Trimeris Reports Financial Results for the First Quarter 2011
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Press Release Source: Trimeris, Inc. On Friday May 13, 2011, 5:00 pm EDT
DURHAM, N.C.--(BUSINESS WIRE)-- Trimeris, Inc., (NASDAQ:TRMS - News) today reported first quarter 2011 financial results. Net loss for the quarter ended March 31, 2011 was $67,000 or $0.00 per share compared with net income of $988,000, or $0.04 per share for the quarter ended March 31, 2010. The Company reported adjusted net income for the quarter ended March 31, 2011 of $269,000 compared to adjusted net loss for the quarter ended March 31, 2010 of $68,000.
Comparisons of net income between the quarters ended March 31, 2011 and March 31, 2010 are affected by several items detailed in the section below entitled “Adjusted (Non-GAAP) Financial Information.”
Cash Position
As of March 31, 2011, cash, cash equivalents and investment securities totaled $47.3 million compared to $45.2 million as of December 31, 2010.
Collaboration Income
Collaboration income from our collaboration with F. Hoffman-LaRoche, Ltd. (“Roche”) for the quarter ended March 31, 2011 was $1.3 million compared with $1.2 million for the quarter ended March 31, 2010. Net sales of FUZEON in the U.S. and Canada for the first quarter of 2011 declined seven percent to $6.7 million, from $7.2 million for the same period in 2010. This net sales decline was completely offset by reduced selling and marketing expenses and cost of goods sold.
Royalty Revenue
Royalty revenue from Roche for the quarter ended March 31, 2011 was $262,000 compared with $1.9 million for the same period in 2010. This decrease was primarily driven by lower sales outside the U.S. and Canada (“ROW”) and the reduction of the royalty rate from 12% to 6% for ROW sales imposed by Roche and described in more detail below.
ROW net sales of FUZEON for the first quarter of 2011 were $5.2 million, down 70 percent from $17.2 million for the same period in 2010. A significant portion of this decline in net sales resulted from the variability in quarterly buying patterns of specific countries that either did not purchase during the quarter (Brazil) or purchased significantly reduced quantities (Mexico and Romania).
Disagreement with Roche over FUZEON Cost of Goods Sold and Royalty Rate
In October 2010, Roche informed the Company that, in reliance on a clause in the Development and License Agreement between the Company and Roche which permits Roche to reduce its ROW royalty payments to the Company if the cost of goods sold outside the U.S. and Canada exceeds a certain proportion of those net sales, Roche would reduce the royalty paid to the Company 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 by Roche 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 the parties’ 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.
The effect of Roche’s imposition of a reduced royalty rate resulted in a $1.8 million reduction in royalty revenue for the first six months of 2010, which was recognized in the third quarter of 2010, and continues to result in significant reductions in expected royalty revenues for so long as the reduced royalty rate is in effect.
Operating Expenses
Operating expenses for the quarter ended March 31, 2011 were $1.7 million compared with $1.4 million for the same period in 2010 reflecting a non-recurring increase in legal fees and patent write-offs.
Earnings Conference Call
The Company will not be conducting a conference call in connection with this earnings release.
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