Germany's Schwarz Pharma, which is in the process of being acquired by Belgian group UCB for $5.6 billion, flipped into profit in the first nine months of 2006, but slipped back into a loss in the third quarter.

Nine-month net profit came in at 14 million euros, reversing a 48 million euro loss a in the first nine months of 2005, helped by an upfront payment from Pfizer for rights to fesoterodine for overactive bladder.

Schwarz said in April that it could get $210 million plus royalties from licensing fesoterodine, which has already been filed for approval with both the US Food and Drug Administration and the European Medicines Agency (EMEA). An additional $110 million is dependent on approvals and other milestones.

Schwarz’ operating loss in the third quarter was a little higher than expected, according to analysts, because of an increase in spending on its pipeline, but overall the figures were in line with forecasts.

The drugmaker has a number of interesting new compounds coming through trials, including Parkinson’s disease patch Neupro (rotigotine) and lacosamide for epilepsy and neuropathic pain, which should help the firm weather the upcoming loss of patent protection on key products such as Zyrtec (cetirizine, in 2007) and Keppra (levetiracetam, in 2008).

Group sales dipped fractionally to 720 million euros in the nine-month period, and should increase to 900 million euros for the full year. Schwarz chief executive Patrick Schwarz-Schuette said the firm would break even for 2006 as a whole.

The loss in the third quarter was reduced to 23 million euros after a year-earlier third quarter loss of 50 million euros. Group sales in the three-month period went up 1.4% to 237 million euros.