Trimeris, Inc., (Nasdaq: TRMS) or the “Company,” today announced
financial results for the quarter ended September 30, 2010,
reporting net income of $16.5 million, or $0.74 per share compared
with $1.6 million, or $0.07 per share for the quarter ended
September 30, 2009. Comparisons of net income between the quarters
ended September 30, 2010 and September 30, 2009 are affected by
several items detailed in the section below entitled “Adjusted
(Non-GAAP) Financial Information.” Excluding these items, the
Company would have reported adjusted net income of $2.1 million or
$0.10 per share in the third quarter of 2010.
For the nine months ended September 30, 2010, the Company
reported net income of $18.8 million, or $0.84 per share, compared
with $5.1 million, or $0.23 per share for the nine months ended
September 30, 2009. Comparisons of net income between the periods
are affected by several items detailed in the section below
entitled “Adjusted (Non-GAAP) Financial Information.” Excluding
these items, the Company would have reported adjusted net income of
$2.4 million, or $0.11 per share for the nine months ended
September 30, 2010, compared with $4.5 million, or $0.20 per share
for the nine months ended September 30, 2009.
Collaboration income for the quarter ended September 30, 2010
was $20.0 million compared with $1.7 million for the quarter ended
September 30, 2009. This increase was primarily driven by the
Company’s agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La
Roche Inc. (“Roche”) in September 2010 (see “Deferred Marketing
Expenses” discussion below), which relieved Trimeris of any
obligation to repay certain deferred marketing expenses to Roche in
the amount of $18.7 million and a decrease in selling and marketing
expenses offset, in part, by payments under the settlement
agreement with Novartis, and a decrease in net sales of FUZEON in
the U.S. and Canada. Net sales of FUZEON in the U.S. and Canada for
the third quarter of 2010 were $9.0 million, down 14 percent from
$10.4 million in the third quarter of 2009.
The Company recorded net adjustments to royalty revenue for the
quarter ended September 30, 2010 of $2.7 million compared to
royalty revenue of $2.1 million for the quarter ended September 30,
2009. This decrease in royalty revenue was driven by (1) a decrease
in net FUZEON® sales outside the U.S. and Canada; (2) a reduction
in the royalty rate for net FUZEON sales outside the U.S. and
Canada (see “Disagreement with Roche over FUZEON Cost of Goods”
discussion below) and (3) the settlement agreement with Novartis
Vaccines and Diagnostics, Inc. (see “Novartis Patent Lawsuit”
discussion below). Net sales of FUZEON outside the U.S. and Canada
for the third quarter of 2010 were $9.3 million, down 52 percent
from $19.4 million in the third quarter of 2009. A significant
portion of this decline in net sales resulted from the fact that
the government of Brazil did not purchase FUZEON in the third
quarter of 2010 after making purchases for eight consecutive
quarters.
Operating expenses for the quarter ended September 30, 2010 were
$1.4 million compared with $1.7 million for the quarter ended
September 30, 2009.
Cash, cash equivalents and investment securities
available-for-sale totaled $44.1 million at September 30, 2010,
compared to $48.4 million at December 31, 2009.
“We are pleased that we were able to negotiate a favorable
outcome on the deferred marketing expense, removing an $18.7
million liability,” said Martin A. Mattingly, Chief Executive
Officer of Trimeris. “Also during the third quarter of 2010, we
were able to successfully resolve the Novartis patent suit. We are
disappointed and disagree, however, with Roche’s position that it
is entitled to apply a reduced royalty rate on FUZEON sales outside
the U.S. and Canada while cost of goods sold are in dispute. We are
committed to working with Roche to bring this matter to a fair
resolution as quickly as possible.”
Deferred Marketing
Expenses
On September 23, 2010, the Company and Roche entered into an
agreement relieving the Company of any obligation to repay certain
deferred marketing expenses to Roche. The agreement relates to the
parties’ collaboration for the development and commercialization of
FUZEON. Under the existing Development and License Agreement
between the parties, the Company and Roche had agreed that certain
expenses related to the selling and marketing of FUZEON that were
incurred by Roche in 2004 would be subject to re-payment by
Trimeris, assuming certain terms and conditions were met and
Trimeris had recorded the obligation on its balance sheet under the
caption “Accrued Marketing Expenses.” Pursuant to this recent
agreement, the Company is no longer obligated to pay these deferred
marketing expenses to Roche. As a result, the Company eliminated
such accrued marketing costs, which increased collaboration income
by $18.7 million in the third quarter of 2010.
Disagreement with Roche over FUZEON
Cost of Goods Sold
In October 2010, Roche informed the Company that, in reliance on
a clause in the Development and License Agreement between the
Company and Roche that permits Roche to reduce its royalty payments
to the Company if the cost of goods sold outside the U.S. and
Canada exceeds a certain proportion of FUZEON net sales outside the
U.S. and Canada, Roche would reduce the royalty paid to the Company
on sales outside the U.S. and Canada from 12%, the amount
previously paid, to 6% with application retroactive to January 1,
2010. As previously disclosed, in April 2009, the Company notified
Roche that it did not agree with the manner in which FUZEON cost of
goods sold were being calculated and charged to the collaboration.
Roche and the Company have been in discussions regarding this
calculation since that time.
The Company has notified Roche of its objection to the timing
and application of the royalty reduction clause, both under the
terms of the contract and in light of its ongoing discussion
related to the calculation of cost of goods sold. While the Company
is considering all available options for resolution of this issue,
the Company currently intends to continue working with Roche to
reach agreement on the appropriate cost of goods sold for
FUZEON.
Roche’s imposition of a reduced royalty rate resulted in a
reduction in royalty revenue for the first six months of 2010 of
$1.8 million which has been recognized in the third quarter of 2010
and will result in significant reductions in expected royalty
revenues for so long as the reduced royalty rate is in effect.
Novartis Patent Lawsuit
On September 23, 2010, the Company and Roche entered into a
settlement agreement with Novartis resolving the litigation
relating to FUZEON then pending in the U.S. District Court for the
Eastern District of North Carolina. Under the terms of the
settlement agreement, the Company’s collaboration with Roche will
continue to sell FUZEON under a license to Novartis’ U.S. patent
No. 7,285,271 B1. In exchange for the grant of this license, the
Company and Roche agreed to pay royalties to Novartis on net sales
of FUZEON of one and one-half percent (1.5%) on sales occurring in
the U.S. and Canada in a calendar year, and one percent (1%) on
sales outside of the U.S. and Canada in a calendar year. The
royalty rate increases to three percent (3%) in the U.S. and Canada
and one and one-half percent (1.5%) on any portion of FUZEON sales
in excess of $50,000,000 in the relevant region in a calendar year.
The Company and Roche will share responsibility for payment of
these royalties equally.
In addition, pursuant to the terms of the settlement agreement,
the Company made payments to Novartis for the Company’s share of
royalties beginning in the fourth quarter of 2007 through the third
quarter of 2010 in the aggregate amount of approximately $2.7
million ($1.5 million has been recorded as a reduction to royalty
revenue and $1.2 million has been recorded as a reduction to
collaboration income). The Company’s share of the payments to
Novartis for the three months ended September 30, 2010 was
approximately $114,000.
Adjusted (Non-GAAP) Financial
Information
In addition to disclosing financial results calculated in
accordance with Generally Accepted Accounting Principles (“GAAP”),
the Company has reported adjusted net income and adjusted net
income per share for the three and nine months ended September 30,
2010 and 2009, to allow investors to make meaningful comparisons of
the Company’s operating performance between periods. Adjusted net
income and adjusted net income per share are not a substitute for
or superior to net income calculated in accordance with GAAP.
(unaudited)
ThreeMonthsEnded
ThreeMonthsEnded
NineMonthsEnded
NineMonthsEnded
September30, 2010[inthousandsexcept
pershareamounts]
September30, 2009[inthousandsexcept
pershareamounts]
September30, 2010[inthousandsexcept
pershareamounts]
September30, 2009[inthousandsexcept
pershareamounts]
Net income (GAAP) $ 16,453 $ 1,644 $ 18,786 $ 5,055 Obligation to
repay certain deferred
(18,658
)
(18,658
)
marketing expenses, which resulted in
an
one-time increase in collaboration
income
[1]
Novartis royalty, which decreased royalty
2,579
2,306
revenue and collaboration income [2]
Revised royalty rate, which decreased
1,760
-
royalty revenue [3]
Real estate commission, which increased
496
operating expenses [4]
Cost of Goods Sold Credit, which
increased collaboration income [5]
(1,081
)
Net income
(Non-GAAP) $ 2,134 $ 1,644 $ 2,434
$ 4,470 Diluted net income per share (GAAP) $ 0.74
$ 0.07 $ 0.84 $ 0.23
Diluted net income per share (Non-GAAP) $ 0.10 $ 0.07
$ 0.11 $ 0.20
[1] On September 23, 2010, the Company and Roche entered into an
agreement relieving the Company of any obligation to repay certain
deferred marketing expenses.
[2] On September 23, 2010, the Company and Roche signed a
settlement agreement with Novartis resolving the then-pending
litigation relating to FUZEON. The Company’s obligation to Novartis
for its share of royalties beginning in the fourth quarter of 2007
through the third quarter of 2010 was approximately $2.7 million
($1.5 million has been recorded as a reduction to royalty revenue
and $1.2 million has been recorded as a reduction to collaboration
income) which has been recognized in the third quarter of 2010.
The adjustment for the three months ended September 30, 2010 was
$2.6 million ($1.4 million related to royalty revenue and $1.2
million related to collaboration income). This amount represents
the Company’s share of royalties beginning in the fourth quarter of
2007 through the second quarter of 2010.
The adjustment for the nine months ended September 30, 2010 was
$2.3 million ($1.2 million related to royalty revenue and $1.1
million related to collaboration income). This amount represents
the Company’s share of royalties beginning in the fourth quarter of
2007 through the fourth quarter of 2009.
[3] In October 2010, Roche informed the Company that, in
reliance on a clause in the Development and License Agreement
between the Company and Roche that permits Roche to reduce its
royalty payments to the Company if the cost of goods sold outside
the U.S. and Canada exceeds a certain proportion of FUZEON net
sales outside the U.S. and Canada, Roche would reduce the royalty
paid to the Company on sales outside the U.S. and Canada from 12%,
the amount previously paid, to 6% with application retroactive to
January 1, 2010.
The adjustment for the three months ended September 30, 2010 was
$1.8 million. This amount represents the effect of the reduced
royalty rate for the first six months of 2010. There was no
comparable adjustment for the nine months ended September 30,
2010.
[4] In May 2009, the Company entered into an agreement releasing
it from future lease obligations relating to the former corporate
office and research facility. In the second quarter of 2009, the
Company expensed a one-time real estate commission of $496,000 in
connection with this agreement.
[5] During 2008, the Company recorded a reserve for 2008 excess
capacity charges in the amount of $4.1 million to be shared equally
between Roche and the Company. In the first quarter of 2009, Roche
informed the Company that actual excess capacity charges for 2008
were $1.9 million. The difference of $2.2 million was recorded by
the collaboration as a credit to cost of goods sold for the first
quarter of 2009. The Company’s share of this credit was $1.1
million. This amount was recorded by the Company in the first
quarter of 2009, which had the effect of increasing collaboration
income in that period. The Company is disputing with Roche the
remainder of the excess capacity charges for 2008 and 2009. The
resolution of this dispute may result in an increase or decrease to
cost of goods sold for the collaboration in future periods.
Earnings Conference Call and FUZEON Sales Releases
The Company will not be conducting a conference call in
connection with this earnings release.
The Company’s collaborative partner, Roche, no longer includes
FUZEON sales results in their quarterly reports. Accordingly, the
Company will no longer issue separate press releases announcing
FUZEON sales results. FUZEON sales results will now be included in
the Company’s earnings releases.
About Trimeris, Inc.
Trimeris, Inc. (Nasdaq: TRMS) is a biopharmaceutical company
engaged in the commercialization of therapeutic agents for the
treatment of viral disease. The core technology platform of fusion
inhibition is based on blocking viral entry into host cells.
FUZEON, approved in the U.S., Canada and European Union, is the
first in a new class of anti-HIV drugs called fusion inhibitors.
For more information about Trimeris, please visit the Company's
website at http://www.trimeris.com.
Trimeris Safe Harbor Statement
This document and any attachments may contain forward-looking
information about the Company's financial results and business
prospects that involve substantial risks and uncertainties. These
statements can be identified by the fact that they use words such
as "expect," "project," "intend," "plan," "believe" and other words
and terms of similar meaning. Among the factors that could cause
actual results to differ materially are the following: the Company
is dependent on third parties for the sale, marketing and
distribution of its drug candidates; the market for HIV
therapeutics is very competitive with regular new product entries
that could affect the sales of its products; the results of its
previous clinical trials are not necessarily indicative of future
clinical trials; there can be no assurance that the Company will be
able to resolve its dispute with Roche over calculation of cost of
goods sold, or that in resolving such dispute, the Company will not
incur significant costs or adversely affect its critical business
relationship with Roche; and the Company’s commercial drug and drug
candidate are based upon novel technology, are difficult and
expensive to manufacture and may cause unexpected side effects. For
a detailed description of these factors, see Trimeris' Form 10-K
filed with the Securities and Exchange Commission on March 16,
2010.
Trimeris, Inc.
Statements of Operations
[in thousands, except per share
amounts]
(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2010
2009
2010
2009
Revenue: Milestone revenue $ 67 $ 67 $ 199 $ 199 Royalty revenue
[1] (2,697) 2,141 824 6,251 Collaboration income [2] 19,973
1,702 22,713 5,555 Total
revenue and collaboration income 17,343 3,910
23,736 12,005 Operating
expenses: General and administrative 1,433 1,669 4,000 4,805 Gain
on disposal of equipment -- --
-- (23) Total operating expenses 1,433
1,669 4,000 4,782
Operating (loss) income 15,910 2,241
19,736 7,223 Other income (expense)
Interest income 28 59 61 338 Gain on investments - 241 - 298
Interest expense - (64) (130)
(192) Total other income (expense) 28
236 (69) 444 Income
before taxes 15,938 2,477 19,667 7,667 Income tax (benefit) expense
(515) 833 881
2,612 Net income $ 16,453 $ 1,644 $ 18,786
$ 5,055 Basic net income per share $ 0.74 $
0.07 $ 0.84 $ 0.23 Diluted net income per
share $ 0.74 $ 0.07 $ 0.84 $ 0.23
Weighted average shares outstanding – basic 22,320
22,320 22,320 22,297 Weighted
average shares outstanding - diluted 22,332
22,320 22,332 22,297
Notes:
[1] In October 2010, Roche informed the Company that, in
reliance on a clause in the Development and License Agreement
between the Company and Roche that permits Roche to reduce its
royalty payments to the Company if the cost of goods sold outside
the U.S. and Canada exceeds a certain proportion of FUZEON net
sales outside the U.S. and Canada, Roche would reduce the royalty
paid to the Company on sales outside the U.S. and Canada from 12%,
the amount previously paid, to 6% with application retroactive to
January 1, 2010. As previously disclosed, in April 2009, the
Company notified Roche that it did not agree with the manner in
which FUZEON cost of goods sold were being calculated and charged
to the collaboration. Roche and the Company have been in
discussions regarding this calculation.
The Company has notified Roche of its objection to the timing
and application of the royalty reduction clause, both in terms of
the contract and in light of its on-going discussion related to the
calculation of cost of goods sold. While the Company is considering
all available options for resolution of this issue, the Company
currently intends to continue working with Roche to reach agreement
on the appropriate cost of goods sold for FUZEON.
Roche’s imposition of a reduced royalty rate resulted in a
reduction in royalty revenue for the first six months of 2010 of
$1.8 million which has been recognized in the third quarter of
2010.
Pursuant to the terms of the settlement agreement with Novartis
related to the patent litigation, the Company’s obligation to
Novartis for its share of royalties beginning in the fourth quarter
of 2007 through the third quarter of 2010 was approximately $2.7
million ($1.5 million has been recorded as a reduction to royalty
revenue and $1.2 million has been recorded as a reduction to
collaboration income) which has been recognized in the third
quarter of 2010.
[2] Collaboration income represents the Company’s share of the
net operating results from the sale of FUZEON in the United States
and Canada under the Company’s Development and License Agreement
with Roche. These net operating results consist of net sales less
cost of goods (gross margin), less selling and marketing expenses,
other costs related to the sale of FUZEON and development expenses
or post marketing commitments.
The Company entered into negotiations with Roche, in accordance
with the Development and License Agreement, related to excess
capacity charges and cost of goods sold variances for 2008 and
overall cost of goods sold for 2009 and 2010. These negotiations
are ongoing today. Accordingly, the Company cannot accurately
determine if cost of goods sold as a percentage of net sales will
increase, decrease or remain the same in the future and the Company
cannot be certain when a final resolution will be
reached. Depending upon the resolution of the Company’s
negotiations with Roche, cost of goods sold may increase or
decrease in future periods, and as discussed above, royalty rates
and other commercial terms may be similarly effected by the outcome
of these discussions.
During 2008, the Company recorded a reserve for 2008 excess
capacity charges in the amount of $4.1 million to be shared equally
between Roche and the Company. In the first quarter of 2009, Roche
informed the Company that actual excess capacity charges for 2008
were $1.9 million. The difference of $2.2 million was recorded by
the collaboration as a credit to cost of goods sold for the first
quarter of 2009. The Company’s share of this credit was $1.1
million. This amount was recorded by the Company in the first
quarter of 2009, which had the effect of increasing collaboration
income in that period. The Company is disputing with Roche the
remainder of the excess capacity charges for 2008 and 2009. The
resolution of this dispute may result in an increase or decrease to
cost of goods sold for the collaboration in future periods.
Pursuant to the terms of the settlement agreement with Novartis
related to the patent litigation, the Company’s obligation to
Novartis for its share of royalties beginning in the fourth quarter
of 2007 through the third quarter of 2010 was approximately $2.7
million ($1.5 million has been recorded as a reduction to royalty
revenue and $1.2 million has been recorded as a reduction to
collaboration income) which has been recognized in the third
quarter of 2010.
Trimeris, Inc.
Condensed Balance Sheets
[$ in thousands]
(unaudited)
September 30,
2010
December 31,
2009
Assets Cash, cash equivalents and short-term investment
securities available-for-sale $44,135 $48,440 Other current assets
3,606 2,782 Total current assets 47,741 51,222 Total other
assets 8,388 9,036 Total assets $ 56,129 $ 60,258
Liabilities and Stockholders’ Equity Total current
liabilities $ 1,211 $ 6,017 Long term portion of deferred revenue
840 1,039 Accrued marketing costs - 18,528 Accrued compensation –
long-term 95 142 Total liabilities 2,146 25,726
Total stockholders’ equity 53,983 34,532 Total
liabilities and stockholders’ equity $ 56,129 $ 60,258
FUZEON Net Sales
(Recognized by Roche, the Company’s
collaborative partner)
[$ in millions]
(unaudited)
The table below presents net FUZEON sales
by quarter beginning in the first quarter of 2009:
(millions) 2010 Q1
Q2 Q3 Q4
Total
U.S./Canada Net Sales
$7.2 $8.0 $9.0
Ex. U.S./Canada Net Sales
17.3 14.6 9.3
Global Net Sales $24.4 $22.7 $18.3
Brazil Purchase* $7.8 $8.0
-
2009 Q1 Q2
Q3 Q4 Total
U.S./Canada Net Sales
$10.0 $9.7 $10.4 $9.0 $39.1
Ex. U.S./Canada Net Sales
17.8 19.4 19.4 16.5 73.1 Global
Net Sales $27.8 $29.1 $29.8 $25.5
$112.2 Brazil Purchase* $7.1 $8.0 $7.8
$7.6 $30.4
(numbers may not add due to rounding)
*included in Ex. U.S./Canada Net Sales and
Global Net Sales
Grafico Azioni Trimeris (NASDAQ:TRMS)
Storico
Da Ago 2024 a Set 2024
Grafico Azioni Trimeris (NASDAQ:TRMS)
Storico
Da Set 2023 a Set 2024
