Trimeris, Inc. (NASDAQ: TRMS), today reported second
quarter 2011 financial results. As previously reported, Trimeris
entered into a new royalty arrangement with F. Hoffmann-La Roche
Ltd. and Hoffmann-La Roche Inc. (collectively, “Roche”) pursuant to
an Amended and Restated Agreement dated as of May 25, 2011 and
effective as of January 1, 2011 (the “New Roche Agreement”), which
is described in footnote 1 to the attached statements of
operations. Because the New Roche Agreement fundamentally changed
the calculation of amounts payable to Trimeris, comparisons of
financial results between the quarters and six month periods ended
June 30, 2011 and June 30, 2010 are not directly comparable.
Net income for the quarter ended June 30, 2011 was $673,000 or
$0.03 per share compared with net income of $1.3 million or $0.06
per share for the quarter ended June 30, 2010. For the six months
ended June 30, 2011, Trimeris reported net income of $606,000, or
$0.03 per share, compared with $2.3 million, or $0.10 per share for
the six months ended June 30, 2010.
The overall decline in net income for the quarter and six months
ended June 30, 2011 compared to the corresponding periods in 2010
resulted primarily from decreased worldwide net sales of FUZEON and
increased general and administrative fees related to the Trimeris
process to evaluate and identify a strategic partner as well as
Trimeris’ proposed merger with Synageva BioPharma Corp.
(“Synageva”) described below and other adjustments, offset by
certain payments from Roche.
Proposed Synageva Merger
As previously reported, on June 13, 2011, the Company entered
into an Agreement and Plan of Merger and Reorganization (the
“Synageva Merger Agreement”) with Synageva. Pursuant to the terms
and subject to the conditions set forth in the Synageva Merger
Agreement, Synageva would become a wholly-owned subsidiary of
Trimeris (the “Synageva Merger”). Completion of the Synageva Merger
is subject to various conditions, including the approval of the
stockholders of both Trimeris and Synageva. On July 13, 2011,
Trimeris and Synageva filed a Registration Statement on Form S-4
with the Securities and Exchange Commission (the “SEC”). This
Registration Statement provides additional information regarding
the Synageva Merger.
Cash Position
As of June 30, 2011, cash and cash equivalents totaled $52.4
million compared to $45.2 million as of December 31, 2010. The
increase in cash is primarily a result of a $4.9 million settlement
payment from Roche in connection with the New Roche Agreement.
Revenue
Total revenue for the quarter ended June 30, 2011 was $3.4
million compared with $3.3 million for the same period in 2010. The
slight increase in revenue for the quarter was attributable to
certain payments and other adjustments recognized in the second
quarter as well as declining sales of FUZEON. Total revenue for the
six months ended June 30, 2011 was $5.0 million compared with $6.4
million for the same period in 2010, primarily due to a decline in
sales of FUZEON and other adjustments, offset by certain payments
from Roche.
FUZEON Sales
The tables below illustrate net sales of FUZEON in North America
and ROW on a quarterly basis. Although worldwide net sales of
FUZEON during the quarter ended June 30, 2011 increased $1.7
million from worldwide net sales of FUZEON in the quarter ended
March 31, 2011, Trimeris believes that this quarter-to-quarter
increase in net sales is more likely due to the continuation of
historical variability in FUZEON sales rather than stabilization of
the recent decline in net sales of FUZEON.
In the first half of 2011 worldwide net sales declined by $21.6
million or 46% from worldwide net sales in the first half of 2010.
North American net sales of FUZEON for the quarter ended June 30,
2011 were $5.7 million, down 29% from $8.0 million for the same
period in 2010. ROW net sales for the second quarter of 2011 were
$7.9 million, down 46% from $14.7 million from the same period last
year. North American net sales for the six months ended June 30,
2011 were $12.4 million, down 18% from $15.2 million for the same
period in 2010. ROW net sales for the six months ended June 30,
2011 were $13.1 million, down 59% from $31.9 million for the same
period last year.
We believe that the sales declines between 2010 and 2011 in
North America have resulted mainly from patients switching to a
more convenient dosing alternative, while the ROW declines stem in
large part from the variability in buying patterns of certain
countries that either do not purchase FUZEON every quarter (Brazil)
or that purchase FUZEON in quantities that vary significantly from
quarter to quarter.
($ millions)
2011 Q1
Q2 Q3 Q4
Total North America Net Sales $6.7
$5.7 $12.4 ROW Net Sales
5.2 7.9
13.1 Worldwide Net Sales $11.9
$13.6 $25.5
Brazil
Purchase* - -
-
2010
Q1 Q2 Q3 Q4
Total North America Net Sales
$7.2 $8.0 $9.0 $7.8 $32.0 ROW Net Sales
17.2 14.7 9.3 15.2
56.4 Worldwide Net Sales $24.4 $22.7
$18.3 $23.0 $88.4
Brazil Purchase*
$7.8 $8.0 -
$7.4 $23.2
*included in ROW Net Sales and Worldwide Net Sales
Operating Expenses
Operating expenses for the quarter and six months ended June 30,
2011 were $2.6 million and $4.3 million, respectively, compared
with $1.1 million and $2.6 million for the same periods in 2010
reflecting increased fees payable to legal and financial advisors,
as well as other administrative expenses related to the proposed
Synageva Merger.
Earnings Conference Call
The Company will not be conducting a conference call in
connection with this earnings release.
About Trimeris
Trimeris, Inc. (NASDAQ: TRMS) pioneered the development of a
class of antiviral drug treatments called fusion inhibitors. The
Company's only marketed product is FUZEON, an anti-HIV fusion
inhibitor which was developed by the Company in collaboration with
Roche. Substantially all of Trimeris’ revenues are derived from the
Company's collaboration with Roche relating to FUZEON. 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: we are
dependent on third parties for the manufacture, sale, marketing and
distribution of FUZEON; the market for HIV therapeutics is very
competitive with regular new product entries that could affect the
sales of the Company’s products; FUZEON is based upon a novel
technology, is difficult and expensive to manufacture and may cause
unexpected side effects; and the proposed Synageva Merger may not
be completed in the time frame the Company expects or at all; and,
if the proposed Synageva Merger is completed, the issuance of the
Trimeris stock to Synageva stockholders in the merger will
substantially dilute the voting power of the current Trimeris
stockholders and the merger may not achieve the benefits that the
Company anticipates.
For a detailed description of these factors, see Trimeris' Form
10-Q filed with the Securities and Exchange Commission on August
12, 2011.
Important Synageva Merger Information and Additional
Information and Where to Find It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities of Trimeris or
Synageva or the solicitation of any vote or approval. In connection
with the proposed Synageva Merger, Trimeris filed a Registration
Statement on Form S-4 with the SEC on July 13, 2011 (the
“Registration Statement”), which includes a preliminary joint proxy
statement of Trimeris and Synageva and constitutes a preliminary
prospectus of Trimeris. These materials are not yet final and will
be further amended. The joint proxy statement/prospectus of
Trimeris and Synageva will be mailed to the stockholders of
Trimeris and Synageva once it is final. Investors are strongly
urged to read the definitive joint proxy statement/prospectus when
it becomes available and other documents filed with the SEC by
Trimeris, because they will contain important information about
Trimeris, Synageva and the proposed Synageva Merger.
Investors and security holders of Trimeris and Synageva may
obtain free copies of the joint proxy statement/prospectus for the
proposed Synageva Merger and other documents filed with the SEC by
Trimeris through the website maintained by the SEC at www.sec.gov. In addition, investors and security
holders of Trimeris will be able to obtain free copies of the joint
proxy statement/prospectus for the proposed Synageva Merger by
contacting Trimeris, Inc., Attn: James Thomas, Chief Financial
Officer, 2530 Meridian Parkway, 2nd Floor, Durham, NC 27713.
Investors and security holders of Synageva will be able to obtain
free copies of the joint proxy statement/prospectus for the merger
by contacting Synageva BioPharma Corp., Attn: Secretary, 128 Spring
Street, Suite 520, Lexington, MA 02421.
Trimeris and Synageva, and their respective directors and
certain of their executive officers, may be deemed to be
participants in the solicitation of proxies in respect of the
transactions contemplated by the agreement between Trimeris and
Synageva. Information regarding Trimeris’ directors and executive
officers is contained in Trimeris’ Annual Report on Form 10-K for
the fiscal year ended December 31, 2010, which was filed with
the SEC on March 14, 2011, and in its proxy statement prepared
in connection with its 2010 Annual Meeting of Stockholders, which
was filed with the SEC on March 16, 2010. Information
regarding Synageva’s directors and officers and a more complete
description of the interests of Trimeris’ and Synageva’s respective
directors and officers in the proposed transaction is available in
the Registration Statement.
Trimeris, Inc.
Statements of Operations
[in thousands, except per share
amounts]
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2011
2010
2011
2010
Revenue: Milestone revenue (1) $ 973 $ 66 $ 1,039 $ 132
Collaboration income and royalty revenue (2) 2,473
3,195 4,006 6,261
Total revenue 3,446 3,261
5,045 6,393 Operating expenses: General
and administrative 2,633 1,135
4,334 2,567 Total operating expenses
2,633 1,135 4,334
2,567 Operating income 813
2,126 701 3,826
Other income (expense) Interest income - 19 5 33 Interest
expense - (65 ) -
(130 ) Total other income (expense) - (46 )
5 (97 ) Income before taxes 813
2,080 706 3,729 Income tax expense 140 735
100 1,396 Net
income $ 673 $ 1,345 $ 606 $ 2,333
Basic net income per share $ 0.03 $ 0.06
$ 0.03 $ 0.10 Diluted net income
per share $ 0.03 $ 0.06 $ 0.03 $ 0.10
Weighted average
shares outstanding – basic
22,399
22,320
22,363
22,320
Weighted average
shares outstanding - diluted
22,399
22,326
22,363
22,327
Notes:
[1] Milestone revenue for the three and six months ended June
30, 2011 includes $973,000 of accelerated milestone revenue
recognized due to the New Roche Agreement, as well as $66,000 of
amortized milestone revenue recognized in the first quarter of 2011
in accordance with the Prior Roche Agreements.
[2] On May 25, 2011, Trimeris and Roche entered into the
New Roche Agreement, effective as of January 1, 2011, pursuant
to which Roche has an exclusive license to manufacture and sell
FUZEON worldwide and Roche has agreed to pay Trimeris a royalty
equal to 16% of worldwide net sales of FUZEON, after a 5.5%
distribution fee (calculated in accordance with the New Roche
Agreement) occurring from and after January 1, 2011. The New
Roche Agreement superseded and replaced the Development and License
Agreement dated July 1, 1999, between Trimeris and Roche and the
Research Agreement dated January 1, 2000 between Trimeris and Roche
(such agreements, as amended, the “Prior Roche Agreements”).
Collaboration income and royalty revenue for the three months
ended June 30, 2011 includes:
- $1.9 million of royalty revenue
calculated in accordance with the New Roche Agreement; and
- a $4.9 million settlement payment from
Roche; offset by
- a $5.3 million write-off of the
advanced payment Roche, net of capitalized variances; and
- a $1 million reversal of a liability
for excess capacity charges as a result of the New Roche
Agreement.
In addition, collaboration income and royalty revenue for the
three and six months ended June 30, 2011 includes an immaterial
adjustment to reflect the difference in royalty revenues during the
quarter ended March 31, 2011 in accordance with the New Roche
Agreement.
Collaboration income and royalty revenue previously reported for
periods ending before June 30, 2011 represent the Company’s share
of the net operating results from the sale of FUZEON in the United
States and Canada under the Prior Roche Agreements, as well as
royalty revenue on ROW sales of FUZEON. Net operating results from
sales of FUZEON in the United States and Canada consist of net
sales less cost of goods (gross margin), less selling and marketing
expenses, other costs related to the sale of FUZEON and development
expenses or post marketing commitments.
Trimeris, Inc.
Condensed Balance Sheets
[$ in thousands]
(Unaudited)
June 30,2011
December 31,2010
Assets Cash, cash equivalents and short-term investments $
52,382 $ 45,164 Other current assets 3,315
3,956 Total current assets 55,697 49,120 Total other assets
2,301 8,159 Total assets $ 57,998 $ 57,279
Liabilities and Stockholders’ Equity Total current
liabilities $ 1,437 $ 1,001 Long term portion of deferred revenue -
774 Accrued compensation – long-term 94 128
Total liabilities 1,531 1,903 Total
stockholders’ equity 56,467 55,376 Total
liabilities and stockholders’ equity $ 57,998 $ 57,279
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