Biohaven Pharmaceutical (BHVN)'s plans for a secondary offering of $300 million has given both shareholders and speculators a headache. For one, the offering will dilute the value of existing stockholders’ investment in the Connecticut-based migraine company. Second, it seems to take off the table the long-rumored likelihood that Biohaven might be acquired.
News of the offering has sent the company’s shares down about $20 in the past three weeks, to just more than $44. Prior to the decline, the stock had soared more than 80% from the beginning of the year to early June.
A sale of Biohaven seems to be on life support. After all, if it was in the offing, why would the company need to raise money? Yet, all hope is not lost. In fact, It could be that talks are underway and that the cash haul is just a bargaining chip, according to an article on Yahoo Finance.
Biohaven did need a cash infusion. At the end of the first quarter its bank account was at $217 million. With the offering, the company now has the financial resources to support the launch of its migraine treatment, rimegepant. The drug is expected to get Food and Drug Administration approval toward the end of this year or early next year.
Biohaven was one of the smaller takeover candidates cited by RBC Capital Markets, in a June 26 article in FiercePharma. It was joined on the list by Blueprint Medicines (BPMC) and The Medicines Company (MDCO). The most expensive of the three would be Blueprint, with a market cap of nearly $5 billion, followed by $3 billion Medicines and $2.3 billion Biohaven.
The two large-cap biopharmas at the top of the menu are Biogen (BIIB) and AstraZeneca (AZN). Biogen is eminently more digestible than it was in March, when the stock was whipsawed by news of the failure of its phase 3 Alzheimer’s drug, aducanumab. That setback made it clear that Biogen needed to make a big buy itself to recharge its pipeline or risk being bought itself. At this point, the odds are on the latter.
The most coveted acquisition target is unfamiliar to many: uniQure (QURE), the Dutch gene therapy company. Supposedly eyeing the firm are Novo Nordisk (NVO), Pfizer (PFE) and Sanofi (SNY). Had the suitors struck earlier they could have saved themselves a lot of money; uniQure shares are up a staggering 160% this year, to about $76.
Getting back to Biohaven, a change in ownerhsip seemed all but a formality in early April, when reliable sources indicated the company had hired an adviser to explore the possibility of a sale, with bidders already lined up. A month earlier, Biohaven made an acquisition of its own, paying $105 million to GW Pharmaceuticals (GWPH) for a priority review voucher to get rimegepant to market faster.
Will any, many or nearly all of these deals actually be consummated? While it’s said that “Where there’s smoke, there’s fire,” it’s worth keeping in mind that, “Oftentimes, rumors burn white hot only to fizzle as fast as they ignited.”
Stay tuned.
Disclosure: The author holds no positions in any of the companies mentioned.
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