Shares of biotech startup Zalicus (Nasdaq: ZLCS) have doubled in price over the past 12 months, against a mere 25% gain for the S&P 500 -- and the run's not done yet. Earlier this week, Oppenheimer put an exclamation point on the rally, telling investors to buy Zalicus on the strength of its new Exalgo pain medication, approved by the FDA just last year. Thanks to this drug, Oppy predicts that the stock has at least 50% more in its run, enough to hit $4 within a year. Investors promptly jumped on the stock -- which itself jumped, up 13% on Tuesday.

So what's all the fuss about Zalicus -- and does it deserve it?

Bull thesis
Obviously, Oppenheimer thinks so. According to the analyst, Zalicus is in line to receive $15 million in high-margin royalty payments from partner Covidien (NYSE: COV) as Exalgo sales ramp. Oppy's also hot for the prospects of Zalicus rheumatoid arthritis drug Synavive and its allergy treatment Prednisporin, but the "big idea" here is Exalgo's potential to achieve $250 million to $300 million in annual sales.

Bear thesis
If Oppenheimer's right about that sales target, it would be easy to conclude that it's right about the stock. With a market cap around $250 million today, Zalicus is a pipsqueak in a world of pain medication dominated by the likes of Pfizer (NYSE: PFE), Cephalon (Nasdaq: CEPH), and Johnson & Johnson (NYSE: JNJ). On the other hand, $250 million in sales would price the stock at just 1 times sales -- versus the 2 to 3 P/S ratios more common in its bigger competitors. Of course, that's assuming that Zalicus gets full credit for the sales, which it won't.

Currently, the company's doing less than $7 million in annual business. (Put down your calculators. The answer is "37 times sales.") This poses an investor dilemma: Do you buy a profitable, slow-growth pharmaceutical giant today, or pay 37 times sales for the chance of owning a bargain tomorrow -- with little idea of how far off "tomorrow" might actually be, if it ever comes at all?

Foolish takeaway
As so often in investing, you pays your money and you takes your chances. For those rolling the dice, though, I have some good news: While Zalicus' income statement reports nearly $43 million in losses over the past 12 months, in fact the company burned only about $21 million worth of cash during the period. With more than $50 million in the bank, Zalicus has a good two years left to make good on Oppenheimer's promises. Here's hoping.

Do you hold out hopes that Zalicus can challenge the big boys? Head over to Motley Fool CAPS now, and tell us what you think about it.)

Fool contributor Rich Smith owns no shares of any company named above.

The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Covidien, Pfizer, and Johnson & Johnson and creating a diagonal call position in Johnson & Johnson.

We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.