Last week, drugmaker OSI Pharmaceuticals (NASDAQ:OSIP) reported a mixed bag of results with its fourth-quarter and full-year earnings. The company's total revenue in Q4 decreased 4% year over year. However, total revenues for FY 2006 increased by 116% on the same basis. The latest Q4 revenues were hurt by lower product sales and sales commission numbers, while the dramatic boost in full-year results is attributable to growth in Tarceva sales and Macugen revenues.

Tarceva is the company's lung cancer drug, which OSI co-promotes with Genentech (NYSE:DNA) and Roche. Macugen is a treatment option for patients suffering from macular degeneration. OSI has partnered with Pfizer (NYSE:PFE) to market it, and the company began recording revenues in Q4 2005.

On a GAAP basis, OSI reported a net loss of $10.22 per share in FY 2006, versus a net loss of $3.02 per share in FY 2005. These results include impairment charges of $186 million and $26 million related to Macugen intangibles and Macugen inventory. In November, the company announced its intentions to exit its eye-disease business in favor of its focus on oncology and diabetes treatment.

Although the stock has struggled a bit following this decision, the company appears to be headed in the right direction. Management is expecting FY 2007 EPS of $1 on $300 million in revenue. That's considerably more than analysts' expectations for EPS of $0.58. The company picked up Macugen in its acquisition of Eyetech in November 2005. The eye business has failed to generate positive cash flow for the company, and this exit strategy appears to be a good move for shareholders, despite the initial cost to exit the business.

Growing royalty revenues overseas have proved especially promising for the company. Royalties from Roche, OSI's international partner for Tarceva, surged from $7 million in FY 2005 to $50 million in FY 2006. For the fiscal year, royalty revenues surged from 6% to 21% of total sales year over year. The company stands to grow even further in this area in FY 2007; just last month, the European Commission granted marketing authorization for Tarceva as part of a treatment regimen for pancreatic cancer.

OSI has invested heavily in discovering and developing its own oncology and diabetes drugs. OSI has a compound for the treatment of type 2 diabetes in phase 2 clinical trials, with two other compounds in phase 1 studies. As long as the company is able to further grow its worldwide revenues while continuing development on these drugs, this stock could prove to be a long-term winner.

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Fool contributor Billy Fisher does not own shares of any of the companies mentioned. The Fool has a disclosure policy.