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Shares of the HIV-drug maker



sank Friday, a day after the Durham, N.C.-based company said sales of its Fuzeon drug have been smaller and slower than expected.

The stock fell 11.1%, or $3.16, to close at $25.26. The stock dropped as low as $23.61.

Two investment banking firms cut their ratings on the stock. Legg Mason Wood Walker dropped its rating to sell from hold; U.S. Bancorp Piper Jaffray lowered its rating to underperform from market perform.

"To date, the launch (of Fuzeon) could, with the exception of a relatively favorable reimbursement climate, be characterized as the 'worst case scenario,'" said Legg Mason analyst Edward H. Nash, in a report to clients Friday.

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Nash noted that Trimeris predicted during its second-quarter conference call to analysts that Fuzeon could produce $70 million in sales this year. At the current rate, Nash said he doubted the sales would exceed $30 million.

Comparing Trimeris' comments from the previous quarter, Nash pointed out that the growth rate of new prescriptions is now half of what the company described just a few months ago. "We continue to believe that the total market size for Fuzeon is much smaller than originally expected," said Nash, who doesn't own shares and whose firm is a market maker in the stock.

He added that the slower-than-expected growth in sales will force Trimeris and its partner Hoffmann La Roche will have to spend more money to market the drug more aggressively to doctors. "While this may have a long-term benefit, it will greatly heighten Trimeris' cash burn and necessitate a cash raise."

Trimeris issued the bad news Thursday after stock markets had closed and conducted a telephone conference call with analysts.

The company said initial production problems have been addressed since the drug was launched March 27. It noted that it still faces a challenge in educating doctors and patients about Fuzeon which, unlike typical oral HIV drugs, must be injected twice a day.

Fuzeon has been marketed as a treatment for patients who have developed a resistance to other HIV drugs. The drug was approved for marketing among European Union countries in late May and it has been launched in 11 of those countries.

Thomas Wei, of U.S. Bancorp Piper Jaffray, said physicians have told him that the twice-daily injections required to administer Fuzeon create "a significant barrier to adoption." In a research note Friday accompanying his cut in Trimeris' ratings, Wei said that Fuzeon sales "will significantly lag due to lack of demand." Wei doesn't own shares; his firm is a market maker in the stock.