When I saw that XOMA (Nasdaq: XOMA) had licensed out its lead pipeline drug XOMA 052, my first thought was, "Why now?" By the middle of this month, the company is set to release three-month data from its phase 2 trial testing XOMA 052 against diabetes; six-month data is due by the end of the quarter. Waiting until then would likely bring in a much bigger deal -- assuming the results were positive, of course.

And then I got to the fifth bullet point of the press release, and suddenly the deal didn't look quite so bad. XOMA has retained the right to buy back the U.S. and Japan rights to XOMA 052 in diabetes and cardiovascular indications. Once it does that -- for some undisclosed amount -- it could relicense the drug to some other company. XOMA is trying to have its cake and eat it, too.

Of course, that means the size of the cake is fairly small. XOMA is only getting $15 million up front from France-based Laboratoires Servier for turning over ex-U.S. rights to XOMA 052. Servier is also loaning XOMA about $20 million to help its cash position.

Servier will pay the first $50 million for the cost of clinical trials testing XOMA against a rare eye disease called Behcet's uveitis. From there, the companies will split the costs, since XOMA has retained the U.S. rights to that indication.

Behcet's uveitis is the fastest pathway to approval for XOMA 052, but the diabetes and cardiovascular disease indications offer much more potential. While some orphan drugs are blockbusters -- Genzyme's (Nasdaq: GENZ) Cerezyme, before the company ran into manufacturing issues, for instance -- most are in the hundreds of millions of dollars range, which is respectable but nothing to get excited about.

A hit in diabetes, on the other hand, could result in an instant blockbuster, given the market size. GlaxoSmithKline's (NYSE: GSK) Avandia topped $3 billion annually before it ran into side-effect issues, and Merck's (NYSE: MRK) Januvia franchise is on pace to top that, having brought in $847 million in the third quarter of 2010.

The deal will help tide over XOMA, but the company's long-term potential still lies solely on the shoulders of XOMA 052's ability to treat diabetes.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.