Trading on Biotech Deals Gets Harder With More Milestone Payouts

Dealmakers are increasingly tapping contingent value rights for transactions in the biopharma space as stocks stay volatile and determining valuations is proving tough.

Contingent value rights, also known as CVRs, entitle holders to additional payouts if certain future milestones are met, such as drug approvals or sales metrics. Amid a slowdown in dealmaking, the tool is getting popular as it helps bridge gaps in valuation expectations for companies, allowing buyers to scoop targets at a cheaper price while taking less risks on early stage pipeline products that have blockbuster potential.

This month alone, the biotech market has seen at ...