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Pharmasset Reports Fiscal Year End 2008 Financial Results

PRINCETON, N.J., Dec. 11 /PRNewswire-FirstCall/ -- Pharmasset, Inc. (Nasdaq: VRUS), a clinical stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections, reported financial results for the fiscal year ended September 30, 2008. At September 30, 2008, Pharmasset held $63.6 million in cash and cash equivalents and short term investments.

Pipeline Update and 2008 Highlights


During 2008, new data from multiple investigator sponsored studies supported the potential of clevudine to treat hepatitis B (HBV), including its use in lamivudine resistant patients. Data from one study suggested that clevudine is as effective as entecavir (Baraclude(R)) and that it can be effectively used in combination with adefovir (Hepsera(R)). Management believes the unique attributes of clevudine will help to differentiate it in the marketplace, including its potential to achieve a sustained virological response (SVR) in patients after a defined treatment period.

In July of 2008, the French National Agency for Research on AIDS and Viral Hepatitis initiated a study to compare treatment with clevudine or tenofovir with a combination of the two. In this study patients will be treated for two years, 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 that impacted the start up in certain countries, the company expects to complete enrollment at the end of the first calendar quarter of 2009.


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

Results from the 28 day study were presented at the recent American Association for the Study of Liver Diseases (AASLD) that demonstrated that R7128 combined with the standard of care (pegylated interferon and ribavirin) provided significant short-term antiviral activity with safety and tolerability comparable to the standard of care alone. Results from the 500mg BID, 1000mg BID, 1500mg BID dose cohorts in 81 treatment-naive patients chronically 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), respectively compared to 19% (3 of 16) in the control group. Further results in genotype 2 and 3, non responder patients treated with 1500mg BID generated RVR rate of 90% (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 was similar to the standard of care alone.

Based on these results and other data, Pharmasset's partner, Roche, plans to move R7128 into a phase 2b trial in HCV-1 infected patients in the first calendar quarter of 2009. Pharmasset has submitted the necessary briefing documents to the FDA and both Roche and Pharmasset plan to meet with the agency in early January to review the preclinical and clinical data and to discuss 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 a combination of two oral antiviral molecules in the absence of interferon. The study began in November 2008, and will investigate the combination of Pharmasset's R7128 with InterMune's R7227, a protease inhibitor. The first cohort of patients has been enrolled and preliminary results from this study are expected in first calendar half of 2009.


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

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

Financial Results

For the fiscal year ended September 30, 2008 Pharmasset reported revenues of $1.9 million, compared with revenues of $22.0 million for the fiscal year 2007. The receipt of milestones totaling $20 million from Roche led to higher reported 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. The increased operating expenses for fiscal year 2008 were primarily the result of an increase in Phase 3 registration clinical trial expenses for clevudine for the treatment of chronic HBV infection, as well as increased drug discovery activities 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 to lower 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 to common stockholders of $6.8 million, or $0.46 per share for the same period in 2007.

    Calendar Year 2009 Anticipated Milestones

    -- Meet with FDA in January 2009 to discuss phase 2b and future trials of
    -- 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

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 oral treatment for chronic HCV infection, has completed a 4-week clinical trial in combination with Pegasys(R) plus 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. Pharmasset also anticipates filing an IND for its second generation nucleotide inhibitor for HCV, PSI-7851 in the first quarter of 2009. Pegasys(R) and Copegus(R) are registered trademarks of Roche.

    Richard E. T. Smith, Ph.D.
    VP, Investor Relations and Corporate Communications
    Office: +1 (609) 613-4181

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 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 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, 2008 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.

                                             Years Ended September 30,
                                           2008        2007          2006

          REVENUES                      $1,857,166  $22,009,458    $5,424,614

            Research and development    42,995,459   20,318,910    10,497,703
            General and
             administrative             13,289,321    9,210,623     7,911,545

                     Total costs and
                      expenses          56,284,780   29,529,533    18,409,248

          OPERATING LOSS               (54,427,614)  (7,520,075)  (12,984,634)

          INVESTMENT INCOME              1,986,276    2,470,563     1,658,977
          INTEREST EXPENSE              (2,216,373)     (15,136)          -

          LOSS BEFORE INCOME TAXES     (54,657,711)  (5,064,648)  (11,325,657)
          PROVISION FOR INCOME TAXES           -            -             -

          NET LOSS                     (54,657,711)  (5,064,648)  (11,325,657)
           ACCRETION                           -      1,775,684     1,110,973

           COMMON STOCKHOLDERS        $(54,657,711) $(6,840,332) $(12,436,630)

          NET LOSS                    $(54,657,711) $(5,064,648) $(11,325,657)
           INVESTMENTS                      (7,009)       2,100       (56,465)
          COMPREHENSIVE NET LOSS      $(54,664,720) $(5,062,548) $(11,382,122)

            BASIC                           $(2.51)      $(0.46)       $(1.19)
            DILUTED                         $(2.51)      $(0.46)       $(1.19)

            BASIC                       21,808,283   14,990,472    10,462,369
             DILUTED                    21,808,283   14,990,472    10,462,369

                               PHARMASSET, INC.
                                BALANCE SHEETS

                                                      As of September 30,
                                                    2008              2007
           Cash and cash equivalents            $63,073,103       $68,745,694
           Short-term investments                   497,310         1,252,113
           Amounts due under
            collaborative agreements              1,169,690           919,110
           Prepaid expenses and other
            assets                                1,008,083           783,311
                    Total current assets         65,748,186        71,700,228

           Laboratory, office furniture
            and equipment                         3,362,846         2,462,647
           Leasehold improvements                 1,836,553         1,836,553
                                                  5,199,399         4,299,200
           Less accumulated depreciation
            and amortization                     (2,432,325)       (1,437,080)
                    Total equipment and
                     improvements, net            2,767,074         2,862,120
         OTHER ASSETS                               466,809         1,282,051
         TOTAL                                  $68,982,069       $75,844,399

           Current portion of long-term
            debt                                 $2,651,592              $-
           Current portion of capital
            lease obligation                         41,641           159,440
           Accounts payable                       2,466,052         3,281,600
           Accrued expenses                       6,182,417         5,513,407
           Deferred rent                            124,463           124,462
           Deferred revenue                       1,857,136         1,857,136
                    Total current
                     liabilities                 13,323,301        10,936,045

         DEFERRED RENT                               79,793           204,256
          LEASE OBLIGATION                              -              41,641
         DEFERRED REVENUE                         3,868,965         5,726,131
         LONG-TERM DEBT, net                     16,522,665               -
                    Total liabilities            33,794,724        16,908,073

         Common Stock, $0.001 par value,
          100,000,000 shares authorized,
          23,340,498 and 21,232,991
          shares issued and outstanding
          at September 30, 2008, and
          September 30, 2007,
          respectively                               23,340            21,233
         Warrants to purchase 116,183
          shares of common stock for
          $12.05 per share, with 66,390
          exercisable starting September
          30, 2007, and 49,793 shares
          exercisable starting March 28,
          2008                                    1,140,114           526,720
         Additional paid-in capital             145,818,439       115,518,201
         Accumulated other comprehensive
          (loss) income                              (2,604)            4,405
         Accumulated deficit                   (111,791,944)      (57,134,233)
                    Total stockholders'
                     equity                      35,187,345        58,936,326
         TOTAL                                  $68,982,069       $75,844,399

SOURCE Pharmasset, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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