Executive Summary

Trimeris is a biopharmaceutical company primarily engaged in the commercialization of a class of antiviral drug treatments called fusion inhibitors. Fusion inhibitors prevent viral fusion, a complex process by which viruses attach to, penetrate and infect host cells. If a virus cannot enter a host cell, the virus cannot replicate. By inhibiting the fusion process of particular types of viruses, like the Human Immunodeficiency Virus ("HIV"), our first commercial product and our development-stage compound offer a novel mechanism of action to treat and potentially prevent the transmission of HIV.

Trimeris has a worldwide agreement (the "Development and License Agreement") with F. Hoffmann-La Roche Ltd., or "Roche," to develop and market T-20, marketed as FUZEON, whose generic name is enfuvirtide. FUZEON is manufactured and distributed by Roche through Roche's sales and distribution network throughout the world in countries where regulatory approval has been received. The Company shares gross profits equally from the sale of FUZEON in the United States and Canada with Roche, and receives a royalty based on net sales of FUZEON outside the United States and Canada.

For the first quarter of 2009, the Company recorded net income of $2.1 million, or $0.10 per share, compared to $2.3 million, or $0.10 per share, in the first quarter of 2008. This decrease was driven by decreased FUZEON sales and an increase in tax expense offset, in part, by reduced operating expenses and the credit to cost of goods sold included in collaboration income.

2009 will continue to be a year of transition for Trimeris:

• Strategic Alternatives - We will continue to evaluate strategic alternatives to enhance shareholder value.

• Profitability -We will focus our efforts on maintaining profitability based on FUZEON sales.

• Competition - Recently, weekly prescription trends for FUZEON have begun to stabilize. Future FUZEON prescription trends will depend on the further refinement of the optimal regimen for treatment experienced patients and the role of FUZEON in these regimens.

• FUZEON Sales and Marketing - We believe that our selling and marketing expense in 2009 will be lower than 2008, as we have exercised again our right under our Development and License Agreement with Roche that prevents Roche from adopting a budget for the marketing of FUZEON above a certain limit without our consent.

• Novartis Litigation - We, along with our partner Roche, are working with outside counsel to come to the most expedient and satisfactory resolution of the patent infringement suit brought by Novartis Vaccines and Diagnostics, Inc.

• Cost of Goods Sold - We have exercised our rights under the Development and License Agreement and entered into negotiations with Roche related to excess capacity charges and cost of goods sold variances for 2008 and overall cost of goods sold for 2009. Accordingly, we cannot accurately determine if cost of goods sold as a percentage of net sales will increase, decrease or remain the same in the future. Although active discussions are on-going, we cannot be certain when a final resolution will be reached. Depending upon the resolution of our negotiations with Roche, cost of goods sold may significantly increase.

RESULTS OF OPERATIONS

Comparison Of Three Months Ended March 31, 2009 and 2008

Revenues

The table below presents our revenue sources for the three months ended
March 31, 2009 compared to the three months ended March 31, 2008.



                                                Three Months Ended
     (in thousands)                                 March 31,           Increase
                                                 2009         2008     (Decrease)
     Milestone revenue                        $       66          66   $        -
     Royalty revenue                               1,969       2,840          (871 )
     Collaboration income                          2,442       2,392            50


     Total revenue and collaboration income   $    4,477    $  5,298   $      (821 )

Milestone revenue: Total milestone revenue represents the amortization of achieved milestones under our collaboration with Roche.

The table below presents certain achieved milestones from Roche as of March 31, 2009. We are recognizing the milestones with remaining unrecognized balances on a straight-line basis over the estimated commercial period of FUZEON.

                                                                  Total Revenue             Revenue
                                                                    Recognized        Recognized for the
                            Milestone                                Through          Three Months Ended      End of Recognition
(in thousands)                Total          Date Achieved        March 31, 2009        March 31, 2009              Period
                                 2,500       June       2003                1,371                      50       November 2014

                                   750       June       2004                  376                      16       November 2014


Total                      $     3,250                           $          1,747     $                66

Royalty revenue: Royalty revenue represents the royalty payments earned from Roche based on total net sales of FUZEON outside the United States and Canada and will continue until all patents covering FUZEON, licensed to Roche, on a country by country basis have expired. Sales of FUZEON outside the United States and Canada began in June 2003. To calculate the royalty revenue, an 8% distribution charge is deducted from Roche's reported net sales, from which the Company receives a 12% royalty. Royalty revenue decreased for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008 as a result of decreased net sales of FUZEON outside the U.S. and Canada. Net sales of FUZEON outside the U.S. and Canada for the three months ended March 31, 2009 and 2008, were $17.8 million and $25.7 million, respectively.

Collaboration income: The table below presents our collaboration income (United States and Canada) for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. Collaboration income is reported on our Statements of Operations as a component of revenue. Under our Development and License Agreement with Roche, we share gross profits equally from the sale of FUZEON in the United States and Canada. The sharing of expenses is according to contractual arrangements and is not equal in all cases. FUZEON was launched commercially in March 2003.

                                                  Three Months Ended
      (in thousands)                                   March 31,
                                                   2009          2008        Change
      Gross FUZEON sales by Roche               $   12,163     $ 20,710     $ (8,547 )
      Less sales adjustments                        (2,208 )     (3,712 )      1,504
      Sales adjustments as a % of Gross Sales           18 %         18 %


      Net sales                                      9,955       16,998       (7,043 )
      Cost of goods sold                            (1,322 )     (6,214 )      4,892
      Cost of goods sold as a % of Net Sales            13 %         37 %


      Gross profit                                   8,633       10,784       (2,151 )
      Gross profit as a % of Net Sales                  87 %         63 %
      Selling and marketing expenses                (2,977 )     (6,194 )      3,217
      Roche development expenses                      (583 )       (580 )
      Other costs                                     (674 )       (655 )        (19 )


      Total shared profit                            4,399        3,355        1,044
      Trimeris share *                               2,521        2,557          (36 )
      Costs exclusive to Trimeris                      (79 )       (165 )         86


      Net income from collaboration             $    2,442     $  2,392     $     50

* We have exercised our right under our Development and License Agreement with Roche that prevents Roche from adopting a budget for the marketing of FUZEON above a certain limit without our consent. As a result, the Company's and Roche's share of the collaboration income was not equal in the first quarter of 2009 or 2008. Depending on the level of marketing expenses for 2009, our share of the collaboration profit may continue to be greater than that of Roche.

Gross FUZEON sales by Roche: Revenue is recognized when Roche ships drug and title and risk of loss passes to wholesalers.

The table below presents the number of kits shipped to wholesalers in the U.S. and Canada during 2009 and 2008.

                           Kits Shipped   2009     2008
                           Q1             5,000    9,600
                           Q2                -     9,000
                           Q3                -     7,900
                           Q4                -     9,500

                           Total          5,000   36,000

Sales adjustments: Sales adjustments are recorded by Roche based on their experience with selling FUZEON. Based on discussions with Roche, we expect sales adjustments for 2009 to fall within a range of 16% to 18% of gross sales for 2009.

Cost of goods sold: We have exercised our rights under the Development and License Agreement and entered into negotiations with Roche related to excess capacity charges and cost of goods sold variances for 2008 and overall cost of goods sold for 2009. Accordingly, we cannot accurately determine if cost of goods sold as a percentage of net sales will increase, decrease or remain the same in the future. Although active discussions are on-going, we cannot be certain when a final resolution will be reached. Depending upon the resolution of our negotiations with Roche, cost of goods sold may significantly increase.

During 2008, we recorded a reserve for 2008 excess capacity charges in the amount of $4.1 million to be shared equally between Roche and Trimeris. Recently, Roche informed us that actual excess capacity charges for 2008 were $1.9 million. The difference of $2.2 million has been recorded as a credit to cost of goods sold for the first quarter of 2009. Trimeris share of this credit was $1.1 million. We are disputing with Roche the remainder of the excess capacity charges for 2008. The resolution of this dispute may result in an additional credit to cost of goods sold for the collaboration in the amount of $1.9 million.

Selling and marketing expenses: We have exercised our right under our Development and License Agreement with Roche that prevents Roche from adopting a budget for the marketing of FUZEON above a certain limit without our consent. As a result, the Company's and Roche's share of the collaboration income was not equal in the first quarter of 2009 or 2008. Depending on the level of marketing expenses for 2009, our share of the collaboration profit may continue to be greater than that of Roche.

Roche development expenses: On January 1, 2009, we adopted Financial Accounting Standards Board ("FASB") Emerging Issues Task Force ("EITF") Issue Number 07-1 "Accounting for Collaborative Arrangements." As a result all development expenses, generated at Roche, related to FUZEON are included in the Company's collaboration income. Prior to January 1, 2009, such amounts were presented in research and development expenses. Prior period amounts have been reclassified to conform to the current period's presentation.

Under the Development and License Agreement, development costs for FUZEON are shared equally with Roche. Development typically includes certain clinical and pre-clinical studies performed on a clinical candidate compound, as well as post-marketing commitments related to approved drugs. Currently only Roche incurs development costs for FUZEON. Roche holds the Investigational New Drug ("IND") and the New Drug Application ("NDA") for FUZEON and is responsible for all regulatory issues, maintenance activities and communications with the FDA.

Other costs: Other costs for the three months ended March 31, 2009 and 2008 include general and administrative costs and distribution charges. The Company is responsible for 50% of these costs under the Development and License Agreement.

Costs exclusive to the Company: Costs exclusive to the Company includes license fees, based on net sales of FUZEON, for certain technology paid to a third party.

Research and Development Expenses

The table below presents our research and development expenses for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

On January 1, 2009, we adopted EITF 07-1 "Accounting for Collaborative Arrangements." As a result, we reclassified $290,000 from research and development expenses in 2008 to collaboration income (see discussion above "Collaboration Income").

Total research and development expenses for 2008 primarily related to the preclinical development of the next generation HIV fusion inhibitor peptide TRI-1144 for which the Company has subsequently discontinued research and development. The Company no longer incurs any research and development expenses.

General and Administrative Expenses

The table below presents our general and administrative expenses for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

Total general and administrative expenses: Total general and administrative expenses decreased for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, primarily as a result of decreases in employee costs and other expenses as a result of reduced headcount and general business activities, offset in part by, increased share-based compensation expense.

We expect general and administrative expenses to decrease in 2009, when compared to 2008, as a result of the 2008 strategic plan which eliminated most general and administrative personnel at Trimeris after June 30, 2008 and reduced operating lease expenses.

Gain on disposal of equipment: The table below presents the gain on the disposal of equipment for the three months ended March 31, 2009 and 2008.

Three Months Ended (in thousands) March 31, Increase 2009 2008 (Decrease) Gain on disposal of equipment $ (23 ) $ (418 ) $ 395

The gain on disposal of equipment for 2009 is due to the Company selling equipment that was written off during 2008. The gain on disposal of equipment for 2008 is due to the Company selling a majority of its property, furniture or equipment in anticipation of relocating its corporate office and shutting down the previous laboratory and office space.

Other Income (Expense): The table below presents our other income (expense) for the three months ended March 31, 2009 and 2008.

                                              Three Months Ended
      (in thousands)                               March 31,              Increase
                                             2009            2008        (Decrease)
      Interest income                      $    164       $      822     $      (658 )
      Gain/(loss) on investments                 34             (738 )           772
      Interest expense                          (64 )            (94 )            30


      Total other income (expenses), net   $    134       $      (10 )   $       144

Interest income decreased for the three months ended March 31, 2009 primarily due to lower cash balances as a result of the special dividends paid in 2008.

There was a realized gain on investments for the three months ended March 31, 2009 as a result of our redemptions of our investment in Bank of America Corporation's Columbia Strategic Cash Portfolio (the "Fund"). In December 2007, Columbia Management Group, LLC, the Fund's manager, determined that the assets of the Fund had declined in fair value and the Fund would no longer seek to maintain a net asset value ("NAV") of one dollar per share. As a result, the Fund's NAV began to fluctuate based on changes in the market values of the assets owned by the Fund. The Fund ceased accepting orders for new shares and began an orderly liquidation of Fund assets for distribution to its shareholders. At March 31, 2009, the Fund's NAV was $0.8336 per share. For the quarter ended March 31, 2009, we recorded an increase of $32,000 in accumulated other comprehensive income and a realized gain of $34,000 related to this investment. For the quarter ended March 31, 2008, the NAV was $0.9701 which had decreased from $0.9874 at December 31, 2007 and the Company recorded a loss in the amount of $738,000. In addition, the Company's holdings of this investment have been significantly reduced through redemptions since December 31, 2007.

Interest expense relates to the accretion of the excess marketing expenses recorded on the balance sheets as "Accrued marketing costs." Our actual cash contribution to certain selling and marketing expenses for FUZEON in 2004 was limited, even though Roche spent significantly more on these expenses. If certain cumulative levels of sales for FUZEON in the United States and Canada are achieved, our share of any additional expenses incurred by Roche during 2004 will be payable to Roche beginning at a future date over several years from that future date. We are increasing the liability over time to the expected payment amount. During the fourth quarter of 2008, the Company revised the estimated date that payments will begin from 2017 to 2022. As a result, we will accrete the marketing debt over a longer period of time resulting in lower interest expense in any particular period.

Income Tax Provision

We recognized income tax expense of $1,044,000 in the first quarter of 2009 compared to income tax expense of $257,000 in the first quarter of 2008. For 2009, the Company believes, based on current estimates, that the effective annual blended tax rate is approximately 32.9%.

In the fourth quarter of 2008, we recognized a deferred tax benefit of $506,000 related to the anticipated future use of some of our federal net operating loss carryovers. In the future, we may reduce the valuation allowance over our federal net operating loss carryovers and recognize an additional deferred tax benefit. Management assesses this potential based upon all available evidence, including the last eleven quarters of profitability and forecasts. At the end of the first quarter of 2009, management determined that it was not appropriate to reduce the valuation allowance to recognize additional benefit.

The Company continues to carry a full valuation allowance on its other deferred tax assets, the majority of which represent net operating loss carry forwards and tax credit carryovers which we generated prior to achieving profitability.

RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

The table below presents our cash flows for the three months ended March 31,
2009 as compared to the three months ended March 31, 2008.



                                                          Three Months Ended
                                                               March 31,
                                                        2009            2008
                                                                   (in thousands)
  Net cash provided by operating activities          $     1,517   $         9,412
  Net cash provided (used) by investing activities         2,928            (4,607 )
  Net cash provided by financing activities                   -                 -


  Net increase in cash and cash equivalents                4,445             4,805
  Cash and cash equivalents, beginning of period          14,389            32,702

  Cash and cash equivalents, end of period           $    18,834   $        37,507

Operating Activities. Since inception, we have financed our operations primarily through private placements and public offerings of common stock, equipment lease financing and payments under our Development and License Agreement with Roche.

For the three months ended March 31, 2009, cash provided by operating activities primarily resulted from net income primarily due to decreased operating expenses offset, in part, by an increase in prepaid expenses.

During the remainder of 2009, cash provided by operating activities will depend on several factors, primarily the sales, cost of sales and commercialization expenses and post-marketing commitments related to the sale of FUZEON (profitability of the collaboration with Roche), and expenses related to the patent infringement suit brought by Novartis Vaccines and Diagnostics, Inc.

Investing Activities. The amount provided (used) by investing activities for the three months ended March 31, 2009 and 2008 primarily relates to the net maturities (purchases) of investment securities available-for-sale. The purchase and maturity of investment securities available-for-sale was due to the normal maturities of investments.

During the remainder of 2009, cash provided by investing activities will depend primarily on the net purchases/maturities of investments. We do not expect to purchase any property and equipment in 2009. We expect patent costs in 2009 to be less than 2008.

Financing Activities. There was no cash provided by or used by financing activities for the three months ended March 31, 2009 or 2008.

Total Cash, Cash Equivalents and Investment Securities Available-for-Sale. As of March 31, 2009, we had $33.1 million in cash and cash equivalents and investment securities available-for-sale, compared to $31.6 million as of December 31, 2008.

Future Capital Requirements. We have expended, and expect to continue to expend in the future, substantial funds in the following areas:

• expenditures for marketing activities related to FUZEON; and

• legal costs to defend the patent infringement suit brought by Novartis Vaccines and Diagnostics, Inc.

Based on expected sales levels of FUZEON, expenses related to the sale of FUZEON, the costs involved in preparing, filing, processing, maintaining, protecting and enforcing patent claims and other intellectual property rights, and litigation expenses, we expect that our existing capital resources, together with the interest earned thereon, will be adequate to fund our operating expenses for the foreseeable future.

Contractual Obligations. The following table summarizes our material contractual commitments at March 31, 2009 for the remainder of 2009 and subsequent years (in thousands):