Synageva BioPharma (GEVA)

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Trimeris Reports Financial Results for the Third Quarter 2009

Press Release
Source: Trimeris, Inc.
On 4:00 pm EST, Thursday November 12, 2009

Companies:Trimeris Inc.
DURHAM, N.C.--(BUSINESS WIRE)--Trimeris, Inc. (Nasdaq: TRMS - News) (“Trimeris” or the “Company”) today announced financial results for the three months ended September 30, 2009, reporting net income of $1.6 million, or $0.07 per share, compared with $3.6 million, or $0.16 per share, for the three months ended September 30, 2008. This result was primarily driven by decreased FUZEON® sales and an increase in tax expense, offset, in part, by lower operating expenses.

For the nine months ended September 30, 2009, the Company reported net income of $5.1 million, or $0.23 per share, compared with $6.5 million, or $0.29 per share for the nine months ended September 30, 2008.

Royalty revenue for the quarter ended September 30, 2009 was $2.1 million compared with $3.4 million for the quarter ended September 30, 2008. This decrease was driven by a decrease in net FUZEON® sales outside the U.S. and Canada. Net sales of FUZEON® outside the U.S. and Canada for the third quarter of 2009 were $19.4 million, down 37 percent from $30.6 million in the third quarter of 2008.

Collaboration income for the quarter ended September 30, 2009 was $1.7 million compared with $1.8 million for the quarter ended September 30, 2008. The decrease was primarily driven by a decrease in net sales of FUZEON® in the U.S and Canada offset, in part, by reduced selling and marketing expenses. Net sales of FUZEON in the U.S. and Canada for the third quarter of 2009 were $10.4 million, down 31 percent from $14.9 million in the third quarter of 2008.

Operating expenses for the quarter ended September 30, 2009 of $1.7 million compared with $1.9 million for the quarter ended September 30, 2008. The decrease was primarily driven by reduced business activities including research and development offset, in part, by increased costs related to the negotiation of the Company’s previously announced agreement and plan of merger with Arigene Co., Ltd. and RTM Acquisition Company as further described below.

The income tax provision for the quarter ended September 30, 2009 was $833,000 compared with $47,000 for the quarter ended September 30, 2008. This increase was driven by an “ownership change” as defined under Section 382 of the Internal Revenue Code of 1986, as amended, which occurred in December 2008. The effects of this ownership change were the imposition of a $457,000 annual limitation on the use of net operating loss carryforwards, tax credits and built-in loss items attributable to periods before the ownership change. Earnings in excess of the annual limitation will now be subject to corporate income taxes.

Cash, cash equivalents and investment securities available-for-sale totaled $35.6 million at September 30, 2009, compared to $31.6 million at December 31, 2008.

As previously announced, the Company has signed an agreement and plan of merger with Arigene Co., Ltd., a Korean corporation (“Arigene”), pursuant to which, upon completion of a tender offer for the outstanding shares of common stock of the Company, the Company will become a wholly-owned subsidiary of Arigene. The Company has previously filed a Schedule 14D-9 Solicitation/Recommendation Statement and amendments thereto with the Securities and Exchange Commission containing additional information regarding the tender offer and merger.

Earnings Conference Call

The Company announced today that it will not be conducting a conference call in connection with this earnings release.

About Trimeris, Inc.

Trimeris, Inc. (Nasdaq: TRMS - News) 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: there is uncertainty regarding the success of research and development activities, regulatory authorizations and product commercializations; we are dependent on third parties for the sale, marketing and distribution of the Company’s drug candidates; the market for HIV therapeutics is very competitive with regular new product entries that could affect the sales of the Company’s products; the results of the Company’s previous clinical trials are not necessarily indicative of future clinical trials; and the Company’s drug candidates 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 13, 2009.

Trimeris, Inc.

Statements of Operations

[in thousands, except per share amounts]

(unaudited)


Three Months Ended

September 30,
Nine Months Ended

September 30,

2009 2008 2009 2008
Revenue:
Milestone revenue $ 67 $ 67 $ 199 $ 199
Royalty revenue 2,141 3,373 6,251 8,663
Collaboration income [1] 1,702 1,756 5,555 6,154
Total revenue and collaboration income 3,910 5,196 12,005 15,016

Operating expenses:
Research and development - 367 - 2,923
General and administrative 1,669 1,519 4,805 5,778
(Gain) loss on disposal of equipment - (10 ) (23 ) 496
Total operating expenses 1,669 1,876 4,782 9,197

Operating income 2,241 3,320 7,223 5,819

Other income (expense)
Interest income 59 397 338 1,756
Gain/(loss) on investments 241 (15 ) 298 (703 )
Interest expense (64 ) (96 ) (192 ) (285 )
Total other income (expense) 236 286 444 768

Income before taxes 2,477 3,606 7,667 6,587
Income tax provision 833 47 2,612 110

Net income $ 1,644 $ 3,559 $ 5,055 $ 6,477

Basic net income per share $ 0.07 $ 0.16 $ 0.23 $ 0.29

Diluted net income per share $ 0.07 $ 0.16 $ 0.23 $ 0.29

Weighted average
shares outstanding – basic
22,320
22,186
22,297
22,180

Weighted average
shares outstanding - diluted
22,320
22,271
22,297
22,270


Dividends declared per common share -- -- -- $ 1.50


Notes:

[1] 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 F.Hoffmann-La Roche, Ltd. (“Roche”), the Company’s collaboration partner. 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.

On January 1, 2009, the Company adopted Financial Accounting Standards Board Emerging Issues Task Force Issue Number 07-1 “Accounting for Collaborative Arrangements,” which falls under the guidance of Accounting Standards Codification Topic 808, "Collaborative Arrangements." As a result, all development expenses generated at Roche related to FUZEON® are included in the Company’s collaboration income. For the three months ended September 30, 2009 and 2008, the Company’s share of the development expenses of $62,000 and $205,000, respectively, was included in the Company’s collaboration income. For the nine months ended September 30, 2009 and 2008, the Company’s share of the development expenses of $594,000 and $716,000, respectively, was included in the Company’s collaboration income. In previous periods, such expenses were included in research and development expenses and have been reclassified to conform to the current presentation.

The Company has 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. 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. Although active discussions are on-going, 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.

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 has been recorded 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. The Company is disputing with Roche the remainder of the excess capacity charges for 2008. The resolution of this dispute may result in an additional credit to cost of goods sold for the collaboration in future periods.

Trimeris, Inc.

Condensed Balance Sheets

[$ in thousands]

(unaudited)


September 30,
2009
December 31,
2008

Assets
Cash, cash equivalents and short-term investment securities available-for-sale $ 35,617 $ 28,750
Other current assets 3,185 3,334
Total current assets 38,802 32,084
Long-term investment securities available-for-sale - 2,827
Total other assets 9,427 9,301
Total assets $ 48,229 $ 44,212
Liabilities and Stockholders’ Equity
Total current liabilities $ 1,594 $ 3,541
Long term portion of deferred revenue 1,105 1,304
Accrued marketing costs 18,463 18,271
Accrued compensation – long-term - 74
Total liabilities 21,162 23,190

Total stockholders’ equity 27,067 21,022
Total liabilities and stockholders’ equity $ 48,229 $ 44,212

FUZEON Net Sales

(Recognized by Roche, the Company’s collaborative partner)

[$ in millions]

(unaudited)


Three Months Ended,** Nine Months Ended, **
September 30,
2009
September 30,
2008
September 30,
2009
September 30,
2008


United States and Canada $ 10.4 $ 14.9 $ 30.1 $ 48.0
Rest of World 19.4 30.6 56.6 78.5
Worldwide Total $ 29.8 $ 45.5 $ 86.7 $ 126.5

** may not add due to rounding

Contact:
Trimeris, Inc.Andrew Graham, Chief Financial Officer919-806-4682