CVRs Are Back — and Structured Differently

Contingent value rights have re-emerged as a defining feature of biopharma M&A — but the current generation bears little structural resemblance to its predecessor. Between January 2025 and June 2026, 23 completed transactions included CVR components. Compared to the 31 CVR-bearing deals from the 2018–2020 wave, the shifts in trigger design, time horizon, and CVR sizing are significant enough to change how both sides should approach the negotiation.

The context matters. When Pfizer acquired Seagen for $229 per share in late 2023, no CVR was necessary — the buyer had full conviction in the ADC platform and paid an outright premium to close the valuation gap. CVRs appear when that conviction is absent. And in the current market, with binary clinical readouts driving a larger share of pipeline value, that gap shows up more often than it did five years ago.

23 Transactions, Three Structural Patterns

Our dataset of 23 CVR-bearing deals since January 2025 reveals three structural shifts relative to the 2018–2020 cohort.

Trigger specificity has increased sharply. The earlier wave relied heavily on broad regulatory approval milestones — "FDA approval of compound X in any indication" was a common formulation. The current generation uses narrower, more precisely defined triggers. Sarepta's CVR structure with Roche around SRP-9001 illustrates the shift: the contingent payment was tied to specific regulatory milestones for the gene therapy in Duchenne muscular dystrophy, not to a blanket approval event. This kind of narrow trigger design reduces ambiguity and litigation risk for both parties, but it demands more granular modeling from the sell-side. You cannot value a trigger you haven't mapped to a specific development timeline with probability-weighted outcomes at each gate.

Time horizons have compressed. Median CVR expiration windows fell from 7.2 years in the 2018–2020 cohort to 4.8 years in the current wave. Buyers have learned from experience. Longer windows created tail risk that acquirers found difficult to manage through integration, particularly when development timelines slipped or portfolio priorities shifted post-close. For sellers, the compression is a double-edged instrument: achievability rates are higher for near-term triggers (a Phase 3 readout 18 months away is more predictable than a commercial sales target five years out), but the total addressable value is capped. The right response depends on where your lead program sits in its development arc.

CVR values as a share of total consideration have grown. In the 2018–2020 wave, CVRs represented a median 12% of total deal value. In 2025–2026, that figure is 19%. The Amgen acquisition of Horizon Therapeutics is instructive as a bridge between eras: the $116.50 per share base price was paired with an $11.50 CVR tied to tepprotumumab sales milestones — roughly 9% of total potential consideration. By 2025–2026 standards, that ratio is modest. Buyers today are using CVRs to bridge larger valuation gaps, particularly in deals where the target's lead asset carries binary risk that cannot be de-risked before signing. The structural message is clear: CVRs are no longer a rounding mechanism. They are a core component of deal economics.

The Achievability Gap

The most consequential number in any CVR negotiation is not the headline value — it is the probability that the trigger conditions will be met. Our analysis of historical CVR outcomes across both waves reveals a wide spread in achievability by trigger type.

Regulatory approval triggers — the most common structure — achieve full payment approximately 58% of the time. Sales threshold triggers, which require the acquired asset to hit defined commercial benchmarks within a time window, achieve payment just 31% of the time. Combination triggers, where multiple independent conditions must all be satisfied, pay out only 19% of the time.

The practical implication is severe. A $200M CVR with a combination trigger has a risk-adjusted present value closer to $38M than $200M. The gap between what the term sheet says and what the seller will actually receive is where deals get mispriced — and where sophisticated buyers gain leverage.

The Astellas acquisition of Iveric Bio offers a useful counterpoint. That CVR was tied to FDA approval of avacincaptad pegol for geographic atrophy — a single, well-defined regulatory trigger for a program already in late-stage review. When approval came through, it triggered full payment. The deal illustrates what achievable CVR design looks like: a near-term, high-probability event with a binary outcome that both parties could model with reasonable confidence. Not every CVR structure has that profile, and sellers should be clear-eyed about the difference.

Bristol Myers Squibb's acquisition of Karuna Therapeutics and its earn-out mechanics around KarXT showed another variant — milestone-linked payments structured as earn-outs rather than traditional CVRs, but functionally similar in their risk profile. The distinction between CVRs and structured earn-outs is increasingly semantic; what matters is the achievability calculus and the seller's ability to model it accurately before accepting the structure.

Tradability Matters More Than Most Sellers Realize

Of the 23 CVR-bearing deals in our dataset, 9 included tradable CVRs — instruments that can be sold on a secondary market after close. The remaining 14 were non-tradable.

Tradable CVRs traded at a median discount of 34% to face value within the first 90 days post-close. That discount is the market's real-time verdict on achievability, informed by public data, clinical timelines, and the acquirer's post-close behavior. For sellers, tradability creates an exit option that fundamentally changes the risk profile: take 66 cents on the dollar today, or hold through the full development timeline and bet on 100 cents. That optionality has quantifiable value and should be modeled as such during negotiations.

Non-tradable CVRs lock sellers into the acquirer's execution. If the acquirer deprioritizes the program, shifts resources to a competing pipeline asset, or restructures the development organization post-close, the CVR holder has no recourse and no exit. The asymmetry is structural: the buyer controls the levers that determine whether the trigger is met, while the seller has no ability to influence the outcome and no market mechanism to hedge the exposure.

The negotiating implication is straightforward: tradability should be a default ask unless you have specific, evidence-based conviction that the acquirer will prosecute the development program on timeline. "They said they would" is not evidence. Board-level development commitments with contractual teeth, ringfenced budgets, and defined governance structures are.

Implications

If you are running a sell-side process in the current market, CVRs will appear in at least one term sheet — and possibly several. The difference between a well-negotiated CVR and a poorly negotiated one can represent 15–25% of total deal economics. Four specific actions will determine which side of that range you land on.

Build your own achievability model before a counterparty proposes the structure. Do not wait for a buyer to define the trigger and then react. Map every plausible milestone to a probability-weighted timeline. For regulatory triggers, use historical approval rates by therapeutic area, phase, and regulatory pathway (Priority Review vs. Standard Review vs. Accelerated Approval each carry different base rates). For sales triggers, model the commercial ramp against analogues in the same indication and distribution channel. The output should be a risk-adjusted present value for each potential trigger structure, discounted at a rate that reflects the illiquidity of the instrument — typically 15–25% for non-tradable CVRs, 8–12% for tradable ones.

Set a floor on the upfront-to-CVR ratio. Based on the current dataset, deals where the CVR exceeds 25% of total consideration have materially worse outcomes for sellers. The achievability discount compounds with the proportion at risk: a 19% CVR with a 58% achievability rate costs the seller roughly 8% of total deal value in expected loss. A 35% CVR with a combination trigger and 19% achievability costs 28%. Establish a maximum CVR share early in negotiations and hold it. These benchmarks are available in real-time on Solidus, our deal terms platform.

Negotiate trigger breadth as aggressively as you negotiate price. Every additional condition layered onto a trigger reduces achievability. A single-trigger CVR tied to regulatory approval in the lead indication has a 58% payout rate. Adding a sales threshold drops it to roughly 30%. Adding a time window drops it further. If a buyer insists on combination triggers, the face value of the CVR must increase proportionally to offset the achievability discount — and you need the model to prove exactly how much.

Require tradability, or extract concessions for giving it up. The option value of tradability is calculable: in our dataset, tradable CVRs preserved a median 66% of face value for sellers who exited within 90 days, compared to a modeled 45–55% expected value for non-tradable instruments held to maturity. If a buyer refuses tradability, that delta — 10 to 20 percentage points of face value — should be recovered elsewhere in the deal structure, whether through a higher upfront price, a lower trigger threshold, or an extended expiration window.

The CVR market has matured. The structures are more precise, the achievability data is richer, and the valuation frameworks are more developed than they were in 2020. Sellers who treat CVRs as an afterthought — or worse, as free upside — will leave real value on the table. The ones who model, negotiate, and structure them with the same rigor they apply to the upfront price will not.