fwiw Meg's update: TRMS (OP/N) - GS conference update -
focus on Fuzeon
52-Week Range US$55-13
YTD Price Change -32.66%
Market Cap US$304.5mn
Management provided an update on commercial initiatives for Fuzeon and provided a
pipeline update at the 25th Goldman Sachs Healthcare conference. Based on our
long-term conviction in Fuzeon and current valuation, we maintain an Outperform rating
on Trimeris and Neutral coverage view. However, we expect that it will continue to take
time to build the market for Fuzeon. Several important initiatives have only recently been
initiated. The key risk for the stock is lack of sufficient pick up in Fuzeon sales.
I. INVESTMENT VIEW: With a market cap approximating $280 million, and estimated
commercial potential of Fuzeon of between $200-$300M, we believe that Trimeris is
attractively valued on a risk reward basis for investors with a long horizon. Applying a
3X multiple to projected end U.S. sales of $225 million suggests potential long-term
market value for Fuzeon of approximately $675 million. A multiple of 3X reflects
Trimeris 50% share of North American profits and is at the low end of the historic range.
Key to potential upside in the stock will be good execution in the market, where there are
a number of challenges. While the initial roll out is difficult to forecast and we expect
continued volatility in the near term as trends are established, we believe that the
long-term prospects are strong based on the clinical data and unmet medical need.
II. Several Fuzeon initiatives being put in place.
We continue to believe that the clinical data support usage and that there is unmet medical need in
advanced AIDS patients who are not responding adequately to other available therapies. We regard
execution in the market as key. Fuzeon was launched in late March 2003. As a first in class,
injectable, expensive agent which is difficult to produce, we knew that the initial roll out would
engender many challenges. Initial launch has been slower than anticipated.
Although it has taken time, we believe that Trimeris and Roche are laying the foundation for a
more progressive ramp. Recent initiatives that we think will be important to potential adoption in
the coming quarters include the initiation of a pilot nurse education program, the initiation of a
printed advertising campaign, expansion of Fuzeon distribution and continued focus on
reimbursement.
** Nurse assistance program to address slow adoption **
As part of a broader initiative announced in January, Trimeris and partner Roche plan to expand a
nursing assistance program, which will include trained nurses to assist patients in the
administration of Fuzeon, preparation of the drug and other issues. The nurses will be available to
patients both through a call center and through a nationwide network in which nurses can travel to
doctors offices or patient homes. The program will be free of charge to patients and providers. The
companies believe that this effort will be important in facilitating Fuzeon use, particularly at the
initial stages where educational needs are high and clinician and nurse time is limited. A pilot
program in 3 states was initiated in the first quarter. This program is expected to roll out to 19
states where the nurse support need is thought highest over the coming months.
** Expanded distribution **
As of April 26, Trimeris expanded distribution of Fuzeon, beyond its original sole distributor.
Distribution was limited to one provider at launch last year due to supply constraints at the time. By
the end of the month Fuzeon will be available through retail and specialty pharmacies. While we
do not believe that limited distribution has been a significant gating factor to launch, to the extent
that specialty distributors may facilitate reimbursement and logistics, we believe that expanded
distribution will support growth.
** Continued focus on reimbursement **
In terms of reimbursement, we believe that most of the primary insurers are covering Fuzeon.
However, high co-payments have hindered usage in some patients, for others high screening
requirements can take time. Management is working to address this. With respect to State
Assistance programs, management reports that coverage has been obtained in 38 states, including
18 out of the 20 top states. There are patient limits though in some states.
** Advertising campaign **
In the first week of April, the companies launched a printed campaign with details on Fuzeon in
journals targeted to clinicians and patients.
III. Clinical initiatives
This summer Trimeris and Roche plan to start studies to assess the potential of once daily dosing
(still two injections) which could potentially represent an improvement over the current regimen of
twice daily injections. The companies also plan to study longer acting formulations of Fuzeon and
hope to select a lead by year end. Research efforts to identify entry inhibitors to other targets are
also underway.
I, Meg Malloy, hereby certify that all of the views
Here's how they played the exec changes:
Trimeris announced after the close that Dr. M. Nixon Ellis, President, is leaving the
company by mutual agreement. Trimeris has begun a search to replace Dr. Ellis with a
candidate with significant commercial experience. We believe that this move is reflective
of the company's emphasis on commercial development. We believe that Dr. Ellis'
expertise was in clinical development and strategic planning, where he made significant
contributions to the development and approval of HIV drug Fuzeon. We do not expect
that the management change will impact Trimeris stock price. Based on our long-term
conviction in Fuzeon and current valuation, we maintain an OutPerform rating on
Trimeris and Neutral coverage view. However, we expect that it will continue to take time
to build the market for Fuzeon. Several important initiatives have only recently been
initiated and script trends continue to be gradual. The key risk for the stock is lack of
sufficient pick up in Fuzeon sales.
I, Meg Malloy, hereby certify that |
