AIDS drug company Trimeris (NASDAQ:TRMS) is getting $4.9 million from partner Roche (OTC:RHBBY) to settle a royalties dispute regarding the AIDS drug Fuzeon.
Durham, North Carolina-based Trimeris and Swiss pharmaceutical giant Roche have clashed over Fuzeon royalty payments since 2009. Under a development and license agreement between the companies, Fuzeon is manufactured by Roche and distributed through Roche’s global network. Trimeris shares gross profits with Roche for Fuzeon sales in North America and receives a royalty based on net sales outside of North America.
But Trimeris objected to the way in which Roche calculated the cost of goods sold for Fuzeon, which affects the royalty that Trimeris receives. Last year, Roche told Trimeris that the change in royalty payments was in accordance with a clause in the agreement that allows a royalty reduction if the cost of goods sold outside North America exceeds a certain proportion of Fuzeon sales. Fuzeon sales have been plunging as other AIDS drugs enter the market. For 2010, net Fuzeon sales outside of North America were $56.4 million, down from $73.1 million in 2009 and $102.8 million in 2008.
Trimeris and Roche have entered a new license agreement that modifies all of the previous agreements regarding Fuzeon, according to a Trimeris securities filing. Roche will pay Trimeris a royalty equal to 16 percent of worldwide net sales of Fuzeon. The new agreement is retroactive to Jan. 1, 2011. The new agreement settles all claims and disputes stemming from the previous agreement and Roche agrees to pay Trimeris a $4.9 million settlement.
Trimeris was founded in 1993 to develop a class of anti-HIV drugs called fusion inhibitors. Fuzeon received U.S. Food and Drug Administration approval in 2003. The drug is Trimeris’ only FDA-approved product.
Trimeris reported $19.9 million in 2010 net income on revenue and collaboration income of $26.7 million. The company’s pipeline includes TRI-1144, a drug candidate intended to suppress HIV. But Trimeris has slashed its operations, including R&D. In 2008, the company announced it would cease development of TRI-1144 and it would not conduct future R&D activities. Trimeris became an acquisition target and in 2009, South Korean company Arigene made an $81 million bid to buy the company. But Arigene couldn’t secure financing and later terminated the deal.
