Pfizer has agreed to buy US biotech Biohaven Pharmaceuticals for $11.6bn, striking its biggest deal in more than five years as the pharma company bolsters its pipeline of drugs.
The New York-based company said on Tuesday that it will pay $148.5 per share in cash for Biohaven, a 78 per cent premium to the biotech’s closing price on Monday.
With record revenues linked to the success of its Covid-19 vaccine and antiviral pill forecast to fade, Pfizer had been hunting for acquisitions to sustain its growth. The deal is Pfizer’s largest since its 2016 purchase of Medivation for $14.3bn.
Analysts have expected a dealmaking boom after a biotech sell-off earlier this year hit valuations, creating opportunities for Big Pharma. A number of large pharmaceuticals groups are looking for ways to replenish their pipelines before they lose exclusivity on blockbuster drugs.
Biohaven, which was founded in 2013, specialises in drugs that target neurological diseases and rare disorders. Its best-known drug is Nurtec ODT, which has been approved for both acute treatment and prevention of migraine in adults. It is also developing an intranasal migraine therapy, zavegepant.
The Connecticut-based company stands to benefit from the growing market for migraine medicines as a new generation of drugs proves more effective.
Evan Seigerman, analyst at BMO Capital Markets, said the acquisition was a good fit for Pfizer and provided potential cost synergies.
“Nurtec checked five of six key criteria for Pfizer in picking an asset to acquire, including: high complement to the portfolio, high level of clinical de-risking, high commercial potential, low infrastructure requirements, and low FTC [antitrust] risk,” he said.
However, Seigerman said Pfizer investors were likely to push for more deals and that the company still had had almost $200bn in firepower.
Nurtec could generate $2bn in global sales by 2026 and would retain intellectual protection to at least 2033, according to consensus estimates by Evaluate Pharma.
“We believe Pfizer is uniquely positioned to help the portfolio [Biohaven] reach its full potential given our leading scale and capabilities,” said Nick Lagunowich, head of internal medicine at Pfizer.
As part of the deal, shareholders in the biotech will also receive 0.5 of a share in New Biohaven, a new publicly traded company that will be established, for each Biohaven share they already own.
New Biohaven will have the right to receive certain royalties once annual net sales of two of Biohaven’s key drugs, rimegepant and zavegepant, surpass $5.25bn.
Pfizer invested $350mn in Biohaven last year, acquiring 2.6 per cent of its shares for $173 each.
Shares in Biohaven surged just over 70 per cent in pre-market trading on Tuesday.
As well as proceeds from its Covid products, Pfizer has also benefited from the spin-off of its Upjohn generics business, which combined with Mylan to form Viatris in late 2020. Pfizer will also have the opportunity to sell out of its consumer health joint venture with GlaxoSmithKline when it lists in London as Haleon this summer.
Pfizer spent $6.7bn on Arena Pharmaceuticals in December, lured by its medicines for immune-inflammatory diseases, and paid $2.3bn in August last year for Trillium Therapeutics as it targeted treatments in blood cancers.
JPMorgan and law firm Ropes & Gray advised Pfizer, while Centerview Partners and law firm Sullivan & Cromwell advised Biohaven.
This article has been amended to clarify the price Pfizer is paying for Biohaven