Trimeris Has Further to Fall

Sales of Trimeris, Inc.’s (TRMS) lead drug Fuzeon -- its first-generation fusion inhibitor for HIV -- has been declining dramatically since 1Q08 due to fierce competition from Selzentry and Isentress. The collaboration amendment with Roche and several management changes further cast a shadow on the company’s future. We maintain our Sell rating on Trimeris with a $3.50 price target.

U.S. sales of Fuzeon came in at only $16.1 million in the second quarter of 2008, down 51 percent year-over-year. Ex-U.S. sales of Fuzeon were $22.2 million, down 23.8 percent year-over-year. As a result, Trimeris booked only $4.7 million in revenue in 2Q08, a decline of 48% year-over-year. Net income in 2Q08 was $2.5 million ($0.11 per share) on an adjusted basis compared to net income of $4.6 million ($0.21 per share) one year ago.

The Biojector 2000 was expected to be approved in 2008. The device was expected to make Fuzeon more convenient for intake and drive the drug s sales. However, in October 2007, Trimeris and Roche announced the withdrawal of the supplemental New Drug Application (sNDA) for Biojector 2000 due to a significant delay in receiving approval of Biojector 2000.

Further, we don’t think the dividend and the share repurchase program will create value to shareholders unless the company acquires meaningful late-stage drug candidates. We remain clueless as to how the management will drive topline growth in the coming years.

Read the full analyst report on TRMS

Read the full analyst report on TRMS