NEW YORK (CNNMoney.com) - The next big stroke drug could come from the venomous mouth of a viper.

Neurobiological Technologies, a California-based biotech, is milking the fangs of Malayan pit vipers at its Kentucky snake farm. Extracting snake venom by hand is not for the squeamish, but it could yield a drug that prevents brain damage in stroke victims.

Viprinex, the experimental stroke drug, is a diluted form of the Malaya viper's venom, which kills its victims by thinning their blood so dramatically that it causes internal bleeding. "They drown in their own blood," said CEO Paul Freiman, referring to snake bite victims.

Viprinex is being tested as a blood thinner to see if it safely increases circulation to the brain in stroke victims. If the drug is successful, it could prevent brain damage, which is common in stroke victims because the blood coagulates, blocking circulation to the head and other parts of the body.

"You try and put sludge through a narrow pipeline and it isn't going to through," said Freiman, using an analogy for stroke-induced blood clots. "[Viprinex] thins the blood to help it go to the brain."

Freiman, who's been in the drug business nearly 50 years, has projected $500 million to $1 billion in annual sales for Viprinex, which is in two phase 3 trials, which is the latest stage of testing before submission to the Food and Drug Administration. Assuming that the tests are successful and the FDA approves the drug, Freiman hopes to get Viprinex on the market in 2008.

The scientists at Neurobiological Technologies (unchanged at $3.67, Research) dilute the venom, gleaning 500 vials of Viprinex from one cubic centimeter of venom. Freiman said he has about 500 snakes, and he wants his stock more than doubled to 1,100 snakes to produce more of the drug.

"They are reproducing as we speak," said Freiman in a recent interview.

Analysts often consider biotech investing to be a risky proposition, but the few analysts who cover Neurobiological Technologies tend to be bullish. Like many biotech upstarts, Neurobiological Technologies is still in the red. But unlike many upstarts, the company has a steady stream of income that is offsetting its research and development costs, according to William Prather, analyst for Dutton Associates.

Prather rates Neurobiological Technologies a "strong speculative buy," with a 12-month price target of $8, which is more than double the stock's current value. Prather believes that Viprinex sales could reach $500 million.

Prather praised Freiman as "brilliant" for licensing Memantine, a treatment for dementia and neuropathic pain, to Forest Laboratories (up $0.77 to $46.93, Research) and three international firms. The licensing fees have already eclipsed the $5 million research costs of developing Memantine, and continued royalties of up to $5 million annually will lessen the burden of RND costs, said Prather.

Neurobiological Technologies also sold the rights to Xerecept, its experimental drug to reduce brain swelling from tumors, to Celtic Pharmaceutical, for a lump sum of $33 million plus additional milestone payments, said Freiman.

Prather is confident that Viprinex will eventually be approved by the FDA, partly because it was approved in Europe to treat vein clots in the legs.

Kilkenny Capital Management is one of the largest holders of Neurobiological Technologies stock. Michael Walsh, managing partner for Kilkenny, said that Viprinex is an effective drug but further testing will show whether it's safe.

"They're a typical biotech company that is doing high risk research that will either pay off very handsomely or not at all," said Walsh.

If the tests are successful and the FDA gives Viprinex the green light, the biotech would enter the $10 billion to $15 billion industry of stroke drugs.

"Any drug that allow doctors flexibility in treating stroke and makes the window of treatment larger is going to be successful," said Adam Noah, analyst for Merriman Curhan Ford.

The analysts interviewed for this story do not own stock in the company.

To read more about biotechs with late-stage pipelines, click here.