The Competition Bites Trimeris

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Small specialty pharma Trimeris (Nasdaq: TRMS) announced fourth-quarter sales of its HIV and AIDS drug Fuzeon yesterday, and the numbers weren't particularly pretty. A trend that began in last year's third quarter continued, as sales of Fuzeon fell 9% year over year in Q4 2007. For the full fiscal year, sales of Fuzeon did rise 7%, but much of those gains occurred earlier in year.

Unfortunately for Trimeris, Fuzeon is only approved as a treatment for patients failing other HIV drugs like Abbott Labs' (NYSE: ABT) Kaletra. In the past six months, newer and more convenient orally dosed drugs have begun to siphon away Fuzeon users. A Johnson & Johnson (NYSE: JNJ) HIV compound was also approved by the FDA just two weeks ago.

Fortunately for Trimeris, all the Fuzeon sales declines in the past six months have occurred in the U.S. and Canada. In the rest of the world, sales by partner Roche grew 13% year over year in Q4. But U.S. sales are falling more quickly than foreign sales are growing, and it won't take long for Fuzeon's competitors to reach other countries as well.

Is Trimeris a cash flow-positive, cigar-butt value pick, as some investors consider fellow pharma QLT (Nasdaq: QLTI) to be, or is it all puffed out? The year ahead will determine whether Fuzeon sales can stabilize against rivals, how much cash Trimeris can wring out of Fuzeon via dramatic cost-cutting, and how much value Trimeris still has left.