EXHIBIT 99.2
[VIROLOGIC LOGO]
FOR IMMEDIATE RELEASE CONTACT:
MAY 3, 2004 Karen Wilson, CFO
(650) 624-4164
kwilson@virologic.com
VIROLOGIC ANNOUNCES FIRST QUARTER 2004 FINANCIAL RESULTS
-- Company Reports 29 Percent Revenue Growth over First
Quarter of 2003 and Generates Cash from Operations --
SOUTH SAN FRANCISCO, CALIF., May 3, 2004 -- ViroLogic, Inc. (NASDAQ: VLGC) today
reported financial results for the three months ended March 31, 2004.
The Company reported revenue of $9.0 million for the first quarter of 2004, an
increase of 29 percent over revenue of $7.0 million for the first quarter of
2003. The year-over-year growth was attributable to the Company's patient
testing business, which rose to $5.8 million from $5.3 million in the first
quarter of 2003, and its pharmaceutical business, which increased 128 percent to
$2.9 million from $1.3 million for the same period in 2003.
Gross margin was 49 percent in the first quarter of 2004 compared to 42 percent
reported during the same quarter last year. Gross margin improvement was driven
by improved efficiencies in laboratory operations as well as an increased
contribution from pharmaceutical revenues during the quarter. Operating costs
and expenses for the first quarter of 2004 were $10.3 million, compared to $9.5
million for the same period in 2003, due to higher costs associated with
increased sample volume and a charge of $0.4 million for the termination of the
Company's lease for original laboratory and office space. This early termination
enabled the Company to eliminate operating expenses related to this lease going
forward and reduce its aggregate remaining obligation by approximately half.
Net loss for the first quarter of 2004, including the lease termination charge,
was $1.2 million, or $0.02 per common share, compared to a net loss of $2.5
million, or $0.09 per common share, for the same period in 2003.
In the first quarter of 2004, the Company recorded stock dividends to preferred
stockholders of $0.1 million, resulting in net loss applicable to common
stockholders of $0.02 per common
share. In the first quarter of 2003, the Company recorded a non-cash deemed
dividend to preferred stockholders of $2.2 million resulting from a warrant
exchange relating to the sale of Series C Convertible Preferred Stock, and
recorded stock dividends to preferred stockholders of $0.5 million, resulting in
net loss applicable to common stockholders of $0.18 per common share.
The Company generated cash from operations during the first quarter of 2004, and
reported $10.3 million of cash, cash equivalents, short-term investments and
restricted cash at March 31, 2004.
RECENT HIGHLIGHTS
- Entered expanded distribution agreement with Quest Diagnostics
under which Quest Diagnostics will make ViroLogic its
preferred provider of HIV phenotypic testing. The agreement
will increase access to the Company's line of phenotypic
testing products, PhenoSense GT(TM) combination assay and
PhenoSense(TM) HIV, throughout Quest Diagnostics' national
network of laboratories, with more than 30 full-service
regional laboratories in major metropolitan areas and nearly
2,000 conveniently located patient service centers, where
patients' specimens are collected;
- Launched VLink online reporting system offering a fast and
convenient way for healthcare professionals to access patient
test results via a secure Internet connection;
- Presented 19 studies at the international retrovirus
conference in February in San Francisco. Among the highlights
were a study demonstrating the value of ViroLogic's
Replication Capacity assay as a tool to predict HIV disease
progression in untreated patients, studies exemplifying how
its neutralization assay can be used to characterize targeted
antibody responses which are relevant for vaccine development,
and studies showing the Company's expanding capability to
support the numerous biopharmaceutical companies now
developing entry inhibitor drugs to treat HIV; and
- Completed CLIA validation of ViroLogic's HIV-1 Co-receptor
Tropism Assay for use in clinical trials. This newly developed
assay accurately and reproducibly determines whether each
patient virus uses the CCR5 and/or CXCR4 co-receptor to infect
new cells. Consequently, it has become an important tool to
identify patients who are most likely to respond to treatment
with specific inhibitors of CCR5 or CXCR4 binding and monitor
the emergence of viral variants throughout clinical trials.
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UPCOMING EVENTS
- Presenting corporate overview at Deutsche Bank Health Care
Conference, May 5 at 3:00 p.m. ET, in Baltimore, MD. An
archived version of the presentation will be available at
www.virologic.com;
- Chairing panel entitled "Making Personalized Medicine a
Reality" at BIO 2004 Annual International Convention on June 8
at 4:00 p.m. PT, in San Francisco, CA. See www.bio.org for
more information; and
- ViroLogic and its scientific and clinical collaborators will
be presenting numerous studies regarding the benefits of its
comprehensive array of drug resistance assays and database for
patient management and drug development at the XIII
International Workshop on HIV Drug Resistance, June 8-12, in
the Canary Islands.
"We are pleased that our business is performing as expected this quarter and,
for the first time, generated cash from operations," said Bill Young, Chairman
and CEO of ViroLogic. "To further enhance our patient testing business in the
future, we plan to increase access to our proprietary assays through expanded
distribution channels, which was given a boost by our just-announced Quest
Diagnostics agreement, and by continuing to make product enhancements. In
addition, funds gained through government research grants will enable us to
continue our R&D efforts to develop and introduce new products and demonstrate
competitive advantages of our existing products."
CONFERENCE CALL DETAILS
ViroLogic will hold a conference call today at 5:00 p.m. ET to discuss its first
quarter 2004 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 web cast 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.
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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 expected reductions in lease obligations, the Company's
distribution agreement with Quest Diagnostics and activities expected to occur
in connection with that agreement, expected performance of the Company's HIV-1
Co-receptor Tropism Assay, the Company's participation in upcoming conferences,
actions designed to continue the growth of patient testing revenue, anticipated
growth in sales of testing products, and expected use of government research
grants. 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
risks that the Company's products may not perform in the same manner as
indicated in this press release, whether ViroLogic successfully introduces new
products, risks related to the implementation of the Company's distribution
agreement with Quest, whether others introduce competitive products, 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 gross margins may not increase as expected, 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
March 31,
2004 2003
---- ----
(Unaudited)
STATEMENT OF OPERATIONS DATA:
Product revenue $ 8,640 $ 6,551
Contract revenue (a) 382 417
-------- --------
Total revenue $ 9,022 $ 6,968
Operating costs and expenses:
Cost of product revenue 4,416 3,819
Research and development 1,393 1,346
Sales and marketing 1,958 1,842
General and administrative 2,080 2,466
Lease termination charge 433 --
-------- --------
Total operating costs and expenses 10,280 9,473
-------- --------
Operating loss (1,258) (2,505)
Interest income 21 37
Interest expense (11) (52)
Other income -- 52
-------- --------
Net loss (1,248) (2,468)
Deemed dividend to preferred stockholders -- (2,155)
Preferred stock dividend (68) (467)
-------- --------
Net loss applicable to common stockholders $ (1,316) $ (5,090)
======== ========
BASIC AND DILUTED AMOUNTS PER COMMON SHARE:
Net loss $ (0.02) $ (0.09)
Dividends to preferred stockholders -- (0.09)
-------- --------
Net loss applicable to common stockholders $ (0.02) $ (0.18)
======== ========
Weighted average shares used in computing
basic and diluted net loss per common share 53,137 28,353
March 31, December 31,
2004 2003 (b)
--------- ------------
(Unaudited)
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments $ 9,484 $ 9,430
Accounts receivable, net 6,581 6,165
Working capital 12,529 13,038
Restricted cash 776 776
Total assets 27,931 28,378
Long term capital lease obligations, less current portion 62 87
Redeemable convertible preferred stock (c) 1,994 1,994
Total stockholders' equity (d) $19,569 $20,587
(a) Contract revenue consists of NIH grants, commercial development and other
revenue. The costs associated with contract revenue are included in
research and development expenses.
(b) The balance sheet data is derived from audited financial statements for the
year ended December 31, 2003, included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
(c) As of March 31, 2004, there were 274 shares of Series A Redeemable
Convertible Preferred Stock issued and outstanding, which were convertible
into approximately 2.5 million shares of common stock.
(d) As of March 31, 2004, there were 53.4 million shares of common stock issued
and outstanding. During 2003, all outstanding shares of Series C
Convertible Preferred Stock were converted into common stock.
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