After years of unprofitable quarters, urology and endocrinology specialty pharmaceutical company Indevus (NASDAQ:IDEV) may be finally turning to the black -- although it still has a ways to go.

The company announced its third-quarter earnings results yesterday with basically more of the same. Excluding one-time charges due to the acquisition of Valera Pharmaceuticals, the net loss for the quarter was $19 million compared to a net loss of $13.4 million for the same quarter last year.

The increased loss was caused by a substantial jump in marketing, general, and administrative expenses. Those costs skyrocketed 122% to $19.8 million in the third quarter, due to the initial launch costs for SUPPRELIN-LA; marketing expenses for Vantas, which it acquired in the Valera deal; pre-launch marketing costs related to its yet-to-be-approved drug Nebido; and the fact that it acquired about 100 sales reps in the Valera merger.

New drugs
Indevus has been on a roll the last three months with FDA approvals of two drugs: SUPPRELIN-LA and SANCTURA XR. The new additions weren't included in this quarter's revenue, but should help turn the company into the black in the future.

At the end of June, the company began shipping Valera's once-yearly implant SUPPRELIN-LA for the treatment of children with Central Precocious Puberty (CPP). In the few months that it has been on the market, the company says it has seen decent interest from doctors in the $80 million market. We'll have to wait until next quarter to see how well the penetration into the market is really going.

On Monday, Indevus announced that the FDA had approved an extended release version of its overactive bladder drug SANCTURA. That earned it a $35 million milestone payment from its marketing partner Esprit Pharma.

The new version is taken just once a day, which should help it compete with market leaders Detrol LA, made by Pfizer (NYSE:PFE), and VESIcare, marketed by GlaxoSmithKline (NYSE:GSK). The overactive bladder market is fairly crowded with additional drugs marketed by Johnson & Johnson's (NYSE:JNJ) subsidiary Ortho-McNeil Pharmaceutical, Novartis (NYSE:NVS), and Procter & Gamble (NYSE:PG), but with an estimated 33 million Americans afflicted with overactive bladder and the number growing as the population ages, there's plenty of market share to be taken.

The most common side effect with overactive bladder medications is dry mouth. While it's not a major medical concern, it's annoying to the patients and a reason to switch medications. SANCTURA XR now sports the lowest dry mouth rate of any of the overactive bladder medications on the market, which should also help with its market penetration.

Indevus' current marketing partner is not large enough to cover the potential larger market share that SANCTURA XR should be able to capture. Esprit could bring in a larger pharmaceutical company to co-promote the drug, or it could just sell its marketing rights to SANCTURA outright. Unfortunately Indevus doesn't really have a say in what Esprit does, although getting the new formulation launched quickly is obviously in both companies' best interest. Indevus says it can be ready to launch in October, but believes that bringing a new marketing partner into the equation will likely delay the launch beyond that.

More products are likely on the horizon as well. The company recently announced positive results of a phase 3 trial testing its long-acting injectable testosterone therapy NEBIDO for the treatment of male hypogonadism. The trial met all of its primary endpoints, and the company plans to file a New Drug Application with the FDA soon. That would allow it to launch at the end of 2008 if the drug is approved.

While it's not a new drug, Indevus hopes to reintroduce its bladder cancer drug VALSTAR fairly soon. VALSTAR was taken off the market in 2002 due to manufacturing issues regarding the stability of an inactive ingredient. Indevus believes that it has fixed the issue and has submitted a supplementary New Drug Application with the FDA.

Acquisition of Valera Pharmaceuticals
In the merger with Valera Pharmaceuticals, Indevus inherited Valera's hydron implant technology. The technology is a soft flexible polymer implant that can be used to release a wide variety of drugs over the course of a year. In addition to the aforementioned SANCTURA XR, Valera was using the technology in its Vantas implant, which treats advanced prostate cancer.

Vantas has a measly 2% of the market since it's not appropriate for all cancer patients, but Indevus believes that it can increase its market share since the other 12-month implant, Viadur, is being discontinued. Even if it's able to capture Viadur's entire market share, that will only contribute an additional $6 million. The true value of the Valera acquisition is probably in future projects using the hydron implant technology.

Turning things around -- eventually
Indevus is certainly on the right track. It expects a 50% increase in revenue from 2007 to 2008 from the launch of SANCTURA XR and a full year of sales of SUPPRELIN-LA. If it can hit that mark and lower its costs by finding a partner for PRO 2000, its leading drug in clinical trials, Indevus may be profitable as early as then.

In the meantime, Indevus seems to be in good shape. At the end of the quarter, the company had $42.1 million in cash and equivalents. Adding the $35 million it will receive in a few days from Esprit, the company has a decent stockpile to hold it until profitability.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a recommendation of the Inside Value team. Glaxo and Johnson & Johnson are Income Investor newsletter pick. The Fool has a disclosure policy.