Not a usual blog post, but on the heels of Biohaven (BHVN) rumored to be exploring a sale by Bloomberg (https://www.bloomberg.com/news/articles/2019-04-12/migraine-drug-developer-biohaven-is-said-to-explore-sale ), I took a look at the recent SEC filings.

On March 18, in conjunction with Biohaven purchasing a Priority Review Voucher from GW Pharma for rimegepant for $105m, they also entered into a financing agreement with RPI Finance Trust for $125m (amended to $200m on 4/5/2019). The interesting part of this agreement is a “Change of Control” clause, which is not necessarily unique in itself. However, the actual agreements seem to be relevant to the Bloomberg rumors.

“If a Change of Control (as defined in the Restated M&A) is announced within six months following the Initial Closing, the Company shall have the option to redeem the Series A Preferred Shares for one point five times (1.5x) the original purchase price of the Series A Preferred Shares upon the closing of the Change of Control.”

“If a Change of Control is announced more than six months following the Initial Closing and the Series A Preferred Shares have not previously been redeemed, the Company must redeem the Series A Preferred Shares for two times (2x) the original purchase price of the Series A Preferred Shares payable in a lump sum at the closing of the Change of Control or in equal quarterly installments following the closing of the Change of Control through December 31, 2024.”

Sounds like RPI would get an immediate 1.5-2x their loan back in the event of M&A. There are some more clauses in the event of rimegepant approval or no approval.

Is this unique to BHVN?

In short, yes. As far as I can tell, Nektar and Sunesis have no such “change of control clauses”.

The closest clause I could find was by Immunomedics on January 7, 2018, in which they state “after the seventh anniversary of the First Commercial Sale (as defined in the Funding Agreement) in the United States and following a change of control of the Company, the Company shall have the option (“Call Option”) to repurchase fifty percent (50%) of the Revenue Participation Right from RPI, at the net present value (calculated using a 5% discount rate) of the projected  royalty payments based upon the then projected sales of the Product.” (The Product referring to IMMU-132, sacituzumab govitecan).

Of course, this is all fun speculation, but when there’s smoke there’s fire (or at least someone burning incense) .

2018 BHVN/RPI Financing

Biohaven also entered into an agreement with RPI back in June 2018. The CoC clause stated they may buy back 100% of the revenue participation rights that came with the financing, if a buyout occurred the buyout window. However, the buyout window was only 1 month (expired July 2018, and was obviously not executed).