Oberland Capital Management is pumping some new life into Biohaven, striking a unique investment deal worth up to $600 million as the biotech awaits a key FDA approval decision that could propel it back into the commercial arena.
The fresh funding comes in the form of a note purchase agreement, through which Oberland can buy up to $600 million of Biohaven’s senior secured notes (a type of corporate debt) split into specific tranches. The first portion of the investment, $250 million, is to be funded on or before April 30, while another $150 million is tied to the FDA’s potential approval of Biohaven’s spinocerebellar ataxia (SCA) prospect troriluzole. That latter tranche is an option exercisable by Biohaven and is "subject to the satisfaction of certain additional conditions," the company said in an April 28 press release.
Besides those two group of funds, up to $200 million could go toward “permitted” strategic acquisitions by Biohaven or related expenses, the company said. That final tranche would be contingent on a mutual agreement between the parties.
In exchange, Oberland is in line to realize a piece of troriluzole's long-term commercial potential. The investor is slated to receive a milestone payment upon potential regulatory approval of the drug plus tiered single-digit royalty payments on global net sales for up to 10 years from the investment closing date.
“This agreement with Oberland Capital provides us with the support and flexibility to continue advancing our pipeline as we make launch preparations in parallel, and we are excited to accelerate our planning efforts in earnest,” Biohaven Chief Financial Officer Matt Buten said in a company statement.
Biohaven's share price jumped about 10% on Monday in the wake of the deal.
It's been something of an uphill battle for Biohaven since it split off from its migraine franchise, which went to Pfizer as part of a $11.6 billion M&A deal back in 2022.
Troriluzole, a prodrug of older amyotrophic lateral sclerosis (ALS) treatment riluzole, is up for a second chance with the FDA after an analysis last year showed that the asset slowed progression of the ultrarare disease SCA. The regulator has accepted the company’s drug application and granted a priority review, so the agency's approval decision is expected in the third quarter of this year.
Even getting to the FDA’s desk represents a change of fate for Biohaven. The agency had initially refused to evaluate the drug in 2023, citing a failed phase 3 trial. Now, the company is already gearing up for a commercial launch within the year, it said in a March update.
Overseas, troriluzole’s future is more unclear as the biotech withdrew its bid for approval with the European Medicines Agency (EMA), the regulator’s Committee for Medicinal Products for Human Use recently revealed in its April meeting highlights.
European regulators listed two main concerns with troriluzole in SCA, namely centered on the drug’s efficacy data and its application status as a new, active substance considering its prodrug origin. The company’s ultimate withdrawal letter noted that it plans to generate additional data before submitting a new application, according to the EMA.
Prodrugs are inactive compounds that become active once metabolized by the body. In many cases, they're derivatives of older or existing medicines.
Still, the EMA application pull “comes as a surprise” considering the FDA’s application acceptance, William Blair analysts said in an April 25 note to clients. Biohaven's share price fell more than 12% on Friday in the wake of the news. Nonetheless, the William Blair analysts view the FDA as “likely to show more regulatory flexibility” compared to its European counterpart.
Beyond troriluzole, Biohaven’s pipeline is stuffed with prospects across its five key platforms that cover neuroscience, oncology, immunology and inflammation. The company boasts one of the “most diverse” pipelines among its peers, William Blair analysts noted.
However, recent setbacks have left a mark on the biotech's R&D efforts. For example, the company is leaning on impending major depressive disorder and epilepsy results for its BHV-7000 after hitting a wall in bipolar disorder with a failed 2/3 study earlier this year. Elsewhere, Biohaven's spinal muscular atrophy prospect taldefgrobep fell short in a phase 3 trial last year, but the company still planned to explore a possible regulatory path forward.