Biohaven Pharmaceutical Holding Co Ltd (NYSE:BHVN) tumbled Tuesday after news of a mixed shelf registration and $300 million share offering killed intense speculation that the migraine drug developer was exploring a sale.
The New Haven, Connecticut-based clinical-stage biopharmaceutical company took the market by surprise by revealing that in addition to the $300 million offering, it will grant the underwriters a 30-day option to buy an additional $45 million in shares at the public offering price.
Investors who had sent shares of Biohaven climbing since April while pinning their hopes on a lucrative sale, turned sour on the biotech on Tuesday sending shares plunging over 25% to $42.95.
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In April, Bloomberg reported that the drug maker was exploring options including a possible sale of the company after attracting interest from potential bidders.
Biohaven says it plans to use the proceeds from the offering, together with existing cash, to advance its pipeline.
The company is gearing up to launch a migraine product which is under consideration for approval at the US Food and Drug Administration.
Despite the stock plunge, Canaccord analyst Sumant Kulkarni continues to see potential in Biohaven’s rimegepant migrane product. According to TheFly.com Kulkarni has a Buy rating and $89 price target on the biotech.
Biohaven is also doing research in Alzheimer’s disease, inflammation and neurodegeneration. Bloomberg reported the company may be attractive to buyers in part because it’s one of the few still focused on this line of research.
Goldman Sachs and Piper Jaffray are acting as joint book-runners for the offering.
Contact Uttara Choudhury at [email protected]