Cash-rich Pfizer to pay $11.6 billion for Biohaven in biggest deal since 2016

Vlad Coric, CEO of Biohaven Pharmaceutical

Source: CNBC

Pfizer is paying $11.6 billion to buy migraine pill maker Biohaven Pharmaceutical, marking the cash-rich drugmaker’s biggest deal since 2016 to bolster its portfolio before patent losses on some cancer drugs.

The deal, announced Tuesday, will give Pfizer access to Biohaven-approved rimegepant, a potential blockbuster in a class of migraine treatments known as calcitonin gene-related peptide (CGRP) inhibitors.

With about $32 billion in cash on hand after its success with Covid-19 drugs, Pfizer has been looking to add treatments as patents for its best-selling drugs, such as the soon-to-expire blood thinner Eliquis.

The company also expects sales of its Covid-19 vaccines to fall from last year’s highs.

“Investors will like this deal. Given Pfizer’s strong balance sheet, this remains a small acquisition and we would expect more such deals,” Wells Fargo analyst Mohit Bansal said in a note.

The Biohaven deal is the largest since Pfizer’s purchase of cancer drugmaker Medivation for $14 billion in 2016.

Pfizer will acquire all Biohaven shares it does not already own for $148.50 per share in cash, a 78.6% premium over the latest closing price. It had acquired a 2.6% stake in Biohaven in November.

Biohaven shares were up 70.1% at $141.39 before the bell, while Pfizer was flat at $48.60.

With this deal, Pfizer will compete in a crowded market for migraine treatments from other big drugmakers like Eli Lilly.

Biohaven’s rimegepant, sold as Nurtec ODT in the United States, is approved for use as a treatment and prevention of migraines and is expected to generate sales of more than $4 billion by 2030. It generated sales of $462.5 million in 2021.

Biohaven is also developing another CGRP inhibitor and is testing two non-CGRP drugs in late-stage studies.

After the deal closes, Biohaven shareholders, including Pfizer, will get 0.5 of a share of a new publicly traded company that will retain Biohaven’s non-CGRP treatments.

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