Recent shifts in international trade policies have led to the imposition of new tariffs prompting life science companies to reassess their license agreements to understand the potential impact of these new tariffs on royalty calculations under such agreements.
Introducing Biotech Briefings
Dear friends and colleagues,
We are excited to introduce Biotech Briefings, providing Gibson Dunn’s commentary and perspectives on the legal, business, and regulatory issues shaping the life sciences industry.
From groundbreaking developments in biopharma, medical devices, and diagnostics to the evolving landscape of IP, FDA and SEC regulation, Biotech Briefings delivers timely insights for companies, investors, and industry stakeholders.
Stay tuned for expert analysis on:
- Key FDA, FTC & SEC developments
- M&A, financing & strategic partnerships
- Market dynamics shaping investment & innovation
We invite you to follow along for actionable insights at the crossroads of law, business, and science.
The Gibson Dunn Life Sciences Team
Life Sciences 2025 Outlook
The life sciences industry is entering 2025 with a largely favorable set of catalysts for the coming year, but also with some larger risks that will impact companies differently.
Delaware Court of Chancery Opines on the Meaning of “Commercially Reasonable Efforts” in a Pharmaceutical Earn-Out Provision
Observations and drafting suggestions for CRE terms in merger agreements, licenses, and royalty purchase agreements.
On April 30, 2024, the Delaware Court of Chancery held that the buyer in a life sciences merger and its successor had not breached their contractual obligations under an earn-out provision to use commercially reasonable efforts (“CRE”) to achieve regulatory approvals for a pharmaceutical product. In Himawan, et al. v. Cephalon, Inc., et al., Vice Chancellor Glasscock found that the merger agreement’s definition of CRE for purposes of the earn-out provision, which referred to the efforts of a company with substantially the same resources and expertise as the buyer, required the Court to analyze whether a reasonable actor faced with the circumstances would continue to pursue the development of a drug that had failed to meet one of its co-primary endpoints in an earlier clinical trial.[1]
Life Sciences Review and Outlook – 2024
This update provides a recap of 2023 highlights for capital markets, M&A activity, royalty finance transactions and clinical funding arrangements, along with expectations for 2024.
The past five years have been particularly tumultuous in the biopharma sector. Strong capital markets and M&A activity into early 2020 were whipsawed during the pandemic, with equity valuations climbing significantly through early 2021 before dropping dramatically through the fourth quarter of 2023.