Yesterday, drugmaker PDL BioPharma (NASDAQ:PDLI) announced that it was advancing its lead compound, Nuvion, into phase 3 clinical trial development.

Nuvion, PDL's top drug candidate, is in testing as a treatment for ulcerative colitis, which is a condition that can necessitate the removal of one's colon. After a data monitoring committee reviewed the drug's safety profile in an ongoing 60-person phase 2 clinical study of the drug, it gave the go-ahead, and the decision was made to continue Nuvion into later-stage testing.

Investors looking for a better picture on the outlook for Nuvion won't have to wait long. The next update on the drug's clinical program will come in the third week of May, during the Digestive Disease Week congress. This is when PDL will present long-term data in patients dosed with Nuvion in earlier studies.

Even taking into account some of the delays, and its drug development programs, there is much to be excited about with PDL. Just considering the estimated 60,000 patients that annually have their colons removed in the U.S. and Europe, the market opportunity for Nuvion is over $1 billion, if the drug is priced conservatively at $20,000 for a course of therapy.

There will surely be more setbacks with PDL's drug pipeline. But even completely discounting other exciting compounds, like the earlier stage multiple sclerosis treatment daclizumab and heart failure candidate ularitide, PDL shares are well undervalued if Nuvion can make it to market.

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