Pfizer to Acquire Biohaven in its biggest deal in 5 years

Having close to doubled its revenue in 2021 from the previous year, Pfizer is on a lookout for potential acquisitions to sustain its record growth owing to the development of its Covid-19 vaccine Comirnaty and Covid-19 drug Paxlovid.

Since its $14.3bn acquisition of Medivation in 2016, sell-offs like the recent one has presented viable opportunities for Pfizer to take over its competitors at a tamed valuation. On 10 May, the business agreed to purchase biotech Biohaven Pharmaceuticals for $11.6bn, which works out to around $148.50 per share in cash. This is a 78% premium to its closing price the day before. ?

Founded in 2013, Biohaven is a clinical-stage biopharmaceutical company and a leader in the biotech industry. Most known for its migraine treatment drug Nurtec ODT, the business is on track to expand its product offering with an expected 2nd quarter acceptance of its intranasal spray and oral soft gel. Biohaven also has a portfolio of five pre-clinical calcitonin gene-related peptide (CGRP) programs that Pfizer is well-positioned to develop further given its industry-leading scale and capabilities.

This deal comes after a collaboration between the two companies to commercialise its rimegepant and zavegepant drugs outside?of the U.S., during which Pfizer invested?$350 million?to acquire 2.6% of Biohaven’s common stock at?$173?per share.

The deal is expected to close by early 2023, following which Biohaven will operate under the new name New Biohaven led by Vlad Coric, Biohaven’s current Chairman and CEO. Existing shareholders of the company will receive 0.5 of a share of New Biohaven for each share of Biohaven owned, during which the new business will be capitalized with?$275 million?of cash. Such an arrangement is typical of a spin-off transaction, which has to precede Pfizer’s acquisition.

The acquirer’s financial advisor was J.P. Morgan while Centerview Partners acted as Biohaven’s financial advisor. For legal, Ropes & Gray LLP advised Pfizer and Sullivan & Cromwell LLP advised Biohaven. “Pfizer’s capabilities will accelerate our mission to deliver our migraine medicines to even more patients, while the new R&D company is well positioned to bring value to patients and shareholders by focusing on our innovative pipeline for neurological and other disorders. We believe this transaction represents significant future value creation for patients and our collective shareholders”, says Vlad.?