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Pharmasset Reports Fiscal Year End 2011 Financial Results

PRINCETON, N.J., Nov. 14, 2011 /PRNewswire/ -- Pharmasset, Inc. (Nasdaq: VRUS), a clinical stage pharmaceutical company committed to discovering, developing, and commercializing novel drugs to treat viral infections, today reported financial results and operational highlights for the fiscal year ended September 30, 2011. At fiscal year end Pharmasset held $166.5 million in cash and cash equivalents and used $21.7 million of our cash and cash equivalents during the fourth quarter of fiscal 2011.

Pipeline Update and 2011 HighlightsPSI-7977The recently-announced registrational program for PSI-7977, the once-a-day nucleotide analog for hepatitis C virus (HCV) infection, is the first to pursue an interferon-free, all-oral regimen, and the first to include patients with all HCV genotypes (GT). The three core studies will evaluate the all-oral two-drug combination of PSI-7977 and ribavirin (RBV) administered for 12 weeks.

The first trial, FISSION, is a pivotal study of PSI-7977 with RBV for 12 weeks in approximately 500 patients with HCV GT2 or GT3. FISSION is designed to demonstrate the superiority of PSI-7977/RBV over the current standard-of-care for HCV GT2/3, pegylated interferon (Peg-IFN) and ribavirin for 24 weeks. The second Phase 3 trial, POSITRON, is planned to begin in early 2012. POSITRON will enroll approximately 225 patients with HCV GT2 or GT3 who cannot take interferon, thus supporting a placebo comparator arm for this trial. During the first quarter of 2012, data from ongoing open-label assessments of PSI-7977/RBV in subjects with HCV GT1 in ELECTRON and QUANTUM will be reviewed and incorporated into the final design for the third registrational trial, NEUTRINO. This trial will also investigate a 12-week regimen of PSI-7977/RBV versus a placebo comparator, and will enroll approximately 280 patients with HCV regardless of viral genotype, including the most common HCV genotype in the US and Europe, GT1.  

At the annual meeting of the American Association for the Study of Liver Diseases (AASLD), Professor Edward Gane of New Zealand presented results from ELECTRON demonstrating viral cure (sustained viral response, SVR) in 40 of 40 (100%) patients with HCV GT2 or GT3.  ELECTRON was designed to determine the minimum duration of interferon required to achieve SVR in combination with the nucleotide analog PSI-7977 and RBV.  All 40 subjects were treated with PSI-7977/RBV, but were randomized to receive one of four "interferon sparing" or interferon-free regimens: 4, 8, or 12 weekly interferon injections, or no interferon. The early antiviral responses were consistent across all four experimental treatment groups with all 40 subjects achieving "undetectable" HCV RNA by week 4.  Importantly, there were no treatment failures or discontinuations due to safety or viral resistance during the 12 weeks of therapy, problems that have limited the effectiveness of other direct-acting antivirals in development for HCV.  

Data from PROTON, the Phase 2 dose-ranging trial for PSI-7977, were presented at AASLD by Dr. Eric Lawitz.  Initial 12-week safety and on-treatment response rates had been presented in early 2011, with 98% of subjects achieving HCV below limit of detection (<LOD), and no safety or tolerability issues in either cohort receiving PSI-7977 at 200 mg or 400 mg QD with Peg-IFN/RBV for 12 weeks.  During the Peg-IFN/RBV dosing from week 13 to 24, three subjects in the 200 mg cohort experienced viral breakthrough and one additional subject experienced relapse within 4 weeks of completing the treatment, for a combined 88% SVR12 for the lower-dose of PSI-7977.  In contrast, no viral breakthrough was observed in the PSI-7977 400 mg QD cohort, and only one relapse, for an intent to treat (ITT) SVR12 of 91% (43 of 47). Of the 44 subjects who received at least 8 weeks of PSI-7977 400 mg QD with PEG/RBV, 43/44, or 98% (91% ITT), achieved SVR12, confirming selection of the PSI-7977 400 mg QD dose for Phase3 studies.  

At the company's investor event on November 6th, interim data from the open-label ATOMIC trial provided preliminary confirmation of the 12-week duration of PSI-7977 for all HCV genotypes, with an initial 15 of 15 subjects with HCV GT1 remaining HCV RNA "undetectable" at the SVR4 timepoint.  Interferon-free assessments of PSI-7977/RBV in HCV GT1 are ongoing in ELECTRON and QUANTUM.  

Collaborative Trials with PSI-7977In the third calendar quarter, Bristol-Myers Squibb completed enrollment of a collaborative trial of 24 weeks of PSI-7977 with the BMS NS5a inhibitor, daclatasvir (with and without ribavirin) in patients with HCV GT1, GT2 or GT3. Recently, Bristol-Myers Squibb announced that four 12-week cohorts of the combination had been added in patients with HCV GT1 who: 1) are naive to prior therapy, or 2) had previously failed an HCV protease inhibitor with Peg-IFN/RBV.

In the fourth calendar quarter of 2011, Tibotec started screening patients in a collaborative study of their HCV protease inhibitor, TMC435, in combination with PSI-7977, in patients with HCV GT1 with a prior "null" response to prior Peg-IFN/RBV therapy.  All subjects will be treated for 12 or 24 weeks, and will be randomized to therapies with or without ribavirin.

A collaborative study with the National Institutes of Health initiated in the third calendar quarter of 2011, evaluating 24 weeks of PSI-7977 with or without ribavirin in patients with HCV GT1

PSI-938In September 2011, QUANTUM was initiated, a phase 2b study of Pharmasset's purine, PSI-938, administered as monotherapy and in combination with PSI-7977 (with and without ribavirin). Two treatment arms of PSI-7977 and RBV without PSI-938 are also included. All combinations will be evaluated for 12 and 24 weeks.  Screening and enrollment for this open-label study have progressed quickly, and interim results from the first half of the subjects enrolled are anticipated in the second calendar quarter of 2012.

MericitabineRoche is currently conducting a number of phase 2 studies with mericitabine, including the INFORM-SVR study in combination with ritonavir-boosted danoprevir with and without ribavirin for 12 or 24 weeks in patients with HCV GT1. Roche recently announced an additional arm added to INFORM-SVR to assess a 24 week regimen of mericitabine, boosted danoprevir and ribavirin in HCV genotype 1 patients contraindicated for or intolerant of interferon. In June 2011, Roche initiated a second trial, MATTERHORN, to evaluate ritonavir-boosted danoprevir and ribavirin in combination with mericitabine and/or pegylated interferon. The study is expected to enroll approximately 420 subjects with HCV GT1 who failed previous therapy. Roche has stated that it intends to file mericitabine for marketing approval in 2014.

Financial ResultsFor the fiscal year ended September 30, 2011 Pharmasset reported revenues of $0.9 million, compared with revenues of $1.0 million for fiscal year 2010. Revenues during each fiscal year primarily consist of amortization of up-front and subsequent collaborative and license payments received from Roche previously recorded as deferred revenue.  

Total costs and expenses for the fiscal year ended September 30, 2011 were $92.5 million compared to $64.7 million for the same period in 2010. The increase in operating expenses was primarily the result of increased clinical development costs associated with the initiation and ongoing conduct of the Phase 2 studies ELECTRON and ATOMIC, as well as the advancement of PSI-938 in NUCLEAR and the large Phase 2b study, QUANTUM.

Pharmasset reported a net loss of $91.2 million, or $1.25 per share for the fiscal year ended September 30, 2011, as compared to a net loss of $66.1 million, or $1.07 per share for the same period in 2010.

"In 2011, we have made significant advances with our HCV nucleotide analogs," stated Schaefer Price, President and Chief Executive Officer. "At the recent AASLD meeting we reported consistently high SVR results from PSI-7977 and ribavirin dosed with or without interferon across genotypes 1, 2 and 3. This encouraging data in combination with PSI-7977's good safety profile and high barrier to resistance have enabled us to rapidly initiate the first interferon-free phase 3 program in the industry. We are excited to pursue an interferon-free regimen in phase 3 since interferon intolerability keeps most patients from being treated for their HCV. We anticipate filing for marketing approval in the US and Europe in the second half of 2013 and hope to be the first to introduce an interferon–free regimen in the marketplace."

Calendar Year 2012 Anticipated Milestones:-- Initiate Phase 3 POSITRON trial with PSI-7977 and ribavirin in patients with HCV GT2 or GT3 in the first quarter of 2012-- Report SVR24 HCV GT1 from Phase 2b PROTON study during the first quarter of 2012-- Report interim QUANTUM data in second quarter of 2012-- Report SVR12 from the 12-week treatment arm of ATOMIC during the second quarter of 2012.-- Report interferon-free ELECTRON data in subjects with HCV GT1 in the first half of 2012-- Initiate NEUTRINO, an interferon free, Phase 3 study of PSI-7977 and RBV for 12 weeks in subjects with all HCV genotypes who cannot take interferon in mid 2012.-- Report SVR12 from QUANTUM in the second half of 2012-- Report SVR12 from the arm with HCV genotype 2 or 3 subjects of Part 3 of ELECTRON during the third quarter of 2012.-- Report SVR12 from ATOMIC 24-week treatment arms during the second half of 2012.About PharmassetPharmasset is a clinical-stage pharmaceutical company committed to discovering, developing, and commercializing novel drugs to treat viral infections. Pharmasset's primary focus is the development of oral therapeutics for the treatment of hepatitis C virus (HCV) infection. Our research and development efforts are focused on nucleoside/tide analogs, a class of compounds which act as alternative substrates for the viral polymerase, thus inhibiting viral replication. We currently have three clinical-stage product candidates advancing in trials in various populations. Our pyrimidine, PSI-7977, an unpartnered uracil nucleotide analog, is currently being studied in an interferon-free, Phase 3 program (FISSION, POSITRON and NEUTRINO) and in five Phase 2b trials including subjects with all HCV genotypes. Our purine, PSI-938, an unpartnered guanosine nucleotide analog, is in QUANTUM, a Phase 2b interferon-free trial of PSI-938 and PSI-7977 in subjects with all HCV genotypes. Mericitabine (RG7128) continues in three Phase 2b trials and one interferon-free trial being conducted through a strategic collaboration with Roche.ContactRichard E. T. Smith, Ph.D.VP, Investor Relations and Corporate CommunicationsOffice +1 (609) 865-0693 Forward-Looking Statements Pharmasset "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release that are not historical facts are "forward-looking statements," that involve risks, uncertainties, and other important factors, including, without limitation, the risk of cessation or delay of any of the ongoing or planned clinical trials and/or our development of our product candidates, the risk that the results of previously conducted studies involving our product candidates will not be repeated or observed in ongoing or future studies involving our product candidates, 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 risks, uncertainties, and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011 and our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission and discussions of potential risks, uncertainties, and other important factors in our subsequent filings with the Securities and Exchange Commission.

PHARMASSET, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(in thousands, except share and per share amounts)Years Ended September 30,201120102009Revenues

3,293COSTS AND EXPENSES:  Research and development

75,85048,26152,552  General and administrative

16,65116,45813,365Total costs and expenses

92,50164,71965,917Operating loss

(91,604)(63,699)(52,624)Investment income

158221Other income

489--Interest expense

(1,058)(2,391)(3,190)Loss before income taxes

(92,158)(66,082)(55,593)Provision (benefit) for income taxes

(973)--Net loss

(55,593)COMPREHENSIVE LOSS:  Net loss

(55,593)  Unrealized gain on available-for-sale investments

--3Comprehensive loss

(55,590)NET LOSS PER SHARE:  Basic and diluted


72,776,98161,909,96652,959,064PHARMASSET, INC.BALANCE SHEETS(in thousands, except par value, share and per share amounts)As of September 30,20112010ASSETSCURRENT ASSETS:  Cash and cash equivalents

$ 166,455$ 127,081  Amounts due from collaboration partner

-6  Prepaid expenses and other assets

3,528718Total current assets


4,8114,060  Leasehold improvements

1,8371,8376,6485,897  Less accumulated depreciation and amortization

(4,665)(4,184)Total equipment and leasehold improvements, net

1,9831,713Restricted cash

100100Other assets


$ 172,205$ 129,761LIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT LIABILITIES:  Current portion of long-term debt

8,705  Accounts payable

5,7035,037  Accrued expenses

7,4675,863  Deferred rent

2825  Deferred revenue

633985Total current liabilities

16,30120,615  Deferred rent

9193  Deferred revenue

1,4251,971  Long-term debt, net of discount of $13 and $150 as of
September 30, 2011 and 2010, respectively

1162,934Total liabilities

17,93325,613Commitments and contingenciesSTOCKHOLDERS' EQUITY:  Common stock, $0.001 par value, 100,000,000 shares authorized,
75,556,036 and 68,087,796 shares issued and outstanding at
September 30, 2011 and 2010, respectively

7668  Warrants to purchase 254,496 shares of common stock
for $6.03 per share at September 30, 2010

-1,230  Additional paid-in capital

478,848336,317  Accumulated deficit

(324,652)(233,467)Total stockholders’ equity


$ 172,205$ 129,761

SOURCE Pharmasset, Inc.
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