AstraZeneca (NYSE:AZN) is drinking nectar, but it might be getting drunk off the stuff. After all, the company gave Nektar Therapeutics (NASDAQ:NKTR) one sweet deal yesterday.

Nektar is getting an up-front payment of $125 million and AstraZeneca is taking over development of two compounds. NKTR-118, which has completed phase 2 testing, treats the constipation that's often caused by opioid painkillers. Further back in the pipeline, NKTR-119 combines NKTR-118 with an opioid painkiller, making it more convenient for patients.

In addition to the up-front payment, Nektar could receive as much as $235 million if NKTR-118 reaches milestones like a Food and Drug Administration approval. And it only gets better from there. If approved, Nektar is due tiered sales-milestone payments of as much as $375 million, and double-digit royalties that CEO Howard Robin implied would be a lot higher than 10%.

There are also potential milestone and royalty payments for NKTR-119, although the companies didn't give specifics.

If approved, NKTR-118 would compete with Progenics Pharmaceuticals (NASDAQ:PGNX) and Wyeth's (NYSE:WYE) Relistor. It would have a distinct advantage of being an oral compound, compared to Relistor, which needs to be injected. Progenics and Wyeth, soon to be Pfizer (NYSE:PFE), are working on an oral version of Relistor, however, so investors may get to see a nice showdown in a few years as both drugs finish phase 3 testing.

The infusion of cash, and not having to pay for the phase 3 trials, is a good move for Nektar. But at a market cap approaching $1 billion, without any late-stage compounds that it hasn't already partnered, Nektar isn't necessarily cheap. Still, management seems to be making sweet deals to keep the company going, and that shouldn't be overlooked.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a recommendation of the Inside Value newsletter. The Fool has a disclosure policy.