A pilot is dead and another is injured after a Virgin Galactic spaceship exploded in midair during a test flight over the Mojave Desert in California today.

In a statement, Virgin Galactic said Space Ship Two "suffered a serious anomaly resulting in the loss of the vehicle." It is a devastating setback for the company and its founder Sir Richard Branson.

Officials: 1 pilot dead, 1 injured in SpaceShipTwo test-flight failure

Space Ship Two cost nearly half a billion dollars to develop. More than 700 people have already signed up to fly on a Virgin Galactic spaceship, at more than $250-thousand dollars a ticket.

Virgin Galactic is considered by many to be the best hope in private space exploration. Prior to Friday's tragedy, they were hoping to start flights within months.

CNN's Dan Simon is OutFront with the story.