OXiGENE (NASDAQ:OXGN) reached an agreement with the FDA last week that smoothes its path to gaining approval for its vascular disrupting agent, ZYBRESTAT.

The drug treats patients with anaplastic thyroid cancer (ATC), a swift and lethal variety that often strikes people between age 60 and 70, according to the company. It would be used in combination with already approved medicines, which bodes well.

The advantage of agreeing to a Special Protocol Assessment (SPA) is that it almost guarantees approval of the drug if the combined phase 2 and phase 3 clinical trial results are positive. Essentially, there's no worrying that the FDA will have a problem with the design of the trial. However, the FDA can still turn down a drug if it has issues with the efficacy or safety results.

The 180-patient trial will compare patients receiving the standard treatment of carboplatin and paclitaxel with those receiving a combination of ZYBRESTAT, carboplatin and paclitaxel. Overall survival is the primary goal. While progression-free survival is generally a quicker endpoint to achieve than survival, the median survival for patients with ATC is only three months, so if the drug works, OXiGENE should have statistically significant survival data fairly quickly.

I like companies with developmental-stage drugs that are used in combination with FDA-approved treatments for a couple of reasons. First, it's easier for the drug to get approved. It doesn't need to be better than the current treatment; the combination of the two treatments just needs to be better than the current treatment alone. Second, it's easier to increase sales once the drug is approved. The new drug isn't competing for market share with the currently approved drugs, since it's only approved for use with the current treatment.

It has been a long road -- from highs near $40 to lows of less than $1 -- for OXiGENE's stock. Since there are only 1,000-4,000 cases of ATC in the U.S. and Europe combined each year, OXiGENE isn't likely to get rich on the approval of ZYBRESTAT. Its strategy is likely to get approved for use on ATC patients, and then increase its uses. ZYBRESTAT has recently completed a phase 2 trial for myopic macular degeneration, and it's also in clinical trials for ovarian cancer and non-small-cell lung cancer. With $42.2 million in cash and short-term investments at the end of last quarter, and a burn rate approaching $16 million per year, OXiGENE has some time to get into the black. It's likely going to need almost all of it, since profitability is still a few years away.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any companies mentioned in this article. The Fool has an ironclad disclosure policy.