For small, developing drug companies, cash is a precious commodity. Without money coming in from sales, there are only three ways for such companies to raise funding for the expensive clinical trials, scientists, and equipment needed to get drugs on the market. Companies can do an equity offering that dilutes shares, take on debt (if possible), or give up a share of future profits for its products in return for cash and other up-front support. SkyePharma (NASDAQ:SKYE) chose the latter option yesterday, selling the European rights to one of its drugs to privately owned pharmaceutical firm Mundipharma.

In a deal worth as much as $109 million -- provided Skye can reach all the associated milestones -- the company will surrender European rights to its asthma drug, Flutiform, in exchange for $19 million in cash up front, a double-digit royalty rate on future European sales if the drug is approved, and $90 million in potential milestone payments. In addition, Mundipharma will be responsible for running a needed clinical trial, and will take over responsibilities for getting the drug approved overseas.

Skye already partnered Flutiform in the U.S. with the much larger KOS Pharmaceuticals (NASDAQ:KOSP) for $25 million up front, $140 million in additional milestone payments, and a mid-teens royalty rate on all sales.

Currently, Flutiform is in phase 3 trials, intended to ease asthma sufferers' breathing more quickly during an attack. There are a host of drugs these days to help asthmatics, from companies like GlaxoSmithKline (NYSE:GSK) and AstraZeneca (NYSE:AZN), but Skye thinks Flutiform is superior because of its faster-acting and longer-lasting effects.

We'll know soon enough whether Skye's claims of Flutiform's superiority are legitimate. Skye hopes to have the phase 3 trial of Flutiform finished in 2007, with a submission for drug approval to the FDA sent in sometime during the second half of that year, and possible marketing beginning in 2009. Any potential European submission for approval is set for late 2008, with possible marketing at the end of 2009.

At first glance (and assuming similar royalty rate structures), it looks like Skye got at least as good a deal partnering Flutiform in Europe as it did with its U.S. partnership. Skye did receive less money for the European rights, but then again, Europe offers a smaller market for Flutiform than the U.S. It's also more fragmented and difficult to sell in, and possible approval won't come for at least several months after U.S. approval. With approval not guaranteed, and a cutthroat market for asthma drugs, this deal looks pretty good for Skye overall.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. He welcomes your feedback at The Motley Fool has a disclosure policy .