Biotech investors aren't easily satisfied. Rigel Pharmaceuticals (NASDAQ:RIGL) signed up AstraZeneca (NYSE:AZN) to take over development of its phase 2 rheumatoid arthritis drug, R788, with more than $1.24 billion in potential payments, and the shares fell more than 9% yesterday.

Some of the drop may be from investors selling on the news. Even after yesterday's drop, shares are up more than 40% since the October lows. Investors were expecting Rigel to partner R788, so short-term thinkers may be moving on to the next catalyst-driven stock.

But I also think the terms of the deal may have had something to do with the sell-off. Don't get me wrong, $1.24 billion in potential payments is a lot for a single phase 2 drug. Incyte didn't get that much from Eli Lilly (NYSE:LLY) for licensing its rheumatoid arthritis drug a couple of months ago. But large payments are expected. Rheumatoid arthritis is a huge market. Abbott Labs' (NYSE:ABT) Humira, Johnson & Johnson (NYSE:JNJ) and Merck's Remicade, and Amgen (NASDAQ:AMGN) and Pfizer's (NYSE:PFE) Enbrel are all blockbusters. Plus, R788 is an oral compound, which should compete well against the current injectable and infused drugs.

Where I think investors probably got cold feet is the amount of money AstraZeneca was willing to risk up front: just $100 million. R788 has had some side effect issues in phase 2 trials and failed to meet the endpoints of one of its trials, possibly due to a placebo effect making the drug not seem effective.

Both problems are probably beatable, but they induce risk, and the AstraZeneca deal didn't remove that risk from the shoulders of Rigel and its investors. The deal is completely back-ended -- $345 million is tied to development, regulatory, and first commercial-sale milestones, and the largest chunk ($800 million) is tied to sales-related milestones.

While Rigel has removed the financial burden of running an expensive phase 3 trial, it hasn't removed the scientific burden of proving that R788 works. For better or worse, Rigel's shares will still be tied to how the drug does in clinical trials.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value selection. Johnson & Johnson is an Income Investor selection and Motley Fool Options has recommended buying calls on the stock. The Fool has a disclosure policy.