[VIROLOGIC LOGO] EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT:
AUGUST 5, 2003 Karen Wilson, CFO
(650) 624-4164
kwilson@virologic.com
VIROLOGIC ANNOUNCES SECOND QUARTER 2003
FINANCIAL RESULTS
-- Company Reports Increased Revenue, Improved Gross Margin and Lower
Net Loss Versus Second Quarter of 2002 --
SOUTH SAN FRANCISCO, CALIF., August 5, 2003 -- ViroLogic, Inc. (NASDAQ: VLGC)
today reported financial results for the second quarter and six months ended
June 30, 2003.
The Company reported revenue of $8.0 million for the second quarter of 2003, an
increase of 19 percent over revenue of $6.7 million for the second quarter of
2002. The growth was primarily attributed to enhanced sales of the Company's
patient testing products, which rose to $6.1 million in the second quarter of
2003 from $4.7 million in the second quarter of 2002, an increase of 31 percent.
Gross margin on product revenue was 45 percent in the second quarter of 2003
compared to 42 percent reported during the same quarter last year. Operating
costs and expenses for the second quarter of 2003 were $10.2 million, compared
to $12.2 million for the same period in 2002. This decrease was the result of
ongoing operational improvements and economies of scale, and was partially
offset by higher costs associated with increased testing volume.
Net loss for the second quarter of 2003 was $2.2 million, or $0.07 per common
share, compared to a net loss of $5.5 million, or $0.22 per common share, for
the same period in 2002.
In the second quarter of 2003, the Company recorded stock dividends to preferred
stockholders of $0.5 million, resulting in net loss applicable to common
stockholders of $0.09 per common share. In the second quarter of 2002, the
Company recorded stock dividends to preferred stockholders of $0.3 million,
resulting in net loss applicable to common stockholders of $0.24 per common
share.
SIX MONTH RESULTS
The Company reported revenue of $14.9 million for the first half of 2003, an
increase of 21 percent over revenue of $12.4 million for the same period of
2002. Operating costs and expenses for the first half of 2003 were $19.7
million, compared to $24.2 million for the same period of 2002. This decrease
was the result of ongoing operational improvements and economies of scale, and
was partially offset by higher costs associated with increasing testing volume.
Net loss for the first half of 2003 was $4.7 million, or $0.16 per common share,
compared to a net loss of $11.6 million, or $0.51 per common share, for the same
period in 2002.
In the first half of 2003, the Company recorded a non-cash deemed dividend to
preferred stockholders of $2.2 million resulting from a warrant exchange
approved by the Company's stockholders on February 4, 2003 relating to the sale
of Series C convertible preferred stock, and recorded stock dividends to
preferred stockholders of $1.0 million, resulting in net loss applicable to
common stockholders of $0.27 per common share. In the first half of 2002, the
Company recorded a non-cash deemed dividend to preferred stockholders of $2.9
million from the sale of Series B convertible preferred stock, and recorded
stock dividends to preferred stockholders of $0.5 million, resulting in net loss
applicable to common stockholders of $0.65 per common share. The Company had
$9.1 million of cash, restricted cash and short-term investments at June 30,
2003.
"We believe steady growth of our patient testing business combined with
disciplined expense management will keep us on track to achieve our 2003
guidance," said Bill Young, CEO and Chairman of ViroLogic. "Patient testing
growth is largely driven by increasing recognition of the importance and value
of HIV drug resistance testing. Recently published guidelines emphasize a
broadening of the applicability of resistance testing and, for the first time,
specifically discuss replication capacity measurement, which is commercially
available only from ViroLogic's assays. In addition, we remain on the cutting
edge by developing new technology through grants that validate our leadership
role in drug resistance and provide a non-dilutive means to fund our ongoing
research and development efforts."
RECENT ACHIEVEMENTS AND UPCOMING EVENTS
- - ViroLogic and collaborators presented seven studies at the 2nd
International AIDS Society Conference on HIV Pathogenesis and Treatment in
Paris, including a
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pioneering study demonstrating the utility of ViroLogic's Replication
Capacity assay as a predictor of clinical progression to AIDS;
- - ViroLogic received three Small Business Innovation Research (SBIR) grants
from the National Institute of Allergy and Infectious Diseases (NIAID), a
division of the U.S. National Institutes of Health, for more than $3
million over three years. The grants will be used to develop analytical
and database tools to facilitate the identification of drug resistant HIV
strains and to aid in the development of the next generation of anti-viral
therapeutics;
- - ViroLogic researchers and collaborators presented 13 studies at the 12th
International HIV Drug Resistance Workshop held in June in Cabo San Lucas,
Mexico, which demonstrated the wide applicability of ViroLogic's drug
resistance testing technology in the treatment of HIV;
- - Paper published in the April issue of the journal AIDS reported the first
multi-year study to demonstrate that phenotypic (i.e., PhenoSense(TM) HIV)
drug susceptibility testing is correlated with sustained long-term
virological outcomes; and
- - ViroLogic researchers and collaborators are scheduled to present numerous
studies using the Company's technology at the 43rd ICAAC, September 14-17,
in Chicago and at the AIDS Vaccine 2003 conference in New York, September
18-21.
CONFERENCE CALL DETAILS
ViroLogic will hold a conference call today at 5:00 p.m. EDT to discuss second
quarter 2003 earnings results. The call will be hosted by Mr. Bill Young,
Chairman & CEO of ViroLogic, Inc. To participate in the teleconference, please
call 800-884-5695 fifteen minutes before the conference begins and ask to be
connected to the ViroLogic teleconference. International callers please dial
617-786-2960. The call will also be webcast live at
http://www.virologic.com/webcast.html. 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 that lead to
better patient outcomes and reduced costs. ViroLogic's technology is also being
used by numerous biopharmaceutical companies to develop new and improved
anti-viral therapeutics and vaccines targeted at emerging drug-resistant
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viruses. More information about the Company and its technology can be found on
its web site at www.virologic.com.
Certain statements in this press release are forward-looking, including
statements relating to anticipated growth in sales of testing products and
ongoing benefits from cost reduction measures, expectations regarding 2003
guidance, the development of new technology, the receipt of non-dilutive grants,
projected cash flow positive operations, continued acceptance of the Company's
products for patient testing and increasing demand from vaccine and drug
development partners. 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 the 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 ViroLogic may not continue to
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,
whether the Company is able to maintain compliance with NASDAQ listing
requirements, 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 ViroLogic's products or services, whether
the Company will encounter 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 licenses to third party technology
will be available, 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.
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VIROLOGIC, INC.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
(Unaudited) (Unaudited)
STATEMENT OF OPERATIONS DATA:
Revenue:
Product revenue $ 7,786 $ 6,430 $ 14,337 $ 11,923
Contract revenue (a) 167 227 584 442
-------- -------- -------- --------
Total revenue $ 7,953 $ 6,657 $ 14,921 $ 12,365
Operating costs and expenses:
Cost of product revenue 4,268 3,761 8,087 7,186
Research and development 1,089 2,862 2,435 5,817
General and administrative 2,375 2,638 4,841 5,382
Sales and marketing 2,469 2,976 4,311 5,848
-------- -------- -------- --------
Total operating costs and expenses 10,201 12,237 19,674 24,233
-------- -------- -------- --------
Operating loss (2,248) (5,580) (4,753) (11,868)
Interest income 26 92 63 198
Interest expense (36) (80) (88) (171)
Other income 52 108 104 243
-------- -------- -------- --------
Net loss (2,206) (5,460) (4,674) (11,598)
Deemed dividend to preferred stockholders -- -- (2,155) (2,860)
Preferred stock dividend (506) (258) (973) (466)
-------- -------- -------- --------
Net loss applicable to common stockholders $ (2,712) $ (5,718) $ (7,802) $(14,924)
======== ======== ======== ========
BASIC AND DILUTED AMOUNTS
PER COMMON SHARE:
Net loss $ (0.07) $ (0.22) $ (0.16) $ (0.51)
Dividends to preferred stockholders (0.02) (0.02) (0.11) (0.14)
-------- -------- -------- --------
Net loss applicable to common stockholders $ (0.09) $ (0.24) $ (0.27) $ (0.65)
======== ======== ======== ========
Weighted average shares used in computing
basic and diluted net loss per common share 29,643 24,289 29,001 22,815
June 30, December 31,
2003 2002 (b)
------- --------
(Unaudited)
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments $ 8,352 $ 11,145
Accounts receivable, net 4,390 4,924
Working capital 9,034 (239)
Restricted cash 776 707
Total assets 25,992 30,486
Long term obligations, less current portion 249 419
Redeemable convertible preferred stock 4,249 4,249
Total stockholders' equity $15,202 $ 7,014
(a) Contract revenue consists of NIH grant, commercial development and other
revenue. The costs associated with contract revenue for the three and six
months ended June 30, 2003 totaled $145,000 and $335,000, respectively,
compared to $227,000 and $442,000, respectively, for the corresponding
periods in 2002, and are included in research and development expenses.
(b) The balance sheet data is derived from audited financial statements for
the year ended December 31, 2002, included in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
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