Sunday 21 July 2019

US pharma firm Biohaven targets Irish tax base as it raises $300m

Tax shift: Biohaven, which is headed by CEO Vlad Coric, says it will be subject to taxation in Ireland through a subsidiary ‘principle operating company’ here
Tax shift: Biohaven, which is headed by CEO Vlad Coric, says it will be subject to taxation in Ireland through a subsidiary ‘principle operating company’ here
John Mulligan

John Mulligan

US drug development firm Biohaven Pharmaceuticals still plans to establish its operational headquarters in Ireland and move its intellectual property here, it has told investors.

The company, with a market capitalisation of just under $2bn (€1.8bn), saw its shares plunge in New York on Tuesday after it said it's raising $300m (€268m) to fuel its late-stage product development. Investors had hoped the company would be put up for sale.

The Connecticut-based clinical stage pharma group said it's also giving its underwriters a 30-day option to buy an additional $45m of shares in the firm at the offer price.

Biohaven is working on a number of potential treatments, including therapies for migraine and pain, Alzheimer's Disease, as well as inflammation and neurodegradation.

Biohaven is headed by CEO Vlad Coric, who was previously a group director of global clinical research at Bristol-Myers Squibb.

It said that it currently has six wholly-owned subsidiaries.

"We also expect to form one or more additional subsidiaries or move one of our existing subsidiaries to be incorporated under the laws of Ireland and resident for tax purposes in Ireland," it told investors.

"We expect that an Irish subsidiary will be the principal operating company for conducting our business and the entity that will hold our intellectual property rights in certain of our product candidates.

"As a result, we expect that we will become subject to taxation in Ireland in the future," it added.

But the company is already sitting on $505m (€450m) of losses, meaning it's unlikely to have any significant corporation tax liability for some time in Ireland. It also expects to incur significant expenses "for at least the next several years", it has told investors.

The company spent $190m (€169m) on research and development last year, with its general and administrative expenses bring its total operating costs in 2018 to $225m (€201m).

In the first three months of 2019, it spent $41m (€36m), while its general and administrative costs were $13.4m. It had $217.4m in cash at the end of March.

The $300m being raised by the firm will be used to advance and expand development of some of its drug platforms, and to pay for planned regulatory filings. It will also be used to pay any milestone payment obligations under its licence agreements.

In April, Bloomberg reported that Biohaven was exploring a possible sale of the company. The news agency said that the firm had engaged a financial adviser, and was in the early stages of considering a sale or partnership. By that stage, Biohaven's shares had nearly doubled over the space of a year.

Bloomberg pointed out that Biohaven's research into Alzheimer's, inflammation and neurodegeneration may have made it attractive to buyers as it's one of the few firms still focused on treatments for those conditions. Large-scale drugmakers are exiting neuroscience research projects after a series of high-profile failures, said the news agency.

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