Gilead Sciences Inc. and GlaxoSmithKline announced a licensing agreement to commercialize Viread(R) (tenofovir disoproxil fumarate) for the treatment of chronic hepatitis B (HBV) infection in adults in five countries in Asia. The companies combined commercialization activities will expand access to Viread for the treatment of HBV. Under the agreement, Gilead will retain exclusive rights for commercialization of Viread for HBV in Hong Kong, Singapore, South Korea and Taiwan. In China, GSK will have exclusive commercialization rights and registration responsibilities for Viread for HBV. Each company will pay royalties to the other on sales of Viread for HBV in their respective Asian territories. The companies are working to expand this agreement to include Japan and other countries. The Viread agreement modifies the terms of the April 2002 licensing agreement between Gilead and GSK under which GSK received exclusive rights to Hepsera(R) (adefovir dipivoxil), Gilead's first hepatitis B treatment, in various territories including China, Japan, South Korea and Taiwan, as well as the right to commercialize Viread for the treatment of HBV under certain circumstances.

The U.S. District Court for the Northern District of California denied in part a motion to dismiss securities fraud claims brought by shareholders against Gilead Sciences Inc. alleging the improper marketing of a drug for off-label applications. Shareholders sued the company and certain of its officers alleging violations of 10(b) and 20(a) of the Securities Exchange Act of 1934 arising from improper marketing of its Viread product for off-label applications. The complaint alleged that the company deliberately trained its sales force to engage its existing and potential clients in off-label discussion regarding Viread using information received from the company, and misrepresented the nature of these activities in its public statements. The district court concluded that the allegations of improper off-label marketing were neither conclusory nor speculative. The plaintiffs offered six confidential witnesses who testified to their own attendance at corporate meetings at which the fraudulent scheme was discussed and agreed to. Moreover, the job description of the confidential witnesses supported the probability that a person in the position so occupied would possess the information alleged. As a result, the motion to dismiss the complaint's 10(b) claims as against the company and those individual defendants specifically alleged to have made materially false statements or omissions was denied. Section 10(b) claims against 'non-speaking' defendants dismissed. However, the complaint's 10(b) claims against those corporate officers who were not alleged to have made or participated in the preparation of false statements were dismissed. In order to state a claim under 10(b), a complaint must allege either that the defendant made a public statement or omission that was misleading or personally committed an act that was deceptive to investors. In the absence of such allegations, the 10(b) claims against these 'non-speaking' defendants were inadequately pled. The district court separately concluded that the complaint sufficiently alleged a company-wide strategy of marketing Viread for off-label purposes, and that a corporate culture encouraged off-label marketing. These allegations, in conjunction with the adequately alleged primary violation under 10(b), were sufficient to support a claim under 20(b) of the Act for control personal liability against all of the individual defendants. Accordingly, an order incorporating the district court's rulings was duly issued.

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