EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT:
FEBRUARY 13, 2003 Karen Wilson, CFO
(650) 624-4164
kwilson@virologic.com
VIROLOGIC ANNOUNCES FOURTH QUARTER AND FULL YEAR
2002 FINANCIAL RESULTS
- Company reports 38% annual revenue growth and improved gross margin -
SOUTH SAN FRANCISCO, CALIF., February 13, 2003 -- ViroLogic, Inc. (NASDAQ: VLGC)
today reported financial results for the fourth quarter and year ended December
31, 2002.
The Company reported revenue of $7.0 million for the fourth quarter of 2002, a
16 percent increase over revenue of $6.0 million for the same period in 2001.
Revenue for the full year 2002 was $25.3 million compared to $18.3 million in
2001, an increase of 38 percent. This increase is largely due to the steady
performance of the Company's patient testing business, which grew nearly 50
percent in 2002.
FOURTH QUARTER 2002 FINANCIAL RESULTS
Gross margin improved to 43 percent in the fourth quarter of 2002 compared to 38
percent during the fourth quarter of 2001. Operating costs and expenses for the
fourth quarter of 2002 were $11.5 million, compared to $12.9 million for the
same period in 2001. This decrease primarily reflects reductions in compensation
and other expenses resulting from the Company's business restructuring and
workforce reduction in November 2002, and is partially offset by higher costs
associated with increased testing volume. In the fourth quarter of 2002, the
Company also recorded a charge of approximately $0.3 million related to the
workforce reduction.
Net loss was $4.6 million, or $0.17 per share, for the fourth quarter of 2002,
compared to a net loss of $6.7 million, or $0.33 per share, for the same period
in 2001. In the fourth quarter of 2002, the Company recorded a deemed dividend
to preferred stockholders of $7.7 million related to the issuance of Series C
Convertible Preferred Stock, and recorded a preferred stock dividend of $0.3
million, resulting in a net loss applicable to common stockholders of $0.48 per
share. During the fourth quarter of 2001, the Company recorded a preferred stock
dividend of $0.2 million resulting in a net loss applicable to common
stockholders of $0.34 per share.
The Company lowered its cash burn from approximately $6 million per quarter
historically to approximately $4.5 million in the fourth quarter of 2002.
2002 FINANCIAL RESULTS
Gross margin for 2002 improved to 41 percent, compared to 34 percent for 2001.
Operating costs and expenses for 2002 were $47.3 million, compared to $45.3
million for 2001. Net loss for the year was $21.8 million, or $0.90 per share,
compared to a net loss of $26.2 million, or $1.30 per share for 2001.
During 2002, the Company recorded a deemed dividend to preferred stockholders of
$10.6 million from the issuance of the Series B and Series C Convertible
Preferred Stock, and recorded dividends to preferred stockholders of $1.0
million, resulting in a net loss applicable to common stockholders of $1.38 per
common share. In 2001, the Company recorded a deemed dividend to preferred
stockholders of $2.3 million from the issuance of Series A Convertible Preferred
Stock and recorded dividends to preferred stockholders of $0.3 million,
resulting in a net loss applicable to common stockholders of $1.43 per common
share.
The Company had $11.9 million of cash, restricted cash and short-term
investments as of December 31, 2002.
RECENT HIGHLIGHTS
- Raised $10 million in cash, including an equity investment
from Pfizer Inc.;
- Florida Medicaid Program initiated benefit coverage policy for
phenotypic and genotypic HIV drug resistance testing, bringing
the number of state Medicaid programs that have coverage
policies enabling reimbursement of ViroLogic's HIV drug
resistance assays to 47 out of 50;
- 20 presentations related to ViroLogic's drug resistance tests,
including those characterizing replication capacity and
phenotypic and genotypic resistance to anti-HIV drugs,
presented at the 10th Conference on Retroviruses and
Opportunistic Infections this week in Boston;
- On February 4, 2003, ViroLogic's stockholders ratified the
Series C Convertible Preferred Stock private placement.
2003 BUSINESS OUTLOOK
ViroLogic estimates revenues to be $32 to $36 million in 2003, which
approximates the revenue growth rate realized in 2002. This increase is based on
the anticipated continued acceptance of
the Company's products for patient testing and increasing demand from drug
development partners and growth in this business. The Company anticipates
quarterly differences in the revenue growth rate due to timing of various
clinical studies and the seasonal effects observed in patient testing, which is
most noticeable in the first and third quarters.
ViroLogic expects gross margin to improve to over 45 percent by
the fourth quarter of 2003. The Company also expects to become cash flow
positive based on achieving a quarterly revenue run rate of $10 to $11 million
in combination with anticipated cost management measures.
"We have successfully streamlined our business to focus on revenue-maximizing
activities," said Bill Young, CEO and Chairman of ViroLogic. "We expect revenue
increases in 2003 to come from continued utilization of and demand for
PhenoSense(TM) GT, our combination assay, driven in part by our novel
replication capacity measurement offered with all of our phenotypic assays. In
addition, our business with drug development partners should improve in 2003 as
compared to 2002 with multiple late-stage HIV drug clinical trials many of which
are under contract. We will also be offering analyses from our proprietary HIV
drug resistance database to drug development customers, which should provide
another source of revenue."
CONFERENCE CALL DETAILS
ViroLogic will hold a conference call today, at 5:00 p.m. EST. To participate in
the teleconference please call 800/299-9630 fifteen minutes before the
conference begins and ask to be connected to the ViroLogic teleconference.
International callers please dial 617/786-2904. The call will also be webcast
live at www.virologic.com. Please see web site for details.
ABOUT VIROLOGIC
ViroLogic is a biotechnology company advancing individualized medicine by
discovering, developing and marketing innovative products to guide and improve
treatment of serious viral diseases such as AIDS and hepatitis. The Company's
products are designed to help doctors optimize treatment regimens for their
patients that lead to better outcomes and reduced costs. The Company's
technology is also being used by numerous biopharmaceutical companies to develop
new and improved antiviral therapeutics and vaccines targeted at emerging
drug-resistant viruses.
Certain statements in this press release are forward-looking, including
statements relating to expected revenue increases and improvement in gross
margin, continued acceptance of the Company's products for patient testing,
increasing demand from drug development partners
and anticipated utilization of the Company's HIV drug resistance database. These
forward-looking statements are subject to risks and uncertainties and other
factors, which may cause actual results to differ materially from the
anticipated results or other expectations expressed in such forward-looking
statements. These risks and uncertainties include, but are not limited to, the
risk that our 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 expected utilization of our HIV drug resistance
database may not materialize, the risk that ViroLogic may not realize
anticipated benefits from its cost-cutting measures, the risk that preliminary
investigations initiated by governmental agencies may continue for a prolonged
period and may not be concluded in the manner expected by ViroLogic, the timing
of pharmaceutical company clinical trials, whether payors will authorize
reimbursement for its products, whether the Company will be able to expand its
sales and marketing capabilities, whether the FDA or any other agency will
decide to regulate ViroLogic's products or services, whether the Company
encounters problems or delays in automating its processes, whether ViroLogic
successfully introduces new products, whether others introduce competitive
products, whether intellectual property underlying the Company's PhenoSense
technology is adequate, whether ViroLogic is able to build brand loyalty and
expand revenues, and whether ViroLogic will be able to raise sufficient capital
when required. For a discussion of other factors that may cause ViroLogic's
actual events to differ from those projected, please refer to the Company's most
recent annual report on Form 10-K and quarterly reports on Form 10-Q, as well as
other subsequent filings with the Securities and Exchange Commission.
VIROLOGIC, INC.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
-------- -------- -------- --------
(Unaudited) (Unaudited)(b)
STATEMENT OF OPERATIONS DATA:
Revenue (a) $ 6,969 $ 6,013 $ 25,261 $ 18,273
-------- -------- -------- --------
Operating costs and expenses:
Cost of product revenue 3,940 3,673 14,589 11,845
Research and development 2,120 2,943 10,406 11,693
General and administrative:
Non-cash stock-based compensation expense 214 488 886 1,706
Other general and administrative expenses 2,675 2,465 9,664 9,670
Sales and marketing 2,535 3,310 11,716 10,336
-------- -------- -------- --------
Total operating costs and expenses 11,484 12,879 47,261 45,250
-------- -------- -------- --------
Operating loss (4,515) (6,866) (22,000) (26,977)
Interest income 55 163 307 1,143
Interest expense (177) (143) (423) (466)
Other income 52 106 347 106
-------- -------- -------- --------
Net loss (4,585) (6,740) (21,769) (26,194)
Deemed dividend to preferred stockholders (7,691) -- (10,551) (2,269)
Preferred stock dividend (262) (231) (977) (334)
-------- -------- -------- --------
Net loss applicable to common stockholders $(12,538) $ (6,971) $(33,297) $(28,797)
======== ======== ======== ========
BASIC AND DILUTED AMOUNTS PER COMMON SHARE:
Net loss $ (0.17) $ (0.33) $ (0.90) $ (1.30)
Dividends to preferred stockholders (0.31) (0.01) (0.48) (0.13)
-------- -------- -------- --------
Net loss applicable to common stockholders $ (0.48) $ (0.34) $ (1.38) $ (1.43)
======== ======== ======== ========
Weighted average shares used in computing
basic and diluted net loss per common share 26,259 20,421 24,157 20,072
December 31, December 31,
2002 2001 (b)
-------- --------
(Unaudited)
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments $ 11,145 $ 8,962
Accounts receivable, net 4,924 4,562
Working capital (c) (239) 7,508
Restricted cash 707 1,000
Total assets 30,486 37,851
Long term obligations, less current portion 419 2,490
Redeemable convertible preferred stock 4,249 11,228
Total stockholders' equity (c) $ 7,014 $ 13,471
(a) Revenue for the three and twelve month periods ended December 31, 2002
includes $34,000 and $731,000, respectively, from NIH grants. Revenue for
the three and twelve month periods ended December 31, 2001 includes
$120,000 and $458,000, respectively, from NIH grants. The costs associated
with these NIH grants are included in research and development expenses.
(b) The balance sheet and statement of operations data is derived from audited
financial statements for the year ended December 31, 2001, included in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
(c) At December 31, 2002, short-term liabilities include $12 million of Series
C Convertible Secured Promissory Notes. On February 4, 2003, ViroLogic's
stockholders ratified the Series C Private Placement resulting in the
conversion of the Notes into stockholders' equity.