Biohaven Ltd. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Unaudited results; dollar amounts below are in millions unless stated otherwise. Biohaven is a clinical-stage biopharmaceutical company with no product-sales revenue. Comparisons with 2022 are affected by the company’s October 2022 spin-off: prior-period results include allocated costs and are not necessarily comparable to standalone operations.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| R&D expense | $79.5 | $177.1 | $143.0 | $247.2 |
| G&A expense | $14.5 | $20.0 | $28.8 | $39.7 |
| Operating loss | $(94.0) | $(197.1) | $(171.8) | $(286.9) |
| Net loss | $(90.3) | $(203.3) | $(160.8) | $(300.3) |
| Basic and diluted loss per share | $(1.32) | $(5.16) | $(2.36) | $(7.63) |
| Net cash used in operating activities | — | — | $(122.0) | $(126.7) |
- Operating performance: No revenue or meaningful operating margin was reported. Net other income was $5.8 million in Q2 and $14.1 million for the first half, driven principally by investment income and transition-service income from the Former Parent. First-half net investment income was $8.2 million; transition-service income was $5.6 million.
- Why losses narrowed: First-half R&D expense fell $104.2 million year over year, mainly because 2022 included a $93.7 million one-time Kv7 asset-acquisition charge and a $25.0 million milestone payment. Lower share-based compensation also reduced R&D and G&A. These reductions were partly offset by higher spending on advancing programs, including troriluzole and taldefgrobep alfa.
- Cash and investments: At June 30, cash and cash equivalents were $147.6 million and marketable securities were $187.5 million. Restricted cash was $54.3 million, including $40.4 million held for the Former Parent and payable to it. Cash, cash equivalents and marketable securities totaled $335.1 million, excluding restricted cash.
- Cash flows: First-half investing activities provided $75.2 million, largely reflecting net sales and maturities of marketable securities; financing activities provided $6.3 million. Cash, cash equivalents and restricted cash decreased $40.7 million during the period.
- Balance sheet and debt: Total assets were $506.7 million, total liabilities $119.5 million and shareholders’ equity $387.3 million. The filing reports no borrowings; long-term operating lease liabilities were $29.1 million. Current assets were $434.1 million versus current liabilities of $87.8 million.
- Runway: Management said existing cash, cash equivalents and marketable securities were expected to fund operating expenses, commitments and other cash requirements for at least one year after issuance of the statements, and its current forecast for more than one year. The company expects to need additional capital until profitable and warns it may need to reduce or delay programs if financing is unavailable.
Pipeline, outlook and material developments
- BHV-7000 (Kv7): The Phase 1 SAD/MAD study was completed in Q1; the company reported low CNS-related adverse events and no serious, severe or dose-limiting toxicities. In July, it reported preliminary low-dose EEG evidence of target engagement and said higher-dose analysis remained ongoing. Phase 2/3 studies in focal epilepsy and bipolar disorder were planned for the second half of 2023; trial designs were not finalized.
- Troriluzole: Biohaven submitted an NDA for SCA3 in May 2023, citing subgroup results, including a reported f-SARA treatment difference of -0.56 points at week 48 (p=0.045). In July, FDA informed the company it would not review the application because the overall study’s primary endpoint was not met. Biohaven planned to request a Type A meeting and intended to submit an EU marketing application in the second half of 2023. Two Phase 3 OCD trials remained ongoing; enrollment was expected to complete in 2023, although an earlier Phase 2/3 OCD study did not meet its primary endpoint.
- BHV-8000 (TYK2/JAK1): Phase 1 dosing began in May. In July, the company reported three single-dose cohorts completed, preliminary achievement of projected therapeutic concentrations and mild adverse events; it anticipated a Phase 2 study in Parkinson’s disease and potentially other neuroinflammatory diseases in 2024.
- Other programs: Taldefgrobep alfa Phase 3 SMA enrollment was expected to complete in the second half of 2023; the company planned a Phase 2 metabolic-disorders study. BHV-2100’s IND submission was expected in the second half of 2023. BHV-1300’s IND was expected in the second half of 2023 and Phase 2 studies in 2024. These are management plans, not guaranteed outcomes.
- Portfolio changes and obligations: The company terminated both Artizan agreements in June 2023 and relinquished associated option rights. License agreements carry potential future developmental, regulatory and commercial milestones of approximately $125.1 million, $547.4 million and $1,270.5 million, respectively, plus royalties. Separately, the Highlightll license requires $10 million cash and 721,136 shares, valued at approximately $10 million at signing, after specified post-closing activities; these remained incomplete at June 30.
Risks, contingencies and unusual items
- The company has recurring losses, no product-sales revenue and substantial continuing R&D needs. Management cautions that additional financing may not be available on acceptable terms and that equity financing could dilute shareholders.
- Clinical development and regulatory approval remain uncertain. The FDA’s July refusal to file the troriluzole NDA is a significant post-quarter development; the underlying Phase 3 SCA study missed its primary endpoint.
- Research commitments to CROs and CMOs exceeded $13.9 million for periods beyond one year, were variable and contingent on trial milestones, and were expected to be paid over the next two years if milestones were achieved. Significant additional license milestone and royalty obligations are contingent on future events.
- The company reported no material legal proceedings and no material changes to its previously disclosed risk factors other than the approaching loss of emerging-growth-company and smaller-reporting-company status. It expected to become a large accelerated filer effective December 31, 2023, increasing compliance costs and demands on management.
- Management concluded disclosure controls were effective as of June 30, 2023; no material change in internal control over financial reporting was reported during the quarter.
Key facts for investors to verify
- Cash runway assumptions, operating cash burn and the timing and terms of any future financing.
- FDA feedback and next steps for troriluzole after the refusal-to-file decision, including whether a Type A meeting changes the regulatory path.
- Execution and results of planned BHV-7000 epilepsy and bipolar studies, and completion of the EEG analysis.
- Enrollment, milestones and clinical results for taldefgrobep alfa, the OCD trials and other pipeline programs.
- Timing and accounting for Highlightll post-closing consideration, and potential future license milestones, royalties and research commitments.
- Comparability of 2022 results with standalone 2023 operations, given pre-spin cost allocations and unusually large 2022 acquisition and share-based-compensation expenses.