Internal Revenue Code.

The Board may abolish such committee at any time and return the
administration of the Restated 1991 Plan to the Board.

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The Board generally has the power to construe and interpret the Restated
1991 Plan. In addition, subject to the provisions of the Restated 1991 Plan, the
Board has the power to determine the following:

- the persons to whom and the dates on which options will be granted;

- what type of option will be granted;

- the number of shares to be subject to each option;

- the time or times during the term of each option within which all or a
portion of the option may be exercised;

- the exercise price;

- the type of consideration; and

- other terms of the option.

SHARES SUBJECT TO THE RESTATED 1991 PLAN

The common stock that may be sold pursuant to options under the Restated
1991 Plan shall not exceed in the aggregate 10,750,000 shares of Common Stock.
If any option expires or terminates, in whole or in part, without having been
exercised in full, the stock not purchased under such option again will become
available for issuance under the Restated 1991 Plan.

ELIGIBILITY

Incentive stock options may be granted only to employees. Nonstatutory stock
options may be granted to employees, directors or consultants. As of
February 25, 2000, approximately 735 employees were eligible to participate in
the Restated 1991 Plan.

Generally, a person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company will not be
eligible for the grant of an incentive stock option. However, such 10%
stockholder may be granted an incentive stock option if: (1) the exercise price
of the option is at least 110% of the fair market value of the common stock
subject to the option on the option's date of grant; and (2) the term of the
option does not exceed 5 years from the date of grant. No person is eligible to
be granted options covering more than 500,000 shares of Common Stock in any
calendar year.

TERM AND TERMINATION

No option is exercisable after the expiration of 10 years from the date it
was granted.

In the event an optionee's continuous service to the Company or its
affiliates is terminated, the optionee's ability to exercise his or her option
is restricted. In such a case, the optionee may exercise his or her option, to
the extent that he or she was entitled to exercise it at the time of
termination, but only within the earlier of (1) the period of time after the
termination of the optionee's continuous service specified in the option
agreement or (2) the expiration of the term of the option as specified in the
option agreement. In the case of an incentive stock option, such period of time
may not exceed 90 days from the date of termination except in the event of death
or disability.

In the event an optionee's continuous service to the Company or its
affiliates terminates as a result of the optionee's death or disability, the
ability of the optionee or such optionee's estate, heirs or beneficiaries to
exercise his or her option is restricted. In such a case, the option may be
exercised, but only within the period ending on the earlier of (1) 12 months
following such termination or such longer

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or shorter period as specified in the option agreement or (2) the expiration of
the term of the option as specified in the option agreement.

EXERCISE PRICE

The exercise price of each incentive stock option and each nonstatutory
stock option granted under the Restated 1991 Plan will not be less than 100% of
the fair market value of the Company's Common Stock on the date of grant. As of
February 25, 2000, the closing price of the Company's Common Stock as reported
by the Nasdaq Stock Market was $72.34. The Company is prohibited from repricing
outstanding options granted under the Restated 1991 Plan without the consent of
its stockholders.

EXERCISE PRICE AND PAYMENT

The option's exercise price is paid either:

- in cash at the time of exercise or purchase; or

- if determined by the Board at the time of grant, by (1) deferred payment
or other arrangement or (2) in any other form of legal consideration that
may be acceptable to the Board, such as by delivery to the Company of
other Common Stock of the Company.

In the case of any deferred payment arrangement, interest will be compounded
at least annually. In addition, interest will be charged at the minimum rate of
interest necessary to avoid imputed interest for federal tax purposes.

TRANSFERABILITY

An incentive stock option is not transferable except by will or by the laws
of descent and distribution. Moreover, an incentive stock option is exercisable
during the lifetime of the person to whom the incentive stock option is granted
only by such person. A nonstatutory stock option generally will not be
transferable except by will or by the laws of descent and distribution. In
addition, an optionee may designate a beneficiary who may exercise his or her
option after death.

VESTING

Options granted under the Restated 1991 Plan may become exercisable in
monthly, quarterly or other periodic installments. The option agreement may
provide that from time to time during each of such installment periods, the
option may become exercisable or vest with respect to some or all of the shares
allotted to that period. In addition, it may provide that the option may be
exercised with respect to some or all of the shares allotted to such period or
any prior period as to which the option became vested but was not fully
exercised. The option agreement may also provide that an optionee may exercise
an option prior to full vesting, so long as the Company has a repurchase right
with respect to any unvested shares.

ADJUSTMENTS UPON CHANGES IN STOCK

If any change is made in the common stock subject to the Restated 1991 Plan,
or subject to any option, without receipt of cash or other property by the
Company through:

- merger, consolidation, reorganization, recapitalization;

- stock dividend, dividend in property other than cash, stock split,
liquidating dividend; or

- combination of shares, exchange of shares, change in corporate structure
or otherwise,

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the class(es) and maximum number of shares subject to the Restated 1991 Plan,
the maximum annual grant of shares under the Restated 1991 Plan and the
class(es) and number of shares and price per share of stock subject to
outstanding options will be appropriately adjusted.

In the event of:

- a dissolution or liquidation of the Company;

- a merger or consolidation in which the Company is not the surviving
corporation;

- a reverse merger in which the Company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether
in the form of securities, cash or otherwise; or

- any other capital reorganization in which more than 50% of the shares of
the Company entitled to vote are exchanged (collectively, a "change in
control"),

then, at the discretion of the Board and to the extent permitted by applicable
law, either (1) the surviving corporation will assume outstanding options or
will substitute similar options for those outstanding under the Restated 1991
Plan, (2) the time during which such options may be exercised will be
accelerated and the options terminated if not exercised prior to such event or
(3) the options will continue in full force and effect.

If, within one month before or 13 months after the date of a change in
control, the continuous service of an optionee terminates due to an involuntary
termination (not including death or disability) without "cause" (as such term is
defined in the Restated 1991 Plan) or a voluntary termination by the optionee
due to a "constructive termination" (as such term is defined in the Restated
1991 Plan), then the vesting and exercisability of all options held by that
optionee will be accelerated, or any reacquisition or repurchase rights held by
the Company with respect to the option will lapse. However, if such potential
acceleration of the vesting and exercisability of options (or lapse of
reacquisition or repurchase rights held by the Company with respect to options)
would cause a contemplated change in control transaction that would otherwise be
eligible to be accounted for as a "pooling-of-interests" transaction to become
ineligible for such accounting treatment under generally accepted accounting
principles as determined by the Company's independent public accountants prior
to the change in control, then such acceleration will not occur.

In the event that such acceleration of the vesting and exercisability of the
options (or lapse of reacquisition or repurchase rights held by the Company with
respect to options) as described above, when added to the benefits otherwise
payable to an optionee, constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code that otherwise would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code, then the
optionee's benefits will be delivered to such lesser extent that will result in
no portion of the benefits being subject to the excise tax.

AMENDMENT OF THE RESTATED 1991 PLAN

The Board at any time, and from time to time, may amend the Restated 1991
Plan. However, no amendment will be effective unless approved by the
stockholders within 12 months before or after the adoption of the amendment,
where the amendment will:

- increase the number of shares reserved for issuance under the Restated
1991 Plan;

- modify the requirements as to eligibility for participation; or

- require stockholder approval in order for the Restated 1991 Plan to
satisfy the requirements of Section 422 of the Internal Revenue Code,
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or any
securities exchange requirements.

10
<PAGE>
The Board may in its sole discretion submit any other amendment to the
Restated 1991 Plan for stockholder approval.

TERMINATION OR SUSPENSION OF THE RESTATED 1991 PLAN

The Board may suspend or terminate the Restated 1991 Plan at any time.
Unless sooner terminated, the Restated 1991 Plan will terminate on April 30,
2010. No options may be granted under the Restated 1991 Plan while the Restated
1991 Plan is suspended or after it is terminated.

FEDERAL INCOME TAX INFORMATION

The following describes the material federal income tax consequences to an
optionee and the Company associated with the grant and exercise of options under
the Restated 1991 Plan. This discussion does not purport to be complete and does
not discuss the income tax laws of any state or foreign country in which an
optionee may reside.

INCENTIVE STOCK OPTIONS. Incentive stock options under the Restated 1991
Plan are intended to be eligible for the favorable federal income tax treatment
applicable to "incentive stock options" under the Internal Revenue Code.

There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.

If an optionee holds stock acquired through exercise of an incentive stock
option for (1) more than two years from the date on which the option is granted
and (2) more than one year from the date on which the shares are transferred to
the optionee upon exercise of the option, any gain or loss on a disposition of
such stock will be capital gain or loss.

The disposition of the stock before the expiration of either of these
holding periods is generally referred to as a "disqualifying disposition." A
disqualifying disposition generally results in the optionee realizing taxable
ordinary income equal to the lesser of (1) the excess of the stock's fair market
value on the date of exercise over the exercise price, or (2) the optionee's
actual gain, if any, on the purchase and sale. The optionee's additional gain,
or any loss, upon the disqualifying disposition will be a capital gain or loss.
The capital gain or loss will be long-term or short-term depending on whether
the stock was held for more than one year.

Capital gains are generally subject to lower tax rates than ordinary income.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Securities
Exchange Act of 1934.

To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled to a
corresponding business expense deduction in the tax year in which the
disqualifying disposition occurs. The Company's ability to take this deduction
will generally depend upon the satisfaction of the requirement of
reasonableness, the provisions of Section 162(m) of the Internal Revenue Code
and a tax reporting obligation.

NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the
Restated 1991 Plan generally have the following federal income tax consequences:

There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income. The
ordinary income will generally be equal to the excess of the stock's fair market
value on the date of exercise over the option exercise price.

11
<PAGE>
Generally, the Company is required to withhold from regular wages or
supplemental wage payments of employees an amount based on any ordinary income
recognized. Subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Internal Revenue Code and the satisfaction of a reporting
obligation, the Company will generally be entitled to a business expense
deduction equal to the taxable ordinary income realized by the optionee.

Upon disposition of the stock, the optionee will recognize a capital gain or
loss. The capital gain or loss will be equal to the difference between the
selling price and the sum of the amount paid for such stock plus any amount
recognized as ordinary income upon exercise of the option. Such gain or loss
will be long-term or short-term depending on how long the optionee holds the
stock. Slightly different rules may apply to optionees who acquire stock subject
to certain repurchase options or who are subject to Section 16(b) of the
Securities Exchange Act of 1934.

POTENTIAL LIMITATION ON THE COMPANY'S DEDUCTIONS. Section 162(m) of the
Internal Revenue Code denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1 million for a covered employee. It is possible that
compensation attributable to options granted in the future under the Restated
1991 Plan, when combined with all other types of compensation received by a
covered employee from the Company, may cause this limitation to be exceeded in
any particular year.

Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. Under
United States Treasury Regulations, compensation attributable to stock options
will qualify as performance-based compensation, if the option is granted by a
compensation committee comprised solely of "outside directors" and either:

- (1) the option plan contains a per-employee limitation on the number of
shares for which options may be granted during a specified period,
(2) the per-employee limitation is approved by the stockholders, and
(3) the exercise price of the option is no less than the fair market value
of the stock on the date of grant; or

- the option is granted or exercisable only upon the achievement, as
certified in writing by the compensation committee, of an objective
performance goal established in writing by the compensation committee
while the outcome is substantially uncertain, and the option is approved
by stockholders.

PROPOSAL 3
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2000 and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has
audited the Company's financial statements since its inception in 1987.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.

Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's by-laws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Board will reconsider whether
or not to retain that firm. Even if the selection is ratified, the Audit
Committee and the Board in their discretion may direct the appointment of a
different independent accounting firm at any time during the year if they
determine that such a change would be in the best interests of the Company and
its stockholders.

12
<PAGE>
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Ernst & Young LLP.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 25, 2000 by: (1) each current
director; (2) each current executive officer (3) all executive officers and
directors of the Company as a group; and (4) all those known by the Company to
be beneficial owners of more than five percent of its Common Stock.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
----------------------------
NUMBER OF
BENEFICIAL OWNER SHARES PERCENT OF TOTAL
- ---------------- --------- ----------------
<S> <C> <C>
Wellington Management Company, LLP(2) ...................... 6,149,472 13.85%
75 State Street
Boston, MA 02109

Fidelity Management & Research Company(3) .................. 4,475,815 10.08%
82 Devonshire Street
Boston, MA 02109

John C. Martin(4)........................................... 387,433 *

Donald H. Rumsfeld(5)....................................... 184,482 *

Norbert W. Bischofberger(6)................................. 147,631 *

Mark L. Perry(7)............................................ 117,412 *

Etienne F. Davignon (8)..................................... 61,580 *

Gordon E. Moore(9).......................................... 58,781 *

James M. Denny(10).......................................... 45,377 *

George P. Shultz(11)........................................ 40,500 *

Sharon A. Surrey-Barbari(12)................................ 13,018 *

Paul Berg(13)............................................... 10,000 *

All executive officers and directors as a group 1,066,214 2.4%
(10 persons)(14)..........................................
</TABLE>

- ------------------------

* Less than one percent

(1) This table is based upon information supplied by the Company's directors,
officers, principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise indicated
in the footnotes to this table, and subject to community property laws
where applicable, each of the stockholders named in this table has sole
voting and investment power with respect to the shares indicated as
beneficially owned. Applicable percentages are based on 44,388,828 shares
of Common Stock outstanding on February 25, 2000.

(2) Based on a Schedule 13G filed with the SEC on February 9, 2000, The
Wellington Management Company, LLP ("WMC"), a registered investment
advisor, has beneficial ownership of and shared dispositive power over
6,149,472 shares of Common Stock at December 31, 1999. Such shares are
owned by numerous investment advisory clients of WMC, none of which is
known to have beneficial ownership of more than 5% of Common Stock. As of
December 31, 1999, WMC had

13
<PAGE>
shared voting power over 3,100,007 of the shares for which it is deemed to
have beneficial ownership.

(3) Based on a Schedule 13G filed with the SEC on February 11, 2000, FMR Corp.
("FMR") indirectly held 4,795,166 shares of Common Stock at December 31,
1999. Fidelity Management & Research Company, a wholly owned subsidiary of
FMR and an investment advisor, was the beneficial owner of 4,475,815 shares
of Common Stock at December 31, 1999 as a result of acting as an investment
advisor to various investment companies. Fidelity Management Trust Company,
another wholly owned subsidiary of FMR and a bank, was the beneficial owner
of 310,751 shares of the outstanding Common Stock at December 31, 1999.
Fidelity International Limited ("FIL"), an affiliate of FMR, provides
investment advisory and management services to a number of non-U.S.
investment companies and certain institutional investors. FIL was the
beneficial owner of 8,600 shares of the outstanding Common Stock at
December 31, 1999.

(4) Includes 348,075 shares subject to stock options exercisable within
60 days.

(5) Includes 30,854 shares held in a grantor annuity trust for which
Mr. Rumsfeld and Mr. Denny are co-donors and trustees and 54,250 shares
subject to stock options exercisable within 60 days.

(6) Includes 12,534 shares held in trust for which Dr. Bischofberger and his
wife are trustees and 131,449 shares subject to stock options exercisable
within 60 days.

(7) Includes 800 shares held in account for Mr. Perry's minor child for which
Mr. Perry is the custodian and 98,250 shares subject to stock options
exercisable within 60 days.

(8) Includes 61,580 shares subject to stock options exercisable within
60 days.

(9) Includes 42,116 shares subject to stock options exercisable within
60 days.

(10) Includes 3,713 shares held in partnership with Mr. Denny's wife and 37,950
shares subject to stock options exercisable within 60 days.

(11) Includes 30,500 shares subject to stock options exercisable within
60 days.

(12) Includes 10,724 shares subject to stock options exercisable within
60 days.

(13) Includes 10,000 shares subject to stock options exercisable within
60 days.

(14) Includes 959,991 shares subject to stock options exercisable within
60 days. See notes (4) through (13) above.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Executive officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during 1999, the Company's executive officers, directors
and greater than ten percent beneficial owners complied with all Section 16(a)
filing requirements applicable to these executive officers, directors and
greater than ten percent beneficial owners.

14
<PAGE>
EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

Each Non-Employee Director of the Company receives a fee of $1,000 for each
meeting attended. For the year ended December 31, 1999, the total compensation
paid to current non-employee directors was $26,000. The members of the Board of
Directors are also eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.

Each Non-Employee Director of the Company also receives stock option grants
under the 1995 Non-Employee Directors' Stock Option Plan ("Directors' Plan").
The Directors' Plan provides for non-discretionary grants of nonstatutory stock
options to Non-Employee Directors of the Company, on an automatic basis pursuant
to a pre-approved schedule. Options granted under the Directors' Plan are at
prices not less than fair value on the date of grant, become exercisable over a
period of five years in equal quarterly installments at the rate of 5% per
quarter and expire after ten years. Such vesting is conditioned upon continuous
service as a Non-Employee Director of or consultant to the Company. The exercise
price of options granted must be paid in cash or shares of Common Stock of the
Company at the time the option is exercised.

Each Non-Employee Director was granted as of January 2, 1996, or on such
later date as he or she is first elected to be a Non-Employee Director, an
option to purchase 25,000 shares of Common Stock of the Company (the "Initial
Grant"). Thereafter, on each anniversary date of a Non-Employee Director's
Initial Grant, the Non-Employee Director is automatically granted an option to
purchase 5,000 shares of Common Stock of the Company (the "Annual Grant"). A
Non-Employee Director who is also the Chairperson of the Board is granted an
option to purchase an additional 20,000 shares of Common Stock of the Company at
the time of his or her Initial Grant or later election as Chairperson, and an
additional 4,000 shares of Common Stock of the Company at the time of his or her
Annual Grant. Each Non-Employee Director who serves on a standing committee of
the Board is automatically granted an option to purchase an additional 1,000
shares of Common Stock of the Company at the time of his or her Initial Grant,
and an additional 1,000 shares of Common Stock of the Company at the time of his
or her Annual Grant, for each such committee. Each Non-Employee Director who
serves on a standing committee and who is also the Chairperson of that committee
is automatically granted an option to purchase an additional 2,000 shares of
Common Stock of the Company at the time of his or her Annual Grant. No other
options may be granted under the Directors' Plan.

During 1999, the Company granted options covering 46,000 shares to its
current Non-Employee Directors, at exercise prices ranging from $41.06 to $43.25
per share. Each option granted had an exercise price equal to the fair value of
the Common Stock of the Company on the date of grant.

As of February 25, 2000, options to purchase a total of 349,000 shares of
Common Stock of the Company were outstanding under the Directors' Plan.

15
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS

SUMMARY OF COMPENSATION

The following table shows, for the years ended December 31, 1999, 1998 and
1997, certain compensation awarded or paid to, or earned by, the Company's Named
Executive Officers:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------
SHARES
YEAR ENDED UNDERLYING
NAME AND PRINCIPAL POSITION DECEMBER 31, SALARY(1) BONUS OPTIONS(2)
- --------------------------- ------------ --------- -------- ------------
<S> <C> <C> <C> <C>
John C. Martin ................................. 1999 $387,681 $250,000 100,000
President and Chief Executive Officer 1998 $354,375 $150,000 65,000
1997 $326,667 $150,000 75,000

Jeffrey W. Bird(3) ............................. 1999 $247,073 $140,000 60,000
Former Senior Vice President, Business 1998 $222,750 $100,000 65,000
Operations 1997 $187,917 $100,000 40,000

Norbert W. Bischofberger(4) .................... 1999 $247,075 $140,000 60,000
Senior Vice President, Research and 1998 $222,752 $115,000 55,000
Development 1997 $199,583 $ 75,000 40,000

Howard S. Jaffe(5) ............................. 1999 $290,368 $175,000 40,000
Former Senior Vice President, Drug Development 1998 $278,461 $100,000 35,000
1997 $269,167 $100,000 40,000

Mark L. Perry(6) ............................... 1999 $275,514 $140,000 60,000
Senior Vice President, Operations 1998 $253,125 $100,000 55,000
1997 $244,458 $ 75,000 40,000
</TABLE>

- ------------------------

(1) Includes amounts earned but deferred at the election of the Named Executive
Officers pursuant to the Company's 401(k) employee savings and retirement
plan.

(2) The Company has not granted any stock appreciation rights, has not made any
long-term incentive plan awards and did not make any restricted stock grants
to the Named Executive Officers during the periods covered.

(3) Dr. Bird resigned as Senior Vice President, Business Operations effective
April 12, 2000. While he will continue to provide certain services to the
Company under the terms of a consulting agreement, he is no longer an
executive officer or an employee of the Company as of the effective date of
his resignation.

(4) Dr. Bischofberger was named Senior Vice President, Research and Development
in January 2000. Prior to that, Dr. Bischofberger served as Senior Vice
President, Research.

(5) Dr. Jaffe became a part-time employee of the Company effective January 1,
2000. Dr. Jaffe's title is Senior Medical Advisor and he is also a member of
the Company's Scientific Advisory Board. As of January 1, 2000, Dr. Jaffe is
no longer an executive officer of the Company.

(6) Mr. Perry was named Senior Vice President, Operations in February 2000.
Prior to that, he served as Senior Vice President, Chief Financial Officer
and General Counsel. Mr. Perry continues to serve as Corporate Secretary.

16
<PAGE>
STOCK OPTION GRANTS AND EXERCISES

As of February 25, 2000, options to purchase a total of 4,822,784 shares of
Common Stock had been granted and remained outstanding under the 1991 Plan, and
options to purchase 2,649,520 shares of Common Stock remained available for
grant thereunder. In addition, as of such date, options to purchase a total of
107,602 shares of Common Stock were outstanding under the Company's 1987
Incentive Stock Option Plan, options to purchase a total of 13,865 shares of
Common Stock were outstanding under the Company's 1987 Supplemental Stock Option
Plan, options to purchase 43,760 shares of Common Stock were outstanding under
the NeXstar Pharmaceuticals, Inc. ("NeXstar") 1988 Stock Option Plan and options
to purchase 509,191 shares of Common Stock were outstanding under NeXstar's 1993
Incentive Stock Plan and pursuant to certain option grants made outside of the
Company's option plans.

The Company grants both incentive stock options and nonstatutory stock
options to its executive officers under the 1991 Plan. The following tables
show, for the year ended December 31, 1999 (the "Last Fiscal Year"), certain
information regarding options granted to, exercised by, and held at year-end by
the Named Executive Officers:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------- AT ASSUMED ANNUAL RATES
SHARES PERCENT OF TOTAL OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(3)
OPTIONS DURING FISCAL YEAR PRICE PER EXPIRATION ---------------------------
NAME GRANTED(1) TO EMPLOYEES(2) SHARE DATE 5% 10%
- ---- ---------- ------------------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John C. Martin.............. 100,000 6.71% $58.375 07/21/09 $3,669,901 $9,299,518

Jeffrey W. Bird............. 60,000 4.03% $58.375 07/21/09 $2,201,941 $5,579,711

Norbert W. Bischofberger.... 60,000 4.03% $58.375 07/21/09 $2,201,941 $5,579,711

Mark L. Perry............... 60,000 4.03% $58.375 07/21/09 $2,201,941 $5,579,711

Howard S. Jaffe............. 40,000 2.69% $58.375 07/21/09 $1,467,961 $3,719,807
</TABLE>

- ------------------------

(1) The terms of such options, which include both incentive and nonstatutory
stock options, are consistent with those of options granted to other
employees under the 1991 Plan. The options vest at the rate of 20% after one
year and 5% per quarter thereafter during the optionee's employment. Subject
to certain exceptions, the maximum term of options granted under the 1991
Plan is ten years.

(2) Based on options to purchase 1,489,494 shares of Common Stock granted to
employees, including executive officers, for the year ended December 31,
1999.

(3) The potential realizable value is based on the term of the option at the
date of the grant (10 years). It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term, and that the option is exercised
and sold on the last day of the option term for the appreciated stock price.
Actual gains, if any, are dependent on the actual future performance of the
Company's Common Stock and the timing of exercise and sale transactions by
the holder. There can be no assurance that the amounts reflected in this
table, or that any gains, will be achieved.

17
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
SHARES OF VESTED/UNVESTED
SHARES COMMON STOCK UNDERLYING VALUE OF VESTED/UNVESTED
ACQUIRED ON UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME EXERCISE VALUE REALIZED(1) DECEMBER 31, 1999(2) DECEMBER 31, 1999(3)
- ---- ----------- ----------------- ------------------------- ------------------------
<S> <C> <C> <C> <C>
John C. Martin............. 26,000 $1,009,526 331,575 / 238,750 $12,177,251 / $3,958,563

Jeffery W. Bird............ -- -- 97,947 / 141,750 $ 3,538,384 / $2,256,250

Norbert W. Bischofberger... -- -- 125,949 / 138,250 $ 4,577,945 / $2,240,813

Howard S. Jaffe............ 48,865 $1,544,642 76,550 / 122,850 $ 2,548,863 / $2,651,888

Mark L. Perry.............. 15,000 $ 611,563 105,750 / 134,250 $ 3,936,063 / $1,993,313
</TABLE>

- --------------------------

(1) Represents the fair value of the aggregate amount of Common Stock on the
date of exercise (based on the closing sales price reported on the Nasdaq
Stock Market or the actual sales price if the shares were sold by the
optionee) less the exercise price, and does not necessarily indicate that
the shares were sold by the optionee.

(2) Includes both in-the-money and out-of-the-money options.

(3) Fair value of the Company's Common Stock at December 31, 1999 ($54.125,
based on the closing sales price reported on the Nasdaq Stock Market), less
the exercise price.

AGREEMENTS WITH FORMER EXECUTIVE OFFICERS

In October 1999, the Company entered into an employment agreement (the
"Employment Agreement") with Dr. Jaffe, formerly the Company's Senior Vice
President, Drug Development. Under the terms of the Employment Agreement,
Dr. Jaffe transitioned to a part-time employee for a one-year period effective
January 1, 2000, in the position of Senior Medical Advisor. Dr. Jaffe will also
be a member of the Company's Scientific Advisory Board. As consideration for
Dr. Jaffe's part-time service, the Company will pay him an annual salary of
$150,000. In addition, all of Dr. Jaffe's outstanding options will continue to
vest pursuant to their existing vesting schedules. The Employment Agreement
automatically renews on the same terms for additional one-year periods, from
January 1 through December 31, unless either the Company or Dr. Jaffe terminates
the Employment Agreement in writing and within a specified amount of time in
advance of the renewal date.

On February 18, 2000, the Company entered into a consulting agreement (the
"Consulting Agreement") with Dr. Bird, formerly the Company's Senior Vice
President, Business Operations, for the period from April 12, 2000 through
June 30, 2000, extendable by mutual agreement. Under the terms of the Consulting
Agreement, Dr. Bird will be on retainer to perform consulting services as
requested by the Company. As consideration for Dr. Bird's services, the Company
will pay him a per diem fee of $1,500 per day plus reasonable out-of-pocket
expenses. Dr. Bird has no minimum consulting obligation under the Consulting
Agreement.

COMPENSATION COMMITTEE REPORT (1)

During the year ended December 31, 1999, the Compensation Committee of the
Board of Directors (the "Committee") consisted of Gordon E. Moore (Chairman),
Paul Berg and James M. Denny. None of the Committee members is an officer or an
employee of the Company. The

- ------------------------

(1) This Report is not "soliciting material," is not deemed "filed" with the SEC
and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.

18
<PAGE>
Committee is responsible for making recommendations and taking actions
concerning salaries and incentive compensation of officers and employees of the
Company, including the award of stock options under the Company's stock option
plans. In particular, the Committee evaluates the performance of management and
determines the compensation of the Chief Executive Officer and other executive
officers on an annual basis. The Chief Executive Officer is not present during
the discussion of his compensation.

The Company's executive compensation philosophy is to attract and retain
executive officers capable of leading the Company to fulfillment of its business
objectives by offering competitive compensation opportunities that reward
individual contributions as well as corporate performance. In addition,
long-term equity compensation is awarded to align the interests of management
and stockholders. The Company provides executive officers (and key employees) of
the Company with a substantial economic interest in the long-term appreciation
of the Company's Common Stock through the grant of stock options, subject to
vesting restrictions.

Compensation for each of the Company's executive officers generally consists
of three elements: cash salary, a cash bonus and stock option grants with
exercise prices set at fair value at the time of grant. Base salaries and cash
bonuses are determined annually, based on the achievement of corporate and
individual goals set by the Board and the Company's Chief Executive Officer, as
well as the financial condition and prospects for the Company. Long-term equity
incentives are granted to executive officers from time to time on a
discretionary basis. Total compensation paid by the Company to its executive
officers is designed to be competitive with compensation packages paid to the
management of comparable companies in the biopharmaceutical industry. As in
previous years, in making its compensation decisions the Committee took into
consideration executive compensation information from other biopharmaceutical
companies, including industry surveys, publicly available information and
reports from compensation consulting firms. The information reviewed by the
Committee is not necessarily from the same group of companies that are included
in the market indices in the graph included under "Performance Measurement
Comparison" in this Proxy Statement.

Many traditional measures of corporate performance, such as earnings per
share or sales growth, are less important in reviewing performance of executives
in the biopharmaceutical industry, as compared to more established industries.
Because of the Company's current stage of development, the Committee emphasizes
other indications of performance, such as the progress of the Company's research
and development programs and corporate development activities. These qualitative
factors necessarily involve a subjective assessment by the Committee of
corporate performance. Moreover, the Committee does not base its considerations
on any single performance factor, nor does it specifically assign relative
weight to factors, but rather considers a mix of factors and evaluates Company
and individual performance against that mix.

Compensation for the Company's executive officers for the fiscal year ended
December 31, 1999 was most recently established by the Committee in July 1999
and reflected the performance of the Company and its executive officers for the
period from July 1, 1998 through June 30, 1999. During this period, the Company
made significant progress in several areas, and met or exceeded most of its
performance goals and timing milestones. As of June 30, 1999, the Company had
initiated and substantially completed a merger transaction with NeXstar
Pharmaceuticals, Inc., which was approved by the stockholders in July 1999. This
was a key strategic event and resulted in a combined Company with three
commercial products and total annual product sales revenue of over
$100 million, a strong pipeline and the international infrastructure to
introduce future products. With respect to the Company's research and
development projects, a new drug application ("NDA") for Tamiflu-TM-, developed
in collaboration with Hoffmann-La Roche, was submitted to the U.S. Food and Drug
Administration ("FDA") in April 1999 with an equivalent filing in the European
Union in May 1999. The FDA granted priority status to the NDA and subsequently
approved the sale of Tamiflu for the treatment of influenza in the United States
in October 1999. In addition, the Company completed its

19
<PAGE>
Phase II clinical trials related to tenofovir disoproxil fumarate for the
treatment of HIV infection and began the design and initiation of a Phase III
program, which was initiated in November 1999. The Company's research and
preclinical development efforts also continued to progress. The Committee
believes that the continued commitment and leadership of the Company's executive
officers were important factors in the Company's achievements during this
period.

The Committee met in July 1999 to determine cash bonuses, stock option
grants and base salary levels for the remainder of the year. Determinations of
the amount of cash bonuses and stock option grants were based primarily on the
Company's achievements described above, the Committee's determination of each
officer's contributions to those achievements and the Committee's expectations
regarding future performance. Recognizing the contributions made by Dr. Martin
as President and Chief Executive Officer, the Committee set his salary at
$425,000 (an 18.1% increase from his previous salary), his cash bonus was
$250,000 and his stock option grant was 100,000 shares. Similar factors
accounted for the overall increase in the compensation mix, including base
salaries, cash bonuses and stock option grants, for Dr. Bird,
Dr. Bischofberger, Dr. Jaffe and Mr. Perry. Salary adjustments were also made in
January 2000, reflecting a change in the timing of the Company's annual
performance reviews for all employees.

Gordon E. Moore, Chairman
Paul Berg
James M. Denny

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PERFORMANCE MEASUREMENT COMPARISON (1)

The following graph compares total stockholder returns of the Company since
its initial public offering of common stock on January 22, 1992 to two indices:
the Nasdaq CRSP Total Return Index for the Nasdaq Stock Market (U.S. companies),
the Nasdaq-US, and the Nasdaq Pharmaceutical Index, the Nasdaq-Pharmaceutical.
The total return for the Company's stock and for each index assumes the
reinvestment of dividends, although dividends have never been declared on the
Company's stock, and is based on the returns of the component companies weighted
according to their capitalizations as of the end of each monthly period. The
Nasdaq-US tracks the aggregate price performance of equity securities of U.S.
companies traded on the Nasdaq Market. The Nasdaq-Pharmaceutical tracks the
aggregate price performance of equity securities of pharmaceutical companies
traded on the Nasdaq National Market. The Company's Common Stock is traded on
the Nasdaq National Market and is a component of both the Nasdaq-US and the
Nasdaq-Pharmaceutical.

COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT SINCE
THE COMPANY'S INITIAL PUBLIC OFFERING ON JANUARY 22, 1992(2)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
GILEAD SCIENCES, INC.
<S> <C> <C> <C>
6-Month Performance Graph Plot Points
Nasdaq US Nasdaq Pharmaceutical Gilead
1/22/92 100 100 100
6/30/92 93 69 82
12/31/92 113 79 128
6/30/93 117 60 109
12/31/93 130 71 80
6/30/94 118 50 57
12/31/94 127 53 63
6/30/95 158 67 118
12/29/95 179 98 213
6/28/96 203 99 168
12/31/96 220 98 167
6/30/97 247 100 184
12/31/97 270 101 255
6/30/98 325 103 214
12/31/98 380 129 274
6/30/99 466 144 350
12/31/99 691 240 361
</TABLE>

- ------------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act, whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.

(2) Shows the cumulative total return on investment assuming an investment of
$100 in each of the Company, the Nasdaq-US and the Nasdaq-Pharmaceutical on
January 22, 1992. The cumulative total return on the Company's Common Stock
has been computed based on an initial price of $15.00 per share, the price
at which the Company's shares were sold in its initial public offering on
January 22, 1992.

21
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CERTAIN TRANSACTIONS

In November 1990, the Company entered into a relocation loan agreement with
John C. Martin, currently the Company's President and Chief Executive Officer.
The principal amount of the loan is $100,000 with a term of ten years. The loan
is non-interest bearing and 100% of the principal amount will be forgiven on a
pro rata basis over years six through ten as long as Dr. Martin is still
employed by the Company. In the event Dr. Martin ceases to be employed by the
Company, the loan becomes interest-bearing and due within ninety days. The loan
is secured by a deed of trust on Dr. Martin's residence. As of December 31,
1999, $20,000 was outstanding.

In October 1994, the Company entered into a loan agreement with Mark L.
Perry, currently the Company's Senior Vice President, Operations. The principal
amount of the loan is $100,000 with a term of ten years. The loan is
non-interest bearing and 50% of the principal amount will be forgiven on a pro
rata basis over years six through ten as long as Mr. Perry is still employed by
the Company. In the event Mr. Perry ceases to be employed by the Company, the
loan becomes interest-bearing and due within sixty days. The loan is secured by
a deed of trust on Mr. Perry's residence. As of December 31, 1999, the entire
loan amount was outstanding.

During 1999, the Company paid an aggregate of $6,747,923 to PharmaResearch
Corporation, a contract research organization. James M. Denny, a member of the
Board of Directors, is a Senior Advisor to William Blair Capital Partners LLC,
which manages William Blair Capital Fund V, which owns a controlling interest
(45% of the voting stock) in PharmaResearch Corporation. Mr. Denny is not
involved in the supervision of the operations of PharmaResearch Corporation.
PharmaResearch Corporation provided services to the Company prior to William
Blair Capital Fund V's investment.

In October 1999, the Company entered into an employment agreement (the
"Employment Agreement") with Dr. Jaffe, formerly the Company's Senior Vice
President, Drug Development. Under the terms of the Employment Agreement,
Dr. Jaffe transitioned to a part-time employee for a one-year period effective
January 1, 2000, in the position of Senior Medical Advisor. Dr. Jaffe will also
be a member of the Company's Scientific Advisory Board. As consideration for
Dr. Jaffe's part-time service, the Company will pay him an annual salary of
$150,000. In addition, all of Dr. Jaffe's outstanding options will continue to
vest pursuant to their existing vesting schedules. The Employment Agreement
automatically renews on the same terms for additional one-year periods, from
January 1 through December 31, unless either the Company or Dr. Jaffe terminate
the Employment Agreement in writing and within a specified amount of time in
advance of the renewal date.

The Company has entered into indemnity agreements with all of its officers
(including the Named Executive Officers) and directors which provide, among
other things, that the Company will indemnify such officer or director, under
the circumstances and to the extent provided for therein, for expenses, damages,
judgments, fines and settlements he may be required to pay in actions or
proceedings which he is or may be made a party by reason of his position as a
director, officer or other agent of the Company, and otherwise to the full
extent permitted under Delaware law and the Company's by-laws.

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<PAGE>
OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors

[SIGNATURE]

Mark L. Perry
SECRETARY

April 12, 2000

A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR RELATIONS, GILEAD
SCIENCES, INC., 333 LAKESIDE DRIVE, FOSTER CITY, CALIFORNIA 94404.

23
<PAGE>
EXHIBIT A

GILEAD SCIENCES, INC.
1991 STOCK OPTION PLAN

ADOPTED NOVEMBER 15, 1991
AMENDED APRIL 8, 1992
AMENDED APRIL 21, 1993
AMENDED OCTOBER 17, 1995
AMENDED AND RESTATED JANUARY 22, 1998
AMENDED MARCH 30, 1999
AMENDED AND RESTATED APRIL 5, 2000

TERMINATION DATE: APRIL 30, 2010

1. PURPOSES.

(a) The Plan initially was adopted on November 15, 1991 and amended through
October 17, 1995 (the "Initial Plan"). The Initial Plan was amended and restated
in its entirety effective as of January 22, 1998 and amended through March 30,
1999. Subject to the approval of stockholders of the Company, the Plan hereby is
amended and restated in its entirety, effective as of April 5, 2000. The terms
of the Plan (excluding the previously amended provision relating to the exercise
price of Nonstatutory Stock Options) shall apply to all options granted pursuant
to the Initial Plan.

(b) The purpose of the Plan is to provide a means by which selected
Employees and Directors of, and Consultants to, the Company and its Affiliates
may be given an opportunity to purchase stock of the Company.

(c) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company, to secure and
retain the services of new Employees and Consultants, and to provide incentives
for such persons to exert maximum efforts for the success of the Company.

(d) The Company intends that the Options issued under the Plan shall, in the
discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.

(e) "COMPANY" means Gilead Sciences, Inc., a Delaware corporation.

(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render services and who is compensated for such
services, provided that the term "Consultant" shall

1
<PAGE>
not include Directors who are paid only a director's fee by the Company or who
are not otherwise compensated by the Company for their services as Directors.
The term "Consultant" shall include a member of the Board of Directors of an
Affiliate.

(g) "CONTINUOUS SERVICE" (formerly designated as "CONTINUOUS STATUS AS AN
EMPLOYEE OR CONSULTANT") means that the Optionee's service with the Company or
its Affiliates is not interrupted or terminated. The Optionee's Continuous
Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Optionee renders service to the Company or its Affiliates
or a change in the entity for which the Optionee renders such service, provided
that there is no interruption or termination of the Optionee's Continuous
Service. For example, a change in status from an Employee of the Company to a
Consultant or Director of the Company or a member of the Board of Directors of
an Affiliate will not constitute an interruption of Continuous Service. The
Board or the chief executive officer of the Company, in that party's sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by the Board or the
chief executive officer of the Company, including sick leave, military leave, or
any other personal leave.

(h) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

(i) "DIRECTOR" means a member of the Board.

(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

(k) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.

(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(m) "FAIR MARKET VALUE" means, as of any date, the value of the common stock
of the Company determined as follows:

(i) If the common stock is listed on any established stock exchange or a
national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a share of common
stock shall be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in common stock) on the last
market trading day prior to the day of determination, as reported in the
Wall Street Journal or such other source as the Board deems reliable;

(ii) If the common stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
of a share of common stock shall be the mean between the high bid and high
asked prices for the common stock on the last market trading day prior to
the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;

(iii) In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.

(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(o) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or subsidiary, does not receive
compensation (directly or

2
<PAGE>
indirectly) from the Company or its parent or subsidiary for services rendered
as a consultant or in any capacity other than as a Director (except for an
amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act), does not possess an
interest in any other transaction as to which disclosure would be required under
Item 404(a) of Regulation S-K, and is not engaged in a business relationship as
to which disclosure would be required under Item 404(b) of Regulation S-K; or
(ii) is otherwise considered a "non-employee director" for purposes of
Rule 16b-3.

(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.

(q) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(r) "OPTION" means a stock option granted pursuant to the Plan.

(s) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

(t) "OPTIONED STOCK" means the common stock of the Company subject to an
Option.

(u) "OPTIONEE" means a person who holds an outstanding Option.

(v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

(w) "PLAN" means this 1991 Stock Option Plan.

(x) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

3. ADMINISTRATION.

(a) The Board shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c).

(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

(i) To determine from time to time which of the persons eligible under
the Plan shall be granted Options; when and how the Option shall be granted;
whether the Option will be an Incentive Stock Option or a Nonstatutory Stock
Option; the provisions of each Option granted (which need not be identical),
including the time or times such Option may be exercised in whole or in
part; and the number of shares for which an Option shall be granted to each
such person.

(ii) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in
a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

(iii) To amend the Plan as provided in Section 11.

3
<PAGE>
(iv) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the
Company.

(c) The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board. In the discretion of the Board,
a Committee may consist solely of two or more Outside Directors, in accordance
with Code Section 162(m), or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3 of the Exchange Act. If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board (and references in
this Plan to the Board shall thereafter be to the Committee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Within the
scope of this authority, the Board or the Committee may delegate to a committee
of one or more members of the Board the authority to grant Options to eligible
persons who (1) are not then subject to Section 16 of the Exchange Act and/or
(2) are either (i) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Option, or
(ii) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code.

4. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate ten million seven hundred fifty thousand (10,750,000)
shares of the Company's common stock. If any Option shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, the stock not purchased under such Option shall revert to again become
available for issuance under the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5. ELIGIBILITY.

(a) Incentive Stock Options may be granted only to Employees. Nonstatutory
Stock Options may be granted to Employees, Directors and Consultants.

(b) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.

(c) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than Five Hundred Thousand (500,000) shares of the Company's common stock
in any calendar year.

6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

4
<PAGE>
(b) PRICE.

(i) EXERCISE PRICE. The exercise price of each Incentive Stock
Option and each Nonstatutory Stock Option shall be not less than one
hundred percent (100%) of the fair market value of the stock subject to
the Option on the date the Option is granted.

(ii) NO AUTHORITY TO REPRICE. Without the consent of the
stockholders of the Company, the Board shall have no authority to effect
(a) the repricing of any outstanding Options under the Plan and/or
(b) the cancellation of any outstanding Options under the Plan and the
grant in substitution therefor of new Options under the Plan covering the
same or different numbers of shares of Common Stock.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or
(ii) at the discretion of the Board or the Committee, at the time of the
grant of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment arrangement, except that
payment of the common stock's "par value" (as defined in the Delaware
General Corporation Law) shall not be made by deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board.

In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person. A Nonstatutory Stock Option but not an
Incentive Stock Option, may be transferred to the extent provided in the
Option Agreement; provided that if the Option Agreement does not expressly
permit the transfer of a Nonstatutory Stock Option, the Nonstatutory Stock
Option shall not be transferable except by will, by the laws of descent and
distribution and shall be exercisable during the lifetime of the person to
whom the Option is granted only by such person. The person to whom the
Option is granted may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event
of the death of the Optionee, shall thereafter be entitled to exercise the
Option.

(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
such period and/or any prior period as to which the Option became vested but
was not fully exercised. During the remainder of the term of the Option (if
its term extends beyond the end of the installment periods), the option may
be exercised from time to time with respect to any shares then remaining
subject to the Option. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Board may deem appropriate. The
provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be
exercised.

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<PAGE>
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced
in financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the Option for such person's own account and not with any present
intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (i) the issuance of the shares upon the exercise of the
Option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may
require the Optionee to provide such other representations, written
assurances, or information which the Company shall determine is necessary,
desirable or appropriate to comply with applicable securities and other laws
as a condition of granting an Option to such Optionee or permitting the
Optionee to exercise such Option. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

(g) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
an Optionee's Continuous Service terminates (other than upon the Optionee's
death or Disability), the Optionee may exercise his or her Option, but only
within such period of time as is determined by the Board, and only to the
extent that the Optionee was entitled to exercise it at the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the case of an Incentive
Stock Option, the Board shall determine such period of time (in no event to
exceed ninety (90) days from the date of termination) when the Option is
granted. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate, and the shares covered by
such Option shall revert to the Plan.

(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's Disability, the Optionee
may exercise his or her Option, but only within twelve (12) months from the
date of such termination (or such shorter period specified in the Option
Agreement), and only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
If, at the date of termination, the Optionee is not entitled to exercise his
or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to the Plan. If, after termination, the Optionee does
not exercise his or her Option within the time specified herein, the Option
shall terminate, and the shares covered by such Option shall revert to the
Plan.

(i) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within twelve (12) months following the
date of death (or such shorter period specified in the Option Agreement)
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the

6
<PAGE>
Optionee was entitled to exercise the Option at the date of death. If, at
the time of death, the Optionee was not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after death, the Optionee's estate or a person
who acquired the right to exercise the Option by bequest or inheritance does
not exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to the Plan.

(j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee or Consultant
to exercise the Option as to any part or all of the shares subject to the
Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to
any other restriction the Board determines to be appropriate.

(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of
the common stock otherwise issuable to the Optionee as a result of the
exercise of the Option; or (3) delivering to the Company owned and
unencumbered shares of the common stock of the Company.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the Options, the Company shall keep available at all
times the number of shares of stock required to satisfy such Options.

(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Options shall constitute general
funds of the Company.

9. MISCELLANEOUS.

(a) The Board shall have the power to accelerate the time at which an Option
may first be exercised or the time during which an Option or any part thereof
will vest pursuant to subsection 6(e), notwithstanding the provisions in the
Option stating the time at which it may first be exercised or the time during
which it will vest.

(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.

(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Consultant or Optionee any
right to continue in the employ of the Company or any Affiliate (or to continue
acting as a Consultant) or shall affect the right of the

7
<PAGE>
Company or any Affiliate to terminate the employment or relationship as a
Consultant of any Employee, Consultant or Optionee with or without cause.

(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the maximum number of shares subject to award to any person
during any calendar year period pursuant to subsection 5(d), and the outstanding
Options will be appropriately adjusted in the class(es) and number of shares and
price per share of stock subject to such outstanding Options.

(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, at the sole discretion of the Board and to the extent
permitted by applicable law: (i) any surviving corporation shall assume any
Options outstanding under the Plan or shall substitute similar Options for those
outstanding under the Plan, (ii) the time during which such Options may be
exercised shall be accelerated and the Options terminated if not exercised prior
to such event, or (iii) such Options shall continue in full force and effect.

(c) Notwithstanding any other provisions of this Plan to the contrary, if an
event occurs as specified in subsection 10(b) (a "Change in Control") and if
within one (1) month before or thirteen (13) months after the date of such
Change in Control the Continuous Service of an Optionee terminates due to an
involuntary termination (not including death or Disability) without Cause (as
such term is defined below) or a voluntary termination by the Optionee due to a
Constructive Termination (as such term is defined below), then the vesting and
exercisability of all Options held by such Optionee shall be accelerated, or any
reacquisition or repurchase rights held by the Company with respect to an option
shall lapse, as follows. With respect to those Options held by an Optionee at
the time of such termination, one hundred percent (100%) of the unvested shares
covered by such Options shall vest and become exercisable (or reacquisition or
repurchase rights held by the Company shall lapse with respect to one hundred
percent (100%) of the shares still subject to such rights, as appropriate) as of
the date of such termination. Notwithstanding the foregoing, however, if such
potential acceleration of the vesting and exercisability of Options (or lapse of
reacquisition or repurchase rights held by the Company with respect to Options)
would cause a contemplated Change in Control transaction that would otherwise be
eligible to be accounted for as a "pooling-of-interests" transaction to become
ineligible for such accounting treatment under generally accepted accounting
principles as determined by the Company's independent public accountants (the
"Accountants") prior to the Change of Control, such acceleration shall not
occur.

For the purposes of this subsection 10(c) only, "Cause" means
(i) conviction of, a guilty plea with respect to, or a plea of NOLO CONTENDERE
to a charge that an Optionee has committed a felony under the

8
<PAGE>
laws of the United States or of any state or a crime involving moral turpitude,
including, but not limited to, fraud, theft, embezzlement or any crime that
results in or is intended to result in personal enrichment at the expense of the
Company or an Affiliate; (ii) material breach of any agreement entered into
between the Optionee and the Company or an Affiliate that impairs the Company's
or the Affiliate's interest therein; (iii) willful misconduct, significant
failure of the Optionee to perform the Optionee's duties, or gross neglect by
the Optionee of the Optionee's duties; or (iv) engagement in any activity that
constitutes a material conflict of interest with the Company or any Affiliate.

For purposes of this subsection 10(c) only, "Constructive Termination" means
the occurrence of any of the following events or conditions: (i) (A) a change in
the Optionee's status, title, position or responsibilities (including reporting
responsibilities) which represents an adverse change from the Optionee's status,
title, position or responsibilities as in effect at any time within ninety
(90) days preceding the date of a Change in Control or at any time thereafter;
(B) the assignment to the Optionee of any duties or responsibilities which are
inconsistent with the Optionee's status, title, position or responsibilities as
in effect at any time within ninety (90) days preceding the date of a Change in
Control or at any time thereafter; or (C) any removal of the Optionee from or
failure to reappoint or reelect the Optionee to any of such offices or
positions, except in connection with the termination of the Optionee's
Continuous Service for Cause, as a result of the Optionee's Disability or death
or by the Optionee other than as a result of Constructive Termination; (ii) a
reduction in the Optionee's annual base compensation or any failure to pay the
Optionee any compensation or benefits to which the Optionee is entitled within
five (5) days of the date due; (iii) the Company's requiring the Optionee to
relocate to any place outside a fifty (50) mile radius of the Optionee's current
work site, except for reasonably required travel on the business of the Company
or its Affiliates which is not materially greater than such travel requirements
prior to the Change in Control; (iv) the failure by the Company to (A) continue
in effect (without reduction in benefit level and/or reward opportunities) any
material compensation or employee benefit plan in which the Optionee was
participating at any time within ninety (90) days preceding the date of a Change
in Control or at any time thereafter, unless such plan is replaced with a plan
that provides substantially equivalent compensation or benefits to the Optionee,
or (B) provide the Optionee with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward opportunities) to those
provided for under each other employee benefit plan, program and practice in
which the Optionee was participating at any time within ninety (90) days
preceding the date of a Change in Control or at any time thereafter; (v) any
material breach by the Company of any provision of an agreement between the
Company and the Optionee, whether pursuant to this Plan or otherwise, other than
a breach which is cured by the Company within fifteen (15) days following notice
by the Optionee of such breach; or (vi) the failure of the Company to obtain an
agreement, satisfactory to the Optionee, from any successors and assigns to
assume and agree to perform the obligations created under this Plan.

(d) In the event that the acceleration of the vesting and exercisability of
the Options or lapse of reacquisition or repurchase rights held by the Company
with respect to Options provided for in subsection 10(c) and benefits otherwise
payable to an Optionee (i) constitute "parachute payments" within the meaning of
Section 280G (as it may be amended or replaced) of the Code, and (ii) but for
this subsection 10(d) would be subject to the excise tax imposed by
Section 4999 (as it may be amended or replaced) of the Code (the "Excise Tax"),
then such Optionee's benefits hereunder shall be delivered to such lesser extent
which would result in no portion of such benefits being subject to the Excise
Tax; PROVIDED, HOWEVER, that the benefits hereunder shall be reduced only to the
extent necessary after all cash amounts otherwise payable to such Optionee and
which constitute "parachute payments" have been returned. Unless the Company and
such Optionee otherwise agree in writing, any determination required under this
subsection 10(d) shall be made in writing in good faith by the Accountants. For
purposes of making the calculations required by this subsection 10(d), the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and such Optionees

9
<PAGE>
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
subsection 10(d). The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this
subsection 10(d).

11. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:

(i) Increase the number of shares reserved for options under the Plan;

(ii) Effect (a) the repricing of any outstanding Options under the Plan
and/or (b) the cancellation of any outstanding Options under the Plan and
the grant in substitution therefor of new Options under the Plan covering
the same or different numbers of shares of Common Stock;

(iii) Modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code); or

(iv) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3 or
any Nasdaq or securities exchange listing requirements.

(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.

(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.

(d) Rights and obligations under any Option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Option was
granted and (ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on April 30, 2010, which is a date within
ten (10) years following stockholder approval of the amended and restated Plan
adopted by the Board on April 5, 2000. No Options may be granted under the Plan
while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.

13. EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the stockholders of
the Company have approved the Plan.

10
<PAGE>
5100-GR-00-T0-X-0214
<PAGE>

PROXY

GILEAD SCIENCES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 24, 2000

The undersigned hereby appoints John C. Martin and Mark L. Perry, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Gilead Sciences, Inc.
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Gilead Sciences, Inc. to be held at Hotel Sofitel, 223 Twin
Dolphin Drive, Redwood City, California on Wednesday, May 24, 2000 at 10:00
a.m., and at any and all continuations and adjournments thereof, with all
powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters
that may properly come before the meeting.

UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1, AND FOR PROPOSALS 2 AND 3 AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.

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<PAGE>

Please mark
your votes as / X /
indicated in
this example

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE THE BOARD OF DIRECTORS RECOMMENDS
NOMINEES FOR DIRECTOR LISTED BELOW. A VOTE FOR PROPOSAL 2.

FOR WITHHOLD FOR AGAINST ABSTAIN
Proposal 1: To elect directors all nominees AUTHORITY Proposal 2: To approve the Company's
to serve for the next year and listed below to vote for 1991 Stock Option Plan, as amended, / / / / / /
until their successors are (except as all nominees to increase the aggregate number of
elected. marked to the listed below. shares of Common Stock authorized for
contrary below). issuance thereunder from 10,000,000 to
10,750,000 shares and to extend the
/ / / / term of the plan from October 2001
Nominees: to April 2010.
Paul Berg Gordon E. Moore
Etienne F. Davignon Donald H. Rumsfeld THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
James M. Denny George P. Shultz
John C. Martin FOR AGAINST ABSTAIN
Proposal 3: To ratify the selection of
Ernst & Young LLP as independent / / / / / /
auditors of the Company for its
fiscal year ending December 31, 2000.

TO WITHHOLD AUTHORITY TO VOTE FOR ANY
NOMINEE(S), WRITE SUCH NOMINEE(S)'
NAME(S) BELOW:

- ---------------------------------------- Please sign exactly as your name
appears hereon. If the stock is
registered in the names of two or
more persons, each should sign.
Executors, administrators, trustees,
guardians and attorneys-in-fact
should add their titles. If signer
is a corporation, please give full
corporate name and have a duly
authorized officer sign, stating
title. If signer is a partnership,
please sign in partnership name by
authorized person.

Signature(s) Dated , 2000
------------------------------------------------------------------ -----------
Please vote, date, sign and promptly return this proxy in the enclosed return envelope that is postage
prepaid if mailed in the United States.

</TABLE>

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