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Pharmasset Reports Fiscal Year End 2007 Financial Results
Date:12/31/2007

PRINCETON, N.J., Dec. 31 /PRNewswire-FirstCall/ -- Pharmasset, Inc. (Nasdaq: VRUS), a clinical stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections, reported audited financial results for the fiscal year ended September 30, 2007. Pharmasset reported a net loss attributable to common stockholders of $6.8 million, or $0.46 per share, as compared to a net loss attributable to common stockholders of $12.4 million, or $1.19 per share for the same period in 2006.

Revenues were $22.0 million during the fiscal year 2007, primarily consisting of development milestones and the amortization of payments received from Roche from the hepatitis C virus (HCV) collaboration agreement that were previously recorded as deferred revenue. Revenues for the same period in 2006 were $5.4 million. This $16.6 million increase from the year ago period was primarily due to the receipt of milestone payments from Roche totaling $20.0 million during fiscal year 2007. Investment income was $2.5 million during fiscal year 2007 compared to $1.7 million during fiscal year 2006. This $0.8 million increase was due to higher average invested cash balances during 2007.

Total costs and expenses for the fiscal year ended September 30, 2007 were $29.5 million as compared to $18.4 million for the same period in 2006. The increased operating expenses for fiscal year 2007 were primarily the result of an increase in Phase 3 registration clinical trial expenses for clevudine for the treatment of chronic hepatitis B virus (HBV) infection, as well as drug discovery, non-cash stock compensation and depreciation expenses.

At September 30, 2007, Pharmasset held $68.7 million in cash and cash equivalents and approximately $1.3 million of short-term investments. In September 2007, Pharmasset entered into a $30 million working capital loan agreement, of which $10 million was funded in October 2007.

"Pharmasset achieved significant clinical development and financial progress in 2007," stated Schaefer Price, Pharmasset's President & CEO. "We remain focused on building our hepatitis and HIV franchises with novel drug candidates that could significantly improve therapeutic standards of care. We hope to maintain the momentum in 2008 by completing HBV patient enrollment of the clevudine Phase 3 clinical trials for registration in the Americas and Europe. In addition, since the first two cohorts were fully enrolled earlier this month, we plan to report preliminary safety and efficacy data following 4 weeks of combination therapy with R7128 and Pegasys(R) plus Copegus(R) in the first calendar quarter of 2008."

Fiscal Year 2007 Highlights

-- Initiated HBV patient dosing of clevudine Phase 3 clinical trials for

registration in the Americas and Europe.

-- Reported clevudine's approval for the treatment of HBV in South Korea.

Clevudine is marketed by Bukwang Pharmaceuticals in South Korea under

the brand name Levovir.

-- Completed Phase 1 single and multiple ascending dose studies of R7128

in both healthy volunteers and patients chronically infected with HCV.

R7128 was generally safe and well tolerated and demonstrated potent,

dose-dependent antiviral activity in these studies.

-- Discovered a new series of proprietary uridine phosphoramidates that

have demonstrated potent anti-HCV activity. We are evaluating these

molecules for potential advancement toward future development.

-- Confirmed Racivir's antiviral activity in treatment-experienced HIV

patients who were failing their HIV treatment regimen and had HIV with

the M184V resistance mutation.

-- Continued building our antiviral clinical development team by adding

experienced senior leadership, including Dr. Michelle Berrey, Chief

Medical Officer and Dr. Michael Rogers, Chief Development Officer.

-- Completed an initial public offering (IPO) of 5,050,000 shares of

common stock at a price of $9.00 per share and began trading on the

NASDAQ Global Market under the symbol "VRUS." Net cash proceeds from

the IPO were $40.7 million.

-- Earned $20.0 million in milestone payments from Roche as part of a

collaboration for the development of R7128 for the treatment of chronic

HCV infection.

-- Closed a $30 million working capital loan agreement.

Calendar Year 2008 Anticipated Milestones

-- Release preliminary safety and efficacy data from a Phase 1, Part 3

multiple ascending dose study of R7128 following 4 weeks of combination

therapy with Pegasys plus Copegus in the first calendar quarter of

2008.

-- Report final safety and efficacy data from a Phase 1, Part 3 multiple

ascending dose study of R7128 following 4 weeks of combination therapy

with Pegasys plus Copegus in the second calendar quarter of 2008.

-- Complete patient enrollment for clevudine Phase 3 registration clinical

trials in the second calendar half of 2008.

-- Initiate a Phase 2b combination study of R7128 with Pegasys plus

Copegus in the second calendar half of 2008, assuming the successful

completion of the on-going R7128 Phase 1 study and the timely

completion of all required Phase 2b study preparation activities.

About Pharmasset

Pharmasset is a clinical stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections. Pharmasset's primary focus is on the development of oral therapeutics 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 clinical trials for registration in North, Central and South America and Europe. Clevudine is already approved for HBV in South Korea and marketed by Bukwang Pharmaceuticals in South Korea under the brand name Levovir. R7128, an orally administered treatment for chronic HCV infection, is in a 4-week Phase 1 clinical trial in combination with Pegasys(R) and Copegus(R) through a strategic collaboration with Roche. Racivir, which is being developed for the treatment of HIV in combination with other approved HIV drugs, has completed a Phase 2 clinical trial.

Contact

Alan Roemer, Vice President

Investor Relations & Corporate Communications

alan.roemer@pharmasset.com

Office: (609) 613-4125

Forward-Looking Statements

Pharmasset "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding our business that are not historical facts are "forward-looking statements" that involve risks and uncertainties, including without limitation the risk that adverse events could cause the cessation of the Phase 3 registration studies and/or our development of clevudine, the risk that adverse events could cause the cessation of the Phase 1 combination study and/or our development of R7128, including the risk that we will fail to release preliminary or final safety and efficacy data from a Phase 1, Part 3 multiple ascending dose study and the risk that we will fail to initiate a Phase 2b combination study of R7128 with Pegasys plus Copegus in the second calendar half of 2008, the risk that our collaboration with Roche will not continue or will not be successful and the risk that any one or more of our product candidates will not be successfully developed and commercialized. For a discussion of these risks and uncertainties, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2007 filed with the Securities and Exchange Commission entitled "Risk Factors" and discussions of potential risks and uncertainties in our subsequent filings with the Securities and Exchange Commission.

PHARMASSET, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE NET LOSS

Years Ended Nine Months

September 30, Ended

------------------------- September 30,

2007 2006 2005

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

REVENUES $22,009,458 $5,424,614 $3,719,104

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

COSTS AND EXPENSES:

Research and development 20,318,910 10,497,703 10,468,026

General and administrative 9,210,623 7,911,545 8,095,897

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

Total costs and expenses 29,529,533 18,409,248 18,563,923

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

OPERATING LOSS (7,520,075) (12,984,634) (14,844,819)

INVESTMENT INCOME 2,470,563 1,658,977 1,136,035

INTEREST EXPENSE (15,136) - -

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

LOSS BEFORE INCOME TAXES (5,064,648) (11,325,657) (13,708,784)

PROVISION FOR INCOME TAXES - - -

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

NET LOSS (5,064,648) (11,325,657) (13,708,784)

REDEEMABLE PREFERRED STOCK

ACCRETION 1,775,684 1,110,973 2,286,799

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

NET LOSS ATTRIBUTABLE TO

COMMON STOCKHOLDERS $(6,840,332) $(12,436,630) $(15,995,583)

========================== =============

COMPREHENSIVE NET LOSS:

NET LOSS $(5,064,648) $(11,325,657) $(13,708,784)

UNREALIZED GAIN (LOSS) ON

AVAILABLE-FOR-SALE

INVESTMENTS 2,100 (56,465) 58,454

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

COMPREHENSIVE NET LOSS: $(5,062,548) $(11,382,122) $(13,650,330)

========================== =============

NET LOSS ATTRIBUTABLE TO

COMMON

STOCKHOLDERS PER SHARE:

BASIC $(0.46) $(1.19) $(2.42)

DILUTED $(0.46) $(1.19) $(2.42)

WEIGHTED AVERAGE SHARES

OUTSTANDING:

BASIC 14,990,472 10,462,369 6,630,463

DILUTED 14,990,472 10,462,369 6,630,463

PHARMASSET, INC.

BALANCE SHEETS

As of September 30,

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

2007 2006

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

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $68,745,694 $26,182,316

Short-term investments 1,252,113 1,250,013

Amounts due under collaborative

agreements 919,110 297,070

Prepaid expenses and other assets 783,311 359,082

Deferred offering costs - 1,608,826

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

Total current assets 71,700,228 29,697,307

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

EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Laboratory, office furniture and

equipment 2,462,647 1,877,095

Leasehold improvements 1,836,553 1,836,553

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

4,299,200 3,713,648

Less accumulated depreciation and

amortization (1,437,080) (544,725)

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

Total equipment and leasehold

improvements, net 2,862,120 3,168,923

OTHER ASSETS 1,282,051 131,300

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

TOTAL $75,844,399 $32,997,530

============================

LIABILITIES, REDEEMABLE STOCK AND WARRANTS,

AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

Accounts payable $3,281,600 $710,386

Accrued expenses 5,513,407 2,055,025

Deferred rent 124,462 124,462

Current portion of capital lease

obligation 159,440 -

Deferred revenue 1,857,136 1,803,564

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

Total current liabilities 10,936,045 4,693,437

DEFERRED RENT 204,256 328,718

NON CURRENT PORTION OF CAPITAL LEASE

OBLIGATION 41,641 -

DEFERRED REVENUE 5,726,131 7,364,547

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

Total liabilities 16,908,073 12,386,702

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

COMMITMENTS

REDEEMABLE STOCK AND WARRANTS

Series B, C, D, and R redeemable

convertible stock - 19,376,679

Series R-1 warrants - 264,000

Redeemable common stock - 1,190,251

Total redeemable stock and

warrants ----------------------------

- 20,830,930

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

STOCKHOLDER'S EQUITY (DEFICIT)

Series A convertible preferred stock - 2,640

Series D-1 warrants - 5,411,932

Common Stock, $0.001 par value,

21,232,991 and 10,291,386 shares

outstanding at September 30, 2007

and 2006, respectively 21,233 10,291

Warrants to purchase 66,390 shares

of common stock 526,720 -

Additional paid-in capital 115,518,201 44,480,015

Accumulated other comprehensive

income 4,405 2,305

Accumulated deficit (57,134,233) (50,127,285)

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

Total stockholders' equity

(deficit) 58,936,326 (220,102)

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

TOTAL $75,844,399 $32,997,530

============================


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SOURCE Pharmasset, Inc.
Copyright©2007 PR Newswire.
All rights reserved

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