Before market open on May 10, Arctic Aurora LifeScience and Arctic Aurora Biotech Select portfolio holding Biohaven Pharmaceuticals announced that the company had agreed to be acquired by Pfizer in an all-cash transaction of approximately USD 11.6 billion*. Compared to previous close, the deal represents a 79% premium to Biohaven shareholders.

Little more than two years ago Biohaven received FDA approval for its migraine drug Nurtec. The treatment belongs to a new drug class known as CGRP inhibitors that have redrawn the migraine treatment landscape. CGRP is a protein fragment that plays several roles is the body, including blood-vessel dilation in the brain. Elevated CGRP levels has been found to correlate with the occurrence of migraine and several companies have developed drugs that limits the negative effects of CGRP. But while most drugs in the class requires injections or intravenous infusion, Nurtec is taken as an oral tablet.

In connection with the company’s latest earnings report, Biohaven expects 2022 Nurtec sales of roughly USD 800 to 900 million. In addition, Biohaven has developed a nasal delivery version of Nurtec, designed to bring quicker symptom relief to migraine sufferers, which is currently under regulatory review for market approval. In 2021, Pfizer and Biohaven entered a collaboration agreement for the ex-US commercialization of Nurtec.

The deal comes on the back of sliding small/mid cap biotech stock prices, lately fuelled by dwindling overall stock market performance. However, as the value of attractive biotech companies have come down, attractiveness from large pharma players is expected to increase. Pfizer and its peers are sitting on large cash holdings and a continuous need to replenish product portfolios. The Biohaven deal may therefore only signal the beginning of increased M&A activity in the industry. Biohaven is the 16th company to be acquired in the Arctic Aurora portfolios since the inception of the LifeScience fund in 2016.

*In addition, Pfizer will also settle Biohaven’s third party debt and redeem preferred stock, amounting to a total consideration of approximately USD 12.8 billion by Morgan Stanley estimates.