Pfizer is starting to use its influx of COVID-19 cash by spending $11.6 billion to venture deeper into a new treatment zone.
The New York-based cancer vaccine and drug maker said on Tuesday it would use available cash to buy the remaining portion of migraine treatments developer Biohaven Pharmaceutical that it does not already own.
Pfizer will pay $148.50 in cash for each share of Biohaven, which makes Nurtec ODT for the treatment and prevention of migraine headaches and has a nasal spray in development.
Pfizer Inc. made more than $14 billion in sales in the recently completed first quarter from its COVID-19 Comirnaty vaccine and new pill treatment for the virus, Paxlovid.
Most of those sales came from Comirnaty, which also had nearly $37 billion in sales last year. But revenues from Comirnaty, which Pifzer developed with BioNTech, are expected to fade in the coming years. Pfizer will also face the loss of patent protection for some key products in its extensive portfolio over the next decade.
This includes Eliquis to prevent blood clots and strokes and the Prevnar 13 vaccine to prevent pneumonia and related bacterial diseases.
The company expects to have approximately $25 billion in sales by 2030 from new business developments.
The agreement announced on Tuesday is a step in this direction. Pfizer does not currently offer any treatment for migraine. US regulators approved Nurtec ODT – which stands for orally disintegrating tablet – to treat migraines in February 2020 and to prevent them about a year ago.
The drug is sold as Vydura in the European Union.
It grossed nearly $124 million in first-quarter sales. Biohaven expects $825 million to $900 million in product sales this year.
Pfizer plans to put its marketing muscle into the drug with potential launches in 70 countries.
Last November, Pfizer announced it would invest $350 million in Biohaven to help sell Nurtec ODT and the spray, zavegepant, outside the United States.
Pfizer said Tuesday the spray is on track for acceptance in the United States in the current quarter, and an oral gel version of it is also in development to prevent chronic migraines.
Pfizer executives told analysts they expect annual revenue from Nurtec ODT and spray to peak at more than $6 billion.
The pharmaceutical giant is an “ideal acquirer” of Biohaven’s portfolio in part because of its strong presence in primary care, its cash position and its need for new growth engines, said Dr Vamil Divan, analyst at Mizuho Securities USA, in a research note.
The deal for Biohaven also includes other potential treatments in the early stages of development.
Other elements of Biohaven’s late-stage development pipeline will go to a new publicly traded company that retains the Biohaven name.
The boards of Pfizer and Biohaven have approved the sale. Biohaven shareholders, who will receive an equity stake in the new company, and regulators have yet to approve it.
The deal is expected to close in early 2023.
Shares of New Haven, Connecticut-based Biohaven Pharmaceutical Holding Company Ltd. soared nearly 70% to $141.20 by midday.
Pfizer’s stock soared about 1% to $49.20 as broader stock indexes slid.
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The story has been corrected to show that Biohaven shareholders have not yet approved the deal.