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Pfizer buys biotech group Biohaven for $11.6 billion

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Pfizer has agreed to buy US biotech Biohaven Pharmaceuticals for $11.6 billion, securing its biggest deal in more than five years as the pharmaceutical company bolsters its drug pipeline.

The New York-based company said Tuesday it would pay $148.5 per share in cash for Biohaven, a 78% premium to the biotech’s closing price on Monday.

With record revenues linked to the success of its Covid-19 vaccine and antiviral pill set to fade, Pfizer was looking for acquisitions to support its growth. The deal is Pfizer’s largest since its 2016 purchase of Medivation for $14.3 billion.

Analysts expect a deal boom after a biotech selloff earlier this year hit valuations, creating opportunities for Big Pharma. A number of big pharma companies are looking for ways to rebuild their pipelines before they lose exclusivity on blockbuster drugs.

Biohaven, founded in 2013, specializes in drugs targeting neurological diseases and rare diseases. Its best-known drug is Nurtec ODT, which has been approved for both the acute treatment and prevention of migraine in adults. She is also developing an intranasal migraine therapy, zavegepant.

The Connecticut-based company stands to benefit from the growth in the migraine drug market as a new generation of drugs proves to be more effective.

Evan Seigerman, analyst at BMO Capital Markets, said the acquisition was a good fit for Pfizer and offered potential cost synergies.

“Nurtec verified five of six key criteria for Pfizer when selecting an asset to acquire, including: high complement to portfolio, high level of clinical risk reduction, high market potential, low infrastructure requirements and a low FTC. [antitrust] risk,” he said.

However, Seigerman said Pfizer investors were likely to push for more deals and the company still had nearly $200 billion in firepower.

Nurtec could generate $2 billion in global sales by 2026 and retain intellectual protection until at least 2033, according to consensus estimates from Evaluate Pharma.

“We believe Pfizer is uniquely positioned to help the portfolio [Biohaven] reach its full potential given our scale and state-of-the-art capabilities,” said Nick Lagunowich, chief internal medicine officer at Pfizer.

As part of the deal, biotech shareholders will also receive 0.5 shares of New Biohaven, a new publicly traded company to be created, for every Biohaven share they already own.

New Biohaven will be entitled to receive certain royalties once annual net sales of two of Biohaven’s lead drugs, rimegepant and zavegepant, exceed $5.25 billion.

Pfizer invested $350 million in Biohaven last year, acquiring 2.6% of its shares for $173 each.

Shares of Biohaven jumped just over 70% in premarket trading on Tuesday.

In addition to proceeds from its Covid products, Pfizer also benefited from the spin-off of its generics business Upjohn, which partnered with Mylan to form Viatris in late 2020. Pfizer will also have the option to sell its consumer healthcare joint venture with GlaxoSmithKline when listing in London as Haleon this summer.

Pfizer spent $6.7 billion on Arena Pharmaceuticals in December, lured by its immune-inflammatory disease drugs, and paid $2.3 billion in August last year for Trillium Therapeutics, which targeted treatments against blood cancer.

JPMorgan and law firm Ropes & Gray advised Pfizer, while Centerview Partners and law firm Sullivan & Cromwell advised Biohaven.

This article has been amended to clarify the price Pfizer is paying for Biohaven

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