PRINCETON, New Jersey, February 14 /PRNewswire/ --

Pharmasset, Inc. (Nasdaq: VRUS), a clinical stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections, reported unaudited financial results for the first fiscal quarter of 2008 ended December 31, 2007. Pharmasset reported a net loss attributable to common stockholders of US$12.2 million, or (US$0.57) per share for the first fiscal quarter of 2008, as compared to net income attributable to common stockholders of US$3.6 million, or US$0.33 per diluted share for the same period in fiscal 2007.

Revenues were US$0.5 million during the first fiscal quarter of 2008, which consisted of the amortization of payments received from Roche from the hepatitis C virus (HCV) collaboration agreement that were previously recorded as deferred revenue. Revenues for the same period in fiscal 2007 were US$8.1 million, which included a US$7.5 million milestone payment received from Roche. Investment income was US$0.9 million during the first fiscal quarter of 2008 compared to US$0.4 million during the same period in 2007. The US$0.5 million increase in the first fiscal quarter of 2008 was due to higher average invested cash balances.

Total costs and expenses for the first fiscal quarter of 2008 were US$13.2 million as compared to US$4.6 million for the same period in fiscal 2007. The US$8.6 million increase in operating expenses for the first fiscal quarter of 2008 was primarily due to a US$7.0 million increase in Phase 3 registration clinical trial expenses for clevudine for the treatment of chronic hepatitis B virus (HBV) infection, as well as approximately US$1.6 million in drug discovery, compensation, insurance, audit and non-cash stock compensation expenses. Interest expense was US$0.4 million during the first fiscal quarter of 2008 compared to US$1,800 during the same period in fiscal 2007. The increase was primarily due to interest paid on the US$10.0 million of long-term debt we incurred during October 2007.

At December 31, 2007, Pharmasset held US$61.5 million in cash and cash equivalents and approximately US$1.3 million of short-term investments.

"We collected preliminary results of the R7128 combination study for the treatment of HCV in the first fiscal quarter of 2008, and we look forward to orally presenting the final results of these two cohorts at the 43rd Annual Meeting of the European Association for the Study of the Liver (EASL) in April 2008," stated Schaefer Price, Pharmasset's Chief Executive Officer. "The rapid advancement of the R7128 program is a tribute to the productivity of our HCV collaboration with Roche and our communications with the FDA. We are currently focused on planning a 12-week Phase 2b combination study of R7128 with Pegasys plus Copegus, continuing clevudine HBV patient enrollment and nominating a lead preclinical candidate from our proprietary HCV discovery efforts."

First Fiscal Quarter 2008 Highlights -- Commenced and subsequently completed dosing two cohorts in 4-week combination study of R7128 with Pegasys(R) plus Copegus(R) for the treatment of HCV. -- Received fast track designation from the FDA for R7128 for the treatment of HCV. -- Entered antiviral research collaboration with the University of Cincinnati's Genome Research Institute. -- Appointed Michael Rogers as Chief Development Officer and Patrick T. Higgins as Executive Vice President, Marketing & Sales. -- Presented R7128 Phase 1 single ascending dose and 14-day monotherapy study results for the treatment of HCV. -- Discovered a new series of proprietary nucleoside analogs that have demonstrated potent anti-HCV activity. Anticipated Highlights -- Oral presentation of the final safety and efficacy data from two cohorts from the third part of a Phase 1 study of R7128 following 4 weeks of combination therapy with Pegasys plus Copegus at the 43rd Annual Meeting of the European Association for the Study of the Liver (EASL) being held from April 23-27, 2008 in Milan, Italy. -- Complete HBV patient enrollment for clevudine Phase 3 registration clinical trials in the second calendar half of 2008. -- Initiate HCV patient screening for a 12-week Phase 2b combination study of R7128 with Pegasys plus Copegus in the fourth calendar quarter of 2008, assuming the successful completion of the on-going R7128 Phase 1 study, transfer of our IND for R7128 to Roche, consent from the FDA and timely completion of all required Phase 2b study preparation activities. -- Conducting preclinical studies of a proprietary anti-HCV nucleoside analog to support first-in-human clinical trials, once a lead compound has been nominated from the series.

About Pharmasset

Pharmasset is a clinical-stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections. Pharmasset's primary focus is on the development of oral therapeutics for the treatment of hepatitis B virus (HBV), hepatitis C virus (HCV) and human immunodeficiency virus (HIV).

Pharmasset is currently developing three product candidates. Clevudine, for the treatment of chronic HBV infection, is enrolling Phase 3 clinical trials for registration in North, Central and South America and Europe. Clevudine is already approved for HBV in South Korea and marketed by Bukwang Pharmaceuticals in South Korea under the brand name Levovir. R7128, an oral treatment for chronic HCV infection, is in a 4-week Phase 1 clinical trial in combination with Pegasys plus Copegus through a strategic collaboration with Roche. Racivir, which is being developed for the treatment of HIV in combination with other approved HIV drugs, has completed a Phase 2 clinical trial.

Contact Alan Roemer, Vice President Investor Relations & Corporate Communications alan.roemer@pharmasset.com Office: +1-609-613-4125

Pegasys(R) and Copegus(R) are registered trademarks of Roche.

Forward-Looking Statements

Pharmasset "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding our business that are not historical facts are "forward-looking statements" that involve risks and uncertainties, including without limitation the risk that adverse events could cause the cessation or delay of any of the ongoing or planned clinical trials and/or our development of our product candidates, the risk that we will fail to present final safety and efficacy data from a Phase 1, Part 3 multiple ascending dose study, the risk that we cannot enroll enough patients for the Phase 3 registration clinical trial for clevudine, the risk that we will fail to initiate a Phase 2b combination study of R7128 with Pegasys plus Copegus in the fourth calendar quarter of 2008, the risk that our collaboration with Roche will not continue or will not be successful and the risk that any one or more of our product candidates will not be successfully developed and commercialized. For a discussion of these risks and uncertainties, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2007 filed with the Securities and Exchange Commission entitled "Risk Factors" and discussions of potential risks and uncertainties in our subsequent filings with the Securities and Exchange Commission.

(All figures in US$ unless otherwise noted) PHARMASSET, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE NET INCOME (LOSS) (UNAUDITED) Three Months Ended December 31, ------------------------------ 2007 2006 ------------------------------ REVENUES $464,291 $8,116,584 ------------------------------ COSTS AND EXPENSES: Research and development 10,550,371 2,561,485 General and administrative 2,619,745 2,055,038 ------------------------------ Total costs and expenses 13,170,116 4,616,523 ------------------------------ OPERATING INCOME (LOSS) (12,705,825) 3,500,061 INVESTMENT INCOME 896,402 408,986 INTEREST EXPENSE (363,176) (1,841) ------------------------------ INCOME (LOSS) BEFORE INCOME TAXES (12,172,599) 3,907,206 PROVISION FOR INCOME TAXES - - ------------------------------ NET INCOME (LOSS) (12,172,599) 3,907,206 REDEEMABLE PREFERRED STOCK ACCRETION - 284,197 ------------------------------ NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $(12,172,599) $3,623,009 ============================== COMPREHENSIVE NET INCOME (LOSS): NET INCOME (LOSS) $(12,172,599) $3,907,206 UNREALIZED GAIN (LOSS) ON AVAILABLE-FOR-SALE INVESTMENTS - 2,195 ------------------------------ COMPREHENSIVE NET INCOME (LOSS): $(12,172,599) $3,909,401 ============================== NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: BASIC $(0.57) $0.35 DILUTED $(0.57) $0.33 WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 21,263,668 10,504,693 DILUTED 21,263,668 11,009,257 PHARMASSET, INC. BALANCE SHEETS As of December 31, As of 2007 September 30, (unaudited) 2007 ------------------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $61,464,961 $68,745,694 Short-term investments 1,252,113 1,252,113 Amounts due under collaborative agreements 1,764,828 919,110 Prepaid expenses and other assets 1,700,240 783,311 ------------------------------ Total current assets 66,182,142 71,700,228 ------------------------------ EQUIPMENT AND LEASEHOLD IMPROVEMENTS: Laboratory, office furniture and equipment 2,863,244 2,462,647 Leasehold improvements 1,836,553 1,836,553 ------------------------------ 4,699,797 4,299,200 Less accumulated depreciation and amortization (1,674,095) (1,437,080) ------------------------------ Total equipment and leasehold improvements, net 3,025,702 2,862,120 OTHER ASSETS 487,793 1,282,051 ------------------------------ TOTAL $69,695,637 $75,844,399 ============================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,709,847 $3,281,600 Accrued expenses 3,007,366 5,513,407 Deferred rent 124,462 124,462 Current portion of capital lease obligation 162,265 159,440 Deferred revenue 1,857,136 1,857,136 ------------------------------ Total current liabilities 6,861,076 10,936,045 DEFERRED RENT 172,883 204,256 NON CURRENT PORTION OF CAPITAL LEASE OBLIGATION - 41,641 DEFERRED REVENUE 5,261,840 5,726,131 LONG-TERM DEBT 9,520,800 - ------------------------------ Total liabilities 21,816,599 16,908,073 ------------------------------ COMMITMENTS STOCKHOLDER'S EQUITY Common Stock, $0.001 par value, 100,000,000 shares authorized, 21,288,614 and 21,232,991 shares issued and outstanding at December 31, 2007 and September 30, 2007, respectively 21,289 21,233 Warrants to purchase 66,390 shares of common stock for $12.05 per share, exercisable starting September 30, 2007 526,720 526,720 Additional paid-in capital 116,633,456 115,518,201 Accumulated other comprehensive income 4,405 4,405 Accumulated deficit (69,306,832) (57,134,233) ------------------------------ Total stockholders' equity 47,879,038 58,936,326 ------------------------------ TOTAL $69,695,637 $75,844,399 ==============================

Web site: http://www.pharmasset.com

Alan Roemer, Vice President Investor Relations & Corporate Communications of Pharmasset, Inc., +1-609-613-4125, alan.roemer@pharmasset.com