On Friday, drug developer Renovis (NASDAQ:RNVS) announced that it received $4.5 million in milestone payments from Pfizer (NYSE:PFE) as a result of its preclinical work on several compounds.

Renovis is best known for its partnered stroke treatment with AstraZeneca (NYSE:AZN) that failed in phase 3 testing last year and crushed its share price from $15 to the sub-$4 range. With no clinical-stage pipeline, many investors signed off on the company. But Renovis still had the Pfizer partnership to identify and bring into the clinic drug candidates with a novel target. In a move that solidified the value of this research, earlier in the year Pfizer extended the research agreement with Renovis through June of next year (it was set to expire this month).

There is at least some value to Renovis' research and development. The developer has identified compounds that have the potential to be in the clinic by the first half of next year, according to its own estimates.

Renovis stands out among the drugmakers who have released failed studies over the past 12 months because its management hasn't tried to string investors along about its failed stroke study. Rather than pick apart subgroup or retrospective analyses to justify the continued development of the drug, Renovis promptly shelved the program and redirected its resources elsewhere.

For 2007, Renovis expects to burn through roughly $20 million in cash but had $90 million in cash and investments on its balance sheet as of the end of the first quarter. While shares are barely trading above the company's cash value, Renovis has no clinical-stage drug pipeline at the moment; anyone investing in the company would be betting on the outcome of preclinical drug candidates years away from showing first efficacy data. That's too risky for me, considering Renovis' historically bad results in the clinic, but the company bears watching over the long haul to see what becomes of these partnered compounds.

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Pfizer is an Inside Value recommendation.

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