Dilutive financings are a fact of life for cash-burning small drugmakers like Encysive Pharmaceuticals (NASDAQ:ENCY). On Tuesday, Encysive announced that it raised $15 million by selling shares and warrants to institutional investors.

Those who don't know the saga of Encysive and its botched efforts at getting its lead drug approved by the Food and Drug Administration can read about it here. Even though it was issued three approvable letters for Thelin, a compound for high blood pressure in the pulmonary artery, it continued running a costly long-term study of the drug and held onto its U.S.-based sales force for another 13 months following the first FDA rejection.

After the third approvable letter, a document that tells the company what information it needs to provide before approval will be given, received in June, Encysive finally took the steps it needed to cut costs by dismissing a large chunk of its U.S. workforce, including the very expensive idle sales team, and ending the long-term use study of the drug.

Encysive has been a cash-burning machine over the past year. The company has raised more than $100 million in equity and debt financings since the first approvable letter in March 2006. It ended the second quarter with $65 million in cash and investments (before the latest equity financing) and said there will be an additional $35 million in operating expenses the rest of the year.

There is undoubtedly some value in Encysive's shares even if Thelin never makes it to the U.S. market. The drug is approved in the European Union and several moderately sized markets throughout the world, like Canada.

Sales of Thelin were $2 million in Q2, not even close enough to cover Encysive's $17 million in research and development spending in that quarter. That means investors can expect more dilutive financings. With a weak pipeline, spending nearly as much on R&D as mid-cap pharmaceuticals like Endo (NASDAQ:ENDP) and BioMarin (NASDAQ:BMRN) is not a recipe for long-term success. The question is, will Encysive investors own a large enough slice of the pie for it to mean anything if the share price goes up? 

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