Experimental Hepatitis C Drug PSI-938 Halted In Clinical Trial

UPDATE: Pharmasset Halts Hepatitis C Drug In Mid-Stage Trial

--Use of PSI-938 halted in clinical trial due to liver-related abnormalities

--Studies of lead hepatitis C candidate, PSI-7977, continue

During routine safety monitoring, the company detected laboratory abnormalities associated with liver function in subjects receiving PSI-938 300 mg once daily. These laboratory abnormalities have not been observed in patients receiving PSI-7977 and ribavirin in the QUANTUM study or in other trials evaluating PSI-7977. Both the 12 and 24-week PSI-7977 and ribavirin arms will continue unchanged, data from which will support NEUTRINO, an interferon free, 12-week Phase 3 study of PSI-7977 and ribavirin in patients with HCV genotype 1 (GT-1).


Pharmasset Announces Intent to Amend QUANTUM Trial

PRINCETON, N.J., Dec. 16, 2011 /PRNewswire/ -- Pharmasset, Inc. (Nasdaq: VRUS) announced today that the company will amend the design of the QUANTUM Phase 2b trial of the guanine nucleotide analog PSI-938 and discontinue all treatment arms with a regimen containing PSI-938. There are 235 individuals with hepatitis C virus (HCV) in the study who are receiving treatment with PSI-938 alone or in combination with PSI-7977 or PSI-7977 and ribavirin. During routine safety monitoring, the company detected laboratory abnormalities associated with liver function in subjects receiving PSI-938 300 mg once daily. These laboratory abnormalities have not been observed in patients receiving PSI-7977 and ribavirin in the QUANTUM study or in other trials evaluating PSI-7977. Both the 12 and 24-week PSI-7977 and ribavirin arms will continue unchanged, data from which will support NEUTRINO, an interferon free, 12-week Phase 3 study of PSI-7977 and ribavirin in patients with HCV genotype 1 (GT-1).

The subject of today's announcement does not trigger the "key product event" clause set forth in section 4.1(t) of the Agreement and Plan of Merger entered into by Pharmasset and Gilead Sciences, Inc. on November 21, 2011 and does not alter either party's rights and obligations under the terms of the agreement. Pharmasset anticipates that the transaction announced on November 21, 2011 will conclude in the first quarter of 2012.

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 the development of oral therapeutics for the treatment of hepatitis C virus (HCV) infection. Our research and development efforts are focused on nucleoside/tide analogs, a class of compounds which act as alternative substrates for the viral polymerase, thus inhibiting viral replication. We currently have two clinical-stage product candidates advancing in trials in various populations. Our pyrimidine, PSI-7977, an unpartnered uracil nucleotide analog, is currently being studied in an interferon-free, Phase 3 program (FISSION and POSITRON) and in five Phase 2b trials in subjects with all HCV genotypes. Mericitabine (RG7128) continues in multiple Phase 2b trials and one interferon-free trial being conducted through a strategic collaboration with Roche.

Contact
Richard E. T. Smith, Ph.D.
VP, Investor Relations and Corporate Communications
Office+1 (609) 865-0693

Forward-Looking Statements
Pharmasset "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release that are not historical facts are "forward-looking statements," that involve risks, uncertainties, and other important factors, including, without limitation, the risk of cessation or delay of any of the ongoing or planned clinical trials and/or our development of our product candidates, the risk that the results of previously conducted studies involving our product candidates will not be repeated or observed in ongoing or future studies involving our product candidates, 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 risks, uncertainties, and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011 and our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission and discussions of potential risks, uncertainties, and other important factors in our subsequent filings with the Securities and Exchange Commission.

SOURCE Pharmasset, Inc.

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UPDATE: Pharmasset Halts Hepatitis C Drug In Mid-Stage Trial


--Use of PSI-938 halted in clinical trial due to liver-related abnormalities

--Studies of lead hepatitis C candidate, PSI-7977, continue

--Pharmasset says setback won't derail $11 billion sale to Gilead

By Peter Loftus

Of DOW JONES NEWSWIRES

Pharmasset Inc. (VRUS) discontinued use of an experimental hepatitis C drug in a clinical trial because of safety concerns, but the drug maker said the setback wouldn't derail its planned sale to Gilead Sciences Inc. (GILD) for nearly $11 billion.

The company discontinued use of a drug code-named PSI-938 in a mid-stage study of people with hepatitis C infection, citing "laboratory abnormalities associated with liver function." However, it will continue testing its lead hepatitis C drug candidate, PSI-7977, which was the primary selling point behind the Gilead deal and wasn't associated with the abnormalities.

Pharmasset said the setback doesn't trigger a "key product event" clause in its sale agreement to Gilead. The Gilead deal was announced in November and is expected to close next year.

A Gilead spokeswoman couldn't immediately be reached.

The Gilead-Pharmasset deal was striking for placing such a high premium -- nearly 90% above Pharmasset's stock price before the deal -- for a company with no products on the market and just over 80 employees. It illustrates the growth commercial potential for drugs that improve treatment of hepatitis C; Decision Resources recently predicted the market will soar to $16 billion in 2015 from $ 1.7 billion in 2010.

In early trading, Pharmasset shares fell 2% to $125.12, while Gilead was off 0.2% at $38.40. The Gilead deal values Pharmasset at $137 per share.

Pharmasset's lead hepatitis C drug, PSI-7977, is known as a nucleotide polymerase inhibitor and is designed to combat hepatitis C infection inside liver cells. Gilead and Pharmasset say it has potential to be part of the first all-oral regimen for hepatitis C. Current regimens include injectable drugs that can be tough to tolerate.

Gilead said in November that it hopes for U.S. regulatory approval of PSI-7977 in 2014.

PSI-938 is similar to PSI-7977, but with certain differences that led Pharmasset to believe they might be complementary in some cases.

The mid-stage clinical trial "Quantum" was testing 235 patients who were receiving PSI-938 alone, or in combination with PSI-7977, or in combination with both PSI-7977 and another drug called ribavirin.

"During routine safety monitoring, the company detected laboratory abnormalities associated with liver function" in people receiving a 300- milligram dose of PSI-938 once daily, Pharmasset said.

Pharmasset said there were no abnormalities observed in patients who received PSI-7977 in the same clinical trial.

ISI Group analyst Mark Schoenebaum said the setback won't materially affect his view of the sale to Gilead. He said he didn't include any sales of PSI-938 in his financial models for Pharmasset and Gilead.

-Peter Loftus, Dow Jones Newswires; +1-215-982-5581; peter.loftus@dowjones.com

--Tess Stynes contributed to this article.

Dow Jones Newswires
12-16-110959ET
Copyright (c) 2011 Dow Jones & Company, Inc.

Dec 16, 2011