Wall Street doesn't like "tweeners" -- companies that don't fit neatly into pre-existing categories. Consequently, companies like Canadian drugmaker Axcan Pharma (NASDAQ:AXCA) fall between the cracks and aren't widely known to investors.

Axcan lives in that shadowy world often called "specialty pharmaceuticals." Simply put, specialty pharmaceutical companies are drug companies that have too much in the way of revenue, income, cash flow, and approved products to be a biotech, but yet are not big enough or diversified enough to be "full-fledged" pharmaceutical companies.

Like many specialty pharma companies, Axcan doesn't try to be all things to all people. This company specializes in drugs for the gastrointestinal system. Targeting over 40 products at obscure conditions including malabsorption, ulcerative proctitis, and primary biliary cirrhosis, Axcan generally focuses on markets that many larger pharmaceutical companies ignore.

Sales for the first quarter were a bit sluggish, rising 7%. Due to increased expenses in both sales and marketing and research and development, operating income actually fell to $12.1 million from $17 million. Despite this, operating free cash flow was $7 million for the quarter (up from a negative amount last year) and totaled over $20 million over the past 12 months.

The sizzle with Axcan is an investigational drug called ITAX, a compound being explored as a treatment for functional dyspepsia (FD). FD is a tricky condition: a gastrointestinal problem causing early satiety, nausea and pain that is different than heartburn, gastroesophageal reflux disease, or ulcers. Though the condition is common, it's usually not problematic (up to 20% of adults might have it). Nevertheless, in some cases it can dramatically affect a person's quality of life and lead to weight loss.

There is a bit of historical controversy regarding the FD market. Johnson & Johnson's (NYSE:JNJ) former drug, Propulsid, was pulled from the market because of safety concerns, and the Food and Drug Administration will certainly give careful scrutiny to safety data on ITAX.

Axcan also isn't likely to have the market to itself. Novartis (NYSE:NVS) is working on an FD approval for its already-approved Zelnorm drug. While Novartis is behind Axcan in clinical development, off-label usage could pull away some potential ITAX revenue.

With potential sales in excess of $200 million, ITAX is clearly an important component in the company's growth plans. Axcan hopes to file with the FDA by the end of the year and looks to announce distribution plans (including a potential marketing partner) in April.

Fools looking at Axcan shares should treat this stock like a hybrid biotech stock. Although the company's valuation appears very reasonable, investors should not ignore the importance of ITAX. But unlike many biotechs, Axcan is cash-flow positive and has a real business today. Accordingly, Axcan may just provide some biotech upside without the stomachaches that can come with pure biotech stocks.

Fool contributor Stephen Simpson, a chartered financial analyst, owns shares of Johnson & Johnson.