Biotech Values

[mskatiescarletohara]

TRMS news is interesting. Here's an article from the local (state) paper in the Raleigh/RTP/Durham/Chapel Hill area. It appears TRMS is positioning itself to develop another drug, whether it's viral or not is the question. Bolognesi is a very talented virologist, deeply rooted within Duke's world renowned virology research division. I'm surprised TRMS is considering venturing outside the viral realm.

http://www.newsobserver.com/104/story/510967.html

Change at top lifts Trimeris shares

Trimeris shares rose nearly 20 percent Wednesday after the Morrisville company announced a restructuring that will include job cuts and the departure of its chief executive, Steve Skolsky.

Dani Bolognesi, who founded the company and helped develop its AIDS drug, will return to the CEO seat.

The company plans to slash costs by shifting sales and marketing responsibilities for its AIDS treatment Fuzeon to its partner, Swiss drug maker Roche. That will allow Trimeris to focus on developing new drugs and free up money to buy promising experimental medicines from other companies.

The changes cost Steve Skolsky his job as CEO. The former GlaxoSmithKline sales and marketing executive joined Trimeris two years ago to boost lackluster Fuzeon sales.

More marketing and sales positions are expected to be eliminated in the next two months. Trimeris employs about 90, but the company hasn't determined how many positions will be cut, Bolognesi said. "It's a drastic change," he said. "But it was very difficult to see how the status quo was supposed to move the needle in the right direction. We can do better by looking at ourselves and redesigning ourselves."

Trimeris announced its restructuring plan Tuesday after the close of the U.S. stock markets.

On Wednesday, the shares jumped $1.99 to close at $12.03.

The stock surged nearly 60 percent this month, since closing at an eight-year low Oct. 30.

Analysts and investors said that Trimeris is winning support for trying to reduce costs and move beyond its one product.

"We applaud Trimeris' shift in strategy," Sharon Seiler, an analyst for Punk Ziegel, wrote in a research note. "But the devil is in the detail."

Trimeris has declined to release 2007 sales projections for Fuzeon, Seiler wrote. The company also has yet to work out changes in its sales and marketing agreement with Roche. And the future value of Trimeris' drug pipeline will depend on the licensing deals the company strikes.

To some extent, the restructuring is taking Trimeris back to its roots as a drug development company -- with the benefit of having income from Fuzeon sales.

By cutting costs, Trimeris expects to boost its annual earnings to $1 per share and add about $20 million to cash reserves next year. Previously, analysts projected earnings per share of 32 cents in 2007.

Bolognesi suggested that the additional cash will allow Trimeris to buy the rights to develop experimental drugs that other companies have discovered, a business transaction known as licensing. The company might buy treatments for other types of diseases.

"We'll be looking beyond viruses," Bolognesi said.

Steering Trimeris as it buys and tests experimental drugs is not where Skolsky's skills and interests lie, Bolognesi said.

"We would be wasting Steve," Bolognesi said.

Skolsky did not return calls seeking comment.

According to a filing submitted to the Securities and Exchange Commission, Skolsky received $700,000 in salary and bonus last year. Bolognesi made $679,088.

Bolognesi, who has been the company's chief scientific officer, helped discover Fuzeon at Duke University in 1993.

He remained at Duke until he was named Trimeris' CEO in 1999. The partnership with Roche, the final stages of development and the commercial introduction of Fuzeon were achieved on his watch.

Fuzeon came to market in the spring of 2003 as one of the most expensive HIV/AIDS drugs available. Its effectiveness was never questioned, but demand fell short of expectations. Physicians reserved it as a drug of last resort. Patients stopped taking it after one month because the twice-daily injections caused welts.

By the time Skolsky stepped in to boost Fuzeon sales, Trimeris stock had dropped more than 75 percent from its high of $54.57 on July 1, 2003.

Under Skolsky's leadership, Trimeris introduced education campaigns, began selling a needle-free device to administer the drug and started research on a next-generation Fuzeon version that promises to reduce injections to once a week.

New treatment guidelines, released about a year ago, gave Fuzeon sales their biggest boost and helped Trimeris become profitable in the fourth quarter of 2005. Under the collaboration with Roche, Trimeris shares the costs and profits of Fuzeon sales in North America and receives royalties on sales elsewhere.

The company is expected to be profitable again this year.