Biohaven Pharmaceutical inked a pair of deals Friday to outfit its pipeline with several new drugs, but BHVN stock plummeted on greater-than-expected quarterly losses.
The first deal has Biohaven paying $100 million in cash and stock to acquire Channel Biosciences, a subsidiary of Knopp Biosciences. The deal bolsters Biohaven's neurosciences division. Channel's most advanced drug is an experimental epilepsy treatment.
Biohaven also licensed a potential spinal muscular atrophy drug from Bristol Myers Squibb.
But the company's fourth-quarter loss of $2.32 per share missed forecasts and BHVN stock fell. On today's stock market, shares plunged 8.9% to 121.94.
BHVN Stock: Promising Deals?
Piper Sandler analyst Christopher Raymond called the quarterly report "somewhat anticlimactic." Biohaven already preannounced revenue. So, $190 million in sales of its migraine drug, Nurtec, wasn't a surprise. But losses were greater than BHVN stock analysts' call for $1.94 per share.
Still, the deals to acquire Channel and license a drug from Bristol Myers are promising, he said.
"The two deals announced today add significant pipeline optionality at a reasonable price, in a development space that we see as right in Biohaven's wheelhouse," Raymond said in a report to clients. He kept his overweight rating.
He noted wider-than-expected losses for the quarter were due to greater-than-expected operating expenses. But research and development costs remain in line.
"However, it's the revenue number that matters most for this name and, on that note, little surprise as Nurtec revenue — having already been prereleased — was $190 million, up 40% quarter over quarter," he said.
Hand-Wringing Over Transactions
Raymond called for some "hand-wringing" over the two deals. But he kept his 170 price target on BHVN stock.
Channel's pipeline focuses on drugs that modulate a key channel in neurons. Biohaven is planning to begin testing Channel's lead drug in patients with focal epilepsy this year. In addition to the upfront payment, Biohaven has agreed to milestone payments up to about $1.14 billion.
The licensing deal with Bristol Myers is for a potential spinal muscular atrophy treatment expected to begin human testing this year. The drug aims to block a protein that can limit muscle growth.
Piper Sandler's Raymond applauded Biohaven's "strategy to continue building out a neurology pipeline that adds optionality and value to its migraine franchise."
BHVN stock is consolidating with a buy point at 151.61, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
