It was a good day for UniQure, a Dutch biotech company at work on gene therapies for rare diseases. A big pharma company had just made a billion-dollar investment in its future. Or so the headlines blared.
Eighteen months and two CEOs later, UniQure is laying off about a quarter of its staff, abandoning some of its would-be drugs — and running out of cash.
So what happened to that billion dollars? It never really existed.
Bristol-Myers Squibb paid UniQure just $50 million in cash up front. The rest of the deal came in what’s known in the industry as “biobucks” — akin to lottery tickets that pay out when an experimental drug hits various milestones along the path to commercialization. When a drug fizzles, the money doesn’t materialize.
STAT analyzed nearly 700 biotech licensing deals inked over the past four years and found that biobucks hugely outweigh actual cash on the barrelhead. On average, just 14 percent of the total announced value was paid out upon signing, according to data from EvaluatePharma.
And the up-front payments have dwindled as optimism about the industry has faded. In 2014, when biotech was the toast of Wall Street, about 18 percent of total deal value was paid out in cash on signing. That has dropped to 11 percent in the first nine months of this year, as biotech stocks have slumped.
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