Pfizer Inc (NYSE:PFE) has agreed a US$11.6bn offer for Biohaven Pharmaceutical Holding Co (NYSE:BHVN), which has reignited talk that more mergers and acquisitions (M&A) could be around the corner in the biotech sector.
The takeover has been struck for US$148.5 of cash per share, a 78% premium to the last closing price.
It is the biggest deal for New York-based Pfizer since its 2016 purchase of Medivation (NASDAQ:MDVN) for $14.3bn.
It comes on the back of a highly profitable pandemic for the group, with its most recent quarter seeing sales of US$25.7bn, including a US$13.2bn contribution from its vaccine partnership with BioNTech.
The biotech sector has been sold off this year, extending losses from highs in spring 2021, along with other sectors, which analysts and sector watchers say could attract Big Pharma giants into swooping for bargains.
“Finally, we’re seeing Covid cash put to use on M&A in the sector,” said Ailsa Craig, co-manager of International Biotechnology Trust, which holds Biohaven as its seventh largest shareholding.
Craig and co-manager Marek Poszepczynski said in their recent results statement that current valuations “pose a compelling opportunity to tap exciting innovation at highly attractive prices – particularly within smaller players in the space, many of which are trading at a fraction of their valuations a year ago."
Biohaven is an attractive potential target for acquisition, the pair said, due to its best-in-class drug for migraines, Nurtec, which addresses a significant medical need in a large number of patients.
Pfizer has already partnered with Biohaven on Nurtec outside the United States.
Analysts at BMO Capital Markets (NYSE:BMO) said Pfizer shareholders will be pushing for the company to splash more cash as it has a close to US$200bn of cash in the bank.