TRMS: Q3 RESULTS AHEAD OF EXPECTATIONS
06:58am EST 3-Nov-00 Prudential Securities (J.SONNIER 847-374-3983) TRMS
TRMS: Q3 RESULTS AHEAD OF EXPECTATIONS
PRUDENTIAL VECTOR HEALTHCARE GROUP November 3, 2000
SUBJECT: Trimeris Inc.(TRMS-$74.88) --NASD
----- ANALYST(S) -------------------- -------- OPINION --------
John S. Sonnier 847.374.3983 Current: Strong Buy
John Walcott 847.374.3934 Risk: High
Target: $75.00
FY REV EPS P/E 1Q 2Q 3Q 4Q
Act 12/99 $10.1 ($1.27) NM ($0.50) ($0.54) ($0.30) ($0.53)
Cur 12/00 $2.0E ($2.12)E NM ($0.37)A ($0.55)A ($0.46)A ($0.73)E
Prev ($2.42)E NM ($0.74)E ($0.75)E
Cur 12/01 $9.0E ($3.19)E NM
----- FUNDAMENTAL -------------------------------------------------------
Avg. Volume: 100,000 IAD/Yield: NA/ NA EPS Growth: NA
Mkt Cap: $1,179 mil 52-Week Range: 76 - 18 P/E / Growth: NM
mil
----- BUSINESS -----------------------------------------------------------
Trimeris (TRMS) is a biopharmaceutical company based in Durham, NC that is
developing a new therapeutic class of drugs called viral fusion inhibitors.
Lead candidate, T-20, is in Phase II trials directed at HIV; the next candidate
is T-1249, which is also directed at HIV and is in Phase I. Both products have
received fast track designation from the FDA. Trimeris' focus on viral fusion
represents a novel broad-based target for the design of antiviral drugs with
significant therapeutic advantages over current therapies. Research efforts are
also directed toward identifying peptides and orally active fusion inhibitors
for a number of other viruses, including respiratory syncytial virus, human
parainfluenza virus, influenza, and hepatitis B and C.
----- HIGHLIGHTS---------------------------------------------------------
1) Trimeris announced Q3 results of EPS ($0.46), ahead of our estimate ($0.74)
and Consensus ($0.65), with a reported net loss of $7.3M. This was largely due
to lower than expected R&D spending and better interest income.
2) Trimeris is still not an earnings driven story, but is making significant
progress in developing its viral f usion inhibitors, T-20 and T-1249, which are
both in clinical trials.
3) We anticipate a $2M milestone from partner Roche for initiation of Phase
III trials in T-20, announced in Q3. We expect complete enrollment of Phase III
trials in 1H'01, T-20 registration in 1H'02 and launch in 2H'02.
4) We believe the next positive news event will be presentation of TRMS
research at the 8th Conference on Retroviruses and Opportunistic Infections in
February 2001.
5) We remain enthusiastic about the progress of TRMS with partner Roche in the
clinical development of both T-20 and T-1249. We reiterate our Strong Buy
rating with a $75 price target.
----- DISCUSSION---------------------------------------------------------
Q3 Results ahead of expectations
Trimeris announced Q3 results of EPS ($0.46) on a net loss of $7.3M, better than
our expectations of ($0.74) on a net loss of $11.8M. The Consensus estimate
was ($0.65). These results were largely due to better interest income and lower
than expected R&D expense, which was $6.8M in Q3. Even as R&D has not
accelerated as anticipated, we believe that the progress of TRMS' viral fusion
inhibitor program is on-track and progressing well with partner, Hoffman-La
Roche.
Viral Fusion Inhibitor Program On-Track
T-20 and T-1249 are the leading drug candidates in Trimeris' program to develop
a new class of antiviral drugs, fusion inhibitors, targeting HIV. Roche has
partnered with TRMS in the development of both T-20 and T-1249. This novel
approach simply blocks the entry of HIV into host cells, preventing replication
of the virus. T-20 is the lead candidate in Phase III and T-1249 is TRMS's
second fusion inhibitor candidate currently in Phase I trials. Trimeris
announced in Q3 the selection of Roche's Colorado manufacturing facility as the
designated supplier of T-20 for the initiation of Phase III trials. We believe
that this agreement on Roche's part strengthens its commitment to and signals
its confidence in the fusion inhibitor program. Phase III trial initiation,
which was announced one month ago, triggers an expected $2M milestone from Roche
in Q4.
T-20 Phase III in progress
Study T-301 is Trimeris' Phase III trial for T-20 in the Americas, including the
U.S., Canada, Mexico and Brazil. Several sites have already been validated in
the U.S. with a total of 48 sites altogether (39 U.S., 5 Canada, 2 Mexico, 2
Brazil). TRMS anticipates full enrollment in six months.
Study T-302 is the T-20 Phase III trial in Europe and Australia. The trial
protocol has been submitted to regulatory bodies and is expected to start
enrollment by the end of the year, also completing in six months.
Upcoming Events
We anticipate that results of both studies will be available and presented at
the 9th Conference on Retroviruses and Opportunistic Infections in Q1'02,
followed by an NDA submission before the end of 1H'02. With FDA designated
fast-track status, T-20 could be approved and potentially launched before the
end of 2H'02.
The next positive news event is likely the presentation of TRMS research at the
8th Conference on Retroviruses and Opportunistic Infections in February 4-8,
2001. Trimeris has submitted 7 abstracts to this conference including:
_ Study T-204 evaluating T-20 safety and efficacy in children,
_ Study T-205 evaluating T-20 efficacy in antiviral
treatment-experienced patients,
_ Study T-206 evaluating T-20 in combination therapy for antiviral
treatment-experienced patients,
_ and Phase I/II dose ranging studies in T-1249.
We anticipate that not all abstracts will be accepted due to conference
constraints, but look forward to these results, as they are made available.
Conclusion
We remain enthusiastic about the progress of Trimeris in developing T-20 and
T-1249 with partner Roche. We believe the progress of clinical development in
viral fusion inhibitors is on-track and provides an exciting alternative to
current anti-retroviral treatment of HIV. We reiterate our Strong Buy rating
with a $75 price target.
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