Drug licensing deals come in all kinds of sizes and flavors. The one that Theravance (NASDAQ:THRX) and Merck (NYSE:MRK) announced is more of a maraschino cherry than a giant three-scoop ice cream sundae.

In exchange for giving up rights to its cardiovascular program, Theravance will receive a $5 million upfront payment and get funding for research. The biotech is eligible for milestone payments up to $148 million for the first indication, and royalties on worldwide net sales of any products derived from the program.

Compare that to some other recent deals Merck has done:

Licensor

Upfront Payment (in millions)

Milestone Payments (in millions)

Theravance

$5

$148

AiCuris

$143

$433

Endocyte (NASDAQ:ECYT)

$120

$880

Source: Company releases.

It appears the reason why Theravance wasn't able to get very much in its deal was because it hasn't done that much work on the program. The cardiovascular program must be really early in development since it's not even listed on Theravance's website. The companies continue to be secretive about the program; they didn't even reveal the number of drugs, let alone their mechanism of action. We do know they'll treat high blood pressure and heart failure -- two very large markets.

By contrast, AiCuris' letermovir is ready to go into phase 3 trials; Merck also got earlier-stage backup compounds in the deal. And vintafolide, the drug Endocyte licensed to Merck, was already in phase 3 trials when the deal went down.

There's no doubt Merck is a good partner for a cardiovascular program. It sells Vytorin and Zetia, and has a substantial pipeline of cardiovascular drugs of its own. But you have to wonder whether developing the drugs further would have been a better move. We don't know the royalty rate, but Theravance is presumably giving up a lot of upside if the drugs are blockbusters years from now.

In the short term, shipping out the program will likely increase the company's value though. Theravance has multiple programs in the clinic, including a chronic obstructive pulmonary disease drug combination that Theravance's longtime partner, GlaxoSmithKline (NYSE:GSK), submitted to the Food and Drug Administration in July. Booking profits, rather than spending the royalty income on early stage programs, will make investors much happier.

Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services recommend GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.