Cleary's Pharma Bites: Contingent Value Rights (CVRs) in Pharmaceutical Deals

June 13, 2024

Cleary Gottlieb’s Pharmaceutical, Biotech, and Healthcare group is pleased to present the latest installment of its “Pharma Bites” series: Contingent Value Rights (CVRs) in Pharmaceutical Deals.

  • Of the deals that have either fully or partially paid out or have expired (and for which payout information is available) (30 out of 65 total deals), 4 have fully paid out to CVR holders, and 6 have made partial payment.
  • Milestones must be carefully constructed so that they capture the intended outcomes for all parties involved. Narrow or vague milestones can result in outcomes that lead to frustration and litigation.
  • The vast majority of CVRs are not listed or tradeable.
  • Parties should carefully consider the pros and cons of including vs. disclaiming efforts standards and whether to use objective vs. subjective efforts standards.

    There are also a variety of approaches to other key terms to consider, including whether to include audit rights and who bears the costs of audits. 
  • Litigation risk exists in any situation where the CVR is not paid out in full, which can include claims for securities fraud or breach of contract.

To learn more about this topic and view the related slide deck, click here.

Cleary’s Pharma Bites series seeks to provide critical updates on a wide range of antitrust, regulatory, arbitration, and litigation issues in the pharmaceutical and biotechnology space.

To learn more about Cleary’s Pharmaceuticals and Biotechnology practice, click here.