ACLARA Announces Third Quarter 2004 Financial Results

ACLARA Announces Third Quarter 2004 Financial Results 


MOUNTAIN VIEW, Calif. Nov. 9  /PRNewswire-FirstCall/ -- ACLARA BioSciences
(NASDAQ:ACLA), today reported financial results for the three and nine months
ended September 30, 2004.

Third Quarter 2004 Financial Results

Revenue for the three months ended September 30, 2004 was $181,000, compared to
revenue for the three months ended September 30, 2003 of $276,000. For the
first nine months of 2004, revenue was $1.3 million compared to $860,000 in the
comparable prior year period.

Total operating expenses for the three months ended September 30, 2004 were
$4.7 million, compared to $5.6 million in the comparable quarter of 2003.
Included in expenses in the third quarter of 2004 were $248,000 of legal,
financial advisory and accounting expenses related to the proposed merger with
ViroLogic, Inc.

The net loss for the three months ended September 30, 2004 was $4.1 million, or
a loss of $0.11 per share, compared to a net loss of $4.9 million, or $0.14 per
share in the third quarter of 2003.  Excluding merger-related expenses and
reflecting the Company's continued expense control efforts, net loss for the
three months ended September 30, 2004 was $3.8 million, a decrease of 22% from
the third quarter of 2003.

For the first nine months of 2004, the net loss was $12.7 million, or a loss of
$0.35 per share, compared to a net loss of $16.3 million, or a loss of $0.46
per share, for the first nine months of 2003.

Total cash resources, comprising cash, cash equivalents and marketable
investments, were $78.6 million at September 30, 2004.  The reduction in these
balances during the third quarter was $3.2 million.

  Business Progress
  Recent progress in ACLARA's business includes:

  -- Proposed Merger with ViroLogic, Inc.:  On June 1, we announced that we
     had signed a definitive merger agreement with ViroLogic.  This proposed
     merger will combine ViroLogic's established infrastructure and
     experience in commercializing technologies for personalized medicine in
     the HIV market with ACLARA's technology applicable to the substantially
     larger cancer market.  On October 19, we announced some changes to the
     terms of the merger.  The merger is expected to be completed shortly
     after the meetings of stockholders that are scheduled for December 10
     to vote on the merger and related matters.
  -- Pharmaceutical company collaboration:  We signed an agreement with
     GlaxoSmithKline (GSK) to evaluate our proprietary eTag(TM) assays for
     their potential use in patient selection for certain of GSK's targeted
     cancer therapies.  Under the agreement, GSK will provide ACLARA with
     drug-treated biological samples and ACLARA will test the samples with
     its eTag assays.  ACLARA and GSK will then correlate the parameters
     measured as biomarkers with response to the drug. GSK will provide
     funding to ACLARA for the study.
  -- Scientific Advisory Board:  Dr. Manuel Hidalgo, an
     internationally-renowned oncologist specializing in targeted cancer
     therapies, has recently joined our Scientific Advisory Board.
  -- Scientific presentations:  In September, our researchers presented four
     posters at the EORTC-NCI-AACR Symposium on "Molecular Targets and
     Cancer Therapeutics," demonstrating the capabilities of our eTag System
     to selectively and quantitatively detect various protein-protein
     interactions.  In October, Sharat Singh, Ph.D., ACLARA's chief
     technical officer, reviewed data from a retrospective pilot study,
     which showed that ACLARA's eTag assays correctly differentiated
     individual patients with breast cancer who did respond to treatment
     with Herceptin(R) from those that did not respond and had progressive
     disease.  This correlation based on limited data from this pilot study
     suggests that eTag assays may offer improved prognostic capability over
     the currently used tests.  Dr. Singh's oral presentation was made at
     the "Advances in Her2 Profiling" session of the European Society for
     Medical Oncology's (ESMO) 29th Congress in Vienna.



"We are enthusiastic about our proposed merger with ViroLogic. We believe the
merged company will have the infrastructure and experience to develop, launch
and commercialize eTag assays for personalized molecular diagnostics for cancer
therapies," said Thomas G. Klopack, ACLARA's Chief Executive Officer.  "Our
recent agreement with GSK demonstrates the continued interest by pharmaceutical
companies in the potential of our eTag assays to directly measure the protein
complexes and pathway activation status in patient samples in order to aid the
development of new targeted cancer therapies.  In addition to our work with
customers, we are also working with clinical collaborators to access additional
sources of existing tissue samples on which clinical studies can be conducted."

About ACLARA

Founded in 1995, ACLARA is a biotechnology company working to provide
physicians and researchers products and services to make personalized medicine
a reality through its protein-based assay technology -- the eTag(TM) System.
ACLARA is dedicated to unlocking the power of pathway biology to accelerate the
development of next-generation targeted therapeutics, recognizing the most
appropriate patients for approved therapies and identifying the
highly-specific, protein-based biomarkers that will enable physicians to create
truly personalized treatment regimens for patients suffering from cancer and
other life-threatening disorders.

ACLARA is commercializing its proprietary eTag System to enhance and accelerate
drug discovery research and the preclinical and clinical development of
targeted therapeutics. ACLARA's technology may also enable the development of
highly specific, protein-based diagnostics capable of providing physicians with
a powerful tool for creating personalized treatment regimens for patients
suffering from serious and difficult-to-treat cancers.  For more information on
ACLARA please visit the Company's web site at http://www.aclara.com/.

Forward-Looking Statements

All statements in this news release that are not historical, including
statements with regard to our proposed merger with ViroLogic, Inc., are
forward-looking statements. Such forward-looking statements are subject to
factors that could cause actual results to differ materially for ACLARA from
those projected.  Those factors include the risks related to our proposed
merger with ViroLogic, Inc., including the risk that the proposed merger may
not be completed, and risks and uncertainties relating to the performance of
our products, anticipated progress in commercialization of our eTag(TM) assay
system; the potential for use of our eTag assays in clinical development
programs; the potential for use of our eTag assays as diagnostic tests; our
ability to successfully conduct clinical studies and the results obtained from
those studies; whether the results from larger studies will confirm initial
results from smaller pilot or feasibility studies; our ability to establish
reliable, high-volume operations at commercially reasonable costs; expected
reliance on a few customers for the majority of our revenues; actual market
acceptance of our products and adoption of our technological approach and
products by pharmaceutical and biotechnology companies; our estimate of the
size of our markets; our estimates of the levels of demand for our products;
our ability to develop organizational capabilities suitable for the further
development and commercialization of our eTag assays; the ultimate validity and
enforceability of our patent applications and patents; the possible
infringement of the intellectual property of others; technological approaches
of ACLARA and our competitors; and other risk factors identified in our Form
10-K for the fiscal year ended December 31, 2003, our subsequent filings on
Form 10-Q and other public filings with the Securities and Exchange Commission.

In connection with ViroLogic's proposed merger with ACLARA, ViroLogic has filed
a registration statement on Form S-4 containing a definitive joint proxy
statement/prospectus and other relevant materials.  INVESTORS AND SECURITY
HOLDERS OF VIROLOGIC AND ACLARA ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND THE OTHER MATERIALS CONTAINED IN THE REGISTRATION
STATEMENT BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT VIROLOGIC, ACLARA
AND THE PROPOSED MERGER, INCLUDING, WITHOUT LIMITATION, RISKS RELATED TO THE
PROPOSED MERGER AND THE COMBINED COMPANY.  The definitive joint proxy
statement/prospectus and other relevant materials have been mailed to
stockholders of Virologic and Aclara in advance of the stockholder meetings to
be held on December 10, 2004 to consider the transaction.  The registration
statement and other documents filed with the SEC by ViroLogic or ACLARA may
also be obtained free of charge at the SEC's website at http://www.sec.gov/. 
In addition, investors and security holders may obtain free copies of the
documents filed with the SEC by ViroLogic by directing a request to ViroLogic,
Inc. 345 Oyster Point Blvd., South San Francisco, CA 94080, Attn: Investor
Relations.  Investors and security holders may also obtain free copies of the
documents filed with the SEC by ACLARA and copies of the joint proxy
statement/prospectus and related materials by contacting ACLARA BioSciences,
Inc., 1288 Pear Avenue, Mountain View, CA 94043, Attn: Investor Relations.

ViroLogic, ACLARA and their respective executive officers and directors may be
deemed to be participants in the solicitation of proxies from stockholders of
ViroLogic and ACLARA with respect to the transactions contemplated by the
merger agreement. A description of any interests that ViroLogic's or ACLARA's
directors and executive officers have in the proposed merger are available in
the joint proxy statement/prospectus. Information regarding ViroLogic's
officers and directors is included in ViroLogic's 10-K/A filed with the
Securities and Exchange Commission on April 23, 2004. Information regarding
ACLARA's officers and directors is included in ACLARA's 10-K/A filed with the
Securities and Exchange Commission on April 29, 2004.

Trademarks

ACLARA BioSciences is a registered trademark and eTag and the ACLARA logo are
trademarks of ACLARA BioSciences, Inc.  Herceptin is a registered trademark of
Genentech, Inc.

                           ACLARA BIOSCIENCES, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                    (In Thousands, Except Per Share Data)
                                 (Unaudited)


                                       Three Months Ended  Nine Months Ended
                                             Sep 30             Sep 30
                                          2004     2003      2004      2003

     Revenues                             $181     $276    $1,293      $860

     Costs and operating expenses:
       Research and development          2,941    3,847     8,568    12,264
       Selling, general and
        administrative                   1,530    1,714     4,733     6,122
       Merger related expenses             248       --     1,852        --

     Total costs and operating expenses  4,719    5,561    15,153    18,386

     Loss from operations               (4,538)  (5,285)  (13,860)  (17,526)
     Interest income, net                  463      364     1,165     1,234

     Net loss                          $(4,075) $(4,921) $(12,695) $(16,292)

     Net loss per common share, basic
      and diluted                       $(0.11)  $(0.14)   $(0.35)   $(0.46)

     Weighted average shares used in
      net loss per common share
      calculation, basic and diluted    36,327   35,681    36,181    35,564


Reconciliation of net loss to net loss excluding merger-related expenses:

     Net loss                          $(4,075) $(4,921) $(12,695) $(16,292)

     Merger-related expenses               248       --     1,852        --

     Net loss excluding merger-related
      expenses                         $(3,827) $(4,921) $(10,843) $(16,292)

     Net loss per common share, basic
      and diluted, excluding
      merger-related expenses           $(0.11)  $(0.14)   $(0.30)   $(0.46)


   Management believes that this pro forma financial data supplements our
   GAAP financial statements by providing investors with additional
   information which allows them to have a more clear picture of the
   company's core recurring operations. The presentation of this
   additional information is not meant to be considered in isolation or as
   a substitute for results prepared in accordance with GAAP. We believe
   that the pro forma information enhances the investors' overall
   understanding of our financial performance and the comparability of the
   company's operating results from period to period. Above, we have
   provided a reconciliation of the pro forma financial information that
   we are providing with the comparable financial information reported in
   accordance with GAAP for the given period.


                          ACLARA BIOSCIENCES, INC.
                          CONDENSED BALANCE SHEETS
             (In Thousands, Except Share and Per Share Amounts)
                                 (unaudited)

                                                 Sep 30,           Dec 31,
                                                  2004              2003

                 ASSETS

  Current assets:
    Cash, cash equivalents and marketable
     investments                                 $78,629           $88,396
    Accounts receivable                              167               272
    Prepaid expenses and other current assets        461               345
    Inventories                                    2,729             2,766

  Total current assets                            81,986            91,779

      Property and equipment, net                  4,930             5,877
      Other assets, net                            1,189             1,350
  Total assets                                   $88,105           $99,006

   LIABILITIES & STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                              $1,749              $519
    Accrued payroll and related expenses           1,114               983
    Accrued expenses and other current
     liabilities                                     740               850
    Deferred revenue                                 136               550
    Current portion of loans payable                  70               161

  Total current liabilities                        3,809             3,063

  Loans payable, net of current portion              329               382
  Deferred rent                                      481               467

  Total liabilities                                4,619             3,912

  Stockholders' equity:
   Common stock, $0.001 par value:
   Authorized 150,000,000 shares; Issued and
    outstanding:
     36,345,562 shares at September 30, 2004
     and 35,901,175 shares at December 31, 2003       37                37
   Treasury stock at cost (900,000 shares at
    September 30, 2004 and at December 31, 2003)  (1,350)           (1,350)
  Additional paid-in capital                     260,672           259,379
  Accumulated other comprehensive
   income                                           (152)               54
  Accumulated deficit                           (175,721)         (163,026)
  Total stockholders' equity                      83,486            95,094

  Total liabilities and stockholders' equity     $88,105           $99,006


DATASOURCE: ACLARA BioSciences, Inc.



CONTACT:  Alfred Merriweather, VP, Finance and CFO of ACLARA BioSciences,

Inc., [phone], or 



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

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