Pfizer announced Tuesday its plan to acquire Biohaven Pharmaceutical Holdings for $11.6 billion. The acquisition is part of Pfizer's push to get into the migraine treatment segment through Biohaven's recently approved Nurtec ODT medication.
Following the announcement, Biohaven's share price surged by more than 70% to $141.31 per share. Pfizer said it expects to realize around $6 billion in annual sales with Biohaven's migraine treatment portfolio. Apart from its Nurtec ODT treatment, Biohaven also has six other migraine treatment drugs in development.
Last year, Nurtec brought in sales of around $462.5 million for Biohaven. The drug competed directly with other calcitonin gene-related peptide (CGRP) inhibitors from AbbVie, Eli Lilly, and Amgen. During its most recent earnings calls, Biohaven forecasted that its Nutec sales could top out at $900 million this year.
Pfizer previously said it was looking to purchase companies or medications that would help it achieve its goal of generating at least $25 billion in yearly revenues by the end of the decade. Thanks to a once-in-a-lifetime boom in revenue from COVID-19 vaccines and therapies, the company has managed to significantly increase its cash flow, allowing it to explore acquisitions.
Pfizer Chief Business Innovation Office Aamir Malik said the company plans to use its commercial capabilities to bring Biohaven's "breakthrough" migraine drug to more patients. Pfizer said it would increase Nurtec's sales team, allowing it to reach out to an additional 70,000 doctors in the United States. It is predicted that CGRP inhibitor medications will account for roughly 40% of migraine prescriptions in the future, up from around 5% presently.
Pfizer will pay $148.50 per share in cash for all of Biohaven's shares it does not already hold. The bid represents a 78.6% premium to Monday's closing price. Biohaven's non-migraine medications will be spun off into a separate publicly traded firm. For each share of Biohaven stock now held, owners will get 0.5 shares in the new spun-off entity.
Biohaven's stock had plummeted substantially in recent months, shedding 45% of its value since hitting a high of $151.26 in October. The stock's decline mirrored that of the rest of the biotech sector in recent months. The deal is Pfizer's largest acquisition since the $14 billion purchase of cancer pharmaceutical Medivation in 2016.
Analysts at Wells Fargo said most investors have welcomed the deal and expect Pfizer to announce more acquisitions given its strong balance sheet. Increased merger and acquisition activity in the sector has also been generally welcomed to restore investor sentiment.