Biohaven .(BHVN) - 2023 Q3 - Quarterly Report

Part I Part I: Financial Information Item 1: Condensed Consolidated Financial Statements (Unaudited) Biohaven's unaudited financial statements for the period ended September 30, 2023, detail a net loss of $263.4 million and total assets of $382.7 million Condensed Consolidated Balance Sheets Total assets decreased to $382.7 million as of September 30, 2023, primarily due to reduced cash and marketable securities Condensed Consolidated Balance Sheet Data (in thousands) | Account | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $111,697 | $204,877 | | Marketable securities | $128,899 | $260,464 | | Total current assets | $310,570 | $586,968 | | Total assets | $382,736 | $661,783 | | Liabilities & Equity | | | | Total current liabilities | $62,177 | $90,021 | | Total liabilities | $92,730 | $123,012 | | Total shareholders' equity | $290,006 | $538,771 | | Total liabilities and shareholders' equity | $382,736 | $661,783 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss decreased to $263.4 million for the nine months ended September 30, 2023, driven by lower R&D and G&A expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Research and development | $238,468 | $300,028 | | General and administrative | $43,872 | $54,492 | | Total operating expenses | $282,340 | $354,520 | | Loss from operations | ($282,340) | ($354,520) | | Net loss | ($263,412) | ($369,172) | | Net loss per share — basic and diluted | ($3.86) | ($9.38) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $216.8 million for the nine months ended September 30, 2023, with a net decrease in cash of $116.6 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($216,844) | ($222,282) | | Net cash provided by (used in) investing activities | $133,744 | ($40,774) | | Net cash (used in) provided by financing activities | ($33,327) | $237,417 | | Net decrease in cash, cash equivalents, and restricted cash | ($116,614) | ($25,639) | | Cash, cash equivalents, and restricted cash at end of period | $125,990 | $51,418 | Notes to Condensed Consolidated Financial Statements Notes detail the spin-off, accounting policies, acquisitions, equity changes, and numerous license agreements with potential future milestone payments - The company became an independent, publicly traded entity on October 3, 2022, following a spin-off from its Former Parent, which was acquired by Pfizer[79][80][101] - In April 2022, the company acquired the Kv7 channel targeting platform from Knopp Biosciences for an upfront payment of $35.0 million in cash and approximately $58.7 million in common shares, with potential future milestone payments[157][177] - The company has numerous license agreements with potential future milestone payments totaling approximately $1.94 billion across developmental ($123.8 million), regulatory ($547.4 million), and commercial ($1.27 billion) stages[188] - In March 2023, Biohaven entered into an exclusive license agreement with Hangzhou Highlightll for a brain-penetrant dual TYK2/JAK1 inhibitor program, with upfront consideration of $10.0 million in cash and $10.0 million in common shares, pending post-closing activities[24][250] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, pipeline progress, and liquidity, highlighting decreased expenses and the upcoming change in filer status Overview and Pipeline Biohaven is advancing a diverse pipeline in neuroscience and rare diseases, with three programs currently in Phase 3 clinical trials - The company is advancing a broad pipeline with key platforms in Kv7 channel modulation, glutamate modulation, myostatin inhibition, and TYK2/JAK1 inhibition[61][299] Key Clinical-Stage Milestones | Drug Name / Platform | Indication(s) | 2H 2023 Milestone | 2024 Milestone | | :--- | :--- | :--- | :--- | | BHV-7000 (Kv7) | Focal Epilepsy | Initiate Phase 3 | - | | | Bipolar disorder | - | Initiate Phase 3 | | BHV-7010 (Kv7) | Epilepsy & mood disorders | - | Submit IND | | BHV-8000 (TYK2/JAK1) | Neuroinflammatory Disorders | - | Initiate Phase 2/3 (Parkinson's) | | Troriluzole | OCD | - | Complete Enrollment | | Taldefgrobep Alfa | SMA | Completed Enrollment | - | - An NDA for troriluzole in Spinocerebellar Ataxia Type 3 (SCA3) was submitted to the FDA but was not accepted for review; a Marketing Authorization Application (MAA) is currently under review by the EMA[285] - Enrollment was completed in September 2023 for the Phase 3 trial of taldefgrobep alfa in Spinal Muscular Atrophy (SMA)[307] Results of Operations Operating expenses decreased for the nine months ended September 30, 2023, primarily due to lower R&D and G&A costs Comparison of Nine Months Ended Sep 30, 2023 and 2022 (in thousands) | Item | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $238,468 | $300,028 | ($61,560) | | General and administrative | $43,872 | $54,492 | ($10,620) | | Loss from operations | ($282,340) | ($354,520) | $72,180 | | Net loss | ($263,412) | ($369,172) | $105,760 | - The decrease in R&D expenses for the nine-month period was primarily due to a one-time $93.7 million expense for the Kv7 Platform Acquisition and a $25.0 million milestone payment in 2022, which did not recur in 2023[363] - The income tax provision decreased significantly, resulting in a benefit for 2023, due to new IRS guidance on R&D expenditure deductions[283][366] Liquidity and Capital Resources The company maintains strong liquidity with $111.7 million in cash and expects current capital to fund operations for over one year - As of September 30, 2023, the company had cash and cash equivalents of $111.7 million and marketable securities of $128.9 million[392] - In October 2023, the company closed a public offering of common shares, raising net proceeds of approximately $242.4 million for general corporate purposes[1][183] - The company also entered an 'at-the-market' equity distribution agreement in October 2023, allowing for the sale of up to $150.0 million in common shares[184][404] - Management expects existing cash, cash equivalents, and marketable securities to be sufficient to fund operating expenses and other cash requirements for more than one year[2][105] - The company will lose its 'emerging growth company' and 'smaller reporting company' status effective December 31, 2023, which will increase compliance costs and disclosure requirements[410][435] Item 3: Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure, including foreign currency, interest rate, and credit risk, is assessed as immaterial or well-managed - The company's exposure to foreign currency translation risk is currently immaterial[426][440] - Interest rate risk is present in the investment portfolio; a hypothetical 1.00% change in interest rates would impact the fair value by approximately $0.2 million[450] - Credit risk is managed by investing excess cash in highly-rated institutions and investment-grade securities, with policies to ensure diversification[428][443] Item 4: Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - Based on an evaluation as of September 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[431] - There were no material changes to the company's internal control over financial reporting during the three months ended September 30, 2023[432] Part II Part II: Other Information Item 1: Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any adverse pending actions - As of the report date, the company is not a party to any material legal proceedings and is not aware of any pending or threatened legal proceedings that could have a material adverse effect on its business[434] Item 1A: Risk Factors No material changes to risk factors, except for increased compliance costs due to the upcoming change in filer status - The company's risk factors have not materially changed from its 2022 Form 10-K, except for a new risk related to its change in filer status[435] - Effective December 31, 2023, the company will become a 'large accelerated filer' and lose its 'emerging growth company' status, leading to increased compliance costs and regulatory requirements[410][447] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities, use of proceeds, or issuer purchases were reported during this period - None[412] Item 6: Exhibits Exhibits filed with this report include CEO and CFO certifications and iXBRL data files for financial statements - The exhibits filed with this report include CEO and CFO certifications under the Sarbanes-Oxley Act and iXBRL formatted financial data[415]