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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