Biohaven (BHVN) Up on PFE's Buyout Offer, Q1 Loss Wider
Biohaven Pharmaceutical BHVN and Pfizer PFE announced a definitive agreement wherein the latter will acquire the former for $148.50 per share or an aggregate equity value of $11.6 billion.
Per the terms of the agreement, Pfizer will acquire Biohaven’s calcitonin gene-related peptide (CGRP) programs, including the company’s sole marketed drug Nurtec ODT (rimegepant), approved in both the United States and the European Union for both the acute treatment of migraine and the preventive treatment of episodic migraine. Biohaven’s CGRP program also includes zavegepant, an intranasal spray for migraine, currently under the FDA review.
We remind investors that Pfizer already owns the commercial rights of the above-mentioned drugs in ex-U.S. markets. These rights were acquired by PFE last November when it entered into a strategic collaboration agreement with BHVN. PFE also acquired a 2.6% stake in Biohaven.
Pfizer will buy the remaining outstanding shares of Biohaven’s common stock at $148.50 each. The acquisition price represents a premium of 78.6% to BHVN’s closing price on May 10. In addition, all existing shareholders of BHVN (including Pfizer) will also receive half a share of a newly publicly traded company that will retain BHVN’s non-CGRP pipeline compounds for every one common share of BHVN.
The new company will continue to operate under Biohaven’s name. PFE will also pay off BHVN’s third-party dues as well as redeem the latter’s outstanding preferred stock.
The acquisition deal, unanimously approved by the boards of directors of both companies, is subject to customary closing conditions, including approval from Biohaven’s shareholders and regulatory authorities. The transaction is expected to be completed by early 2023.
Shares of Biohaven skyrocketed 68.4% on Tuesday, following the acquisition announcement. The stock has gained 1.6% in the year so far against the industry’s 26.3% decline.
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In a separate press release, Biohaven also reported first-quarter 2022 results. BHVN incurred a loss of $2.97 per share for first-quarter 2022, wider than the Zacks Consensus Estimate of a loss of $2.52 but narrower than the year-ago loss of $4.21.
Adjusted loss (excluding non-cash stock-based compensation and a few other non-cash expenses) for the first quarter was $1.62 per share compared with $3.25 in the year-ago period.
Total revenues were $319 million in the first quarter, which beat the Zacks Consensus Estimate of $187.1 million. The top line rose more than 600% year over year.
Quarter in Detail
Total revenues comprised product sales and collaboration revenues. During the quarter, Biohaven generated $123.6 million from Nurtec ODT product sales, up 182% year over year. In the same period, BHVN recorded $195.3 million of collaboration revenues, derived from Pfizer as part of a strategic agreement signed last November. BHVN did not record any collaboration revenues in the year-ago period.
Research and development (R&D) expenses, including stock-based compensation, were $119.1 million in the quarter, up 11.2% year over year, induced by higher employee-related costs.
Selling, general and administrative (SG&A) expenses were $227.2 million in the quarter, up 79.3% from the year-ago period’s level. The significant increase in SG&A expense was due to higher costs to support the commercialization of Nurtec.
As of Mar 31, 2022, Biohaven had cash and restricted cash worth $602.5 million compared with $367 million as of Dec 31, 2021.
2022 Guidance
Biohaven expects product revenues from Nurtec ODT between $825 million and $900 million for 2022.
Nurtec Update
Last month, Biohaven along with Pfizer announced that rimegepantwas granted a marketing authorization by the European Commission as an acute and preventive treatment for migraine. The drug will be marketed in Europe under the trade name Vydura.
This February, Biohaven announced top-line data from a phase III study evaluating Nurtec ODT in migraine patients in China and South Korea. Data from the study was consistent with the previous studies, which supported the drug’s approval in the United States. Data from this study will support the regulatory application, expected to be filed in second-half 2022, for the potential approval of the drug in China and South Korea.
Earlier in February, Biohaven initiated a phase II/III study to evaluate Nurtec ODT as a potential treatment for chronic rhinosinusitis. Last month, BHVN enrolled the first patient in a phase II/III study evaluating Nurtec ODT as a potential treatment for temporomandibular disorder.
License Agreements
In February 2022, Biohaven expanded its pipeline through two new agreements with Bristol Myers BMY and the privately-held Knopp Biosciences.
Biohaven signed a worldwide license agreement with Bristol Myers, gaining development and commercialization rights to the latter’s phase III-ready pipeline candidate taldefgrobep alfa. BHVN is planning to start a phase III study in mid-2022 to evaluate the candidate in patients with spinal muscular atrophy. BHVN will pay Bristol Myers regulatory approval milestone payments and sales-based royalties related to taldefgrobep alfa’s development and commercialization.
Biohaven added an epilepsy candidate, BHV-7000, under its agreement with Knopp Biosciences to acquire the latter’s Kv7 channel targeting platform. BHVN plans to start a clinical study on the candidate later this year. Per the same agreement, BHVN also wins rights to other pipeline candidates from Knopp Biosciences’ Kv7 channel targeting platform.
Biohaven Pharmaceutical Holding Company Ltd. Price
Biohaven Pharmaceutical Holding Company Ltd. price | Biohaven Pharmaceutical Holding Company Ltd. Quote
Zacks Rank & Stock to Consider
Biohaven currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the overall healthcare sector is Alkermes ALKS, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alkermes’ loss per share estimates for 2022 have narrowed from 14 cents to 3 cents in the past 30 days. Shares of ALKS have risen 15.9% year to date.
Earnings of Alkermes beat estimates in each of the last four quarters, the average being 350.5%. In the last reported quarter, Alkermes delivered an earnings surprise of 1,100%.
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