Pfizer will buy migraine drugmaker Biohaven Pharmaceuticals for nearly $12 billion in a deal "that couldn't have come at a better time," according to one analyst. The news sent BHVN stock rocketing.
The takeover marries Biohaven's efforts in migraine treatment with Pfizer's presence in the primary care space, Wedbush analyst Laura Chico said in a report to clients. Biohaven's drug, Nurtec, blocks a peptide known as CGRP to treat and prevent migraines. Pfizer already owns the overseas rights to Nurtec.
Non-CGRP assets will be spun out into their own company called "New Biohaven."
"(The deal) couldn't have come at a better time," Chico said. "Given Pfizer's presence in the primary care space and existing neurology franchise, we see the CGRP portfolio fitting in nicely."
On today's stock market, BHVN stock rocketed 68.4% to 140. Pfizer stock rose 1.8% to 49.49.
BHVN Stock: Pfizer Pays Hefty Premium
Pfizer will pay $148.50 per share of BHVN stock and settle Biohaven's third-party debt. The terms value Biohaven stock at a 33% premium to the average volume-weighted price of 111.70 over the past three months. Investors will also receive half a share of the "New Biohaven."
Biohaven also announced its first-quarter report which included $124 million in Nurtec sales. That was well below analysts' call for $181 million, Wedbush's Chico said. But the company expects $825 million to $900 million in full-year sales which "implies an acceleration in growth" in late 2022.
Chico kept her outperform rating on BHVN stock.
The deal with Pfizer also includes experimental migraine drugs rimegepant and zavegepant as well as five preclinical CGRP assets.
"While takeout has long been rumored as a potential outcome, we see this deal making sense in both terms of the suitor and the timing," Chico went on to say. "We don't want to dismiss the possibility of a competing bid to emerge, however, the Pfizer bid appears fair and full."
Light First-Quarter Nurtec Sales
Mizuho Securities analyst Vamil Divan doesn't expect any other suitors to emerge.
"We believe other large players in the migraine space either already have acute migraine drugs in their portfolio, or are not in a position to do an acquisition of this size," he said in his note to clients. "We also do not see any major upcoming events that would likely impact the deal."
He has a buy rating on BHVN stock and holds a neutral rating on Pfizer shares.
Like Wedbush's Chico, Divan noted the first-quarter Nurtec sales number lagged expectations. But sales were likely snagged on first-quarter payer dynamics across the migraine space, also impacting AbbVie, he said.
Those dynamics "should normalize over the course of the full year and over the longer term," he said.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
