Pfizer is Acquiring a Migraine Fixer for $11.6 Billion - The Daily Upside

With the pandemic giving way to a wave of stressful economic news, Covid vaccine maker Pfizer is turning to the business of eliminating headaches.

The biotech giant announced plans on Tuesday to buy migraine drugmaker Biohaven in an $11.6 billion all-cash deal. It’s the kind of mammoth transaction investors have been waiting for as Pfizer piled up mountains of cash on the back of sales of its highly lucrative jabs.

Fortune Favors the Sold

Pfizer’s pandemic fortunes are still rolling in. Driven by the global uptake of vaccines for children over five, as well as booster campaigns, the company bested Wall Street’s expectations and sold $13.2 billion in Covid vaccines and $1.5 billion worth of antiviral treatment Paxlovid in the first quarter.

But Pfizer still has to contend with the two banes of every pharma firm’s existence: R&D costs and patent expirations. Last week, the company lowered its earnings guidance for 2022, citing high research and development costs. Several key patents are due to expire in the next few years. Luckily, the pandemic windfall left Pfizer with $32 billion in cash on hand, and buying Biohaven could ease the pain:

• Biohaven’s Nurtec was the top prescribed migraine medicine in its class in America last year, earning $462 million in revenue. A glitzy ad campaign fronted by Khloé Kardashian helped, but the reality star also earned the FDA’s ire, in the form of a reprimand, for being a tad too effusive about the drug during an appearance on The View.
• Biohaven has a second migraine drug at the pre-approval stage with the FDA, as well as five preclinical drugs in the pipeline. That could help Pfizer replace the $20 billion in annual sales it could lose beginning in 2026 due to patent expirations on treatments, including anti-blood-clot medicine Eliquis and prostate-cancer drug Xtandi.

Cash to Burn: “Investors we have spoken with have said that they want Pfizer to be more aggressive on the M&A front and to use the cash they have made from COVID vaccine and oral antiviral sales to grow the company,” wrote Cantor Fitzgerald analyst Louise Chen in a note Tuesday. Biohaven would be Pfizer’s biggest deal since the summer of 2019.

Do-Over: Biohaven represents a rerun of sorts for Pfizer. Nurtec, as well as the drugs Pfizer has in development, are known as anti-CGRPs. Pfizer developed one, but sold the rights to it in 2012; in the meantime, rival Eli Lilly became a big player in the space. Now they get to butt heads over treating migraines.