seems to have lost its way.
A better-than-expected fourth-quarter earnings report late Thursday was overshadowed by a trio of announcements. The Morrisville, N.C.-based maker of an HIV drug said both its chief executive and chief financial officer had resigned; an important drug development partnership with
was abandoned; and the company's previously stated 2007 earnings guidance was no longer valid.
Following the announcement, Trimeris shares tumbled more than 10% in after-hours trading to $10.
Taken together, the new developments raise serious questions about the company's future. Trimeris' sole source of revenue is Fuzeon, an HIV drug that has
struggled commercially because it must be given by a painful injection and it has a host of bad side-effects. As a result, doctors typically prescribe Fuzeon only to HIV patients who have developed resistance to all other HIV drugs.
new HIV drugs from
nearing FDA approval later this year, demand for Fuzeon likely will wane.
Simply put, the trends in HIV drug research work against Trimeris, because as new drugs reach the market, Fuzeon patients can stop using that painful drug and switch to new medicines that are easier to use, and in many cases, more effective.
Tht is the context in which to view Thursday's developments at Trimeris. CEO Dani Bolognesi and CFO Robert Bonczek announced their retirements from the company via press release, and neither man was on the company's conference call.
Management consultant E. Lawrence Hill Jr. was appointed Trimeris' acting president and chief operating officer.
Trimeris also announced that Roche, its partner in Fuzeon, was handing back rights to a second-generation version of the drug that was in the early stages of development by both companies.
On its conference call, Hill didn't give a reason why Roche was abandoning the drug, known as TRI-1144. Trimeris said it is reviewing strategic options regarding the future of the drug.
But if Roche had confidence in the long-term future of the Fuzeon franchise, would it have given up on TRI-1144? Not likely.
Trimeris had previously announced a corporate restructuring designed to focus efforts on achieving sustainable profitability with Fuzeon sales alone. But this plan also was cast into the shadows Thursday when Hill said he no longer could hold tight to the company's guidance for 2007 earnings of $1 a share.
Hill's entire conference call on behalf of Trimeris was awkward. He acknowledged only taking his caretaker role as acting president on Wednesday, and he was clearly left with not much more than a script from prior management to read. Analysts on the call pitched questions about the future plans for the company, but Hill had little to offer.
Trimeris did report fourth-quarter earnings of 21 cents a share, an increase over 17 cents a share a year earlier, which topped the consensus analyst estimate by 5 cents. Revenue in the quarter totaled $12.5 million, up 57% from last year.
But while the quarter looked good, the future at Trimeris is uncertain, at best.
Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
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