Biotech companies are always searching for new ways to fund the costly and uncertain process of drug development and product launch. Over the past several years, synthetic royalty and drug development financings have become an additional option for fundraising, as traditional equity markets have remained challenging. Covington & Burling’s third annual study tracks these deals from 2019 through 2024, and highlights how the market has developed.

One trend that stands out in the most recent data is the growing involvement of European biotech companies. In the past two years alone, more than one in five deals reviewed in the study involved European companies. This signals that the appeal of synthetic royalty and drug development financings is not limited to the U.S. market, even though the investors are primarily based in North America, and documentation typically governed by New York law.

The study goes beyond just the numbers, breaking down how these deals are structured and what protections are in place for both companies and investors (with brand new charts for this year’s study, showing how terms differ across deals and investors). It looks at everything from the use of security interests and return caps to the types of covenants and buy-out rights that are becoming standard. As deal sizes have grown, so too has the sophistication of these financings. For anyone interested in how biotech companies in Europe are funding innovation in today’s market, this report offers a detailed and practical look at the latest developments in synthetic royalty and drug development financings.

To view the full report, please click here.