What a long way Transkaryotic Therapies (NASDAQ:TKTX) has come in just two short years. This is a company that was really on the skids in January 2003. The company's drug Replagal -- for treating a rare genetic disorder called Fabry disease -- failed to gain approval in the U.S. This was a big blow, as Genzyme's (NASDAQ:GENZ) Fabrazyme was approved, locking Replagal out of the U.S. market at least until Fabrazyme's Orphan Drug protection expires.

During this tumult, Transkaryotic shares fell below $4. However, that represented the bottom not only for the share price, but for the company. Since that time, steady strides have been made in the right direction. I give a lot of credit for the turnaround to CEO Michael Astrue, who returned to the company in February 2003. The revival under his tenure is a great case study in the importance of a top-notch management team.

Aside from changes in the company's management structure, there has been important progress made with the company's drug portfolio. Replagal has done well in Europe and other international pharmaceutical markets. The drug's sales increased 35% over 2003 to reach $77.4 million last year. Additional strong growth is expected this year, with sales guided to come in near $100 million.

There has also been exciting progress made in the drug pipeline. Transkaryotic's lead drug candidate is I2S, for treating another rare genetic disorder called Hunter syndrome. I2S is currently in a phase 3 trial, with data expected this June. If positive, Transkaryotic will file for approval in the U.S. and Europe in the second half of this year.

The I2S situation is the one to watch in the coming months. Its success is likely required for Transkaryotic to become profitable in the near term, and that makes it a very important product. The long-term data out of the drug's phase 1 study looks positive, so I think the odds are favorable that the phase 3 trial will show the drug works. But in drug development, you never know until the study is done.

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Fool contributor Charly Travers is the biotech analyst for Motley Fool Rule Breakers . He owns shares of Transkaryotic Therapies. The Motley Fool has a disclosure policy.