Glaxo should consider purchasing a
Drug advisory group Evaluate thinks GlaxoSmithKline PLC (GSK, Financial) should consider running a run at Biohaven Pharmaceutical Holding Company Ltd. (BHVN, Financial) after the latter recorded exceptional third-quarter sales of its oral migraine treatment, Nurtec ODT.
Evaluate believes the addition of Biohaven would not only help remove activist investor Elliott Management from Glaxo’s back, but would give the British pharmaceutical giant a treatment to go along with its migraine drug Imitrex.
It sounds like a good idea, but there seems to be a big problem. Biohaven, with a market cap approaching $ 9 billion, is twice as expensive as it was just six months ago, currently trading at around $ 135.
Glaxo has the resources to close the deal, but the question is whether the potential payoff would be worth it. Nurtec ODT’s net present value, as calculated by Evaluate Omnium, is $ 3 billion. Still, the company has not shied away from making questionable acquisitions, most recently the Tesaro buyout.
Nurtec ODT is the only drug approved by the Food and Drug Administration for the treatment and prevention of migraine headaches. Sales of the drug again exceeded expectations in the third quarter, reaching $ 136 million and bringing total revenue to $ 336 million since the drug’s launch in March 2020, according to the company. Biohaven claims doctors have written over a million prescriptions for the drug.
Revenue exceeded even some of Wall Street analysts’ most optimistic forecasts. Piper Sandler had increased its expected revenue to $ 122 million, while Mizuho Securities had expected revenue of $ 110 million.
Nurtec ODT is now the market leader in new oral migraine medications with more than 60% of brand new prescriptions in its category, according to Biohaven. It first gained US approval as an acute treatment in February 2020 and competes with AbbVie Inc. (ABBV, financier) Ubrelvy and Eli Lilly and Co. (THERE IS, Financial) Lilly’s Reyvow for this use.
Earlier this year, Biohaven received approval to sell Nurtec ODT as a preventative treatment. The other drugs for this indication are all injectables owned by Eli Lilly, Amgen Inc. (AMGN, financial) and Teva (SUITS YOU, Financial). The huge market shares of these companies are vulnerable to Biohaven treatment as it can be taken orally much easier.
A migraine is a headache that can cause a severe throbbing pain or a throbbing sensation, usually on one side of the head, according to the Mayo Clinic. It is often accompanied by nausea, vomiting, and extreme sensitivity to light and sound. Migraine attacks can last for hours or even days, and the pain can be so severe that it interferes with daily activities.
Almost one in four American households includes someone with migraine, reports the Migraine Research Foundation. About 12% of the population – including children – suffer from migraines. About 18% of American women, 6% of men, and 10% of children suffer from migraines. Migraines are more common between the ages of 18 and 44.
The ubiquity of migraine headaches translates into a great business opportunity. 360 Research reports that the “Acute Migraine Drugs Market” will grow at a compound annual rate of 7.3% in terms of revenue over the next five years, with the global market reaching nearly $ 3 billion d ‘by 2026.
Other companies competing in the global migraine market include Pfizer Inc. (PFE, Financial), Novartis (NVS, Financial), Sun Pharmaceutical Industries Ltd. (NSE: SUNPHARMA, Financial), Endo International (ENDP, Financial), Merck & Co. Inc. (MRK) and Johnson & Johnson (JNJ, Financial).