Pfizer makes $11.6bn migraine bet

July 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2022 Issue

Pfizer Inc has entered into a definitive agreement to acquire Biohaven Pharmaceutical Holding Company in an all-cash deal worth $11.6bn, its biggest deal since the 2016 purchase of Medivation for $14.3bn.

Under the terms of the deal, Pfizer will acquire all outstanding shares of Biohaven not already owned by the company for $148.50 per share. The deal, which has been unanimously approved by the boards of the directors of both Biohaven and Pfizer, will also see Pfizer make payments at closing to settle Biohaven’s third-party debt and for the redemption of all outstanding shares of Biohaven’s redeemable preferred stock.

The $148.50 cash consideration represents a premium of approximately 33 percent to Biohaven’s volume weighted average selling price of $111.70 over the three months prior to the announcement of the transaction.

As a result of the deal, Pfizer will gain Biohaven’s already approved Nurtec ODT, which belongs to a class of migraine treatments called calcitonin gene-related peptide (CGRP) inhibitors. The company also has six other migraine drugs in development. Biohaven’s migraine drugs could exceed $6bn in annual sales at their peak, said Aamir Malik, chief business innovation officer at Pfizer, on a conference call announcing the deal. This would contribute to Pfizer’s existing plan to add $25bn in risk-adjusted revenues by 2030 through business development, Mr Malik noted.

Biohaven common shareholders, including Pfizer, will also receive 0.5 of a share of New Biohaven, a new publicly traded company that will retain Biohaven’s non-CGRP development stage pipeline compounds, per Biohaven common share. New Biohaven will retain Vlad Coric as its chief executive, alongside other executives. After the acquisition, New Biohaven will still be entitled to receive royalties tied to US sales of Nurtec and Zavegepant in excess of $5.25bn.

“Today’s announcement builds on our legacy of delivering breakthroughs for patients living with complex pain disorders and diseases that disproportionately impact women,” said Nick Lagunowich, global president of Pfizer Internal Medicine. “NURTEC ODT, which is already the No.1 prescribed migraine medicine in its class in the United States, coupled with Biohaven’s CGRP pipeline, offers hope for patients suffering from migraine worldwide.

“We believe Pfizer is uniquely positioned to help the portfolio reach its full potential given our leading scale and capabilities, including comprehensive field force engagement with Primary Care Physicians, specialists and health systems delivering the right information at the right time,” he added.

“We are excited to announce Pfizer’s proposed acquisition of Biohaven, recognizing the market leadership of NURTEC ODT, our breakthrough all in one migraine therapy, and the untapped potential of our CGRP franchise,” said Mr Coric. “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.”

The deal is subject to completion of the New Biohaven spin-off transaction and other customary closing conditions, including receipt of regulatory approvals and approval by Biohaven’s shareholders. The companies expect the transaction to close by early 2023.

In November 2021, the two companies agreed to collaborate on the commercialisation of the migraine drugs Rimegepant and Zavegepant outside the US, in connection with which Pfizer invested $350m to acquire 2.6 percent of Biohaven’s common stock at $173 per share. At the time of the deal, Pfizer promised up to $1.24bn in upfront and milestone payments for Nurtec’s ex-US rights.

The Biohaven deal marks a comeback for Pfizer in the neuroscience arena after a downsizing in 2018.

Pfizer has said it will fund the Biohaven transaction with existing cash. The company benefitted enormously from a once-in-a-lifetime surge in revenue from coronavirus (COVID-19) vaccines and therapeutics.

In December 2021, Pfizer spent $6.7bn on Arena Pharmaceuticals and paid $2.3bn in August last year for Trillium Therapeutics.

Richard Summerfield