Trimeris, Inc. (Nasdaq: TRMS), (“Trimeris” or the “Company”), announced today that the Company and its partner, F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (“Roche”), have entered into an agreement relieving Trimeris of any obligation to repay certain deferred marketing expenses. In addition, Trimeris and Roche have jointly settled the U.S. patent infringement suit related to Trimeris’ and Roche’s product FUZEON® (enfuvirtide) with the plaintiff, Novartis Vaccines and Diagnostics, Inc. (“Novartis”).
The agreement reached today between Roche and Trimeris relates to the parties’ collaboration for the development and commercialization of FUZEON. Under the existing Development and License Agreement between the parties, Trimeris and Roche had agreed that certain expenses related to the selling and marketing of FUZEON that were incurred by Roche in 2004 would be subject to re-payment by Trimeris, assuming certain terms and conditions were met. Pursuant to today’s agreement, Trimeris will no longer be obligated to pay these deferred marketing expenses to Roche.
The re-payment obligation is recorded on the Company’s balance sheet as a single entry under the caption “Accrued marketing costs.” This liability was $18.7 million at June 30, 2010. The reversal of this liability will be reflected as income on the Company’s income statement in the third quarter of 2010.
Also, the Company announces today, that Trimeris and Roche have signed a settlement agreement with Novartis resolving the litigation over FUZEON currently pending in the U.S. District Court for the Eastern District of North Carolina. Under the terms of the settlement, the Roche and Trimeris collaboration will continue to sell FUZEON under a license to Novartis’ U.S. patent No. 7,285,271 B1. In exchange for the grant of this license, Roche and Trimeris have agreed to pay royalties to Novartis on net sales of FUZEON of one and one-half percent (1.5%) on sales occurring in the U.S. and Canada in a calendar year, and one percent (1%) on sales outside of the U.S. and Canada in a calendar year. The royalty rate increases to three percent (3%) in the U.S. and Canada and one and one-half percent (1.5%) in the rest of the world on any portion of FUZEON sales in excess of $50,000,000 in the relevant region in a calendar year. Roche and Trimeris will share responsibility for payment of these royalties equally.