Some drug deals are better than others. Yesterday, Rule Breakers pick Myriad Genetics (NASDAQ:MYGN) announced a particularly strong partnership deal for its lead drug, Flurizan.

Flurizan is currently in late-stage testing as a treatment for Alzheimer's disease. The marketing agreement that Myriad inked with European pharma H. Lundbeck A/S will bring $100 million in cash immediately, with the potential for another $250 million in milestone payments. 

It also includes a tiered escalating royalty rate of 20% to 39% on all of Lundbeck's sales of Flurizan, less the amount paid for the bulk drug, if it gets approved for marketing. In exchange, Myriad cedes Lundbeck its marketing rights to the drug throughout Europe.

The Lundbeck deal is definitely a bit of a hedge on Myriad's part, as some analysts noted. Myriad is only a month away from announcing study results for the first of two pivotal phase 3 studies for Flurizan, with a second phase 3 study expected to produce data "around the end of 2008." Had Myriad waited until after these study results were announced (assuming they were positive), it would have greatly strengthened its partnership bargaining power.

Then again, Myriad's idea to get at least $100 million for a drug that many analysts think has a fairly high likelihood of failing in testing is not a bad one. Investors following the neurology drug treatment space right now are understandably worried about experiencing deja vu. This time last year, another high-risk Alzheimer's-disease drug developer, BELLUS Health (NASDAQ:BLUS) -- then known as Neurochem -- issued a large dilutive financing ahead of its pivotal phase 3 Alzheimer's drug data, to hedge against negative study results.

Other details make this deal a good one for Myriad. The company didn't give up anything close to all the potential fruits of its Flurizan labors; it will retain U.S. rights to the drug, which it also wants to partly partner out. In addition, Myriad still stands to gain a very healthy royalty rate on Lundbeck's European sales of a compound that will be expensive to promote. 

Just as importantly, Lundbeck has some good experience in marketing Alzheimer's-disease drugs because it has the European rights to the Alzheimer's drug that Forest Laboratories (NASDAQ:FRX) markets as Namenda in the U.S.

The deal may have its downsides, but on the whole it looks like a smart move for Myriad.

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