Pfizer grabbed a stake in Biohaven Pharmaceuticals last fall when it partnered with the company on the commercialization of oral migraine drug Nurtec. Now the pharmaceutical giant is buying the rest of the neuroscience drugmaker for $11.6 billion.

Besides Nurtec, the deal brings to Pfizer the nasal spray migraine drug candidate zavegepant, which is on track to a submission with the FDA, as well as five preclinical assets that address the same pain target. Meanwhile, Biohaven’s remaining assets will be spun off as a new publicly traded company led by current Biohaven management.

According to terms of the deal, Pfizer will pay $148.50 cash for each share of Biohaven that it does not already own. That price is a 78.6% premium to Biohaven’s closing stock price on Monday, and a 33% premium to the stock’s average selling price over the three months before the agreement was announced Tuesday. Pfizer will also get a stake in the company formed from Biohaven’s other assets. Biohaven shareholders, including Pfizer, will receive 0.5 of a share in this new company for each Biohaven share that they currently own.

The centerpiece of the deal is Nurtec, a drug that belongs to a new class of migraine medicines that target calcitonin gene-related peptide (CGRP), a protein whose levels rise with the onset of migraine attacks. The first wave of CGRP-blocking drugs hit the market in 2018. Those antibody drugs developed and commercialized by Amgen, Eli Lilly, and Teva Pharmaceutical are injectable medicines.

The FDA approved Biohaven’s CGRP inhibitor for treating acute migraine pain in 2020. Last year, Nurtec added a second FDA approval for migraine prevention. Though Nurtec trailed its CGRP rivals in reaching the market of an estimated 1 billion migraine sufferers globally, Biohaven positioned its drug as a faster-acting and more patient friendly product. As a small molecule, Nurtec can be made into an oral drug that’s more convenient for patients than an injection. Biohaven formulated Nurtec as a tablet that dissolves quickly in the mouth without the need for water, providing a faster-acting therapeutic effect. Biohaven’s intranasal CGRP-inhibitor, zavegepant, was also developed with speed in mind.

Nurtec is not yet a blockbuster seller but it’s on track to become one. For 2021, Biohaven reported $462.5 million in sales for the drug, a more than 600% increase over 2020 sales. In first quarter 2022 financial results reported Tuesday, Biohaven said that the drug generated $123.6 million in revenue, a 121% increase compared to the same period in 2021. The drug has topped 2 million prescriptions and has achieved broader insurance coverage that the company said now reaches 96% of commercial covered lives, which represents about 263 million people.

Pfizer grabbed on to Nurtec’s rise last November, inking a deal for rights to sell the drug globally, with the exception of the U.S., where Biohaven retained rights. That deal also included rights to zavegepant outside of the U.S. That deal paid off when Nurtec won European marketing authorizations in late April for both acute migraine and migraine prevention (it will be marketed in Europe under the name Vydura).

Speaking on a conference call Tuesday, Aamir Malik, Pfizer’s chief business innovation officer, said that when the initial deal was struck, the pharma giant was excited about the commercialization prospects for both Nurtec and zavegepant outside of the U.S. In the months since, Malik said Pfizer learned more about both drugs and concluded it would be able to leverage its commercialization capabilities in the U.S. as well.

The new learnings included Phase 3 data for zavegepant. In preliminary results posted last December, Biohaven said the drug started to take effect in patients as soon as 15 minutes after dosing. Biohaven CEO Vlad Coric said on the conference call that zavegepant will provide another treatment option that complements Nurtec. Though patients prefer oral over intranasal administration, nasal dosing becomes important for faster treatment of acute migraine when an attack unexpectedly hits.

“We’ve thought of it as the EpiPen of migraine,” Coric said, referring to the epinephrine injection devices that people carry to quickly address asthma and allergy attacks.

Pfizer exited neuroscience R&D in 2018. The Biohaven assets that are coming to the pharma giant will be housed in the internal medicine part of the drug portfolio, which includes cardiometabolic medicines and women’s health products. Angela Hwang, group president of the Pfizer Biopharmaceuticals Group, said that of the estimated 40 million U.S. migraine sufferers, one in five of them are women. She added that Pfizer’s capabilities will expand the reach of Nurtec to 70,000 more primary care physicians and OB-GYN specialists.

Biohaven plans an FDA submission for zavegepant in acute migraine later in the current quarter. Nurtec could also bring additional commercialization opportunities. Biohaven has filed paperwork with the FDA to begin clinical trials evaluating the tablet as a treatment for chronic rhinosinusitis and temporomandibular disorder, a disorder of the jaw muscles and nerves that leads to chronic facial pain. Meanwhile, zavegepant is in clinical testing for additional indications that include migraine prevention and asthma.

The new Biohaven will start out with $275 million in cash. Its pipeline includes troriluzole, which has reached pivotal testing in obsessive compulsive disorder and spinocerebellar ataxia, and verdiperstat, which is in Phase 3 testing in amyotrophic lateral sclerosis. New Biohaven will also receive tiered royalties from Pfizer on any annual net sales of Nurtec and zavegepant in the U.S. in excess of $5.25 billion. Pfizer projects that the incoming migraine assets could reach $6 billion in peak annual sales. In a research note, analysts at William Blair wrote that the acquisition is a good deal for both Pfizer and Biohaven.

“We view today’s news of Pfizer’s proposed acquisition of Biohaven and spin-off of the non-CGRP assets into New Biohaven as clear validation of the value of Nurtec ODT, which has become a leader in the migraine space, and the broader CGRP portfolio in the treatment of migraine,” they said. “We believe the scale of Pfizer’s commercial capabilities will enable the company to realize more value from the asset, while the spin-off will allow the Biohaven team to continue developing innovative therapies in a more R&D-focused company.

In addition to the cash that Pfizer is paying to acquire Biohaven, the pharma giant will make additional payments to settle that company’s debt and for the redemption of all of its preferred stock. The boards of directors of both companies have unanimously approved the deal, which still needs the approvals of regulators and Biohaven shareholders. The companies expect to complete the transaction in early 2023.

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