Over a decade in­to the mile­stone boom, it's time to ask. Just how of­ten do they re­al­ly pay off?

Those mega­bil­lion biobuck deals: Do they work? Are they ever paid?

It’s the ques­tion loom­ing be­hind most biotech buy­outs and li­cens­ing deals, which now al­most al­ways come stuffed with de­vel­op­men­tal, reg­u­la­to­ry and sales mile­stones. Take Roche, which last month ac­quired a “break­through” an­ti-fi­brot­ic drug for $390 mil­lion cash but $1 bil­lion in earnouts and to­day inked glob­al rights for Sarep­ta’s in­ves­ti­ga­tion­al Duchenne mus­cu­lar dy­s­tro­phy gene ther­a­py for $1.15 bil­lion cash but $1.7 bil­lion in earnouts.

An­a­lysts have tried to track and quan­ti­fy these earnouts since they first took off a lit­tle over a decade ago. (At­las’ Bruce Booth made a valiant ef­fort in 2012). SRS Ac­quiomm has ar­guably the most com­pre­hen­sive out­look. On be­half of sell­ers, they track buy­ers’ progress to­ward these earnouts. That gives them in­sight in­to what they es­ti­mate is half of all biotech M&As and they’ve be­gun pub­lish­ing re­ports on that da­ta.

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