Pharmasset Reports Fiscal Year End 2008 Financial Results

Friday, December 12, 2008 General News
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PRINCETON, N.J., Dec. 11 Pharmasset, Inc.(Nasdaq: VRUS), a clinical stage pharmaceutical company committed todiscovering, developing and commercializing novel drugs to treat viralinfections, reported financial results for the fiscal year ended September 30,2008. At September 30, 2008, Pharmasset held $63.6 million in cash and cashequivalents and short term investments.

Pipeline Update and 2008 Highlights


During 2008, new data from multiple investigator sponsored studiessupported the potential of clevudine to treat hepatitis B (HBV), including itsuse in lamivudine resistant patients. Data from one study suggested thatclevudine is as effective as entecavir (Baraclude(R)) and that it can beeffectively used in combination with adefovir (Hepsera(R)). Managementbelieves the unique attributes of clevudine will help to differentiate it inthe marketplace, including its potential to achieve a sustained virologicalresponse (SVR) in patients after a defined treatment period.

In July of 2008, the French National Agency for Research on AIDS and ViralHepatitis initiated a study to compare treatment with clevudine or tenofovirwith a combination of the two. In this study patients will be treated for twoyears, followed by a determination of the SVR rates.

Pharmasset is currently enrolling two registration trials worldwide(studies 305 and 306) and as a result of unforeseen regulatory delays thatimpacted the start up in certain countries, the company expects to completeenrollment at the end of the first calendar quarter of 2009.


During 2008, Pharmasset made significant progress with our hepatitis Cvirus (HCV) programs. R7128, our lead HCV nucleoside inhibitor, completed 28day clinical studies in both treatment naive and treatment experienced HCVpatients. In addition, the company was issued a US patent covering R7128.

Results from the 28 day study were presented at the recent AmericanAssociation for the Study of Liver Diseases (AASLD) that demonstrated thatR7128 combined with the standard of care (pegylated interferon and ribavirin)provided significant short-term antiviral activity with safety andtolerability comparable to the standard of care alone. Results from the 500mgBID, 1000mg BID, 1500mg BID dose cohorts in 81 treatment-naive patientschronically infected with HCV genotype 1 indicated rapid virological response(RVR) rates of 30% (6 of 20), 88% (22 of 25) and 85% (17 of 20), respectivelycompared to 19% (3 of 16) in the control group. Further results in genotype 2and 3, non responder patients treated with 1500mg BID generated RVR rate of90% (18 of 20) versus 60% (3 of 5) in the control group. Across all studies,safety and tolerability of R7128 combined with peginterferon and ribavirin wassimilar to the standard of care alone.

Based on these results and other data, Pharmasset's partner, Roche, plansto move R7128 into a phase 2b trial in HCV-1 infected patients in the firstcalendar quarter of 2009. Pharmasset has submitted the necessary briefingdocuments to the FDA and both Roche and Pharmasset plan to meet with theagency in early January to review the preclinical and clinical data and todiscuss the phase 2b design and future studies.

In addition to planning for phase 2b, Roche initiated the INFORM-1 trial,a potentially ground-breaking study to investigate the activity of acombination of two oral antiviral molecules in the absence of interferon. Thestudy began in November 2008, and will investigate the combination ofPharmasset's R7128 with InterMune's R7227, a protease inhibitor. The firstcohort of patients has been enrolled and preliminary results from this studyare expected in first calendar half of 2009.


During 2008, Pharmasset nominated PSI-7851 as its lead, second generationnucleotide candidate for HCV. Preclinical data indicate that PSI-7851 could beup to 20 times more potent than R7128, raising the prospect that the drugmight be used in fixed dose combinations in the future. The company plans tofile an IND for PSI-7851 in the first calendar quarter of 2009.

"During 2008, Pharmasset made significant progress both in the clinic andon the corporate front," said Schaefer Price, Pharmasset's President and CEO."We remain focused on maintaining this momentum and building a pipeline ofdifferentiated antiviral candidates. Through our collaboration with Roche, theleader in HCV market, we plan to rapidly progress R7128 through phase 2studies. The partnership is also exploring the paradigm changing model of anall oral (interferon sparing) regimen for HCV, which we believe would be thefuture of treatment. These efforts provide the groundwork for our nextgeneration of nucleoside and nucleotide inhibitors, such as PSI-7851, thathold the potential for us to explore fixed dosed combinations."

Financial Results

For the fiscal year ended September 30, 2008 Pharmasset reported revenuesof $1.9 million, compared with revenues of $22.0 million for the fiscal year2007. The receipt of milestones totaling $20 million from Roche led to higherreported revenues in the fiscal year 2007.

Total costs and expenses for the fiscal year ended September 30, 2008 were$56.3 million as compared to $29.5 million for the same period in 2007. Theincreased operating expenses for fiscal year 2008 were primarily the result ofan increase in Phase 3 registration clinical trial expenses for clevudine forthe treatment of chronic HBV infection, as well as increased drug discoveryactivities and the administrative expenses of a public company.

Investment income was $2.0 million during fiscal year 2008 compared to$2.5 million during fiscal year 2007. This $0.5 million decrease was due tolower rates of return on the average invested cash balances during 2008.

Pharmasset reported a net loss attributable to common stockholders of$54.7 million, or $2.51 per share, as compared to a net loss attributable tocommon stockholders of $6.8 million, or $0.46 per share for the same period in2007.

About Pharmasset

Pharmasset is a clinical-stage pharmaceutical company committed todiscovering, developing and commercializing novel drugs to treat viralinfections. Pharmasset's primary focus is on the development of oraltherapeutics for the treatment of hepatitis B virus (HBV), hepatitis C virus(HCV) and human immunodeficiency virus (HIV).

Pharmasset is currently developing three product candidates. Clevudine,for the treatment of chronic HBV infection, is enrolling Phase 3 clinicaltrials for registration in North, Central and South America and Europe.Clevudine is already approved for HBV in South Korea and marketed by BukwangPharmaceuticals in South Korea under the brand name Levovir. R7128, an oraltreatment for chronic HCV infection, has completed a 4-week clinical trial incombination with Pegasys(R) plus Copegus(R) through a strategic collaborationwith Roche. Racivir, which is being developed for the treatment of HIV incombination with other approved HIV drugs, has completed a Phase 2 clinicaltrial. Pharmasset also anticipates filing an IND for its second generationnucleotide inhibitor for HCV, PSI-7851 in the first quarter of 2009.Pegasys(R) and Copegus(R) are registered trademarks of Roche.

Forward-Looking Statements

Pharmasset "Safe Harbor" Statement under the Private Securities LitigationReform Act of 1995: Statements in this press release regarding our businessthat are not historical facts are "forward-looking statements" that involverisks and uncertainties, including without limitation, the risk that adverseevents could cause the cessation or delay of any of the ongoing or plannedclinical trials and/or our development of our product candidates, the riskthat the results of previously conducted studies involving our productcandidates will not be repeated or observed in ongoing or future studiesinvolving our product candidates, the risk that our collaboration with Rochewill not continue or will not be successful and the risk that any one or moreof our product candidates will not be successfully developed andcommercialized. For a discussion of these risks and uncertainties, any ofwhich could cause our actual results to differ from those contained in theforward-looking statements, see the section of our Annual Report on Form 10-Kfor the fiscal year ended September 30, 2008 filed with the Securities andExchange Commission entitled "Risk Factors" and discussions of potential risksand uncertainties in our subsequent filings with the Securities and ExchangeCommission.Calendar Year 2009 Anticipated Milestones -- Meet with FDA in January 2009 to discuss phase 2b and future trials of R7128 -- Roche initiates phase 2b study of R7128 in first quarter of 2009 -- Complete enrollment of clevudine registration trials end of first quarter of 2009 -- File IND for PSI-7851 in first quarter of 2009 -- Report end of treatment data from 28 day add-on study with R7128 in non-responder, HCV genotype 2 and genotype 3 patients in first quarter of 2009 -- Report interim results from INFORM-1 trial in first half of 2009 -- Report end of treatment results from 28 day add-on study with R7128 in treatment naive, HCV genotype 1 patients around mid-year 2009 -- Report phase 1 data with PSI-7851 in second half of 2009

SOURCE Pharmasset, Inc.

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