EXHIBIT 99.1
[VIRO LOGIC LOGO]
FOR IMMEDIATE RELEASE CONTACT:
NOVEMBER 4, 2003 Karen Wilson, CFO
(650) 624-4164
kwilson@virologic.com
VIROLOGIC ANNOUNCES THIRD QUARTER 2003
FINANCIAL RESULTS
- -- Company Reports Third Quarter Revenue of $9.1 million, an Increase of Over 50
Percent over Third Quarter of 2002 --
SOUTH SAN FRANCISCO, CALIF., November 4, 2003 -- ViroLogic, Inc. (NASDAQ: VLGC)
today reported financial results for the third quarter and nine months ended
September 30, 2003.
The Company reported revenue of $9.1 million for the third quarter of 2003, an
increase of 54 percent over revenue of $5.9 million for the third quarter of
2002. The growth was attributed to continuing steady performance of the
Company's patient testing products, which rose to $6.2 million in the third
quarter of 2003 from $4.6 million in the third quarter of 2002, an increase of
35 percent. The growth was further enhanced this quarter by increases in
pharmaceutical drug development and NIH grant revenues.
Gross margin was 50 percent in the third quarter of 2003 compared to 39 percent
reported during the same quarter last year. Operating costs and expenses for the
third quarter of 2003 were $9.6 million, compared to $11.5 million for the same
period in 2002. The decrease in operating costs and expenses was the result of a
company-wide focus to increase efficiencies and achieve improved economies of
scale, partially offset by higher costs associated with increasing testing
volume. Gross margin improvement was also driven by an increased contribution
from pharmaceutical revenue during the third quarter.
Net loss for the third quarter of 2003 was $0.4 million, or $0.01 per common
share, compared to a net loss of $5.6 million, or $0.23 per common share, for
the same period in 2002.
In the third quarter of 2003, the Company recorded stock dividends to preferred
stockholders of $0.4 million, resulting in net loss applicable to common
stockholders of $0.02 per common share. In the third quarter of 2002, the
Company recorded stock dividends to preferred
stockholders of $0.2 million, resulting in net loss applicable to common
stockholders of $0.24 per common share.
NINE MONTH RESULTS
The Company reported revenue of $24.0 million for the first nine months of 2003,
an increase of 31 percent over revenue of $18.3 million for the same period of
2002. Operating costs and expenses for the first nine months of 2003 were $29.3
million, compared to $35.8 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 nine months of 2003 was $5.1 million, or $0.17 per common
share, compared to a net loss of $17.2 million, or $0.74 per common share, for
the same period in 2002.
In the first nine months 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 $1.4 million, resulting in net loss applicable to
common stockholders of $0.28 per common share. In the first nine months 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 $0.7 million, resulting in net loss
applicable to common stockholders of $0.89 per common share.
The Company had $9.1 million of cash, restricted cash and short-term investments
at September 30, 2003.
"We believe we are on track to achieve near the middle of our projected $32 to
$36 million revenue range for 2003," said Bill Young, Chairman and CEO of
ViroLogic. "We continue to focus our efforts on revenue generating activities in
our patient testing and pharmaceutical drug development businesses. At the same
time, our pragmatic expense management has led to a significantly reduced net
loss and, combined with growing revenues, increased gross margin. This should
enable us to generate cash from operating activities at a quarterly revenue run
rate of approximately $10 to $11 million. While we will be providing full year
2004 guidance on our fourth
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quarter and year end conference call in February 2004, preliminarily we expect
annual revenue growth that is consistent with levels we have achieved over the
last two years. On the expense side, we plan to leverage the efficiencies of our
existing infrastructure and scale operations to further grow our business, and
build sustainable long-term profitability."
RECENT ACHIEVEMENTS
- ViroLogic was ranked number 19 on the 2003 Deloitte Technology Fast
500, a list of the 500 fastest growing technology companies in North
America, based on revenue growth for the years 1998 - 2002.
- ViroLogic was awarded a grant from the National Institute of Allergy
and Infectious Diseases (NIAID), a division of the U.S. National
Institutes of Health, to develop a Hepatitis C virus (HCV) drug
susceptibility assay. This grant award follows three previously
announced NIH grants to ViroLogic and brings the total grant awards
announced this quarter to more than $4 million to be funded over
three years.
- ViroLogic announced the publication of updated guidelines from the
International AIDS Society USA (IAS-USA) and the U.S. Department of
Health and Human Services (DHHS) further supporting the value and
importance of resistance testing as a means to improve virologic
outcome among HIV infected individuals.
- ViroLogic researchers and collaborators presented four studies using
the Company's technology at the 43rd ICAAC in September, including a
presentation by Dr. Eric S. Daar, M.D., Director, Division of HIV
Medicine, Harbor-UCLA Research and Education Institute and Associate
Professor of Medicine, David Geffen School of Medicine at UCLA, Los
Angeles, which outlined the statistical analysis of data
demonstrating the utility of HIV Co-Receptor Tropism and Replication
Capacity, a gauge of "viral fitness," as predictors of clinical
progression to AIDS.
- ViroLogic promoted Ken Hitchner to the position of Vice President,
Pharmaceutical Collaborations.
CONFERENCE CALL DETAILS
ViroLogic will hold a conference call today at 5:00 p.m. ET to discuss third
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 800-299-8538 fifteen minutes before the conference begins and ask to be
connected to the ViroLogic teleconference. International callers please dial
617-786-2902. The call will also be webcast live at
http://www.virologic.com/webcast.html. Please see web site for details.
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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
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 and
2004 guidance, the development of new technology, the receipt of non-dilutive
grants, projected operating results, continued acceptance of the Company's
products for patient testing and increasing demand from vaccine and drug
development partners. 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 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 Nine months ended
September 30, September 30,
2003 2002 2003 2002
-------- -------- -------- --------
(Unaudited) (Unaudited)
STATEMENT OF OPERATIONS DATA:
Revenue (a) $ 9,125 $ 5,927 $ 24,046 $ 18,292
-------- -------- -------- --------
Operating costs and expenses:
Cost of product revenue 4,403 3,463 12,490 10,649
Research and development 1,090 2,469 3,525 8,286
General and administrative 2,113 2,279 6,954 7,661
Sales and marketing 1,990 3,333 6,301 9,181
-------- -------- -------- --------
Total operating costs and expenses 9,596 11,544 29,270 35,777
-------- -------- -------- --------
Operating loss (471) (5,617) (5,224) (17,485)
Interest income 22 54 85 252
Interest expense (32) (75) (120) (246)
Other income 52 52 156 295
-------- -------- -------- --------
Net loss (429) (5,586) (5,103) (17,184)
Deemed dividend to preferred stockholders -- -- (2,155) (2,860)
Preferred stock dividend (413) (249) (1,386) (715)
-------- -------- -------- --------
Net loss applicable to common stockholders $ (842) $ (5,835) $ (8,644) $(20,759)
======== ======== ======== ========
BASIC AND DILUTED AMOUNTS
PER COMMON SHARE:
Net loss $ (0.01) $ (0.23) $ (0.17) $ (0.74)
Dividends to preferred stockholders (0.01) (0.01) (0.11) (0.15)
-------- -------- -------- --------
Net loss applicable to common stockholders $ (0.02) $ (0.24) $ (0.28) $ (0.89)
======== ======== ======== ========
Weighted average shares used in computing
basic and diluted net loss per common share 34,365 24,695 30,809 23,449
September 30, December 31,
2003 2002 (b)
------- --------
(Unaudited)
BALANCE SHEET DATA
Cash, cash equivalents and short-term investments $ 8,285 $ 11,145
Accounts receivable, net 5,109 4,924
Working capital 11,017 (239)
Restricted cash 776 707
Total assets 26,805 30,486
Long term obligations, less current portion 169 419
Redeemable convertible preferred stock 3,880 4,249
Total stockholders' equity $17,111 $ 7,014
(a) Revenue for the three and nine months period ended September 30,
2003 includes contract revenue of $366,000 and $950,000 compared to
$255,000 and $697,000 for the corresponding periods in 2002.
Contract revenue consists of NIH grant, commercial development and
other revenue. The costs associated with contract revenue for the
three and nine months ended September 30, 2003 totaled $432,000 and
$767,000 compared to $255,000 and $697,000 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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