Washington Editor
A decision reached by Trimeris Inc. and F. Hoffmann-La Roche Ltd. to halt clinical development of the early-stage HIV candidate T-1249 did not trigger a stock slide of devastating proportions for Trimeris, the company that discovered Fuzeon, a first-in-class fusion inhibitor for HIV patients.
And while the halt certainly is not good news, the clinical hold on T-1249, a next-generation fusion inhibitor, is being interpreted differently by those in the investment community. For example, Leerink Swann & Co., of Boston, downgraded its opinion of Trimeris, while Deutsche Bank-North America, of New York, issued a research report maintaining its buy rating.
Trimeris' stock (NASDAQ: TRMS) fell $2.93 Tuesday, or 14.5 percent, to close at $17.31.
The partners, which last March launched Fuzeon, placed T-1249 on hold due to challenges in achieving the desired technical profile with the current formulation, Dani Bolognesi, co-founder and CEO of Durham, N.C.-based Trimeris, said in a conference call.
In conjunction with the decision surrounding T-1249, Bolognesi said Roche, of Basel, Switzerland, and Trimeris signed a three-year extension to their research agreement to discover, develop and commercialize the next generation of HIV peptide fusion inhibitors. The partners will focus on improved formulations and delivery technologies to reduce administration of the products to a weekly or, possibly, a monthly basis. (Fuzeon must be administered twice a day.)
In concert with those developments, Trimeris has redirected its resources to high-impact programs and realigned its work force, including a staff reduction of about 25 percent (around 25 to 30 people), leaving it with 100 employees, Robin Fastenau, Trimeris' director of corporate communications, told BioWorld Today.
Since its launch, sales of Fuzeon have been disappointing, said Dennis Harp, a biotechnology analyst at Deutsche Bank, who told BioWorld Today there are a few problems with the first-in-class product.
"The product has to be reconstituted - which is inconvenient for patients - there are injection site reactions and it has to be injected twice per day," he said.
But unlike traditional HIV products that work inside the cell, Fuzeon is considered special because it is designed to work outside the cell and to block the virus from entering. Fuzeon also is active against viruses that have developed resistance to existing drugs.
Harp had once believed Fuzeon would be a worldwide blockbuster, but now he estimates the product's worth will be $250 million to $500 million at peak sales. Worldwide sales of Fuzeon in the second and third quarters of 2003 totaled about $18.3 million. Fourth-quarter figures will be released Feb. 3.
Bearing all that in mind, Roche and Trimeris decided to halt the T-1249 program, a decision Harp supports.
"We view this as a positive development for Trimeris in that they will not move [further] with T-1249 until they address the issues that have plagued Fuzeon, namely manufacturing difficulties and a product that is not very convenient to use," Harp said. "In my mind, it made no sense to move forward until those issues were fully addressed."
In a prepared research note released by Leerink Swann, analysts Bill Tanner and Ronald Ellis said halting T-1249 studies will diminish Trimeris' pipeline as the company is without a successor product. Phase II studies were expected to begin in the first half of 2004, Leerink Swann said.
But Bolognesi assured listeners that the companies will continue to develop T-1249.
"We have a great deal of information and experience in the clinic with T-1249, therefore it will remain one of our second-generation drug candidates," he said.
And as per the agreement with Roche, Trimeris' financial commitment to marketing expenses in 2004 will drop to about $10 million (from $20 million), helping Trimeris conserve its cash. (That part of the deal remains, although Roche plans to increase its promotion efforts for Fuzeon.)
Bolognesi said that under the new cost structure, Trimeris' research and development expenses in 2004 are expected to range from $22 million to $27 million, and general and administrative expenses are expected to range from $12 million to $15 million. Based on reductions in the 2004 cash burn, Bolognesi said the company has sufficient cash to fund operations for at least two years. At the end of the third quarter, Trimeris had $111 million in cash.