Shares of drug developer Trimeris (NASDAQ:TRMS) were down nearly 30% last Friday after the company revealed -- on the day of its quarterly financial results -- that CEO Dani Bolognesi was resigning despite holding the job for only four months.
Trimeris' CEO position has been a bit of a revolving door lately. Former CEO Steven Skolsky resigned in November during a "strategic shift" for the company and was replaced by Dr. Bolognesi, one of Trimeris' co-founders. But just a few short months later, Trimeris announced that he was stepping down; the company's CFO was also retiring.
Whether this moving around of executives is good or indicates that something is wrong at the company remains to be seen, but Friday's financial results announcement didn't hint at any problems. As was announced in February, marketing partner Roche's sales of Fuzeon were $249 million last year with a current run-rate of more than $290 million. Based on 20% sales growth of Fuzeon in 2006, Trimeris' revenue was $37 million and earnings per share were $0.34 for the year.
Back during the third quarter, Trimeris guided for "modest" Fuzeon sales growth this year and earnings above $1.00 a share. Considering that EPS were $0.21 in the most recent quarter (including options expenses), this goal should be surpassed in 2007.
With growing sales of Fuzeon, Trimeris has proved that demand is not limited for novel HIV therapies. Despite marketing a drug that is both much less convenient and more costly than other HIV compounds, Fuzeon sales have been steadily climbing. At a market cap just a nudge under $160 million, shares of Trimeris are undervalued just based on the net present value of cash flows from Fuzeon (with its current label) over the next six years.
Although there are other fusion inhibitors in clinical development, Fuzeon will give Trimeris a stable source of royalty income for years to come. There's also the added upside of Trimeris potentially developing improved versions of the drug with easier forms of administration that could drive sales growth higher. With shares trading near their 52-week lows amid all the pessimism, now is a good time for less-risk adverse investors to buy in.
Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.
