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Analysts expected this patent litigation to give a further blow to the US$ 16.9
million operating margin of Trimeris. Moreover, Trimeris was reportedly under
significant pressure from HealthCor, a New York-based investment firm and
Trimeris’ largest shareholder, to shut down its R&D operations and consider
selling the entire venture to another company. It was against this backdrop that
Trimeris announced its plans to downsize the company. Under the new
restructuring plan, Trimeris planned to complete clinical trials for bringing
out TR-1144 by 2008.
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After completing the initial stages of tests for its
new drug, Trimeris planned to discontinue its R&D function. Mattingly
said, “While market conditions and the significant risks involved in
research and development have required the company to shift strategic
direction, Trimeris still possesses significant financial assets that
include substantial cash and revenue streams from the sale of FUZEON in
collaboration with Roche.”
Trimeris expected TR-1144 to cause fewer reactions when injected as
compared to Fuzeon. It expressed confidence that once launched – in 2008
– TRI-1144 would prove to be valuable in the fight against HIV/AIDS.
“During this transition period we will evaluate a full range of options
for maximizing shareholder value, including strategic transactions,”
Mattingly added.
The company’s operating expenses were in the range of US$ 21–23 million
in 2007. With the proposed downsizing exercise, Trimeris aimed to reduce
its operating expenses to US$ 10–14 million in 2008. Apart from cutting
down on R&D expenses, the company also planned to lay off its workforce.
The company, however, did not give any details regarding how many
employees would be laid off.
Analysts said that Fuzeon’s pricing, coupled with its drug delivery
system, were to blame for the disappointing performance of the company.
Right from the time when sales of Fuzeon failed to live up to its
initial expectations, various analysts had indicated that Trimeris was
in deep trouble.
With sales of Fuzeon failing to pick up significantly and the company
being encircled by a number of problems, most of the industry watchers
painted a gloomy outlook for Trimeris. Analysts were also skeptical
about the future prospect of its new drug. Considering the circumstances
Trimeris found itself in, experts viewed the company’s decision to
restructure itself as a logical step.
ADDITIONAL READINGS AND REFERENCES
1. Ben Hirschler, “Record High Price Set for New Roche AIDS Drug,”
www.aidsmeds.com, February 24, 2003.
2. Sabine Vollnmer, “New Prescriptions for AIDS Drug Fuzeon Fall,”
www.hivandhepatitis.com, October, 2003.
3. “International Prix Galien 2004: Revolutionary HIV Drug Fuzeon
Receives Most Prestigious Award for Innovation in Pharmaceutical
Industry,” www.roche.com, October 8, 2004.
4. “Trimeris Reports 2005 Fuzeon Sales Results: Global Sales Exceed $200
Million,” www.trimeris.com, January 31, 2006.
5. Varsha Tickoo, “Trimeris Falls after Roche Deal Change, Exec
Departures,” www.natap.org, March 16, 2007.
6. Brian Lawler, “Not What Trimeris Needs,” www.fool.com, November 30,
2007.
7. “Trimeris to Lay off Employees, Drop R&D,” www.bizjournals.com,
December 10, 2007.
8. “Trimeris Announces 2008 Strategic Plan,” www.businesswire.com,
December 10, 2007.
9. David Ranii, “Trimeris Ending AIDS Research,” www.newsobserver.com,
December 11, 2007.
10. “Trimeris Plans to Cut Workforce, Slash Spending in 08,”
www.localtechwire.com, December 11, 2007.
11. “Tough Times for Small HIV Fighters,” www.fool.com, December 13,
2007.
CASES ON RELATED TOPICS
1.
Pricing Fuzeon: Cost of Innovation
2.
Race-Specific Drug 'BiDil': Nitromed's Marketing Challenge
3.
HSBC's Restructuring in India
4.
Employee Downsizing - A Global Phenomenon
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