Genzyme, Alcon Deals Throw Spotlight on Earn-Outs, Now Commonplace in Private Deals
Should Genzyme Corp. succumb to the advances of Sanofi-Aventis, contingent value rights (CVRs, or earn-out payments) will likely play a significant part in bridging the valuation gap that now exists between those companies.
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California's Ligand Teams Up With Chinese Drug Player For Hep B Treatment Aimed At 80 Million People In China
BEIJING - La Jolla, California-based Ligand Pharmaceuticals is creating an alliance with Chiva Pharmaceuticals centered on a licensing agreement that will give Chiva the right to develop anti-hepatitis medicines in China, where hepatitis B has already infected more than 80 million people, and access to Ligand's technology to develop products globally for other liver ailments
Novartis reaches agreement to buy the part of Alcon it doesn't already own for $12.9 billion, ending months of squabbling with Alcon minority shareholders.
Despite a few bright spots, the fundraising environment remains difficult for many venture investors. Biotechs that went public during the 2005-2007 window have largely underperformed, despite hitting the stock exchanges with what plenty of CEOs and VCs felt were artificially low prices negotiated by an oligarchy of biotech IPO buyers. Moreover, pharmaceutical companies have been buying fewer, not more, biotechs - even as more companies are seemingly created with acquisition, not IPO, in mind. Meanwhile, the M&A deals that do occur are increasingly risk-sharing affairs that resemble alliances, replete with earn-out payments triggered by development, regulatory, or commercial milestones. In short: good venture exits have been extremely hard to come by. And data from Elsevier's Strategic Transactions analyzed by START-UP suggest that although these risk-sharing deal structures may be a by-product of a miserable economy, they are likely to stick around regardless of any economic turnaround.