Arena Pharmaceuticals (Nasdaq: ARNA) set the bar for obesity-drug deals when it licensed lorcaserin to Eisai Pharmaceuticals in July. Orexigen Therapeutics (Nasdaq: OREX) seems to have figured that was good enough, smacking the bar solidly with its licensing deal with Takeda Pharmaceutical today.

Drug

Owner

Licenser

Upfront Payment

Milestone Payments

Percent of Sales to Owner

Contrave

Orexigen

Takeda

$50 million

"over $1 billion"

20%-35%

lorcaserin

Arena

Eisai

$50 million

$1.25 billion

31.5%-36.5%

Source: Company releases.

There are a couple of differences in the deals: Orexigen's deal covers the U.S., Canada and Mexico, while Arena's deal is limited to the U.S. The breakdown of who pays for clinical trials required by the Food and Drug Administration also differs. Both biotechs will manufacture their drugs, but Takeda will cover Orexigen's manufacturing costs, while those costs will be borne by Arena. Assuming a single-digit cost of goods sold, it looks like Arena has better terms on the low end of the payments, but worse at the highest sales tier when the percentage maxes out. Let's call it a draw.

It's pretty clear from both deals that Takeda and Eisai don't have much confidence that the drugs will get approved. Obesity is a fairly large market, and the companies are only willing to put $50 million on the line for drugs that have already been submitted to the FDA. By comparison, Allergan (NYSE: AGN) got $40 million from Bristol-Myers Squibb (NYSE: BMY) for its pain drug -- which hasn't even entered phase 2 development -- and a backup compound that's farther behind. Biogen Idec (Nasdaq: BIIB) invested $80 million in upfront and equity investments in privately held Knopp Neurosciences for its ALS drug that hasn't read out phase 3 results yet.

Whether the small drugmakers should have tried to get more upfront and lower milestone payments down the road or perhaps passed on the deals altogether, depends on whether the drugs get approved. Arena will face an FDA advisory panel on Sept. 16 with a decision coming around its PDUFA date of Oct. 22. Orexigen is a little farther behind with an advisory panel on Dec. 7 and Jan. 31, 2011, PDUFA date.

After VIVUS' (Nasdaq: VVUS) Qnexa was shot down at its FDA advisory panel, it's clear that Arena and Orexigen have an uphill battle in front of them.

Tom Jacobs recommends you buy this company before it gets sold. Literally.

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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.