Filed by ViroLogic, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: ACLARA BioSciences, Inc.
Commission File No. 333-116981
In connection with a proposed merger with ACLARA BioSciences, Inc., ViroLogic, Inc. (“ViroLogic”) filed a registration statement on Form S-4 (File No. 333-116981) with the Securities and Exchange Commission on June 30, 2004, as amended on August 25, 2004. The registration statement includes a joint proxy statement of ACLARA BioSciences, Inc. (“ACLARA”) and ViroLogic for a meeting of ACLARA’s stockholders to consider and vote upon the proposed merger and for a meeting of ViroLogic’s stockholders to consider and vote upon the issuance of shares of ViroLogic in the proposed merger and an amendment to ViroLogic’s certificate of incorporation. The registration statement when finalized and declared effective will also serve as a prospectus of ViroLogic with respect to the shares and contingent value rights of ViroLogic to be distributed to stockholders of ACLARA pursuant to the merger.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS, AS MAY BE AMENDED FROM TIME TO TIME, BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT VIROLOGIC, ACLARA, THE MERGER AND RELATED MATTERS.
Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when it is available) and other documents filed by the companies at the SEC’s web site at http://www.sec.gov.
In addition to the joint proxy statement/prospectus, both ViroLogic and ACLARA file annual, quarterly and special reports, proxy statements, registration statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information filed by ViroLogic or ACLARA at the SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of the SEC’s other public reference rooms in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. ViroLogic’s and ACLARA’s filings with the SEC are also available to the public from commercial document-retrieval services and at the web site maintained by the SEC at http://www.sec.gov.
ViroLogic, ACLARA and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from stockholders of ViroLogic and ACLARA with respect to the transactions contemplated by the merger agreement. A description of any interests that ViroLogic’s or ACLARA’s directors and executive officers have in the proposed merger will be available in the joint proxy statement/prospectus. Information regarding ViroLogic’s officers and directors is included in ViroLogic’s 10-K/A filed with the Securities and Exchange Commission on April 23, 2004. Information regarding ACLARA’s officers and directors is
included in ACLARA’s 10-K/A filed with the Securities and Exchange Commission on April 29, 2004.
Beginning September 20, 2004, ViroLogic may make presentations to investors and others. Attached are the slides that may be used in such presentations:
ViroLogic, Inc.
Making Individualized
Medicine a Reality
Merriman Curhan Ford & Co.
Investor Summit
San Francisco, CA
September 20, 2004
Safe Harbor Statement
During the course of this presentation we will state our beliefs and make projections and other forward-looking statements regarding future events and the future financial performance of both ViroLogic and ACLARA, including statements relating to revenue growth, expectations of testing products and actions designed to continue the growth of patient testing revenue, anticipation of cash resources upon the completion of the merger, the ability of the combined companies to create a leader in molecular diagnostics for personalized medicine in oncology and infectious disease, the size of the oncology testing opportunity and the approval of new targeted therapeutics requiring individual patient testing, and the timing of completion and the likelihood of stockholder approval of the merger. We wish to caution you that such statements are just predictions and subject to risks and uncertainties and other factors that may cause actual events or results to differ materially. These risks and uncertainties include, but are not limited to: risks related to the inability to obtain, or meet conditions imposed for, governmental and other approvals of the merger, including approval by stockholders of the companies; the risk that the ViroLogic and ACLARA businesses will not be integrated successfully; risks related to any uncertainty surrounding the merger, and the costs related to the merger; the risks that the Companies’ products may not perform in the same manner as indicated in this discussion; whether the combined company successfully conducts clinical trials and successfully introduces new products; risks related to the commercialization of ACLARA’s eTag assay system; risks related to the implementation of ViroLogic’s distribution agreement with Quest; whether others introduce competitive products; the risk that the combined company’s products for patient testing may not continue to be accepted or that increased demand from drug development partners may not develop as anticipated; the risk that the combined company may not continue to realize anticipated benefits from its cost-cutting measures; the timing of pharmaceutical company clinical trials; whether payors will authorize reimbursement for its products; whether the FDA or any other agency will decide to regulate the combined company’s products or services; whether the combined company will encounter problems or delays in automating its processes; whether intellectual property underlying the ViroLogic’s PhenoSense technology and ACLARA’s eTag System is adequate; the ultimate validity and enforceability of the companies’ patent applications and patents; the possible infringement of the intellectual property of others and whether licenses to third party technology will be available; and whether the combined company is able to build brand loyalty and expand revenues. We refer you to ViroLogic’s and ACLARA’s publicly filed SEC disclosure documents, including our most recently filed Forms 10-Q, for a detailed description of the risk factors affecting our businesses and other important factors that could cause our actual results to differ materially from our projections and other forward-looking statements.
Other Information
Investors and security holders are advised to read the joint proxy statement/prospectus regarding the proposed merger when it becomes available, because it will contain important information. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus when available and other documents filed by ViroLogic and ACLARA at the Securities and Exchange Commission’s web site at www.sec.gov. The joint proxy statement/prospectus and such other documents may also be obtained, when available, from ViroLogic by directing such request to ViroLogic Investor Relations. The joint proxy statement/prospectus and such other documents may also be obtained, when available, from ACLARA by directing such request to ACLARA Investor Relations. ViroLogic, ACLARA and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from stockholders of ViroLogic and ACLARA with respect to the transactions contemplated by the merger agreement. A description of any interests that ViroLogic’s or ACLARA’s directors and executive officers have in the proposed merger will be available in the joint proxy statement/prospectus. Information regarding ViroLogic officers and directors is included in ViroLogic’s 10-K/A filed with the Securities and Exchange Commission on April 23, 2004. Information regarding ACLARA’s officers and directors is included in ACLARA’s 10-K/A filed with the Securities and Exchange Commission on April 29, 2004. These materials are available free of charge at the Securities and Exchange Commission’s web site at http://www.sec.gov and from ViroLogic and ACLARA.
About ViroLogic
Advancing individualized medicine by developing and marketing innovative products to help guide and improve treatment of viral, oncologic and other serious diseases.
A Leader in Individualized Medicine
HIV Market Leader
Market leader in HIV drug resistance testing
Partner of choice for HIV drug development:
Provided testing for all HIV drugs approved by FDA in the last 5 years
Working with ~50 companies developing new HIV drugs and vaccines
Expansion into Cancer Market
ACLARA’s novel eTag technology expected to open up significant opportunity
Leveraging established commercial infrastructure, experience and pharma relationships
Applying proven business model
Personalized Medicine Benefits All Stakeholders
Critically ill patients
Treat with the most effective drugs sooner
Physicians
Assist in guiding improved patient care
Pharmaceutical companies
Faster/broader acceptance for targeted therapies
More effective drugs with better economics
Payors
Pay for the most effective treatment
Experience & Infrastructure
Proven product development capability Scalable CLIA-licensed lab
40,000+ tests/year
Extensive QA and data reporting
Sales and marketing
Distribution channels: agreements with national labs
25 person direct-to-physician sales org.
Scientific credibility with physicians
Established relationships with pharma companies
Reimbursement—broad national coverage
Comprehensive HIV Product Line
A direct, quantitative measure of drug resistance in an infected patient (list price: $955)
Genotypic testing looks for genetic mutations, or changes, in HIV that may be associated with drug resistance (list price: $495)
A combination of genotypic and phenotypic tests which provides a comprehensive look at resistance (list price: $1,210)
A unique measure of viral fitness offered only by ViroLogic
At Forefront of Evolving Marketplace
Data and Science-driven Market; ViroLogic Cutting Edge -
Evolution of Complex HIV Management Tools
Multiple alternative products
Limited alternative products VLGC technology is only option commercially available
CD4
Viral Load
Genotypic Resistance Testing
Phenotypic Resistance Testing
Combination Resistance Testing
Replication Capacity
Fusion Inhibitor RT*
Tropism*
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
* Research only assay Source: ViroLogic Marketing
Business Model: Multiple Revenue Streams
Serious Viral Diseases
HIV / AIDS
Hepatitis B
Hepatitis C
Patient Therapy:
Guidance for Treating Physicians
Pharma:
Support Drug Discovery and Clinical Trials for Drug Development
Revenue Growth
Millions ($)
Patient testing
Pharma
Grants
35 30 25 20 15 10 5 0 $1.1M $7.5M $18.3M $25.3M $33.4M $14.9M $18.2M
1998 1999 2000 2001 2002 2003 H1’03 H1’04
The Future of HIV Therapy:
Increasingly complex choice of drug therapies –
tests needed to clarify choices
19 drugs approved – 60 more in development
ViroLogic involved with over 80% of drugs in Phase II/III
Stage of Development
HIV Drugs in Development: # drugs Pre-Clin. Ph.I/II Ph.III
Entry/Attachment Inhibitors 22 14 8 -
RT Inhibitors 11 5 6 -
NNRTI 17 12 5 -
Protease Inhibitors 10 5 3 2
Total: 60 36 22 2
Expanding from HIV into Oncology
Leverage
existing
infrastructure Capitalize on
advent of personalized medicine in cancer
Develop new
products for
cancer drug
development &
patient testing
Cancer – Large New Opportunity
Growing Market
1.1M new solid tumor cancer patients annually
700K solid tumors in lung, breast, colon, prostate
5 new targeted drugs
Only work on ~10%-20% of patients
Very expensive
Cancer therapy evolving in similar way to HIV therapy
Multiple drug therapies
Variable individual patient responses
Complexity of disease and treatment options leads to cocktail approach
Need for testing to clarify individual treatment choices
Approved Targeted Cancer Drugs
ALL projected to be ~$1 billion drugs
Drug Pathway
Avastin™ VEGF
Erbitux™ EGFR
Gleevec® BCR-ABL
Herceptin® HER2
Iressa® EGFR
The Challenge for Targeted
Cancer Drugs
Effective on ~10-20% of patients
But we don’t know which 10%-20%
So have to treat all 10 and only help 1 or 2
Good Response
Toxicity and Cost
Value of Prognostic Tests –
Herceptin® Case Study
Phase III Trial Outcome for Herceptin with and without Test
With Test (actual) Without Test (calc)
Patient Number 470 2,200
Response Rate 50% 10%
Yrs Followup 1.6 10
P Value 0.05 0.05
Result Expedited Approval Not Approvable
Source: Genentech
Prognostic Tests – The Challenge
Herceptin – simple protein test increases response rate from ~10% to ~ 50%
Biology is much more complicated
Requires ability to detect protein complexes such as “dimers” not simple proteins
This is expected to be a unique capability of eTag technology
Quantitative measurement of protein complexes central to cancer mechanism and related drug mechanisms
Facilitates patient specific test to predict drug responsiveness
eTag System Potential Advantages
ADVANTAGES eTag™ System BENEFITS
Work with FFPE tissue YES Standard
tumor sample format
Identify simple protein markers YES Ability to measure the drug target
Identify protein complexes YES Key indicators of disease pathways
Scaleable in commercial labs YES 10,000 CE instruments installed
No need for subjective
Quantitative YES interpretation
Functional pathway measurement YES Does not rely on vague statistical relationships
eTag System Potential Advantages
Other protein tests (ELISA, mass spec)
eTag™ System IHC protein tests Gene
amplification Gene arrays
Work with FFPE YES YES NO YES NO
tissue
Identify simple YES YES YES NO NO
protein markers
Identify protein YES NO NO NO NO
complexes
Scaleable in YES YES NO NO COSTLY/COMPLEX
commercial labs
Quantitative YES NO YES YES NO
Functional pathway YES NO NO NO NO
measurement
eTag Assays – Early Clinical Results
Preliminary study on Herceptin response
Received 13 blinded breast tumor samples (DAKO +++)
eTag correctly predicted response for all patients:
Identified all non-responders (4/4 = 100%)
Identified all responders (9/9 = 100%)
Further stratified responders into stable disease vs. complete/partial response categories, with 8/9 correct
Next steps: expanded study to be conducted
eTag Assays Measure Key Drug Targets
C-kit EGFR Family VEGF-R PDGF-R
ISIS 3521 CGP41251 Bryostatin-1 UCN-01 LY333531
Gleevec SU11248
CCI-779 RAD001
ISIS 2503 R115777 SCH66336 BMS214662
ISIS 5132 L-779,450 BAY 43-9006
Herceptin 2C4 MDX-210
IMC-C225 ABX-EGF ZD1839/Iressa OSI-744/Tarceva MDX-447 EMD 72000 GW2016 CI-1033 EKB-569 RH3
SU5416 SU11248 PTK787 PD173074 SU6668 ZD6474 ZD4190 CP564959 GW2286
Avastin IMC-1C11 DC101
Gleevec SU11248
PKC
PLCg
c-Cbl
Src
* FAK
* Stat1,3,5
Shc
Grb2
Sos
Ras
Raf
MEKK1
MKK3/6 MKK4/7 MEK1/2
* P38a/b * JNK1/2 * Erk1/2
PI3K
PIP3
PDK1
UCN-01 mTOR
* PKB/Akt p70S6K
Cyclin D
Caspase9
BAD
PD 184352 U-0126
Rsk
BAD
Cell Death
Cell Growth (Cancer)
Market Opportunity
Test panel for EGFR receptor pathways
1.1M new solid tumor patients per year
Est. available market = $500M to $1B per year for 1 panel
Additional panels for VEGFR, PDGFR, IGFR Additional opportunities
Specific cancer/drug combinations
FDA approved kits for specific drugs
Product Plan
First product: Test panel for EGFR pathway
Herceptin, Erbitux, Iressa, Tarceva
Assays currently in use in drug development
Obtain clinical outcome data
CLIA patient testing format under development
Future products: VEGFR, IGFR, PDGFR test panels
Multiple Potential Revenue Streams
Viral Diseases Oncology Other Diseases
Patient Therapy Guidance
Pharma Collaborations
Combined Company Financial Profile
$75M in cash resources after merger transaction and integration costs
Revenue: ~ $40M annually *
P&L:
HIV business running close to breakeven
Cancer business adds significant revenue opportunity
Merger synergies being realized – elimination of duplicate G&A costs and consolidation of facilities
Resources deployed to product development
* Based on Q2 2004 ACLARA and ViroLogic results
Partner of Choice
Experienced Management
Bill Young Chairman and CEO Mike Bates VP, Clinical Research Tien Bui VP, Sales & Marketing
Mike Dunn CBO (*)
Kathy Hibbs General Counsel
Ken Hitchner VP, Pharma Collaborations
Alfred CFO (*) Merriweather
Chris Petropoulos, VP R&D and CSO,
Ph.D. Virology
Sharat Singh, CTO, Oncology (*) Ph.D.
Jeannette Whitcomb, Ph.D. VP, Operations
(*) Effective on closing of merger
ViroLogic/ACLARA Merger Terms
Each share of ACLARA (ACLA) =
1.7 shares of ViroLogic (VLGC) + 1.7 contingent value rights (CVR)
Each CVR =
$0.00-$0.50 cash/CVR 12 months after closing based on VLGC share price
VLGC Share Price: $2.40 CVR Value: $0.50 $2.90 $0.00
Anticipated Closing: Q4 ‘04
Capitalization post merger: ~ 115m shares outstanding
ViroLogic/ACLARA –A Compelling Combination
ViroLogic:
Leader in infectious disease testing Commercial/operational experience & infrastructure Growing revenues Pharma relationships
ACLARA:
Proprietary eTag™ Assay System: next generation cancer diagnostics platform Financial strength
Expanded Market Opportunity:
New cases/year HIV: 40K
Cancer: >1M
Milestones
HIV
Growth in high value combination products Expanded trials for new drugs in development Replication capacity clinical trial results New tests
Tropism, Replication Capacity, Screening/Monitoring assays International expansion
Leading presence at scientific conferences
Oncology
CLIA validation of eTag assays Definition of EGFR test panel Clinical validation of EGFR panel Pharmaceutical collaborations
Technical evaluations
Trials for new drugs in development
Opinion leader publications and presentations at scientific meetings
Leader in Personalized Medicine
VLGC Successful patient & pharma business in HIV
HIV Combination Drugs
ACLA Enabling new assay technology & financial strength
Targeted Cancer Therapies
ViroLogic, Inc.
Making Individualized Medicine a Reality
Merriman Curhan Ford & Co.
Investor Summit San Francisco, CA September 20, 2004