Milestones mounting in biotech M&A

M&A with milestones attached have become an increasingly popular tool for biopharma dealmakers, with at least half of deals totaling $500 million or more in total value having a contingent value right or other potential payment tied to the acquired company’s products hitting clinical, regulatory, licensing or sales milestones in every quarter but one since 3Q24. That’s more than the six total quarters in the prior 22 from 1Q19 to 2Q24.

Biopharma’s largest M&A deals generally do not include such milestones— just two of the 24 transactions totaling $10 billion or more since 2019 had them. But for deals of more than $1 billion in total value, the percentage of deals with potential payouts has hit 70% for each of the past three quarters. ...