Way back in November 2003, Pfizer (NYSE:PFE) snatched up tiny biotech Esperion Therapeutics for a cool $1.3 billion. Esperion didn't have an approved drug generating big sales, or even an experimental drug that was close to market. So why did Pfizer pay so much for a company that had essentially no near-term value drivers? Because one of Esperion's drugs in clinical trials, ETC-216, showed in a mid-stage study that it could potentially reverse atherosclerosis, the clogging of arteries. ETC-216 looked like a future blockbuster, and Pfizer paid handsomely to bring the drug into its portfolio.

In the months after the Esperion deal, the stock of another biotech, Atherogenics (NASDAQ:AGIX), took off in anticipation of a possible takeover bid. Why? Because it, too, had an atherosclerosis drug in the works, called AGI-1067. From November 2003 (when Pfizer bought Esperion) to November 2004, Atherogenics' share price more than doubled. Since that time, however, the stock has come back to reality and is trading at about the same level it was two years ago.

And I think now is the right time for biotech investors to take a good look at Atherogenics. Let me explain why.

Coronary artery disease is the leading killer in the U.S., causing a million deaths every year. The disease manifests when the arteries leading into the heart become narrowed by the buildup of atherosclerotic plaques -- small fatty deposits. If you've ever pinched a garden hose to slow down water flow, you understand what is going on here. These plaques are restricting blood flow to the heart and causing chest pain and heart attacks.

Given the prevalence and seriousness of coronary artery disease, any drug able to address the molecular underpinnings of the disease is likely to become a huge blockbuster -- hence Pfizer's purchase of Esperion and my interest in Atherogenics.

All of the risk factors we are familiar with for cardiovascular disease -- high blood pressure, high cholesterol, smoking, and diabetes -- lead to inflammation in the arteries. That inflammation is believed to be responsible for the formation of atherosclerotic plaques, and AGI-1067 is designed to block the inflammatory process. That's great for Atherogenics, as well as for any pharma looking to buy it out, because it means that AGI-1067 works by a completely new mechanism.

AGI-1067's head start in this area is a huge first-mover advantage that should lead to a quick sales ramp if the drug reaches its potential. The icing on the cake is that it can be ingested in pill form, the preferred dosing route for drugs that are taken daily.

Of course, all experimental drugs, no matter how novel their mechanism, are only as good as the clinical data that back them up. Many interesting ideas for new drugs have not panned out as expected in trials. So it's important that the drugs we invest in have some hard data that suggest that they really do work.

Fortunately for us, we have such data on AGI-1067. In its phase 2 trial, it showed a statistically significant reduction in atherosclerotic plaque volume. That's an important result. It means that the plaques plugging up the arteries have gotten smaller and that blood flow should improve. I think this bodes well for the results of future trials.

We should find out soon enough whether AGI-1067 is the real deal. In June 2003, Atherogenics began its phase 3 trial on the drug -- a huge clinical program involving more than 6,000 patients at high risk for a cardiovascular event. The program is assessing the drug's ability to reduce the number of deaths, heart attacks, strokes, and angina in patients who have coronary artery disease. It is one thing to reduce atherosclerotic plaque volume, as the drug did in its phase 2 study, but it is more important to have a positive effect in patient outcomes. That is what the phase 3 trial is designed to measure.

If AGI-1067 can reduce the risk of heart attacks or death, it would be a huge advance in care. All of the patients have been enrolled, and the trial is expected to be completed in the first quarter of 2006. The company expects to report the study's results and file a new drug application with the FDA in mid- to late 2006.

I find a lot to like about Atherogenics. If approved, its AGI-1067 drug could become a megablockbuster with several billion dollars in annual sales. Atherogenics is a clear Rule Breaker for tackling the treatment of a major medical problem in a new and exciting way. Yes, AGI-1067 could crash and burn, taking Atherogenics' stock with it, but I think the potential for rewards far outweighs the risks.

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Fool biotech analyst Charly Travers does not own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value recommendation. The Fool has a disclosure policy.