Pfizer (NYSE:PFE) has nothing to be upset about with the European Union. Like clockwork, on Tuesday it approved Pfizer's and Ligand Pharmaceuticals' (NASDAQ:LGND) osteoporosis drug, Fablyn, after the EU drug panel had given a positive opinion about the drug in December.

On the other hand, in the U.S., an advisory panel voted 9-3 (with one abstention) recommending approval of the drug, but the Food and Drug Administration sent Pfizer a response letter in January. Pfizer wasn't very forthcoming in its press release, so it's not clear exactly what it will need to do to get the drug approved.

The EU approval comes with a $3 million milestone payment for Ligand, but unfortunately for Ligand, it won't be in the form of cash. Pfizer is returning about a third of the shares of Ligand it owns as payment. But the deal works out well for Pfizer because the 323,000-plus shares it's using for that milestone payment are valued at roughly $9.27 each, more than three times Ligand's stock price, thanks to two agreements back in the 1990s.

However, the resulting lower number of shares outstanding will benefit Ligand's investors at least a small bit because they now own a slightly larger share of the pie. (The returned shares are about 0.28% of the total outstanding shares.) Unfortunately, the pie is still bleeding cash, and Ligand certainly could have used the cash. The company will get royalties on sales of Fablyn, so at least there's some green stuff headed its way.

Ironically, Ligand has a pair of deals with Wyeth (NYSE:WYE) to develop an osteoporosis treatment in the same class of drugs -- selective estrogen receptor modulator (SERM). The FDA also rejected one, Viviant, in its first attempt at approval. A filing for approval is expected for the other one -- Viviant plus Wyeth's Premarin -- in the second half of the year. However, once Pfizer completes its acquisition of Wyeth, it's not clear whether it'll need all three SERMs -- assuming they eventually get approved -- and that could affect potential royalties for Ligand.

Ligand's best hope is probably that the government makes Pfizer dispose of one or more of the SERMs, but I don't know how likely that is. Eli Lilly (NYSE:LLY) has a SERM, Evista, on the market to treat osteoporosis. And there's plenty of other osteoporosis drugs, like GlaxoSmithKline's (NYSE:GSK) Boniva and generic versions of Merck's (NYSE:MRK) Fosamax, as well as up-and-comers like Amgen's (NASDAQ:AMGN) denosumab.

The market for osteoporosis treatment is in flux -- no bones about it.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.