Pfizer & Biohaven Combine Forces; Vying for Valuable Upside

Continuing the acquisition spree after absorbing Arena Pharmaceuticals and Reviral Ltd. to meet unmet patients’ needs, Pfizer Inc. (NYSE: PFE), the global pharmaceutical and biotechnology company, has agreed to snap up migraine drugmaker Biohaven Pharmaceutical Holding Company Ltd. (BHVN). 

The cash deal is valued at $11.6 billion, to be funded by Pfizer with current cash in hand.  

Following the news, shares of Pfizer rose 1.66% on Tuesday at the close, while shares of Biohaven skyrocketed 68.4%. 

The deal followed the strategic partnership deal between the two, entered in November 2021, for the commercialization of rimegepant and zavegepant outside the U.S. Per the terms of the deal, Pfizer made an equity investment of $350 million in Biohaven to acquire 2.6% at $173 per share. 

Benefits of the Deal 

Through this acquisition, Pfizer will commercialize NURTEC® ODT (rimegepant), an innovative migraine therapy, designed to prevent and acutely treat migraines, a condition with high unmet needs. Also, the company’s innovative internal medicine pipeline will be expanded, which is likely to unlock significant growth through 2030 and beyond. 

Nick Lagunowich, the Global President at Pfizer Internal Medicine, said, “Today’s announcement builds on our legacy of delivering breakthroughs for patients living with complex pain disorders and diseases that disproportionately impact women.” 

Terms of the Acquisition 

Per the terms of the deal, Pfizer will pay $148.50 for each share of Biohaven (not owned by Pfizer). The price tag represents a 33% premium to Biohaven’s volume-weighted average selling price of $111.70 over the three months, before the deal announcement. Also, Pfizer will assume Biohaven’s third-party debt and redeem all outstanding shares of redeemable preferred stock.   

Interestingly, all Biohaven common shareholders will receive 0.5 shares of New Biohaven for each share held. New Biohaven is a new publicly-traded company retaining Biohaven’s non-calcitonin gene-related peptide (CGRP) development stage pipeline compounds. 

Pfizer will acquire Biohaven’s CGRP programs, including rimegepant, zavegepant, and a portfolio of five pre-clinical CGRP assets. 

The transaction is likely to close in early 2023, pending Biohaven shareholders’ approval, certain regulatory approvals, and the completion of the New Biohaven spin-off agreement.  

Upon the closure of the deal, New Biohaven will continue to operate under the Biohaven name, led by the CEO of Biohaven, Vlad Coric, and a capital of $275 million in cash. Additionally, New Biohaven will be entitled to tiered royalties to be received from Pfizer on annual net sales of rimegepant and zavegepant in the U.S. exceeding $5.25 billion. 

Wall Street’s Take 

The Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on six Buys and eight Holds. The average Pfizer price target of $58.92 implies 19.05% upside potential. Shares have gained 29% over the past year. 

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