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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, 2008



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 0-23155





TRIMERIS, INC.

(Exact name of
registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 56-1808663                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

2530 Meridian Parkway, 2ndFloor

Durham, North Carolina 27713

(Address of principal executive offices, including zip code)

Registrants telephone number, including area code: (919) 806-4682





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   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

The number of shares outstanding
of the registrants common stock as of October 23, 2008 was 22,252,122.

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a smaller reporting company or a non-accelerated filer. See definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                    |  |                           |  |  
|----------------------- |  | -------------------------------------------------- |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                  |  | Accelerated filer         |  | x
|                        |  |                                                    | 
|Non-accelerated filer   |  |  ̈    (do not check if a smaller reporting company) |  | Smaller Reporting Company |  |  ̈









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TRIMERIS, INC.

FORM 10-Q

September 30, 2008

INDEX



|               |  |                                                                                                           |  |     
|-------------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|               |  |                                                                                                           |  | Page
|PART I.        |  | FINANCIAL INFORMATION                                                                                     |  |     
|               |  |                                                                                                          
|Item 1.        |  | Financial Statements (unaudited)                                                                          |  | 3   
|               |  |                                                                                                          
|               |  | Condensed Balance Sheets as of September 30, 2008 and December 31, 2007                                   |  | 3   
|               |  |                                                                                                          
|               |  | Condensed Statements of Operations for the Three Months and Nine Months Ended September 30, 2008 and
2007 |  | 4   
|               |  |                                                                                                          
|               |  | Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007                  |  | 5   
|               |  |                                                                                                          
|               |  | Notes to Condensed Financial Statements                                                                   |  | 6   
|               |  |                                                                                                          
|Item 2.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                     |  | 14  
|               |  |                                                                                                          
|Item 3.        |  | Quantitative and Qualitative Disclosures About Market Risk                                                |  | 26  
|               |  |                                                                                                          
|Item 4.        |  | Controls and Procedures                                                                                   |  | 26  
|               |  |                                                                                                          
|PART II.       |  | OTHER INFORMATION                                                                                         |  |     
|               |  |                                                                                                          
|Item 1.        |  | Legal Proceedings                                                                                         |  | 28  
|               |  |                                                                                                          
|Item 1A.       |  | Risk Factors                                                                                              |  | 28  
|               |  |                                                                                                          
|Item 2.        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                               |  | 30  
|               |  |                                                                                                          
|Item 3.        |  | Defaults Upon Senior Securities                                                                           |  | 30  
|               |  |                                                                                                          
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                                       |  | 30  
|               |  |                                                                                                          
|Item 5.        |  | Other Information                                                                                         |  | 30  
|               |  |                                                                                                          
|Item 6.        |  | Exhibits                                                                                                  |  | 30  
|               | 
|Signature Page |  | 31                                                                                                       
|               | 
|Exhibit Index  |  | 32                                                                                                       



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

TRIMERIS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except par value)

(unaudited)



|                                                                                                                     |  |                   |          |   |                  |   |          |  
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                     |  | September 30,2008 |          |   | December 31,2007 |  
|Assets                                                                                                               |  |                   |          |   |                  |   |          |  
|Current assets:                                                                                                      |  |                   |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                            |  | $                 | 24,821   |   |                  | $ | 32,702   |  
|Investment securities available-for-sale                                                                             |  |                   | 12,223   |   |                  |   | 27,938   |  
|Accounts receivable  Roche                                                                                          |  |                   | 3,341    |   |                  |   | 12,240   |  
|Other receivables                                                                                                    |  |                   | 36       |   |                  |   | 60       |  
|Prepaid expenses                                                                                                     |  |                   | 105      |   |                  |   | 679      |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total current assets                                                                                                 |  |                   | 40,526   |   |                  |   | 73,619   |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Property, furniture and equipment, net                                                                               |  |                   |         |   |                  |   | 1,644    |  
|Long-term investment securities available-for-sale                                                                   |  |                   | 14,580   |   |                  |   | 8,952    |  
|                                                                                                                     |  |                  
|Other assets:                                                                                                        |  |                   |          |   |                  |   |          |  
|Patent costs, net                                                                                                    |  |                   | 2,978    |   |                  |   | 2,724    |  
|Advanced payment  Roche                                                                                             |  |                   | 6,824    |   |                  |   | 6,812    |  
|Deposits and other assets                                                                                            |  |                   | 345      |   |                  |   | 370      |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total other assets                                                                                                   |  |                   | 10,147   |   |                  |   | 9,906    |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total assets                                                                                                         |  | $                 | 65,253   |   |                  | $ | 94,121   |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Liabilities and Stockholders Equity                                                                                 |  |                   |          |   |                  |   |          |  
|Current liabilities:                                                                                                 |  |                   |          |   |                  |   |          |  
|Accounts payable                                                                                                     |  | $                 | 502      |   |                  | $ | 917      |  
|Accrued compensation                                                                                                 |  |                   | 1,841    |   |                  |   | 4,804    |  
|Deferred revenue  Roche                                                                                             |  |                   | 265      |   |                  |   | 265      |  
|Accrued expenses                                                                                                     |  |                   | 1,568    |   |                  |   | 453      |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total current liabilities                                                                                            |  |                   | 4,176    |   |                  |   | 6,439    |  
|                                                                                                                     |  |                  
|Deferred revenue  Roche                                                                                             |  |                   | 1,370    |   |                  |   | 1,569    |  
|Accrued marketing costs                                                                                              |  |                   | 18,208   |   |                  |   | 17,923   |  
|Accrued compensation-long-term                                                                                       |  |                   | 154      |   |                  |   | 150      |  
|Other liabilities                                                                                                    |  |                   |         |   |                  |   | 718      |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total liabilities                                                                                                    |  |                   | 23,908   |   |                  |   | 26,799   |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Stockholders equity:                                                                                                |  |                   |          |   |                  |   |          |  
|Preferred Stock at $.001 par value per share, 10,000 shares authorized, zero shares issued and outstanding           |  |                   |         |   |                  |   |         |  
|Common Stock at $.001 par value per share, 60,000 shares authorized, 22,252 and 22,272 shares issued and outstanding |  |                   | 22       |   |                  |   | 22       |  
|Additional paid-in capital                                                                                           |  |                   | 378,797  |   |                  |   | 410,937  |  
|Accumulated deficit                                                                                                  |  |                   | (337,184 | ) |                  |   | (343,661 | )
|Accumulated other comprehensive (loss) income                                                                        |  |                   | (290     | ) |                  |   | 24       |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total stockholders equity                                                                                           |  |                   | 41,345   |   |                  |   | 67,322   |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  
|Total liabilities and stockholders equity                                                                           |  | $                 | 65,253   |   |                  | $ | 94,121   |  
|                                                                                                                     |  |                   |          |   |                  |   |          |  

See accompanying notes to condensed financial statements.



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TRIMERIS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------------------------- |  | --------------------------------------- | ------ | - | -------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                               |  | For the Three Months EndedSeptember 30, |        |   | For the Nine Months EndedSeptember 30, |  
|                                                               |  | 2008                                    |        |   | 2007                                   |   |        | 2008 |  |   | 2007   |  
|Revenue:                                                       |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Milestone revenue                                              |  | $                                       | 67     |   |                                        | $ | 78     |      |  | $ | 199    |   |  | $ | 9,369  |  
|Royalty revenue                                                |  |                                         | 3,373  |   |                                        |   | 4,781  |      |  |   | 8,663  |   |  |   | 11,862 |  
|Collaboration income                                           |  |                                         | 1,961  |   |                                        |   | 5,518  |      |  |   | 6,870  |   |  |   | 15,692 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Total revenue and collaboration income                         |  |                                         | 5,401  |   |                                        |   | 10,377 |      |  |   | 15,732 |   |  |   | 36,923 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Operating expenses:                                            |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Research and development                                       |  |                                         | 572    |   |                                        |   | 3,809  |      |  |   | 3,639  |   |  |   | 9,865  |  
|General and administrative                                     |  |                                         | 1,519  |   |                                        |   | 1,674  |      |  |   | 5,778  |   |  |   | 10,150 |  
|(Gain)/loss on disposal of equipment                           |  |                                         | (10    | ) |                                        |   |       |      |  |   | 496    |   |  |   | (7     | )
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                       |  |                                         | 2,081  |   |                                        |   | 5,483  |      |  |   | 9,913  |   |  |   | 20,008 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Operating income                                               |  |                                         | 3,320  |   |                                        |   | 4,894  |      |  |   | 5,819  |   |  |   | 16,915 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Other income (expense):                                        |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Interest income                                                |  |                                         | 397    |   |                                        |   | 815    |      |  |   | 1,756  |   |  |   | 2,212  |  
|Loss on investments                                            |  |                                         | (15    | ) |                                        |   |       |      |  |   | (703   | ) |  |   |       |  
|Interest expense                                               |  |                                         | (96    | ) |                                        |   | (115   | )    |  |   | (285   | ) |  |   | (519   | )
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Total other income                                             |  |                                         | 286    |   |                                        |   | 700    |      |  |   | 768    |   |  |   | 1,693  |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Income before taxes                                            |  |                                         | 3,606  |   |                                        |   | 5,594  |      |  |   | 6,587  |   |  |   | 18,608 |  
|Income tax provision                                           |  |                                         | 47     |   |                                        |   | 54     |      |  |   | 110    |   |  |   | 242    |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Net income                                                     |  | $                                       | 3,559  |   |                                        | $ | 5,540  |      |  | $ | 6,477  |   |  | $ | 18,366 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Basic net income per share                                     |  | $                                       | 0.16   |   |                                        | $ | 0.25   |      |  | $ | 0.29   |   |  | $ | 0.83   |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Diluted net income per share                                   |  | $                                       | 0.16   |   |                                        | $ | 0.25   |      |  | $ | 0.29   |   |  | $ | 0.83   |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Weighted average shares used in basic per share computations   |  |                                         | 22,186 |   |                                        |   | 22,108 |      |  |   | 22,180 |   |  |   | 22,047 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Weighted average shares used in diluted per share computations |  |                                         | 22,271 |   |                                        |   | 22,132 |      |  |   | 22,270 |   |  |   | 22,068 |  
|                                                               |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  

See accompanying notes to condensed financial statements.



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TRIMERIS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)



|                                                                                  |  |                                |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Nine Months EndedSeptember 30, |        
|                                                                                  |  | 2008                           |         |   | 2007 |  
|Cash flows from operating activities:                                             |  |                                |         |   |      |   |         |  
|Net income                                                                        |  | $                              | 6,477   |   |      | $ | 18,366  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |         |   |      |   |         |  
|Depreciation and amortization of property, furniture and equipment                |  |                                | 135     |   |      |   | 622     |  
|Postretirement benefits                                                           |  |                                |        |   |      |   | 55      |  
|Net loss/(gain) on disposal of equipment                                          |  |                                | 496     |   |      |   | (7      | )
|Patent/license amortization                                                       |  |                                | 151     |   |      |   | 199     |  
|Patent costs expensed                                                             |  |                                | 100     |   |      |   | 63      |  
|Amortization of deferred revenue  Roche                                          |  |                                | (199    | ) |      |   | (9,369  | )
|Stock compensation expense                                                        |  |                                | 1,193   |   |      |   | 2,678   |  
|Accrued marketing costs                                                           |  |                                | 285     |   |      |   | 519     |  
|Decrease (increase) in assets:                                                    |  |                                |         |   |      |   |         |  
|Accounts receivable  Roche                                                       |  |                                | 8,899   |   |      |   | 2,587   |  
|Other receivables                                                                 |  |                                | 50      |   |      |   | (37     | )
|Prepaid expenses                                                                  |  |                                | 574     |   |      |   | 594     |  
|Advanced payment  Roche                                                          |  |                                | (12     | ) |      |   | (562    | )
|Deposits and other assets                                                         |  |                                | 6       |   |      |   | 377     |  
|Increase (decrease) in liabilities:                                               |  |                                |         |   |      |   |         |  
|Accounts payable                                                                  |  |                                | (415    | ) |      |   | (11     | )
|Accrued compensation                                                              |  |                                | (2,959  | ) |      |   | 127     |  
|Accrued expenses                                                                  |  |                                | 1,115   |   |      |   | (1,111  | )
|Other liabilities                                                                 |  |                                | (718    | ) |      |   | 6       |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                | 15,178  |   |      |   | 15,096  |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Cash flows from investing activities:                                             |  |                                |         |   |      |   |         |  
|Purchases of investment securities available-for-sale                             |  |                                | (39,179 | ) |      |   | (34,087 | )
|Maturities of investment securities available-for-sale                            |  |                                | 48,952  |   |      |   | 32,650  |  
|Purchases of property and equipment                                               |  |                                |        |   |      |   | (264    | )
|Proceeds from the sale of equipment                                               |  |                                | 987     |   |      |   | 8       |  
|Patent costs                                                                      |  |                                | (486    | ) |      |   | (355    | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided (used) by investing activities                                  |  |                                | 10,274  |   |      |   | (2,048  | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Cash flows from financing activities:                                             |  |                                |         |   |      |   |         |  
|Dividends paid                                                                    |  |                                | (33,333 | ) |      |   |        |  
|Proceeds from employee stock purchase plan exercise                               |  |                                |        |   |      |   | 104     |  
|Proceeds from exercise of stock options                                           |  |                                |        |   |      |   | 48      |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash (used) provided by financing activities                                  |  |                                | (33,333 | ) |      |   | 152     |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net (decrease) increase in cash and cash equivalents                              |  |                                | (7,881  | ) |      |   | 13,200  |  
|Cash and cash equivalents, beginning of period                                    |  |                                | 32,702  |   |      |   | 30,052  |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                              | 24,821  |   |      | $ | 43,252  |  
|                                                                                  |  |                                |         |   |      |   |         |  

See accompanying notes to condensed financial statements.



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TRIMERIS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

1. BASIS OF PRESENTATION

Trimeris, Inc.
(Trimeris or the Company) is a biopharmaceutical company primarily engaged in the commercialization of a new 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 compound under research 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., (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.

The Development and License Agreement with Roche accounted for 100% of the Companys royalty revenue for the three and nine months ended
September 30, 2008 and 2007. The Development and License Agreement also provides substantially all of the Companys collaboration and milestone revenue. Substantially all of the accounts receivable at September 30, 2008 and
December 31, 2007, are comprised of receivables from Roche owing under the Development and License Agreement.

The accompanying
unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles and applicable Securities and Exchange Commission (the SEC) regulations for interim financial
information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to the SEC 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 that 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 2007 financial statements and notes thereto included in the Companys 2007 Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on March 17,
2008.

The preparation of financial statements in conformity with United States generally accepted accounting principles 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 AND DILUTED NET INCOME PER SHARE

In accordance with SFAS No. 128, Earnings Per Share (SFAS No. 128), basic net income per common share is calculated by
dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the maximum dilutive effect of common stock issuable upon exercise of stock options, restricted stock, stock
warrants and purchases under the Companys Employee Stock Purchase Plan (the Employee Stock Purchase Plan). The dilutive effect of outstanding options, restricted stock, stock warrants and purchases under the Employee Stock Purchase
Plan is reflected in diluted earnings per share by application of the treasury stock method, which includes consideration of stock-based compensation required by SFAS No. 123 (revised), Share-Based Payment. The following table sets
forth the computation of basic and diluted net income per share for the three and nine months ended September 30, 2008 and 2007 (in thousands, except per share amounts):



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|                                                |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|----------------------------------------------- |  | ------------------------------------ | ------ | ------------------------------------ | - | ----------------------------------- |  | ----------------------------------- | ------ |  | - | ------
|                                                |  | Three Months EndedSeptember 30, 2008 |        | Three Months EndedSeptember 30, 2007 |   | Nine Months EndedSeptember 30, 2008 |  | Nine Months EndedSeptember 30, 2007
|Numerator:                                      |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Net income                                      |  | $                                    | 3,559  |                                      | $ | 5,540                               |  | $                                   | 6,477  |  | $ | 18,366
|                                                |  |                                      |        |                                     
|Denominator:                                    |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Weighted average common shares                  |  |                                      | 22,186 |                                      |   | 22,108                              |  |                                     | 22,180 |  |   | 22,047
|                                                |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Denominator for basic calculation               |  |                                      | 22,186 |                                      |   | 22,108                              |  |                                     | 22,180 |  |   | 22,047
|Weighted average effect of dilutive securities: |  |                                      |       |                                      |   |                                    |  |                                     |       |  |   |      
|Employee stock options                          |  |                                      |       |                                      |   |                                    |  |                                     |       |  |   |      
|Employee stock purchase plan                    |  |                                      |       |                                      |   | 1                                   |  |                                     |       |  |   | 1     
|Restricted stock                                |  |                                      | 85     |                                      |   | 23                                  |  |                                     | 90     |  |   | 20    
|                                                |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Denominator for diluted calculation             |  |                                      | 22,271 |                                      |   | 22,132                              |  |                                     | 22,270 |  |   | 22,068
|                                                |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Net income per share:                           |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Basic                                           |  | $                                    | 0.16   |                                      | $ | 0.25                                |  | $                                   | 0.29   |  | $ | 0.83  
|                                                |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       
|Diluted                                         |  | $                                    | 0.16   |                                      | $ | 0.25                                |  | $                                   | 0.29   |  | $ | 0.83  
|                                                |  |                                      |        |                                      |   |                                     |  |                                     |        |  |   |       

The calculation of diluted net income per share excludes all anti-dilutive shares. For the three
and nine months ended September 30, 2008, the number of anti-dilutive shares issuable upon exercise of options that were excluded, as calculated based on the weighted average closing price of the Companys common stock for these periods,
amounted to approximately 2,500,000 for each period. Also excluded for the three and nine months ended September 30, 2008 were 362,000 warrants to purchase common stock, due to their anti-dilutive effect. For the three and nine months ended
September 30, 2007, the number of anti-dilutive shares issuable upon exercise of options that were excluded amounted to approximately 2,791,000 and 2,746,000, respectively. Also excluded for the three and nine months ended September 30,
2007 were 362,000 warrants to purchase common stock, due to their anti-dilutive effect.

At September 30, 2008, there were 2,500,000
options to purchase common stock, 30,000 shares of restricted stock that vest in August 2011, 85,000 shares of restricted stock/restricted stock units that vest in March 2009 and 362,000 warrants to purchase common stock outstanding. At
September 30, 2007, there were 2,820,000 options to purchase common stock, 85,000 shares of restricted stock/restricted stock units that vest in March 2009 and 362,000 warrants to purchase common stock outstanding.

3. STATEMENTS OF CASH FLOWS

For the nine months ended
September 30, 2008 and 2007, approximately $285,000 and $519,000, respectively, was charged to interest expense for the accretion of the liability resulting from the Companys share of estimated selling and marketing expenses. The Company
recorded a liability of $15.6 million during 2004, as part of collaboration loss, which represented the net present value of the Companys estimated share of these expenses, based on the expected timing and terms of payment under the
Development and License Agreement, as amended July 12, 2004. No cash was paid for interest during the nine months ended September 30, 2008 and 2007.

4. ROCHE COLLABORATION

The Development and License Agreement

In July 1999, the Company entered into a Development and License Agreement with Roche to develop and commercialize T-20, currently marketed as FUZEON,
whose generic name is enfuvirtide, and T-1249, or a replacement compound. The Development and License Agreement has been amended several times; most recently in March 2007, the agreement was amended to cover only the development and
commercialization of FUZEON. The Development and License Agreement will effectively terminate upon the expiration of the last relevant patent covering FUZEON. Our present understanding is that this expiration date will occur in 2021.

The Development and License Agreement, as amended, grants Roche an exclusive, worldwide license for FUZEON. Under this agreement, a joint management
committee consisting of members from Trimeris and Roche oversees the strategy for the collaboration. Roche may terminate its license for a particular country in its sole discretion with advance notice. In addition, the Development and License
Agreement gives Roche significant control over important aspects of the commercialization of FUZEON, including but not limited to pricing, sales force activities and promotional activities. Under the Development and License Agreement, Roche cannot
adopt a budget for the marketing of FUZEON above certain limits without the agreement of the Company.



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As mentioned above, in March 2007, the Company entered into an agreement with Roche that amended the
terms of both the Development and License Agreement and the Research Agreement (defined below). This amendment provided that all intellectual property that was formerly shared between the companies, other than intellectual property related to
FUZEON, would now belong solely to Trimeris. The returned intellectual property covers both research and development stage molecules, including T-1249. Currently, there are no patients being treated with T-1249. Following the March 2007 amendment,
Roche is responsible for only one remaining $5.0 million milestone under the Development and License Agreement payable upon the achievement of a certain cumulative twelve-month sales threshold for FUZEON in the United States and Canada.

Collaboration Income

Product
sales of FUZEON began in the United States in March 2003 and are recorded by Roche. Under the Development and License Agreement with Roche, the Company shares gross profits from the sale of FUZEON in the United States and Canada equally with Roche.
Collaboration income is calculated as follows: Total gross sales of FUZEON in the United States and Canada is reduced by any discounts, returns or rebates resulting in total net sales. Net sales are reduced by costs of goods sold resulting in gross
profit. Gross profit is reduced by certain selling, marketing and other expenses related to the sale of FUZEON, resulting in operating income or loss. The Companys share of the operating income or loss is reported as collaboration income or
loss as a component of revenue. Total net sales of FUZEON in the United States and Canada were $48.0 million and $92.8 million during the nine months ended September 30, 2008 and 2007, respectively. Total net sales of FUZEON in the United
States and Canada were $14.9 million and $30.6 million during the three months ended September 30, 2008 and 2007, respectively. During the nine months ended September 30, 2008 and 2007, the gross profit from the sale of FUZEON exceeded the
sales, marketing and other expenses resulting in the Companys share of operating profit from the sale of FUZEON in the United States of $6.9 million and $15.7 million, respectively. During the three months ended September 30, 2008 and
2007, the gross profit from the sale of FUZEON exceeded the sales, marketing and other expenses resulting in the Companys share of operating profit from the sale of FUZEON in the United States of $2.0 million and $5.5 million, respectively.
Revenue is recognized when Roche ships the drug and title and risk of loss passes to wholesalers. FUZEON is widely available through retail pharmacies and wholesalers across North America.

Roche is responsible for the manufacture, sales, marketing and distribution of FUZEON. Roche manufactures bulk quantities of FUZEON drug substance in its
Boulder, Colorado facility and produces finished drug product from bulk drug substance at another Roche facility. The finished drug product is then shipped to a Roche facility for distribution. Roches sales force is responsible for selling
FUZEON. Under the Companys Development and License Agreement with Roche, the Company does not have the ability or rights to co-market this drug or field its own FUZEON sales force. All third party contracts for manufacturing, distribution,
sale, and reimbursement are between Roche and the third party. The Company is not a party to any of the material contracts in these areas. Roche provides the Company with information on manufacturing, sales and distribution of FUZEON. Roche is
responsible for estimating reductions to gross sales for expected returns of expired products, government rebate programs, such as Medicaid reimbursements, and customer incentives, such as cash discounts for prompt payment. The Company reviews these
items for accuracy and reasonableness.

Roche prepares estimates for sales returns and allowances, discounts and rebates based primarily on
its historical experience with FUZEON and other anti-HIV drugs and their estimates of the payor mix for FUZEON, updated for changes in facts and circumstances on a quarterly basis. If actual results differ from these estimates, these estimates will
be adjusted, which could have an effect on results of operations in the period of adjustment.

Accrued Marketing Costs

The Company and Roche agreed to limit the Companys actual cash contribution to the FUZEON selling and marketing expenses in 2004 to approximately
$11.2 million, 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, the Companys share of the additional expenses incurred by Roche during
2004 will be payable to Roche beginning at a future date over several years from that future date. During the first quarter of 2008, the Company revised its estimate of the date that payments will begin from 2014 to 2017. During the year ended
December 31, 2004, the Companys share of selling and marketing expenses exceeded $11.2 million. During 2004, the Company recorded $15.6 million as part of collaboration loss, which represented the net present value of the Companys
estimated share of the expenses that were in excess of approximately $11.2 million. This amount was determined by taking into account the expected timing and terms of payment under the Development and License Agreement, discounted at a risk free
interest rate. The Company is increasing the liability over time to the expected payment amount. For the three months ended September 30, 2008 and 2007, the Company increased the recorded liability by $96,000 and $115,000, respectively, for
accretion of interest. For the nine months ended September 30, 2008 and 2007, the Company increased the recorded liability by $285,000 and $519,000, respectively, for accretion of interest. The total liability of $18.2 million and $17.9 million
at September 30, 2008 and December 31, 2007, respectively, is reflected on our balance sheets under the caption Accrued marketing costs.



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The accrued marketing costs apply only to the 2004 FUZEON marketing costs; with respect to both 2008 and
2007, there are no accrued marketing costs.

Advanced PaymentRoche

In September 2005, the Company entered into a Letter of Amendment (Manufacturing Amendment) with Roche, which amended the Development and
License Agreement and set forth certain rights and responsibilities that the parties previously agreed to with respect to the manufacture and sale of FUZEON. The Company will pay Roche for the Companys share of the capital invested in
Roches manufacturing facility over a seven-year period. As a result, Roche will no longer include the depreciation related to the manufacturing facility in cost of goods sold.

Under the terms of the Manufacturing Amendment, the Companys contribution to the capital improvements made at Roches manufacturing facility
is to be reviewed on an annual basis. Following such review, the Companys contribution will be adjusted, when necessary, to reflect changes to the relative geographic distribution of FUZEON sales. During the first quarter of 2008, the Company
and Roche reviewed certain FUZEON sales data which resulted in a change in the amount of the Companys contribution to the capital investment. Following this 2008 review, the Company expected to contribute approximately $12.1 million towards
the capital investment as compared to its previous expectation of approximately $12.8 million. At September 30, 2008, we had capitalized costs of $11.2 million, and expect to pay approximately $285,000 per quarter through June 2009. In the
event the Development and License Agreement is terminated, the Company would not be obligated for any unpaid amounts for capital investment.

These payments, net of the portion allocated to cost of goods sold, are recorded as an asset presented as Advanced payment  Roche. This asset is amortized based on the units of FUZEON sold during the collaboration period
in order to properly allocate the capital investment to cost of goods sold as the related inventory is sold in future periods. Assuming all payments are made and sales of FUZEON continue, the Company estimates that this asset has a remaining useful
life of approximately 13 years. The carrying value of this asset will be evaluated annually for impairment or if an event occurs that triggers impairment.

Under the Manufacturing Amendment, if the Roche-owned facilities in Boulder, Colorado used for the manufacture of FUZEON, are used to produce other products for Roche, a credit to the collaboration will result.
Through September 30, 2008, the Companys share of this credit was approximately $1.9 million. These credits have been recorded on the Companys balance sheets as a reduction to the Advanced payment  Roche. These
credits offset variances that would otherwise have been allocated to FUZEON if the facilities had remained underutilized and will be recognized when the related FUZEON produced during these periods is sold.

Royalty Revenue

The Company receives
royalties on sales of FUZEON in countries outside of the United States and Canada. Roche is responsible for all activities related to FUZEON outside of the United States and Canada, including regulatory, manufacturing, sales and distribution. These
royalties are recognized as revenue when the sales are made by Roche. 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. Royalties of $3.4
million and $4.8 million were recognized as revenue during the three months ended September 30, 2008 and 2007, respectively. Royalties of $8.7 million and $11.9 million were recognized as revenue during the nine months ended September 30,
2008 and 2007, respectively.

Development Expenses

Under the Development and License Agreement, development costs for FUZEON are shared equally. 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. Quarterly, the companies reconcile the amounts expended and one party pays the other party on a 50/50 basis. 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. Development expenses pertaining to the United
States and Canada are included in our statements of operations as operating expenses under Research and Development.

The Research
Agreement

Research, or the process of identifying clinical candidates, is generally distinct from the advanced testing of these
compounds, a process referred to herein as development (see discussion above Development Expenses). In the Companys collaboration with Roche, the identification of compounds that may become clinical candidates had been governed by
a separate research agreement and the work by the parties was performed according to an agreed upon research plan. In 2001, the Company entered into a research agreement (the Research Agreement) with Roche to discover, develop and
commercialize next generations of HIV fusion inhibitor



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peptides (NGFI). In addition, the Company has the option to participate in the co-development and commercialization of certain Roche-developed
fusion inhibitor peptides. In order to exercise its option, the Company must pay Roche a one-time, lump sum payment of $4.5 million per candidate.

In March 2007, the Company entered into an agreement with Roche that amended the terms of the Research Agreement whereby all rights, joint patents and other intellectual property rights to the NGFI peptides falling under the Research
Agreement, which includes the lead drug candidate, TRI-1144, reverted to the Company. As a result of this agreement, the Company accelerated revenue recognition for those milestones being amortized over the length of the research and development
period of the NGFI peptides because the period of our joint development has ended. The acceleration of these milestones resulted in $8.7 million of additional milestone revenue during the first quarter of 2007. The Company has maintained the option
to participate in the co-development and commercialization of certain Roche-developed fusion inhibitor peptides, as described in the preceding paragraph.

5. COMPREHENSIVE INCOME

SFAS No. 130, Reporting Comprehensive Income, establishes rules for the reporting and
display of comprehensive income or loss and its components. Comprehensive income includes all non-owner changes in equity during a period and is divided into two broad classifications: net income and other comprehensive income (OCI). OCI
includes revenue, expenses, gains, and losses that are excluded from earnings under generally accepted accounting principles. For the Company, OCI consists of unrealized gains or losses on securities available-for-sale, and actuarial gains and
losses and prior service costs for the post-retirement health insurance plan that have not been recognized as components of net periodic post-retirement benefit costs.

The table below presents the Companys OCI for the three and nine months ended September 30, 2008 and 2007.



|                                                                              |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       
|----------------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ------
|                                                                              |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30,
|                                                                              |  | 2008                            |       |   | 2007                           |   |       | 2008 |  |   | 2007 
|Net income                                                                    |  | $                               | 3,559 |   |                                | $ | 5,540 |      |  | $ | 6,477 |   |  | $ | 18,366
|                                                                              |  |                                 |       |  
|Reclassification of realized loss on securities available-for-sale            |  |                                 |      |   |                                |   |      |      |  |   | 206   |   |  |   |      
|                                                                              |  |                                 |       |  
|Unrealized (loss) gain on securities available-for-sale                       |  |                                 | (439  | ) |                                |   | 19    |      |  |   | (520  | ) |  |   | 11    
|                                                                              |  |                                 |       |  
|Unrecognized prior service costs and actuarial gains for post-retirement plan |  |                                 |      |   |                                |   | (4    | )    |  |   |      |   |  |   | 55    
|                                                                              |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       
|Other comprehensive income (OCI)                                              |  | $                               | 3,120 |   |                                | $ | 5,555 |      |  | $ | 6,163 |   |  | $ | 18,432
|                                                                              |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       

6. INVESTMENT SECURITIES AVAILABLE-FOR-SALE

Investment securities, which consist of corporate bonds, Euro-dollar bonds, certificates of deposit, and federal agency notes, are classified as
available-for-sale, and are reported at fair value based on quoted market prices. The cost of securities sold is determined using the specific identification method when computing realized gains and losses. Unrealized gains and losses are included
as a component of stockholders equity until realized.

In accordance with its investment policy, the Company limits the amount of
credit exposure with any one issuer and the investments are generally not collateralized.

Investment securities include an investment of
approximately $5.6 million at September 30, 2008 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 September 30, 2008, the Funds NAV was $0.9572 per share. For the quarter
ended September 30, 2008, we recorded a loss in the amount of $15,000. If the current credit environment continues to deteriorate, our investments in this money market fund could become impaired and our investment in the Columbia Strategic Cash
Portfolio could suffer losses, which would adversely impact our financial results.



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The Company adopted SFAS No. 157, Fair Value Measurements, effective January 1,
2008 for financial assets and liabilities measured on a recurring basis. SFAS No. 157 applies to all financial assets and liabilities that are being measured and reported on a fair value basis. There was no impact to the financial statements
upon the adoption of SFAS No. 157. SFAS No. 157 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified
and disclosed in one of the following three categories:



| | Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.
| | -------- | ------------------------------------------------------------------------------------------------------------------------------------------



| | Level 2: | Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | Level 3: | Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
| | -------- | ------------------------------------------------------------------------------------------------------------------

A financial instruments level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement.

The Companys assets that are measured at fair value on a recurring basis are generally classified within Level 1 or
Level 2 of the fair value hierarchy. The types of instruments valued based on quoted market prices in active markets include most money market securities, corporate and euro dollar bonds, commercial paper and certificates of deposit. Such
instruments are generally classified within Level 1 of the fair value hierarchy.

The types of instruments valued based on quoted prices in
less active markets, or alternative pricing sources with reasonable levels of price transparency, include the Bank of America Corporations Columbia Strategic Cash Portfolio.

The following table sets forth, by level, within the fair value hierarchy, financial assets and liabilities accounted for at fair value under SFAS
No. 157 as of September 30, 2008 (in thousands):



|                                      |  |       |        |                                       |   |                                 |  |                              |       |  |   |  
|------------------------------------- |  | ----- | ------ | ------------------------------------- | - | ------------------------------- |  | ---------------------------- | ----- |  | - | -
|                                      |  | Total |        | QuotedPrices inActiveMarkets(Level 1) |   | OtherObservableInputs(Level 2)* |  | Un-observableInputs(Level 3)
|Money market funds                    |  | $     | 30,403 |                                       | $ | 24,821                          |  | $                            | 5,582 |  | $ | 
|Corporate and euro dollar bonds       |  |       | 14,190 |                                       |   | 14,190                          |  |                              |      |  |   | 
|Commercial paper                      |  |       | 6,369  |                                       |   | 6,369                           |  |                              |      |  |   | 
|Certificates of deposit               |  |       | 662    |                                       |   | 662                             |  |                              |      |  |   | 
|                                      |  |       |        |                                       |   |                                 |  |                              |       |  |   |  
|Total investments, available for sale |  | $     | 51,624 |                                       | $ | 46,042                          |  | $                            | 5,582 |  | $ | 
|                                      |  |       |        |                                       |   |                                 |  |                              |       |  |   |  



|* | represents our investment in Bank of America Corporations Columbia Strategic Cash Portfolio, which is discussed in more detail above.
|- | --------------------------------------------------------------------------------------------------------------------------------------

Assets measured at fair value on a recurring basis were presented in the balance sheet as of September 30, 2008 as follows (in thousands):



|                                                |  |       |        |                                       |   |                                |  |                              |       |  |   |  
|----------------------------------------------- |  | ----- | ------ | ------------------------------------- | - | ------------------------------ |  | ---------------------------- | ----- |  | - | -
|                                                |  | Total |        | QuotedPrices inActiveMarkets(Level 1) |   | OtherObservableInputs(Level 2) |  | Un-observableInputs(Level 3)
|Cash and cash equivalents                       |  | $     | 24,821 |                                       | $ | 24,821                         |  | $                            |      |  | $ | 
|Short-term investments in marketable securities |  |       | 12,223 |                                       |   | 8,439                          |  |                              | 3,784 |  |   | 
|Long-term investments in marketable securities  |  |       | 14,580 |                                       |   | 12,782                         |  |                              | 1,798 |  |   | 
|                                                |  |       |        |                                       |   |                                |  |                              |       |  |   |  
|Total assets                                    |  | $     | 51,624 |                                       | $ | 46,042                         |  | $                            | 5,582 |  | $ | 
|                                                |  |       |        |                                       |   |                                |  |                              |       |  |   |  

The carrying value of other financial instruments, including accounts receivable, accounts
payable, and accrued liabilities approximate fair value due to their short maturities.



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7. INCOME TAXES

Income tax expense has been accrued for the three and nine months ended September 30, 2008 in the amount of $47,000 and $110,000, respectively. For the three and nine months ended September 30, 2007, income tax expense was accrued
in the amount of $54,000 and $242,000, respectively. The Company is anticipating incurring a current tax liability for Federal alternative minimum taxes and does not believe that it is more likely than not that the corresponding alternative minimum
tax credit will be realized in the foreseeable future.

8. COMMITMENTS AND CONTINGENCIES

Under the Development and License Agreement, Trimeris and Roche are obligated to share equally the future development expenses for FUZEON for the United
States and Canada.

In 2004, the Company entered into a sublease agreement for its office and laboratory space in Morrisville, North
Carolina. The sublease called for the payment of a security deposit for which the Company has paid $126,000 as of September 30, 2008. During the second quarter of 2008, the Company relocated its corporate offices and shut down its existing
facility. As a result, the Company recorded a liability and associated expense of $939,000 for future lease commitments.

On
November 20, 2007, the Company was informed that Novartis Vaccines and Diagnostics, Inc. (Novartis) had filed suit against Hoffman-La Roche Inc., Roche Laboratories Inc., Roche Colorado Corp., and F. Hoffman-La Roche LTD.
(collectively the Roche Entities) and Trimeris alleging infringement of Novartis U.S. Patent No. 7,285,271 B1, entitled Antigenic Composition Comprising an HIV gag or env Polypeptide (the 271
Patent).

The 271 Patent that is the subject of the infringement suit was granted to Novartis on October 23, 2007. On
March 7, 2008, the Company received formal service of the complaint in this case and on May 29, 2008, Roche and Trimeris filed an answer and counterclaim requesting relief on several grounds including non-infringement, patent invalidity,
unenforceability and double-patenting. Also on May 29, 2008, Roche and Trimeris filed a motion to transfer or, in the alternative, dismiss Trimeris pursuant to the Federal Rules of Civil Procedure. On July 30, 2008, Novartis filed an
answer to the Roche-Trimeris counterclaims. On August 1, 2008, Roche and Trimeris filed a reply in support of Trimeris motion to transfer. On September 3, 2008, the Court dismissed the Roche - Trimeris motion for transfer of venue
without prejudice. On October 10, 2008, Roche and Trimeris filed a renewed motion to transfer. The Court has not yet ruled on this renewed motion. No trial date has been scheduled and the outcome of this matter cannot be determined at this
time.

9. REDUCTION IN WORKFORCE

During
November 2006, the Company announced a shift in strategic emphasis and reorganization to focus on FUZEON profitability and research and early stage development. With this shift in strategic emphasis, the Company reduced its workforce by
approximately 25% and recognized expense of $3.2 million for severance and other costs in the fourth quarter of 2006.

During March 2007,
as a continued part of the shift in strategic emphasis, the Company reduced its workforce by approximately 25% and recognized expense of $4.3 million for severance and other costs in the first quarter of 2007. Of this $4.3 million, $870,000 was
related to the acceleration of vesting of restricted stock and is excluded from the table below.

During April 2007, as a continued part of
the shift in strategic emphasis, the Company reduced its workforce by approximately 7% and recognized expense of $77,000 for severance and other costs in the second quarter of 2007.

During December 2007, the Company implemented a reduction in force in connection with a 2008 strategic plan to maximize cash flows from FUZEON, while
also advancing TRI-1144 to a value creating milestone. In connection with the strategic plan and as a result of the reduction in force, the Company expects that it will no longer staff any research and development functions. The Company recognized
expense of $1.7 million for severance and other costs during the fourth quarter of 2007 related to this 2008 strategic plan.



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Following is a summary of activity related to the 2006 and 2007 restructuring accruals (in thousands):



|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|----------------------------- |  | ------------------------- | ------ | - | ------------------------- | - | ------ | ----- |  | - | ------ | -
|                              |  | Severance andBenefits2006 |        |   | Severance andBenefits2007 |   |        | Total | 
|2006 severance charge         |  | $                         | 3,161  |   |                           | $ |       |       |  | $ | 3,161  |  
|Payments                      |  |                           | (64    | ) |                           |   |       |       |  |   | (64    | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at December 31, 2006  |  | $                         | 3,097  |   |                           | $ |       |       |  | $ | 3,097  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|2007 severance charge         |  |                           |       |   |                           |   | 3,344  |       |  |   | 3,344  |  
|Adjustments                   |  |                           | 130    |   |                           |   |       |       |  |   | 130    |  
|Payments                      |  |                           | (1,061 | ) |                           |   |       |       |  |   | (1,061 | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at March 31, 2007     |  | $                         | 2,166  |   |                           | $ | 3,344  |       |  | $ | 5,510  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|2007 severance charge         |  | $                         |       |   |                           | $ | 77     |       |  | $ | 77     |  
|Adjustments                   |  |                           | (66    | ) |                           |   |       |       |  |   | (66    | )
|Payments                      |  |                           | (440   | ) |                           |   | (543   | )     |  |   | (983   | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at June 30, 2007      |  | $                         | 1,660  |   |                           | $ | 2,878  |       |  | $ | 4,538  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Adjustments                   |  |                           | 2      |   |                           |   | (92    | )     |  |   | (90    | )
|Payments                      |  |                           | (676   | ) |                           |   | (246   | )     |  |   | (922   | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at September 30, 2007 |  | $                         | 986    |   |                           | $ | 2,540  |       |  | $ | 3,526  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|2007 severance charge         |  | $                         |       |   |                           | $ | 1,688  |       |  | $ | 1,688  |  
|Adjustments                   |  |                           | (35    | ) |                           |   | (9     | )     |  |   | (44    | )
|Payments                      |  |                           | (384   | ) |                           |   | (667   | )     |  |   | (1,051 | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at December 31, 2007  |  | $                         | 567    |   |                           | $ | 3,552  |       |  | $ | 4,119  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Adjustments                   |  |                           | (6     | ) |                           |   | (55    | )     |  |   | (61    | )
|Payments                      |  |                           | (152   | ) |                           |   | (1,196 | )     |  |   | (1,348 | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at March 31, 2008     |  | $                         | 409    |   |                           | $ | 2,301  |       |  | $ | 2,710  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Adjustments                   |  |                           | 2      |   |                           |   | 36     |       |  |   | 38     |  
|Payments                      |  |                           | (123   | ) |                           |   | (538   | )     |  |   | (661   | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at June 30, 2008      |  | $                         | 288    |   |                           | $ | 1,799  |       |  | $ | 2,087  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Adjustments                   |  |                           | 2      |   |                           |   | 12     |       |  |   | 14     |  
|Payments                      |  |                           | (124   | ) |                           |   | (525   | )     |  |   | (649   | )
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  
|Balance at September 30, 2008 |  | $                         | 166    |   |                           | $ | 1,286  |       |  | $ | 1,452  |  
|                              |  |                           |        |   |                           |   |        |       |  |   |        |  

10. SPECIAL DIVIDEND

On May 8, 2008, the Companys Board of Directors declared a one-time special cash dividend of $1.50 per share of common stock to stockholders of record on May 22, 2008. On August 6, 2008, the Board
of Directors approved a downward adjustment to the exercise price of all stock options existing prior to May 22, 2008 of $1.14. The downward adjustment to the exercise price of all stock options had no impact on the financial statements.



13



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

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 compound under research 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 third quarter of 2008, the Company recorded net income of $3.6 million, or $0.16 per share, compared to $5.5 million, or $0.25 per
share, in the third quarter of 2007. This decrease was driven by decreased revenue offset, in part, by decreased operating expenses.

2008
will continue to be a year of transition for Trimeris:



| |  |  | Special Cash Dividend  On May 8, 2008, the Companys Board of Directors declared a one-time special cash dividend of $1.50 per share of common stock
to stockholders of record on May 22, 2008. The dividend payment totaled approximately $33.3 million and was paid on June 6, 2008.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Stock Repurchase Program  Also on May 2, 2008, the Board of Directors authorized a share repurchase program to purchase up to $17.0 million of Trimeris
common stock from time to time on the open market, in block trades or otherwise. The timing of repurchases and the amount of any shares repurchased will be determined by Trimeris management based on its evaluation of market conditions and other
factors. The repurchase program may be suspended or discontinued at any time and will expire on December 31, 2008. Any repurchased shares will be available for use in connection with Trimeris stock plans and for other corporate purposes. Both
the special cash dividend and any repurchases under the stock repurchase program will be funded using Trimeris working capital. As of September 30, 2008, the Company has not repurchased any outstanding shares of common stock.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Competition  FUZEON sales have been significantly impacted by the recent market introduction of three new oral HIV agents. We believe it is too early to
determine the future sales trend after this initial negative impact.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cost of Goods Sold  We have concluded our discussions related to the calculation of cost of goods sold for 2008. We believe that cost of goods sold for 2008
will remain at current year-to-date levels of approximately 37% of net sales. Cost of goods sold is dependent on many factors, which are outside of the Companys control, including plant utilization, staffing levels and purchasing volumes.
Therefore, we cannot accurately determine if future cost of goods sold as a percentage of net sales will increase, decrease or remain the same.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For a comparison of the nine months ended
September 30, 2008 and 2007, see Results of Operations  Comparison of Nine Months Ended September 30, 2008 and 2007.

Recent announcements

In August 2008, the Company announced preliminary results from study TRI-1144-101, a Phase 1 study of
the next-generation HIV fusion inhibitor, TRI-1144. Conducted in 24 healthy subjects, study TRI 1144-101 was a placebo-controlled, double-blind, single-dose trial that explored the safety, tolerability and pharmacokinetics of four doses of TRI-1144.
A total of 18 subjects received TRI-1144, ranging from 25 mg to 250 mg while 6 subjects received placebo. Pharmacokinetic analyses showed that the plasma half-life ranged from 13 to 20 hours depending on the dose administered, with a time to maximal
exposure ranging from 10 to 13 hours.

There were no serious adverse events observed during the trial. Eight subjects experienced a total
of 13 adverse events. Of these eight subjects, five were in the TRI-1144 group (5/18 or 28%) while three subjects were in the placebo group (3/6 or 50%). With respect to the events observed in the TRI-1144 group, five were considered mild (5/6 or
83%) and one was moderate (1/6 or 17%) (backache; unrelated). With respect to adverse events observed in the placebo group, five events were considered mild (5/7 or 71%) and two were moderate in intensity (2/7 or 29%). No serious injection-site
reactions (ISRs) were observed. Two out of six (33%) and



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15/18 (83%) of subjects receiving placebo or TRI-1144, respectively, experienced mild or moderate ISRs. No ISRs were experienced in the TRI-1144 25 mg
group. Erythema and pain/discomfort were the most frequent signs/symptoms observed and most ISRs resolved by 96 hours. No ISRs were experienced in the 25 mg group. Full data from the trial was presented at a recent medical conference.

RESULTS OF OPERATIONS

Comparison Of Three Months Ended
September 30, 2008 and 2007

Revenues

The table below presents our revenue sources for the three months ended September 30, 2008 compared to the three months ended September 30, 2007.



|                                       |  |                                 |       |                    |   |        |  |   |        |  
|-------------------------------------- |  | ------------------------------- | ----- | ------------------ | - | ------ |  | - | ------ | -
|(in thousands)                         |  | Three Months EndedSeptember 30, |       | Increase(Decrease) |  
|                                       |  | 2008                            |       | 2007               |  
|Milestone revenue                      |  | $                               | 67    |                    |   | 78     |  | $ | (11    | )
|Royalty revenue                        |  |                                 | 3,373 |                    |   | 4,781  |  |   | (1,408 | )
|Collaboration income                   |  |                                 | 1,961 |                    |   | 5,518  |  |   | (3,557 | )
|                                       |  |                                 |       |                    |   |        |  |   |        |  
|Total revenue and collaboration income |  | $                               | 5,401 |                    | $ | 10,377 |  | $ | (4,976 | )
|                                       |  |                                 |       |                    |   |        |  |   |        |  

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

The table below presents our achieved milestones from Roche as of September 30,
2008. We are recognizing the milestones with remaining unrecognized balances on a straight-line basis over the estimated commercial period of FUZEON.



|      |  |                |       |               |      |                                                   |      |                                                     |   |                          |  |   |    |  |               |  
|----- |  | -------------- | ----- | ------------- | ---- | ------------------------------------------------- | ---- | --------------------------------------------------- | - | ------------------------ |  | - | -- |  | ------------- | -
|      |  | MilestoneTotal |       | Date Achieved |      | Total RevenueRecognized ThroughSeptember 30, 2008 |      | Revenue for theThree Months EndedSeptember 30, 2008 |   | End of RecognitionPeriod | 
|      |  | (in thousands) |      
|      |  | $              | 2,500 |               | June |                                                   | 2003 |                                                     | $ | 1,272                    |  | $ | 50 |  | November 2014 | *
|      |  |                | 750   |               | June |                                                   | 2004 |                                                     |   | 343                      |  |   | 17 |  | November 2014 | *
|      |  |                |       |               |      |                                                   |      |                                                     |   |                          |  |   |    |  |               |  
|Total |  | $              | 3,250 |               |      |                                                   |      |                                                     | $ | 1,615                    |  | $ | 67 |  |               |  
|      |  |                |       |               |      |                                                   |      |                                                     |   |                          |  |   |    |  |               |  



|* | During the third quarter of 2007, the Company extended the recognition of the remaining milestones through November 2014, as the patent term associated with these milestones was
extended through this date. The original expiration of the associated patents was June 2013.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 September 30, 2008 as compared to the three months ended September 30, 2007 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 September 30, 2008 and 2007, were $30.6 million and $43.3 million, respectively.

Collaboration income:The table below presents our collaboration income (United States and Canada) for the three months ended September 30, 2008 compared to the three months ended September 30, 2007. 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.



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|                                        |  |                                 |        |   |        |   |         |   |  |   |         |  
|--------------------------------------- |  | ------------------------------- | ------ | - | ------ | - | ------- | - |  | - | ------- | -
|(in thousands)                          |  | Three Months EndedSeptember 30, |        |   | Change |  
|                                        |  | 2008                            |        |   | 2007   |   |        
|Gross FUZEON sales by Roche             |  | $                               | 18,077 |   |        | $ | 36,249  |   |  | $ | (18,172 | )
|Less sales adjustments                  |  |                                 | (3,137 | ) |        |   | (5,637  | ) |  |   | 2,500   |  
|Sales adjustments as a % of Gross Sales |  |                                 | 17     | % |        |   | 16      | % |  |   |         |  
|                                        |  |                                 |        |   |        |   |         |   |  |   |         |  
|Net sales                               |  |                                 | 14,940 |   |        |   | 30,612  |   |  |   | (15,672 | )
|Cost of goods sold                      |  |                                 | (5,429 | ) |        |   | (10,182 | ) |  |   | 4,753   |  
|Cost of goods sold as a % of Net Sales  |  |                                 | 36     | % |        |   | 33      | % |  |   |         |  
|                                        |  |                                 |        |   |        |   |         |   |  |   |         |  
|Gross profit                            |  |                                 | 9,511  |   |        |   | 20,430  |   |  |   | (10,919 | )
|Gross profit as a % of Net Sales        |  |                                 | 64     | % |        |   | 67      | % |  |   |         |  
|Selling and marketing expenses          |  |                                 | (5,345 | ) |        |   | (8,508  | ) |  |   | 3,163   |  
|Other costs                             |  |                                 | (790   | ) |        |   | (639    | ) |  |   | (151    | )
|                                        |  |                                 |        |   |        |   |         |   |  |   |         |  
|Total shared profit                     |  |                                 | 3,376  |   |        |   | 11,283  |   |  |   | (7,907  | )
|Trimeris share *                        |  |                                 | 2,085  |   |        |   | 5,641   |   |  |   | (3,556  | )
|Costs exclusive to Trimeris             |  |                                 | (124   | ) |        |   | (123    | ) |  |   | (1      | )
|                                        |  |                                 |        |   |        |   |         |   |  |   |         |  
|Net income from collaboration           |  | $                               | 1,961  |   |        | $ | 5,518   |   |  | $ | (3,557  | )
|                                        |  |                                 |        |   |        |   |         |   |  |   |         |  



|* | 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 third quarter of 2008. For 2007, the Companys and Roches share of the collaboration income was equal. Depending
on the level of marketing expenses for 2008, 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 2008 and 2007.



|             |  |        |  |       
|------------ |  | ------ |  | ------
|Kits Shipped |  | 2008   |  | 2007  
|Q1           |  | 9,600  |  | 17,900
|Q2           |  | 9,000  |  | 19,200
|Q3           |  | 7,900  |  | 17,600
|Q4           |  |       |  | 17,500
|             |  |        |  |       
|Total        |  | 26,500 |  | 72,200
|             |  |        |  |       

Sales adjustments: Sales adjustments are recorded by Roche based on their experience with
selling FUZEON. Based on discussions with Roche, we have increased our expectation for sales adjustments from a range of 15% to 16.5% of gross sales to a range of 16% to 18% of gross sales for 2008.

Cost of goods sold:We have concluded our discussions related to the calculation of cost of goods sold for 2008. We believe that cost of goods
sold, for 2008, will remain at current year-to-date levels of approximately 37% of net sales. Cost of goods sold is dependent on many factors, which are outside of the Companys control, including plant utilization, staffing levels and
purchasing volumes. Therefore, we cannot accurately determine if future cost of goods sold as a percentage of net sales will increase, decrease or remain the same.



16



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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 third
quarter of 2008. For 2007, the Companys and Roches share of the collaboration income was equal. Depending on the level of marketing expenses for 2008, our share of the collaboration profit may continue to be greater than that of
Roche.

Other costs: Other costs for the three months ended September 30, 2008 and 2007 include general and
administrative costs and distribution charges. Other costs for the three months ended September 30, 2007 also include inventory write-offs. 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 September 30, 2008 compared to the three months ended
September 30, 2007.



|                                        |  |                                 |     |                    |   |       |  |   |        |  
|--------------------------------------- |  | ------------------------------- | --- | ------------------ | - | ----- |  | - | ------ | -
|(in thousands)                          |  | Three Months EndedSeptember 30, |     | Increase(Decrease) |  
|                                        |  | 2008                            |     | 2007               |  
|Total research and development expenses |  | $                               | 572 |                    | $ | 3,809 |  | $ | (3,237 | )
|                                        |  |                                 |     |                    |   |       |  |   |        |  

Total research and development expenses include:



| |  |  | Development expenses for FUZEON, which we share equally with Roche; and
| | - |  | -----------------------------------------------------------------------



| |  |  | Research expenses related to the Phase I clinical trial for TRI-1144, our lead drug candidate.
| | - |  | ----------------------------------------------------------------------------------------------

Total research and development expenses: Total research and development expenses decreased for the three months ended September 30, 2008
compared to the three months ended September 30, 2007, primarily as a result of the following:



| |  |  | Decreased employee costs as a result of reduced headcount;
| | - |  | ----------------------------------------------------------



| |  |  | Decreased costs related to TRI-1144 as we are in the final stages of reporting the results from this trial;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | Decreased expenses related to our employee share-based compensation; and
| | - |  | ------------------------------------------------------------------------



| |  |  | Decrease in supplies related to the reduction of research and development activities.
| | - |  | -------------------------------------------------------------------------------------

We expect total research and development expenses, including payments to Roche for 2008 FUZEON development costs, to be less than those incurred in 2007,
as a result of the 2008 strategic plan which eliminated all research and development personnel at Trimeris after June 30, 2008. After June 30, 2008, we believe that research and development expenses will be primarily related to the ongoing
post marketing commitments with the FDA for FUZEON and the close out of our Phase I clinical trial for TRI-1144.

General and
Administrative Expenses

The table below presents our general and administrative expenses for the three months ended
September 30, 2008 compared to the three months ended September 30, 2007.



|                                          |  |                                 |       |                    |   |       |  |   |      |  
|----------------------------------------- |  | ------------------------------- | ----- | ------------------ | - | ----- |  | - | ---- | -
|(in thousands)                            |  | Three Months EndedSeptember 30, |       | Increase(Decrease) |  
|                                          |  | 2008                            |       | 2007               |  
|Total general and administrative expenses |  | $                               | 1,519 |                    | $ | 1,674 |  | $ | (155 | )
|                                          |  |                                 |       |                    |   |       |  |   |      |  

Total general and administrative expenses: Total general and administrative expenses decreased for
the three months ended September 30, 2008 compared to the three months ended September 30, 2007, primarily as a result of the following:



| |  |  | Decreased employee costs as a result of reduced headcount;
| | - |  | ----------------------------------------------------------



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| |  |  | Decreased occupancy costs as a result of the relocation of the Companys corporate offices and shutdown of its existing facility, which resulted in the
recording of a liability and associated expense for future lease commitments in the amount of $939,000 in the second quarter of 2008, thus reducing our expenses during the third quarter of 2008; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Decreased expenses related to our employee share-based compensation.
| | - |  | --------------------------------------------------------------------

We expect general and administrative expenses to decrease in 2008, when compared to 2007, as a result of the 2008 strategic plan which eliminated most
general and administrative personnel at Trimeris after June 30, 2008.

Gains on disposal of equipment:The table below presents
the gain on the disposal of equipment for the three months ended September 30, 2008 and 2007.



|                              |  |                                 |    |                    |   |   |  |   |   
|----------------------------- |  | ------------------------------- | -- | ------------------ | - | - |  | - | --
|(in thousands)                |  | Three Months EndedSeptember 30, |    | Increase(Decrease)
|                              |  | 2008                            |    | 2007               |  
|Gain on disposal of equipment |  | $                               | 10 |                    | $ |  |  | $ | 10
|                              |  |                                 |    |                    |   |   |  |   |   

Other Income (Expense):The table below presents our other income (expense) for the three
months ended September 30, 2008 and 2007.



|                        |  |                                 |     |   |                    |   |      |   |  |   |      |  
|----------------------- |  | ------------------------------- | --- | - | ------------------ | - | ---- | - |  | - | ---- | -
|(in thousands)          |  | Three Months EndedSeptember 30, |     |   | Increase(Decrease) |  
|                        |  | 2008                            |     |   | 2007               |   |     
|Interest income         |  | $                               | 397 |   |                    | $ | 815  |   |  | $ | (418 | )
|Gain on investments     |  |                                 | (15 | ) |                    |   |     |   |  |   | (15  | )
|Interest expense        |  |                                 | (96 | ) |                    |   | (115 | ) |  |   | 19   |  
|                        |  |                                 |     |   |                    |   |      |   |  |   |      |  
|Total other income, net |  | $                               | 286 |   |                    | $ | 700  |   |  | $ | (414 | )
|                        |  |                                 |     |   |                    |   |      |   |  |   |      |  

Interest income decreased for the three months ended September 30, 2008 primarily due to the
interest rate environment and lower cash balances as a result of the special dividend paid on June 6, 2008.

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 first quarter of 2008, the Company revised the estimated date that payments will begin from 2014 to 2017. 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 an income tax expense of $47,000 in the third quarter of 2008 compared to income
tax expense of $54,000 in the third quarter of 2007. For 2008, the Company believes, based on current estimates, that the effective annual blended tax rate is approximately 1.7%.

Currently, we carry a full valuation allowance against our deferred tax assets, the majority of which represent net operating loss tax carry forwards
which we generated prior to achieving profitability. In the future, we may need to reduce the valuation allowance and recognize a deferred tax benefit. Management assesses this potential based upon all available evidence, including the last nine
quarters of profitability, and forecasts. At the end of the third quarter, management determined that it was not appropriate to reduce the valuation allowance.



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RESULTS OF OPERATIONS

Comparison of Nine Months ended September 30, 2008 and 2007

Revenues

The table below presents our revenue sources for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007.



|                                       |  |                                |        |                    |   |        |  |   |         |  
|-------------------------------------- |  | ------------------------------ | ------ | ------------------ | - | ------ |  | - | ------- | -
|(in thousands)                         |  | Nine Months EndedSeptember 30, |        | Increase(Decrease) |  
|                                       |  | 2008                           |        | 2007               |  
|Milestone revenue                      |  | $                              | 199    |                    | $ | 9,369  |  | $ | (9,170  | )
|Royalty revenue                        |  |                                | 8,663  |                    |   | 11,862 |  |   | (3,199  | )
|Collaboration income                   |  |                                | 6,870  |                    |   | 15,692 |  |   | (8,822  | )
|                                       |  |                                |        |                    |   |        |  |   |         |  
|Total revenue and collaboration income |  | $                              | 15,732 |                    | $ | 36,923 |  | $ | (21,191 | )
|                                       |  |                                |        |                    |   |        |  |   |         |  

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

The table below presents our achieved milestones from Roche as of September 30, 2008 in thousands.
We are recognizing the milestones with remaining unrecognized balances on a straight-line basis over the estimated commercial period of FUZEON.



|      |  |                |       |               |      |                                                   |      |                                                    |   |                          |  |   |     |  |               |  
|----- |  | -------------- | ----- | ------------- | ---- | ------------------------------------------------- | ---- | -------------------------------------------------- | - | ------------------------ |  | - | --- |  | ------------- | -
|      |  | MilestoneTotal |       | Date Achieved |      | Total RevenueRecognized ThroughSeptember 30, 2008 |      | Revenue for the NineMonths EndedSeptember 30, 2008 |   | End of RecognitionPeriod | 
|      |  | $              | 2,500 |               | June |                                                   | 2003 |                                                    | $ | 1,272                    |  | $ | 150 |  | November 2014 | *
|      |  |                | 750   |               | June |                                                   | 2004 |                                                    |   | 343                      |  |   | 49  |  | November 2014 | *
|      |  |                |       |               |      |                                                   |      |                                                    |   |                          |  |   |     |  |               |  
|Total |  | $              | 3,250 |               |      |                                                   |      |                                                    | $ | 1,615                    |  | $ | 199 |  |               |  
|      |  |                |       |               |      |                                                   |      |                                                    |   |                          |  |   |     |  |               |  



|* | During the third quarter of 2007, the Company extended the recognition of the remaining milestones through November 2014 as the patent term associated with these milestones was
extended through this date. The original expiration of the associated patents was June 2013.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Milestone revenue decreased for
the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007, as a result of the acceleration of all revenue recognition for certain past milestone payments received from Roche into the first quarter of
2007. On March 13, 2007, the Company entered into an agreement with Roche that amended the terms of the Research Agreement. Under this agreement, all rights and joint patents and other intellectual property rights to the next generation fusion
inhibitor peptides falling under the Research Agreement, which includes the lead drug candidate, TRI-1144, reverted to Trimeris. As a result of this agreement, the Company accelerated revenue recognition for past milestone payments received from
Roche into the first quarter of 2007 because our period of joint development ended. These milestone payments were previously being amortized over the length of the joint research and development period of the next generation fusion inhibitor
peptides or through December 2012.

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 nine months ended September 30, 2008 as
compared to the nine months ended September 30 2007, 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 nine months ended September 30, 2008 and 2007, were
$78.5 million and $107.5 million, respectively.



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##### Table of Contents

Collaboration income:The table below presents our collaboration income (United States and Canada)
for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. 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.



|                                        |  |                                |         |   |        |   |         |   |  |   |         |  
|--------------------------------------- |  | ------------------------------ | ------- | - | ------ | - | ------- | - |  | - | ------- | -
|(in thousands)                          |  | Nine Months EndedSeptember 30, |         |   | Change |  
|                                        |  | 2008                           |         |   | 2007   |   |        
|Gross FUZEON sales by Roche             |  | $                              | 58,342  |   |        | $ | 110,336 |   |  | $ | (51,994 | )
|Less sales adjustments                  |  |                                | (10,325 | ) |        |   | (17,516 | ) |  |   | 7,191   |  
|Sales adjustments as a % of Gross Sales |  |                                | 18      | % |        |   | 16      | % |  |   |         |  
|                                        |  |                                |         |   |        |   |         |   |  |   |         |  
|Net sales                               |  |                                | 48,017  |   |        |   | 92,820  |   |  |   | (44,803 | )
|Cost of goods sold                      |  |                                | (17,649 | ) |        |   | (30,807 | ) |  |   | 13,158  |  
|Cost of goods sold as a % of Net Sales  |  |                                | 37      | % |        |   | 33      | % |  |   |         |  
|                                        |  |                                |         |   |        |   |         |   |  |   |         |  
|Gross profit                            |  |                                | 30,368  |   |        |   | 62,013  |   |  |   | (31,645 | )
|Gross profit as a % of Net Sales        |  |                                | 63      | % |        |   | 67      | % |  |   |         |  
|Selling and marketing expenses          |  |                                | (16,129 | ) |        |   | (26,794 | ) |  |   | 10,665  |  
|Other costs                             |  |                                | (2,223  | ) |        |   | (2,568  | ) |  |   | 345     |  
|                                        |  |                                |         |   |        |   |         |   |  |   |         |  
|Total shared profit                     |  |                                | 12,016  |   |        |   | 32,651  |   |  |   | (20,635 | )
|Trimeris share *                        |  |                                | 7,306   |   |        |   | 16,325  |   |  |   | (9,019  | )
|Costs exclusive to Trimeris             |  |                                | (436    | ) |        |   | (633    | ) |  |   | 197     |  
|                                        |  |                                |         |   |        |   |         |   |  |   |         |  
|Net income from collaboration           |  | $                              | 6,870   |   |        | $ | 15,692  |   |  | $ | (8,822  | )
|                                        |  |                                |         |   |        |   |         |   |  |   |         |  



|* | 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 nine months of 2008. For 2007, the Companys and Roches share of the collaboration income was equal.
Depending on the level of marketing expenses for 2008 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.

Sales adjustments: Sales adjustments are recorded by Roche based on their experience with selling FUZEON. Based on discussions with Roche we have increased our expectation for sales adjustments from a range of
15% to 16.5% of gross sales to a range of 16% to 18% of gross sales.

Cost of goods sold:We have concluded our discussions related
to the calculation of cost of goods sold for 2008. We believe that cost of goods sold, for 2008, will remain at current levels of approximately 37% of net sales. Cost of goods sold is dependent on many factors, which are outside of the
Companys control, including plant utilization, staffing levels and purchasing volumes. Therefore we cannot accurately determine if future cost of goods sold as a percentage of net sales will increase, decrease or remain the same.

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 for the nine months ended September 30, 2008. For 2007,
the Companys and Roches share of the collaboration income was equal. Depending on the level of marketing expenses for 2008, our share of the collaboration profit may continue to be greater than that of Roche.

Other costs: Other costs for the nine months ended September 30, 2008 and 2007, include general and administrative costs and distribution
charges. Other costs for the nine months ended September 30, 2007 also include inventory write-offs. The Company is responsible for 50% of these costs under the Development and License Agreement.



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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 nine months ended September 30, 2008 compared to the nine months ended
September 30, 2007.



|                                        |  |                                |       |                    |   |       |  |   |        |  
|--------------------------------------- |  | ------------------------------ | ----- | ------------------ | - | ----- |  | - | ------ | -
|(in thousands)                          |  | Nine Months EndedSeptember 30, |       | Increase(Decrease) |  
|                                        |  | 2008                           |       | 2007               |  
|Total research and development expenses |  | $                              | 3,639 |                    | $ | 9,865 |  | $ | (6,226 | )
|                                        |  |                                |       |                    |   |       |  |   |        |  

Total research and development expenses include:



| |  |  | Development expenses for FUZEON, which we share equally with Roche; and
| | - |  | -----------------------------------------------------------------------



| |  |  | Research expenses for the preclinical development of the NGFIs, which we shared equally with Roche through March 13, 2007, the date of the signing of the
agreement with Roche whereby all rights, joint patents and other intellectual property rights to the NGFI peptides falling under the Research Agreement, which includes the lead drug candidate, TRI-1144, reverted to the Company. After March 13,
2007, these expenses became the sole responsibility of the Company.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total research and development expenses:
Total research and development expenses decreased during the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007, primarily as a result of the following:



| |  |  | Decreased employee costs as a result of reduced headcount; and
| | - |  | --------------------------------------------------------------



| |  |  | Decrease in supplies related to the reduction of research and development activities;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Offset, in part, by increased costs for the development of TRI-1144 as this compound entered a Phase I clinical trial in 2008.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------

General and Administrative Expenses

The table below presents our general and administrative expenses for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007.



|                                          |  |                                |       |                    |   |        |  |   |        |  
|----------------------------------------- |  | ------------------------------ | ----- | ------------------ | - | ------ |  | - | ------ | -
|(in thousands)                            |  | Nine Months EndedSeptember 30, |       | Increase(Decrease) |  
|                                          |  | 2008                           |       | 2007               |  
|Total general and administrative expenses |  | $                              | 5,778 |                    | $ | 10,150 |  | $ | (4,372 | )
|                                          |  |                                |       |                    |   |        |  |   |        |  

Total general and administrative expenses:Total general and administrative expenses
decreased for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007, primarily as a result of the following:



| |  |  | Decreased employee costs as a result of reduced headcount;
| | - |  | ----------------------------------------------------------



| |  |  | Decreased consulting costs;
| | - |  | ---------------------------



| |  |  | Decreased expenses related to our employee share-based compensation; and
| | - |  | ------------------------------------------------------------------------



| |  |  | Decreased severance costs related to the reduction in force which occurred during the first quarter of 2007;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Offset, in part, by the relocation of the Companys corporate offices and shutdown of its existing facility, which resulted in the recording of a liability and
associated expense for future lease commitments in the amount of $939,000.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Loss/(gain) on disposal of equipment:The table below presents the loss/(gain) on the disposal of equipment for the nine months ended September 30, 2008 and 2007.



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|                                     |  |                                |     |      |                    |    |   |  |   |    
|------------------------------------ |  | ------------------------------ | --- | ---- | ------------------ | -- | - |  | - | ---
|(in thousands)                       |  | Nine Months EndedSeptember 30, |     |      | Increase(Decrease)
|                                     |  | 2008                           |     | 2007 |                    |   
|Loss/(gain) on disposal of equipment |  | $                              | 496 |      | $                  | (7 | ) |  | $ | 503
|                                     |  |                                |     |      |                    |    |   |  |   |    

The loss/(gain) on disposal of equipment for the nine months ended September 30, 2008
primarily relates to the write-off of all property, furniture and equipment in the amount of $989,000 (79% of this write-off comprises leasehold improvements) offset, in part, by gains on asset disposals.

Other Income (Expense):The table below presents our other income (expense) for the nine months ended September 30, 2008 and 2007.



|                        |  |                                |       |   |                    |   |       |   |  |   |      |  
|----------------------- |  | ------------------------------ | ----- | - | ------------------ | - | ----- | - |  | - | ---- | -
|(in thousands)          |  | Nine Months EndedSeptember 30, |       |   | Increase(Decrease) |  
|                        |  | 2008                           |       |   | 2007               |   |      
|Interest income         |  | $                              | 1,756 |   |                    | $ | 2,212 |   |  | $ | (456 | )
|Loss on investments     |  |                                | (703  | ) |                    |   |      |   |  |   | (703 | )
|Interest expense        |  |                                | (285  | ) |                    |   | (519  | ) |  |   | 234  |  
|                        |  |                                |       |   |                    |   |       |   |  |   |      |  
|Total other income, net |  | $                              | 768   |   |                    | $ | 1,693 |   |  | $ | (925 | )
|                        |  |                                |       |   |                    |   |       |   |  |   |      |  

Interest income decreased for the nine months ended September 30, 2008 primarily due to the
interest rate environment and lower cash balances as a result of the special dividend paid on June 6, 2008.

Loss on investments for
the nine months ended September 30, 2008 relates to our investment in money market funds 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 September 30, 2008, the Funds
NAV was $0.9572 per share. As a result, we have recorded a loss for the nine months ended September 30, 2008 in the amount of $703,000.

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 first quarter of 2008, the Company revised the estimated date that payments will begin
from 2014 to 2017. 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 an income tax expense of $110,000 for the nine months
ended September 30, 2008 compared to income tax expense of $242,000 for the nine months ended September 30, 2007.

Currently, we
carry a full valuation allowance against our deferred tax assets, the majority of which represent net operating loss tax carry forwards which we generated prior to achieving profitability. In the future, we may need to reduce the valuation allowance
and recognize a deferred tax benefit. Management assesses this potential based upon all available evidence, including the last nine quarters of profitability, and forecasts. At the end of the third quarter, management determined that it was not
appropriate to reduce the valuation allowance.



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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

The table below presents our cash flows for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007.



|                                                     |  |                                |         |   |      |   |        |  
|---------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------ | -
|(in thousands)                                       |  | Nine Months EndedSeptember 30, |        
|                                                     |  | 2008                           |         |   | 2007 |  
|Net cash provided by operating activities            |  | $                              | 15,178  |   |      | $ | 15,096 |  
|Net cash provided (used) by investing activities     |  |                                | 10,274  |   |      |   | (2,048 | )
|Net cash (used) provided by financing activities     |  |                                | (33,333 | ) |      |   | 152    |  
|                                                     |  |                                |         |   |      |   |        |  
|Net (decrease) increase in cash and cash equivalents |  |                                | (7,881  | ) |      |   | 13,200 |  
|                                                     |  |                               
|Cash and cash equivalents, beginning of period       |  |                                | 32,702  |   |      |   | 30,052 |  
|                                                     |  |                                |         |   |      |   |        |  
|Cash and cash equivalents, end of period             |  | $                              | 24,821  |   |      | $ | 43,252 |  
|                                                     |  |                                |         |   |      |   |        |  

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 nine months ended September 30, 2008, cash provided by operating activities primarily resulted from increased payments from Roche for the collaboration activities offset, in part, by severance payments.
We use our cash in operating activities primarily to fund research and development relating to FUZEON and TRI-1144 and costs for the commercialization of FUZEON.

During the remainder of 2008, cash provided by operating activities will depend on several factors, primarily the sales, cost of sales and commercialization expenses related to the sale of FUZEON (profitability of the
collaboration with Roche), expenses related to the patent infringement suit brought by Novartis Vaccines and Diagnostics, Inc. and post-marketing commitments for FUZEON (development expenses.)

Investing Activities. The amount provided (used) by investing activities for the nine months ended September 30, 2008 and 2007 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 maturity and repurchase of investments.

During the remainder of 2008, cash used by investing activities will depend primarily on the net purchases/maturities of investments. We do not expect to
purchase any property and equipment in 2008. We expect patent costs in 2008 to approximate the spending in 2007.

Financing
Activities. The amount used by financing activities for the nine months ended September 30, 2008 was related to the special dividend paid on June 6, 2008. The amount provided by financing activities for the nine months ended
September 30, 2007 resulted from the exercise of stock options.

On May 8, 2008, the Companys Board of Directors declared a
one-time special cash dividend of $1.50 per share of common stock to stockholders of record on May 22, 2008. The aggregate dividend payment totaled approximately $33.3 million and was paid on June 6, 2008.

Total Cash, Cash Equivalents and Investment Securities Available-for-Sale. As of September 30, 2008, we had $51.6 million in cash and cash
equivalents and investment securities available-for-sale, compared to $69.6 million as of December 31, 2007.

Future Capital
Requirements.On December 10, 2007, Trimeris announced its strategic plan for 2008 that is designed to maximize cash flows from FUZEON while also advancing TRI-1144 to a value-creating milestone. Since June 30, 2008, the Company has no
longer staffed any research or development functions and significantly reduced its general and administrative staff. As a result of this plan, excluding any extraordinary items, 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 a significant portion of our operating expenses for the foreseeable future.



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On May 8, 2008, the Board of Directors authorized a share repurchase program to purchase up to $17.0
million of Trimeris common stock from time to time on the open market, in block trades or otherwise. The timing of repurchases and the amount of any shares repurchased will be determined by Trimeris management based on its evaluation of market
conditions and other factors. The repurchase program may be suspended or discontinued at any time and will expire on December 31, 2008. Any repurchased shares will be available for use in connection with Trimeris stock plans and for other
corporate purposes. Any repurchases under the stock repurchase program will be funded using Trimeris working capital. As of September 30, 2008, the Company has not repurchased any outstanding shares of common stock.

Depending on FUZEON sales, the level of expenses and other factors, we may not be able to generate sufficient positive cash flows to fund our operations
in the foreseeable future. We expect to use funds in the future primarily for the following purposes:



| |  |  | purchases under our share repurchase program approved by the Board of Directors on May 8, 2008;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | expenditures for commercialization activities related to FUZEON;
| | - |  | ----------------------------------------------------------------



| |  |  | expenditures related to the patent infringement suit brought by Novartis Vaccines and Diagnostics, Inc; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | expenditures related to post-marketing commitments for FUZEON (development expenses).
| | - |  | -------------------------------------------------------------------------------------

Contractual Obligations.The following table summarizes our material contractual commitments at September 30, 2008 for the remainder of 2008
and subsequent years (in thousands):



|                                                                |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |        |  |   |       
|--------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | ----- |  | - | ------ |  | - | ------
|Contractual Obligation****                                      |  | 2008 |       | 2009 |   | 2010  |  | 2011 |       | 2012 |   | Thereafter |  | Total
|Operating leases*                                               |  | $    | 386   |      | $ | 1,569 |  | $    | 1,600 |      | $ | 1,632      |  | $     | 1,665 |  | $ | 3,575  |  | $ | 10,427
|Other contractual obligations**                                 |  |      | 285   |      |   | 570   |  |      |      |      |   |           |  |       |      |  |   |       |  |   | 855   
|Reduction in workforce***                                       |  |      | 1,452 |      |   |      |  |      |      |      |   |           |  |       |      |  |   |       |  |   | 1,452 
|Other long-term liabilities reflected on the Balance Sheet **** |  |      |      |      |   |      |  |      |      |      |   |           |  |       |      |  |   | 22,204 |  |   | 22,204
|                                                                |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |        |  |   |       
|Total                                                           |  | $    | 2,123 |      | $ | 2,139 |  | $    | 1,600 |      | $ | 1,632      |  | $     | 1,665 |  | $ | 25,779 |  | $ | 34,938
|                                                                |  |      |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |        |  |   |       



|* | Includes payments due under a sublease signed during June 2004, which commenced on January 1, 2005, on an existing office and laboratory building. In the second quarter of
2008, the Company relocated its corporate offices and shut down this facility. The Company is liable for all remaining lease payments if it does not sublease the facility and is actively looking for a sublease tenant for the offices and laboratory
building.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | We are making advance payments to Roche for our share of the cost of the capital improvements made at Roches Boulder manufacturing facility where FUZEON drug substance is
produced. In 2005, we reached an agreement with Roche whereby we will pay Roche for our share of the capital invested in Roches manufacturing facility over a seven-year period. Under the terms of the agreement, our contribution to the capital
improvements made at the Boulder manufacturing facility will be reviewed on an annual basis using sales data from the previous four quarters. During the first quarter of 2008, the Company and Roche reviewed the appropriate sales data resulting in a
change to our share of the capital investment from approximately $12.8 million to approximately $12.1 million. At September 30, 2008, we have capitalized costs of $11.2 million, and expect to pay approximately $285,000 per quarter through June
2009. This amount, net of charges to cost of goods sold as the related inventory is sold, is recorded as an asset on our balance sheets under the caption Advanced paymentRoche. In the event our Development and License Agreement is
terminated, we would not be obligated for any unpaid amounts for capital investment.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | During 2006 and 2007, the Company reduced its workforce and accrued amounts related to severance and other costs. It is the current intention of the Company to pay all of these
costs by the end of 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | Our cash contribution to the selling and marketing expenses for FUZEON in 2004 was limited to approximately $11.2 million, 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 these additional expenses incurred by Roche during 2004 will be payable to Roche beginning at a future date over several years from
that future date. During the first quarter of 2008, we revised our estimate of the date that payments will begin from 2014 to 2017.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the year ended December 31, 2004, we reached the $11.2 million limitation for the year. We recorded a liability of approximately $15.6 million as part of collaboration loss during the year ended December 31, 2004. This
represented the net present value of our estimated share of the additional expenses, discounted at a risk-free interest rate from the expected payment date based on achievement of the sales milestones in the agreement. We are increasing the
liability over time to the expected payment amount. During the three months ended September 30, 2008, we increased this liability by $96,000. The total liability of $18.2 million at September 30, 2008, is reflected on our balance sheet
under the caption Accrued marketing costs. The amount reflected in the above table represents the undiscounted value of the obligation.



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The Company also has contractual obligations to the New York Blood Center pursuant to a license agreement
that requires the Company to make payments based on a contracted term.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements other than an operating lease, which the Company is looking to sublease, for our property.

Accounting and Other Matters

In November 2007,
the Financial Accounting Standards Board (FASB) Emerging Issues Task Force approved Issue No. 07-1 Accounting for Collaborative Arrangements The objective of this Issue is to define collaborative arrangements and to
establish reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. This issue is effective for fiscal years beginning after December 15, 2008. We
are currently assessing the impact of this Issue on our financial statements.

The FASB also issues exposure drafts for proposed statements
of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as Statements of Financial Accounting Standards. Management considers the effect of the
proposed FASB statements on our financial statements and monitors the status of changes to issued exposure drafts and to proposed effective dates.

Net
Operating Loss Carryforwards

As of December 31, 2007, we had a net operating loss carryforward for federal tax purposes of
approximately $310.6 million. We have recognized a valuation allowance equal to the deferred asset represented by this net operating loss carryforward and other deferred tax assets, net of deferred tax liabilities, and therefore recognized no tax
benefit.

The financial statements for the first quarter of 2008 were prepared based on the assumption that an ownership change
occurred under Section 382 of the Internal Revenue Code during the first quarter of 2008. Based on a subsequent analysis of changes in the Companys common stock ownership, this position has been reversed. As a result, the Company believes
that the utilization of its net operating losses is not limited at this time.

Critical Accounting Policies

Reference is made to Critical Accounting Policies included in our Annual Report on Form 10-K for the year ended December 31, 2007, filed
with the SEC on March 17, 2008. As of the date of the filing of this Quarterly Report, the Company has not identified any significant changes to the critical accounting policies discussed in our Annual Report on Form 10-K for the year ended
December 31, 2007 except as follows:

Accrued Marketing Costs

Our cash contribution to the selling and marketing expenses for FUZEON in 2004 was limited to approximately $11.2 million, 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 these additional expenses incurred by Roche during 2004 will be payable to Roche beginning at a future
date over several years from that future date. During the first quarter of 2008, we revised our estimate of the date that payments will begin from 2014 to 2017.

Advanced Payment  Roche

We are making advance payments to Roche for our share of the cost of the
capital improvements made at Roches Boulder manufacturing facility where FUZEON drug substance is produced. In 2005, we reached an agreement with Roche whereby we will pay Roche for our share of the capital invested in Roches
manufacturing facility over a seven-year period. Under the terms of the agreement, our contribution to the capital improvements made at the Boulder manufacturing facility will be reviewed on an annual basis using sales data from the previous four
quarters. During the first quarter of 2008, the Company and Roche reviewed the appropriate sales data resulting in a change to our share of the capital investment from approximately $12.8 million to approximately $12.1 million. At September 30,
2008, we have capitalized costs of $11.2 million, and expect to pay approximately $285,000 per quarter through June 2009. This amount, net of charges to cost of goods sold as the related inventory is sold, is recorded as an asset on our balance
sheets under the caption Advanced paymentRoche. In the event our Development and License Agreement is terminated, we would not be obligated for any unpaid amounts for capital investment.



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Cautionary Statements Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q and any attachments may contain forward-looking information about the Companys financial results and business
prospects that involve substantial risks and uncertainties. These statements can be identified by the fact that they use words such as expect, project, intend, plan, believe and other words
and terms of similar meaning. Among the factors that could cause actual results to differ materially are the following: there is uncertainty regarding the success of research and development activities, regulatory authorizations and product
commercializations; we are dependent on third parties for the sale, marketing and distribution of our drug candidates; the market for HIV therapeutics is very competitive with regular new product entries that could affect the sale of our products;
the results of our previous clinical trials are not necessarily indicative of future clinical trials; and our drug candidates are based upon novel technology, are difficult and expensive to manufacture and may cause unexpected side effects. For a
detailed description of these factors, see Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2008 and its subsequent periodic reports filed with the SEC.

Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this report. We disclaim any current
intention or obligation to update any forward-looking statements or any of the factors that may affect actual results. See Risk Factors, in Part II -Item 1A in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2007, for further discussion regarding some of the reasons that actual results may be materially different from those that we anticipate.



|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 U.S.
dollars; therefore, we have no material foreign currency risk. We have an investment policy that sets 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.

Fair value is based on actively quoted market prices and other observable inputs. Our investments are generally most vulnerable to changes in short-term
interest rates in the United States. Substantially all of our investments have been given a rating of A1 or higher by a nationally recognized statistical rating organization or are the debt obligations of a federal agency and, therefore, we believe
that the risk of material loss of principal due to changes in interest rates is minimal.

Investment securities, which consist of corporate
bonds, Euro-dollar bonds, certificates of deposit, and federal agency notes, are classified as available-for-sale, and are reported at fair value based on quoted market prices. The cost of securities sold is determined using the specific
identification method when computing realized gains and losses. Unrealized gains and losses are included as a component of stockholders equity until realized.

In accordance with its investment policy, the Company limits the amount of credit exposure with any one issuer and the investments are generally not collateralized.

Our exposure to credit risk relates to primarily to a component of investment securities involving an investment of approximately $5.6 million at
September 30, 2008 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 September 30, 2008, the Funds NAV was $0.9572 per share. For the quarter ended
September 30, 2008, we recorded a loss in the amount of $15,000. If the current credit environment continues to deteriorate, our investments in this money market fund could become impaired and our investment in the Columbia Strategic Cash
Portfolio could suffer losses, which would adversely impact our financial results.



|Item 4. | Controls and Procedures
|------- | -----------------------

Our Chief Executive
Officer and our Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, with the participation of the Companys management, as of September 30, 2008. The term disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported,



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within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the companys management, including its principal executive and
principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30,
2008, our Chief Executive Officer and Chief Financial Officer have each concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

No change in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), occurred
during the fiscal quarter ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

On
November 20, 2007, the Company was informed that Novartis Vaccines and Diagnostics, Inc. (Novartis) had filed suit against Hoffman-La Roche Inc., Roche Laboratories Inc., Roche Colorado Corp., and F. Hoffman-La Roche LTD.
(collectively the Roche Entities) and Trimeris alleging infringement of Novartis U.S. Patent No. 7,285,271 B1, entitled Antigenic Composition Comprising an HIV gag or env Polypeptide (the 271
Patent).

The 271 Patent that is the subject of the infringement suit was granted to Novartis on
October 23, 2007. On March 7, 2008, the Company received formal service of the complaint in this case and on May 29, 2008, Roche and Trimeris filed an answer and counterclaim requesting relief on several grounds including
non-infringement, patent invalidity, unenforceability and double-patenting. Also on May 29, 2008, Roche and Trimeris filed a motion to transfer or, in the alternative, dismiss Trimeris pursuant to the Federal Rules of Civil Procedure. On
July 30, 2008, Novartis filed an answer to the Roche-Trimeris counterclaims. On August 1, 2008, Roche and Trimeris filed a reply in support of Trimeris motion to transfer. On September 3, 2008, the Court dismissed the
RocheTrimeris motion for transfer of venue without prejudice. On October 10, 2008, Roche and Trimeris filed a renewed motion to transfer. The Court has not yet ruled on this renewed motion. No trial date has been scheduled and the outcome
of this matter cannot be determined at this time.



|Item 1A. | Risk Factors
|-------- | ------------

Other than as discussed
below, there have been no material changes in our risk factors since the filing of our most recent 10-K. Our business activities involve various elements of risk. We consider the following issues to be some of the critical risks that should be
considered in evaluating our Company and our business:



| |  |  | We face intense competition in our efforts to increase sales of FUZEON and to develop TRI-1144 as a commercially successful drug. If we are unable to compete
successfully, our business will suffer.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If FUZEON does not maintain or increase its market acceptance, our business will be materially harmed.
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | We do not control the manufacturing and production schedule at Roches Boulder facility where FUZEON is manufactured and we cannot ensure that significant
costs associated with scheduling decisions will not be incurred.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have been named as defendants in a lawsuit in which Novartis. has alleged infringement of a patent in connection with the manufacture and sale of FUZEON. If we
cannot resolve this lawsuit on favorable terms and at a reasonable expense, our business may be materially harmed.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may not be able to maintain profitability.
| | - |  | ---------------------------------------------



| |  |  | In order to remain profitable we will need to maintain arrangements with third parties for the sale, marketing and distribution of FUZEON or expend significant
resources to develop these capabilities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If sufficient amounts of FUZEON, or any other drugs we attempt to bring to market, cannot be manufactured on a cost-effective basis, our financial condition and
results of operations will be materially and adversely affected.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | HIV is likely to develop resistance to FUZEON and any of our future drug candidates, which could adversely affect demand for those drug candidates and harm our
competitive position.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | In order to move forward with the development and commercialization of TRI-1144 we would likely need to partner with a company that has the requisite expertise and
capabilities related to the sale, marketing and distribution of drugs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Obtaining regulatory approvals and maintaining compliance with government regulations will entail significant costs that could harm our ability to maintain
profitability.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If we cannot maintain commercial manufacturing arrangements 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If Roche or our manufacturing partners do not maintain good manufacturing practices, it could negatively impact our ability to obtain regulatory approvals and
commercialize our drug candidates.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We depend on patents and proprietary rights, which may offer only limited exclusive protection and do not protect against infringement. If we are unable to protect
our patents and proprietary rights, our assets and business could be materially harmed.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The intellectual property of our competitors or other third parties may prevent us from developing or commercializing our drug candidates.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Uncertainties 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If the testing or use of FUZEON or our other drug candidates harms people, we could face costly and damaging product liability claims far in excess of our liability
and indemnification coverage.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our quarterly operating results are subject to fluctuations. 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If we are unable to meet or maintain the standards for maintaining internal control over financial reporting as required by the Sarbanes-Oxley Act of 2002, our
stock price could be materially harmed.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We rely on our collaborative partner Roche to timely deliver important financial information relating to FUZEON sales and expenses. In the event that this
information is inaccurate, incomplete or not timely, we will not be able to meet our financial reporting obligations as required by the SEC.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our charter requires us to indemnify our officers and directors to the fullest extent permitted by law, which obligates us to make substantial payments and to incur
significant insurance-related expenses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Any additional financing we obtain may result in dilution to our stockholders, restrictions on our operating flexibility or the transfer of particular rights to
technologies or drug candidates.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



| | (a) | Not applicable.
| | --- | ---------------



| | (b) | Not applicable.
| | --- | ---------------



| | (c) | On May 8, 2008, the Board of Directors authorized a share repurchase program to purchase up to $17.0 million of Trimeris common stock from time to time on the open market, in
block trades or otherwise.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The timing of repurchases and the amount of any shares repurchased will be determined by Trimeris
management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time and will expire on December 31, 2008. Any repurchased shares will be available for use in connection
with Trimeris stock plans and for other corporate purposes. As of September 30, 2008, the Company has not yet repurchased any shares of common stock.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not
applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------



| | (a) | Exhibits
| | --- | --------

The exhibits filed as part of this Quarterly
Report on Form 10-Q are listed on the Exhibit Index and such list is incorporated herein by reference.



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SIGNATURES

Pursuant to 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 7, 2008 |  |  |  | By:            |  | /s/ MARTIN A. MATTINGLY                                             
|                 |  |  |  |                |  | Martin A. Mattingly Chief Executive
Officer                         
|                 |  |  | 
|November 7, 2008 |  |  |  | By:            |  | /s/ ANDREW L. GRAHAM                                                
|                 |  |  |  |                |  | Andrew L. Graham                                                    
|                 |  |  |  |                |  | Chief Financial Officer and Secretary (Principal
Accounting Officer)



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EXHIBIT INDEX



|       |  |                                                                                
|------ |  | -------------------------------------------------------------------------------
|Number |  | Description                                                                    
|31.1   |  | Rule 13a-14(a) Certification by Martin A. Mattingly as Chief Executive Officer.
|       | 
|31.2   |  | Rule 13a-14(a) Certification by Andrew L. Graham as Chief Financial Officer.   
|       | 
|32.1   |  | Section 1350 Certification by Martin A. Mattingly as Chief Executive Officer.  
|       | 
|32.2   |  | Section 1350 Certification by Andrew L. Graham as Chief Financial Officer.     



32