Business context and reporting period
Biohaven Ltd. filed its first annual Form 10-K as an independent, publicly traded clinical-stage biopharmaceutical company for the fiscal year ended December 31, 2022. The separation from Biohaven Pharmaceutical Holding Company Ltd. was completed on October 3, 2022; results before that date are historical combined results and may not reflect the costs or performance of a standalone company. Biohaven develops therapies primarily for neurological and neuropsychiatric diseases and has no approved products or product-sales revenue.
Financial and operating metrics
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue from product sales | $0 | $0 |
| Research and development expense | $437.1 million | $181.5 million |
| General and administrative expense | $130.9 million | $37.4 million |
| Total operating expense / operating loss | $567.9 million | $218.9 million |
| Net loss | $570.3 million | $213.8 million |
| Basic and diluted loss per share | $12.75 | $5.43 |
| Net cash used in operating activities | $297.7 million | $145.8 million |
At December 31, 2022, cash and cash equivalents were $204.9 million and marketable securities were $260.5 million, or $465.3 million combined; restricted cash of $37.7 million was additional. Current assets were $587.0 million and current liabilities were $90.0 million. The filing reports no Biohaven debt balance; the Former Parent’s Sixth Street facility was repaid in full at the separation and was not reflected as Biohaven debt. Management expected existing cash, cash equivalents and marketable securities to fund planned expenses and commitments for at least 12 months from the filing date. No operating margin is meaningful because the company had no product revenue and incurred operating losses.
Cash flows included $304.8 million used in investing activities, mainly purchases of marketable securities, the Kv7 asset acquisition and equipment; and $767.6 million provided by financing activities, including $282.8 million net proceeds from the October share offering and transfers from the Former Parent. The company had $61.0 million of specified lease and non-cancellable research commitments, plus approximately $18.8 million of variable, milestone-dependent research commitments not included in that total. Additional contingent licensing milestones and royalties were not quantified as fixed obligations.
Material changes versus comparable periods
- Net loss increased by $356.5 million year over year, while R&D expense rose $255.6 million and G&A expense rose $93.4 million.
- R&D costs included $93.7 million expensed for the acquired Kv7 in-process R&D asset and a $25.0 million Kv7 regulatory milestone. Personnel-related costs also increased, including substantial share-based compensation.
- Total non-cash share-based compensation was $193.6 million, including $101.4 million related to acceleration of Former Parent awards upon separation.
- Other expense included a $10.0 million impairment of the Artizan preferred-stock investment. Biohaven cited Artizan’s funding difficulties; the company’s Parkinson’s disease program was halted after Artizan cut substantially all staff.
- Biohaven completed its separation and raised $282.8 million net in an October 2022 public offering. The company’s common shares began NYSE trading in October.
Outlook, commentary, risks and unusual items
- Management expects continued substantial operating losses and rising development costs and expects to need additional capital before reaching profitability. Funding needs depend on trial progress, regulatory requirements, licensing obligations and commercialization plans; future financing is not committed.
- Near-term development plans included completing enrollment in two Phase 3 troriluzole OCD trials in 2023; advancing taldefgrobep alfa in a Phase 3 SMA trial; and planned 2023 studies or filings for BHV-7000, BHV-8000, BHV-2100 and BHV-1300. These are forward-looking plans, not assured outcomes.
- Troriluzole’s Phase 3 SCA trial missed its primary endpoint in the overall population (p=0.76). Post-hoc SCA3 subgroup results were suggestive, but not confirmatory; management planned to consult regulators in the first half of 2023 and had not decided whether to seek approval or conduct further studies.
- Troriluzole’s earlier Phase 2/3 OCD study did not meet its primary endpoint at week 12. Two subsequent Phase 3 trials were ongoing, with enrollment expected to finish in 2023.
- Verdiperstat failed to differentiate from placebo on key measures in the HEALEY ALS trial; Biohaven said it did not plan further ALS trials at that time. Earlier MSA trial results were also negative.
- Key risks include clinical and regulatory failure or delay, dependence on third-party manufacturers and trial operators, need for additional financing, competition, intellectual-property and licensing exposure, reimbursement and pricing pressure, and higher standalone-company costs. The company also disclosed credit risk from deposits and investments; it reported no relationship with Silicon Valley Bank or Signature Bank.
- In March 2023, after year-end, Biohaven licensed the brain-penetrant TYK2/JAK1 program, now BHV-8000. The agreement includes an initial cash payment and shares of approximately $10 million each, plus potential milestones of up to $950 million and tiered royalties. These are contingent future amounts, not 2022 expenses or debt.
Important facts for investors to verify
- Current cash runway against actual trial spending, milestone obligations and the stated expectation of at least 12 months of funding.
- Final OCD Phase 3 enrollment and results, and whether regulators consider the SCA3 post-hoc findings sufficient for any filing.
- Progress, costs and potential milestones for the SMA, Kv7 and newly licensed BHV-8000 programs.
- Consequences of the Artizan impairment and whether its remaining programs have viable funding and development paths.
- Standalone operating costs, share-based compensation and potential dilution from equity awards or future financing.