Attention Kmart biotech shoppers: ViroPharma (NASDAQ:VPHM) is on sale in Aisle Four! Value investors searching for the multibagger spice that a drug developer can provide need look no further than ViroPharma.

Most value investors would never go near biotech stocks, which is unsurprising, since most drugmakers are unprofitable and dependent on the FDA and other regulatory agencies to get their products to the market.

Fortunately, ViroPharma already has a drug approved by the FDA. On the back of its lead compound, an antibiotic named Vancocin, ViroPharma had $95 million in operating cash flow last year, and operations have already provided $92 million in the first nine months of 2007. Not bad for a drugmaker with a market capitalization of about $550 million and more than $300 million in net cash and investments on its balance sheet.

I've been a fan of ViroPharma since it was trading at the $14-a-share level. Unfortunately, that was a little too early to get excited about the drugmaker; its hepatitis C drug candidate subsequently offered a few too many side effects in combination with its impressive efficacy.

The side effects of ViroPharma's HCV-796 are disappointing, considering that the drug's efficacy has only been bested by a few other anti-hepatitis C drugs such as Vertex Pharmaceuticals' (NASDAQ:VRTX) telaprevir and Schering-Plough's (NYSE:SGP) boceprevir.

ViroPharma and partner Wyeth (NYSE:WYE) discontinued dosing of HCV-796 -- one of only two clinical-stage drug candidates in ViroPharma's pipeline -- after the unexpected side effects popped up, and they will decide in the coming months whether to continue development of the drug based on how patients perform in long-term follow-up.

Following the negative hep C drug results in August (and some suspicious trading beforehand), shares of ViroPharma have fallen more than 40%. This drop in share price skews the risk/reward balance in favor of owning shares of ViroPharma, even with the possible discontinuation of its hepatitis C treatment and the possibility of generic competition for lead drug Vancocin.

ViroPharma started marketing Vancocin after acquiring it from Eli Lilly (NYSE:LLY) in 2004. Sales of the antibiotic have grown 22% in the first nine months of this year, even though it has been on the market for many years.

Earlier in the year, there were worries about a new competitor to Vancocin coming online as Genzyme (NASDAQ:GENZ) was testing one of its drug candidates against Vancocin. But the Genzyme compound failed to outperform Vancocin in a head-to-head study.  

With competition worries out of the way, strong and growing cash flow, and a share price reflecting expectations of nothing but bad times ahead, ViroPharma gets my vote as one of the cheapest value stocks on the market. It won't take much success with ViroPharma for value investors to be rewarded if they snap up shares at this bargain-basement Black Friday price.

If you agree that ViroPharma shares are a deal that can't be passed up, vote outperform for its shares in our CAPS database. CAPS is free to use, and you can see what other investors have to say about ViroPharma as well. We'll tally up the votes and reveal the winner of the Black Friday Bargain Stock contest on Monday. Happy Thanksgiving!

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