UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
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Commission File Number 0-23155
TRIMERIS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 56-1808663
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3518 Westgate Drive
Durham, North Carolina 27707
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (919) 419-6050
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
The number of shares outstanding of the registrant's common stock as of
November 12, 2001 was 17,396,299.
TRIMERIS, INC.
(A Development Stage Company)
FORM 10-Q
For the Nine Months Ended September 30, 2001
INDEX
PART 1. FINANCIAL INFORMATION Page
- ------------------------------------ ----
Item 1. Financial Statements
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Balance Sheets as of December 31, 2000 and
September 30, 2001 (unaudited) 1
Statements of Operations (unaudited) for the Three and Nine Months
Ended September 30, 2001 and 2000 and Period From
Inception (January 7, 1993) Through September 30, 2001 2
Statements of Cash Flows (unaudited) for the Nine Months Ended
September 30, 2001 and 2000 and Period From
Inception (January 7, 1993) Through September 30, 2001 3
Notes to Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations 7
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Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
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PART 2. OTHER INFORMATION
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Item 1. Legal Proceedings 19
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Item 2. Changes in Securities and Use of Proceeds 19
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Item 3. Defaults Upon Senior Securities 19
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Item 4. Submission of Matters to a Vote of Security Holders 19
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Item 5. Other Information 19
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Item 6. Exhibits and Reports on Form 8-K 19
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Signature Page 20
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Exhibit Index 21
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PART 1. FINANCIAL INFORMATION
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Item 1. Financial Statements
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TRIMERIS, INC.
(A Development Stage Company)
BALANCE SHEETS
(in thousands, except par value)
December 31, September 30,
2000 2001
---- ----
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 31,349 $ 23,901
Short-term investments 62,025 66,394
Accounts receivable 4 311
Prepaid expenses 393 363
----------- ----------
Total current assets 93,771 90,969
Property, furniture and equipment, net 3,983 3,737
----------- ----------
Other assets:
Patent costs, net 924 1,243
Equipment deposits 255 227
----------- ----------
Total other assets 1,179 1,470
----------- ----------
Total assets $ 98,933 $ 96,176
=========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,476 $ 2,840
Accounts payable - Roche 9,556 8,719
Current installments of capital lease obligations 1,174 999
Accrued compensation 1,359 2,045
Deferred revenue - Roche 1,304 1,304
Accrued expenses 2,904 3,297
----------- ----------
Total current liabilities 19,773 19,204
Obligations under capital leases, excluding current installments 1,861 1,233
Deferred revenue - Roche 3,920 2,942
----------- ----------
Total liabilities 25,554 23,379
----------- ----------
Commitments and contingencies
Stockholders' equity:
Series A, B, C, and D preferred stock at $.001 par value
per share, 10,000 shares authorized, zero
shares issued and outstanding at December 31,
2000 and September 30, 2001 (unaudited) -- --
Common Stock at $.001 par value per share, 60,000
shares authorized, 15,863 and 17,395 shares issued
and outstanding at December 31, 2000 and
September 30, 2001 (unaudited) 16 17
Additional paid-in capital 196,844 242,929
Deficit accumulated during the development stage (122,154) (167,363)
Deferred compensation (1,394) (3,028)
Accumulated other comprehensive income 76 251
Notes receivable from stockholders (9) (9)
----------- -----------
Total stockholders' equity 73,379 72,797
----------- ----------
Total liabilities and stockholders' equity $ 98,933 $ 96,176
=========== ==========
See accompanying notes to financial statements.
1
TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Period
Three Months Nine Months From Inception
Ended September 30, Ended September 30, (January 3, 1993)
------------------- ------------------- through September 30,
2000 2001 2000 2001 2001
---- ---- ---- ---- ----
Revenue $ 210 $ 326 $ 630 $ 978 $ 7,568
-------- --------- --------- --------- -----------
Operating expenses:
Research and development:
Non-cash compensation 475 (1,690) 7,042 (2,142) 6,432
Other research and
development expense 6,825 14,772 20,066 42,653 131,329
-------- --------- --------- --------- -----------
Total research and
development expense 7,300 13,082 27,108 40,511 137,761
-------- --------- --------- --------- -----------
General and administrative:
Non-cash compensation 1,158 421 8,202 1,468 11,805
Other general and
administrative expense 1,929 2,790 5,360 7,702 33,535
-------- --------- --------- --------- -----------
Total general and
administrative expense 3,087 3,211 13,562 9,170 45,340
-------- --------- --------- --------- -----------
Total operating
expenses 10,387 16,293 40,670 49,681 183,101
-------- --------- --------- --------- -----------
Operating loss (10,177) (15,967) (40,040) (48,703) (175,533)
--------- --------- --------- --------- -----------
Other income (expense):
Interest income 1,702 1,044 4,579 3,643 13,947
Interest expense (54) (48) (165) (149) (1,597)
--------- --------- --------- --------- -----------
1,648 996 4,414 3,494 12,350
-------- --------- --------- --------- -----------
Net loss before cumulative
effect of change in
accounting principle (8,529) (14,971) (35,626) (45,209) (163,183)
Cumulative effect of change
in accounting principle -
implementation of SAB 101 -- -- (4,180) -- (4,180)
-------- --------- --------- --------- -----------
Net loss $ (8,529) $ (14,971) $ (39,806) $ (45,209) $ (167,363)
======== ========= ========= ========= ===========
Basic and diluted net loss per share:
Before cumulative effect of
accounting change $ (0.54) $ (0.86) $ (2.32) $ (2.71)
Accounting change -- -- (0.27) --
-------- -------- --------- ---------
Basic and diluted net loss per
share (0.54) $ (0.86) $ (2.59) $ (2.71)
======== ========= ========= =========
Weighted average
shares used in per share
computations 15,653 17,386 15,356 16,691
======== ========= ========= =========
See accompanying notes to financial statements.
2
TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Period
Nine Months Ended From Inception
September 30, (January 7, 1993)
--------------------- through September 30,
2000 2001 2001
---- ---- ----
Cash flows from operating activities:
Net loss $ (39,806) $ (45,209) $ (167,363)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 940 1,407 6,359
Other amortization 10 12 121
Amortization of deferred revenue - Roche (630) (978) (1,934)
Non-cash compensation expense 15,244 (674) 18,237
401(K) plan stock match - - 914
Provision for equipment held for resale - - 61
Stock issued for consulting services - - 5
Stock issued to repay interest on notes to stockholders - - 195
Debt issued for research and development - - 194
Cumulative effect of change in accounting principle 4,180 - 4,180
Loss on disposal of property and equipment - - 16
Changes in operating assets and liabilities:
Accounts receivable 16 (307) (311)
Accounts receivable - Roche 144 - -
Prepaid expenses 33 30 (363)
Other assets (48) 28 (227)
Accounts payable (4,075) (636) 2,840
Accounts payable - Roche 1,314 (837) 8,719
Accrued compensation 623 686 2,045
Accrued expenses (455) 393 3,207
Deferred revenue - Roche - - 2,000
------- --------- --------
Net cash used by operating activities (22,510) (46,085) (121,105)
-------- --------- --------
Cash flows from investing activities:
Sales (purchases) of short-term investments (24,641) (4,194) (66,143)
Purchases of property and equipment (952) (1,161) (3,381)
Equipment held for resale - - (61)
Organization costs - - (8)
Patent costs (267) (331) (1,302)
-------- --------- --------
Net cash used by investing activities (25,860) (5,686) (70,895)
------- --------- --------
Cash flows from financing activities:
Proceeds from issuance of notes payable - - 6,150
Lease costs - - (13)
Principal payments under capital lease obligations (619) (803) (4,499)
Proceeds from issuance of Common Stock 66,570 43,385 175,679
Proceeds from issuance of Preferred Stock - - 23,896
Proceeds from sale of options 2,796 344 3,140
Proceeds from exercise of stock options 1,939 1,200 4,883
Proceeds from employee stock purchase plan exercise 192 197 1,006
Repayment of notes receivable from stockholders 80 - 259
Warrant issuance - - 5,400
------- --------- --------
Net cash provided by financing activities 70,958 44,323 215,901
------- --------- --------
Net increase (decrease) in cash and cash equivalents 22,588 (7,448) 23,901
Cash and cash equivalents, beginning of period 37,023 31,349 -
------- --------- --------
Cash and cash equivalents, end of period $59,611 $ 23,901 $ 23,901
======= ========= ========
See accompanying notes to financial statements.
3
TRIMERIS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
Trimeris, Inc. (the "Company") was incorporated on January 7, 1993 in
Delaware, to discover and develop novel therapeutic agents that block viral
infection by inhibiting viral fusion with host cells. These financial statements
have been prepared in accordance with Statement of Financial Accounting
Standards No. 7, "Accounting and Reporting by Development Stage Enterprises," to
recognize the fact that the Company is devoting substantially all of its efforts
to establishing a new business and planned principal operations have not
commenced.
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and applicable Securities and Exchange Commission regulations for
interim financial information. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to the Securities and Exchange Commission rules
and regulations. In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of financial
position and results of operations have been made. Operating results for interim
periods are not necessarily indicative of results which may be expected for a
full year. The information included in this Form 10-Q should be read in
conjunction with the Risk Factors and Management's Discussion and Analysis of
Financial Condition and Results of Operations sections and the 2000 financial
statements and notes thereto included in the Company's 2000 Annual Report on
Form 10-K filed with the Securities and Exchange Commission on April 2, 2001, as
amended on July 24, 2001.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. BASIC NET INCOME (LOSS) PER SHARE
In accordance with SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"),
basic loss per common share is calculated by dividing net loss by the
weighted-average number of common shares outstanding for the period after
certain adjustments described below. Diluted net income per common share
reflects the maximum dilutive effect of common stock issuable upon exercise of
stock options, stock warrants, and conversion of preferred stock. Diluted net
loss per common share is not shown, as common equivalent shares from stock
options, and stock warrants, would have an antidilutive effect. At September 30,
2001, there were 2,076,000 options to purchase common stock outstanding and
362,000 warrants to purchase common stock outstanding. At September 30, 2000,
there were 1,719,000 options to purchase common stock outstanding and 362,000
warrants to purchase common stock outstanding.
3. STATEMENTS OF CASH FLOWS
Interest of approximately $165,000 and $149,000 was paid during the nine
months ended September 30, 2000 and 2001, respectively. Capital leases of
$1,123,000 and $0 were incurred for the nine months ended September 30, 2000 and
2001, respectively for the purchase of new furniture and equipment.
4
4. STOCKHOLDERS' EQUITY
In October 1997, the Company closed its initial public offering of common
stock at $12 per share. The net proceeds of the offering, including the proceeds
received in connection with the exercise of the Underwriters' over-allotment
option which closed in November 1997, were approximately $34.5 million after
deducting applicable issuance costs and expenses. In connection with the public
offering, all the outstanding preferred stock was converted into 6,261,615
shares of the Company's common stock.
In June 1999, the Company closed a public offering of common stock at
$11.75 per share. The net proceeds of the offering, including the proceeds
received in connection with the exercise of the Underwriters' over-allotment
option, were approximately $31.4 million after deducting applicable issuance
costs and expenses.
In February 2000, the Company closed a private placement of 1.75 million
shares of common stock at $40.50 per share. The net proceeds of the offering
were approximately $66.6 million after deducting applicable issuance costs and
expenses.
In May 2001, the Company closed a private placement of approximately 1.4
million shares of common stock at $33.00 per share. The net proceeds of the
offering were approximately $43.4 million after deducting applicable issuance
costs and expenses.
In September 2001, the Company entered into derivative transactions with a
financial institution that may be settled by selling up to 107,000 shares of its
stock to the financial institution at prices significantly higher than the
market price per share of the Company's stock at the inception of the
transaction. The Company received approximately $344,000 in proceeds that were
accounted for as an increase to additional paid-in capital in accordance with
EITF Issue No. 00-19, "Determination of Whether Share Settlement Is within the
Control of the Company for Purposes of Applying EITF Issue No. 96-13,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock." Alternatively, the Company has the option to
settle these contracts by making a cash payment to the financial institution for
the underlying value of the derivative contracts to the financial institution on
the settlement date. The Company intends to settle the contracts by issuing
shares. All of these derivative transactions expire or mature in September 2002.
Other significant changes in additional paid-in capital during the nine
months ended September 30, 2001 were $2.4 million debited to additional paid-in
capital related to expense reversal of non-cash compensation charges, and $3.3
million credited to additional paid-in capital related to deferred compensation
recorded for a former consultant who became an employee.
5. ROCHE COLLABORATION
In July 1999, the Company announced an agreement with F. Hoffmann-La Roche
Ltd ("Roche") to develop and market T-20 and T-1249 worldwide. In the United
States and Canada, the Company and Roche will share equally development expenses
and profits for the two fusion inhibitors. Outside of these two countries, Roche
will fund all development costs and pay the Company royalties on net sales of
these products. Roche made an initial cash payment to the Company of $10 million
during 1999 and a milestone payment of $2 million in 2000. Roche will provide up
to an additional $56 million in cash and funding upon achievement of
developmental, regulatory and commercial milestones. In accordance with Staff
Accounting Bulletin No. 101, the initial cash payment, net of the $5.4 million
fair value of the warrant granted to Roche, is being amortized into revenue over
the research and development term of the Roche agreement.
In June 2001, the Company announced a research agreement with Roche to
discover, develop and commercialize novel generations of HIV fusion inhibitor
peptides. Roche and Trimeris will equally fund worldwide research, development
and commercialization costs, as well as share equally in profits from worldwide
sales of new HIV fusion inhibitor peptides discovered after July 1, 1999.
5
6. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", establishes rules for the reporting and display of
comprehensive income or loss and its components. This Statement requires that
unrealized gains or losses on the Company's available-to-sale securities be
included in other comprehensive income. Comprehensive income (loss) totaled
($45,034,000) for the nine months ended September 30, 2001. For the nine months
ended September 30, 2000, comprehensive loss is equal to the Company's net loss.
6
Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
---------------------
This discussion of our financial condition and the results of operations
should be read together with the financial statements and notes contained
elsewhere in this Form 10-Q. Certain statements in this section and other
sections are forward-looking. While we believe these statements are accurate,
our business is dependent on many factors, some of which are discussed in the
"Risk Factors" and "Business" sections of our 2000 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 2, 2001, as amended
on July 24, 2001. These factors include, but are not limited to: that we are a
development stage company that has sustained losses since our inception, and
expect our losses to continue and that we may never develop any drugs that
achieve commercial viability; that if we cannot raise additional funds in the
future, our ability to develop our drug candidates will suffer; that any
additional financing we obtain may dilute our stockholders, restrict our
operating flexibility, or result in a transfer of rights to our technologies or
drug candidates; that if we are unable to commercialize T-20, our lead drug
candidate, our business will be materially harmed; that if our clinical trials
are delayed or achieve unfavorable results, we may never obtain regulatory
approval for our drugs or generate any revenue; that if sufficient amounts of
our drug candidates cannot be manufactured on a cost-effective basis or we
cannot obtain the appropriate quantities of raw materials to manufacture our
drug candidates, our financial condition and results of operations will be
materially and adversely affected; that if Roche does not meet its contractual
obligations to us, our research and development efforts and the regulatory
approval and commercialization of our drug candidates could be delayed or
otherwise materially and adversely affected; that if we cannot maintain
commercial manufacturing agreements with third parties on acceptable terms, or
if these third parties do not perform as agreed, the commercial development of
our drug candidates could be delayed or otherwise materially and adversely
affected; that our business is based on a novel technology called fusion
inhibition, and unexpected side effects or other characteristics of this
technology may delay or otherwise adversely affect the development, regulatory
approval and/or commercialization of our drug candidates; that even if we are
successful in developing a commercially viable drug, in order to become
profitable we will need to maintain arrangements with third parties for the
sale, marketing and distribution of our drug candidates or expend significant
resources to develop these capabilities; that the HIV virus is likely to develop
resistance to some of our drug candidates, which could adversely affect demand
for those drug candidates and harm our competitive position; that our stock
price is highly volatile and you may not be able to sell our shares at or above
the price you paid to acquire our shares; that we depend on patents and
proprietary rights, which may offer only limited protection against
infringement, and if we are unable to protect these rights, our assets and
business could be materially harmed; that we are subject to extensive and
complex government regulation, including regulation by the FDA, which can entail
significant costs and could delay, limit or prevent commercialization of our
drug candidates; that we face intense competition in our efforts to develop
commercially successful drugs in the biopharmaceutical industry and if we are
unable to compete successfully, our business will suffer; that our drugs may not
achieve market acceptance; that uncertainty relating to third-party
reimbursement and health care reform measures could limit the amount we will be
able to charge for our drugs and adversely affect our results of operations;
that if an accident or injury involving hazardous materials occurs, we could
incur fines or liability, which could materially and adversely affect our
business and our reputation; that if the testing or use of our drug candidates
harms people, we could face costly and damaging product liability claims far in
excess of our liability and indemnification coverage; that our quarterly
operating results are subject to fluctuations, and if our operating results for
a particular period deviate from the levels expected by securities analysts and
investors, it could adversely affect the market price of our common stock; that
if we lose any of our executive management or other key employees, we will have
difficulty replacing them, and if we cannot attract and retain qualified
personnel on acceptable terms, the development of our drug candidates and our
financial position may suffer; and future sales of common stock by our existing
stockholders or key management could adversely affect our stock price. Many of
these factors are beyond our control and any of these and other factors could
cause actual results to differ materially from the forward-looking statements
made in this Form 10-Q. The results of our previous clinical trials are not
necessarily indicative of the results of future clinical trials. We undertake no
obligation to release publicly the results of any revisions to the statements
contained in this Form 10-Q to reflect events or circumstances that occur
subsequent to the date hereof.
7
Overview
We began our operations in January 1993 and are a development stage
company. Accordingly, we have a limited operating history. Since our inception,
substantially all of our resources have been dedicated to:
o the development, patenting, preclinical testing and clinical trials of
our drug candidates, T-20 and T-1249,
o the development of a manufacturing process for T-20 and T-1249,
o production of drug material for future clinical trials, and
o research and development and preclinical testing of other potential
product candidates.
We have lost money since inception and, as of September 30, 2001, had an
accumulated deficit of approximately $167.4 million. We have received revenue
only from federal small business innovative research grants, otherwise known as
SBIR grants, an investigative contract, and an initial collaboration payment and
a milestone payment from Roche, and have not generated any revenue from product
sales or royalties. We may never generate any revenue from product sales or
royalties.
Development of current and future drug candidates will require significant
additional, time-consuming and costly research and development, preclinical
testing and extensive clinical trials prior to submission of any regulatory
application for commercial use. We expect to incur substantial losses for the
foreseeable future and expect losses to increase as our research and
development, preclinical testing, drug production and clinical trial efforts
expand. The amount and timing of our operating expenses will depend on many
factors, including:
o the status of our research and development activities,
o the results of product candidate discovery and development efforts,
including preclinical testing and clinical trials,
o the timing of regulatory actions,
o the costs involved in preparing, filing, prosecuting, maintaining,
protecting and enforcing patent claims and other proprietary rights,
o our ability to work with Roche to manufacture, develop, sell, market and
distribute T-20 and T-1249,
o technological and other changes in the competitive landscape,
o changes in our existing or future research and development relationships
and strategic alliances,
o development of any future research and development relationships or
strategic alliances,
o evaluation of the commercial viability of potential product candidates,
and
o other factors, many of which are outside of our control.
As a result, we believe that period-to-period comparisons of our financial
results in the future are not necessarily meaningful. The past results of
operations and results of previous clinical trials should not be relied on as an
indication of future performance. If we fail to meet the clinical and financial
expectations of securities analysts and investors, it could have a material
adverse effect on the market price of our common stock. Our ability to achieve
profitability will depend, in part, on our own or our collaborative partner's
ability to successfully develop and obtain regulatory approval for T-20 or
T-1249 or other product candidates, and our ability to develop the capacity,
either internally or through relationships with third parties, to manufacture,
sell, market and distribute approved products, if any. We may never generate
significant revenues or achieve profitable operations.
8
Results of Operations
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 2001
REVENUE. Total revenue increased from $210,000 for the three months ended
September 30, 2000 to $326,000 for the three months ended September 30, 2001.
Total revenue for the three months ended September 30, 2000 represents the
amortization of the $10 million initial collaboration payment from Roche, net of
the $5.4 million assigned to the warrant granted to Roche concurrent with the
initiation of our collaboration, over the research and development term of the
agreement. Total revenue for the three months ended September 30, 2001 includes
this amortization and amortization of a $2.0 million milestone payment received
from Roche in 2000 over the research and development term of the Roche
agreement.
RESEARCH AND DEVELOPMENT EXPENSES. Total research and development expenses were
$7.3 million and $13.1 million for the three months ended September 30, 2000 and
2001, respectively. Total research and development expenses include gross
research and development expenses less Roche's share of development costs for
T-20 and T-1249. Under our collaboration agreement, Roche and we shared equally
the development costs incurred during the period from July 1, 1999 until
September 30, 2001 for T-20 and T-1249. Total research and development expenses
excluding non-cash compensation charges increased from $6.8 million during the
three months ended September 30, 2000 to $14.8 million during the three months
ended September 30, 2001 primarily because we:
o continued two Phase III clinical trials for T-20 which were initiated in
late 2000,
o increased the number of our personnel to support our clinical trial and
manufacturing process development activities,
o continued four Phase II clinical trials for T-20,
o continued a Phase I/II clinical trial for T-1249, and
o continued manufacturing process development and purchase of drug material
from third party manufacturers to supply future clinical trials.
Non-cash compensation changed from $475,000 in expense for the three months
ended September 30, 2000 to $1.7 million in expense reversal for the three
months ended September 30, 2001 due to the effect that the higher market value
of our stock at September 30, 2000 compared to the market value of our stock at
September 30, 2001, had on the calculation of this expense under Emerging Issues
Task Force ("EITF") 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services" for stock options previously granted to non-employees. The expense
reversal resulted because the cumulative expense under EITF 96-18 for stock
options previously granted to non-employees was greater at December 31, 2000
than at September 30, 2001 because of the reduction in the market value of our
stock during the first nine months of 2001.
Total research personnel were 60 and 64 at September 30, 2000 and 2001,
respectively. We expect research and development expenses, net of reimbursements
for T-20 and T-1249 development costs from Roche, to increase substantially in
the future due to:
o continuation of two Phase III clinical trials for T-20,
o preparation of materials for an anticipated submission of a New Drug
Application for T-20 to the United States Food and Drug Administration
following receipt of data from our Phase III clinical
trials,
o expanded clinical trials for T-20, T-1249 and other product candidates,
o the manufacture of drug material for these trials,
o increased preclinical research and testing of potential product
candidates, and
9
o increased number of personnel to support these activities.
GENERAL AND ADMINISTRATIVE EXPENSES. Total general and administrative expenses
were $3.1 million and $3.2 million for the three months ended September 30, 2000
and 2001, respectively. Expenses excluding non-cash compensation charges
increased from $1.9 million for the three months ended September 30, 2000 to
$2.8 million for the three months ended in September 30, 2001 because during the
three months ended September 30, 2001, we:
o performed market research and conducted pre-marketing activities with
respect to T-20 which we shared equally with Roche,
o added administrative personnel to support our growth, and
o incurred increased professional fees to support our growth.
Non-cash compensation expense decreased from $1.2 million for the three months
ended September 30, 2000 to $421,000 for the three months ended September 30,
2001 due to the effect that the higher market value of our stock at September
30, 2000 compared to the market value of our stock at September 30, 2001, had on
the calculation of this expense under EITF 96-18 for stock options previously
granted to non-employees. We expect administrative expenses to increase in the
future to support the anticipated expansion of product development activities,
including pre-marketing activities undertaken in anticipation of the
commercialization of T-20 to be shared equally with Roche.
OTHER INCOME (EXPENSE). Other income (expense) consists of interest income and
expense. Total other income (expense) was $1.6 and $1.0 million for the three
months ended September 30, 2000 and 2001, respectively. The decrease was
primarily due to lower interest income because of lower interest rates on our
investment portfolio during the three months ended September 30, 2001 compared
to the three months ended September 30, 2000. We expect yields on our investment
portfolio to continue to decrease in the future based on the current short-term
interest rate environment.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 2001
REVENUE. Total revenue increased from $630,000 for the nine months ended
September 30, 2000 to $978,000 for the nine months ended September 30, 2001.
Total revenue for the nine months ended September 30, 2000 represents the
amortization of the $10 million initial collaboration payment from Roche, net of
the $5.4 million assigned to the warrant granted to Roche concurrent with the
initiation of our collaboration, over the research and development term of the
agreement. Total revenue for the nine months ended September 30, 2001 includes
this amortization and amortization of a $2.0 million milestone payment received
from Roche in 2000 over the research and development term of the Roche
agreement.
RESEARCH AND DEVELOPMENT EXPENSES. Total research and development expenses were
$27.1 million and $40.5 million for the nine months ended September 30, 2000 and
2001, respectively. Total research and development expenses include gross
research and development expenses less Roche's share of development costs for
T-20 and T-1249. Under our collaboration agreement, Roche and we shared equally
the development costs incurred during the period from July 1, 1999 until
September 30, 2001 for T-20 and T-1249. Total research and development expenses
excluding non-cash compensation charges increased from $20.1 million during the
nine months ended September 30, 2000 to $42.7 million during the nine months
ended September 30, 2001 because we:
o continued two Phase III clinical trials for T-20 which were initiated in
late 2000,
o increased the number of our personnel to support our clinical trial and
manufacturing process development activities,
o continued four Phase II clinical trials for T-20,
10
o continued a Phase I/II clinical trial for T-1249, and
o continued manufacturing process development and purchase of drug material
from third party manufacturers to supply ongoing and future clinical
trials.
Non-cash compensation expense decreased from $7.0 million in expense for the
nine months ended September 30, 2000 to $2.1 million in expense reversal for the
nine months ended September 30, 2001 due to the effect that the higher market
value of our stock at September 30, 2000 compared to the market value of our
stock at September 30, 2001, had on the calculation of this expense under EITF
96-18 for stock options previously granted to non-employees. The expense
reversal resulted because the cumulative expense under EITF 96-18 for stock
options previously granted to non-employees was greater at December 31, 2000
than at September 30, 2001 because of the reduction in the market value of our
stock during the first nine months of 2001.
Total research personnel were 60 and 64 at September 30, 2000 and 2001,
respectively. We expect research and development expenses, net of the
reimbursements for T-20 and T-1249 development costs from Roche, to increase
substantially in the future due to:
o continuation of two Phase III clinical trials for T-20,
o preparation of materials for an anticipated submission of a New Drug
Application for T-20 to the United States Food and Drug Administration
following receipt of data from our Phase III clinical trials,
o expanded clinical trials for T-20, T-1249 and other product candidates,
o the manufacture of drug material for these trials,
o increased preclinical research and testing of potential product
candidates, and
o increased number of personnel to support these activities.
GENERAL AND ADMINISTRATIVE EXPENSES. Total general and administrative expenses
were $13.6 million and $9.2 million for the nine months ended September 30, 2000
and 2001, respectively. Expenses excluding non-cash compensation charges
increased from $5.4 million for the nine months ended September 30, 2000 to $7.7
for the nine months ended September 30, 2001 because during the nine months
ended September 30, 2001 we:
o initiated several market research studies and conducted pre-marketing
activities with respect to T-20 which we shared equally with Roche,
o added administrative personnel to support our growth, and
o incurred increased professional fees to support our growth.
Non-cash compensation expense decreased from $8.2 million for the nine months
ended September 30, 2000 to $1.5 million for the nine months ended September 30,
2001 due to the effect that the higher market value of our stock at September
30, 2000 compared to the market value of our stock at September 30, 2001, had on
the calculation of this expense under EITF 96-18 for stock options previously
granted to non-employees, and the fact that a former consultant became an
employee during this period. We expect administrative expenses to increase in
the future to support the anticipated expansion of product development
activities, including pre-marketing activities undertaken in anticipation of the
commercialization of T-20 to be shared equally with Roche.
OTHER INCOME (EXPENSE). Other income (expense) consists of interest income and
expense. Total other income (expense) was $4.4 million and $3.5 million for the
nine months ended September 30, 2000 and 2001, respectively. The decrease was
primarily due to lower interest income because of lower interest rates on our
investment portfolio during the nine months ended September 30, 2001 compared to
the nine months
11
ended September 30, 2000. We expect yields on our investment portfolio to
continue to decrease in the future based on the current short-term interest rate
environment.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through the
private placement of equity securities, the issuance of notes to stockholders,
equipment lease financing, an initial public offering of common stock in October
1997, a public offering of common stock in June 1999, a private placement of
common stock in February 2000, and a private placement of common stock in May
2001. Net cash used by operating activities was $22.5 million and $46.1 million
for the nine months ended September 30, 2000 and 2001, respectively. The cash
used by operating activities during the nine months ended September 30, 2001 was
used primarily to fund research and development relating to T-20, T-1249, and
other product candidates, and increased for the nine months ended September 30,
2001 over the same period in 2000 because of increased research and development
activities primarily related to the development of T-20 and T-1249. Cash used by
investing activities was $25.9 million for the nine months ended September 30,
2000. Cash used by investing activities was $5.7 million for the nine months
ended September 30, 2001. The amount used for the nine months ended September
30, 2000 resulted from the purchase of short-term investments, using the
proceeds from our private placement of common stock in February 2000. The amount
used for the nine months ended September 30, 2001 resulted from the net purchase
of short-term investments, using the proceeds from our private placement of
common stock in May 2001. Cash provided by financing activities for the nine
months ended September 30, 2000, was $71.0 million. Cash provided by financing
activities for the nine months ended September 30, 2001 was $44.3 million. Cash
provided by financing activities for the nine months ended September 30, 2000
was primarily the proceeds from our private placement of common stock in
February 2000. Cash provided by financing activities for the nine months ended
September 30, 2001 was primarily the proceeds of our private placement of common
stock in May 2001.
As of September 30, 2001, we had $90.3 million in cash and cash equivalents
and short-term-investments, compared to $93.4 million as of December 31, 2000.
The decrease is primarily a result of the cash used by operating activities,
offset by the closing of a private placement of common stock in May 2001, which
resulted in net proceeds of approximately $43.4 million.
In July 2000, we entered into a derivative transaction with a financial
institution that provided for settlement by the sale of up to 300,000 shares of
our stock to the financial institution at prices significantly higher than the
market price per share of our stock at the inception of the transaction. We
received $2.8 million in proceeds that were accounted for as an increase to
additional paid-in capital in accordance with generally accepted accounting
principles at the time of the transaction. Concurrently, we entered into a
second derivative transaction with the same financial institution on shares of
our common stock at no net premium to either party. These contracts expired
unexercised during July 2001.
In September 2001, we entered into derivative transactions with a financial
institution that may be settled by selling up to 107,000 shares of our stock to
the financial institution at prices significantly higher than the market price
per share of our stock at the inception of the transaction. We received
approximately $344,000 in proceeds that were accounted for as an increase to
additional paid-in capital in accordance with generally accepted accounting
principles at the time of the transaction. Alternatively, we have the option to
settle these contracts by making a cash payment to the financial institution for
the underlying value of the derivative contracts to the financial institution on
the settlement date. We intend to settle the contracts by issuing shares. All of
these derivative transactions expire or mature in September 2002. The financial
institution has advised us that it has engaged and may continue to engage in
transactions, including the buying and selling of shares of our common stock, to
offset its risks related to these transactions, which may or may not affect the
market price of our stock.
We have experienced negative cash flows from operations since our inception
and do not anticipate generating sufficient positive cash flows to fund our
operations in the foreseeable future. Although we expect to share the future
development costs for T-20 and T-1249 for the United States and Canada equally
with Roche, we have expended,
12
and expect to continue to expend in the future, substantial funds to pursue our
product candidate and compound discovery and development efforts, including:
o expenditures for clinical trials of T-20, T-1249 and other product
candidates,
o research and development and preclinical testing of other product
candidates,
o manufacture of drug material, and
o the development of our proprietary technology platform.
As of September 30, 2001, we had commitments of approximately $5.7 million
to purchase product candidate materials and fund various clinical studies over
the next 10 months. Substantially all of these expenditures will be shared
equally by Roche under our collaborative agreement. Under this collaborative
agreement, we are obligated to share equally the future development expenses for
T-20 and T-1249 in the United States and Canada. We also expect to have capital
expenditures of approximately $500,000 during the remainder of 2001 that will
not be shared with Roche. These expenditures may be financed with capital or
operating leases, debt or working capital.
In May 2001, we closed a private placement of approximately 1.4 million
shares of common stock at a price of $33.00 per share. The net proceeds of the
offering were approximately $43.4 million after deducting applicable issuance
costs and expenses. Barring unforeseen developments, we expect that our existing
capital resources, together with the interest earned thereon, will be adequate
to fund our capital requirements through the middle of 2002. We believe that
substantial additional funds will be required after the middle of 2002.
We will be required to raise additional funds, which may be raised through
equity or debt financings. Since our initial public offering in 1997, we have
obtained the majority of our funding through public or private offerings of our
common stock. The public capital markets in which shares of our common stock are
traded have been volatile and the general ability of companies to obtain
additional financing has become more difficult thus far in 2001 compared to
2000. This difficulty has been compounded by the terrorist events of September
11, 2001, the threat of similar events, and the effect this has had on the
availability of capital to small biotechnology companies such as Trimeris. If
and when we raise funds by selling equity, our stockholders' interest may be
diluted. Any debt financings may contain restrictive terms that would limit our
operating flexibility. Additionally or alternatively, we may have to attempt to
obtain funds through arrangements with collaborative partners. These partners
may require us to relinquish rights to our technologies or product candidates.
If adequate funds are not available through debt or equity financings, we may be
required to delay, scale-back or eliminate certain preclinical testing, clinical
trials and research and development programs, including our collaborative
efforts with Roche. This could have a material adverse effect on our business,
financial condition or results of operations.
Our future capital requirements and the adequacy of available funds will
depend on many factors, including the availability of funds from Roche under our
collaboration agreement, the condition of public capital markets, the results of
clinical trials relating to T-20 and T-1249, the progress and scope of our
product development programs, the magnitude of these programs, the results of
preclinical testing and clinical trials, the need for additional facilities
based on the results of these clinical trials and other product development
programs, changes in the focus and direction of our product development
programs, the costs involved in preparing, filing, processing, maintaining,
protecting and enforcing patent claims and other intellectual property rights,
competitive factors and technological advances, the cost, timing and outcome of
regulatory reviews, changes in the requirements of the FDA, administrative and
legal expenses, evaluation of the commercial viability of potential product
candidates and compounds, the establishment of capacity, either internally or
through relationships with third parties, for manufacturing, sales, marketing
and distribution functions, and other factors, many of which are outside of our
control.
13
Accounting and Other Matters
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). Statement 133 establishes
standards for valuation and disclosure of derivative financial instruments and
is effective for fiscal quarters of fiscal years beginning after June 15, 2000.
The Company adopted this statement on January 1, 2001 and it had no effect on
the Company's financial statements.
In July 2001, the FASB issued Statement No. 141, "Business Combinations",
and Statement No. 142, "Goodwill and Other Intangible Assets." Statement 141
requires that all business combinations be accounted for under the purchase
method and prohibits use of the pooling-of-interests method. Statement 141
requires that the purchase method be used for business combinations initiated
after June 30, 2001. Statement 142 requires that goodwill (and intangible assets
with indefinite useful lives) no longer be amortized to earnings, but instead be
reviewed for impairment. The amortization of goodwill ceases upon adoption of
the Statement, which will be January 1, 2002. We do not expect the adoption of
Statement No. 141 or Statement No. 142 to have a material impact on our
financial statements.
Factors That May Affect Future Results and Financial Condition
Clinical Development
The following discussion highlights certain aspects of our on-going and
planned clinical development programs. The results of our previous clinical
trials are not necessarily indicative of the results of future clinical trials.
T-20
We are developing T-20, our first drug candidate for HIV fusion inhibition,
which has been granted fast track designation by the FDA. T-20 is currently in
Phase III clinical trials. We currently expect to collect clinically relevant
data from our Phase III trials during the first half of 2002, and, subject to
the results of such trials, we currently expect to submit a New Drug Application
to the FDA with respect to T-20 in the second half of 2002.
Ongoing T-20 Clinical Trials
Phase III -- T20-301. In June 2001, we completed enrollment of T20-301, a
48-week Phase III clinical trial in North America, Mexico, and Brazil, that will
evaluate the activity, safety, and pharmacokinetics of T-20 in approximately 500
HIV-infected patients who had previously used all three classes of
currently-approved anti-HIV drugs, with a planned interim analysis at 24 weeks.
In this trial, patients will be randomly assigned to receive an optimized
background regimen of other anti-HIV drugs alone or in combination with twice
daily subcutaneous injection delivering 90 mg of T-20 each. The background
regimen will be optimized based on the genotype and phenotype of the patient's
virus. T20-301 is ongoing and we expect data from this trial to be available
during the first half of 2002.
Phase III -- T20-302. In August 2001, we completed enrollment of
T20-302, a 48-week Phase III clinical trial in Western Europe and Australia,
with a planned interim analysis at 24 weeks. The protocol for T20-302 is
substantially similar to T20-301 and will also involve approximately 500
HIV-infected patients. T20-302 is ongoing and we expect data from this trial to
be available during the first half of 2002.
Phase II -- T20-206. In June 1999, we initiated T20-206, a 48 week
Phase II clinical trial for T-20 to assess the antiviral activity and long-term
safety of T-20 when used in combination with other anti-HIV drugs. The trial
consists of four treatment groups:
o arm A who received only the background regimen of 300 mg of abacavir
twice daily, 1200 mg of amprenavir twice daily, 200 mg of ritonavir twice
daily, 600 mg of efavirenz once daily, and
o arms B, C and D who received 50mg, 75mg, and 100 mg, respectively, of
T-20 via twice daily subcutaneous injections in addition to the background
regimen.
14
T20-206 enrolled 71 HIV-infected individuals at several sites in the United
States. At entry in the trial, all enrolled patients had prior exposure to
nucleoside reverse transcriptase inhibitors, or NRTIs, and protease inhibitors,
or PIs, but no prior exposure to non- nucleoside reverse transcriptase
inhibitors, or NNRTIs.
In February 2001, we announced 16 week interim data from T20-206. At
week 16, the median maximum reduction in HIV viral load from the viral load at
the beginning of the trial for all patients ranged from 2.16 log10 or 99.3% to
2.84 log10 or 99.9% across the T-20 treatment groups. The median maximum
reduction in HIV viral load for patients with HIV viral loads greater than
20,000 copies/microliter at the beginning of the trial was 2.64 log10 or 99.8%
across the T-20 treatment groups versus 1.55 log10 or 97.2% for the control arm
only. Data from 16 weeks suggest that T-20 is safe and active in combination
with other anti-HIV therapy.
T20-206 is ongoing and the next analysis of data is scheduled to occur
based on 48-week data.
T20-205. T20-205 is an ongoing Phase II trial that has been extended
beyond its initial 48-week protocol. This trial involves 71 patients from
earlier T-20 Phase I/II studies. In T20-205, 50 mg of T-20 is administered via
subcutaneous injection in combination with oral anti-HIV drugs. Combinations of
the oral anti-HIV drugs were optimized based on genotypic and phenotypic
analysis of each patient's virus.
At 48 weeks, 41 of the 71 patients were evaluated. No patients
discontinued this trial due to T-20 related toxicity, but 14 patients
discontinued this trial due to a virologic failure, or HIV viral load less than
- -0.5 log10 from baseline at the beginning of the trial. At 48 weeks, 23 of 41
patients or 56% exhibited a decrease in HIV viral load of more than 1.0 log10 or
less than 400 copies/ml, and 16 of 41 patients or 39% had an HIV viral load
below 400 copies/ml.
At 48 weeks, the patients continued to tolerate T-20. Data suggest that
T-20 in combination with other anti-HIV drugs may contribute to a lasting and
clinically relevant suppression of HIV in the blood in patients with extensive
prior anti-HIV treatment.
T20-204. In November 1999, in collaboration with the Division of AIDS
of the National Institute for Allergy and Infectious Diseases, or NIAID, we
initiated a Phase I/II trial to evaluate the safety, tolerability and
pharmacokinetics of T-20 in children living with HIV infection. The trial is
managed by the Pediatric AIDS Clinical Trial Group, or PACTG, and has been
designated as a fast-track study within the PACTG system.
The trial is being conducted in two parts and has enrolled 12 pediatric
patients ages three to 12. The first part, week one, examined safety parameters
to establish a well-tolerated pediatric dose that provides target concentrations
of T-20 in the blood. The second part, conducted over a twenty-four week period,
evaluates the safety and tolerability of T-20 via twice daily subcutaneous
injections in combination with a background regimen of other anti-HIV drugs
selected for each particular patient based on the patient's prior treatment
history. Within seven days of dosing with T-20 as an addition to an inactive
anti-HIV therapy, patients in the highest dose group had an average reduction in
HIV viral load of approximately 10 fold from baseline at the beginning of the
trial. At eight weeks, three of four patients in the lowest dose group and six
of seven patients in the highest dose group continued to maintain a similar
reduction in HIV viral load from baseline at the beginning of the trial. Data at
the 12 week interim analysis suggest that short-term subcutaneous dosing of T-20
is well tolerated in pediatric patients.
Of the 12 patients enrolled in the trial, one patient withdrew due to
an aversion to the method of administration of T-20 via subcutaneous injection.
T20-204 is ongoing and the next analysis of data is scheduled to occur based on
24-week data.
Other Ongoing Trials of T-20
T20-208. In March 2000, we initiated T20-208, a Phase II clinical trial
for T-20 that evaluates alternative formulations of T-20, which could lead to a
simpler dosing regimen. The trial enrolled 46 patients, and evaluates two new
formulations of T-20 compared to the formulation presently used in other ongoing
clinical trials initiated prior to T20-208. All three formulations are given as
twice daily subcutaneous injections in combination with oral anti-HIV drugs
selected for each patient on an individualized basis. From this trial, an
interim analysis of the highest dose group indicated
15
that a patient received a delivered dose of 90mg per dose. We designed our Phase
III protocols to reflect this information from T20-208. T20-208 is ongoing and
we expect to complete the collection of clinically relevant data from this trial
in 2001.
T20-210. In June 2001, we initiated T20-210, a Phase II clinical trial
for T-20 that provides T-20 to patients who completed our T1249-101 trial. The
trial is designed to enroll up to 52 patients and will evaluate the safety of
T-20 in patients who previously received T-1249 in the T-1249-101 trial. In
T20-210, 90 mg of T-20 is administered via twice daily subcutaneous injections
plus a background regimen selected by the physician. T20-210 is ongoing and we
expect to collect clinically relevant data from the trial prior to submission of
the New Drug Application to the FDA.
Future T-20 Clinical Trials
We expect to initiate Phase IIIb trials during 2002.
T-1249
We are also developing T-1249, our second drug candidate for HIV fusion
inhibition, which has been granted fast track designation by the FDA. T-1249 is
currently in a Phase I/II clinical trial.
Phase I/II - T1249-101
T1249-101. In July 1999, we initiated T1249-101, a Phase I/II clinical
trial designed to assess the safety and pharmacokinetics of T-1249. T1249-101
enrolled 72 HIV-infected individuals at several sites in the United States, with
61 patients completing the study. Three different daily doses of T-1249 were
administered alone and not in combination with any other anti-HIV drugs for 14
days to HIV-infected adults by once or twice daily subcutaneous injection. Of
the 72 patients randomized for the trial, nine withdrew before receiving T-1249
therapy, and two withdrew during the course of the therapy. For at least two
weeks prior to entering the study, these patients had not received any other
anti-HIV drugs. This trial protocol has been amended in order to evaluate
further different daily doses of T-1249 by once daily injection under the skin.
This trial is ongoing and we currently anticipate completing the collection of
clinically relevant data from this trial in 2002.
In February 2001, we announced interim data from T1249-101. Patients
received T-1249 via once or twice daily subcutaneous injections alone and not in
combination with any other anti-HIV drugs for 14 days at doses ranging from 6.25
mg per day to 50 mg per day. At entry into the trial, 98%, or 62 of 63, patients
had a clinical history of exposure to a mean number of ten anti-HIV drugs. At 14
days, the median maximum reduction in viral load reduction from baseline at the
beginning of the trial ranged from 0.1 log10 or 20.5% to 1.5 log10 or 96.8%
across the treatment groups. Data suggest that T-1249 was well-tolerated over a
14-day period and there were dose-related decreases in HIV viral load.
Future T-1249 Clinical Trials
We expect to initiate additional Phase I/II trials and Phase II trials
in 2002.
Risk Factors
Our business is subject to certain risks and uncertainties. Please read the
"Risk Factors" and "Business" sections of our 2000 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 2, 2001, as amended
on July 24, 2001, which highlight some of these risks. If any of these risks
materialize, our business, financial condition and results of operations could
be materially adversely affected.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Our exposure to market risk is primarily in our investment portfolio. We do
not use derivative financial instruments for speculative or trading purposes.
Substantially all of our contracts are denominated in US dollars, therefore we
have no material foreign currency risk. We have an investment policy that sets
16
minimum credit quality standards for our investments. The policy also limits the
amount of money we can invest in any one issue, issuer or type of instrument. We
have not experienced any material loss in our investment portfolio, and we
believe the market risk exposure in our investment portfolio has remained
consistent over this period.
The table below presents the carrying value, which is approximately equal
to fair market value, and related weighted-average interest rates for our
investment portfolio at September 30, 2001. Our investments are generally most
vulnerable to changes in short-term interest rates in the United States.
Substantially all of our investments mature in twelve months or less, therefore
we believe that the risk of material loss of principal due to changes in
interest rates is minimal.
Carrying Average Annual
Amount Interest
(thousands) Rate
Cash equivalents - fixed rate $ 15,219 3.36%
Short-term investments - fixed rate 66,394 3.64%
Overnight cash investments - fixed rate 8,682 2.50%
----------- --------
Total investment securities $ 90,295 3.48%
=========== ========
In July 2000, we entered into a series of call transactions with respect to
our common stock. These transactions are described in detail under Item 2
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources." These contracts expired
unexercised during July 2001.
In September 2001, we entered into a series of call transactions with
respect to our common stock. These transactions are described in detail under
Item 2 "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources." These contracts expire or
mature in September 2002.
17
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Use of Proceeds:
---------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q
are listed on the Exhibit Index immediately preceding such
exhibits and such list is incorporated herein by reference.
(b) Reports on Form 8-K
None
18
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Trimeris, Inc.
--------------------
(Registrant)
November 13, 2001 By: /s/ DANI P. BOLOGNESI
- ----------------- ---------------------------
Dani P. Bolognesi
Chief Executive Officer,
and Chief Scientific Officer
November 13, 2001 /s/ ROBERT R. BONCZEK
- ----------------- --------------------------
Robert R. Bonczek
Chief Financial Officer (Principal
Financial Officer)
November 13, 2001 /s/ TIMOTHY J. CREECH
- ----------------- --------------------------
Timothy J. Creech
Director of Finance
and Secretary (Principal
Accounting Officer)
19
EXHIBIT INDEX
-------------
Number Description
- ------ -----------
10.1 Form of Equity Option Confirmation for Call Transaction
20