Bristol-Myers Squibb's (NYSE: BMY) purchase of privately held Amira Pharmaceuticals last week looks a little expensive on the surface, but if things work out, the acquisition could end up paying for itself many times over.

The pharma is paying $325 million up front and potentially another $150 million in milestone payments. The latter is reasonable; Bristol-Myers will be happy to pay if the drugs actually work. But on the surface, $325 million seems a tad pricy for Amira's pipeline.

Amira lists a couple of drugs in the clinic. The farthest along is a phase 2 asthma drug, but it's partnered with GlaxoSmithKline (NYSE: GSK). The others are in phase 1 development without any proof-of-concept data.

The press release touts AM152, which is being tested in idiopathic pulmonary fibrosis, or IPF, and scleroderma. There aren't any drugs approved for IPF, but InterMune (Nasdaq: ITMN) is well ahead of AM152 if it can convince the Food and Drug Administration that Esbriet works.

At the other end of the spectrum, Amira is developing treatments for asthma and chronic obstructive pulmonary disease, two very large markets. Of course, there are also a lot of drugs used to treat the lung diseases: Glaxo's Advair, Merck's (NYSE: MRK) Foradil, and AstraZeneca's (NYSE: AZN) Symbicort, just to name a few.

But Amira's partnership with Glaxo could ultimately make the purchase work financially. The deal licensing Amira's asthma drugs AM103 and AM803 to Glaxo included $425 million in milestone payments. It appears that some of those payments may have already been made -- being a private company, Amira doesn't have the same disclosure requirements as a public company -- but we can assume most of the milestone payments are probably tied to phase 3 success and/or regulatory approval. Also, Bristol would be due royalties as part of the deal. If either compound is a clinical success, the deal could pay for itself, and Bristol-Myers would end up with a free call option on the rest of Amira's pipeline.

Not bad, Bristol-Myers. Not bad at all.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Click here to see his holdings and a short bio. The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services have recommended buying shares of 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.