Biohaven Ltd. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited combined financial statements; Biohaven completed its spin-off and became independent on October 3, 2022. Historical results reflect allocations from the Former Parent and may not represent costs as a standalone company. Biohaven is a clinical-stage biopharmaceutical company and reported no product revenue.
Key financial metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $52.8m | $47.0m | $300.0m | $139.7m |
| General and administrative expense | $14.8m | $8.5m | $54.5m | $28.3m |
| Total operating expenses / operating loss | $67.6m | $55.5m | $354.5m | $168.0m |
| Net loss | $68.9m | $54.4m | $369.2m | $161.9m |
| Basic and diluted loss per share | $1.75 | $1.38 | $9.38 | $4.11 |
At September 30, cash was $50.7m; restricted cash was $0.8m. Total current assets were $80.6m, total current liabilities $28.4m, total assets $135.6m, and total liabilities $35.4m. The filing reports no debt on the combined balance sheet. Operating cash use was $222.3m for the first nine months, investing cash use was $40.8m, and financing cash inflow from the Former Parent was $237.4m; cash and restricted cash declined $25.6m. No meaningful revenue-based margin was reported.
Material changes versus prior period
- Q3 net loss increased $14.5m year over year; nine-month net loss increased $207.3m. Nine-month operating expenses rose $186.5m.
- Nine-month R&D included $93.7m for the acquired Kv7 in-process research and development asset, plus a $25.0m regulatory milestone payable to Knopp. The acquisition consideration also included $58.7m in shares; $35.0m was paid in cash.
- R&D growth also reflected higher personnel costs and spending on programs including BHV-7000 and BHV-2000. Lower verdiperstat spending partially offset increases.
- G&A increased, in part due to personnel, share-based compensation, and legal, accounting and professional costs related to Pfizer’s acquisition of the Former Parent and Biohaven’s spin-off.
- Cash used in operations rose $109.5m year over year. The prior-year period included a $5.3m gain from remeasurement of the existing Kleo investment, which did not recur.
Liquidity, outlook and risks
- After quarter-end, the Former Parent contributed cash that brought Biohaven’s balance to approximately $257.8m at the October 3 distribution. Biohaven then completed an October 25 public offering, including the underwriters’ full option, raising approximately $282.8m net. Management said available cash was expected to fund operating expenses and other cash requirements for at least one year after issuance of the statements.
- The Former Parent’s Sixth Street debt and related interest were excluded from Biohaven’s historical financial statements. Biohaven had been a joint and several co-obligor; the debt was repaid in full on October 3 by a Pfizer affiliate on behalf of the Former Parent, and related liens were released.
- Management expects significant losses and R&D spending to continue for the foreseeable future and expects to need additional capital until product revenue, if any, can support operations. Financing may dilute shareholders or impose restrictive terms; inability to raise funds could delay, reduce or terminate programs.
- Pipeline milestones described include BHV-7000 Phase 1 results expected in the first half of 2023 and potential pivotal epilepsy trials in the second half of 2023 if Phase 1 succeeds; enrollment in the Phase 3 OCD program was expected to complete in 2023. These are forward-looking expectations, not guarantees.
- Troriluzole’s Phase 3 SCA trial missed its primary endpoint in the overall population; subgroup analyses suggested a possible signal in SCA3, and the company planned regulatory discussions in the first half of 2023. Verdiperstat failed to differentiate from placebo on the primary and key secondary endpoints in the ALS trial; Biohaven said it had no current plans for further ALS trials while evaluating other indications.
- Potential obligations include substantial contingent development, regulatory and commercial milestones and royalties under license and acquisition agreements. The Cambridge lab and office lease entered into in October has disclosed future lease payments totaling $39.0m. Research commitments could reach approximately $19.8m, subject to trial activity and milestones.
- Management reported disclosure controls effective as of September 30, 2022, and no material change in internal control over financial reporting during the quarter. The company said risk factors had not materially changed from its registration statement, while directing investors to its subsequent S-1 for further risks.
Important facts for investors to verify
- Reconcile the post-spin share count and dilution: 35.8m distribution shares, equity awards settled after distribution, and 28.75m shares sold in the October offering; 68.2m shares were outstanding on November 7.
- Track cash burn against the post-quarter cash contribution and offering proceeds, including standalone-company costs and the timing of future financing needs.
- Assess clinical and regulatory updates for BHV-7000, the OCD Phase 3 trials, taldefgrobep alfa in SMA, and the post-hoc SCA3 findings for troriluzole.
- Review the implications of the negative verdiperstat ALS result and Biohaven’s decisions on the program’s future.
- Examine the terms, triggers and potential financial impact of acquisition and license milestones, royalties, research commitments, and the Cambridge lease.