Biotech Values

[DewDiligence]

Caution: read biotech press releases in their entirety!

http://biz.yahoo.com/rc/040106/health_trimeris_roche_3.html

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UPDATE - Roche, Trimeris deny burying HIV drug failure news

By Ransdell Pierson

NEW YORK, Jan 6 (Reuters) - Roche Holding AG and Trimeris Inc. (NasdaqNM:TRMS - News) on Tuesday denied accusations by industry analysts that they buried news about the failure of their new HIV drug in a news release that seemed to be about something else.

The headline and first two paragraphs of the release late on Monday announced that Swiss drugmaker Roche (ROG.VX) and Trimeris, a tiny biotech company based in Durham, North Carolina, would continue working together to develop so-called fusion inhibitors to block the virus that causes AIDS.

A single sentence at the end of the third paragraph noted the companies had halted clinical trials of T-1249, the only experimental medicine in Trimeris' pipeline.

"If you're not a savvy investor you'll get screwed by reading a press release like that," said Edward Nash, a biotech analyst for Legg Mason.

Alert investors nonetheless bailed out of Trimeris' stock, pushing it down more than 10 percent in after-hours trading almost immediately after the 4 p.m. press release on Monday. The stock continued to fall on Tuesday, touching $16.60 -- its lowest point since October 1999.

The release, which did not detail the problems seen with the new medicine, concluded by describing Trimeris' excitement about expanding its research partnership with Roche to discover new formulations of fusion inhibitors.

"They buried the bad news about T-1249, and that's terrible because there's nothing remaining in Trimeris' pipeline now," said Leerink Swann analyst Ron Ellis. "They were trying to accomplish damage control."

Trimeris Chief Executive Dani Bolognesi said the release, which was jointly produced by Trimeris and Roche and reviewed by senior officials of both drugmakers, was strictly above board.

"We certainly weren't trying to hide any of the news. It clearly is in the body of the press release," he told Reuters. [LOL]

Instead, Bolognesi said the companies meant to signal their commitment to develop a new generation of HIV fusion inhibitors that are easier to administer than the one, called Fuzeon, that Roche and Trimeris launched early last year.

Ellis said while an individual investor might not spot hard-to-find bad news in a press release, investors as a group are efficient and usually pinpoint it. "At some point the news comes out."

Legg Mason's Nash said he believed Roche and Trimeris attempted to draw attention away from the failure of T-1249 by focusing instead in glowing terms about their continued relationship.

"But T-1249 was the most important news from the standpoint of investors, who wanted to know why they're not working on the drug and what's wrong with it and why it doesn't work," Nash said.

Nash said experienced biotech investors, especially those that had studied Trimeris for years, would have realized the need to sift through the entire press release and would have realized it spelled trouble for Trimeris.

Roche spokesman Alexander Klauser defended the release, saying the setback for T-1249 was less worthy of top billing than the expanded research agreement between the two drugmakers.

"It was transparent and straightforward," he said, adding that the discontinuation of clinical trials for T-1249 was "not bad news." [!?!]

"It is only on hold. It's not stopped," Klauser said, adding that trials of the drug could be resumed years from now.

Trimeris' CEO said demand for Fuzeon has been hobbled by the need to take two injections of the medicine every day and reluctance by some insurers to cover the $20,000-a-year product.

Bolognesi said Trimeris and Roche hope to develop HIV fusion inhibitors that can be taken far less frequently, including possibly a reformulated version of T-1249, but that it will take years to test them and get them to market.

Trimeris closed down $2.93, or 14.5 percent, at $17.31 on Nasdaq. Shares of Roche, which sells a wide array of medicines, eased 0.4 percent to 124.50 Swiss francs.
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