Since being profiled as an undiscovered growth stock by Fool contributor Tim Beyers in March, shares of the micro-cap drug company Oscient (NASDAQ:OSCI) have been highly volatile -- trading down to a low of around $4 per share and up to a high of just under $8 per share before settling at around $5.60 as of the close of trading on Friday. Recent developments include a convertible debt offering in April, additional FDA approval for currently marketed antibiotic Factive for the five-day treatment of mild to moderate community acquired pneumonia, and first-quarter results that showed a narrower loss compared to the previous year.

Most recently, first-quarter results included revenues of $23.2 million and a net loss of around $12 million compared to $11 million in revenues and a loss of $20 million in the same period last year. Revenues for the first quarter reflect $12.3 million in sales of cholesterol drug Antara, which was acquired last August and, therefore, not part of last year's revenue stream. The company's antibiotic Factive generated a 20% increase in first-quarter sales this year, reaching $11 million vs. $9.2 million in the same period last year.

With the company's recent convertible debt offering in April, it currently has a cash position of about $80 million, which management estimates to be sufficient liquidity to bring the company into the black for the first time ever. Oscient expects net cash utilization to decrease from about $40 million in 2007 to a range of $20 to $24 million in 2008 until the company (hopefully) reaches profitability sometime in 2009.

The company's revenue guidance includes expected growth of at least 80% this year from about $46 million in 2006 to a target of at least $83 million in 2007 (at the low end of analyst estimates), with two-thirds of all sales (or about $55 million) coming from Antara, as the company renews its focus on sales of the cholesterol drug since the major respiratory illness season has ended for its antibiotic Factive.

Oscient has also been doing an excellent job at controlling expenses as it strives to reach profitability, reporting a decline of about $3 million in selling, marketing, general, and administrative costs for this quarter versus the same period last year. The company recently reported that it completed enrollment in its post-marketing study of Factive one year earlier than expected, which saved the company about $1 million in research and development costs.

The overall cost of product revenues increased by $6 million this quarter, reflecting the acquisition of cholesterol drug Antara, which was not reflected in last years first-quarter results. Tight control of expenses is crucial at this juncture for Oscient as it looks to start making money for the first time in the company's history on the back of Antara and Factive, in addition to the possibility for in-licensing an additional third product that could be marketed immediately and leverage the company's existing sales force.

Also during last week, Oscient received additional FDA approval for its antibiotic Factive for the five-day treatment of mild to moderate CAP, which expands use of the drug beyond its current label for treatment of acute bacterial exacerbations of chronic bronchitis (AECB). The company has collaborations for Factive with Inside Value pick Pfizer (NYSE:PFE) in Mexico, Abbott (NYSE:ABT) in Canada, and granted rights to the Menarini Group for European marketing upon the completion of regulatory approval in those territories.

Looking ahead, the key to Oscient's future may lie in the cholesterol drug called Antara that it acquired last August for around $80 million. First-quarter results demonstrated a 5% increase in the number of prescriptions dispensed to 119,000 versus an increase of just 2.3% in total scripts for the entire class of branded fenofibrate cholesterol drugs -- which is dominated by Abbott's branded fenofibrate called Tricor. Oscient is doing a good job at growing sales for Antara, evidenced by an increase in the four-week moving average for total scripts to 9,261 based on the most recent data ending April 20. This represents an increase of more than 13% from the four-week moving average of just 8,153 at the time Oscient acquired the rights to Antara.

Antara is crucial to the company because of the huge, multibillion dollar market for cholesterol drugs that provide plenty of growth potential from an estimated $55 million in sales for the drug this year. Perhaps more interesting is the potential for an agreement with Pfizer, following news last December that clinical trials and development of its experimental cholesterol drug torcetrapib were halted after an independent monitoring board said participants in a large trial who took the medication had an increased risk of death.

Pfizer could easily acquire Oscient at a premium to its current market cap of around $75 million to bolster its cholesterol drug portfolio beyond Lipitor, and still spend much less for a proven, marketed drug compared to the huge amount of money it lost on the unproven development of torcetrapib. Although Antara obviously does not have the blockbuster sales potential of torcetrapib, the acquisition would still fit in nicely with Pfizer's portfolio and they would also get full rights to the antibiotic Factive with its recently expanded label for five-day treatment of CAP.

With the company currently trading at a market cap below its estimated revenues of around $83 million for 2007, the potential for Oscient is awesome. However, potential is the key word with Oscient, since the company needs to keep delivering market share gains for Antara and Fictive while keeping costs contained as it strives to become profitable. However, in the meantime, it is possible that the oscillation in share price may make a final turn to the upside if Pfizer decides to take a closer look at the company.

Looking for more foolish biotech coverage? Check out the Fool's market-beating Rule Breakers newsletter service, which scours the market for innovators of all stripes and types. You can check out all of our recommendations, and get access to our message boards and exclusive content, with a 30-day free trial.

Fool contributor Mike Havrilla, Rap. B.S., Harmed., is a Rite Aid pharmacist who lives, writes, works, and enjoys running on the streets and trails in the small Pennsylvania town of Portage. He invites your comments and feedback. Mike does not have a position in any company mentioned in this article. Pfizer is a Stock Advisor pick. The Fool has a disclosure policy.