With so many drugless biopharmaceutical companies out there, sometimes it takes the announcement of a partnership deal to get a developmental-stage drugmaker onto investors' radars.

Dyax (Nasdaq: DYAX) became a giant flashing light on my radar when it soared more than 20% Tuesday, after the drug developer announced a licensing deal with Sanofi-Aventis (NYSE: SNY).

First things first
Before we get into the deal, let's take a look at what Dyax has to offer potential partners and patients.

Essentially, Dyax has a way to screen through millions of potential drug candidates, in a process called phage display, to find ones that might actually work. The process involves using viruses to display potential protein or antibody candidates. The viruses are exposed to a purified human protein that a drug company would like to inhibit, and the ones that stick to the protein are further characterized. Since the potential drug candidates are attached to a virus, scientists can easily figure out the molecular structure of the candidate.

Dyax has a few different libraries of drug candidates that companies can screen through, but the most promising one is probably its antibody phage library. The library allows researchers to screen through 35 million antibodies to find one that could become the next rival to Genentech's (NYSE: DNA) Avastin.

Dyax has licensed this technology out to a whole host of companies, from ImClone Systems (Nasdaq: IMCL) to Wyeth (NYSE: WYE) in order to help the companies find drug candidates. There are currently 12 programs in the clinic that have used the screening technology, and Dyax will get a small piece of the revenue stream, should any of them make it onto the market.

But wait, there's more
Not only is Dyax licensing the phage display technology to other companies, it's also using the technology to develop drugs itself.

Dyax's lead drug, DX-88 (ecallantide) is a small protein molecule that was fished out of one of its libraries because it inhibits kallikrein, a protein involved in inflammation. The drug is in its second phase 3 trial for hereditary angioedema (HAE) a rare disease that causes inflammation and swelling in the hands and feet. There are about 10,000 HAE patients in the U.S. and Europe, although there are probably additional undiagnosed patients. There are no approved drugs for HAE, so the FDA has given DX-88 an orphan drug designation, and it will likely get a quick six-month review once the second phase 3 trial is completed. That would put a FDA approval towards the end of the year, if the second phase 3 trial turns out as well as the first.

DX-88 is also being studied for use in patients on bypass pumps during heart surgery. The same kallikrein protein that causes problems in HAE patients also causes inflammation when patients are on a pump.

This is probably a much bigger market for DX-88, since more than one million procedures are done each year worldwide, and Trasylol, the only drug currently approved drug to inhibit kallikerin, has been pulled from the market. Results of the phase 2 trial should be available in the first half of this year, so it will be a while before DX-88 will be approved for this indication.

Dyax also has two pre-clinical antibodies that target proteins required for growth of tumors. The drugs look good in mouse models -- but then, so does every other drug that's been brought into the clinic and failed, so let's not get too excited until after they've shown promise in humans.

The deal
I'm not sure why Dyax's deal with Sanofi caused such a spike in the stock price. Then again, the stock's valuation has been all over the place in the last year, so perhaps investors are having trouble figuring out how to value Dyax.

The partnership sends one of Dyax's pre-clinical molecules, DX-2240, to Sanofi in exchange for $25 million up-front. Sanofi also gets access to Dyax's phage display technology, which could result in additional payments of up to $500 million if the first five antibody candidates, including DX-2240, make it to market. Like its other licensing deals, Dyax has the potential to receive royalties on the marketed products.

There's nothing wrong with the Sanofi deal, I just don't see anything strikingly different than its numerous other licensing deals. If the partnerships produce commercial successes, Dyax could turn into the next PDL Biopharma (Nasdaq: PDLI) -- hopefully without the drama -- but that potential royalty stream is still years down the line.

The deal investors should really be looking for is one involving DX-88. The small market makes it more attractive to a company that has experience in orphan drug development, like BioMarin Pharmaceuticals (Nasdaq: BMRN), than to a large pharmaceutical company.

At a market cap of around $250 million, Dyax seems like it's fairly priced, with one small-market drug very late in the clinic and a potential revenue stream down the line. With the additional cash from Sanofi, the company can easily make it until DX-88 is approved by the FDA. Even if a potential partnership deal for DX-88 doesn't come with a lot of up-front cash, Dyax should be OK.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy was picked up in a screen to find documents that would keep things out in the open.