Investors never like negative revenue or earnings surprises, regardless of whether the company is missing its own guidance or analysts' guidance. Whether fair or not, shares of Aspreva Pharmaceuticals (NASDAQ:ASPV) dropped significantly last week because the Canadian-based pharmaceutical company announced it wouldn't be meeting analysts' guidance for third-quarter revenue.

Aspreva derives all of its revenues from royalties on the drug CellCept, via a collaboration agreement with Roche (OTC BB: RHHBY.PK) whereby Roche markets the drug and Aspreva investigates expanding the drug's label and usage in various autoimmune disorders.

The big drop in Aspreva's share price on Friday came when Aspreva announced it expected only $48 million in CellCept royalties for the third quarter, whereas the two analysts covering the company were respectively expecting $53 million and $56 million in revenues for the quarter. Because of some variability in when royalties are recognized and how they are accounted for, it's still possible for Aspreva to get close to the analyst estimates of royalty revenues for the quarter since actual royalty revenues have differed from initial estimates in the past.

In 2005, CellCept brought $76 million in royalties to Aspreva and the company expects revenues from the drug "in excess of $200 million for 2006" because of prescription growth in the 20%-25% range for the year. 163% revenue growth is nothing to sneeze at, and Aspreva should continue to see a rapid growth in royalties if it can expand the label of the drug.

Part of the reason for the sub-$800 million market cap of Aspreva despite the company's expectations of over $200 million in royalty revenues for the year is that CellCept will lose its U.S. patent protection in 2009 and EU protection ends in 2011 but even earlier in certain countries. To make up for this coming generic threat, Aspreva is looking for new drugs to collaborate on.

The larger point here is that small cap companies with short operating histories (Aspreva has a market cap of less than $800 million and has been a public company only since March 2005) are subject to loads of volatility in their share prices as the few analysts and investors who follow them adjust their outlook for the company.

We'll learn more about the company's outlook for CellCept royalties when final third-quarter results are announced Nov. 1. So for better or worse, investors can expect more volatility in the future with shares of Aspreva.

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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 .