In the next 12 months or so,

Sanofi-Aventis

(SNY) - Get Report

faces several key events that could produce very good news for shareholders and patients -- or some very bad news for shareholders.

During this period, Sanofi-Aventis expects to hear from health regulators about an experimental obesity drug and an experimental insulin that patients can inhale, and it may hear from judges about patent challenges to some of its biggest-selling drugs.

This convergence of events will bring more visibility to a company that combines ubiquity of products with near-invisibility to many U.S. investors because few U.S.-based analysts follow the company. The average daily trade of 1 million shares of American depositary shares pales in comparison with average daily trades of Big Pharma and Big Biotech peers, as well as to the average daily trades of many mid-sized drugmakers.

Sanofi-Aventis' revenue from the U.S. market is greater than all but six drugmakers. Worldwide, it sells more drugs than any companies except

Pfizer

(PFE) - Get Report

and

GlaxoSmithKline

(GSK) - Get Report

.

The company's $125 billion market capitalization makes it bigger than the combined market caps of

Merck

(MRK) - Get Report

plus

Bristol-Myers Squibb

(BMY) - Get Report

. And, its stock price appreciation has outpaced the

S&P 500

, the Amex Pharmaceutical Index and the Amex Biotechnology Index over the last three months, six months, 12 months and 24 months.

Gaining Attention

The company attracted investors' attention when Sanofi-Synthelabo and Aventis merged last year. The next big headline should be the verdict from U.S. and European medical regulatory agencies about Acomplia, the anti-obesity drug.

Acomplia "could be the highest profile drug launch ... over the next 12 months," says Tim Anderson, of Prudential Equity Group, in a recent report to clients. Earlier this month, the company submitted its application to the Food and Drug Administration and its European counterpart. The company didn't provide details on precisely what the application covers, but Anderson says he believes Sanofi-Aventis will seek approval for treating both obesity and diabetes. Some tests suggest Acomplia could help some people stop smoking.

Although some analysts predict Acomplia could reach multibillion-dollar sales levels in peak years, Anderson says "expectations need to be reined in a bit." He predicts $1.2 billion by 2009. Even with this conservative view, Anderson calls Sanofi-Aventis the best bet among 12 drug companies that he covers "because of strength in the rest of the business." He has an overweight rating on the stock. He doesn't own shares, and his firm doesn't have an investment banking relationship.

Another prospect is Exubera, an inhaled form of insulin developed with Pfizer and

Nektar Therapeutics

(NKTR) - Get Report

. The companies' application was accepted for review by the FDA in March.

In a few months, analysts say Sanofi-Aventis should hear from the FDA about Ambien CR, a controlled-release version of its market-leading insomnia drug Ambien. The FDA granted conditional approval in April, but the agency asked for more information.

TheStreet Recommends

Sanofi-Aventis is counting on FDA approval to permit its sleep drug franchise to have a broader use and fewer restrictions, as well as to fend off competition from

Sepracor's

(SEPR)

new drug Lunesta. Ambien loses U.S. patent protection in October 2006.

Anderson also says a top prospect is a depression drug, SR58611, for which late-stage clinical trials should be released later this year.

Continuing Integration

Sanofi-Aventis "is a very good story," says Tom D'Amore, a drug industry analyst at Morningstar. "It has some of the best-in-class R&D, especially in anti-infectives and antibiotics."

The merged company has managed to expand operating margins into the first quarter of 2005 vs. pro forma results for the first quarter of 2004, a feat that impressed D'Amore not only because the margins are high for the industry, but also because he had worried about the ability of the smaller Sanofi-Synthelabo to digest Aventis.

"They are capturing substantial savings," he said in a telephone interview.

He calls Acomplia "one of the most exciting drugs I've seen." If Acomplia is approved, it would join a company lineup that includes Plavix for reducing the risk of clots caused by blood platelets; the cancer drugs Taxotere and Eloxatin; the allergy medication Allergra; the anticoagulant Lovenox; and Ambien.

Plavix had nearly $3 billion in sales last year just in the U.S., according to the medical-data monitoring firm IMS Health. All of the above drugs produced more than $1 billion in worldwide sales, and enjoyed first-quarter sales gains ranging from 10.7% to 43.4%.

D'Amore is in the process of reviewing his evaluation. In a March 30 report, he pegged the fair value at $48 (the same target price of Prudential's Anderson), and he gave Sanofi-Aventis a three-star (out of five) rating. He doesn't own shares, and his firm doesn't have an investment banking relationship.

Possible Problems

In his March report, D'Amore says he would cut the fair value to $42 if Sanofi-Aventis and its marketing partner, Bristol-Myers Squibb, lose a patent challenge to Plavix in the U.S. The companies say the main Plavix patent is good until 2011. A private Canadian company,

Apotex

, and the Indian generic company

Dr. Reddy's Laboratories

(RDY) - Get Report

say the patent is invalid. A pretrial hearing is slated for May 27. A trial could start later this year.

Plavix accounted for 7% of corporate sales during the first quarter, making it Sanofi-Aventis' second largest-selling drug behind Lovenox at 8%. But that doesn't tell the whole story -- the company only records non-U.S. sales of Plavix. Bristol-Myers Squibb reported U.S. sales of Plavix worth 509 million euros during the first quarter; Sanofi-Aventis' Plavix revenue was 468 million euros.

Plavix is just one of Sanofi-Aventis' big drugs under patent challenge. Lovenox faces a patent trial starting Nov. 15 from

Amphastar Pharmaceuticals

, a private company based in Rancho Cucamonga, Calif.

Even if Sanofi-Aventis loses the Lovenox case, Prudential's Anderson says generic competition is probably two years off.

He adds that the company expects to receive results in the fourth quarter of a late-stage clinical trial that examines Lovenox as a treatment for heart attack patients. Favorable data "would help establish a serious presence" for Lovenox in treating acute heart problems, Anderson says.

Morningstar's D'Amore is even more enthusiastic: If the FDA approves Lovenox for heart attack patients, it would "quadruple the drug's potential market," he says.

Sanofi-Aventis lawyers also will remain busy because several companies are mounting a patent fight over Allegra. No trial date has been set, says Anderson. If Sanofi-Aventis loses, he figures generic challengers might reach the market in mid-2006.

What Else to Watch

In addition to legal uncertainty, Sanofi-Aventis must continue dealing with the financial hangover of merging two giant companies and the debt incurred to realize the transaction. Moody's Investors Service recently gave the merged company a mixed review, upgrading its rating on 9 billion euros worth of debt but cutting the company's outlook to stable from positive.

On the one hand, Moody's praises the company for extracting savings from the transaction and for its "high degree of diversification, a strong drug portfolio and high profitability."

At the same time, the ratings agency says the financial foundation is still weak for a company whose rating was just raised from A2 to A1, the top level for an upper-medium grade rating. (A1 is the fifth-best rating.) Sanofi-Aventis says it will pay off the debt from the transaction in five years.

That stable outlook depends on the company's ability to keep reducing debt, to avoid making "material acquisitions," and to keep developing new drugs that will offset revenue losses from drugs affected by generic competition, Moody's says. The most immediate risk, Moody's adds, is the challenge to the Plavix patent.

And for investors, that's plenty of reason to keep a close eye on developments at Sanofi-Aventis.