With: Andrew Berdon, Joe Paunovich
Quinn Emanuel Partners
Host: John B. Quinn
Founder and chairman, Quinn Emanuel Urquhart & Sullivan
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Episode description:
John is joined by Andrew Berdon, partner in Quinn Emanuel’s New York Office, and Joe Paunovich, partner in Quinn Emanuel’s Salt Lake City office. They discuss the $300 million victory Andrew and Joe’s team recently won in Delaware Chancery Court in an earnout dispute arising from a pharmaceutical merger. The dispute involved the acquisition of Syntimmune, a biotech company founded around a promising antibody drug—Alexion 1830—designed to treat rare autoimmune diseases by reducing levels of IgG. The drug was initially developed from academic research at Harvard and advanced by a venture-backed startup that invested over $75 million before selling the company to Alexion, now a division of AstraZeneca.
The acquisition included an upfront payment of $400 million, plus up to $800 million in earnout payments tied to eight developmental milestones, most of which were based on progress during pre-approval clinical trials. The dispute arose when Alexion, shortly after the acquisition, deprioritized and ultimately terminated the drug’s development, citing safety concerns and a perceived loss of first-mover advantage. No earnout payments were made.
The court found that Alexion breached its obligation to use “commercially reasonable efforts”—defined in the agreement as those a similarly situated biotech company would use—to develop the drug. Evidence at trial showed Alexion made no attempt to benchmark its efforts against peer companies developing similar drugs. Instead, internal shifts in corporate priorities and the subsequent acquisition by AstraZeneca led to the program’s quiet abandonment, despite a highly promising therapeutic profile and a still viable market opportunity.
The episode concludes with reflections on the broader pharmaceutical industry, the strategic use (and misuse) of earnout structures, and the importance of precisely drafted effort clauses to protect sellers when control shifts post-acquisition.
Published: Aug 22 2025
