Grrrrrr. On Monday morning, Atrix Laboratories (NASDAQ:ATRX) announced it was being purchased by Canadian drug company QLT (NASDAQ:QLTI). Those of us who invest in small drug companies should not be surprised when a suitor comes along. But as an Atrix shareholder, I find the timing of this deal to be incredibly frustrating.

As I wrote back in April, Atrix has been flawless in executing its business plan. Its lead drug for the treatment of prostate cancer, Eligard, was making inroads against entrenched competition from Abbott's (NYSE:ABT) Lupron. A new formulation of Eligard is due to be approved in late '04/early '05, and this product was going to be the jewel in the company's crown. On top of the Eligard franchise, later this year Atrix was going to file for FDA approval of its second drug, Atrisone. With the recent accomplishment of attaining profitability and the upcoming drug launches, Atrix looked to have a bright future.

Given that Atrix is profitable and has a deep pipeline of interesting drug programs, I am not at all surprised that another company was interested in making the acquisition. To take QLT's point of view for a second, it seems to be a pretty good move as it fills out the firm's thin pipeline and reduces its dependence upon Visudyne, which could soon be facing competition from Genentech's (NYSE:DNA) Lucentis and Eyetech's (NASDAQ:EYET) Macugen.

During the conference call, Atrix's management said it didn't have the resources to rapidly advance drug candidates without returning back to unprofitability. That's an argument I can buy. The combined QLT/Atrix entity will definitely be able to spend more on R&D than Atrix could have by itself.

At the same time, I wonder if Atrix shareholders would have been better off if management had held off for another year; 2005 was poised to be a good year for Atrix with the possible approvals of the new Eligard formulation and its next drug, Atrisone, to treat acne. With additional approved drugs in hand, a better offer than $35 per share could possibly have been had.

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Fool contributor Charly Travers owns shares of Atrix Laboratories.