For most companies, the start of a new calendar year also coincides with the beginning of a new fiscal year and the accompanying financial forecasts for the upcoming quarters. Yesterday, drug developer ViroPharma (NASDAQ:VPHM) became the latest company to give its 2007 guidance for sales and expenditures.

Absent any potential generic competitors entering the market for its only marketed drug, the antibiotic Vancocin, ViroPharma is expecting another strong year of sales growth, with sales up at least 15% over 2006.

Sales*

Y-O-Y Growth

2007**

$195-$205

15%-27%

2006**

$162-$170

29%-35%

2005

$126

133%

2004***

$54

(N/A)
*in millions
**company estimates
 ***Drug acquired in the fourth quarter. Three-quarters of Eli Lilly (NYSE:LLY) sales included.

ViroPharma guided for gross margins in excess of 90% on its Vancocin sales, a small window into how earnings could wind up for the company next year. At the midpoint of its sales and expenditure numbers, this would bring 2007 operating income to at least $114 million, excluding stock-based compensation. Applying a 35% tax rate to this income would give ViroPharma approximately $75 million in expected net income, or a little more than $1 in earnings per share for the coming year.

Based on my estimates, ViroPharma is trading at a cheap 14 times 2007 earnings, and with more than $220 million in cash and short-term investments on the balance sheet, it has more than $3 of its share price covered by this cash. It will be interesting to see what ViroPharma spends this growing cash pile on, considering management's ability to be an astute in-licenser of drugs in the past with its acquisitions of Vancocin and Maribavir.

With one promising drug candidate in phase 3 trials, and another in phase 2 trials to treat hepatitis C, ViroPharma has a lot going for it -- assuming it can fend off any possible generic entrants against Vancocin. Another risk to watch out for is Genzyme's (NASDAQ:GENZ) competing drug, which will be completing phase 3 trials this year and could be on the market as soon as 2008. If it shows superior efficacy compared to Vancocin, that could also be bad news for ViroPharma shareholders in the short run, until the company gets Maribavir onto the market. Either way, this small-cap pharmaceutical stock is worth taking a look at just for its cheap valuation.

Eli Lilly is an Income Investor pick. You can check out any of the Fool's newsletters with a 30-day free trial.

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