A cautious recommendation for approval is better than nothing. But don't bet the farm on it.

On Monday, Pfizer (NYSE:PFE) and partner Ligand Pharmaceuticals (NASDAQ:LGND) received a positive vote from an FDA advisory panel committee for their potential osteoporosis drug Fablyn. Ligand shares traded up 11% that day, with Pfizer shares up 3.4%.

It's important to note that advisory panel hearing recommendations are not binding upon the Food and Drug Administration. Even so, the 9-3 vote recommending approval does tip the odds for marketing approval somewhat in Fablyn's favor when its PDUFA date (for Prescription Drug User Fee Act) comes up in the fourth quarter.

Fablyn is a class of drugs called selected estrogen receptor modulators, or SERMs. These drugs are used in postmenopausal women to help prevent osteoporosis and to fight breast cancer. There are a few SERMs on the market, like Eli Lilly's (NYSE:LLY) Evista for osteoporosis -- the only SERM approved for this -- and GTx's (NASDAQ:GTXI) Fareston for breast cancer.

Other non-SERM osteoporosis treatments include GlaxoSmithKline's (NYSE:GSK) Boniva and Merck's (NYSE:MRK) Fosamax, along with various generics. However, while facing that competition, Lilly sold $541 million worth of Evista in the first half of the year. So, it seems that Fablyn faces a large market opportunity if it can jump through the remaining FDA hoops.

Documents that the FDA submits ahead of the advisory panel hearing can be just as illuminating about a drug's chances for approval as the advisory panel hearing itself. The FDA briefing documents (seen here -- opens a PDF file) for Fablyn show that the agency does have some reservations about Fablyn's safety profile, including the fact that in studies, a higher percentage of patients on the drug died than placebo patients. Pfizer said before the panel meeting that this was because of chance.

In 2005, the FDA rejected Fablyn for marketing because of concerns about uterine cancer; this hasn't shown up in more recent studies. Given that previous rejection and other safety concerns versus the positive advisory panel vote, it is far from a shoo-in for approval this time. Nonetheless, Fablyn wouldn't have been subjected to an advisory panel hearing if the FDA hadn't thought it deserved a closer look.

Looks like we'll find out in the fourth quarter if Pfizer can score another success with its pipeline. 

Pfizer is an Inside Value pick. Pfizer, Eli Lilly, and GlaxoSmithKline are Income Investor picks. Try any of our Foolish newsletters today, free for 30 days

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