When people find out what I do for a living, the first question out of their mouths is nearly always, "What stock should I buy?" Sometimes, when they know a little bit about biotech, they want to know what company will be the next Amgen (NASDAQ:AMGN) or Genentech (NYSE:DNA).

While I usually try to dodge giving stock tips like that, the biotech company that always pops to the top of my head is Protein Design Labs (NASDAQ:PDLI). This company is the total package.

PDL is best known for its leadership position in the humanization of monoclonal antibodies. It licenses these patents to other drug companies, receiving upfront cash payments and royalties. Some of the best-known and most successful drugs in the industry, including Genentech's Avastin and Herceptin and MedImmune's (NASDAQ:MEDI) Synagis, send royalties PDL's way. This royalty revenue will top $110 million this year, and I expect it to grow to nearly $200 million over the next few years.

Long viewed as a royalty story, PDL is now branching out. This year, it acquired private drug company ESP Pharma, bringing in numerous approved and investigational drugs. With this deal closed, PDL now markets its own drugs. This was a wise strategic move to diversify the company's revenue sources; ESP Pharma's products produce considerably more than $100 million in annual sales.

All of this is great, but believe it or not, it leaves out the best reason to own PDL: the drug Nuvion, which has enjoyed superb early clinical trial results in the treatment of severe ulcerative colitis. At present, the only treatment for this disease is the surgical removal of the colon. As you may imagine, patients would certainly welcome an effective drug alternative. Nuvion is moving into pivotal trials later this year, and I expect that the drug could have peak annual sales near $1 billion.

PDL's pipeline is not just a one-trick pony; besides Nuvion, two other drugs deserve a mention. Everyone who follows biotech has heard of Genentech's Avastin, a monoclonal antibody that treats cancer by blocking the growth of new blood vessels in tumors. The drug is a huge commercial success and will likely become a multibillion-dollar drug. PDL's own anti-angiogenesis monoclonal, M200, is currently in phase 2 trials for the treatment of several different cancers. It's still too early to know the drug's effectiveness, but we'll get a preliminary indication at next year's ASCO meeting. I won't claim at this point that M200 is Avastin's second coming, but the drug could potentially be a valuable product even if it only attains a fraction of Avastin's sales.

The other notable drug in PDL's pipeline is ularitide, a potential treatment for congestive heart failure (CHF). Acquired in the ESP Pharma acquisition, ularitide is a great opportunity for PDL. The drug had positive phase 2 data and should be moving into pivotal trials in the near future. I like the market opportunity here; one of the drugs on the market to treat CHF, Johnson & Johnson's (NYSE:JNJ) Natrecor, is a several-hundred-million-dollar product despite coming under fire for causing severe side effects. If ularitide is just as effective but safer, I expect that it would capture a large share of this market.

Protein Design Labs is a great company for biotech investors. It has a diverse and growing revenue stream, will turn cash-flow positive next year, and has some potential winners in its pipeline to increase the company's value for long-term-minded shareholders.

Protein Design Labs has beaten the market a few times over since being recommended in the Motley Fool Rule Breakers newsletter service. The average pick has nearly tripled the S&P 500's return. You can take us up on a free 30-day trial to see what all the fuss is about.

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Fool contributor Charly Travers owns shares of Protein Design Labs. The Fool has a disclosure policy.