Last week, tiny biopharma Trimeris (NASDAQ:TRMS) announced first-quarter sales numbers for its HIV treatment, Fuzeon (which is marketed by Trimeris' partner, Roche). In the latest quarter, sales of the fusion inhibitor were up 16% year over year to $64 million on the back of 25% sales growth internationally. International sales account for 55% of all sales for the drug this quarter.

Trimeris splits the profits on all revenue from Fuzeon in the U.S. and Canada with Roche, and receives royalties on sales of the drug in the rest of the world. If sales of Fuzeon continue to grow at double-digit rates, then it looks like Trimeris will be able to meet its 2007 goal of $20 million in free cash flow and more than $1 per share of earnings.

While Fuzeon's U.S. sales growth trajectory has been moderating, international sales have been gaining traction in the past three quarters. Last year they were up 20% compared to 2005.

U.S./Canada sales growth

International growth

Overall sales growth

Q1 2007




Q4 2006




Q3 2006




Q2 2006




With a market capitalization of barely $180 million, Trimeris doesn't need Fuzeon to be a billion-dollar blockbuster in order to support a higher valuation for the company. As long as the drug can continue to corral a profitable niche in the HIV treatment space and fend off potential competitors, then shares of Trimeris will not disappoint investors.

Shares of the company were up 25% last week after it reported stronger-than-expected sales of the fusion inhibitor. I still think shares of Trimeris are undervalued considering the sales potential of Fuzeon. Other Fools may disagree, but based on Trimeris' slim market cap -- and considering it's trading at just nine times this year's expected free cash flow -- I think investors should take a look at the tiny drug developer.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.