Yesterday, embattled drug developer Encysive Pharmaceuticals (NASDAQ:ENCY) announced its second-quarter financial results, and they revealed a company whose cost structure is way out of whack for a drugmaker of its size and potential.

In its second full quarter on the market, Encysive's lead drug Thelin brought in $2 million of sales in the European Union. Operating expenses for the quarter were nearly $33 million. Even after the effects of the elimination of its U.S.-based sales force and other cost-cutting moves, operating expenses are still expected to be $15 million in the fourth quarter.

Comparable drugmakers such as ViroPharma (NASDAQ:VPHM) or Trimeris (NASDAQ:TRMS) spend equal or lesser amounts on their budgets for research and development or sales, general, and administrative costs, yet they bring in much more revenue for their lead drugs.

Part of the reason for the low Thelin sales this quarter was that it has formal reimbursement in less than one-third of the potential EU market. Sales of Thelin will continue ramping higher as more reimbursing countries such as France and Italy come on line, but competition from GlaxoSmithKline (NYSE:GSK) and others are also potentially on the way in the EU.

This upcoming possible competition is likely why Encysive hired Morgan Stanley last month to explore "strategic alternatives." The problem is that beyond Pfizer (NYSE:PFE) or United Therapeutics (NASDAQ:UTHR), there aren't that many potential interested acquirers in the pulmonary arterial hypertension (PAH) treatment space that could be looking for an oral endothelin antagonist.  

Rather than fund early-stage clinical stage trials with its drug pipeline, Encysive would be much better off (i.e., appetizing to a potential acquirer) running a phase 3 study that could get Thelin approved in the U.S. or an improved label to treat earlier-stage PAH patients in the EU. Encysive's closest rival in the oral PAH market, Actelion, is going this route with its lead PAH treatment, Tracleer.

Encysive is likely wasting its time and limited cash resources going through a dispute-resolution process with the FDA trying to reverse the agency's decision on granting Thelin a third approvable letter in June.

On the conference call yesterday, Encysive's management was less than convincing in its arguments that the FDA should turn its opinion on the drug around. Even if Encysive is able to get a favorable ruling in the dispute-resolution process (which could take months depending on how high the dispute process goes), this doesn't guarantee approval of Thelin, as Encysive will then simply get another class 1 or 2 approvable letter review for Thelin and have to go through the whole approvable-letter process again. After three failed attempts at the FDA already, this is not a situation that any investor in shares of Encysive likely finds appealing.

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Pfizer is an Inside Value pick, and GlaxoSmithKline is an Income Investor recommendation.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.