PRINCETON, New Jersey, December 31 /PRNewswire/ --

Pharmasset, Inc. (Nasdaq: VRUS), a clinical stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections, reported audited financial results for the fiscal year ended September 30, 2007. Pharmasset reported a net loss attributable to common stockholders of US$6.8 million, or US$0.46 per share, as compared to a net loss attributable to common stockholders of US$12.4 million, or US$1.19 per share for the same period in 2006.

Revenues were US$22.0 million during the fiscal year 2007, primarily consisting of development milestones and 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 2006 were US$5.4 million. This US$16.6 million increase from the year ago period was primarily due to the receipt of milestone payments from Roche totaling US$20.0 million during fiscal year 2007. Investment income was US$2.5 million during fiscal year 2007 compared to US$1.7 million during fiscal year 2006. This US$0.8 million increase was due to higher average invested cash balances during 2007.

Total costs and expenses for the fiscal year ended September 30, 2007 were US$29.5 million as compared to US$18.4 million for the same period in 2006. The increased operating expenses for fiscal year 2007 were primarily the result of an increase in Phase 3 registration clinical trial expenses for clevudine for the treatment of chronic hepatitis B virus (HBV) infection, as well as drug discovery, non-cash stock compensation and depreciation expenses.

At September 30, 2007, Pharmasset held US$68.7 million in cash and cash equivalents and approximately US$1.3 million of short-term investments. In September 2007, Pharmasset entered into a US$30 million working capital loan agreement, of which US$10 million was funded in October 2007.

"Pharmasset achieved significant clinical development and financial progress in 2007," stated Schaefer Price, Pharmasset's President & CEO. "We remain focused on building our hepatitis and HIV franchises with novel drug candidates that could significantly improve therapeutic standards of care. We hope to maintain the momentum in 2008 by completing HBV patient enrollment of the clevudine Phase 3 clinical trials for registration in the Americas and Europe. In addition, since the first two cohorts were fully enrolled earlier this month, we plan to report preliminary safety and efficacy data following 4 weeks of combination therapy with R7128 and Pegasys(R) plus Copegus(R) in the first calendar quarter of 2008."

Fiscal Year 2007 Highlights -- Initiated HBV patient dosing of clevudine Phase 3 clinical trials for registration in the Americas and Europe. -- Reported clevudine's approval for the treatment of HBV in South Korea. Clevudine is marketed by Bukwang Pharmaceuticals in South Korea under the brand name Levovir. -- Completed Phase 1 single and multiple ascending dose studies of R7128 in both healthy volunteers and patients chronically infected with HCV. R7128 was generally safe and well tolerated and demonstrated potent, dose-dependent antiviral activity in these studies. -- Discovered a new series of proprietary uridine phosphoramidates that have demonstrated potent anti-HCV activity. We are evaluating these molecules for potential advancement toward future development. -- Confirmed Racivir's antiviral activity in treatment-experienced HIV patients who were failing their HIV treatment regimen and had HIV with the M184V resistance mutation. -- Continued building our antiviral clinical development team by adding experienced senior leadership, including Dr. Michelle Berrey, Chief Medical Officer and Dr. Michael Rogers, Chief Development Officer. -- Completed an initial public offering (IPO) of 5,050,000 shares of common stock at a price of US$9.00 per share and began trading on the NASDAQ Global Market under the symbol "VRUS." Net cash proceeds from the IPO were US$40.7 million. -- Earned US$20.0 million in milestone payments from Roche as part of a collaboration for the development of R7128 for the treatment of chronic HCV infection. -- Closed a US$30 million working capital loan agreement. Calendar Year 2008 Anticipated Milestones -- Release preliminary safety and efficacy data from a Phase 1, Part 3 multiple ascending dose study of R7128 following 4 weeks of combination therapy with Pegasys plus Copegus in the first calendar quarter of 2008. -- Report final safety and efficacy data from a Phase 1, Part 3 multiple ascending dose study of R7128 following 4 weeks of combination therapy with Pegasys plus Copegus in the second calendar quarter of 2008. -- Complete patient enrollment for clevudine Phase 3 registration clinical trials in the second calendar half of 2008. -- Initiate a Phase 2b combination study of R7128 with Pegasys plus Copegus in the second calendar half of 2008, assuming the successful completion of the on-going R7128 Phase 1 study and the timely completion of all required Phase 2b study preparation activities.

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 orally administered treatment for chronic HCV infection, is in a 4-week Phase 1 clinical trial in combination with Pegasys(R) and Copegus(R) 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

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 of the Phase 3 registration studies and/or our development of clevudine, the risk that adverse events could cause the cessation of the Phase 1 combination study and/or our development of R7128, including the risk that we will fail to release preliminary or final safety and efficacy data from a Phase 1, Part 3 multiple ascending dose study and the risk that we will fail to initiate a Phase 2b combination study of R7128 with Pegasys plus Copegus in the second calendar half 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.

PHARMASSET, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE NET LOSS (All currency in US Dollars unless otherwise noted) Years Ended Nine Months September 30, Ended ------------------------- September 30, 2007 2006 2005 ------------------------- ------------- REVENUES $22,009,458 $5,424,614 $3,719,104 ------------------------- ------------- COSTS AND EXPENSES: Research and development 20,318,910 10,497,703 10,468,026 General and administrative 9,210,623 7,911,545 8,095,897 ------------------------- ------------- Total costs and expenses 29,529,533 18,409,248 18,563,923 ------------------------- ------------- OPERATING LOSS (7,520,075) (12,984,634) (14,844,819) INVESTMENT INCOME 2,470,563 1,658,977 1,136,035 INTEREST EXPENSE (15,136) - - ------------------------- ------------- LOSS BEFORE INCOME TAXES (5,064,648) (11,325,657) (13,708,784) PROVISION FOR INCOME TAXES - - - ------------------------- ------------- NET LOSS (5,064,648) (11,325,657) (13,708,784) REDEEMABLE PREFERRED STOCK ACCRETION 1,775,684 1,110,973 2,286,799 ------------------------- ------------- NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $(6,840,332) $(12,436,630) $(15,995,583) ========================== ============= COMPREHENSIVE NET LOSS: NET LOSS $(5,064,648) $(11,325,657) $(13,708,784) UNREALIZED GAIN (LOSS) ON AVAILABLE-FOR-SALE INVESTMENTS 2,100 (56,465) 58,454 ------------------------- ------------- COMPREHENSIVE NET LOSS: $(5,062,548) $(11,382,122) $(13,650,330) ========================== ============= NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: BASIC $(0.46) $(1.19) $(2.42) DILUTED $(0.46) $(1.19) $(2.42) WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 14,990,472 10,462,369 6,630,463 DILUTED 14,990,472 10,462,369 6,630,463

PHARMASSET, INC. BALANCE SHEETS As of September 30, ---------------------------- 2007 2006 ---------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $68,745,694 $26,182,316 Short-term investments 1,252,113 1,250,013 Amounts due under collaborative agreements 919,110 297,070 Prepaid expenses and other assets 783,311 359,082 Deferred offering costs - 1,608,826 ---------------------------- Total current assets 71,700,228 29,697,307 ---------------------------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS: Laboratory, office furniture and equipment 2,462,647 1,877,095 Leasehold improvements 1,836,553 1,836,553 ---------------------------- 4,299,200 3,713,648 Less accumulated depreciation and amortization (1,437,080) (544,725) ---------------------------- Total equipment and leasehold improvements, net 2,862,120 3,168,923 OTHER ASSETS 1,282,051 131,300 ---------------------------- TOTAL $75,844,399 $32,997,530 ============================ LIABILITIES, REDEEMABLE STOCK AND WARRANTS, AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $3,281,600 $710,386 Accrued expenses 5,513,407 2,055,025 Deferred rent 124,462 124,462 Current portion of capital lease obligation 159,440 - Deferred revenue 1,857,136 1,803,564 ---------------------------- Total current liabilities 10,936,045 4,693,437 DEFERRED RENT 204,256 328,718 NON CURRENT PORTION OF CAPITAL LEASE OBLIGATION 41,641 - DEFERRED REVENUE 5,726,131 7,364,547 ---------------------------- Total liabilities 16,908,073 12,386,702 ---------------------------- COMMITMENTS REDEEMABLE STOCK AND WARRANTS Series B, C, D, and R redeemable convertible stock - 19,376,679 Series R-1 warrants - 264,000 Redeemable common stock - 1,190,251 Total redeemable stock and warrants ---------------------------- - 20,830,930 ---------------------------- STOCKHOLDER'S EQUITY (DEFICIT) Series A convertible preferred stock - 2,640 Series D-1 warrants - 5,411,932 Common Stock, $0.001 par value, 21,232,991 and 10,291,386 shares outstanding at September 30, 2007 and 2006, respectively 21,233 10,291 Warrants to purchase 66,390 shares of common stock 526,720 - Additional paid-in capital 115,518,201 44,480,015 Accumulated other comprehensive income 4,405 2,305 Accumulated deficit (57,134,233) (50,127,285) ---------------------------- Total stockholders' equity (deficit) 58,936,326 (220,102) ---------------------------- TOTAL $75,844,399 $32,997,530 ============================

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

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